IN clear case of better late than never Makerere University
last week launched its endowment fund board of trustees led by Dr Martin
Aliker.
The fund which will be funded by existing university
surpluses, donors and alumni of the university will be used to alleviate the
institution’s financial deficit.
This is a long overdue initiative as the university is
staggering under the burden of providing quality education to thousands of
students only funded by government’s inconsistent contributions and the fees
from students.
"The reality is that over the years the government has shifted its emphasis more towards primary and secondary education, feeling little need to fund university education. And the university can only raise its tuition fees so much before they compromise their mission to provide university education as widely as possible....
A third way had to be found and the endowment fund may just
be the answer if managed well.
It’s not a new concept. Universities around the world have
built up huge endowment funds, the most famous being Harvard’s, which last year
reported assets of $37.2b or almost double the economy of Uganda.
These universities have used a portion of these funds to pay
for operations and capital development.
Makerere’s fund is going to kick off with £800,000 (about
sh3.5b) that has been managed up to now by Crown Agents in London.
Anecdotal evidence suggests that beyond this fund Makerere
can leverage its huge holdings in real estate, on Makerere hill and around the
city and intellectual property to fund itself.
There is probably some work to do in revising the law that
Makerere or public universities operate under allowing them to raise money and
invest for themselves but we are off to a good start with setting up the
endowment fund.
It will liberate the university from its dependency on
government funding and reduce the pressure to raise fees out of reach of the
majority of Ugandans.
But more importantly in my mind, it will open our eyes to
how much resources are floating around but are ineffective because they are not
aggregated into meaningful sums.
By accident or design (I think more the latter) we have been
wed to this mentality that when there is a need we have to look for someone
else to resolve it, our brightest minds at the university are not averse to
this way of thinking.
"Makerere is a microcosm of the Ugandan condition. Sitting on an embarrassing bounty of resources – human and land, but cash poor and hard to really feel sympathy for...
It is all very nice to say government has a responsibility
to its citizens to educate its citizens but what happens when government cannot
or is lukewarm about its commitment? You roll over and die?
Recommendations on how the university can raise money is
through the building of multipurpose income generating structures like
amphitheatres, halls of residence, computer labs and cafeterias. In addition it
has been suggested that staff residing on the campus vacate to make way for
paying students. The possibilities are endless.
But let us just take the sh3.5b that will kick off the
endowment fund and for which there already plans to examine the possibilities.
The 364-day Treasury bill yield is now about 11.8 percent.
Assuming the university invested this money in 364-day bill they would get an
income of about sh400m after a year. Assuming the yield remain constant for the
next decade and Makerere kept rolling back the profit they would have grown this
single amount threefold to sh10b. And we haven’t even started on fund raising drives,
sale of properties, income from property etc.
Of course they have to have good money managers and not fall
prey to the snake oil salesman hawking products with no real returns.
Its fantastic that Makerere is at last taking the bull by
the horns and the other universities both public and private should pick a
leaf.
Ideally Makerere should have launched the fund decades ago
but you know what they say, “the best
time to plant a tree was 20 years ago,
the next best time is today.”
