Magufuli used loan system to open tertiary access

Among the late Tanzanian president Dr John Pombe Magufuli’s political successes was the overhaul of the higher education sector in Tanzania, which meant more funds for student loans and greater access to tertiary education.

Magufuli, who died in March, is credited with overturning Tanzania’s higher education sector by improving student welfare, amending the law that led to increased recovery of student loan repayments, and enabling the revolving fund to grow bigger under the Higher Education Students’ Loans Board (HESLB) to benefit more students.

The HESLB budget could jump to TZS500 billion (US$216 million) for the fiscal year 2021-22 – up from TZS464 billion in 2020-21, allowing more qualifying students to access higher education, Omary Kipanga, the deputy minister of education, science and technology, told parliament early in April.

The increased revolving fund for HESLB means more beneficiaries. The number of students who benefit increased to 145,000 in 2020-21 from only 93,100 in 2014-15.

As testimonies and outpouring praise come from students and staff in the sector, the student organisation at the University of Dodoma said that students attending higher institutions of learning will remember the late Magufuli for his efforts in improving tertiary education, and particularly for increasing budgets for higher education loans, caring about students’ welfare, and amending laws for loan recovery so that the HESLB remained stable.

Peter Niboye, the chairperson of the Tanzania Higher Learning Institutions Students Organisation (TAHLISO), praised Magufuli for taking students’ interests to heart and ensuring timely disbursement of the funds which resulted in a calm atmosphere at universities in the country over the past five years. Magufuli was the patron of TAHLISO.

Loan repayments

It was during Magufuli’s presidency that student loan laws were amended and, for the first time since it was created in 1994, the HESLB recovered unprecedented amounts from defaulters.

Approximately TZS507 billion has been recovered of the TZS784 billion disbursed in the 15 years since the loans scheme was established by the government.

The HESLB’s loan manager for the Dodoma zone, Octavia Seleman, told the media the late president contributed significantly to the process to ensure borrowers repaid the money so that new students could also access the loans.

The no-nonsense Magufuli ensured the revised HESLB law increased monthly deductions. The Tanzanian parliament amended the HESLB Act 2004 in November 2018, revising the monthly deductions from gross salary to 15% from 8% for higher education loan beneficiaries. The amended law took effect in January 2019.

He also encouraged the use of technology to trace all higher education loan beneficiaries, at some point implementing a ‘name and shame’ policy that published names and photographs of loan defaulters in the media and dragged them to court.

The defaulters included members of parliament and other VIPs. That year alone, about 71,000 people indebted to HESLB began repaying their loans.

Six directors sacked

Use of technology also ensured that the loan management system was linked to government systems that facilitate tracing defaulters and prompt monthly electronic deductions off their gross salaries.

HESLB then created partnerships with key stakeholders, including the pension fund, Tanzania Revenue Authority, and the National Identification Authority to ease loan recovery.

The amended law also convicted employers who failed to comply with reporting their higher education loan beneficiary employees and to allow the timely deduction and remittance of monthly loans. Failure was considered a criminal offence. People who are self-employed must commit 10% of their monthly taxable income to repayment.

Magufuli sacked six directors over allegations of negligence and occasioning the loss of funds and named a new team led by HESLB executive director Abdul-Razaq Badru. But it was ultimately political will that facilitated increased loan recovery collections and boosted the revolving fund.

When Badru’s team took over in 2016, the monthly collection was only an average of TZS2.1 billion. Magufuli urged them to implement reforms and now the average monthly collection is between TZS16 billion and TZS17 billion.

According to Badru, since the new administration assumed office in 2015, the HESLB’s repayment collection grew from TZS21.67 billion in 2014-15 to TZS183 billion in 2019-20.

Annual collection of due loans increased from TZS28.2 billion in 2016-17 to TZS192.1 billion in 2019-20. The target for 2020-21 is TZS200 billion.

Badru said Magufuli was a man of action, keen on performance, improving quality of services and results.

The board also improved the justice system. Complaints were dealt with in a manner that ensured compliance and fairness.

In 2017, HESLB also introduced new products, including the biometric-based Digital Disbursement Solution (DiDiS). Thanks to this system, about 85% of students now receive funds in less than five minutes.

Loan application and processing is 95% automated. HESLB also recently introduced an online portal for employers and beneficiaries to get loan statements and payment procedures, Badru told the media.

Magufuli (61), described as a COVID sceptic, died on 17 March. He was not in favour of vaccinations against the virus, instead calling on Tanzanians to pray.