Hot Investment Opportunities in Kenya’s Public Universities

 

Kenyan public universities have opened doors to private sector investors wanting to set projects geared to make the universities able to accommodate an increasing number of students and varieties of study curricula. Pressing need areas include hotels for students.

 

Already South African investors have shown interest in investing in a hotel project at the Masinde Muliro University of Science and Technology in Western Kenya, where the need is said to be most acute.

 

This follows an invitation by the university to investors to build hostels on its campuses, to ease congestion in its facilities.

 

 “There is a shortage of adequate housing to meet student numbers,” Housing Minister Soita  Shitanda whose ministry leases office and residential spaces for state institutions has said. “We have identified three developers from South Africa to build new hostels at the university to accommodate more students.”

 

Under the arrangement with the South Africans, Masinde Muliro will provide the land for construction of the facilities while the investors will put up the hostels and run them for 20 years to recoup their investments and before handing them over to the university.

Kenya Universities Statistics

Kenya has seven public universities most of them newly established.  The fast growth as the government to admit an extra 40,000 students to clear existing backlogs, has outstripped government funding and the institutions have had to tap funds from other sources such as the private sector to expand their infrastructure, despite the government increasing its direct funding to public universities from Sh21.8 billion (US$259 million) to Sh24.1 billion (US$286.9 million) in the current fiscal year.

 

The Universities are expected to generate more than Sh14 billion from commercial activities, bringing the total budget to Sh38 billion (US$452 million. Higher education enrolments have been rising by around 40% annually for the past five years, while real subsidies have increased by 4% to 5%. The number of students in public universities was 143,000 last year, up from 101,000 the previous year.

 

 Professor Sibilikhe Makhanu, deputy vice-chancellor in charge of finance and administration at Masinde Muliro, said the institution was short of accommodation for 7,000 students.

 

Opportunities at Kenyatta University

 

Kenyatta University, the country’s second largest university by student numbers, is another university in urgent need of private sector funds. It has been looking for an investor to invest US$11 million into building academic and residential facilities. The investors are required to build and operate the facilities for between eight and 12 years before transferring ownership to the institution.

Government Incentives

 

The government also recently moved to encourage private sector investment in higher education. From June last year, following amendments to the Income Tax Act, education facilities were added to the list of buildings that qualify for capital deduction, a tax break previously only enjoyed by investors in industrial buildings, hotels, mining, and plant and machinery.