BRD seeks to streamline recovery of student loans

Only Rwf 7.5 bn of the Rwf188 bn has been recovered.
University of Rwanda graduates. From 2016, BRD managed to recover only Rwf7.5 billion of loans. / Courtesy

The Development Bank of Rwanda (BRD) says it is looking to create strategic partnerships with different institutions to fix the challenges in recovery of students’ loans.

Emmanuel Murangayisa, the Senior Manager for Education Financing Department at BRD told The New Times that new recovery strategies are  needed since the existing ones have yieled little success. 

The student loans scheme was created in 1980.

“Since then Rwf188 billion has been disbursed,” Murangayisa said. 

The Fund has been managed by multiple institutions including The Ministry of Education and its affiliated organisations such as Rwanda Education Board and the now defunct Student Financing  Agency of Rwanda (SFAR).

To enhance efficieny, the management of the Fund was moved to BRD in 2015. 

It is a cause for concern that of the RWF 188bn disbursed, only 4 % percent has been recovered.

The total numbers of graduates who have benefitied are said to be 94,000 and only 85 have comlpleted paying their loans, representing less than 0.1 percent. 

Those who are deceased or disabled have their loans waived. 

“We have so far issued 85 clearance letters to loan beneficiaries while others are still in the process of paying,” Murangayisa said.

“The most important [Step] is to know who benefited from the scheme and untimely declaration by beneficiaries or their employers.”

One of the strategies used by BRD was to ask employers of student loan beneficiaries to withold a portion of the pay each month and transfer it to the fund. 

However, the move encountered several challenges as there are beneficiaries who are either self-employed or instituions that were not corperative.

According to BRD, they are also trying to figure out how best to get refunds from beneficiaries who do not have stable incomes or part-time jobs.  

“Indeed the bank is aware of such clients and we’re exploring other payment options, especially discussing with each loan beneficiary a repayment schedule aligned to their income," Murangayisa said. 


The Bank is also looking into how best to take advantage of technology for record keeping and tracking of payments. 

One of them is the Education Finance Management Information System (EFMIS).

“Most of the repayment received is now recorded into the EFMIS system. That means we can track the cash received and balance,” Murangayisa said.

He added that they are considerening payment options such as the use of mobile money and that they are open to other innovative ideas that can support the recovery process. 

Beneficiaries, PSF speak out

Some of the graduates who benefitted from the loan scheme say that if the payment options were more flexible, they would start paying back. They argue that the mandated 8 % deduction from one's gross salary is at times unrealistic. 

“It is good to pay [back], but charging 8 per cent is high. It should be around 5 per cent,” said one employee of the district in Kigali city.

Another issue that come was the lack of information on the progress a beneficiary has made in terms of paying back. 

"The lack of updates is a flaw to the system," one beneficiary said.

“Due to lack of updates, you  risk being charged  despite fully paying back," 

"They should send an SMS or email notifying how much you have repaid and the amount you still owed.” 

BRD says updates are done though errors can be made and people are over charged. 

“This should be a concern for both the beneficiaries and their employers. The bank provides the amount of loan owing on each and their respective monthly deductions. It is, therefore, the primary concern of both the beneficiary and their employer to know when deductions started and when they should end so that timely interventions are made,"Murangayisa said. 

However, with EFMIS, the un-updated repayments are significantly dropping. Also, over-deductions are refunded given satisfactory documentation,” he added.

One beneficiary who works for a private Radio Station in Kigali said that their income is insufficient and unstable, hindering their pay back. 

"There should a formal system that monitors beneficiary incomes so that people payback based on what they earn."  

Robert Bafakulera, the Chairperson of the Private Sector Federation (PSF) advised BRD to work closely with them. 

“To repay the loans, PSF has a big role. But BRD has not yet involved us. We can work together. If they have realized that some employers in the private sector are dodging as they do not engage their employees in repaying the loan, we are ready to investigate and study how to best to fix it.

As private sector is monitored in terms of taxes declarations, it must go with loan recovery. We urge employers to declare employees owing loans based on a database that BRD can share to us,” he said.