MPs give University of Nairobi two weeks to explain Sh10bn pension deficit

NAIROBI, Kenya, Oct 29 – The University of Nairobi has been given 14 days to account for billions of shillings in unpaid pension contributions and taxes, with MPs demanding documentary evidence to explain how the liabilities accumulated and what management is doing to settle them.

The National Assembly Public Investments Committee on Governance and Education questioned Vice-Chancellor Prof Ayub Njoroge Gitau and his management team over the institution’s financial obligations, warning that verbal assurances would not be sufficient to establish whether corrective measures were working.

The committee, chaired by Luanda MP Dick Maungu, was reviewing Auditor-General’s reports covering the 2020/2021 to 2024/2025 financial years when members raised concerns over outstanding pension remittances, unpaid Pay As You Earn (PAYE) taxes and the university’s financial recovery plans.

Maungu directed the university to submit supporting documents within two weeks, saying MPs needed verifiable records to establish the extent of the liabilities and assess the institution’s efforts to address them.

“There’s nothing to support the good stories,” Maungu told university officials, demanding evidence of payments made and agreements reached with the relevant statutory agencies.

The scrutiny followed audit findings showing that the university failed to remit approximately Sh1.4 billion in pension contributions and Sh50 million in PAYE during the 2021/2022 financial year alone.

The revelations prompted MPs to question why deductions made from employees’ salaries had not been forwarded to the relevant institutions, as well as how the unpaid obligations had grown over successive financial years.

Kasipul MP Boyd Were pressed the management over the outstanding taxes, warning that penalties and interest could further inflate the amount owed.

Lungalunga MP Chiforomodo Mangale questioned how the pension and tax liabilities had accumulated to billions of shillings, insisting that the university provide a clear account of the financial decisions that led to the situation.

“How did it happen that there was an accumulation of up to Sh5 billion?” Mangale asked.

He warned against accepting explanations that could not be backed by documentary evidence, saying the committee’s responsibility was to establish what had gone wrong rather than merely accept management’s assurances.

“We are not here to sanitise issues. We need to get to the root of what happened,” he said.

Central Imenti MP Moses Kirima called for a comprehensive examination of the university’s financial records, drawing comparisons with concerns previously raised over financial management at Moi University.

He said the committee needed to determine how the liabilities arose, whether there were weaknesses in financial controls and whether the proposed interventions would be sufficient to restore the institution’s financial stability.

Prof Gitau told the committee that the university had begun making payments to retiring employees and resumed remitting pension deductions in recent months.

He acknowledged, however, that the institution remained financially constrained and was working with pension scheme trustees to develop a recovery plan.

The vice-chancellor disclosed that the pension deficit had grown from approximately Sh5 billion to more than Sh10 billion, with management considering the use of university land and other assets to help settle the outstanding obligations.

The proposal to leverage the institution’s assets forms part of efforts to identify additional resources beyond the university’s ordinary revenue streams.

Prof Gitau also told MPs that the government owed the university slightly more than Sh3 billion in outstanding funding and payments linked to the Higher Education Loans Board (HELB).

Management said the arrears had declined from nearly Sh5 billion but continued to weigh on the institution’s ability to meet its financial obligations.

Deputy Vice-Chancellor in charge of Finance, Planning and Development Prof Josiah Omollo Aduda told the committee that the university had submitted a remedial payment plan to the Retirement Benefits Authority and was engaging the Kenya Revenue Authority over the unpaid taxes.

He said discussions with the relevant agencies were ongoing as the institution sought to meet its statutory obligations.

However, MPs demanded copies of correspondence with the agencies, payment schedules, remittance records and other documents to verify the claims.

The committee said the evidence would be used to compare the university’s financial position across the audited years and determine whether management had made measurable progress in settling the arrears.

The university’s acting Director of Finance, Stephen Kimeli, attributed the financial difficulties to several pressures, including the cost of implementing collective bargaining agreements, declining student numbers, changes in university funding arrangements and the effects of the Covid-19 pandemic.

He said management had introduced expenditure-reduction measures targeting personnel costs, post-retirement contracts and staff meal payments.

The institution was also pursuing the commercialisation of its assets to generate additional revenue, with a valuation of its property undertaken to support the proposals.

Kimeli said the proposals had been forwarded to the university council for consideration.

Management further cited a staff strike as one of the challenges affecting day-to-day revenue generation.

Despite the explanations, MPs maintained that the university needed to demonstrate, through records, how the liabilities had accumulated and what concrete steps had been taken to resolve them.

Maungu said the committee would examine the submitted documents alongside the Auditor-General’s findings before assessing the effectiveness of the proposed recovery measures.

The university is expected to provide the records within 14 days, setting the stage for further scrutiny of its pension obligations, tax arrears and overall financial management.