Crisis looms as Treasury maintains Helb allocation

Money Markets

Customers at a KCB banking a hall in Juba. The lender’s first quarter net profit has risen by 28.7 per cent to Sh3.9 billion. Photo/FILE 

 

By Mugambi Mutegi, pmutegi@ke.nationmedia.com

A crisis is looming at the Higher Education Loans Board (Helb) after the Treasury maintained its allocation to the institution at a time when student enrolment has steeply increased.


 

According to the budget estimates released on Wednesday, the government has set aside Sh5.7 billion to sponsor students in public institutions of higher learning.

This figure, however, includes Sh2.4 billion that Helb recovered from past student loanees, meaning that the actual allocation from the Treasury is Sh3.34 billion — the same as last year. Helb retained about Sh800 million of its collections to cater for operating expenses.

The loans agency now says this year’s allocation is only enough to sponsor the students already in universities and that more money is needed for freshers set to join later this year.

“The students currently in second to fourth year of their education are consuming about Sh5.5 billion per year meaning that we will need more money for students joining the scheme as from October,” said Helb chief executive Charles Ringera.

“Our estimate is that we will approve 70,000 new applications this year and that these students will require Sh2.4 billion in loans. This is the funding deficit that we will soon be facing.”

While the Treasury’s allocation to the loans board for the financial year 2014/2015 remained unchanged, the number of students they are supposed to cater for has increased over the years.

The Economic Survey 2014 released this week shows that the number of public universities has now increased to 22 from the eight in 2012 after the Ministry of Education upgraded 14 colleges to universities.

These former colleges include Maasai Mara, University of Eldoret, Pwani and Jaramogi Oginga Odinga.

There has also been a sharp rise in enrolment of students in public universities with the number currently standing at 276,349, having risen from 62,000 in 2002.

Helb says it is currently supports 154,000 students in public universities and 10,000 more in tertiary colleges.

One of the options for Helb, its chief executive said, is to get extra funding from government. Another one is to seek relatively cheap funding from multilateral donors such as the World Bank for onward lending to the ever increasing number of students.

“We are working on sealing the loopholes in collections even as we pursue alternative avenues of raising cash. We are at advanced stages of discussions with some of the lenders,” said Mr Ringera.

Since inception in 1995, Helb has disbursed more than Sh44 billion to about 400,000 beneficiaries. At the moment, about 68,000 loanees owe the institution about Sh9.8 billion.

Next year, Helb’s responsibilities are set to increase since private universities will begin enrolling State-sponsored students, meaning that even more students will be dependent on government.