Economy
UoN tops varsities’ Sh19bn unpaid bills
Tuesday, June 16, 2020 0:01
By EDWIN MUTAI
Public universities have accumulated pending bills worth Sh19 billion on failure to remit statutory deductions such as pay-as-you-earn (PAYE), the latest report shows.
A report tabled in Parliament on the 2020/21 Budget shows that the University of Nairobi (UoN) tops the list with Sh5.5 billion in unpaid statutory dues.
The Jomo Kenyatta University of Agriculture Technology (JKUAT) and the Technical University of Kenya come in second having not remitted Sh3.5 billion each, while Kenyatta University has a pending bill of Sh2.7 billion in unremitted statutory deductions.
The Budget and Appropriations Committee (BAC) said Egerton University has not remitted Sh2 billion while Moi University has Sh1.3 billion in pending bills.
Critical statutory deductions such as PAYE tax, National Social Security Fund (NSSF), National Hospital Insurance Fund (NHIF), Higher Education Loans Board (Helb), pension and sacco deductions went unpaid, the report reveals.
In May last year, the Retirement Benefits Authority (RBA) warned six public universities that they risk assets seizures after they failed to remit deductions then estimated at Sh5 billion to build workers’ retirement funds.
The RBA said the State-run institutions of higher learning could lose assets such as land and homes to pension schemes.
The authority said the universities would cede the properties if they lack funds to clear the arrears.
University cash flows have been hit hard after lower entry grade cut student population, adversely affecting the lucrative parallel degree courses in which students paid fees based on market rates.
This has prompted many universities to delay statutory deductions such as pension, which will see thousands of retirees take home smaller retirement benefits as they miss out on the investment incomes.
The RBA reckons it has opened talks with some vice-chancellors to work on a remedial plan to clear the arrears, which it said must be cleared within six years as per the law.
In October 2018, the RBA put into use the amendments to the RBA Act in which employers face a penalty of five percent of the unremitted contributions or Sh20,000, whichever is higher.
Education ministry data shows that universities did not remit Sh4.58 billion to the pension schemes as of June 2017.
The University of Nairobi had arrears of Sh1.3 billion while JKUAT owed Sh1.09 billion.
The University of Nairobi sank into a Sh1.4 billion loss last year after overshooting its budget and failing to raise projected revenue, a report by the Auditor-General revealed.
The report showed that the university was unable to meet financial obligations worth Sh2 billion in the year to June 2018.
Staff income tax deductions in the form of PAYE of Sh282.7 million was unpaid as well as Sh3.4 million contributions to NSSF. The UoN failed to remit Sh10.8 million to the NHIF, Sh1.52 billion pension contributions, Sh204.1 million Chuna Sacco dues and Helb deductions amounting to Sh828,387.
