6 December 2012

Tanzania: Students' Loans Board Out to Recover Funds

THE government's decision to establish Higher Education Students' Loans Board (HESLB) was made deliberately to enable as many qualified Tanzanians as possible to get university education through loans and later pay them back to benefit others.

Despite all these efforts, there are also some dishonest loaned beneficiaries who frustrate this programme. In this article, MOSES FERDINAND of the Open University of Tanzania (OUT), looks at the funds already released since the system started and how loan repayment operates...

THE last 18 years saw the Higher Education Students' Loans Board issuing the total loans of 1,184,490,554,983/- to 512,745 students. No doubt, this is a very significant amount of money and if all timely recovered more Tanzanians could benefit from the same system.

"Out of all these funds released 51,103,685,914/- were issued by the then Ministry of Higher Education, Science and Technology while loans valued at 1,133,386,869,069.58/- were issued by HESLB after its establishment in July 2005," the Board's Executive Director, Mr George Nyatega, says in an interview.

Since introduction of loans arrangement to students of higher learning institutions in 1994, more colleges and universities have been established and enrollment of students has also increased for the better. He says between July, 1994 and the end of June, 2012, only 160,730,886,339.00/- principal loan amounts were due for repayment from 110,529 loan beneficiaries.

"While the rest of 1,023,759,668,644.58/- were not yet for repayment because the students who benefited from these loans are either continuing with studies or their one year grace period of repayment is yet to expire," Mr Nyatega says.

Mr Nyatega says that from July, 1994 when students' Loans system introduced by the government through the then Ministry of Higher Education, Science and Technology to June, 2005 there were 48,378 students already benefited from 51,103,685,914/-. According to HESLB boss, 2005/2006 saw the board disbursing a total of 56,111,371,483/- to 42,729 students.

"The amounts of funds released to students have been increased yearly," he says, noting that the number of students applying for the loans to enable them afford university education is very high. Tanzania has 65 universities and university colleges among them 37 are privately owned while the remaining 28 are public. Students in either universities benefit from loans.

"The last one decade and a half we have also seen the establishment more universities in both private and public sectors," Mr Nyatega notes. The year 2006/2007 there were 47,554 students who benefited from 76,071,839,629/- while in 2007/2008 110,873,883,141/- of loans went to 55,687 students. "We as the board have come up with our strategies to enhance loan repayment and recovery," he observes. In the 2008/2009, there were 58,798 students sharing 139,093,094/- of loans.

He says the annual funds allocated cannot meet the growing demands of all students per annum. For instance, in 2009/2010, only 72,035 students got loans amounting to 197,348,958,875/-. The year 2010/2011, there were 231,855,927,151.85/- earmarked for 92,792 students while in 2011/2012, the funds set aside were 322,031,207,695.73 meant for 94,775 students.

Statistics by Tanzania Commission for Universities (TCU) indicate that first year enrollment for the year 2012/2013 was 47,000 students. "Despite our all commitments to ensure smooth loan disbursement to students, most of them tend to go hiding hence make it difficult in tracing them," Mr Nyatega explains. He also singles out the inadequate loan repayment culture as one of major challenges facing the board for loan beneficiaries.

"Most of these people (loan beneficiaries) are not considerate for others wishing to benefit under the same scheme. They are very reluctant to pay back their loans," he says. In addressing challenges of loan repayment to meet the 2012/2013 financial year's target, Mr Nyatega says the Board has come up with a number of strategies including: -Liaise with strategic partners to locate loanees not repaying or dropouts (Pension Funds, Tanzania Revenue Authority (TRA), National Identification Authority (NIDA), Treasury and National Bureau of Statics Bureau (NBS)).

Others use Local Government Authorities to trace loanees, liaising with the Ministry of Home Affairs department of Migration for tracking loaners travelling abroad and improving the existing Loan Recovery Module, provide computers to newly recruited staff and requisite training on Loan Repayment System to all repayment staff. Others are institute inspection for employers' compliance in their premises, Institute loan repayment through Mobile payment systems, Publicity and advertising, Enforcement of HESLB Act provisions on Loan Repayment and issuance of Loan statements to graduating loan beneficiaries.

HESLB also plans use of free SMS for voluntary disclosure of the whereabouts of loaners, plan to engage debt collectors and use of the established Diaspora department of the Ministry of Foreign Affairs and International Cooperation. Issuance of financial incentive to HESLB staff in the cause of tracing loan beneficiaries who are self employed, and those living/ working abroad is one of the issues that need follow-up.

HESLB want to make ensure that all employers deduct monthly loan repayment installment at the rate of 8 per cent of the basic salary of their loan beneficiaries and also continue to monitor and supervise the performance of the appointed debt collectors HESLB also wants to continue using the databases of our strategic partners (including the government payroll and that of NIDA) in the course of tracing loan beneficiaries and also direct more efforts, when tracing loaners to loan beneficiaries employed by the central Government, Government Ministries, Departments and Agencies, much as loan repayments of such beneficiaries are timely deducted at source by the Treasury.

" A total of 26,047 loaners or 54 per cent of the cumulative traced loanees were those who benefited loans under the Government scheme between 1994/1995 and 2004/2005 while 22,188 or 46 per cent of the cumulative traced loaners were those who benefited loans under HESLB from 2005/2006 to date," he says. Expounding more about loan repayment, Mr Nyatega says out of the total loans amounting to 1,184,490,554,983.58/- loaned out between July, 1994 and June, 2012, only 160,730,886,339/- principal loan amounts were due for repayment by September, this year from 110,529 loan beneficiaries.

"During the first quarter ended 30th September, 2012 - 4,289 loan beneficiaries with loans amounting to 15,284,933,238/- were traced," he says, adding that it was equivalent to 2 per cent above the 4,209 loaners traced during the fourth quarter ended June 30th, 2012. The cumulative loan beneficiaries traced up to 30th September, 2012 were 48,235 equivalent to 53% of the 110,529 students whose loans are due for repayment.

He says the cumulative outstanding loans of all traced loanees stood at 94,674,536,762.67/- which was 58 per cent of the principal loan amounting to 160,730,886,339/- that was due for repayment by September, 2012. The Board's Director of Information, Education and Communications, Mr Cosmas Mwaisobwa, told the 'Daily News' that the board would employ all strategies to recover the loaned funds.

"Frankly speaking the government is really committed to ensure many Tanzanians get university education," he says, adding that establishment of the board realized its commitment to education sector. Mr Mwaisobwa admits that the number of students seeking for loans is extremely high compared to the financial muscles the board can handle at a go. Israel Pascal, is a beneficiary of the Loans Board, who does not hide his appreciation for the support he got from the board to pursue his bachelor Degree six years ago.

"I got my first degree six years ago and now I am a Master Degree holder," he says, calling for loaners to pay back the loans given to them so as to enable others enjoy the benefit. Mr Pascal who is an economist by profession employed in a public sector, says most loaners are not honest and they are not supporting the board to be sustainable through repayment of loans.

According to HESLB's loans collection reports show that the total loans collected during the first quarter of September, 2012 was 3,767,009,268/- equivalent to 64 per cent of the targeted 4,423,200,598/-. However, the report indicates that the loan collection target could not be attained in full due to the delayed monthly installments from some of the employers.

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