Efficiency and Total Factor Productivity Growth of Selected Public Chartered Universities in Kenya
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Date
2025-06
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Kenyatta University
Abstract
University education is indispensable in the economic development of economies globally. It is offered by public owned and privately-owned universities. Unlike private universities, public universities get financed by governments which allocates funds for recurrent and development expenditure to facilitate them undertake their core activities which are research and teaching. These activities can only be attained as long as the institutions are provided with adequate resources which are necessary. The prudent use of these resources is necessary to ensure maximum utilization of the limited resources allocated to these universities. Despite of their importance, Kenyan public, these institutions continue to face huge funding gaps amidst increased administration costs and operational costs which have significantly affected their efficiency and their overall productivity over time. Many Kenyan public universities have huge pending bills which have continued to negatively affect their operations thereby impacting on their performance. The main problem studied is underfunding which is clear from decline in of the universities through the Differentiated Unit Cost model over time. The study aimed at assessing technical efficiency and total factor productivity growth of public universities in Kenya from 2017/2018 to 2021/2022 academic years when the university sector has been seriously hit by huge funding gaps and resource constraints. The specific objectives were to measure the Total Factor Productivity growth and technical efficiency levels of public chartered universities in Kenya as well as the determinants of technical efficiency. The study targeted 31 public universities which are fully fledged. Secondary data was obtained from the Decision-Making Units during the period under study. The study employed Malmquist Productivity Index in evaluating the total factor productivity growth and Data Envelopment Analysis in determining technical efficiency of the sampled public chartered universities using panel data covering five academic years from 2017/2018 to 2021/2022. Under the assumption of the variable returns to scale, this study found out that average TE scores for 31 Decision Making Units was 0.760. This implies that the public universities could have significantly improved their performance by 24% using the resources at their disposal during the period under study. Out of the 31 public universities only 12 public universities, 38.71% were found to be technically efficient having TE score of 1 under assumption of variable returns to scale. The Decision-Making Units recorded a mean Total Factor Productivity growth of 0.018. The results indicate that mean Total Factor Productivity growth was negative and declined by 98.2% during the period under study. From the Tobit regression analysis, employee cost negatively affected technical efficiency levels of public universities. All the other input and output variables besides employee costs positively influenced technical efficiency of the Decision-Making Units analyzed in the study. Therefore, the public chartered universities can increase their technical efficiency by increasing the number of undergraduate, master degrees and doctoral degrees graduates, amount of tuition income and government grants
Description
A Research Project Submitted to the Department of Economic Theory in the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Economics of Kenyatta University, June 2025.
Supervisor
Paul Gachanja