- Ethuro acknowledged that recovering loans from informal sector workers has remained one of the board’s biggest challenges
- More than 380,000 beneficiaries have defaulted on their loans, with over 124,000 classified as chronic defaulters.
- More than 83,000 have not made any repayments for over a decade and have since been listed with CRBs
The Higher Education Loans Board (HELB) is set to partner with the Kenya Revenue Authority (KRA) in a renewed effort to recover outstanding student loans from borrowers in the informal sector.
Speaking during an interview with a local media outlet on Wednesday, July 8, HELB Chairperson Ekwee Ethuro acknowledged that recovering loans from informal sector workers has remained one of the board’s biggest challenges.
Unlike salaried employees whose repayments are deducted directly from their earnings, many borrowers in the informal sector have been difficult to trace, resulting in low recovery rates.
“That’s why we are exploring the partnerships, and the KRA partnership is a very viable one,” stated Ethuro, adding that KRA has better systems and a greater outreach.
For years, the Higher Education Loans Board (HELB) has faced an uphill task tracing beneficiaries who never secured formal employment after completing their studies.
Many have ventured into the jua kali sector, the gig economy or other informal businesses, making them difficult to reach through the conventional payroll-based loan recovery system.
Ethuro revealed that more than 380,000 beneficiaries have defaulted on their loans, with over 124,000 classified as chronic defaulters. Of these, more than 83,000 have not made any repayments for over a decade and have since been listed with Credit Reference Bureaus (CRBs), restricting their access to credit. He attributed the growing defaults largely to high youth unemployment.
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The partnership with the Kenya Revenue Authority (KRA) is expected to address the challenge by leveraging the authority’s data-driven enforcement systems, enabling it to identify and pursue borrowers outside the formal employment sector rather than relying solely on traditional recovery methods.
Ethuro said KRA’s extensive access to financial data enables it to identify economic activity that HELB cannot independently detect. For instance, he noted that major purchases and other significant transactions are likely to leave a financial trail that KRA’s systems can capture.
He, however, emphasised that the recovery initiative is not intended to intimidate borrowers or threaten them with imprisonment. Instead, HELB wants the exercise to be viewed as a fair and collaborative effort between the institution and the beneficiaries it once supported.
Ethuro said loan defaulters owe a combined outstanding balance of KSh20 billion, noting that the board has made significant progress in recovering the funds through measures such as the adoption of fintech solutions and closer collaboration with employers.
By Frank Mugwe
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