Helb eyes a slice of the banking market

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BY VICTOR ADAR

Imagine a world through the eyes of a financially vulnerable student. As always, joining higher learning institutions for this lot takes a leap of faith. It is a constant battle of “should I work, beg, or just hope that someday things will change and education will be free?” The first thing many think about so they don’t fall out along the way due to lack of fees is a bursary fund.

Nearly twenty years after the Higher Education Loans Board was established by an act of Parliament, it has been more about growing its funding base and sources. A majority of students feel that the ‘meagre’ Sh35, 000 to a maximum of Sh60, 000 currently disbursed is not enough. To say the least, a new ball game must be played if we are to make headway in financing education – students possesses several unique needs and only until a reasonable amount of money is offered will our education system recover from this unfortunate situation. 

The corporation’s chief executive, Charles Ringera, has an ambitious dream. As the balance sheet hits Sh40 billion this year, he is convinced that the bursary fund must be looked at a fresh, and nothing excites the seasoned banker of over 20 years more than transforming Helb into a bank. With that strong muscle for growth, he aims to build something similar to a sacco where parents can start saving, say, Sh500 monthly once they get a child to help reduce the difficulty that comes when it is time to start post secondary education. This may be the most eagerly anticipated development in HELB’s race to growing its funding base. In fact, he envisions a day when serving students will be handled with efficiency and certainty, and the grim issue of liquidity becomes a thing of the past. 

“We want to take more risks,” says Ringera. “The policy makers will be grateful for what they did. It was meant to be a social fund, and it continues to be a social fund. And we are happy to have seen growth in terms of student numbers.” 

At the moment the loans board has one source – the government. It also rides on loans that are being repaid (about 30 billion) as it taps into other partnership products. But at what cost? 

Since its inception, Sh49 billion has been disbursed, while cleared loans total to about Sh9.2 billion. There are nearly 86,000 beneficiaries who have failed to pay back money, which accounts for about Sh10 billion – some of this yet-to-be recovered money dates way back to the 1990s. 

On building a strong and bigger base as far as recovering money is concerned, the fund has spread its wings to benefit students in Rwanda, Uganda and Tanzania as part of East African Community protocol. Locally, recovery of the money has picked up pace thanks to mobile money transfer services. He explains further that the corporation has split recovery between them and government, such that now 53 per cent of funding comes from loan recovery. 

“The message is actually sinking. There are students who start repaying when still in campus. Since M-Pesa was started in 2005, we have recovered nearly 800 million. Airtel is also doing pretty well. The 2.2 billion recovered last year came through money transfer channels,” says Ringera, pointing out that the number of students requiring bursaries has increased.  

 

Looking back at the demand last year (what Helb is now processing) there is a huge growth in terms of student numbers. A total of 10,300 continuing students met their luck while fresh applicants numbered 450.  Last year’s figure is an interesting one as the programme attracted 110,000 applicants, the biggest number ever recorded. In contrast, when free primary education started in 2003, the numbers were quite low. Seemingly students took the opportunity to go back to school since it came at no cost. The increase was anticipated, an indication that it has really been a long walk. Universities have also grown from a small number of seven to 67; this number will continue to grow. 

What must be fixed are the repayment plans. There is a strong tendency of previous beneficiaries to fail to service their loans. He notes that some people want to begin repaying when they find employment but cannot commence because they have not be cleared by the board. But there is some good news for students caught up in such situations. Helb listens, he says. This is a positive move because it means that the scheme is ready to hear one’s story, see if one’s penalties can be waived and one offered a flexible way of paying back. 

In fighting the menace of “students dropping out of school due to lack of money” the corporation has gone hi-tech, offering innovative services like self kiosks where Kenyans can use mobile money transfer services, or even go online, and serve themselves better.

“Students can check out the website and know why this and that happened. One can tell if it is a document that is missing, which one can then resend/upload. On social media, we are reaching on customers and keeping them engaged. We think it is relieving our channels. Students can check the status of their applications on our website. It is quite comprehensive,” he says. 

With changing customer experience models (there is supreme banking today), Ringera believes that a first class student centre would also make a big difference. He wants students to have the best of experience when borrowing, and to give the body that same experience when paying back – no hassle, and no cat-and-mouse races.

Moreover, in keeping up with the ever-changing technology landscape, social media has kept the conversation going as they are able to reach hundreds of thousands. Their Facebook page is now at 74,378 likes and growing. Twitter (@HELBpage) further lifts its digital mission with over 14,900 followers. A clever online campaign hash-tagged #LipaHelbTuesday as well as a programme billed “HELB ambassadors” has also helped the body reach out to thousands of people both locally and in the diaspora. 

