A STATEMENT BY HONOURABLE MINISTER OF FINANCE AND DEVELOPMENT PLANNING ON GOVERNMENT’S POLICY FOR LOAN BURSARIES TO POST-HIGH SCHOOL STUDENTS EFFECTIVE FROM 1^ST AUGUST, 2003

A STATEMENT BY HONOURABLE MINISTER OF FINANCE AND DEVELOPMENT PLANNING ON GOVERNMENT’S POLICY FOR LOAN BURSARIES TO POST-HIGH SCHOOL STUDENTS EFFECTIVE FROM 1^ST AUGUST, 2003

  1.          Introduction

1.1             As every Mosotho knows Basotho have always valued and cherished education from time immemorial.  Long before independence they created Sethaba-thaba Fund in order to enable young brilliant Basotho to pursue higher education abroad.

1.2             Since independence successive Governments have strongly supported increased financial allocation to education.  The Government is just as committed today to fighting poverty and ignorance through increased access to education at all levels including:

o       free primary education currently up to standard 4;

o       scholarships towards the largest number of students in the history of Lesotho (7,547 in tertiary institutions and 10,000 in primary, secondary and vocational schools receiving welfare support); and

o       subventions to tertiary institutions amounting to 4% of the 2003/2004 budget.

1.3             Despite its strong commitment to development through education, Government faces a difficult choice; namely how to meet from limited financial resources rapidly rising social demands for education scholarships, jobs, food, infrastructure, health and other social services?

1.4             Clearly, the Government cannot finance all these.  It must set priorities and be selective on what it can or cannot finance.

1.5             In Section 2 of the Statement I review the evolution of the current policy of granting loan bursaries to every student that gets admission to a higher education institution.  Section 3 presents problems that have beset scholarship management over many years, while Section 4 outlines a new policy approach for awarding scholarship loans on the basis of priority fields of study identified by Government.  The last section discusses some of the improvements that are underway or being considered in NMDS including the repayment systems for loans.

2.          Origins of Policy to Provide Loan Bursaries to Students Admitted to Tertiary Institutions

2.1          Different Governments of Lesotho have placed high value on the need to develop skilled manpower as a basis for sustained economic development and improvement in the quality of life for all Basotho.  They have also recognized that many Basotho are poor to afford post-high school education for their children.  Even though others could finance their children through University, they were considered few in numbers to make a significant difference in the overall scheme of things.

2.2     Based on the above considerations, Government offered scholarships for various fields of study for students who performed well at matriculation and COSC levels.  These students were not required to pay back the cost of this funding support from Government until 1978.

2.3     By Act No.8 of 1978, the Government established the National Manpower Development Secretariat (NMDS) under the Ministry of Development Planning to administer scholarships and bursaries.  It also changed the policy and granted scholarships and bursaries as loans, which were to be recovered from the students when they completed their studies. 

2.4          NMDS was to issue contracts to the students which were guaranteed by their parents or guardians.  It was also to keep good records and track of these students and to recover the loans from students who had completed.  More importantly, NMDS was to submit to Government annual statements in accordance with Legal Notice 20 of 1978.  There was also to be a National Council that would advise the Minister on the students to be awarded bursaries and scholarships.

2.5     All students that received admission to NUL and other higher education institutions inside and outside the country were granted bursaries or scholarships through NMDS.  The country could afford this because the numbers who qualified were few and the bursary loan recoveries were expected to be proportionally large and therefore reduce the annual costs borne by the Fiscus.

2.6            Specifically, those who completed their studies and worked in the Public Service were required to pay back 50% of the total loan bursary; those who worked in the private sector in Lesotho were to repay 65%, while those who worked outside Lesotho were to repay 100%.  Unfortunately, those repayments from outside Government have never materialized.

3.0     What went wrong?

3.1            Appointment of Council:  The Council, which was to advise the Minister on awards as well as oversee the process of advertising, interviewing, selection, awarding and recovering loan bursaries was never appointed from 1978 when NMDS was set up. NMDS performed all those functions assigned to the Council.  However, its record of performance has not been stellar.

3.2            Quality of NMDS staffing:  Although the responsibility given to NMDS by the Act is broad and complex, the quality and quantity of staff appointed was not commensurate to the task.  Consequently, all the key functions of NMDS were performed poorly or never done at all.

3.3            Weak administration and systems:  With inadequate staffing, the administration of NMDS was weak in managing relations with institutions; keeping good records of contracts; maintaining a list of graduates; tracking the movements of graduates through their families; ensuring timely loan recoveries and presenting annual results. Consequently,  it has been impossible to track down those students who have not repaid their loans.  Each year renewals of awards is a time of great consternation on the part of parents and students.  There is no clear-cut system of obtaining student records directly from the Universities or paying the fees on time let alone living allowances.

