Nigerian Education Bank and Students Loan Scheme: What Next? By Tunde Adejumo

Further to the remarkable Presidential ascent on the Students Loan (Access to Higher Education) bill 2023, meant for advancing interest-free loans to Nigerian students of Government-owned Higher institutions among other things, the question on the lips of many Nigerians now is ‘’What next?”.

The new law which provides for establishment of a new development bank- “National Education Bank (NEB)” in Nigeria, is with a view to ensuring ease of access to tertiary education by indigent students in the country. Given that, since June 12 this year when the bill was signed into law by President Bola Ahamed Tinubu, the media (across the country) had been awashed with discussions, different opinions and recommendations on the new law, i think it is time to begin further actions on the matter.

While so many sections of the new law requiring further enhancement had been identified and thoroughly argued, the general consensus across the diverse viewpoints is that such innovative intervention, which reflects a lot of departure from the earlier unsuccessful attempts in the country, is long overdue. No wonder, the new law is welcomed with a lot of excitements and anticipations particularly by the financially-disadvantaged people in the country. These are Nigerians who are genuinely in need of such financial interventions.

From the diverse arguments and numerous debates that greeted the enactment of the new law, one could see that the highest number of agitators were actually those who would never think of borrowing a dime in financing their children or wards’ higher education due to their robust financial status. Various observations raised so far about the inadequacy of the new law pertain to the stipulated threshold of the financial status of parents of students qualified to apply for the interest-free Student loan. As indicated, total annual income of parents of a would-be-beneficiary of the loan is expected to be below Five hundred thousand Naira (=N=500,000). Considering the current inflationary situation, and the minimum salary regime of =N=30,000 in the country however, the stated sum truly looks ridiculous and implies that only a few among the targeted “poorest of the poor” would be eligible at the end. Going by the concerns raised on this inappropriate threshold, am certain an increase of this amount to a much more reasonable level (for instance =N=1million) would be made before commencement of the implementation of the law.

Similar to this concern is the pessimistic view of some critics on the ability of the operators of the loan scheme to be able to secure prompt repayments of the loan from the potential beneficiaries so as to guarantee its sustainability. The genuineness of this concern is derived from the unpalatable experiences on the previous Students’ loan schemes in the country. As valid as this concern is however, am of the view that the modalities of securing the loan through two notable guarantors (chosen from Civil servant with at least 12 years in service, a Lawyer with at least 10years post-call experience, a Judicial officer, or a Justice of peace), and associated penalty is enough to guide the proposed loan against default. Certainly, defaulters of students’ loan are indirectly stealing from the national Appropriation account, and no measure meant to dissuade this unwholesome practice should be adjudged too much. Surprisingly, most of the critics doubting repayment of the loans by the would-be-beneficiaries are also the same group of agitators against the seemingly water-tight securitization arrangement on the loan. These are the people vehemently criticizing the reasonableness of Guarantee arrangement on the proposed interest-free loan. Till date, third party guarantees still subsist in the country (as applicable in other climes) as part of critical conditions for commercial lending. Therefore, one wonders why such an arrangement on government’s interest-free loan would generate such level of condemnation.

As higher institutions of learning in the country would soon be warming up for a fresh academic session, and given the desire of President Tinubu to have this scheme taking off by September this year, it is highly desirous that necessary machineries are swiftly put in motion to ensure prompt take off of the new Development bank (i.e. NEB) saddled with the implementation of the loan scheme.

Going by the membership of the board of the new bank as provided under the law, all the members with the exception of the Chairman of the board, the Chief Executive of the proposed bank, and Secretary to the Bank’s board, are known without any ambiguity. Incidentally, under the law, the three named key officials of the Bank’s board are to be appointed by Mr. President. As clearly stated in the law, a Professor and retired Vice Chancellor of any Nigerian University is to be appointed as the Chairman of the board of the new bank. For the bank’s MD, it is expected that an experienced Banker, Economist, or Finance expert shall be ideal for the role. In the case of the Secretary to the board, certainly, a Lawyer is usually considered for such position.

Therefore, in order to ensure prompt take-off of the new bank, meant to pursue immediate implementation of the new Students loan law, necessary steps should be taken towards an unimpeded take-off of the new bank. To pave way for this, Mr. President should be beseeched to appoint the three named key officials or actors of the bank, saddled with the responsibility of strategic piloting of affairs of the new development bank, and immediate implementation of the students’ interest-free loan scheme.

We have had enough of the post-mortem reviews of the various sections and provisions of the new law. It is time to put necessary machineries in place for immediate implementation of the law. Definitely, there cannot be a better time for such if indeed the anticipated disbursement of the first tranche of the Students’ loan under the new arrangement is to materialize by September this year as anticipated by Mr. President. Enough of the rethorics, September is almost here!.

-Adejumo, PhD, is Director-General Osun State Debt Management Office