Tertiary education financier Higher Education Loans Board (Helb) plans to run a lottery and offer education saving plans by the end of this year as it moves to cut its dependency on taxpayer funds.
Profits from the lottery, to be run in the form of raffles, will be used to finance the agency’s loan book, which currently faces a massive funding gap.
Helb chief executive Charles Ringera said plans are also underway to offer child education plans as a new strategy to mobilise long-term funds for the education sector.
Under the proposed plan, parents can save as low as Sh1,000 monthly towards meeting their children’s future cost of college education.
“We want to introduce education savings products and education lotteries all geared towards increasing the revolving fund,” said Mr Ringera.
The new funding proposals are aimed at overhauling the current Helb Act that came into force in 1995 and is now seen as outdated and rigid.
“We want to reform our Act to help address the myriad challenges. We want a more progressive Act that will allow us to mobilise deposits from the public,” said Mr Ringera in an interview with the Business Daily.
The United States is an example of a country that uses education lotteries to offer scholarships to learners.
Mr Ringera said the proposed law will empower the board to run a variety of lotteries — ranging from scratch tickets, SMS-based raffles and online sweepstakes — and use the proceeds to fund higher education.
Critics, however, questioned Helb’s ability to offer investors returns that match those offered by insurance companies if it goes into the savings business.
Jubilee Insurance, Kenya’s biggest underwriter, pays a bonus of between four and six per cent per annum on its child education plans – which also offer additional benefits such as life cover, tax breaks and can be used as collateral when applying for a loan facility.
The Helb chief executive said the Bill is currently undergoing review at the Education ministry and expects the proposed law to be published by June.
Helb has hitherto relied on the Treasury and recoveries from past beneficiaries to disburse new loans but the rising number of university students has made it difficult to meet growing demand.
For instance, half of the 67,124 government-sponsored students who joined public universities last year failed to get loans due to a funding crisis, and those who received loans had to wait for four months till January this year to receive the cash.
Helb in 2008 extended its loan programme to needy students in self-sponsored programmes (commonly known as ‘parallel’) in public universities as well as those attending private chartered universities, adding pressure to its purse.
Similarly, the number of public universities has grown threefold to 23 from seven in 2007.
Kenya’s betting industry — especially sports gambling — has experienced phenomenal growth, aided by the ease of placing bets online or through SMS and paying via mobile money platforms such as M-Pesa.
SportPesa and Betway — the official sponsor of English premier league side West Ham United — are some of the big names in Kenya’s betting market.
Kenya’s mobile-based gambling fad has even caught the eye of Arsenal Football Club, which last month signed a deal with SportPesa to grow its fan base in Kenya and reach out to local supporters.
The top-flight English Premier League team said it will offer Kenyan fans exclusive bets under the partnership with SportPesa.
Helb’s plans to cash in on Kenyans’ gambling craze and offer education plans is the agency’s latest in a series of initiatives planned to boost its loan book.
There are also plans to partner with the National Transport and Safety Authority to tie renewal of driving licences to servicing of Helb loans in order to catch defaulters.
Helb has already smoked out 8,000 past loanees who hold driving licences but have not been paying their loans, Mr Ringera told the Business Daily.
The new plans are also in line with proposals made by the task force appointed by President Uhuru Kenyatta to streamline parastatals.