By Reporter
A watchdog committee of the National Assembly has demanded that the University of Nairobi management provide concrete measures for clearing its Sh20 billion debt and restoring the institution’s financial stability.
The demand follows an audit report that found the university technically insolvent, with lawmakers challenging the management to provide verifiable figures and firm timelines for its financial recovery.
The National Assembly Public Investments Committee on Governance and Education, chaired by Luanda MP Dick Maungu, on Thursday questioned the university’s management over its financial position during a review of Auditor-General’s reports covering the 2020/2021 to 2024/2025 financial years.
The committee expressed concern over the institution’s accumulated deficits, outstanding statutory obligations and pension contributions, as well as losses reported by some of its income-generating units.
Auditor-General Nancy Gathungu told the committee that the university’s financial statements for the year ended 30 June 2022 attracted a qualified audit opinion, with a material uncertainty relating to its ability to continue operating as a going concern.
She said the university had reported a deficit of approximately Sh2.2 billion, pushing its accumulated deficit to Sh8.8 billion.
The institution also faced substantial statutory obligations, including taxes and pension contributions, which the Auditor-General said amounted to about Sh10.6 billion and had increased from the previous financial year.
The findings raised questions about the university’s ability to meet its financial obligations despite holding valuable assets.
Appearing before the committee, Vice-Chancellor Prof Ayub Gitau acknowledged the financial challenges but maintained that the university remained a premier institution with a substantial asset base that could be leveraged to support its recovery.
“We have a debt of about Sh20 billion and an asset base of over Sh220 billion,” Prof Gitau told the MPs.
He said the university’s management and council were exploring ways of maximising returns from its assets, including through renting and leasing some of its properties.
Prof Gitau added that the institution had established a committee chaired by the Deputy Vice-Chancellor in charge of finance to examine the valuation of its assets and identify opportunities to improve revenue generation.
He also cited austerity measures intended to reduce financial leakages and improve the management of the university’s resources.
However, the explanation did little to convince the committee, which insisted that the management had failed to demonstrate how the proposed interventions would translate into measurable financial improvements.
Hon. Maungu challenged the vice-chancellor to move beyond citing the university’s property portfolio and provide practical measures for addressing its outstanding obligations.
“The people who are suffering, some of whom are your creditors, will not mind about the asset base you have,” the chairman said.
He added: “What members and I have not seen are pragmatic steps that you have put in place as management to secure the university from this condition. We need to see actionable, pragmatic steps to free the university from this yoke.”
The chairman said the committee expected clear timelines and evidence that the proposed recovery measures would deliver results.
The committee’s concerns were amplified by Embakasi West MP Hon. Mark Mwenje, who questioned whether the institution’s leadership was adequately responding to the financial crisis.
“Is the university solvent?” he asked.
In response, Deputy Vice-Chancellor Prof Josiah Aduda acknowledged that the institution had been declared technically insolvent for the financial year under review because its liabilities exceeded its assets.
Hon. Mwenje warned that the financial difficulties threatened the reputation of an institution that had long been regarded as one of Kenya’s leading universities.
“When you start looking at these figures, and a whole university that was the first in this country is insolvent, then you have a crisis at the University of Nairobi,” he said.
He questioned the leadership’s capacity to reverse the situation, arguing that the university’s financial records pointed to deeper management challenges that required urgent attention.
Central Imenti MP Hon. Moses Kirima also demanded detailed evidence to support claims that austerity measures were helping the institution recover.
He said the management needed to demonstrate, through figures, how it was reducing unnecessary expenditure and addressing the university’s financial obligations.
“Where is the analysis? Where are the figures to show that you are cutting down on expenses and taking steps to revive this university?” Hon. Kirima asked.
He expressed particular concern about the outstanding pension contributions, warning that delays in remitting the money could cause hardship to former university employees who depended on their retirement benefits.
Hon. Kirima said the committee needed to understand what the university was doing to settle the pension arrears and protect the interests of affected workers.
The university’s acting Director of Finance, Stephen Kimeli, attributed its financial difficulties partly to a reduction in government funding following the introduction of the Differentiated Unit Cost (DUC) funding model in 2017/2018.
He told the committee that the reduction in capitation had created a funding gap of about Sh1.6 billion, which continued to affect the institution’s operations.
Hon. Kimeli said rising payroll costs had compounded the problem, making it increasingly difficult for the university to meet its financial obligations while sustaining its operations.
He, however, said the university was implementing measures under its 2023–2027 strategic plan to improve its financial position.
These include increasing student enrolment, reviving income-generating units and expanding research activities to generate additional revenue.
Mr Kimeli said the revised university funding model could also help improve revenue, while research grants offered another opportunity to raise funds.
He acknowledged that outstanding bills continued to affect the university’s day-to-day operations.
Kasipul MP Hon. Boyd Were questioned the effectiveness of the income-generating strategy, noting that some of the university’s commercial activities were themselves making losses.
Deputy Vice-Chancellor Aduda said management had engaged the heads of the income-generating units to identify ways of increasing revenue and had introduced stricter expenditure controls.
“We have also developed serious austerity and cost-management measures at the university because when you are in a hole, you don’t continue digging,” Prof Aduda said.
He maintained that the measures were beginning to yield results through improved revenue and reduced costs.
But Sotik MP Hon. Francis Sigei demanded evidence to substantiate the claims, insisting that the committee could not rely on general assurances.
“I would like to see this recovery in terms of figures. What are the figures?” he asked.
Hon. Sigei said MPs needed measurable indicators of progress, including improvements in revenue collection, staffing costs and expenditure management.
“We want to support you, but we need to know so that we can be convinced that you are actually on the right path,” he said.
Kilome MP Hon. Thaddeus Nzambia also sought clarification on whether the audit findings covered the university’s various campuses and asked the management to provide an update on its current financial position, given that the accounts under discussion related to 2021/2022.
Prof Aduda told the committee that the university was developing a policy to commercialise its assets, which was awaiting approval by the university council.
He said the plan would help the institution unlock the value of its extensive property portfolio and use the proceeds to address its financial obligations.
The deputy vice-chancellor also reported progress in reducing pension arrears and remitting statutory deductions, although he did not provide detailed figures during the exchange.
He said the management expected the proposed asset-commercialisation programme to ease the university’s financial burden.
The committee, however, demanded a clear implementation schedule.
Prof Aduda told the MPs that his team expected to complete its work on the recovery proposals within a month.
Maungu directed the university to submit a report on the proposed interventions by 1 December 2026.
The chairman said the committee would continue examining the Auditor-General’s reports for the remaining financial years and would make recommendations after considering the issues raised.
