Strategic Drivers of Income Generation Projects in Public Universities: Implications for Budget Deficit Financing in Tanzania

Abstract

Income-Generation Projects (IGPs) have emerged as strategic mechanisms for public universities to enhance financial sustainability and reduce dependence on government subventions and donor funding. These projects aim to bridge budget deficits while promoting institutional missions such as teaching, research, and community service. This study examined the influence of IGP effectiveness on budget-deficit financing in Tanzanian public universities. An explanatory quantitative research design was employed, involving 303 respondents selected through simple random sampling. Quantitative data were analyzed using descriptive statistics, Pearson’s correlation, and hierarchical multiple linear regression (HMLR). Results from the HMLR analysis showed that after controlling for university age and university size, the inclusion of IGP effectiveness in the second model produced an insignificant change in the explained variance (ΔR² = 0.002, p = 0.956). This indicated that the effectiveness of IGPs did not significantly predict budget-deficit financing among public universities in Tanzania. The findings suggest that while IGP effectiveness contributes positively to university revenues, it is insufficient alone to reduce financial deficits without strong governance, leadership, and institutional support systems. The study concluded that achieving sustainable income generation requires a holistic approach integrating governance, leadership, stakeholder participation, and robust financial management frameworks. It recommends strengthening partnerships with private sector organizations and international donors, establishing centralized IGP management units, incorporating stakeholder feedback, and adopting innovative financing models such as crowdfunding and impact investing. Implementing performance monitoring systems with clear Key Performance Indicators (KPIs) will further enhance efficiency, accountability, and financial outcomes in Tanzania’s higher education sector.