Moi University is under intense scrutiny from the National Assembly’s Public Investments Committee on Education over its controversial decision to acquire Rivatex Limited and take a Sh3 billion loan for upgrading the textile company, as well as the construction of a university gate that cost Sh30 million.
The committee, chaired by Bumula MP Wamboka Wanami, raised questions about the financial decisions made by the institution, particularly the rationale behind a cash-strapped university venturing into a loss-making textile firm. The MPs are concerned about the viability of the project, especially given that only around 600 students, out of a total of 30,000 at Moi University, are enrolled in textile-related courses.
Acquisition and Funding of Rivatex Limited
The controversy centers on Moi University’s acquisition of Rivatex Limited in 2008 for Sh600 million. According to Vice Chancellor Isaac Kosgey, the university’s intent was to use the company as a training ground for its textile engineering students and to support local farmers through fabric production. However, after the acquisition, the government, under the Jubilee administration, facilitated a Sh3 billion loan from Exim Bank to upgrade the facility with modern equipment.
Despite these efforts, Rivatex has been on a loss-making streak, with a reported Sh300 million loss in the year leading up to June 2023. As the loan nears maturity, MPs are pressing the university on how it plans to repay the amount, especially given the company’s poor financial performance.
MPs were puzzled by the decision to take on such a massive financial burden for a non-core activity, especially when the university has other pressing needs. “If you were given Sh3 billion, would you not improve learning facilities? Are you getting value for money?” asked Wanami. The committee found it illogical for a financially struggling institution to prioritize a non-essential project when only a small fraction of its students benefit from it.
A Questionable Investment Decision
The acquisition of Rivatex has raised deeper questions about the university’s strategic management, with MPs querying why an institution that teaches business management would make such a risky investment. Kiminini MP Esau Karan pointed out that the decision to acquire and invest heavily in a loss-making enterprise while the university struggled to meet its statutory obligations was poorly thought out. “Who is going to repay this loan? Is it Moi University or the company? This matter is not adding up. It was a wrong decision, the government has lost,” Karan remarked.
The committee has requested that the Ministry of Industry, the Ministry of Education, the Treasury, former Vice Chancellor Richard Mibeyi, and any other individuals involved appear before them to provide clarity on the matter.
Sh30 Million Gate Sparks Audit Queries
The university’s gate construction has also raised concerns. Initially, a gate was built for Sh4.8 million, but it was demolished for encroaching on a road. The current gate, built afterward, cost an additional Sh25 million, bringing the total expenditure on the gate to Sh30 million. This sparked queries from the committee about the university’s use of funds.
In response, VC Kosgey explained that the decision to build the gate was made after the initial structure was found to be poorly located. However, MPs expressed dissatisfaction with the explanation, pointing out that the university’s financial priorities appeared misplaced.
Audit Issues and Welfare Fund Mismanagement
Further complicating matters, an audit revealed that Moi University and Rivatex were using different accounting platforms, a violation of international auditing standards. Though Rivatex was delinked from the university in 2022 and became a standalone entity, MPs argued that the university’s leadership remains accountable, as it still has representation on the company’s board.
The probe also uncovered instances of welfare fund mismanagement. Unscrupulous staff members colluded with a bank to divert staff welfare contributions to a different account. Moi University has since taken action against those involved, with some staff members being sacked and the bank refunding the diverted funds.
As the committee continues its investigation, MPs have expressed concerns about the university’s long-term financial viability and are demanding answers on how these decisions were made and who will ultimately bear the financial burden of the Sh3 billion loan.
