The irony of Ruto rooting for new public varsities as older ones drown in Sh100b debt

President William Ruto is pushing ahead with the creation of new universities even as public institutions are sinking under a crushing Sh100 billion debt, with at least 11 already technically insolvent and struggling to stay afloat.

The expansion drive, which has seen new universities chartered and others upgraded across the country, is now colliding head-on with a worsening financial crisis  that is choking existing institutions, delaying salaries, and forcing some to operate on the brink of collapse.

Fresh disclosures before Parliament show that public universities debt has ballooned from about Sh60 billion in 2022 to more than Sh100 billion, exposing the scale of the crisis during Ruto’s administration.

At the centre of the storm is a sector that Ruto inherited in a state of distress. 

When he took office in 2022, some 39 public universities were already weighed down by chronic underfunding and mounting debts. 

So bad was the situation that his predecessor, former President Uhuru Kenyatta, had imposed a freeze on the establishment of new universities to stop unchecked expansion.

Ruto came in promising to stop the bleeding, fix university finances, streamline funding, and restore stability.

But three years later, the numbers tell a different story.

Instead of slowing down expansion, the government has rolled out new institutions, including Bomet University, chartered in 2026, and Nyandarua and Kabarnet university colleges established in 2025. 

The administration also launched the Open University of Kenya in 2023, the country’s first fully online public university, the National Intelligence and Research University chartered in November 2024 and licensed the Kenya Advanced Institute of Science and Technology in 2022.

But amid the establishment of new institutions, data presented to MPs shows that the financial strain inside universities has reached alarming levels. 

Egerton University is the most indebted with Sh25.5 billion, followed by University of Nairobi (Sh16.99 billion), Technical University of Kenya (Sh14.13 billion), Kenyatta University (Sh12.79 billion) and Moi University (Sh10.38 billion).

The debt accrued is a result of unremitted statutory deductions, including Sh26.34 billion in Pay As You Earn, Sh33.21 billion in pension, gratuity and insurance, and Sh18.63 billion in Sacco deductions. 

Part-time lecturers are owed Sh4.69 billion, suppliers Sh4.17 billion, while banks and other lenders are also exposed.

Higher Education Principal Secretary Beatrice Inyangala told Parliament that 11 universities are now technically insolvent, meaning they owe more than they own, and warned that the situation could get worse.

“We previously had 22 technically insolvent institutions, but that number has now improved to 11. However, if underfunding persists, more universities risk falling into insolvency,” she said while appearing before parliament.

Inyangala explained that the debt in universities is a result of funding shortfalls by the government.

The funding shortfall was attributed to the old funding model, also known as Differentiated Unit Cost (DUC), which was discontinued in 2023.

By the time it was discontinued, the universities were only getting 47 per cent of the funding they expected.

This means for every Sh100 the institution expected to get, they only got Sh47.

To address the challenge, President Ruto introduced the new funding model otherwise referred to as student-centred funding model, which was introduced in 2023 as the solution to the sector’s long-standing problems.

The model was meant to align funding with students’ needs and finally end the cycle of underfunding that crippled the previous DUC system.

Instead, it is now showing signs of cracking under pressure, with underfunding, which brought down DUC, now plaguing it.

Universities currently require Sh29.55 billion to fully fund students under the model, but the government has allocated only Sh16.92 billion in the 2025/2026 financial year. 

That leaves a massive funding gap of Sh12.63 billion, meaning institutions are operating with just 57 per cent of the money they need.

Even with a proposed supplementary allocation of Sh1.5 billion, funding will only rise to about 62 per cent still far below what is required.

The shortfall has been worsening each year. In the first year of the model, the government met 100 per cent of the funding requirement. 

That dropped to about 64 per cent in the second year and has now fallen to 57 per cent, the lowest level so far.

At the same time, the number of students has continued to rise sharply.

Currently, 437,648 students are funded under the model across three cohorts, 122,634 admitted in 2023, 134,889 in 2024, and 180,125 in 2025. 

A fourth cohort of 270,000 students is expected later this year, which will pile even more pressure on already strained resources.

“The budget allocation of 2025/26 remained the same as the previous financial year despite the entry of a new cohort of 180,125 students,” Inyangala told MPs while appearing before the National Assembly committee on education.

Inyangala attributed the crisis to “a mismatch between projected and actual disbursements,” revealing that about eleven public universities are technically insolvent.

“Two institutions, Moi University and the Technical University of Kenya, are in critical financial condition,” she said.

In the most recent turn of events, Moi University is staring at a possible closure after the High Court froze its bank accounts in connection with a Sh1 billion debt owed to contractor Vishva Builders Ltd.

The dispute, filed as Eldoret High Court Civil Case No. 51 of 1999, stems from the construction of the Faculty of Science Complex and has now reached a critical stage that threatens the institution’s survival.

On February 4, a garnishee application led to the freezing of the university’s accounts. A garnishee order authorises a third party, such as a bank, to release funds belonging to a debtor in satisfaction of a court-awarded debt owed to a creditor.

The move has effectively paralysed Moi University’s ability to meet financial obligations.

In an internal memo dated April 15, the university warned that its operations could be paralysed. 

“The university is facing serious financial constraints coupled with the garnishee order that is in place.” The letter further cautioned that operations have been crippled and closure looms if the order is upheld.

To avert collapse, the university has sought a 60-day postponement of a ruling scheduled for April 16, 2026. 

A proposed consent filed in court requests the deferral of the ruling, lifting of the garnishee order, and commencement of structured settlement talks.

The plan includes an immediate payment of Sh50 million from the frozen accounts toward the debt.

If approved, the matter will be mentioned again on June 16, 2026, for confirmation of settlement or further directions.

Despite previous government bailouts, this latest development has raised questions about the university’s financial management and accountability, given its recurring struggles.

While appearing before the National Assembly Committee on Education, Moi University acting Vice-Chancellor Prof Isaac Kiplagat confirmed the university received Sh1.5 billion last year, which was used to pay staff salaries and arrears. 

However, he said the institution still faces a pension liability of about Sh4.5 billion and are not out of the woods yet.

“We have received approvals to liquidate some properties in partnership with the pension fund to clear arrears,” he said.

Similar crisis is plaguing Technical University of Kenya.

Technical University Vice-Chancellor Prof Benedict Mutua told MPs the institution has been unable to pay gross salaries since 2013 and that the current crisis has been a buildup of the long standing deficit.

He indicated that the staff are only earning net salary as the institution is unable to meet the other statutory deductions.

“We only pay net salaries. Our monthly wage bill stands at Sh102 million, but we receive less than Sh60 million from the Treasury,” he said.