Ringera explains Helb’s efforts to help learners get education

Underfunding and non-repayment are the two major issues the students' loan board continues to grapple with. 

The problems have been exacerbated by the Covid-19 pandemic, which affected loanees' ability to make payments. 

The Higher Educations Loans Board is headed by CEO Charles Ringera. 

Looking outside the window of his 19th-floor office at the Anniversary Towers in Nairobi, one can see the expressway and the University of Nairobi student body offices.

It is against this backdrop that we sit down for an interview with Ringera. 

How did Covid-19 affect the repayment of loans?

Repayments have decreased in the two years since Covid. Our target in terms of collection in 2019-20 was Sh4.5 billion but we fell short by almost Sh800 million. In 2020-21 we lost Sh1 billion. We are trying to bounce back with the penalty waiver campaign.

The retrenchment was a double-edged sword for us. One, people who were repaying their loans monthly lost their jobs and could no longer make payments. Two, parents who previously could support their children through tertiary education could no longer afford the fees. This led to a surge in applications. We had budgeted for about 236,000 but we received about 309,000 [applications].

We also have the bad book, which is people who are supposed to be paying but are not. This has increased from Sh8.5 billion to Sh10.5 billion, which we are trying to manage.

What happens in case a Helb beneficiary dies?

For instance, at Garissa University, even though that was a special case, out of the 147 students who were killed, 97 were loanees. We wrote off Sh10 million. That’s why when we started the insurance credit scheme, we were very clear on the money because the law says we should have insurance for the money.

When a student dies and Helb is not informed, the money continues to be disbursed to their account. When the account becomes dormant, the money is taken to the Unclaimed Financial Assets Authority. How then will we get it back? We tell universities to inform us if anybody is deceased. In this case, we first go for the insurance to claim our money back so that we do continue funding that student.

How do you handle social media pressure from students, parents and politicians?

One of the key things is to build a team. Our contact centre has got about 30 agents and there are people assigned to calls, social media messages and emails. When I tweet I use my official page, Ringera. You will not find me tweeting for the official Helb page, that is done by our team. 

Does the organisation teach university students how to manage their loans?

We have a pack online that students are supposed to go through. It teaches them how to budget the money, which they receive twice a year. We do not leave it there because some would just tick that they have seen the terms and conditions. There is a multiple-choice exam that one has to score 80 per cent before they can make a loan application. We also organise clinics in most universities where we hold discussions with students.

How is the response to the Covid penalty waiver?

The target was Sh700 million. As of March 31, which was the first month, we had collected Sh202 million from 3,500 loanees. The queues are getting longer, which means people are showing an interest and, as usual, Kenyans wait for the deadline. There's also a self-service option.

What’s the loan recovery rate?

Our performing book is at about 73 per cent, the target is by June we should be at 74 per cent. We have really brought down our portfolio at risk and that shows the economy is recovering from Covid.

What’s your take on some politicians' pledge to turn Helb into grants and not loans, if elected?

Every administration comes with its own policies. Currently, 67 per cent of our budget comes from the Exchequer while 33 per cent comes from loan recoveries. The government would have to make a decision on what to do with the 33 per cent. 

From the countries you’ve benchmarked, what’s the appropriate funding method for student loan boards?

I still think the grants 80 per cent and household or loans 20 per cent is the best model looked at. In Malaysia, the size of their Helb is the total budget of Kenya. They have become self-sufficient. The revolving fund has completely revolved so they no longer get any support from the exchequer apart from the Sovereign guarantee, which we are also trying to do.

What has Helb learnt from other countries?

We have received approval from Treasury to procure an education bond. After my board meeting next week, will issue an RFQ or an expression of interest in the media for people to come in as transaction advisers.

They look at how much is required for the year then issue a bond of that size which is floated in the market and investors take it up and the money comes in. When the bond matures for repayment, we will be repaid at an interest rate of three per cent. But because the bond is priced at eight per cent, the difference will be paid by Treasury because it is the one that should have given the money ideally but didn’t have it. 

Why is it important for you to implement the education bond

Because of e-learning. We think that using phones for e-learning is not the best. We want to offer laptop loans. 

Should the billions lying at the Unclaimed Financial Assets Authority be used to fund Helb?

The mandate of the agency is to reunite the assets with the owners, but there's a window of opportunity. Remember it doesn't give you interest. Whatever interest it generates goes into funding its operations. 

Have you tried to engage the authority on the same?

We have written a very strong proposal, which is under consideration, asking for the interest generated from unclaimed assets. There is some money at the authority under the Kenya Hospital Association Fund or something like that.

We are not able to fund KMTC students this year because USAID pulled out. We have sent a proposal to the Health CS asking him to reconstitute the foundation's board of trustees to reclaim the money and use it to fund KMTC students.

How about the issue of funding tuition for government-sponsored students in private universities?

All universities are the same under the Universities Act, 2012. That is what you see grants sent to government-sponsored students in private universities except for two—Strathmore and USIU. Our funding is on a need basis. That is why today, Strathmore does not receive any government grant, but 35 per cent of its income comes from Helb. So for us, it is the need and not what university you are in.

How much money is needed to run Helb, approximately?

Education has been allocated Sh544 billion in the next financial year. Take South Africa, for instance. Their university enrolment is about 700,000, while ours is about 680,000, meaning we're at par. Our budget for running universities is Sh91 billion while in South Africa, with the same number of students and fewer universities (they have 25), the budget is Sh350 billion, almost quadruple our budget. If you compare loan to loan, our budget is worth S15.8 billion while they have Sh350 billion.

UoN doubled its tuition fees but Helb loans remain the same. Is the money enough for the students?

Helb needs to be enhanced. We did a small case study on how much a student needs to stay well in a university. Of course girls need more but generally, a student needs Sh200,000 in a year but Helb can only give Sh68,000 to the most vulnerable.

So, who’s making up the difference? You now start understanding this sponsor mentality has to chip in to fill the balance. The bigger picture is to go to school, get your education and then get out and start earning and repaying the loan at whatever cost it was. For Helb, as a social fund, we will continue being at four per cent. 

BBI proposed to increase the grace period from one year to four years and a reduction of interest from four per cent to three per cent, what would this do to Helb?

Part of Helb's budget comes from loan repayment. So saying that you will squeeze it or delay [repayment], what government will have to do during the delay period is to top up the amount. For example, if you lose like Sh1.5 billion, then this means the exchequer (who when asked for Sh27 billion said it didn't have the money) will have to provide that amount or fund fewer students.

Edited by Josephine M. Mayuya