In recent weeks, an uncomfortable dissonance has emerged within the country’s fiscal corridors, one that speaks to deeper structural and fiscal tensions in the way the government funds essential services, such as education. The National Treasury and Economic Planning Cabinet Secretary, John Mbadi, during a meeting with a parliamentary committee, signalled a cut in education capacitation, particularly on university funding.

This was promptly denied by the Education Cabinet Secretary, Julius Ogamba, who termed it a misrepresentation. Yet, behind the semantic frictions lies a more sobering reality: Kenya’s current model for financing education is not only strained but also untenable.

Education capacitation, broadly defined as the government’s investment in infrastructure, personnel, systems, and institutional support across the learning spectrum, has historically depended on the Exchequer. However, with a growing public debt burden, stagnant revenues, and a tightening fiscal space, the state’s ability to sustain this model is collapsing under its weight.

Debt and the Shrinking Pie of Shareable Revenue

At the core of this funding crisis is the country’s debt profile. As of July 2025, the public debt stands at approximately KSh 11.4 trillion, equivalent to about 70.8% of the GDP. Debt servicing is projected to consume over 60% of total revenue in FY2025/26. This means that for every KSh 100 the government collects, more than KSh 60 goes into paying past debts, leaving less than KSh 40 to be shared among all other national and devolved priorities, including education, healthcare, infrastructure, and security. 

Under these constraints, budget lines that are not politically protected or constitutionally ring-fenced face the axe. Higher education, already plagued by mismanagement, bloated institutions, and low graduate absorption rates, becomes an easy target.

University funding, once guided by a differentiated unit cost model designed to ensure predictable government contributions per student, is now erratic and insufficient. Many public universities are technically insolvent. The attempt to reform this model through the “New Higher Education Funding Framework” has raised more questions than it has answered, particularly regarding transparency, equity, and sustainability.

The broader question is no longer whether education should be prioritised, but whether the current fiscal model can guarantee such prioritisation in the face of unrelenting debt obligations. The answer, as it stands, is grim.

Overreliance on the Exchequer: A Strategic Miscalculation

For decades, the default assumption within both government and public institutions has been that the Exchequer will provide. Ministries, state corporations, and universities prepare budgets under the presumption of full or substantial government financing. This assumption is no longer conscionable.

The Treasury has made repeated attempts to signal a shift in thinking, urging departments and institutions to generate their revenue, rationalise their expenses, and explore partnerships. However, the political economy of the country’s public sector, marked by inertia, patronage networks, and weak accountability systems, has resisted this shift.

Educational institutions, particularly at the tertiary level, have been slow to adapt. Attempts to increase tuition fees, monetise research, or attract international students face backlash from both political and civil society actors. Yet, in the absence of such bold moves, these institutions will continue to teeter on the brink of financial ruin.

Own Source Revenue: An Underrated Solution?

Amid this impasse, a possible path forward lies in reimagining how public institutions, and not just counties, leverage Own Source Revenue (OSR). Traditionally associated with county governments, OSR refers to the internally generated revenues by a government entity or institution, independent of the central fiscal transfers.

For universities and other learning institutions, OSR could come from a mix of short courses, professional certifications, technology transfer services, consultancies, rent from institutional assets, alumni endowments, and smart public-private partnerships. While this is not a silver bullet, it represents a critical component of a new funding architecture.

Some public universities globally generate as much as 60–80% of their budgets internally whereas Kenya’s average less than 15%. With the right governance structures, incentives, and legal frameworks in place, these numbers can be changed.

However, OSR will not materialise in a vacuum. It requires systemic reforms in procurement, asset management, and institutional autonomy. The universities must be given room to function like modern, semi-autonomous enterprises while remaining aligned with public interest objectives.

Rethinking Public Investment in Education: Beyond Funding

Education capacitation is not just about money. It is also about policy direction, efficiency, and outcomes. In a resource-constrained environment, the government must ask hard questions: What is the return on investment in the current education model? Are we funding access or transformation? Should every public institution offer all programmes, or should we move toward specialisation and consolidation?

Equally, the government must confront the ghost of inefficiency and wanton wastage. In 2024, the Auditor-General flagged over KSh 4.6 billion in unsupported expenditures across public universities. Without sealing these leaks, additional funding, whether from the Exchequer or OSR, would merely feed the inefficiency loop.

The political class, too, must stop weaponising education funding for populist ends. The issue is not whether students deserve support; they do. However, the question is how to fund such support sustainably, transparently, and equitably.

In conclusion, the country’s education sector stands at a fiscal and strategic crossroads. The recent confusion between the Treasury and Education ministries is not just a communication failure; it is a metaphor for the incoherence in policy, funding, and accountability that has long plagued the sector.

This moment must be used as a springboard to rethink capacitation: Who should fund what, to what end, and under what framework? If Kenya continues to rely solely on an overstretched Exchequer, education capacitation will suffer a slow, irreversible decline. The country must now choose between clinging to the past or boldly reshaping the future.