Funding Higher Education in Zambia

By Chola Mukanga

Without doubt the biggest challenge facing higher education is funding. In many countries it is accepted that higher education delivers benefits beyond the individual and therefore it is susceptible to under-provision if we relied on market forces alone. Until not too long ago for many African nations this meant government shouldering the full cost. Increasingly, we now have other countries following Kenya, Zimbabwe and other countries towards greater role for private funding. The latest comments from Robert Serpell (former UNZA Vice Chancellor) is further evidence that more needs to be done in Zambia to move this issue forward. He is calling on Government to abolish the current bursary system and replace it with a new student loan system :

"The wise thing for the Zambian Government to do is to set aside money upfront for underprivileged students, but also institute measures for recoveries of these funds, when the students graduate and enter the employment sector. Bursaries are not as effective as setting up loans that could be used as a revolving fund. This system has worked in other countries such as Kenya and even the United States..."

Serpell's proposal is for a system run by an independent statutory body, working with the commercial banks. Sadly all of this is not new. We have been here before. In 2004 the Mwanawasa administration proposed to introduce a "Student Loan Scheme" to operate as a revolving fund for students at universities. The new loan scheme was planned to be administered through Finance Bank Zambia Limited. In 2005/6, the Bursaries Committee undertook study tours abroad to learn the implementation of the new student loans scheme in Zambia. Following the study tours, the creation of the Zambia Higher Education Loans Board (ZAHELB) was proposed. The Board was to build on progress made so far in financing higher education in Zambia and perform the following functions:

a) establish mechanisms to recover mature loans;

b) establish a “tracer system” by using an identification system such as the Green National Registration Card Numbers as a tool to trace loaners or beneficiaries of the new loan scheme; and

c) establish a suitable system and instrument (Loans Application Form), capable of assessing applicants’ level of need by analyzing their financial status.

This proposal was submitted to the Mwanawasa led Cabinet for the creation of the stated Board and implementation of the loan system. Nothing was done, which forced the Parliamentary Assurance Committee to observe with dismay that "the Students’ Loan Scheme under the Bursaries committee will take long to be implemented as modalities of how to administer it were still on the drawing board". It urged the Banda administration "to urgently approve the Students’ Loan Scheme to benefit the students, especially those from the vulnerable groups".  No action was taken and the rest is history.

The failure to act means that important issues in relation to introducing the scheme have still not been resolved. The old proposal was focused on using an existing banking institution (perhaps through an auction?) rather than simply creating a separate student loan company as proposed by Serpell (e.g. the UK model). That needs to be resolved. However, what was good about the prior work is that it had identified  the key issues - tracing people; means testing; and repayment. In the past the stumbling block was always "tracing people" - the working model which had been developed (but not implemented) appears to have solved that.

One area which is worth looking into if the model is to implemented is for GRZ permanently ensuring that "immigration officers" are able to arrest people returning to the country who have not paid back their debts (this appears to be the only credible threat - of course not without costs). If you borrow student finance and go abroad without paying you must be held accountable (e.g. by facing arrest on your return).

There are two challenges which people usually mention when the question of student loan financing is raised. The first challenge is that people would not be able to pay back debts because they would be unemployed. This is a legitimate concern, but I think if you have taken out a loan you would become a more responsible student. You will do all you can to take a course that will be useful in the long run. If people are able to fund their education, I suspect they would even be more responsible citizens. As I have always said, public provision whilst useful does make for lazy citizens. More importantly the loan system may alter the incentives away from less productive courses.

The second challenge is the huge inequalities across families. The argument goes like this. Many students are potential bread winners for their families. When they get educated they will have broader responsibilities than simply paying back the loan, they have family members to support. This point is actually important from a cultural perspective. It suggests the importance of carefully devising a Zambian approach to the problem not mere import a system from Kenya or England. But I do not think it rules out the loan finance model in general. It is a case of simply ensuring that we take into account family background when assessing when people need to start paying back. 

The upshot of all this is that it is possible to put in place a viable system in the same way the Kenyans have done. The challenges can be sorted out. It is a question of political will. If the politicians do not want to put such a system in place they should follow Sweden and other countries that give free university education. What is clear is that the current bursary system is not working. Either we move to an individual funded system or a full state system.

Chola Mukanga is an economist and founder of the Zambian Economist which provides independent economic perspectives on Zambia's progress towards meaningful development for her people

Copyright: Zambian Economist, 2013
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