Union tells graduates to pay back loans so others can benefit

The Tanzania Higher Learning Institutions Students Organisation (TAHLISO) has called on graduates to pay back student loans. This follows revelations by the local press that sustainability of the loan scheme has been a matter of concern for some time now due to non-repayment of loans by some beneficiaries.

TAHLISO’s president, Zaynab Kitima, said the organisation’s stance towards defaulters is “very firm” and that loans “must be paid back so others can benefit”.

Poor loan recovery methods

The Higher Education Students’ Loans Board (HESLB) recently came under fire from the controller auditor general’s office which accused the organisation of poor loan recovery methods.

The controller auditor general’s office noted that, by 30 June 2023, the HESLB had collected only 62% of all matured loans since 2006, The Citizen reported earlier. Some of the HESLB’s loan recovery methods in the past included publishing names of defaulters on its website and threatening them with legal action.

The HESLB also had the Fichua campaign, which entailed asking ‘patriotic citizens’ to report defaulters.

The organisation has since embarked on a new data-sharing initiative which, it says, will help it track defaulters. In an interview with University World News, Kitima praised the HESLB for its recent efforts to ensure that defaulters pay back loans. “Despite major challenges that have been facing the HESLB, the board has been doing its job effectively.”

The data-sharing initiative

The HESLB has partnered with the National Identification Authority, the Registration, Insolvency and Trusteeship Agency, and Credit Info Tanzania Ltd. The HESLB signed agreements with the three organisations on 11 September 2024. Collaboration between the HESLB and these organisations is aimed at tapping into their data sources to track defaulters easily.

Many of the defaulters are in the informal sector, where, according to Kitima, they are difficult to track. But the HESLB’s new data-sharing system, according to local press, will make it easier to track defaulters in the private and informal sectors. The data-sharing system will enable the HESLB to pinpoint the whereabouts of defaulters and learn about their current financial status.

Unemployment is the primary reason loan beneficiaries default, Kitima said. “The major reasons contributing to defaulting by most students may be difficulties encountered in the job market where most of the previous loan beneficiaries are unemployed.” She added that limited information and education on repayment of loans were also key factors.

Defaulters threaten sustainability of loan scheme

The HESLB is over-reliant on government funding and needs to come down hard on defaulters to ensure the sustainability of the loan scheme, according to Kitima. She said the loan scheme was expanding.

“Recently, there have been efforts by the government of the United Republic of Tanzania under Her Excellency, President Samia Suluhu Hassan, to improve loan provision to students, especially by expanding loan provision to diploma-level students, increasing the provision of meals and accommodations to TZS10,000 (just under US$4) per day from TZS8,000, increasing the number of loan beneficiaries as well as increasing the budget on loans provided to higher education students.”

She said all these endeavours require a lot of money. “Currently, the board [HESLB] is over-dependent on the annual budget by the government which makes it incompetent to meet the growing demand for loans to students.”

Kitima said the steps the HESLB is taking to recoup loans from defaulters are important in the fight to keep the loan scheme going. “Without appropriate follow-ups and efforts like the ones initiated by the HESLB, the future of loan provision to students would be put in jeopardy, given the growing number of admissions to higher learning institutions in Tanzania.”