The Higher Education Loans Board (Helb) has announced plans to float a Sh500m bond even as it struggles to recover billions of shillings from defaulting past loanees.
Helb board chairman Ekwee Ethuro told the Business Daily that the bond will be floated by 2022 after the agency tabled proposals to the Treasury last December.
The move is expected to boost cash-flow and ease pressure on the agency that relies on the Treasury, loan repayments, grants from development partners and deals with counties and constituencies.
In three years
"We are hoping that in the next three years we should be able to have the first bond, but it is subject to other players like the Treasury.
"It will be floated the same way we are doing with infrastructural bonds," Mr Ethuro said Wednesday.
He said that Helb was working closely with its counterparts in Malaysia which has successfully used the model to fund students.
The bond's maturity period will be determined to coincide with an average period taken by students to complete various varsity courses to ensure it is not defaulted on.
Increase average amount
The move comes as Helb seeks to increase the average amount of loans advanced to every student in the next three years.
Helb targets to increase the minimum loan to each student from the current Sh40,000 to Sh44,000 by 2022 while increasing the number of beneficiaries from 296,219 today to 375,986.
The agency has however faced deficits mainly due to low allocations by the Treasury and thousands of defaulting beneficiaries.
This has led to delays in releasing loans to thousands of students.