It was a great relief to many, including students, parents and lovers of education generally when on June 12, 2023 President Bola Tinubu signed the Students Loan (Access to Higher) Bill into law.
Those who have been following my weekly write-ups do know the premium I put on education. Education is the catalyst to all round development through which one can overcome ignorance, tribalism and poverty.
As far back as 2018, I have written series of articles urging the Federal Government to reestablish education bank.
As far back as 1993, the Federal Government had established what was then known as Education Bank.
The Education Bank was set-up to provide loans to students. The bank was designed to replace the former students' loan board.
By virtue of section 7 of the Nigerian Education Bank Act, Cap N104, Laws of the Federation of Nigeria, 2010, the bank was saddled with the following functions:
Functions of the Bank
The functions of the bank shall be to:
(a) approve and disburse loans for educational purposes;
(b) provide loans to students to finance their education in institutions of higher education;
(c) recover loans disbursed under this action;
(d) provide short-term loans to individuals or other bodies in appropriate cases, if it is satisfied -
(i) that the purpose for which the loan is requested is viable and would enhance the educational development of Nigeria; and
(ii) that there is adequate security for the loan;
(e) promote the mobilisation of savings and grants from the public and private sections for educational investments;
(f) accept deposits from individuals, institutions and organisations to finance educational investments;
(g) provide financial advice an educational matters to institutions of higher education, and to parents, students and educational investors;
(h) engage and participate in other banking business, including lasing, fund and management, foreign exchange and letters of credit;
(i) promote the development of viable research, consultancy services and relevant ventures within institutions of higher education and research institutes and centres;
(j) aid authors by providing them with forms for the purpose of financing the printing and publishing of educational books; and
(k) do anything or enter into any transaction which in the opinion of the Board is necessary to ensure the proper performance of its functions under this Act.
By virtue of Section 4(2) of the Act, the Bank was to be administered by a Board of Directors, the composition of which was as follows:
(2) The Board shall comprise -
(a) a part time chairman to be appointed by the President;
(b) the Managing Director of the bank
(c) the Permanent Secretary of the Ministry of Education or his representative.(d) one person to represent the Ministry of Finance
(e) three persons to represent the share-holders in proportion of their shareholding in the bank
(f) the Executive Directors of the Bank; and
(g) three other persons who, by reason of their character and experience in matters relating to education, banking, accountancy, law, finance or economics, are in the option of the Minister suitable for appointment as members of the Board.
(3) The members of the Board shall be paid such allowances as the Bank in a general meeting may, from time to time, approve.
(4) The provision of the Schedule to this Act shall have effect with respect to the proceedings of the Board and the other matters mentioned therein.
Again by Section 8 of the Act, the Board was saddled with the following functions:
Functions of the Board
The Board shall, subject to the general direction of the Minister, be responsible for:
(a) managing and superintending the affairs of the bank;
(b) for the overall policy and general administration of the bank;
(c) formulating policies and guidelines for operating the loans from the bank and ensuring their implementation;
(d) working closely with the management of the bank to ensure smooth operation of the affairs of the bank;
(e) deciding on and approving the borrowing power and credit limits of the bank;
(f) approving annual reports and statements of accounts of the bank;
(g) appointing and approving fees for external auditors; and
(h) carrying out such other activities connected with or incidental to the other functions of the Board.
While the Bank could by virtue of Section 16(1) charge interest on loans disbursed by it at the prevailing commercial rate in the country, Section 16(2) nevertheless provided that the rate of interest on loans granted to students shall be subsidised by the Federal or State Governments to such extent as may, from time to time, be agreed upon by the Minister and the Board.
A careful examination of the above provisions readily reveals that it was the intention of the lawmaker that the Board of the Bank would play a very important role in the achievement of the functions of the bank which for the sake of emphasis was to provide much needed funding, in the form of loans to the educational sector.
Regrettably the Bank failed woefully in the discharge of this functions leading to the decision of the Federal Executive Council in 2000 to set up a Ministerial Committee to wind up the Bank.
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The Committee itself was inaugurated on May 23, 2001. The Committee at the end of its assignment submitted a report, which contained certain recommendations to the government. It is from the resultant White Paper that one can understand just why laudable ideas just do not appear to work in Nigeria.
Firstly, it was revealed that the government which had put in place the legal frame work for the establishment of the Bank, which as stated above, required the composition of the Board of Directors, failed totally to put in place a board right from the inception of the Bank in 1993. This led to the decision of the government to wind it up in 2000.
Thus government was majorly responsible for the failure of the bank to carry out its statutory duties. In this respect, the White Paper stated as follows:
"The Edubank had no Governing Board since inception in 1993, so the Honourable Minister of Education acted in place of the Board throughout".
It is, therefore, beyond dispute that government itself, by its failure to set up the Board, allowed the bank to fail. As provided in Section 8, the Board was supposed to carry out its several functions including managing the affairs of the bank subject to the supervision of the Minister.
However the Minister ended up managing the affairs of the bank without any supervision. The effects of this, as I will show next week from the very findings of the ministerial committee, were profound.
