40 Higher Education Policy Vol. 8, No. 1, 1995 Cost Recovery and its Impact on Quality, Access and Equity: The Case of Kenyan Public Universities John Aluko Orodho INTRODUCTION This paper addresses the issue of cost recovery and its impact on quality, access and equity in the Kenyan context. The position taken is that the purpose of higher education is to find and advance knowledge, wisdom and understanding, by teaching and research and by the example and influence on its corporate life. One of the cardinal aims of university education in Kenya has been to provide quality education and training. The other essen- tial goal has been the advancement of learning through research. There is not only the direct contribution of new knowledge, which may have far-reaching social effects, but there is the indi- rect benefit of fostering the spirit of inquiry in the community as a whole, which is the surest safeguard against stagnation. It is, therefore, implicit that research and the teaching aspects of uni- versity life are inseparably bound up, and this principle should be the cornerstone of all development. How budgetary allocations to education and the recovery expectation have impacted on quality, access and equity in Kenyan public university education will be examined. BUDGETARY ALLOCATION TO EDUCATION The 1980s were a period of worldwide declining growth in real public spending on education (Buchert, 1992:19). ma majority of developing countries, particularly in Africa, the proportion of the overall public budget spent on education declined as a result of the slow-down of gross domestic product (GDP) growth and the dramatic increase in the cost of debt servicing, leaving little for other sectors. The decrease in public funds devoted to education took place while enrolments, fed by strong demographic growth, expanded and remained high at all levels. Despite these economic hardships, the Government of Kenya showed a strong commitment to education by continuing to invest heavily in its provision (Achola, 1988:32). For instance, in a comparative study of Ethiopia, Kenya and Tanzania in the early l970s, Weele found that Kenya spent a greater share of its GNP on education than the others (Weele, 1973:1). Kenya's rela- tively heavy investment in education was reaffirmed in a study of educational funding in some 19 African countries by the World Bank (Wolf, 1984:1-37). Such findings are hardly surprising in view of the fact that since the 1970s, education's share of central government spending has remained above 17 per cent. Indeed, recurrent and development expenditure on education rose by 6.7 per cent and 60.7 per cent, respectively, to reach 629.82 and 96.05 million Kenyan Pounds in the 1992/3 fiscal year (Republic of Kenya, 1993:184). As is well known, Kenya, like many other less industrialized countries, has been faced with dwindling revenues earmarked for social services. In order to rationalize the budget for education with those of other deserving departments, the Government and the World Bank have been collaborating on the implementation of an adjustment programme for the educational sector. This col- laboration calls for increased cost-sharing in the financing of education between the Government, communities and beneficia- ries. COST-SHARING THROUGH LOANS TO STUDENTS In the early 1970s, the Kenyan Government adopted a strategy of passing on to the parent and guardians certain university costs associated with the education of their children for which public revenues were not available. Until 1973, the Government covered the cost of accommodation and feeding of university students, their stationery and personal expenses, including the contribu- tion to the students' union. In 1974, it was decided that universi- ty students should meet the cost of catering and residential ser- vices, as well as of books and stationery. However, in order to ensure that no qualified candidates were denied university educa- tion by reason of inability to raise the required funding, the Government introduced a loan scheme for all Kenyan students enrolled in universities in East Africa during the 1974/5 academ- ic year. Part of the loan was given directly to the students to meet their stationery and personal expenses. The other part, meant to cover the residential and catering expenses of the students who were accommodated at the university, was given directly to the university. This latter amount fell short of the actual expenditure incurred in providing food, residential services and maintenance of related equipment. Consequently, the university was forced to devise means of subsidizing these services from funds received as undergraduate capitation grant. Table 1 shows the rate of subsidy by the University of Nairobi over and above the student loans between the 1975/6 and 1979/80 academic years. On average, the university had to subsidize students to the extent of over 40 per cent of their maintenance costs at the University. Table 1: Rate of subsidy by the University of Nairobi between 1975/6 and 1979/80 academic years (in Kenyan pounds) YEAR STUDENT ACTUAL SHORTFALL SHORTFALL CONTRIBUTION EXPENDITURE (KP) (KP) INCLUDING CENTRAL VOTE (KP) Source: University of Nairobi, Registrar's Office. Another aspect of the loan scheme was that it was granted equally to all Kenyan students irrespective of the parents'fstudents' abili- ty and needs. In fact, this could have been established through a 'means' test whereby every student admitted to the university would be required to apply for the loan through the local educa- tional and provincial administration. This could also have been done with the help of officials from local churches and former schools who would be able to comment appropriately on the financial capability of the family. As of 1981, the Government was aware that since the com- mencement of the loan scheme the university had found itself deeply involved in loan management in terms of personnel, money and time (Republic of Kenya, 1988). This development 1975/76 726,880 1,401,282 674,402 48.1 1976/77 796,402 1,395,640 599,238 42.9 1977/78 1,006,174 1,661,170 654,496 39.4 1978/79 1,080,409 1,915,201 834,792 43.6 1979/80 1,043,642 1,859,499 815,857 43.9