Current line of Credit interest RatesActual credit interest rates of the credit line
Accordingly, the counterparties must be statutorily authorised to borrow in currencies other than their own and are subjected to an internal assessment of risks by AFD as the planned credit line scheme is not backed by State guarantee. According to the policy document, the scheme will comprise tailor-made credit facilities and other instruments such as risk-sharing with banking institutions, as well as providing TA and institution building, and will contribute to "creating an incentive for investments and removing technological and fiscal obstacles that hamper the expansion of investments in higher education".
It is the latest in a series of Kyrgyz initiatives aimed at increasing the resources available to higher learning in order to satisfy the growing demands for higher learning, which has led to financial strains on publicly funded higher learning and a lack of sufficient institutions and teaching staff. The failure to raise resources in line with increasing enrollments has eroded the colleges' growth agendas, notably the building of new campsites, and there has been strong pressures for alternate financings.
Registrations of students have risen by around 40% per year over the last five years, while grants have risen by 4% to 5% over the years. "Neither state nor privately owned institutions already lend funds from business banking institutions, but the high interest rates and tight maturities of these credits do not promote investment in more expensive and thus - at least in the long run - less lucrative programs that still meet the needs of the labour market," the policy document says.
"It also requires higher educational institutions to raise student dues, which will become prohibitive for the student and his family. "Appropriate lending should take into consideration the different rates of return of the schemes and the Kenyans' median incomes. Governments and developing countries are just not in a position to allocate enough resources to meet all the necessary investments in higher learning, the policy document says, and points to the need for more partnership.
Governments plan to lend long-term resources provided by the AFD to commercial banking institutions at an acceptable interest rates and with long maturity, which will include a grace period. 25.4.2006 C 294/32 The AFD has also agreed to a long-term loan agreement with the Federal Republic of Germany. That means that those currently having to make do with high interest rates will have better credit terms. The Kenyan central bank's figures show that loan interest rates are currently 16% on average, doubling the 8.5% reference interest rat fixed by the regulatory authority.
Reference interest is the price at which the central bank grants credit to business customers. According to the document, the bank will grant a loan for investments in higher education institutions that must fulfil the admission requirements. It has already commissioned advisers to carry out a survey to manage the establishment of credit facilities, determine the amount of funding required and anticipate the identification of the participating bank.
Consideration will be given to reviewing funding arrangements and terms related to the growth of higher learning - qualification requirements, rates, goodwill, duration, charges, safety and guarantees. The report will summarize five years of investments over the past five years, as well as those sponsored by support from domestic banking institutions, multinational organizations, in particular the World Bank and the African Development Bank, and other sources.
As a result, the investments that can be made in higher public and commercial higher education over the next three to five years can be made. It will also make recommendations on how to overcome the current barriers to access to funding and to the development of higher learning facilities. We expect the paper to be submitted to the federal authorities in the coming few days, paving the way for a possible credit expansion in the next fiscal year, which begins in July.
Meanwhile, the administration has encouraged publicly funded colleges to look for business credits and participate in income-generating activity to collect funding for growth. However, in order to lend finance, both the Ministry of Higher Education and the Ministry of Finance must approve official institutions of higher education. A number of recent attempts by a number of different institutions to find funding for the development of infrastructures have broken new grounds.
During January, the Kabinett gave the go-ahead for two large state-owned colleges - Kenyatta and Moi - to attract investment from individuals. It has also been committed to supporting the growth of privately-owned higher education, e.g. through exemption from taxes on capital investment and the allocation of lands for investment schemes in isolated areas.
The funding pressures have also been piled on the Higher Education Loans Board or Help, which issues college loan money to the state. Consequently, poorly educated people have missed opportunity at a times when higher learning is becoming more and more challenging for homes to finance. It is the goal of the credit bureau to quadruple the study finance funding volume from the current 63.5 million US dollars to 224.7 million US dollars in 2018.
The World Bank's 2009 World Bank survey showed that Kenya's higher learning system is among the most costly in the area. As part of a strategy started in February, the aim of HBELB is to establish a major revolving funds to guarantee the continuation and accessibility of student loan facilities. Kenya currently has more than 200,000 college graduates, and the Kenyan authorities expect the number to be doubled to 450,000 by 2016.
Counsellors are required to examine the credit system of Helvetia and the current structure's economic viability in comparison to matriculation trend of enrolled people. It shows the potentials of HRELB and/or individual credit institutions for lending to foreign nationals, taking into consideration the framework conditions for credit institutions such as rules and security standards.
Teachers responded that the AFD-Kenya agreement could reduce the pressures on some college kids who miss out on Help funding as they will be able to get bank credit. Nevertheless, the costs of bank lending are likely to be higher than the costs of Hypo Real Bank lending, which is currently valued at 4% per year. "The Kenyan university system is at a turning point.
A way must be found to expand student credit at lower cost while supporting higher education to finance growth," said Dan Ngugi, a Nairobi-based economist and part-time professor. "It seems the governments and HEALTH are getting the urgent need for this topic, especially with the new alliances we are seeing.