•       The University of Zambia is faced with significant financial challenges.

•       In February 2021, the University of Zambia successfully secured government support with a bond of K150 million.

The University of Zambia (UNZA) has reaffirmed calls for government to increase the institution’s Grant allocation so that it meets payroll obligations.

Addressing the nation on the State of the University, Professor Luke Mumba said the institution is technically insolvent as it is facing significant financial challenges, and cannot continue to operate without government support.

Professor Mumba stated that while the government grant has remained static, its real value has declined with a continued rise in the operational costs.

He added that between 2014 and 2017, UNZA’s statement of comprehensive income recorded a consistently rising deficit, as the average annual deficit of the institution now stands at K800 million.

“The University of Zambia is faced with significant financial challenges. While the government grant has remained static, its real value has declined with a continued rise in the operational costs. Over the last four years, revenue from tuition fees has gone up marginally. Similarly, the University of Zambia has worked hard to marginally increase other sources of funding in the period 2016 to-date. Therefore, the challenge is significantly a marginal increase of funding from the government.”

“The institution is technically insolvent as indicated by external audits for the past five years, meaning that without government support, UNZA cannot continue to exist.  I appeal to government to increase the grant so that it meets most if not all of our payroll obligations,” Professor Mumba said.

Professor Mumba explained that arising from funding gaps, the University has been exposed to intermittent delayed payment of salaries, and has fallen behind in the remittance of statutory obligations and settlement of retirement and contract gratuities, stating that the total UNZA debt now stands at K4.4 billion.

“Moreover, the University of Zambia has fallen behind in paying providers of utilities resulting in a myriad of litigations which are also very costly to the institution. The total UNZA debt now stands at K4.4 billion,” he disclosed.

Meanwhile, Professor Mumba discloses that management has produced a restructuring plan which will entail reducing the number of employees from 2, 200 to about 1, 300, to be done in a phased manner.

He also said another key component in the huge University Debt include the retirement liabilities and outstanding contractual obligations, which stood at K600 million as at 31st December 2020.

“One of the key drivers in the high operational costs are the UNZA staff costs which account for 80 to 90 percent of the total expenses incurred by the University of Zambia. On its part, management has produced a restructuring plan which will entail a rightsizing the number of employees from 2,200 to 1,300.  This will be a 40 percent reduction in staffing. Since to achieve this we require funding, we shall do it in a phased manner, mostly relying on natural staff attrition.”

Professor Mumba further attributed the huge University debt to the retirement liabilities and outstanding contractual obligations.

He revealed that as at 31st December 2020, the institution was owing in excess of K600 million in retirement liabilities. “I am glad to report that in February 2021, the University of Zambia successfully secured government support with a bond of K150 million and a loan of K50 million both from Zanaco. So far, only K75 million has been disbursed. Once the full amount is disbursed, we plan to settle some of the outstanding retirement and contract obligations.”