UGANDA: Education finance a formidable challenge

Lack of finance is the leading cause of drop-outs from institutions of higher learning in Uganda, writes Steven Tendo for The Monitor. Every year, hundreds of students leave due to failure to raise tuition fees, which has prompted government to embark on an education finance scheme to tackle the problem, starting next year.

Last September, Education Minister Namirembe Bitamazire announced that government had earmarked Shs250 million (US$3.3 million) as seed money to kick-start a loan scheme for university students. "Demand [for the programme] has been on board for some years," she said. "Now we will be in a position to help students to access funds."

Students are expected to pay back loan money on completion of their studies. And therein lies a problem. Banks, which are the alternative source of finance, are not comfortable with the idea of lending to students who have not guarantee that they will pay back. The Financial Institutions Act of 2004 states that where the collection of debt in full is highly questionable or improbable, such a facility should not be provided. Bank of Uganda actually penalises banks that offer such money.
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