Rwanda Development bank-BRD is set to manage the implementation of the University Loan Scheme( Students loans) after government gave a positive nod for the transfer of the struggling scheme.
This comes after the Cabinet recently approved the students fundingmechanisms that paves way for the implementation of the scheme under to the country’s development bank –BRD from Rwanda Education Board
The scheme that provides loans to students in higher learning institutions both in the country and abroad had faced a challenge of loan recovery, something that called for revision of the disbursement mechanism.
For example according to Ministry of education Statistics, of about Rwf80 billion that had been disbursed under the old scheme only 10 percent had been recovered.
Accordingly, the scheme will starting disbursing loans in September this year and will be at an annual interest rate of 11 percent and payable a year after employment and the beneficiaries as previous scheme will be from social stratification(Ubudehe) of one to four.
The government will according to Prof. Silas Lwakabamba, Minister for Education pumped in Rwf40 billion in the next ten years while the scheme becomes sustainable to provide financing on its own.
The scheme according to the feasibility study done in 2013 was found vital in spurring higher learning education that is needed to increased personnel that is needed in the labor market.
Minister Rwakabamba notes that the scheme will target 31,796 beneficiaries both continuing and fresh entrants in higher learning institutions while the scheme is expected to benefit over 143,000 students in 10 years.
Under the new arrangement, the beneficiaries will sign contracts with the bank of which it will also ensure recovery and well as close follow up of the borrower while also a borrower will be asked to provide a guarantor to help the bank in recovery process.
To facilitate the recovery of the previous loans, the Development will also under a new law that is yet to be passed by parliaments take over loans under the previous scheme to bring down the scheme’s bad loans.