Local financial experts have advised the Rwanda Education Board (REB) to invest the money recovered from its loan repayment scheme in short-term interest generating projects.
The money which is collected from former beneficiaries, who graduated from universities and are now in gainful employment, was formerly collected by the Students Financing Agency of Rwanda, (SFAR), which is now part of REB.
The experts, who were contacted by The New Times, said that reinvestment would protect the money from depreciating in value, especially because it is not spent at once.
This would also generate more income to possibly finance more students.
According to Esther Mukasine Ndagije, from REB’s loan repayment department, over Rfw 3.5 billion has been refunded by beneficiaries since 2008 when the activity began.
Current statistics indicate that more than Rwf 70 billion is expected to be reclaimed, gradually.
After repayment, the money is re-injected into the education sector, to give education loans for new students.
Ronald Nkusi, an economist with the Ministry of Finance and Economic Planning, suggests that the money should be loaned to unemployed graduates as a form of capital.
“If they lend out the money to graduates who have the skills but lack collateral, they can resolve issues of unemployment and also enable the beneficiaries to earn from their business, and consequently clear the loans.”
He further explained that the loans would gradually be repaid with interest.
However, a strict repayment policy would be necessary in implementation of the strategy, Nkusi said.
“They can develop a good model and sign a MoU with a certain bank through which the loans can be issued. Follow up would then be strict and the money put back into the education system gradually.”
Roger Munyampenda, the Chief Executive Officer of the Private Sector Federation (PSF), says that short-term investments, like treasury bills would be an ideal investment for REB.
“REB should consider investing in treasury bills which can be recovered in the short run, like after three months, six months, a year… yet with interest” he said.
“Towards the end of an academic year, for example, the bills can be resold and the more new beneficiaries could be financed”.
Available statistics indicate that over 58,000 people have benefited from the student loan scheme, but only 1,003 people have completed repayment. 6,793 are currently in the repayment process.