On Monday, Tinubu signed the bill at the Presidential Villa in Abuja.

The objective of this legislation is to offer financial support to Nigerian students attending tertiary institutions. It successfully completed the third reading in the lower chamber in May.

The bill was sponsored by Femi Gbajabiamila, the former speaker of the House of Representatives.

How the bill has been analyzed by Kalu Aja, CFEI. Author, Making Money, the Economy and personal Finance easy to understand.

In his analysis, Aja commended the signing of the bill into law by President Bola Tinubu and on the other hand, made some observations, which considered not workable and also proffered solutions.

Below, is a comprehensive analysis Aja gave on the bill, now Law

Ok, read the Nigerian Education Bank Bill.

The bill is about a bank, the loans only happen because there is a bank, so I call it Education Bank Bill.

The object of the bank is to fund higher education tuition, which is always a good idea. So I commend this bill...however.

The Bank will be funded by a share capital of N1b. this is puny & does not show ambition.

N1b to capitalize a bank that will fund higher education is a non-starter.

However, the bank will get funding from many sources, including 1% of FIRS & 1% of oil and mineral profits.

What does 1% of FIRS, 1% of Net oil & Minerals revenue translate to? Let's use ACTUAL June 2022 as baseline & extrapolate, assuming a straight line

1. 1% of Net Crude Oil & Gas: N4.84b
2. 1% of solid Minerals: N80m
3. 1% of FIRS: N43b

Total: Less than N50b

Now that we have established the funding structure, I can give my opinion on the bill.

1. Why a bank? Why not just a Fund managed by the Ministry of Finance or SWF?

This bank will have overheads, including allowances for the Board of about 12, including Head office & staff.

1.2 why establish a vast, costly bureaucracy to offer loans?

The core functions performed by the Education Bank (Inflow, invest, outflow) can be performed by a Fund.

No bank should concern itself with tracking grades and employment, rather let the credit bureaus do that.

1.3 My fear is founded; most institutions end up being avenues to pay salaries. Take the 2023 Education budget as initially proposed.

Total Budget: N1.08t
Total Capital: N239b
Total Salaries: N706b
Total Overheads: N52

I want the education bank to give loans, not pay salaries.


1.4 All the processes for submitting a loan request can be done online and have minimal human interaction; this will speed up approvals and keep operational costs low.

2. Funding is a non-starter. The N1b capital & 1% revenue heads must be more robust.

1% of N100 is more than 1% of N10, but why 1% ? Is the largest economy in Africa saying she can't allocate more to fund higher education?

Brazil did 100% of its oil royalties to education.

2.1 What other sources of revenue to boost the 1%?

Private endowments. Alumni, companies or individuals should be able to donate to the fund and earmark disbursements to a school in return for transferable tax credits.

3. I tend to stay on the financial, but some provisions in this bill are too "funny" to ignore

The Bill transfers the sins of the parent to the children. Kids can't get a loan if a parent defaults on ANY loan? How does this pass legal or even moral muster?

3.2 Jail time for failure to repay a loan?

I understand the intent of this provision is to create consequences for the premeditated loss of principal, but you don't jail former students who don't repay; instead, you blacklist their credit, so they can't get any loan.

3.3 Guarantors

By introducing guarantors, the bill introduces collateral via other means.

How many students can a lawyer or civil servant guarantee? What if I want to study medicine and score a good grade but have no one to guarantee me?

This is implicit discrimination.

Finally, we do these reviews because we love Nigeria.

My suggestions strengthen this bill by boosting funding and reducing costs and any implicit unintended bias.

let's call this a good start; this bill passed b4 this administration. Now Make it better

If the bill is updated, then I will update my post."

https://thisweekng.com/students-interest-free-loan-the-hidden-costs-of-the-education-bank-bill-exposed-by-expert/

Lets appreciate it first, then we then think of other corrections.
The man tried now!

jullary:
Lets appreciate it first, then we then think of other corrections.
The man tried now!

Yes na