Kenya's Cash-Strapped Higher Institutions Received Boost By New Government Funding

Ministry of Education Kenya

Kenya’s cash-strapped higher education sector has received a boost after government increased funds to public universities by 8% – more than double an earlier planned raise.

The extra cash is meant to better the lives of university students, who will also be more likely to get internship opportunities following a raft of policy and fiscal measures announced by the government on Thursday.

The Treasury will now give tax exemptions on apprentice emoluments to employers who engage at least 10 graduates.

This, said Cabinet Secretary for the National Treasury Henry Rotich, should incentivise internship opportunities for more graduates. In the past, employers paid tax on intern salaries, effectively discouraging them: now compliant firms will pay lower corporate taxes. Interns are expected to receive stipends to cover expenses and upkeep during the internship period.

The internship scheme is expected to boost the skills set for graduates who have no work experience to help secure meaningful jobs. Employers are increasingly shunning new graduates, complicating a growing youth unemployment problem in Kenya and East Africa.

A 2014 study by the Inter-University Council for East Africa showed that 51% of Kenya’s graduates were believed to be unfit for jobs. The figure was higher for the other countries of the East African Community – Burundi (55%), Rwanda (52%), Tanzania (61%) and Uganda (63%).

Boost for student loans

In the 2016-17 financial year budget released on Wednesday, Treasury also increased the allocation to the Higher Education Loans Board, or HELB, by 21% to US$91 million.

This makes the agency that disburses loans to university students on behalf of the government the biggest winner in the new budget allocation, since the government has nearly met the request of US$100 million that HELB presented to it.

With an enhanced lending book, HELB now can give loans to more students, as demand continues to rise.

Treasury says that the number of first-time applicants seeking loans will grow nearly five-fold from this year’s 32,776 to 147,687 in 2018. This is because of growing student numbers and the expansion of loans to students in colleges and private institutions.

Meanwhile, HELB has announced that it is deepening partnerships with key public agencies to tackle the problem of US$120 million worth of non-performing loans. It is working with the tax authority, state pensioner body, public prosecutions agency, employers and others in efforts to track down past beneficiaries who have not been repaying loans.

Funding rise for universities, research

State universities will now receive at least US$674 million, up from US$624 million allocated in the current fiscal year. The purse is much higher than the US$646 million that government announced in February, giving universities greater financial headroom.

Higher education funding was part of a US$20.3 billion spending plan that Kenya unveiled for the coming financial year, which begins next month.

The increased funding comes at a time when universities are preparing to implement a new tuition fee model that will see students pay fees based on the courses they undertake.

This will bring to an end years of haggling over a differentiated unit cost system, which vice-chancellors said last week would promote equity in the funding of public institutions.

The government also plans to fund research to the tune of more than US$30 million, up from US$24 million the previous year.

Treasury said under the research vote that it plans to accredit 15 research institutes, monitor research systems, establish thematic research fairs and develop nanotechnology programmes. This effectively actualises the National Research Fund that government mooted several years ago to strengthen research in universities, with an eye to boosting innovation.

Money available for university research will grow substantially, providing opportunities to get into high-end research projects. The money will fund research in medicine, industry, agriculture, forestry, sugar and crime, among other areas.

Research is seen as crucial to Kenya’s long-term economic blueprint, Vision 2030, which plans to turn the country into a middle-income economy in two decades. Kenya is positioning itself as Africa’s next research hub, with several initiatives expected to generate hundreds of innovations.

To boost science and technology in the coming three years, Kenya plans to design and establish a National Science and Technology Parks master-plan, establish a national physical science laboratory and license 2,500 research projects.

More expansion, lingering challenges

The policy and fiscal measures are expected to further fuel expansion of the higher education sector, which has experienced steadily rising enrolment in both public and private universities to reach 421,152 students.

This was as a result of accelerated intake as well as expansion of physical infrastructure in various public universities, said Treasury, adding that enrolment and retention at university had also been enhanced through increased provision of bursaries to needy students.

However, said Treasury in its budget policy paper, higher education still faces numerous challenges including poor infrastructure, lecturer shortages, a slow pace of ICT integration, and legislative and policy limitations. The adoption of e-procurement processes also slowed down work progress in the sector.