Helb unlikely to recover Sh8bn, cash locked in bank

More than Sh8.8 billion advanced to students by the Higher Education Loans Board (Helb) a decade ago is unlikely to be recovered, with Sh400 million stuck in a bank under receivership, Auditor-General Edward Ouko warns.

Mr Ouko says Helb is unlikely to recover a third or Sh8.8 billion of the mature loan of Sh26.4 billion.

The inability to recover the billions lent to the former students has weakened Helb’s ability to support university freshmen and continuing students, prompting the agency to cut students’ loan allocation.

This comes as the Auditor-General revealed that Helb had deposits of Sh305 million and short term investments of Sh100 million in a lender placed in receivership in April 2016.

“Short-term investments totalling Sh100million were held in the same financial institution. As a result the board could not access its own funds totalling Sh405 million as at the date of this report,” said Mr Ouko.

Unexplained loss

Central Bank of Kenya (CBK) placed Chase Bank under receivership in April 2016 after an unexplained loss of billions of shillings.

Imperial Bank has remained under the CBK management since October 2015 following reported malpractices like fraudulent withdrawals and other illegal transactions amounting to more than Sh34 billion.

Those who benefit from Helb student loans are expected to start repaying one year after completing studies.

The agency relies on formal employers to provide details of beneficiaries in their service, making it hard to trace those who do not find jobs or join the informal sector.

Helb chief executive officer Charles Ringera says it is doing data analysis against the taxman, National Social Security Fund (NSSF), and National Hospital Insurance Fund (NHIF) in mapping out beneficiaries who are not repaying.

“We are also getting into Jua Kali sector such as those doing office supplies,” he added.

More agents

It has also hired more agents to help recover debts in America and South Africa.

“Last year three agents managed to collect Sh244 million from 8,000 accounts.
We now have 2,000 agents and hope to reach 20,000 accounts which will give us more than Sh700 million,” said Mr Ringera.

A sharp rise in the enrolment of students in public universities has continued to stretch the loans agency’s capacity to assist needy applicants.

Most university students come from poor backgrounds and require financial assistance to pay tuition fees and for their upkeep. The loans are given at an interest rate of four per cent per annum.

About 88,600 are set to join universities this year.

In the financial year starting July, Mr Ringera said Helb requires about Sh12.3 billion to meet the students’ needs against an allocation of Sh10 billion.

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