Loans board here to stay, government stresses amid mounting concerns

Dar es Salaam. The government says the higher education students fund will be sustainable considering underlined strategies to improve the scheme’s performance especially the loans board efficiency in collecting debts and allocating credits to new students.

This comes as a result of the presence of concerns about the sustainability of the loan system for higher education students in the country, but also, stakeholders have suggested better ways to get borrowers and employers to adhere to the requirement to repay loans on time to protect the fund.

The government through the Ministry of Education, Science and Technology has kicked off implementation of the World Bank’s Higher Education for Economic Transformation (HEET) programme, a five-year project worth $425 billion though the World Bank support, that aims to promote higher education as a catalytic force in the new Tanzanian economy.

This, the government says will be invested in requisite infrastructure for modern and effective teaching and research, and by training to the highest standard the teachers, researchers and administrators needed by universities to achieve their full potential.

Through this project the government has also formed a team to assess the conduct of higher education loans application and allocation under the leadership of Prof Allen Mushi, deputy vice chancellor at Mzumbe University, whose recommendations to the ministry shall enable the government to make the relevant decisions that would inform policy.

“This team will advise us on the best way to issue loans and address existing challenges... Let me relieve people’s worries, this fund will be developed and all these ongoing efforts exist for that purpose,” Prof Mkenda tells The Citizen shortly after launching loan application guidelines for the 2022 /23 academic year last week.

Elaborating further, the executive director of HESLB, Mr Abdul-Razaq Badru said through a team of three experts appointed to go through the board’s operational system, after about six months, answers will be found that would help improve the fund…

However, Prof Mkenda wants HESLB to continue to work with great professionalism and increase efforts because, “challenges are growing and others are teaching us, there are complaints, I have sat with you guys and I understand them, I also understand your efforts but let’s continue to increase efforts in serving our students who want to study.”

Prof Mkenda exudes that for the financial year 2021/2022, HESLB aimed to collect Sh182 billion, of which by July 30, 2022 a total of Sh183.8 billion was collected.

“These collections are equivalent to 32.2 percent of the government’s budget for student loans in 2021/22. So, with this trend, work still needs to be done…,” he reminds.

According to HESLB, there were initiatives including a new campaign that has resulted in the achievements in the debt collection seen in the 2021/22.

Dubbed by the Swahili name ‘Sifurisha’ which means to make the beneficiaries completely settle their debts (bring to zero), the campaign followed the government’s abolition of the levies that were considered a burden on the loan beneficiaries.

They say it was inevitable that the fund had to devise new methods that would keep it at the same pace of debt collection with the aim of helping to expand the scope of loan allocations each year.

The board plans to have outstations/call centres in various regions in the country to facilitate the beneficiaries with answers on how they can repay their debts as well as those who apply for the fund.

In the law

In November 2018, the Parliament amended the HESLB Act 2004, raising the monthly deductions from gross salaries of loan beneficiaries from 8 percent to 15 percent.

The amended law also convicts defaulters who acquired loans during the years 1994/95 to 2005 and requires that employers cooperate by reporting their loan beneficiary employees and facilitating the timely deduction and remittance of monthly loans.

Beneficiaries themselves are also required to notify the board in writing of their location and make arrangements for settling the debts.

People who are self-employed are required to commit 10 percent of their monthly taxable income to repayment, while employers have 28 days to submit names of new employees to Heslb for verification that failure to do so will be considered a criminal offense.

Failure by the employer to comply makes them liable for a fine of Sh1 billion or not less than a 36-month jail term. Heslb officials have the mandate to examine records of all employees to verify loan repayment status.

Stakeholders’ take

With the laws and regulations in place, stakeholders argue that compliance is still needed for the beneficiaries of higher education loans, including holding employers who do not follow the established procedure to account.

“After the President removed the charges, it is now the responsibility of the expertise fraternity and the parliamentarians to come up with a better strategy to protect the money that is loaned based on the value after a certain period, otherwise the way things are going we will fail,” says Mr Amos Juma, an expert on development issues from the University of Dodoma.

He notes, since HESLB has an established network with other key stakeholders, they require more efforts to turn such networks into financial support for capital accumulation.