The Development Bank of Rwanda (BRD) is pushing for reforms to the law that governs the students’ loan scheme in order to increase enforcement of penalties to defaulters.
Since it was created in 2008, the student loans and bursaries scheme has been managed by multiple institutions affiliated to the Ministry of Education such as Rwanda Education Board (REB) and the defunct Student Financing Agency of Rwanda (SFAR). This has at times made the loan recovery process difficult.
To enhance efficiency, the management of the scheme was moved to BRD in 2015, which says has encountered numerous recovery challenges hence affecting the disbursement of more loans.
As of January 2021, the Bank had recovered Rwf24.4 billion out of the total disbursement of Rwf221.85 billion including the grant component.
The number of loan beneficiaries is 139,925 whereas only 18,626 have so far complied with the law, which represents just 13.3 per cent.
The number excludes the disabled and the deceased whose loans were either waived or written off.
Edward Byaruhanga, BRD’s Loan Recoveries Manager, attributes the little success to the law governing student loans and bursaries.
He explains that article 22 and 23 of law 44/2015 of 14/09/2015 governing the student loans and bursaries stipulates the sanctions for staff and institutions that do not comply, but does not clarify which next steps should be taken.
"The law is not really supportive because when borrows don’t pay back, there is no law to enforce the penalties,” he noted.
This, according to him, allows employers to relax on staff declarations and also encourages some beneficiaries to neglect their obligation to payback.
"If we had the legal framework that allows us to garnish the bank accounts of a certain organization or individual because they are not paying back the loan when they have an income-generating activity, they would comply,” he added, citing that the method is used in other parts of the region.
Dr Rose Mukankomeje, the Director-General of Higher Education Council, said that there is a policy framework being drafted to address the issue.
"Discussions are underway on creating a policy framework and a strategy for implementation,” she said, adding that awareness should come first. "People should understand that the fund is a revolving fund that aims at catering for all generations, and that will happen if beneficiaries pay back their dues,” she concludes.
Among the other challenges that the Bank faces is the missing and inaccurate students data who benefitted from the scheme since 1980 as per the law.
This makes it hard to trace the loan beneficiaries with their full IDs, but the institution is embarking on integrating with more stakeholders like RRA,RSSB,NIDA and CRB to get additional data and collaborate with the Foreign Affairs Ministry to put in place mechanisms to bring on board beneficiaries living abroad so that they start paying back.