Editorial | If UWI were a firm

If one of the big regional conglomerates, say, the Massy Group, or the privately held Bermudez Biscuit Company, racked up losses, was in danger of becoming illiquid and had its capital calls rejected by shareholders, the firm’s managers and directors would most likely take a hard look at their business model in an attempt to bring the balance sheet in order and, hopefully, avoid insolvency.

The turnaround plan would be subject to robust debate among managers, the board and shareholders. These kinds of review are not usually easy, and often painful. Yet, this is the kind of process, obviously taking into account the peculiarities of an academy, which, if not already under way, appears urgent at the University of The West Indies (UWI). Its top people seem qualified to lead the effort.

Robert Bermudez, of Trinidad and Tobago, is chancellor of the university, which makes him chairman of the university council, effectively UWI’s board of directors. Further, Mr Bermudez is a successful businessman, who, through organic growth and a series of mergers and acquisitions, transformed an admittedly not insignificant family company into a big regional snacks and baked products manufacturer. As chairman of the Massy Group, he has also been at the forefront of that listed company’s recent revitalisation.

Mr Bermudez’s business skills ought to be a good balance, and perhaps vice versa, for any presumed over-inclination towards the academic side of the UWI’s operation by its vice-chancellor, or CEO, Professor Hillary Beckles, who is not without experience in business.

For anyone who assumes that business, and other broad management, principles can’t be applied to universities, ought perhaps to conduct a realistic review of the UWI. The University of the West Indies, effectively, is owned by Caribbean governments. Implicitly, Caribbean taxpayers are its shareholders. They used to cover almost all its costs.

But faced with fiscal crisis and competing demands for limited resources, regional governments can no longer afford to fully fund the university. In the 2017-2018 fiscal year, their contributions, though still the largest component, accounted for 45 per cent of UWI’s income of Bds$965.3 million. These contributions, a percentage point lower than the previous year, are likely to continue to fall.

Indeed, several governments, including Jamaica’s, which earmarked J$8.7 billion for the institution, have capped their allocations at current levels. At the same time, some governments have been unable to cover arrears to the university. In the case of Barbados, the UWI wrote off Bds$102 million in debt and converted a similar amount to bonds.

Meanwhile, the university has been unable to grow income from other sources – such as special projects, which accounts for 30 per cent of income, and commercial activities, eight per cent – fast enough to replace lost subventions and cover increased costs. Students’ tuition, and other fees, accounted for Bds$130.2 million, or 13 per cent of income, which suggests that each of the UWI’s enrolled student, during the 2017-18 financial year, paid, on average, Bds$2,683 towards their education. However, the unrefined cost of delivering that education, calculated solely on the university’s expenditure of Bds$1.061 billion, was closer to Bds$22,000, or eight times more than students paid. In the circumstance, the worsening of UWI’s deficit to Bds$95 million, or by more than 250 per cent, in 2018, wasn’t surprising.

The financial stringency is happening at the same time the university, as Professor Beckles outlined in his recent review, has been widening its horizons. It established a fourth campus in Antigua and Barbuda and has forged operational relationships with academies across the world. In the event, questions of sustainability are likely to arise, as well as debates about the kinds of degrees the UWI should offer and over what time frame.

For, at the bottom line, the institution’s economic model is stressed. Messrs Bermudez and Beckles must propose a fix.