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African universities must rethink financing models to stay afloat

Public and private Kenyan universities have had it rough meeting financial obligations in the past months. In late January, the Ministry of Education, through the Commission for University Education (CUE), revoked the operating license of a church-based university. Two others have been given a one-year ultimatum to put their house in order or suffer the same fate.

The reasons given by the authorities relate to cash flow.

The challenge is not unique to Kenya, however. Recently, in a neighbouring country, the government had to intervene to help a leading university pay its lecturers after a cash crunch stalled its operations.

The ongoing strike by lecturers also highlights the challenges the institutions of higher learning are going through. It is more than a month since the staff downed tools, paralysing learning and forcing the closing of some campuses for lack of funds.

LEARNING INTERRUPTED
In South Africa, learning was interrupted early this year for a long period following student unrest after university management increased fees to meet what they termed as increasing operational costs.

For a long time, universities have relied disproportionately on the Exchequer and students’ tuition fees to finance their operations.

However, the number of public universities has been increasing. Also, the 2012 Universities Act provides for establishment of at least one public university in every county. This is bound to put a strain on the State to sufficiently finance them.

And as the spending needs of the government grow, the National Treasury has already said it will reduce allocations for several sectors.

Increasing competition for students following an explosion of private universities also means that brick and mortar expansion of facilities to host more learners is no longer viable as enrolment is uncertain. Moreover, building a modern vibrant university that meets the needs of the highly digitised world requires immense resources.

WAKE-UP CALL
However much it gets from the Exchequer and tuition charges, it will not be enough for the varied requirements of a university that keeps pace with the ever changing technologies.

However, the current rough patch is a wake-up call that we need to go back to the drawing board as far as the financing models for our universities is concerned. There is light at the end of the tunnel in the form of the diverse opportunities that universities can explore to generate the needed resources.

We need to look at the successful models adopted by hugely successful universities in the West such as Harvard, Massachusetts and Yale. I have visited these globally reputable institutions and carefully studied their sources of income and I realised that we have quite a lot to learn from them.

These institutions do not rely on funding from the federal government. A huge share of their resources are generated through innovative internal mechanisms. They have diversified revenue streams, the main one being research.

ACADEMIC PURPOSES
The research is not merely for academic purposes but is geared towards generating products that address the society’s challenges. This has enabled them to cultivate strong linkages with the corporate world as big companies seek innovative products for an edge in the competitive marketplace.

They have also created endowment funds. Revenue generated from research, consultancy, innovations and investment instruments, among others, is kept in safe custody for a rainy day.

Much as I commend the Ministry of Education for establishing the Universities Funding Board, our institutions must begin to seriously grapple with the challenges of broadening their revenue streams.

Author: Prof. Simon N. Gicharu, CBS founder and chairman, Mount Kenya University

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