Over the past three years, the mood around education has shifted significantly, thanks to the issue of funding. In 2023, a taskforce – the Presidential Working Party on Education Reforms – was formed to come up with recommendations on a financing model that would sustainably support university education in Kenya.
The result of this exercise was a student-centered financing structure, which categorised them into five tiers based on their family income, and allocated varying amounts of scholarships and loans as per those bands.
However, this has eventually proved to be unsustainable, both for families, which cannot afford the high amounts of money which they are asked to pay as fees, and for the government, on what it should give Helb to provide all students with loans (its current budget deficit stands at Sh56 billion), and the Universities Fund with a shortfall of Sh28 billion.
The government plan to drop this model raises questions about how we can approach education financing if Kenya is to subsidise the sector. The problem we should be confronting now is how to fund higher education sustainably for future generations.
A look at the current budget shows that out of the total Sh4.8 trillion only Sh3.6 trillion comes from revenue collected. The other amount, a deficit of Sh1.15 trillion is from loans.
A breakdown of the budget shows that outside the debt repayment (which stands at Sh2.3 trillion), the education sector receives the highest (ministerial) allocation, standing at Sh784.5 billion.
This amount is divided among TSC for payment of teachers’ and interns’ salaries, basic education (capitation for primary and secondary schools and tertiary institutions (loans, scholarships, infra projects and research).
However, the amount we consider to be generous still contains huge deficits.
The universities loans and scholarships have a total deficit of Sh84 billion. Add that to the fact that public universities are collectively deep in debt of Sh57 billion, with 23 out of the 37 public universities nearing insolvency.
The government has Sh60 billion owed to private universities for allocating some of the State-sponsored students there between 2017 – 2023. Therefore, the total additional amount that would be crucial to save universities, would be around Sh201 billion.
Where can we get this additional money? The first is that we should seal all corruption loopholes and use what is saved to fund higher education.
The second way out is divert funding from other sectors and allocate it to education. Proponents of this idea suggest that we should slash the budget allocated to State House (which is just Sh8.5 billion) or consolidate all bursary funds (which stand at just Sh9 billion).
However, it is important to note that every department gets an allocation that is commensurate to its activities, and so, asking them to cut theirs, would hinder their operations with a ripple effect on the general economy.
Additionally, when we compare the amounts we need to make an impact, and the amounts we’re trying to generate using these budget cuts, then we find that it’s a drop in the ocean. Therefore, it can only serve as a stop-gap solution.
The third option suggested is obtaining loans. However, since education is a recurrent expenditure and for which we cannot obtain direct returns of investment which would help us repay it, then it would be imprudent to take up loans to fund it.
The fourth option would be creating a separate fund for it, then taxing people, just as has been done with the affordable housing levy.
However, by virtue (or vice) of the fact that we’ve never managed to widen our tax base beyond payslips, it wouldn’t be burdensome to only tax the salaried so as to support the entire nation.
Therefore, there exists no short-term solution. There can only be a long-term strategy, which would involve looking for ways to increase our gross domestic product so as to have more money to fund social amenities.
This is basically asking for industrialisation because the ripple effects run beyond increasing the GDP, and also involve providing jobs for graduates as well as increasing our forex through reduction of imports.