Absa Bank Kenya #ticker:ABSA is offering private schools overdraft loans to pay teachers’ salaries and utilities in the wake of the coronavirus outbreak that has led to the closure of institutions.
As the economic fallout from the pandemic begins to bite, several smaller private schools, which are struggling to pay teachers salary risk being driven out of business on the loss of their main income — school fees.
This is opening an opportunity for banks to grow their loan books while easing the pain of businesses that have shut in efforts to curb the spread of the viral disease.
“The bank is offering a short-term ﬁnancing option to help schools cater for their recurrent expenses such as salaries. Under this arrangement, schools can access up to Sh10 million in unsecured overdrafts and short-term loans,” Absa Bank Kenya managing director Jeremy Awori said in a statement.
President Uhuru Kenyatta in March directed all schools and higher education learning institutions to shut down to reduce the danger of the spread of the coronavirus.
Private schools had warned of a possible financial crisis and their teachers and staff being laid off if the coronavirus pandemic continued beyond April, which means delayed start to the second term.
Now, the State remains uncertain when schools will reopen, further hurting the finances and outlook of private schools.
Unlike government schools, private schools do not receive capitation or State funding, meaning they depend entirely on school fees to operate.
Some private schools are turning to online classes to generate income from school fees revenue as they fight for survival.
Students are taught real-time via apps like Zoom and Skype, allowing them to interact and seek clarification from teachers, a move that looks set to exacerbate the learning gap between the haves and have-nots.
Absa is now offering loans for the purchase of IT hardware and software needed for online classes.
“Absa Bank will support schools to procure e-learning infrastructure including the hardware and software required to enable e-learning during this period,” Mr Awori said.