Tanzania plans new higher education funding system

The challenge was laid bare this week when the Permanent Secretary in the Ministry of Education, Science and Technology, Prof Carolyne Nombo, disclosed that the Higher Education Students’ Loans Board (HESLB) has begun exploring alternative financing mechanisms as demand for student loans continues to grow.

Speaking while opening a meeting of chief executives and heads of institutions under the ministry to discuss implementation priorities for the 2026/27 financial year on July 13, 2026, Prof Nombo said government funding alone would no longer be sufficient to sustain the sector’s growing needs.

“The government has continued increasing allocations for students’ loans, and this year we have reached about Sh1 trillion. But Tanzanians continue to value higher education and demand keeps increasing.

It is therefore important to identify alternative financing mechanisms,” she said.

She commended HESLB for initiating discussions on new financing models, saying the entire education sector should begin thinking beyond the traditional dependence on the Treasury.

“It is necessary to reduce the huge burden carried by the government and identify other sources of financing. Institutions must also increase income-generating activities through their own initiatives,” she added.

Her remarks come at a time when the ministry itself is facing tighter fiscal space.

While education remains among the government’s priority sectors, the ministry’s budget for 2026/27 recorded a slight decline compared to the previous year, even as implementation of education reforms, expansion of technical and vocational education, digital transformation, research, and the new competency-based curriculum require substantially higher investments.

The financing pressure is becoming more pronounced because access to higher education is expanding rapidly.

This year alone, the Tanzania Commission for Universities (TCU) announced that universities have more than 170,000 admission slots, following another year of exceptionally high Form Six examination performance.

With university enrolment rising steadily, demand for student loans is also expected to increase significantly, placing further strain on HESLB’s resources.

For years, the government has remained the principal financier of higher education through HESLB. While annual allocations have increased considerably, experts argue that public financing alone cannot sustainably meet future demand without stronger participation from the private sector.

There are already signs that such partnerships can work.

Both NMB Bank and CRDB Bank have introduced education financing products that enable eligible students and parents to access loans at relatively affordable interest rates to meet tuition and related education expenses.

Although these products currently complement rather than replace government loans, education analysts say they demonstrate how commercial financing can help bridge funding gaps, particularly for students who do not qualify for HESLB support but still struggle to afford university education.

Prof Nombo believes the same spirit should extend across the wider private sector.

She urged institutions under the ministry to stop relying solely on government subventions and actively cultivate partnerships with businesses through Public-Private Partnerships (PPPs), noting that nearly 70 percent of employment opportunities are generated by the private sector.

“We already have a PPP framework. Let us not leave these documents on the shelves. Every institution should identify the model that suits it best and engage the private sector in supporting education,” she said. Her call goes beyond financing students.

It encompasses investment in university infrastructure, research, innovation, student accommodation, specialised laboratories and commercial ventures capable of generating sustainable institutional income.

Education policy expert Dr Thomas Jabir said Tanzania must now transition from a government-funded higher education system towards a diversified financing ecosystem.

“Higher education should increasingly be viewed as a shared national investment.

Government will remain the anchor, but employers, financial institutions, industries, development partners, philanthropists and alumni all have roles to play in financing future graduates,” he said.

According to Dr Jabir, universities should become more entrepreneurial by commercialising research, strengthening consultancy services, licensing innovations and building stronger links with industry.

Education economist Dr Ibrahimu Mkora argues that financing reforms should also address graduate employability.

“When employers participate in financing education, they naturally become more involved in curriculum development, internships and practical training.

That ultimately produces graduates with skills that match labour market demands,” he noted.

He added that the government could introduce incentives, including tax relief, to encourage companies that invest in scholarships, research partnerships and university infrastructure.