Road to financial freedom for universities in Kenya

Kenya’s universities face a choice: continue prioritizing quantity over quality, or embrace reinvention.

In a lecture hall built to accommodate 100 students, over 600 jostle for seats. In the corridors, Professors, when not on strike, shuffle between part-time teaching jobs to plug holes in their paychecks.

These are the daily realities in many of Kenya’s public universities. Once admired across the region, universities are drowning in debt, overcrowding, and a chronic lack of accountability.

To save them, Kenya must stop treating its universities as mere vessels for mass education. The future lies in two bold shifts; granting universities the freedom to build autonomous endowment funds and enforcing rigorous academic accountability through measurable staff-to-student ratios.

Kenya’s public universities expanded rapidly from the year 2000, fueled by an agenda to democratise access to higher education. What emerged was a system that prized volume over value.

Amid industrial-scale graft, managerial inertia, and a pervasive culture of short-termism, most universities were left indebted when the revenues from parallel degree programs inevitably dried up.

The government’s recent move to tie funding to student numbers—where “money follows the student”—has some merit. It encourages competition, rewards popular programs, and imposes market discipline. But this model risks turning universities into factories for mass credentialing.

Institutions are incentivised to chase headcounts, not excellence. Research output, staff quality, and institutional capacity to attract external funding are sidelined in the funding formula.

This is a costly omission. Universities are not just teaching centers; they are also research engines, idea incubators, and innovation labs. Treating them as mere enrolment depots strips them of their broader intellectual and economic value.

Kenya’s universities are at an inflection point. They can continue down the current path—pursuing quantity at the expense of quality—or they can rise to the challenge of reinvention.

Endowment funds will grant them financial independence to chart long-term visions. The most successful universities of the future will not only be those with the largest lecture halls filled with students, but also those with the deepest intellectual capital and the boldest financial vision.

Globally, elite universities—from Harvard to Cape Town—owe much of their financial resilience to endowment funds. These are pools of capital invested over time, with income used to fund scholarships, research, and infrastructure. They shield institutions from budget volatility and create long-term incentives for prudent financial management.

Kenya’s universities have virtually no such buffers. They rely almost entirely on capitation, tuition fees, and ad hoc grants. Their budgets are devoured by unsustainable wage bills, often upwards of 70 percent, leaving little room for investment in labs, libraries, or research.

What’s needed is a policy shift that allows public universities to create and grow endowment funds managed by professional fund managers. Legislation must permit them to build capital from alumni, philanthropists, and private donors.

A small percentage of returns can be used annually, with the rest reinvested. Donors could be incentivized through tax relief and public recognition.

Endowments won’t fix things overnight. But planting the seed now could transform Kenya’s higher education landscape in a decade.

Teaching without Teachers

There is another dimension to this crisis: instructional quality. Many public universities operate with a staff-to-student ratio that would alarm any serious educator. While the United Nations Educational, Scientific and Cultural Organization (UNESCO) recommends a ratio of 1:20 to 1:30, some Kenyan departments exceed 1:70.

Overstretched lecturers juggle teaching loads with administrative duties and side hustles. The result is pedagogical decay—students learn less, drop out more, and graduate underprepared.

Here, accountability must be non-negotiable. Every university should be required to publish its staff-to-student ratios annually. These numbers should be audited and made public. Institutions that chronically fall short should face corrective measures—reduced capitation, conditional enrollment caps, or performance-based sanctions.

Linking funding to enrolment without tracking who is doing the teaching is both inefficient and irresponsible. Staffing must align with curriculum demands, not bureaucratic headcounts. Transparent ratios will also expose ghost staffing and inflated payrolls, pushing universities toward leaner, more accountable operations.

A new compact for reform

To rebuild Kenya’s universities, government and institutions alike must rethink their roles. The state must continue supporting higher education but do so intelligently. The “money follows the student” model should be retained—but complemented.

A portion of funding should follow research output: publications, patents, grants. Another should follow the capacity to raise non-government revenue—from industry partnerships, alumni donations, or externally funded research.

Revamping university funding to support cost-sharing and channel surplus toward endowments is one step. Offering matching public funds for every shilling raised privately is another.

Above all, the state must refrain from politicizing university leadership—appointments should be merit-based and aligned to performance metrics.

Universities, for their part, must become more entrepreneurial. This means investing in fundraising offices, hiring financial professionals, and nurturing alumni networks.

It means rewarding academic staff who secure grants or build industry links. It also means cutting administrative fat and redirecting resources toward core academic functions.

The writer teaches finance and accounting at Karatina Unversity.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.