One of Kenya’s largest institutions of higher learning, Kenyatta University is seeking a Sh450 million loan from local lenders as harsh economic times persist.
The university has given interested parties until the end of February to offer their quotations for the loan that is payable in 10 years.
“KU will select an individual financial institution among those invited to submit proposals or those who respond to the invitation for proposals in accordance with the method of selection detailed under this section and consistent with the regulations,” the tender notice read in part.
A 2019 report by the Auditor General specifically pointed to two buildings; fully equipped with learning materials, in Kigali and Arusha.
The Kigali building, valued at Sh420 million was closed by the Rwandan government before operations could kick-off.
The campus in Arusha was shut down following standards-related queries.
According to the then auditor general, Edward Ouko, the investments worth at least Sh500 million were a “sunk cost.”
Kenyatta University last year recorded a deficit of more than Sh2 billion, reducing the accumulated surplus from Sh8 billion in 2017 to Sh6 billion by June 2018.
The varsity did not also remit pension and taxes amounting to Sh1 billion, some Sh3 million in audit fees among other statutory deductions estimated at Sh200 million.
“The university is, therefore, operating under financial difficulties and currently it has resorted to financing its operations using costly short-term borrowings which may further worsen its liquidity position,” he said.
He added, “The university is technically insolvent and unless urgent steps are taken to improve the situation, it may not be able to meet its mandate in the future.”
Education CS Prof George Magoha proposed that some of the universities be merged.
He also proposed the reduction of staff, especially in non-essential roles, which he said would help reduce the varsities’ wage bill.
Merging of courses was also on the list of cost-cutting measures.
The ministry has also stopped the opening of satellite campuses and has asked varsities to instead concentrate on the quality of education offered.