University students expecting to access higher education loans from Rwanda Development Bank (BRD) that was supposed to be operational starting next month will have to wait a little longer following the postponement of the scheme.
The bursary scheme was supposed to be taken over by BRD from higher education loans department at Rwanda Education Board (Reb).
On implementation of the scheme, students will access loans straight from the bank, a move that seeks to increase the number of students accessing funding as well as increase compliance.
Speaking to The New Times, last week, Alex Kanyankole, BRD chief executive, said the scheme had been approved by Cabinet but the restructuring and privatisation of the bank had held it back.
“BRD was undergoing restructuring and we are having private investors coming in. At the same time, Reb, the students’ finance agency that was handling it previously, was still organising the transfer of the necessary documents,” Kanyankole said
“What we have completed so far is the feasibility study which we had agreed on unanimously, alongside effective discussions of the business model.”
He said on the completion of the bank’s privatisation, the scheme will be effected considering that the new investors are willing to be part of it as well as bring on board expertise.
“We have to wait for the completion of the privatisation of BRD, but it is positive that the incoming investors are willing to take it on and help BRD implement it. The timing is what matters as everything else had been agreed upon,” Kanyankole said.
The bank is being privatised with the acquisition of a 77 per cent stake by Atlas Mara Group owned by Bob Diamond, founder of Atlas Merchant Capital LLC and former chief executive of Barclays Bank; and Ashish Thakkar, founder of Mara Group.
Kanyankole lauded the model, saying it would increase the number of students accessing higher education funding as well as compliance of recovery of the loans from former beneficiaries.
“The model is a best practice that has proved to be successful in other countries, including the US and Ghana,” he said.
“More students will be able to get funds to go through school since the model is not dependent on a budget and it will attract banks since they are assured they can get their money back,” the chief executive added.
There were fears among some of the would-be beneficiaries of the scheme that bank loans would come with many penalties and restrictions.
Education minister Silas Lwakabamba told The New Times that following cabinet approval of the new policy of tertiary education financing, a feasibility study was conducted that showed that the transfer of the tertiary education financing system from Reb to BRD would create a more efficient service delivery of bursary.
“The perpetual inadequacy of the student loan scheme which include the inadequate operational systems and tools of student loan management under Reb and the poor mindset of loan beneficiaries in terms of loan repayments will be addressed by the new policy,” Prof. Lwakabamba said.
“The financing system will progressively be able to provide the student loans from the current percentage of 16 to 36.”
The minister said the transfer of the loan scheme will be complete and operational by September 2015.
Louise Karamaga, the deputy director-general for Higher Education at Reb, said the framework and business plan for the acquisition of the Higher Education Loans completion timing coincided with the acquisition of the bank by Atlas Mara Group.
“As a result, the project had to wait for the acquisition to take place but we will resume next year when they are ready,” Karamaga said.
She noted that this year’s intake will use previous scheme Ubudehe categorisation where students are classified according to their family background in one of the six categories in accordance with their level of income.
Categories 1 and 2 are the ‘most vulnerable’ and have their entire fees covered by government and an additional Rwf25,000 as monthly upkeep; categories 3 and 4 have half their tuition covered; while 6 and 7 are required to cater for their tuition and expenses.
Public colleges charge Rwf600,000 in tuition per academic year.
In a past interview with The New Times, Prof. Michel Bezy, the associate director at Carnegie Mellon University, a US university with a satellite campus in the country, lauded the higher learning loans model saying that it was sustainable and would not overwhelm the government.
In the East African region, Tanzania and Kenya use a scheme similar to the one Rwanda is in the process of adopting while Uganda is in the process of setting up a loans fund.
University students called for speeding up of the new funding scheme as most of them were not sure if they would be able to afford tuition since they had not been categorised as most vulnerable (categories 1 and 2).
Maria Mbabazi, who expects to join University of Rwanda’s College of Business and Economics next month, said she had been hopeful that she would easily be able to pay her tuition through a loan from BRD but she would have to find an alternative source.