The state corporation also plans partner with high traffic countries abroad, which include the US and UK to help drive home the need for those who benefited from the loan to pay back without. “We will be signing an MOU on this aspect on making payment service available in these specific high traffic areas abroad. We are positive that the loans will be recovered,” he says. 

At a time when we have a lot of institutions offering bursaries from the national government to counties, even banks and hospitals, we need a clever strategy if big money is to be made and the needy are to go to school. One coordinator is better than two, or three, it seems, that the best bet is to put all these in one pot. 

Ringera is clearly drawing parallels to today’s unique and varied needs of students, citing cases of needy ones who have a predilection to courses that are only offered in expensive institutions, for example, but cannot afford fees. A somewhat awkward scenario but one that excites him is that there is someone (another institution, a relative, a well wisher, a church) who gets things done for such students, and the small amount from Helb, as always, goes a long way in complimenting such efforts. 

Kenyatta University is already on board, putting a smile on the faces of needy students on self-sponsored courses. In university partnerships like this one, the concerned institution (enrolling a needy student) takes care of the balance through the financial aid office. Helb’s Visa Oshwal scholarships partnership funds some 20 students for undergraduate degree programmes, offering a maximum of Sh100, 000 per year, with the application period being between July and August. 

Its major milestones in funding education also gets a nod from the ministry of Devolution and Planning in the Training Revolving Fund which facilitates public servants pursuing master’s and doctoral degrees, or short technical and professional courses. Its Funzo Kenya partnership funded by the USAID helps students pursuing health diploma and certificate courses in recognised institutions. 

But the lights don’t dim for students who may not qualify for the financing thanks to bank loans. Helb has inked a deal with the Co-operative bank, National Bank, Commercial Bank of Africa and Kenya Commercial Bank to provide personal loans to university students in the East African region. 

For years, Helb has been based at the Anniversary Towers until last year when they moved their services to Huduma Centres in a bid to get their services closer to the people. Huduma services are an integrated programme offering public service in a one-stop shop for all citizens through an e-payment platform, that is, Posta Pay. Although the service is currently being offered at GPO Nairobi, City Square Post Office along Haile Selassie Avenue, Madaraka Community Centre and Machakos, ten more centres were opened in July last year in Kakamega, Kisumu, Nyeri, Nakuru, Mombasa, Embu, Kisii, Eldoret, Kajiado and Nairobi’s Eastleigh. 

There is a planned migration to a new system on May 1 this year, which is expected to revolutionise the way bursary funds are transferred. Helb is embracing plastic money as well, a pointer to better things to come for students with Visa and Master cards.  

 

Technological solutions

“We are upgrading our core system. The old system sometimes gets an error when capturing accounts and that’s why money bounces back,” he says.

“We want things to be done on the front. We would like to see banks that collect for us exploring other forms of making payments, such as wire transfers, where one can transfer directly from his/her bank account, or through ATMs to the loan account. With the new system, one can pay via the Internet, Western Union or Moneygram. It comes with several options for those who are outside the country – one can open for us card not present (CNP)…. we will debit and close again so that it is not used elsewhere,” Ringera explains. 

In dealing with the issue of money being channelled to unintended purposes, Helb has created three wallets: Tuition, Books and Stationery, and Upkeep money. It is a versatile wallet (which is locked) so that the money goes back into the scheme’s account in case it is not taken. This application will, for example, allow a student to only swipe at the school for tuition, and not in a bar. 

At a time when development of Technical Industrial Vocational and Entrepreneurship Training (Tivet) and youth skills is the trend, Helb will play a pivotal role in financing students. There is an opportunity to go the technical area, and the bottom line is to help the country stop exporting technical skills. 

“This year has experienced a surge in the number of applicants. The government agenda of deepening Tivet by having it in all 47 counties by 2017 shows that there is this opportunity to grow the technical arena – 60 are being constructed across the country. We think that the extractive sector (for example) will be thriving in the near future. And we want to see whether we can stop exporting jobs. Producing technical people is the first step in benefitting Kenyans,” he says. 

 

Evidently, Helb is a social welfare fund like no other – disbursing loans, bursaries and scholarships to Kenyan students joining recognised institutions of higher learning within the East African Community, directly from high school either through the Joint Admission Board or as self sponsored students. Most importantly, however, the interest rate charged, at just 4 per cent, is very low, despite the credit risk of those who fail to pay – but this is already loaded as the fund is insured. These loans are awarded based on the level of need, gauged using a scientific formula known as the Means Testing Instrument (MTI). First time applicants apply for loans from May to July once they get their admission letters while second and subsequent applications are open from December to July.

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