Massive job cuts in the economy have seen beneficiaries of
student loans stop repaying midway, reducing the capacity of government
to fund learners from poor backgrounds.
The Higher
Education Loans Board (Helb) said it has recorded a surge in
notifications from employers indicating retrenchments of their workers
who benefited from the Helb cash.
The employers’ alerts effectively halt deductions on beneficiaries’ monthly payroll.
“We
received notifications from counties and employers of exit of service
by some of the loanees hence inability to honour monthly deductions,”
the board chief executive Charles Ringera said.
The
Helb Act requires employers to notify the board within three months of
employing a beneficiary of the fund and start deducting their salaries
for remission to offset the loan.
Employers are fined Sh3,000 monthly for each defaulting employee while individual beneficiaries attract a Sh5,000 fine.
The student financier relies on loan recoveries and government capitation to fund new and continuing students.
A dip in recoveries due to defaults as the economy takes a hit
means some poor students could miss out on this critical funding which
pays for tuition and accommodation.
The Treasury allocated Helb Sh10.1 billion this financial year, half the amount it requires, including loan recoveries.
The agency recovered Sh4.1 billion last financial year ending June, up from Sh3.9 billion a year earlier.
Layoffs
Corporate Kenya has recently witnessed a wave of job layoffs amid a tough economic climate.
Last month’s election, which saw new county leaders elected, has also resulted in job losses.
“Retrenchment and suspension of staff members at the county governments is worrying too,” said Mr Ringera.
Public service jobs require applicants to obtain compliance certificates from Helb.
Several
banks have sent staff home and some have closed their branches across
the country amid the rise in online banking and thinned margins in the
wake of the law capping interest rates.
The lenders include Bank of Africa Kenya, Standard Chartered
, Ecobank, Family Bank, Sidian, and Islamic financier First Community Bank.
Samsung
this month also downgraded its Nairobi regional office in a major
operational shake-up that is likely to result in job losses.
Coca-Cola last year downgraded its regional headquarters in Nairobi and relocated significant operations to South Africa, resulting in 40 job losses.
The prolonged elections have further dampened the country’s economic prospects.
The
country is set to hold a repeat poll in October 26 after the Supreme
Court nullified the results of an August 8 presidential election citing
irregularities in the tallying process.
Kenya lowered
its 2017 economic growth forecast to 5.5 per cent due to drought and
political uncertainty. The government’s revenue collection for the year
starting July is behind target by Sh29 billion.
Helb has 85,000 loan defaulters owing Sh9.6 billion.
So
far a total of 169,909 graduates have fully repaid their loans worth
Sh13.2 billion while some 136,783 beneficiaries are servicing loans
worth Sh20.7 billion.
The various advertisements by
counties to fill in various positions has made a fresh surge on
compliance certificates required by the Public Service Boards.
“We
have witnessed very hardcore old debts being paid-off as ex-loanees
chase for CEC and Chief Officer’s jobs in the counties,” said Mr
Ringera.
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