About 21 public universities are on the verge of collapsing, as they are operating on a negative working capital amounting to Sh42.5 billion, Auditor General Nancy Gathungu has warned.

In her report for the financial year 2023/2024, Gathungu revealed that current liabilities in the institutions were higher than assets, indicating a potential inability to meet short-term financial obligations.

She raises concerns that in most of the cases, the continued operations of the universities were being sustained only with support from the National Government or creditors’ leniency.

According to the report, the prevalence of recurrent annual deficits, accumulation of long outstanding receivables and payables, and non-remittance of statutory deductions has further exacerbated the financial vulnerability of public universities. This not only compromises operational stability and continuity, but also exposes the public universities to penalties and litigation risks.

Reads the report: “The going concern in public universities is increasingly under threat due to persistent financial constraints and systemic inefficiencies. A significant number of institutions are operating under negative working capital positions, whereby current liabilities consistently exceed current assets, raising concerns about their ability to meet short-term financial obligations.”

Despite operating on a negative capital, the report shows that the public universities spent Sh62.2 billion on personnel emoluments or 62 per cent of the total revenue of Sh100.7 billion with Technical University of Kenya and Taita Taveta University having the highest wage bills at 116 per cent and 83 per cent in proportion to their total revenue respectively.

It adds: “This condition undermines financial sustainability and may disrupt critical operations and service delivery. These substantial deficits reflect serious liquidity challenges, with implications on creditor payments, staff remuneration, and overall service delivery.”

According to the report, Kenyatta University reported the highest negative working capital amounting to Sh10.97 billion, followed by the University of Nairobi at Sh8 billion.

Other public universities, including Egerton University operating on negative capital of Sh7.4 billion, Jomo Kenyatta University of Agriculture and Technology Sh6.6 billion, Moi University Sh3.6 million , the Technical University of Kenya Sh5.6 billion, Multimedia University of Kenya Sh1.67 billion, and Taita Taveta University Sh259.95 million.

Others are University of Kabianga Sh609.5 million, Technical University of Mombasa Sh357.5 million, and Maasai Mara university Sh280.5 million. 

The report has further detailed how the universities have failed to remit statutory deductions, have long outstanding receivables, have unsupported expenditure, unsupported balances, unreconciled variances, and unbudgeted expenditure amounting to Sh67.7 billion.