TSC hits teachers with 3pc bank loan collection charges
Kenya National Union of Teachers secretary-general Wilson Sossion. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
TSC wants to charge a percentage of the monthly deductions as opposed to a flat charge of Sh5, earning it between Sh45 million and Sh60 million monthly.
The Teachers Service Commission (TSC) is demanding a three per cent fee on monthly deductions it makes on tutors’ pay on behalf of banks and saccos in changes that have drawn protests from the teachers’ union and lenders.
TSC wants to charge a percentage of the monthly deductions as opposed to a flat charge of Sh5, earning it between Sh45 million and Sh60 million monthly. The commission reckons that the flat rate does not cover the cost of collection, but teachers say they will oppose the new rate if not shouldered by the third parties including banks, saccos and hire purchase firms.
Kenya Bankers Association (KBA), the bankers lobby, said they would transfer the extra costs to the teachers, setting the stage for a review of lending rates.
“The banks will have no other option than to recover this additional charge from teachers an action that will negatively impact on them,” KBA chief executive Habil Olaka said in a letter to TSC. “Levying a collection fee based on a percentage of the loan amount has a direct impact on the contracts that the teachers have signed with the financial institutions and will interfere with the agreements currently in place.”
The commission is estimated to remit between Sh1.5 and Sh2 billion monthly to the third parties.
“We will not allow the fees to be transferred to teachers because there is no legal basis for the charges — it is a way of taxing teachers again,” said Kenya National Union of Teachers (Knut) secretary-general Wilson Sossion. “TSC will rake in billions from this – its business for them. If the third parties agree to bear the costs then well and good but it will not be on teachers.”
He said the TSC should have sought talks with teachers and the creditors before reviewing the collection fee. The spat over the fee comes amid crunch talks between the combative teachers union and TSC over a new pay deal.
The union has given the government up to the end of the month to table a pay counter-proposal following the union’s demands for a new collective bargaining agreement that includes the revision of basic pay, housing and responsibility allowances.
Teachers have threatened a strike that has the potential of disrupting the school calendar and national examinations set to start next month.
