After Kenya’s Higher Education Loans Board (HELB) announced a strategy to recover US$120 million in unpaid student loans, concerns for a sector facing extreme financial hardship were rapidly on the rise. Now after months of uncertainty, Kenya’s university system has received a much-needed lift, with public universities in the region getting set to receive an eight percent rise in Government funding – more than double the figure that had previously been promised.
The funding will greatly improve the Kenyan student experience, with newly implemented Government policies and fiscal measures to significantly increase internship opportunities for students in the region.
The nation’s treasury will now give tax exemptions on apprentice emoluments to employers who engage at least 10 graduates, University World News reports.
According to Henry Rotich, Cabinet Secretary for the Kenyan National Treasury, the scheme will serve as an incentive for local employers to invest in recent graduates. Previously, employer-paid tax for internship salaries discouraged firms from investing in new university graduates, but participating companies will now pay much lower corporate taxes thanks to the new Government funding scheme.
Another benefit of the new strategy is that interns will receive an allowance to cover expenses and upkeep throughout their entire employment period.
“The internship scheme is expected to boost the skills set for graduates who have no work experience to help secure meaningful jobs,” writes University World News, noting that regional employers are increasingly shunning new graduates, dangerously contributing to the growing youth unemployment problem burdening Kenya and other East African nations.
In 2014, 51 percent of Kenya’s recent graduates were deemed unfit for work, according to a study by the Inter-University Council for East Africa (IUCEA). The same data showed figures to be even higher in various regions of East Africa, with 52 percent of Rwanda’s recent graduates branded unsuitable for the jobs market, alongside 55 percent in Burundi, 61 percent in Tanzania and 63 percent in Uganda.
The scheme also hopes to aid the expansion of Kenya’s higher education sector, with the education ministry expecting university enrollments to significantly increase from this year’s 32,776 to 147,687 by 2018, citing factors such as rising student numbers and increased accessibility to loans as causes of the projected inflation.
The Treasury believes growth comes as a result of accelerated intake as well as the development of infrastructure at various public universities, adding that rates of enrollment and retention have already received a boost thanks to increased accessibility to funding for the most deprived prospective students in Kenya.
But in its most recent budget policy paper, the Treasury points out that Kenya’s higher education sector still has a long way to go, citing things like dilapidated infrastructure, a lack of modern ICT facilities, lecturer shortages and legislative limitations as challenges the system desperately needs to overcome. The adoption of e-procurement processes also slowed down work progress in the sector, University World News reports.
Kenya’s cash-strapped higher education sector has received a boost after government increased funds to public universities by 8% – more than double an earlier planned raise.
The extra cash is meant to better the lives of university students, who will also be more likely to get internship opportunities following a raft of policy and fiscal measures announced by the government on Thursday.
The Treasury will now give tax exemptions on apprentice emoluments to employers who engage at least 10 graduates.
The internship scheme is expected to boost the skills set for graduates who have no work experience to help secure meaningful jobs. Employers are increasingly shunning new graduates, complicating a growing youth unemployment problem in Kenya and East Africa.
A 2014 study by the Inter-University Council for East Africa showed that 51% of Kenya’s graduates were believed to be unfit for jobs. The figure was higher for the other countries of the East African Community – Burundi (55%), Rwanda (52%), Tanzania (61%) and Uganda (63%).
Boost for student loans
In the 2016-17 financial year budget released on Wednesday, Treasury also increased the allocation to the Higher Education Loans Board, or HELB, by 21% to US$91 million.
This makes the agency that disburses loans to university students on behalf of the government the biggest winner in the new budget allocation, since the government has nearly met the request of US$100 million that HELB presented to it.
With an enhanced lending book, HELB now can give loans to more students, as demand continues to rise. Treasury says that the number of first-time applicants seeking loans will grow nearly five-fold from this year’s 32,776 to 147,687 in 2018. This is because of growing student numbers and the expansion of loans to students in colleges and private institutions.
Meanwhile, HELB has announced that it is deepening partnerships with key public agencies to tackle the problem of US$120 million worth of non-performing loans. It is working with the tax authority, state pensioner body, public prosecutions agency, employers and others in efforts to track down past beneficiaries who have not been repaying loans.
Funding rise for universities, research
State universities will now receive at least US$674 million, up from US$624 million allocated in the current fiscal year. The purse is much higher than the US$646 million that government announced in February, giving universities greater financial headroom.
Higher education funding was part of a US$20.3 billion spending plan that Kenya unveiled for the coming financial year, which begins next month.
The increased funding comes at a time when universities are preparing to implement a new tuition fee model that will see students pay fees based on the courses they undertake.
This will bring to an end years of haggling over a differentiated unit cost system, which vice-chancellors said last week would promote equity in the funding of public institutions.
The government also plans to fund research to the tune of more than US$30 million, up from US$24 million the previous year.
Treasury said under the research vote that it plans to accredit 15 research institutes, monitor research systems, establish thematic research fairs and develop nanotechnology programmes. This effectively actualises the National Research Fund that government mooted several years ago to strengthen research in universities, with an eye to boosting innovation.
Money available for university research will grow substantially, providing opportunities to get into high-end research projects. The money will fund research in medicine, industry, agriculture, forestry, sugar and crime, among other areas.
Research is seen as crucial to Kenya’s long-term economic blueprint, Vision 2030, which plans to turn the country into a middle-income economy in two decades. Kenya is positioning itself as Africa’s next research hub, with several initiatives expected to generate hundreds of innovations.
To boost science and technology in the coming three years, Kenya plans to design and establish a National Science and Technology Parks master-plan, establish a national physical science laboratory and license 2,500 research projects.
More expansion, lingering challenges
The policy and fiscal measures are expected to further fuel expansion of the higher education sector, which has experienced steadily rising enrolment in both public and private universities to reach 421,152 students.
This was as a result of accelerated intake as well as expansion of physical infrastructure in various public universities, said Treasury, adding that enrolment and retention at university had also been enhanced through increased provision of bursaries to needy students.
However, said Treasury in its budget policy paper, higher education still faces numerous challenges including poor infrastructure, lecturer shortages, a slow pace of ICT integration, and legislative and policy limitations. The adoption of e-procurement processes also slowed down work progress in the sector.