The Kenya Revenue Authority has frozen all bank accounts operated by Kenyatta University (KU) over unpaid taxes amounting to Ksh2 billion. According to a report published by the Sunday Nation, the KRA blocked the accounts after the university failed to remit statutory deductions.
The Ksh2 billion tax arrears is part of a Ksh5.6 billion debt that Kenyatta University owes KRA and its suppliers. In what reveals the university’s deepening financial crisis, the institution is reported to have paid its staff in cheques that bounced at the bank.
In August 2021, the Auditor General Nancy Gathungu revealed that KU had dipped into a Ksh1.3 billion deficit in the year to 30th June 2021, forcing it to rely on short-term loans to finance its operations.
Ms Gathungu added that Kenyatta University is operating under financial difficulties and is relying on costly borrowings which may worsen the cashflow problem. “The university is, therefore, technically insolvent and if no urgent positive measures are taken to improve the financial position, it may not be able to meet its mandate in future,” she said.
Ms Gathungu noted that the deficit that the university recorded in the year under review reduced KU’s accumulated surplus from Ksh5.84 billion in 2019 to Ksh4.5 billion.
“Further, the current liabilities of Ksh6.38 billion as at June 30, 2020, exceeded the current assets of Ksh1.58 billion resulting in a negative working capital of Ksh4.8 billion,” she said, adding that KU was unable to remit pensions and taxes amounting to Ksh3.67 billion, audit fees of Ksh8.1 million and other deductions worth Ksh342.9 million to the respective beneficiaries.