University of Nairobi declared technically insolvent over Sh20 billion debt
University of Nairobi declared technically insolvent over Sh20 billion debt
The University of Nairobi has been declared technically insolvent by the Office of the Auditor-General (OAG), with the institution grappling with debts estimated at Sh20 billion, accumulated deficits, unpaid statutory obligations and pension arrears.
An audit report for the 2021/2022 financial year showed that the university recorded a deficit of Sh2.2 billion, pushing its accumulated deficit to Sh8.8 billion.
The report also highlighted the institution’s negative working capital, raising concerns about its ability to meet short-term financial obligations.
While appearing before the National Assembly Education Committee, an officer from the Office of the Auditor-General on Thursday, October 22, 2026, detailed the university’s financial position, pointing to the gap between its current assets and liabilities.
“Assets of Kenya shillings 5,170,219,000, resulting in a negative working capital of Kenya shillings 8,615,765,000,” the officer stated.
The financial difficulties have been attributed partly to reduced government funding following the introduction of the differentiated unit cost funding model, which reportedly left the university with a funding gap of approximately Ksh1.6 billion.
Rising payroll costs and losses in some income-generating units have further strained its finances, while tax and pension obligations have reportedly mounted to approximately Sh10.6 billion.
Appearing before lawmakers, Vice-Chancellor Professor Ayub Gitau acknowledged the financial challenges facing the institution but maintained that the university had a substantial asset base valued at more than Ksh220 billion.
Gitau said the management was exploring several measures to improve revenue collection and restore financial stability.
These include leasing university properties, increasing student enrolment, securing research funding and reviving commercial units to strengthen the institution’s income streams.
Responding to concerns about the university’s financial position, the vice-chancellor said management was working to maximise available resources to improve the situation.
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“We are trying to salvage the situation by optimally raising our resources, and outside there have been some improvements going forward,” Gitau said.
He maintained that the university was exploring ways to make better use of its resources to address the financial challenges.
Education Committee chair Dick Maungu put the vice-chancellor to task over the implications of running a university declared technically insolvent, questioning how the institution could continue meeting its obligations to staff, suppliers and other stakeholders.
Maungu challenged Gitau to explain the practical implications of the financial position, particularly given the university’s responsibility to pay employees and suppliers while maintaining its academic operations.
The lawmakers questioned how the proposed recovery measures would be implemented and whether they would generate sufficient revenue to address the institution’s mounting liabilities.
They insisted that the recovery plan must be backed by verifiable financial projections, clear timelines and measurable results.
The university’s substantial asset base also raised questions about how effectively its properties and commercial ventures could be converted into sustainable revenue to support its operations.
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