Alex discussing EduFinance during a scholarship ceremony at OBUL
Taking time to hear first-hand from our financial institution partner staff reminds us that successful education financing requires developing good relationships with school owners and understanding their unique needs as they seek to expand and improve their schools.
This month we took the opportunity to interview Alex Ahabwe, EduFinance Manager at our long-standing partner Opportunity Bank Uganda, Limited. With a 23-strong branch network, over 1,000 School Improvement Loans and 68,000 School Fee Loans disbursed to date, the bank has developed extensive experience in lending to affordable private schools and families with school-aged children. During our discussion, Alex shared his experience working with school owners seeking financing to invest in their schools, how Opportunity Bank Uganda engages new schools, and why Alex's home village calls him a 'living testimony to education.'
Alex, thank you for taking time to speak with Opportunity EduFinance! Can you please introduce yourself, and what you do in your role at Opportunity Bank Uganda Limited (OBUL)?
I'm Alex Ahabwe and I am the EduFinance Manager of Opportunity Bank Uganda limited.
I've worked with Opportunity Bank for 5 years. [Previously] I started as an SME officer, where I helped build a strong EduFinance portfolio at my branch over a period of years. [Management] decided to promote me to EduFinance Manager because of the good relationship I had established with the school owners.
At Opportunity Bank we have a very good team that is dedicated to serving clients’ needs. When you come to Opportunity Bank and get a school improvement loan, you are well assured that you will get terms of payment that favour your cash flow, which is often triannual with schools that have three school terms. [For example], if you get a loan in October the school will start paying in the first two-four weeks in the next academic term. That is when students are paying school fees and the director is in a position to pay the loan instalment with ease.
When a client opens a school account, he or she is given free deposit bank slips that they can distribute freely to parents for their school fees payment. Opportunity Bank has also introduced School Pay, which is the easiest way for parents to pay school fees using mobile money. We also have Opportunity ku simu (mobile banking) which has increased accessibility to our bank services whereby parents and clients can pay using their mobile phone which saves them the cost of transport to and from the bank.
The final benefit for us is the student. Whatever we do - whether provide School Improvement Loans or School Fee Loans - the final benefit is the student. The student is who gets an opportunity to change their future forever through education.
What are the key Benefits of a School Improvement Loan?
In Uganda, it is very hard to get huge sums of money at once for school development. For example, it is complex to attain money summing up to 20million and above. School owners may need money to build additional classrooms, latrines, safety fencing, or purchase buses for student transportation, but they cannot raise the sum at once. They may also have short term needs like purchase of food to feed the students before the school term begins.
So Opportunity Bank comes in and bridges the gap by financing the schools and giving them flexible termly instalments to pay back the loan that suits their cash inflows. The education environment is becoming competitive everyday with many new private schools are coming on board so it is very important for the schools to provide quality facilities as they work on buffing their enrolment.
What happens when a school cannot make a payment?
At OBUL, School Improvement Loans have performed better than any other loan product. It is very rare that schools end the month in delinquency. All schools have to be monitored at least four times in a year to ensure proper utilisation of the loan. If default happens, we follow the recovery steps.
For a school that is 15 days delinquent we visit the school for monitoring to find out what the challenges are and remind them of their due payment. Sometimes schools are in default because of delay in payment of some underprivileged students. Some receive cash fees but delay getting to the bank to make payment, or sometimes there is a certain issue like a septic tank is broken. Usually, clients clear the payment before the month ends and for those short term challenges we offer an emergency loan to put things right at the school so they stabilise and pay their instalments normally. Through regular monitoring and snap checks on the school owners that is how we come to know the challenges faced and help solve them.Scholarship award ceremony with students benefitting from EduFinance products
Sometimes people learning about the EduFinance products have criticized high interest rates. Do you hear similar concerns from school owners?
When it comes to loans, what is important is client relationship management. Turnaround time is their priority - 'How fast am I served?' Long delays between the loan application and loan disbursement can create challenges for client. If their need is not met immediately, they resort to emergency loans from money lenders to bridge the gap which puts the loan at a risk of not performing. For example, when the financing is delayed for a school owner that is trying to do construction during the school holidays it disorganises them, as most schools are not allowed to do construction when students are in school. We try to give clients a fast turnaround time, while still doing our thorough due diligence.
I have not seen someone declining a loan because of interest rates. Turnaround time is more important than the interest rate charged so long as they get the loan as soon as possible. A customer served faster is usually our best moving billboard. If they are served fast, they refer many others back to us. Interest is taken as an important factor when you move up to high ticket loans of UGX100million (US$27k) and more, as they usually compare the rates with what competition is offering.
How does Opportunity Bank Uganda prevent a loan client from diverting the funds from the stated use of purpose?
We give the proprietor the school improvement loan funds in tranches, [a process] called 'phase disbursements.' If you apply for a loan to do classroom construction, we give you a tranche to do the first part, and then give you a second tranche after utilization of the first tranche. This helps control diversion.
How do you make schools aware of the opportunity to apply for a School Improvement Loan?
One thing we do to attract new schools is working closely with the Opportunity EduQuality program. There are schools in clusters but not banking with us, so we visit and attend some of those cluster meetings to make sure they are brought on board. We also get lists of [affordable private] schools and send marketing SMS texts. We say 'if you need a school improvement loan, come to Opportunity Bank Uganda and we will serve you.'
We focus on not only big schools but also small starting schools with at least two years of operation, as those are the best clients for our future. The best way to attract school owners is when they feel appreciated and part of the bank. Personally, I go to all branches and visit all schools. We also ask our current school clients to recommend more schools to work with our bank. I even share my personal phone number with potential prospects and existing school clients.
Is there a personal memory that has inspired you to work for increasing access to education in Uganda?
I am a living testimony to education. I come from a poor family. Both my parents were alive, but they couldn’t afford raising my school fees. If it were not for my mother who asked relatives to contribute towards my education (Uncle Mr. kiiza Kenneth and my Aunt Mrs Enid muhumuza), I wouldn’t be who I am today. Whenever I go in my home village they use me as an example to motivate others in a similar situation for the change I have done for my family and community due to education. They look at me and say ”with education everything is possible.”
I'm working to help transform my community by fundraising and contributing towards building the community schools and church and make an impact on those facing the same difficulties that I managed to overcome. When I support my family or other people, those who know my story appreciate the value of education. In the place where my parents live they took long to appreciate the value education and instead kept their children at home to look after their livestock, get married at early stages or engage in small business. These children couldn’t get a chance to go to school. But during holidays and gatherings people see me and get inspired and know the value and purpose of education.
EduFinance supports affordable private schools to deliver accessible, quality education across 20 countries. Through partnerships with over 35 financial institutions worldwide, EduFinance offers two flagship education lending products: School Improvement Loans and School Fee Loans. Over 8,000 School Improvement Loans have been disbursed to school leaders for both capital improvements and work capital needs, and more than 215,000 School Fee Loans have been provided to help families facing cash flow challenges to meet the costs of children’s school fees, uniforms, materials and other educational needs.