Financial sustainability of private universities in Uganda: a critical perspective

Abstract

The role of Universities in the development of any economy cannot be underrated. Universities contribute significantly to the achievement of global and National strategic educational goals. These goals cannot be achieved without having financially sustainable Universities. Indeed, education reforms have contributed to the increased concern towards financial sustainability of Universities worldwide and Uganda in particular. This paper offers a critical analysis of the financial sustainability of private Universities in Uganda especially in the context of the COVID- 19 pandemic. A list of 39 legally recognized private Universities was obtained from National Council for Higher Education as per 2019. From the obtained list, Universities that had not been in existence for five years were left out. Also, Universities that prepared their financial reports following different standards rather than International Accounting Standards were left out. Finally, financial reports of 34 Universities were used. Data from audited financial reports for the financial year ending 2019 was used. A composite measure of financial sustainability was used to categorize universities in four groups as absolute, normal, unstable and critical financial sustainability. The results indicate that only 19% of the universities are financially sustainable falling in the categories of either absolute or normal financial sustainability. The majority of universities (81%) are either unstable or in critical financial sustainability category. The study calls for an urgent mitigating intervention from owners and managers of these universities with full support of the Government if the Institutions are to achieve their mission amidst the financially devastating effect of the COVID 19 pandemic. Only Universities with sound financial structures and stable income flow will be able to fulfill their multiple missions and respond to the current challenge especially those caused by the COVID pandemic. Financial sustainability turnaround strategies should be embraced, otherwise the survival of many private Universities in Uganda is at stake.