The cabinet has opened the door to the implementation of the university loan scheme under the Development Bank of Rwanda (BRD) following its approval of the students funding mechanism on Tuesday.

The scheme’s implementation had been postponed as the bank was undergoing restructuring and partnership with a private investor, Atlas Mara group.

Over the years, higher education loan scheme was under Rwanda Education Board, where it faced challenges of loans recovery.

The new higher learning institutions funding mechanism will start making disbursements in September and is expected to increase the percentage of students accessing loans from 16 to 36 per cent, according to the Ministry of Education.

Officials from the ministry explained that the Cabinet approval was informed by a feasibility study conducted in 2013 that ascertained the contribution of the scheme to the higher learning sector.

Addressing journalists in Kigali, yesterday, Education minister Silas Lwakabamba said the mechanism was a much needed addition to the education eco-system, whose demand had increased thanks to the 12-Year Basic Education programme.

"Whereas students with minimum admission conditions were 37,440 in 2013, the number has since grown to 43,635 in 2014 and is expected to rise to about 143,600 in 10 years. Starting September, we plan for 31,796 students for both Freshmen and continuing students,” Prof Lwakabamba said.

He added that under the bank, the mechanism would become financially sustainable as it would apply innovative skills to mobilise resources and recover previously issued student loans.

"In 10 years, we expect the scheme to be fully self-sustainable and continue providing loans to students without necessitating any more funds from government,” Lwakabamba said.

The government will inject about Rwf40 billion annually into the scheme for the next 10 years.

International students

The scheme is expected to benefit students studying in the country as well as those abroad.

For local students, the scheme will finance tuition expenses, living allowances and research facilitation whereas for students abroad it will also include medical expenses and air tickets.

To ensure compliance, students will sign a contract with the bank and will also require a guarantor who will ascertain that they will facilitate the recovery process.

The minister said the beneficiaries would commence paying back the loans a year after employment at an interest rate of 11 per cent per annum.

The repayment premiums will, however, not exceed 10 per cent of the graduates’ salary.

Like in the previous loan system, students to benefit are those in the Ubudehe (social stratification) categories one to four.

Under the previous loans scheme managed by Rwanda Education Board, the minister estimated that about Rwf80 billion had been disbursed over the years with only 10 per cent of it being recovered.

He pointed out that the recovery of previously issued loans will also be under the bank and a new law would be passed by Parliament to aid in recovery.

BRD, under its new structure, and partners has demonstrated willingness to implement the model, noting that it intends to improve efficiency and number of beneficiaries.

In a previous interview, BRD chief executive Alex Kanyankole told The New Times that the bank was comfortable with the findings of the surveys and feasibility studies conducted.

"We have already agreed upon tools and mechanisms to be employed in debt administration and recovery. We have also discussed the tools to identify our borrowers wherever they may be, be it in college, in employment or travelling abroad,” he said.

Admission to the University of Rwanda is currently ongoing until May 4, with places open for about 12,500 students.

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