Ugandans hit by loans scheme collapse

November 1, 2002

About 1,000 students in Uganda will be unable to study at university this year because the ministry of education has failed to launch an effective loans scheme, according to a government consultant.

A scheme was set up last year with 400 million shillings (£143,000) set aside as an initial investment. The hope was that the repayments and interest would allow more recipients to be included as it grew.

But a failure to set up a system to identify and monitor recipients and to collect debts has kept the money away from students. The government funds 4,000 of the estimated 50,000 students in Ugandan universities. The rest have to rely on money from their families.

The loan is meant for students whose families cannot afford university education. But the ministry has yet to set criteria for identifying the needy. They are also trying to fix an interest rate that would be lower than the average 24 per cent charged by commercial banks. And they want to find the best way to call in the debt.

"The money is lying there and there are students who need it but the way in which it should be given out has not been found yet," said Odrek Rwabwogo, a consultant who was hired to research how to manage the scheme.

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