Monday, September 5, 2011


Makerere University has been closed indefinitely following a breakdown in talks between the campus staff and government over pay increases.

The staff at the university are pushing for a minimum monthly wage for assistant lecturers of sh8m.

I will be the last to begrudge anyone their wage demands, after all you get paid according to what you negotiate, but I think the dons of the ivory tower are going about things the wrong way.

According to sources familiar with the situation the teaching staff of Makerere want government to pay their salaries because they know they have reached the limit of how much they can reasonably extract from students in fees and secondly, the demands are based on the fear that in an increasingly competitive sector Makerere will earn less and they need to secure their salaries by insisting on a vote from the treasury.

I have heard it said that Makerere was once referred to as the Harvard of Africa (must have been long before my time) so I shall refer to how the original Harvard handles its finances as a pointer to how Makerere should be thinking.

But first of all, the desire to be paid by the government is a losing strategy on two fronts.

To begin with the incentive for Makerere staff to be more productive in terms of teaching students will be removed. As it is now teaching staff’s pay is also pegged to the size of the class one teaches. This incentive system has glaring weaknesses but at least it ensures that lecturers make an appearance in the lecture theaters. It does not take rocket science to work out what will happen when lecturers start drawing salaries from the consolidated fund.

And related to that improvements in staff productivity will not be recognized as readily at the finance ministry, as it may if spending decisions are controlled by the Makerere Administration.

A man after dreaming about acres of diamonds sold his land and set out into the world in search of his fortune. He went prospecting all over the world failing miserably sometimes or striking it rich only to squander all his wealth. Frustrated and dejected he returned to his village where he expected he could throw himself at the mercy of friends and family. On arrival at his old home he found it was a flourishing diamond mining enterprise fuelled by diamonds from his old plot.

Everybody except the dons of Makerere do not realize how much gold they are seating on.

It’s a stretch to compare Makerere with Harvard, but for illustrative purposes America’s oldest University has some interesting pointers.

In 2008 before the credit crunch Harvard had an operating budget of $3b a year. However the university managed an income of $9.3b the previous year of which only(!) $600m or just over 5% came from student fees. And we know Harvard’s student fees are not to be laughed at.

So where does Harvard get more than 90% of its income? About half of the budget is met by income from its $35b endowment fund – this was the value before the credit crunch, and then in order of size donations, merchandising, publishing and from licensing of patents the University holds. This is aside from the fees from hiring out their buildings and land or consulting. Meanwhile they earn about $1m a year from ticket sales when University teams are playing.

Yale is not very different with student fees account for just under ten percent, with the bulk of income coming from their own endowment and the medical services.

These vaunted institutions of learning do not create new revenue streams because they like to but because they long came to the realization that there was only so much they could charge students to enroll.

Makerere University’s intellectual properties (if it has bothered to license them at all) are worth millions of dollars if only their value can be unlocked for the benefit of the institution.

What Makerere needs is time-tested, entrepreneurial managers who can unlock the billions of shillings of assets that Makerere owns and controls.

But maybe we should not be too harsh on Makerere’s the same syndrom is coursing through the general society. When we have a need our first instinct is to look outside ourselves for help while we have all we need around us – as individuals, institutions and even as a country.

Makerere does not need handouts from government, in fact it is Makerere’s best interest not to need them.

No comments:

Post a Comment