The Rwandan government has introduced a Ministerial order imposing penalties on beneficiaries of the student loans scheme who have failed to repay their loans. The order, which came into effect recently, states that beneficiaries will be subjected to a 10 percent fine, while their employers will face a penalty of 1.5 percent of the amount due. This move aims to recover outstanding loans disbursed to students pursuing higher education both within Rwanda and overseas.
According to the Development Bank of Rwanda (BRD), a total of Rwf272 billion has been disbursed to students since 2016. However, only Rwf21 billion has been successfully recovered over the past six years. Out of the 92,000 students who benefited from study loans, 24,000 have fulfilled their repayment obligations. The government has been providing loans to students since 1980, and the bank emphasizes that all beneficiaries from government loans for their studies are now subject to the imposed fines.
The Ministerial order allows beneficiaries who express willingness to repay after receiving a notification to request repayment in installments. This provision applies to employers or study loan beneficiaries who are self-employed, work abroad, or work with diplomatic institutions operating in Rwanda. The order also states that after BRD inspects non-compliant institutions or beneficiaries, a written notification is established, which has the value of an enforcement order.
Beneficiaries of BRD's study loans have expressed difficulties in repaying their loans due to a lack of understanding of the payment process and insufficient follow-up. Edith Berwa, who graduated in 2014 after studying for four years on government assistance, said she has not been able to determine how much she owes or who to contact to make payments. Similar complaints have been raised about continued deductions from bank accounts even after completing payments.
In response to these challenges, the BRD has established the "Minuza" platform, which allows beneficiaries to follow up on their loan repayments. The platform has been functional since January 2023, but uptake and usage for paying back loans remain low. The bank has also introduced a mobile money account to facilitate loan repayments.
Wilson Rurangwa, head of Education Portfolio Management at BRD, emphasized the importance of loan recovery initiatives to avoid loss-making initiatives. He stated that the implementation of the "Education for All" program would be challenging if the government paid for every student's tuition and living costs without them paying back. The bank aims to contribute to developing resilience and sustainability by aiding the government in this endeavor.
The introduction of penalties and the emphasis on loan recovery are expected to encourage beneficiaries to repay their loans. With nearly 50,000 beneficiaries facing legal fines and penalties, the government's efforts to recover outstanding loans are likely to continue. The success of these initiatives will be crucial in ensuring the sustainability of the student loans scheme and the "Education for All" program.
Key points
- Nearly 50,000 beneficiaries of Rwanda's student loans scheme face legal fines and penalties for non-repayment.
- The Rwandan government has disbursed Rwf272 billion to students since 2016, with only Rwf21 billion successfully recovered.
- The BRD has introduced measures to facilitate loan repayments, including the "Minuza" platform and a mobile money account.
