How to finance operations of the novel schools

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

20 June 2021

Last week, we saw how selling two old dilapidated schools (Nairobi and Lenana) can raise more than enough money to build seven new, state-of-the-art ones that will accommodate all the 3,000 pupils. The total cost of this endeavour came to about Sh3.5 billion which left Sh46.5B unused. The question then is: what do we do with this balance?

The first though would be to build about 93 more schools of the same kind to make a total of 100. Even though the money would be enough, such a move would be unwise! It is killing the goose that can lay golden eggs. There would no money left to run them. Remember that the dream is children learning in very high-quality institutions free of charge.

Currently, the operational cost of a high schools as per government guidelines is Sh75,000 per pupil per year. This amount does not include the cost of teachers – they are paid directly and outside the school budget. From my experience in school Boards of Management, this amount is just enough to provide for basic necessities. Thus, I would recommend an annual allocation of Sh200,000 per pupil to maintain high level living standards and meet the cost of all student supplies including uniforms and consumables.

The total operating cost for the seven new schools with 3,000 pupils comes to Sh600 million per year. Where would this money come from? If Sh46.5 billion is invested in secure government treasury bonds and bills, it can easily earn an average of 12 per cent per annum – after tax. This is about Sh5.6B.

Subtracting Sh600M from this leaves Sh5B. What do we do with this unused interest? (Remember: the Sh46.5B principal amount is still intact!) This Sh5B can now be used to build more schools of similar high quality. With estimated construction cost of Sh500M per school, we can construct 10 new schools of similar quality in one year; and in four years, we would have an additional 40, making a total of 47. One in each county – nice!

The 47 schools will accommodate a total of about 20,000 pupils. The operating cost comes to about Sh4B per year. This is easily financed by the Sh5.6B annual earnings from the Sh46.5B – even leaves a Sh1.6B headroom for unexpected costs.

Picture that: 20,000 children learning in the best schools – public or private – absolutely free of charge! And all this is achievable in less than five years.