Helb should strengthen its capacity to recover loans

 

Central Bank of Kenya Governor Patrick Njoroge. PHOTO | FILE 

By BUSINESS DAILY

The Higher Education Loans Board’s latest plan to cash in on the emerging gambling craze among Kenyans and start child education saving plans shows it understands its dependence on taxpayers’ funds is not sustainable.

But even as Helb mulls over the available options, it is important to remind the agency that a relentless pursuit of past beneficiaries, who are able but are not paying their loans, remains its best shot at staying solid in the long term.

So far, the fund is owed Sh11 billion in unpaid debts — a large segment of which is by people who are capable of paying but live outside the formal employment market where Helb can easily find them.

Some 25,000 debtors, including self-employed millionaires with informal businesses that earn them super profits and drive top-of-the range cars, cannot be traced.

Then, there are the tenderpreneurs raking in billions of shillings from government jobs as well as Kenyans in the diaspora who owe Sh2.5 billion.

Helb has stepped up its inspection of organisations to ensure staff, who benefited from its loans, pay. Initiatives such as the recent partnerships with the taxman and the Director of Public Prosecutions are also commendable.

It would be helpful to extend these partnerships to other agencies such as City Hall, the Immigration Department and the National Transport and Safety Authority (NTSA) that issue and renew key government documents such as business licences, passports and driving licences.

It might also help to increase penalties where it becomes clear that a loanee has been deliberately avoiding his or her obligations to the revolving fund.

Most important, the State must stop playing politics with the fund and bring to an end the ever growing list of beneficiaries.

Initially the fund was strictly for needy students in public universities. Then it expanded to private universities, and even to those studying in countries such as Uganda and non-university tertiary institutions.

It surely beats logic for the State to allow such expansion while at the same time struggling to release the money it allocates the fund.

Before expanding the scheme, it would be rational for the fund to diversify its sources of funding, improve its ability to trace borrowers and to recover outstanding student loans. This is the rational thing Helb must do to make it work for Kenyans in the long term.