14 March 2018

Zimbabwe: Loan Facility Raises Hopes for Tertiary Students

Maximum Tinotenda completed his A-Levels in 2016 at Madzivire High School in Chivhu. He had three good A-Level passes, but could not proceed to college because of lack of money. His father died and his mother could not raise money to pay for his fees.

It pained him a lot.

Maximum's mother, a farmer, was unable to raise the money required for his university tuition.

His brother too, the bread winner in the family, could not afford to take him to university because he was paying fees for his sister who is still going to college.

To survive, Maximum had to do all kinds of odd jobs in the village, at least to help support his mother.

All this shattered his dreams to pursue a career as a software engineer.

He is not alone.

Over the years thousands of students from poor backgrounds have failed to enrol for tertiary education because of lack of money.

The situation is dire especially for those in rural areas where jobs are not easy to come by.

For those little a fortunate, they enrolled but were forced to drop midway due to financial hardships.

The prevailing economic situation in Zimbabwe has had its toll on parents and guardians, which in turn has disadvantaged many promising students.

Most could not access loans because of lack of collateral either by their parents or guardians.

The Ministry of Higher and Tertiary Education, Science and Technology Development acknowledged the problem but could not do anything for several years due to fiscal constraints.

A solution had to be found.

To address the problem, the Ministry, in conjunction with the Reserve Bank of Zimbabwe, unveiled an educational loan facility to support students in colleges and universities.

Students can now access the loans at ZB, NMB, POSB, CBZ, Eduloans and Getbucks financing institutions.

Though there are still conditions for the loans, this new development has brought a glimmer of hope to Maximum and other students who had lost hope to advance their education.

"As soon as the Government announced the educational loans, I started making enquiries on universities that offer the programme I want to do," he said.

"By next year I will be in school and it is the best feeling one could ever have knowing there is another chance. I'm so delighted about the prospects."

For many students who have been failing to pay fees on time, this has come as a huge relief.

Many have hailed the Government for unveiling this facility.

"I never have to worry about dropping out of school one day," said a Harare Polytechnic student.

"I am thankful to the Government for addressing the student loans issue. This will see many students fulfilling their dreams."

The educational loan, to which every student is eligible has an interest rate of 10 percent per annum.

The application process requires that the parent or guardian makes the application and provides the necessary details.

In case the parent or guardian cannot provide any proof of payment, institutions were given a directive by the Government to act as guarantors.

The bank then carries a credit assessment to make sure that the money is for education purposes before disbursing it straight into the university or college account to avoid misuse of the funds.

Even though it was welcomed by some students, others have criticised the loan facility for having stringent requirements, something that could make it difficult for some students to access the loans.

"What is going to happen is that after students complete school and find jobs, some will vanish leaving their parents or guardian in serious debt," said Lloyd Katumba, a self-employed man from Chitungwiza.

"The students must sign the loans on their own so that they can repay the loans once they get employed. This will make them responsible and ensure continuity of the loan facility."

Some students argue that the provision of education is a parent's responsibility.

Many students said it was not guaranteed that soon after school one would get a job.

They said debiting a student was not logical as interest would keep accumulating to an extent that one would not be able to pay back.

Educational lobbyists and activists are critical of the student loan facility.

They said requirements to qualify for the loans were difficult for students and requested the Government, together with involved stakeholders, to review the processes.

"Accessibility of the loans is cumbersome and students are facing challenges," said Takudzwa Gambiza, president of the Zimbabwe Congress of Students Unions.

"The conditions are too stringent for students to access the loans.

"The requirements are somehow rigid and stringent, especially on the issue of collateral security, which the banks and micro-finance institutions require. Our appeal is to have easy access to the loans and not something that fails to manifest on the ground."

The Zimbabwe National Students Union felt that the interest rate of 10 percent per annum was too high and would leave parents and guardians in serious debt.

"The qualifying criterion for the loans is discriminatory to many students out there," said Achibold Madida, president of the Zinasu.

"The interest charges by the banks are also way too high considering that some parents will take more than a year to be able to pay back the money.

"The loans should make life easier for parents and students on both short and long term basis."

Activists also worry that institutions which should assume the role of guarantor maybe hesitant to comply with Government's directive which in turn disadvantages the students.

The Minister of Higher and Tertiary Education, Science and Technology Development Prof Amon Murwira assured students about the loans.

He said institutions were bound to be guarantors and urged them to create risk funds that may be used in cases of failure to pay by debtors.

"We are asking institutions to be innovative. All we are saying is when money comes to an institution, it cannot be dead in water. It must be used to generate more money," the minister said.

"Institutions therefore must create a risk fund that will then be used to pay for defaulting loans."

Prof Murwira also said his ministry would continue to explore ways to improve the lives of students.

"We are trying our best to support the students to make sure that every student has an opportunity to go to school," he said.

"Students will be helped so that all can access the loans. We are trying to look for mechanisms that will guarantee every child to attain the best education.

"My meeting so far with student leaders shows there is progress. But of course as a ministry we can do more."

Zimbabwe is going through a rough economic patch and the uptake of loans will be a good indicator of the value of this student loan facility.

Zimbabwe needs to debate the issue rigorously and decide whether this is the way to go or not.

Otherwise, the Government grant facility was the best and could be accessed by students from poor rural backgrounds.

Honesty and responsibility of students will also be key for the continuity of the loan facility.

Students who get jobs must play their part to repay the loans. They have a social and moral responsibility to the country and to other students who need support.

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