Private schools decline line of credit offer from banks

Monday July 27 2020

School proprietors anticipate that when lessons

School proprietors anticipate that when lessons resume in September, paying back the loans will be difficult, even when many were forced to cut salaries of teachers and staff due to the coronavirus pandemic. PHOTO | FILE  

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Private schools teachers have been left on their own as employers decline loan offers to support their staff during Covid-19 period.

A number of financial institutions had offered loan facilities to private school to enable them to meet financial obligations, among them paying salaries, but proprietors argued that this would overburden the institutions.

School proprietors anticipate that when lessons resume in September, paying back the loans will be difficult, even when many were forced to cut salaries of teachers and staff due to the coronavirus pandemic.

Like other sectors, which have been given relief and support, the government through banks and Co-operative Umwarimu Sacco set aside funds for schools to borrow pay teachers in form of loans.

However, since mid May when the support fund was made available, only 24 private schools out of over 1,100 have applied for the loan.

Owners of private schools who spoke to Rwanda Today said borrowing money for teachers would be putting the school at the future risk of paying back the debt.


Rwanda Today has learnt that over 20,000 teachers and employees from unaided budget schools and those run by religious bodies have either not been paid salaries or just received part of it since March.

Loan burden

“The government is favouring teachers and banks hence shifting loan burden to schools only so that when teachers they are liable for the debt,” said Mr Patrick Gatungo, director of fi nance at Authentic International Academy in Kigali.

“We want teachers to acquire the loan from the bank or Sacco in their names and the school can support by offerring security after having an agreement with them on terms of payment, “said Mr Gatungo.

“We cannot put our schools at the risk by getting the loan to all teachers who are currently unproductive and some whose contracts are about to get finished,” says Gatungo.


“Teachers usually, work for who pays high, then what would happen when a teacher decides to change the school after classes resume? This would mean leaving a burden for the former school paying off the loan,” he said, adding “If teachers want support from schools would be collaterals instead of pushing the school to get what they will not use,”

Alex Mushumba, the head master of New Life Christian Academy said that despite not earning, they are partly paying their teachers and employees using saved funds.

“Though we still can partly pay teachers’ salaries, if coronavirus cases continue to increase forcing schools to remain closed beyond September, we will likely not manage to keep supporting teachers without working,” says Mr Mushumba.

“We do not have plans to acquire the support from the bank for teachers because this would be putting the school at risk since no one knows how the situation will be in the future,” says Mushumba.

He added that many schools are likely to reduce the number of teachers when schools commence so they cannot afford to borrow money to lend teachers before they are sure who will remain employed or unemployed.

Rwanda Today further learnt that private schools owners also do not want to get the money from the bank because of fear that the three months’ waiver offered by the Sacco before the first payback instalment is short hence would put them in trouble after failing to pay on time.

Additionally, teachers say they cannot accept to acquire the loan from the bank themselves without knowing how they will be paid by their employers when schools resume.

“There are high chances of schools cutting salaries when lessons get back to normal in September, then how will some manage to pay back the loan with anticipated little pay,” said Denis Ngabi, a part-time teacher at more than five private schools in Kigali.

“If schools get the loan and then teachers borrow from their respective employers, it will give us a guarantee that before one completes the loan is secure at work,” says Mr Ngabi.

He added that schools care about their interests only without minding whether teachers starve or not because they are certain whatever it is they seek for them for work when schools are allowed to operate.

Rwanda Today has further discovered that the situation is unlikely to improve anytime soon as school managements refuse to get support fund from Cooperative Umwarimu Sacco.