KENYA: Students repay loans using cell phones

Students and graduates can now repay loans from the Higher Education Loans Board using their cell phones. The phone option is among other initiatives aimed at making repayment easier and enhancing student loan recovery.

HELB recently announced a partnership with mobile telephone service provider Zain Kenya, which will enable student debtors to make payments from anywhere in the world through Zain's international money transfer system.

The deal signed between the two organisations enables HELB customers to make payments from a location of their convenience through Zain Kenya's Zap service.

Addressing the media in Nairobi at the launch of the new loan repayment facility, HELB Chief Executive Officer Benjamin Cheboi said the innovation was aimed at enhancing the organisation's loan recovery portfolio and would "enable us to finance more Kenyans pursuing higher education".

He said HELB had recently developed a wide spectrum of loan recovery and repayment strategies.

One was strengthened cooperation with employers, resulting in more effective loan recovery through a check-off system. Others included introducing a direct debit facility for self-employed debtors, direct deposits into HELB bank accounts and use of credit or debit cards to service loans.

Such strategies were having a positive impact, Cheboi said, including among people in the Kenyan diaspora.

As a result HELB was "seeking to enhance its performing loan portfolio from the current 55% to over 70%," he added.

Cheboi disclosed that 33,000 students had fully repaid loans amounting to Kenyan shillings 2.4 billion (US$32 million) and 113,840 others were at various levels of servicing their loans.

In the last financial year, the board recovered KES1.6 billion - an increase of 20% on the previous year, with monthly loan recoveries now standing at an average of KES150 million.

"By the end of this financial year we expect the board will have disbursed KES3.1 billion. It is therefore imperative that the recovery of loaned funds by the Higher Educations Loans Board be taken to a higher and more sophisticated level by providing various avenues of repayment," he added.

Zain Corporate Communications Director Michael Okwiri, who signed the agreement on behalf of CEO Rene Meza, described the partnership as a "facilitation process to help pay loans without necessarily lining up at banks".

Okwiri said functionality within the Zap service would enable HELB beneficiaries make up to 25 transactions a day at the cost of KES20 per transaction, and a maximum of KES35,000 per transaction. HELB will incur no cost for repayment transactions.

Earlier this year, HELB entered into a data-sharing partnership with Metropol East Africa Limited in a bid to tackle the problem of student loan defaulters.

Metropol collates information on the credit histories of beneficiaries of HELB loans and passes the information on to banks. Students who fail to repay loans on completing their degrees could be barred from accessing loans from banks and other credit facilities.