Former students of the University of Malawi (Unima) and Mzuzu University (Mzuni) owe government about K1.7 billion ($2.5 million) in loans for their tuition borrowed between 1985 and 2012, it has been established.
Despite employing diverse strategies, government has been struggling to recover the money from the beneficiaries, some of whom hold senior positions in the public and private sectors.
Higher Education Students’ Loans and Grants Board (HESLGB), established under a 2015 Act of Parliament, has since set 12 months starting from April 2016 to recover the loans during the stated period, which are deemed to be matured.
The outstanding loans were granted to the beneficiaries under students’ loan schemes which government introduced during the 1985/86 university education calendar.
The board’s director of loans, Emma Tambala, said in an interview yesterday government had embarked on a recovery crusade to collect the public funds to finance the upcoming loans for needy students in higher education institutions.
She said: “The total uncollected debt of matured loans due for recovery or collection is K1.7 billion. However, the response from the public enquiring on the details of repayment is quite impressive.”
Tambala said they would be establishing strategic partnerships with government, particularly the Department of Human Resource Management and Development, private sector employers and professional bodies to assist in tracing the loan beneficiaries and recovery of the loans at source.
The professional bodies include the Institute of Chartered Accountants in Malawi (Icam), Institute of Internal Auditors (IIA), Malawi Institution of Engineers (MIE), Institute of People Management Malawi (IPMM) and the Bankers Association of Malawi (BAM).
Tambala said the board was mandated by an Act which obligates former beneficiaries to repay the loans they obtained through the students’ loan scheme. She said so far, the response from the beneficiaries willing to repay was impressive.
She said: “It is by law that these loans must be paid, thus non-repayment of the same will be considered as an offence. However, for those who will have not been traced by the stipulated period recovery of their loans shall be conducted by a debt collector which the board will engage for the recovery of their loans.”
Tambala also dismissed assertions that government was failing to trace the beneficiaries of the loans because it has no information on them.
She said: “The secretariat has the data of the beneficiaries and their loan amounts. However, since most of them have changed addresses now that they are employed, we shall indeed engage strategic stakeholders to trace them for their current addresses and recovery as the Act is also mandating us to obtain information from them and they do indeed have that obligation under Section 31.”
In November last year, student leaders from the country’s four functional public universities—Unima, Mzuni, Lilongwe University of Agriculture and Natural Resources (Luanar) and Malawi University of Science and Technology (Must)— petitioned Parliament demanding an increase in the allocation of grants and loans from the current provision to K3 billion to accommodate more beneficiaries.
Currently, the amount would only cater for 10 percent of students in public universities, according to the students.
In an earlier interview with The Nation in January this year, the board’s executive director Chris Chisoni said 10 198 students had applied for the loans this year, but the board would pay about K1.2 billion to needy students in the 2015/16 financial year.
In a statement issued last week, the board said failure by an employer to disclose the existence of the former students’ loans beneficiaries under their employment will attract a penalty fee of K1 million for each employer which is in line with the HESLGB Act Section 30 Sub-section 1.
“The board will do all it can to recover all the overdue students’ loans which are public funds expected to develop into a revolving fund that will benefit all the upcoming generations of our nation,” reads part of the statement.
Some former students, who did not want to be named, yesterday blamed government for lacking proper mechanisms on repayment modes when it started asking the graduates to begin clearing their loans some years ago as there was practically nothing on the ground.
In 2014, the Ministry of Education, Science and Technology handed over a list of about 13 000 beneficiaries believed to have defaulted repayment of the loans to Credit Data Reference Bureau to procure information of the beneficiaries with debts but the process did not materialise.