Rwanda Development Bank (BRD) faces a daunting task to recover Rwf68 billion from university graduates who benefited from the government initiated student loans.

Latest statistics show that, since 1980, over Rwf80 billion has been loaned to some 70,000 Rwandan students to pursue higher education studies.  

The government, through Rwanda Education Board (REB), started the process to recover the loans in 2008.

By the time the student loan scheme was transferred to BRD, government had recovered Rwf12 billion. Since that time, the bank has managed to recover a paltry Rwf5.1 billion, raising questions on the sustainability of the student loans scheme.  

Speaking to journalists on Tuesday during the regular ‘Meet the Press’, an initiative of Rwanda Journalists Association that brings together journalists and public officials to discuss issues of public interest, Eric Rutabana, BRD’s Chief Executive Officer, appealed to previous beneficiaries to pay back so that they can fund more students.

The bank’s loan recovery challenges are compounded by its inability to identify all the beneficiaries. Its database can only identify 13, 000 graduates who benefited from the scheme, a number that Rutabana considers small compared to the amount of money in arrears.

More to that, only between 5,000 and 6,000 graduates are voluntarily paying back their loans.

Claudine Matata, the bank’s Head of Recovery Unit, said there is a big number of beneficiaries whose details are unknown to BRD. She said that efforts are being put in place to capture the beneficiaries’ bio data.

As one of the solutions, the bank has put in place a digital management information system (MIS) that will improve recovery.

"We already built the database to simply identify students who benefited from the loan so we can track them during the times of loan recovery,” she said.

Undergraduate beneficiaries are charged an interest rate of 11 per cent while postgraduate students are subjected to a rate of 12 per cent.

According to Rutabana, the bank targets to recover the bursary loans enough to fully cover students’ financing by 2025.

"There is hope that the government budget allocated to education will be significantly reduced as long as the graduates are increasingly paying back loans,” he said.

Since taking over the student loans scheme from REB, BRD has disbursed Rwf60 billion in student loans and living allowances.

The bank currently enrolls 28,500 local university students and another 365 students studying abroad all benefiting from the loan scheme.

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