3.4            Priority fields of study:  The Ministry of Development Planning has not put to Government a clear list of courses that must be given priority in the award of scholarships.  NMDS has therefore been unable to base its recommendations on this list.  This is why Lesotho has hardly any Doctors  except seven in training to-day.

3.5            Planning the amounts to be spent on awards:  Because of lack of proper planning and management of the NMDS awards, Government does not know how much it will spend on bursaries over the next five years and whether or not it can afford that level.

3.6            Impact of more admissions from RSA:  Since 1994 the new government of South Africa has undertaken a fundamental review of the management and funding of higher education.  This has resulted in the Universities being more creative in attracting fee-paying students.  They began to admit large numbers of students from Lesotho who were guaranteed sponsorship by NMDS. The following numbers were and are enrolled in various South African Universities and Technikons in 2002 and 2003:

3.7            Impact of bridging courses on Admissions: To increase its enrolment NUL embarked on providing for a few months extra instruction to those students who had failed English or Science.  Once NUL admits them, the Government is obliged to sponsor them regardless of whether or not they had been budgeted for.  For example, NUL is currently providing bridging to a little over 900 students while those that have been recommended by NMDS are about 950.   NUL projects that in five years time, it wants to have an enrolment of about 10,000 students.  Lesotho Government cannot afford to sponsor all these students.

3.8            Moreover, the upgrading that is provided by most South African Universities takes a full year and makes their degrees 4 years rather than 3 years, thereby adding more costs to Government.

3.9            Increase in fees:  NMDS currently sponsors students in the following Lesotho and overseas institutions whose student numbers are shown next to them:

3.10       Despite a population increase of no more than 3 percent and the fact that at least a fourth of the students must graduate each year, the net increase in the number of new students needing support is 14 percent!

3.11       Most of Lesotho institutions in which Government sponsors students have given notice that they intend to increase fees significantly. As indicated above, they expect that Government will foot the bill for these increases.

3.12       The expansion in loan bursary cost can no longer continue beyond the current level. The total expenditure on loan bursaries per year has increased by M115 million from M80 million in 2000/2001 to M195 million presently. In terms of total expenditure, loan bursaries absorb 5 percent, while total tertiary expenditure is equivalent to 9 percent of Government expenditure. Meanwhile, repayment is next to nil.

3.13       Conclusion:

From the above factors that impact on the budget, it is clear that there is no way that Government can continue with current policy of sponsoring every student that is admitted to an institution of higher education.  Furthermore, Government cannot be expected to automatically pick up increased subventions without those institutions first discussing their projected growth in enrolments and fees.

4.0     New Policy

4.1             For the 2003/2004 budget and those of subsequent years, Government will limit financing of loan bursaries to the amount that has been authorised by Parliament. This is M195 million or 5 percent of the 2003/2004 budget.

4.2             As a guideline for this year, priority will be given to students who aim to study in the disciplines identified by Government as critical for achieving Lesotho’s national vision, reducing poverty, creating jobs, and improving quality of life of people. These fields are:

o      Information and communication technologies and computer sciences;

o       Economics and business sciences;

o       Education particularly the teaching of math and science;

o       Agriculture and environmental sciences;

o       Health sciences;

o       Engineering; and

o       Legal studies

o       Sciences.

4.3             I have authorised the NMDS to effectively manage scholarships and to issue a number of loan bursaries such that the M195 million authorised by Parliament is not exceeded. The Country can no longer afford to pay more for loan bursaries particularly when repayments are not being made by those who have graduated.

4.4             Equally, Government is no longer in a position to offer more subventions than is currently provided. However, institutions are free to engage in any expansion or adjustment in fees they consider appropriate, provided they can pay for them.

5.0          Improvements at NMDS

5.1             We have begun computerisation of all contracts in order to enable tracking of past recipients;

5.2             We are in the process of increasing staffing;

5.3             We are:

o       Streamlining and expediting disbursements of funds to students at all institutions in Lesotho and elsewhere. This will also assist in closing loopholes that lead to unauthorised use of funds.

o       Opening accounts in both Lesotho and South Africa as part of improvements in management of disbursements; and

o       Engaging a debt collection agency with collection powers in both Lesotho and South Africa.

6.       I wish to emphasize that the Government is committed to accelerated development through making access to education as easy as possible to as many Basotho as possible.

30 July 2003