Commercial banks and money lenders are swarming schools offering discounted school fees loans to parents wishing to clear tuition and procure educational materials ahead of schools reopening next week.
The competition for new customers by the lenders coincides with the fact that many parents would like to take their children back to school, but are constrained financially. The financial sector is also targeting school proprietors and suppliers, who now need instant cash to get their businesses up.
Many lending institutions are offering discounted interest rates, easy security for loans, and simplified processing for getting the money, among other incentives.
The ministry of Education and Sports says some regulated financial institutions approached them with proposals of financial solutions for schools, parents, and suppliers and the financing models have been agreed on.
Dr Kedrace Turyagyenda, the director of education standards at the ministry says there is a cycle of financial constraint with the cash-strapped schools only having hope in parents, yet the parents are also constrained.
She says the other option would be relying on the government, yet the government resources are also impacted by the pandemic. She, therefore, says the move by the banking industry comes as a relief to all players.
The government and the education sector also secured relief positions where schools would be given a waiver of loan interest accumulated in 2021.
Stanbic Bank Uganda chief executive officer Anne Juuko says they decided to give interest rate cuts to education-related loans to 16 per cent but says that unsecured loans will attract a higher interest of 19 per cent. For the period to January 31, 2022, the bank will charge no loan arrangement fees, while a loan can be secured within two minutes for parents who already have accounts with the bank.
“The COVID-19 pandemic has left us with an unprecedented challenge; our schools have been closed and teachers have been out of work for two years, many parents and guardians also had their livelihoods interrupted as a result of loss of jobs or business,” Juuko says.
Teachers have also been given special consideration on the salary loans they acquire, due to the fact that many, especially in private schools have not been paid salary for two years. Other offers will include access to communication gadgets like laptops for students on credit, as more learning institutions are requiring students to have either laptops or smart mobile phones.
She says, unfortunately, that the loans that the schools already […]