KENYA: Universities in talks with private investors

Kenya is in talks with three South African investors to construct facilities in one of its public universities, as institutions seek private funding to expand facilities against a background of soaring student numbers. Another major university is also seeking private investment in academic and residential infrastructure.

Housing Minister Soita Shitanda said last month that the investors were being engaged to construct educational and boarding facilities at Masinde Muliro University of Science and Technology, Kenya's newest public university, under the Build-Operate-Transfer scheme.

The minister did not disclose details of the investors or the amount of money they would be injecting into the projects, but said the talks were nearing conclusion.

Masinde Muliro earlier this year invited investors to build hostels on its campuses, to ease congestion in its facilities.

"There is a shortage of adequate housing to meet student numbers," said Shitanda, whose ministry leases office and residential spaces for state institutions. "We have identified three developers from South Africa to build new hostels at the university to accommodate more students," he told reporters.

The entry of the South African investors is part of a trend being followed by most universities in Kenya as they sort out their faltering infrastructure, which has not matched demand for learning services. As numbers surge, universities are increasingly embracing new financing models, such as private equity funds.

For the country's seven public universities, annual government funding has not matched the need for new facilities, meaning institutions have to tap funds from other sources like private investors to expand their infrastructure.

Under the arrangement with the South Africans, Masinde Muliro will provide the land for construction of the facilities while the investors will put up the hostels, run them for 20 years to recoup their investments and then hand them over to the university.

Professor Sibilikhe Makhanu, deputy vice-chancellor in charge of finance and administration at Masinde Muliro, said the institution was short of accommodation for 7,000 students.

Kenyatta University, the country's second largest university by student numbers, has also been looking for an investor to pump US$11 million into building academic and residential facilities. The investors are required to build and operate the facilities for between eight and 12 years before transferring ownership to the institution.

But Kenyatta has not yet released details of the planned investment.

The trend highlights the growing importance of private funds in higher education, especially at a time when Kenya's public coffers are strained by growing budgetary needs.

Unprecedented expenses in the recent past, including famine and the ongoing war against militias in Somalia, and falling revenues due to economic hardships, have only made things worse, meaning that the government has been unable to fund universities sufficiently to expand infrastructure.

The situation has hit state-run universities hardest, as they are taking in more students as the government moves to have an extra 40,000 admitted to clear existing backlogs.

The growing role of the private sector in Kenya's higher education was also illustrated last year after the government announced it was in talks with private universities to admit at least 20,000 state-sponsored students to ease the admissions crisis. The thinking was that the government would make use of the idle infrastructure capacity in private universities to teach more students.

But this plan seems to have stalled after government failed to dish out several incentives - including tax subsidies and loan guarantees - requested by the private universities if they were to get into such an arrangement with the state.

Government statistics show higher education admissions have been rising by around 40% annually for the past five years, while real subsidies to public universities have increased by a measly 4% to 5% over the period. According to government figures, the number of students in public universities was 143,000 last year, up from 101,000 the previous year.

But funding levels changed this year.

As previously reported in University World News, to support planned higher enrolments in the coming two years when the double-intake programme is expected to be finalised, the Ministry of Finance upped its direct funding to public universities from Sh21.8 billion (US$259 million) to Sh24.1 billion (US$286.9 million) in the current fiscal year.

Universities are projected to generate at least Sh14 billion from commercial activities, bringing the total budget to Sh38 billion (US$452 million). But public university administrators still insist the funding levels are far from what they would need to accommodate rising numbers of students and lift the faltering quality of education.

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