Home NewsNational New Law Directs Bank to Manage Students Scholarships

New Law Directs Bank to Manage Students Scholarships

by Jean de la Croix Tabaro
5:02 pm

Rwanda cabinet has approved a law that empowers the Development Bank of Rwanda (BRD) to manage students’ scholarships and subsequently relieving the government of the daunting task.

The draft law was approved on May 14 during a cabinet meeting chaired by President Paul Kagame.

The Bank will be required to offer scholarship loans, and to recover billions of arrears the country spent on students since 1980s.

Government has been facing challenges in recovering funds worth Rwf82 billion that has been spent on students’ scholarship since 1980.

According to the Auditor General’s report last week, only Rwf 3 billion of scholarship funds has been recovered as of June 2014.

In 2008, government resolved to recover the funds by establishing an education revolving fund.

Under the new law, students will no longer apply for scholarship loans from the education ministry but rather will have to go through the bank.

A student, with a guarantor, will sign a contract with the bank for tuition, living allowances, research, and travel allowances for those studying abroad, at an interest rate of 11%.

After getting employed, beneficiaries will recover the money within 15 years.

If a student receives Rwf 5M loan, he will have to pay Rwf 36,600 per month, to raise a total Rwf 5,490,000.

Previously the Finance ministry deposited scholarship funds to Central Bank which would later be transferred to the Education ministry’s account. The funds would later be transferred to respective college accounts and finally onto students accounts.

With this lengthy process, students would receive their tuition after three months which the Education minister Silas Lwakabamba says, “some losses were also involved.”

Obadiah Biraro the Auditor General said while presenting a report to Parlaimant that government does not have complete information on students’ loan and recovery.

“We have been doing business which is not ours,” Lwakabamba told KT Press in a previous interview.

To start the process the government will deposit Rwf 29 billion ($40 million) for local students, and Rwf11 billion ($15 million) for students studying abroad, every year for 10 years. After then, Lwakabamba said, the bank “will handle it and sustain it.”

Peter Rwambala, Director of Corporate affairs at BRD said this is practical, if all the actors play their part.

The number of students who attended tertiary education increased to 87,000 this year from 3,000 in 1994.

Education officials say, parents have to share cost of education with government by paying scholarship, as government ensures equipment and personnel required for quality education.