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Why public universities are struggling with accumulating debts
16th September, 2025 10:12 AM
Prof. Daniel Mugendi, the Vice-Chairman of the Vice Chancellors of Public Universities in Kenya, has shared reasons behind the outrageous debts of a number of Kenyan universities, attributing it to the past method of funding universities by the government.
Speaking on Tuesday, September 16, 2025, during an interview with a local media house, he detailed the unsustainability of funds to universities as a major cause of debts.
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The Embu University vice chancellor revealed that the former way of funding the universities, which was through the use of differentiated unit costs, also called capitation, was not sustainable.
In addition, Mugendi noted that this was a major reason why many of the universities found themselves accumulating enormous amounts of debt.
“The former way of funding the universities through the use of differentiated unit costs, or capitation, rather, was not sustainable, and that’s why many of the universities found themselves accumulating these debts,” Mugendi detailed.
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However, Mugendi noted that following the inception of the new funding model, many universities were able to pull themselves out of a pool of debt.
“But the new funding model, when it kicked in, then many of us were able to pull out, and we were able to pay whatever we were owing,” Mugendi said.
UoN debts
Prof. Mugendia’s remarks follow a report by the University of Nairobi’s management in April 2025, which acknowledged that the institution is facing a financial crisis, with debts exceeding Ksh12 billion due to insufficient funding from the Ministry of Education.
At the time, a growing rift between the acting vice chancellor and the university council had worsened the situation. The vice chancellor claimed the council had been making key decisions, including staff dismissals, without his input.
The Parliamentary Education Committee in April 2025 visited the university to uncover the reasons behind its financial and managerial problems.
At the time, university management, led by Acting Deputy Vice-Chancellor Margaret Jesang Hutchinson, opened up about the causes of the institution’s troubles. Debts of over Ksh12 billion top the list, including pension arrears of Ksh7.8 billion and Ksh4 billion owed to the Kenya Revenue Authority (KRA).
The university is only managing to stay afloat with external support and needs Ksh800 million every month to pay its staff. At the same time, the Kisumu and Mombasa campuses remain dormant due to a significant decline in student enrollment. Some parts of the campuses have been rented out to businesses.
“Our payroll is Ksh800 million monthly, but the government only provides Ksh 100 million. We have no students in Mombasa and Kisumu,” said Acting Deputy Vice-Chancellor Margaret Jesang Hutchinson.
