Possible solutions to the financial crisis in institutions of higher education

  • 20 Jan 2023
  • 3 Mins Read
  • 〜 by Brian Otieno

A recent feature in one of the dailies painted the dire picture depicting Egerton University’s financial distress. The university’s debt burden has escalated to KShs. 9 billion, while at the same time it struggles financially to run its functions. To drive a nail into the coffin, towards the end of last year, the Education CS, made some comments that elicited far-reaching reactions, indicating that the government was on course to stop funding universities. In the backdrop of these, institutions of higher learning are facing a funding crisis and a solution needs to be mooted and implemented at the earliest instance.

The threat of financial sustainability

Global studies have shown that one of, if not the biggest existential threats faced by institutions of higher education, is financial sustainability. Financial sustainability connotes the ability to maintain financial capacity over time. Sustainability is a process rather than a means to an end. The measure of sustainability relies on the ability of an organisation to fulfill its mission and serve the interests of its stakeholders over a period of time. This implies that an entity does “end up being sustainable” and then rely on its success thereafter. The aim therefore, for any organisation, should be to ensure it realizes income after taking care of its expenses, remain liquid enough to settle its bills and guarantee solvency by ensuring assets always stay above liabilities.

Kenya’s current picture

The higher education sector in Kenya has predominantly relied on state subsidies to oversee the daily operations and management aspects of institutions. The risk that this comes with is dependence, and possibly over-dependence, on a single financing source, which could result in unsustainability.

Currently, public institutions are bearing the brunt of significant budget disruptions. The financial subsidy from the government is reducing day by day, post-graduate programmes are no longer financially beneficial as they should be, well-wishers and donors are making conditions for funding more stringent, and institutions are at cross-roads as they can no longer increase fees, without making the sacrifice on occupancy.

New strategic direction?

In the face of these uncertainties, and their bleak effect on these institutions, they also form the basis upon which new strategic directions can be undertaken. There is indeed great potential, that if properly harnessed, then tertiary institutions are bound to reap the benefits of greater autonomy and flexible funding, as well as the path to financial optimization for the achievement of strategic growth, while also limiting dependence on government subsidies. It is therefore important that tertiary institutions diversify their revenue streams.

Revenue diversification

Revenue diversification implies creating various sources of income, rather than depending on one, as a way of increasing income and mitigating risk. The goal is to ensure that an entity does not become overly reliant on one revenue stream, to ensure flexibility, financial stability, and adaptability.

Higher learning institutions can explore (i) continued education, (ii) research and innovation, (iii) services, (iv) asset utilisation, and (v) partners, backing them up with sound fiscal policy structures, during application to ensure they are financially sustainable.

Continued Education

This entails building professional partnerships with corporate and government training divisions as a way of reducing the burden of training on them, while also roping in entities that are passionate about shaping the quality of professionals institutions churn into the job market. The aim of this here is to share the costs of education while also ensuring the quality of education is high and one that responds to the dictates of the job market.

Research and Innovation

Institutions of higher learning must be at the forefront in responding to challenges in society, developing new ways of meeting societal needs, and bridging the gaps between human needs and human ability. This component aims to engage leading entities to work together with institutions on mutually beneficial projects while raising revenue for all stakeholders involved.


Institutional facilities that can be of service to either a target group or the general society can generate income. Facilities such as sports complexes can be opened up for use through seasonal sports camps, with the institution retaining a share of the revenue. Similarly, the existing facilities can be opened up and improved as a means of optimization e.g. The Dartmouth College whose sports facilities are recognized globally.

Asset Utilization

Universities have assets that can be utilized to raise revenue. Institutions that offer practical courses such as event planning, and culinary arts among others, can utilize these assets to raise revenue while also providing a practical learning platform for students. The potential revenue returns that asset utilization needs to be fully tapped.


Institutions of higher learning can open themselves up to strategic and financially beneficial partnerships. The University of Pennsylvania, for instance, developed a co-branded card in partnership with the Bank of America in 1997. Accounts opened and purchases made by students through the card secured a percentage of returns to the university.


In conclusion, institutions of higher learning in the country need to embrace revenue diversification. The case of Egerton University is a timely reminder of why this is necessary now, more than ever. Taking up revenue diversification as a strategy needs to be holistic and structured. It is a phased process that needs to be undertaken in a tailored manner that fits an institution’s unique profile, for optimum returns.