The University of Nairobi is under pressure to explain how its pension deficit ballooned to over Sh10 billion, with MPs demanding documentary evidence to back management's claims on efforts to settle the mounting liabilities. The National Assembly's Public Investments Committee on Governance and Education has given the university two weeks to produce records detailing unpaid pension contributions, tax arrears, engagements with government agencies, and measures being taken to stabilise its finances. This follows consideration of the university's audit reports covering 2020/21 to 2024/5 financial years.
The issues emerged during a session with the oversight committee chaired by Luanda MP Dick Maungu, with University of Nairobi Vice-Chancellor Prof Ayub Njoroge Gitau in attendance. The session exposed gaps in the university's explanations, with lawmakers questioning how statutory deductions from employees' salaries accumulated into billions of shillings without being remitted to the relevant agencies. An Auditor-General's representative revealed that the university had failed to remit approximately Sh1.4 billion in pension contributions and Sh50 million in Pay As You Earn (PAYE) during the 2021/2022 financial year.
The pension deficit has more than doubled from approximately Sh5 billion to over Sh10 billion, according to the vice-chancellor. The university is also grappling with unpaid taxes, including PAYE, as it explores asset commercialisation to raise money to meet its obligations. Prof Gitau acknowledged that the institution had experienced periods when pension contributions were not remitted but said it had resumed some payments, particularly for employees approaching retirement.
The university is in discussions with pension scheme trustees and is considering making some of its land available for development to help offset the deficit. The university council and pension scheme have agreed to explore this proposal, with Prof Gitau explaining that the university is going through valuation of its assets. However, committee chairman Maungu challenged the management to demonstrate how the institution's extensive property portfolio would translate into revenue.
Maungu expressed dissatisfaction with the university's explanations, demanding practical strategies rather than proposals whose financial benefits remained unclear. Central Imenti MP Moses Kirima called for a deeper investigation into how the liabilities accumulated, warning that the committee needed to establish whether financial mismanagement had contributed to the situation. Kirima mentioned that previous investigations had uncovered anomalies and siphoning of funds by cartels.
Other lawmakers, including Kasipul MP Boyd Were and Narok Woman Representative Rebecca Tonkei, questioned the potential cost of accumulated penalties and interest on unpaid PAYE and backed the demand for documentary evidence. An official from the Inspectorate of State Corporations noted that the committee could not conclude its inquiry without verifying the university's submissions, citing possible violations of the law.
The university also disclosed that the government owed it slightly more than Sh3 billion in outstanding funding and payments linked to the Higher Education Loans Board (HELB). Prof Gitau said the amount had reduced from nearly Sh5 billion but remained a significant burden on the institution's cash flow. The committee has given the university two weeks to provide the required documentation.
Key points
- University of Nairobi faces a Sh10 billion pension deficit.
- MPs demand documentary evidence on efforts to settle liabilities.
- University explores asset commercialisation to raise funds.
