June 8, 2021

Bank Charged With Handling Students Loans Doesn’t Know Who Received Loans

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Development Bank of Rwanda (BRD) headquarters in Kigali

The Rwanda Development Bank (BRD) which is charged with disbursing university student loans doesn’t have full list of who got the money.

As par government planning, all people who received a fully paid government scholarship to university, have to start paying back once they start working. 

Several years ago, BRD was given the task to handle the whole process. At the same time, the bank also ensures students at university receive their monthly subsistence allowance. 

The BRD terms it was given by government say a monthly deduction of 11% of gross salary is made until the beneficiary completes payment of the principal and interest. 

On paper, the Bank keeps a figure 88,451, said to be the number of people who have completed university as of April 2021. As stipulated by law, the bank should have a full database about each of these people. 

That database is supposed to have name of the individual, personal details like ID, period of study, amount of principal loan and interest accrued to be paid by each individual. 

But according to the national Auditor General’s report released last month, BRD only availed a database with 16,705 loan beneficiaries. However, even with this database, BRD had incomplete information about some individuals. 

Among the above people, the BRD database doesn’t have national ID numbers for 3,563 loan beneficiaries. 

For 863 people, the BRD database lacks information on when these loan beneficiaries started and completed their university education. 

With regard to 876 loan beneficiaries, the BRD database doesn’t have details of the total recoverable loan – basically BRD doesn’t know how much the individuals owes the government. 

The Auditor General found that BRD had a platform called the Education Finance Management Information System (EFMIS) in which is meant to have data about all loan beneficiaries who should be paying back their loan. The bank has an expensive system that’s not being effectively used. 

Another issue with the loan scheme is that between January 2016 and December 2020, BRD had recovered Rwf 11,713,281,721 from former students. 

The problem with this number, though, according to the Auditor General, BRD does not update information on each individual by stating how much was paid, who paid it and the outstanding balance. 

“Therefore, I cannot assure that the amount reported as recovered is accurate if it is linked to every individual who paid it,” writes the AG Obadia Biraro. 

As a result of having incomplete data on who is supposed to repay and how much, some of the people in the BRD system have ended up being victims as they are overcharged. 

The Auditor General discovered Rwf 221,869,212 in the accounts of BRD which had been overcharged from loan beneficiaries. Of this amount, only Rwf 50.8m had been reclaimed by those who noticed they had been overcharged. 

This situation suggests that some of you readers who are former university students have been or are still being overcharged for your student loans without you noticing. 

The Auditor General also says in the report that he uncovered many other serious issues with the student loan scheme. 

The AG’s latest report comes at a time when the Education Ministry and BRD have repeatedly appeared in the media issuing threats to those who they say are supposed to be repaying their loans, but aren’t. 

There is also a discrepancy on the figure for former students which BRD and the Education Ministry usually divulge in the media. They repeatedly say there are more than 94,000 former loan beneficiaries, yet the same BRD has another total figure of 88,451. 

Even then, as detailed above in this story, the bank only has physical data for just about 18.8% of the former students. It cannot explain why there is no data on the rest of the 80% plus former loan beneficiaries. 

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