Public universities whose graduates fail to secure jobs within a year face reduced cash from the State under a proposed funding formula based on performance.
The formula recommended by the Universities Fund —which guides the allocation of State funds to public universities – is based on five performance indicators, including absorption of an institution’s graduates in the job market, research and training on financial management for top officials.
This is a departure from the present formula that is based on the number of students and the cost of courses at the universities.
The formula signals reduced allocations to the universities with courses that are not marketable in the job market.
The new funding structure comes in a period when Kenya has witnessed a jump in the number of universities and campuses as well as degree courses, most liberal arts, that offer little opportunities in the competitive jobs market.
“Performance-based funding is funding aimed at allocating a portion of universities education budget according to specific performance measures. It makes funding allocating more transparent and more competitive,” UF’s board says in the draft.
“The key performance indicators to be considered will be four-year graduation rate, graduate employability rate (one year after graduation) and research inputs.”
Kenya is currently grappling with a large number of jobless graduates in an economy that is struggling to create new jobs.
The number of students enrolled in Kenyan universities has surged in recent years, buoyed by State financing of students in private institutions and the setting up of new campuses.
Public universities had 452,089 students last year, up from 412,840 a year earlier, the Economic Survey says.
Kenya has 102 public universities and campuses — which posted a deficit of Sh6.2 billion in the year to June and received nearly Sh70 billion from the Treasury to run their operations.
The State has come under pressure from the World Bank to close and merge some of the cash-strapped public universities, citing duplication of courses and the need to cut spending.
The rise in university enrolment puts pressure on the government to create jobs for the graduates whose number stood at 62,000 in 2002 amid a slowdown in the creation of new jobs. Before the onset of Covid-19, which shed thousands of jobs last year, the economy had been generating less than 100,000 private sector positions. The economy added 69,600 formal private sector jobs in 2019, coming at a time when the government sought to tame its bloated wage bill through a freeze in hiring.
Half of jobless Kenyans have given up looking for work, disheartened by reduced opportunities in a tough economy that has seen many businesses downsize operations in a bid to survive.
Data by the Kenya National Bureau of Statistics (KNBS) covering the quarter ended March 2021 shows that 1.23 million out of the total of 2.49 million jobless Kenyans aged between 15 and 64 — and who qualify for the labour force — were not actively looking for employment.
The majority of those who have given up on employment are aged between 20 and 24 at 363,018, followed by 25- to 29-year-olds at 232,146.
The 20-24-year-old demographic consists mostly of fresh graduates whose job-seeking efforts are hurt by a lack of experience and a mismatch between skills and job openings.
The large numbers of new entrants into the job market every year have also led to limited opportunities, forcing many to seek alternatives such as setting up small businesses.
Since March 2020, many businesses have been unable to take more workers due to the economic problems caused by the Covid-19 pandemic, with many resorting to lay-offs or wage cuts to survive.
Public universities have come under financial strain in recent years as a result of rapid expansion amid a dip in student enrolment to lucrative parallel degree programmes in which students paid fees based on market rates.
The number of public universities and campuses grew from 49 in 2010 to 204 in 2017 before falling to 102 last year. Since 2016, several campuses have been shut across the country.
The cash crunch at the universities has also been caused by the implementation of the differentiated unit cost model that resulted in a reduction of government capitation in large universities.
This caused a huge payroll gap and accumulation of debts.
Universities that have shut some of their campuses include Kisii, Laikipia, Moi, and Jomo Kenyatta University of Agriculture and Technology. The World Bank is seeking acceleration of the closure in the wake of losses reflected in the performance of the top public universities.