A new law is in the works as the government moves to tackle the deepening financial crisis facing universities and technical and vocational education and training (TVET) institutions, which are grappling with a combined funding gap of nearly Sh44 billion.
Education Cabinet Secretary Julius Ogamba told the National Assembly's Public Investments Committee on Education and Governance that the Ministry of Education is putting the final touches on the Tertiary Education and Funding Bill, 2025.
The proposed legislation is expected to create a stable funding system for higher education after years of inadequate budget allocations, delayed capitation and late scholarship payments that have strained institutions.
The latest figures show public universities are operating with a funding deficit of Sh28.97 billion, while TVET institutions require an additional Sh14.9 billion to meet their financial needs.
Ogamba said the proposed law draws from recommendations made by the Presidential Working Party on Education Reforms, which called for a lasting solution to higher education financing instead of relying on yearly budget allocations that have repeatedly fallen short.
“One of the recommendations is that we will need to relook all the funds that we are utilising in the sector of education and have them in one pot that we can then use to distribute and support our students,” he told the Public Investments Committee on Education and Governance chaired by Luanda MP Dick Maungu.
He told the committee that universities required Sh70.39 billion for scholarships and grants during the financial year ending June 2026 but received Sh41.42 billion, leaving a funding gap of Sh28.97 billion.
The Cabinet Secretary also said universities under the student-centred funding model required Sh29.5 billion but received Sh18 billion. At the same time, students still covered under the previous funding model were affected by another funding shortfall of Sh17.4 billion.
Ogamba said TVET institutions have continued to receive an annual capitation allocation of Sh5.2 billion for several years despite a steady rise in student enrolment.
He explained that the allocation caters for trainees under the previous capitation arrangement as well as scholarships introduced under the new funding model that began in the 2023/24 financial year.
Although the approved allocation has remained unchanged, he noted that actual releases have in several years fallen below Sh5.2 billion, leaving institutions with funding gaps that continue to affect their operations.
He said public universities have also been weighed down by long-standing financial challenges caused by years of inadequate funding.
“The figures represent budgetary gaps arising from inadequate allocations, not undistributed Exchequer funds. Every shilling released to the Universities Fund was disbursed to eligible public universities,” he said.
Ogamba said the continued shortage of funds has led to growing pending bills and made it harder for universities to pay salaries, settle supplier bills and sustain teaching, research and student support services.
Figures tabled in Parliament by the State Department of Higher Education in March show pending bills in public universities rose by 17.6 per cent within eight months to Sh100.3 billion.
The data further shows that pending bills stood at Sh85 billion in July 2025. The unpaid obligations include Sacco and statutory deductions, supplier payments, capital projects and payments owed to part-time lecturers.