Our Vision A loan available for every Kenyan enrolled in higher education

  Our Vision A loan available for every Kenyan enrolled in higher education

  Our Vision A loan available for every Kenyan enrolled in higher education

helb disbursment charts for 2016/2017 - Our Mandate Disburse loans, bursaries and scholarships to Kenyan students pursuing higher education in recognized institutions as well as recover loaned out funds, and to establish a revolving fund. Our Vision A loan available for every Kenyan enrolled in higher education Our Mission To provide affordable loans to Kenyans pursuing higher education through adequate mobilization and prudent management of resources. Our Core Values Our Motto Accountability Courtesy Fairness & Transparency Competence Teamwork Working with you to finance higher education now and in the future. 



2 CHAIRMAN S FOREWORD The (HELB) Strategic Plan is a clear roadmap of the Board as an enabler of the Country s development agenda of Vision 2030 through training a highly competent Human Capital. It is the Board s commitment into ensuring equity in accessing financial resources to higher education for all Kenyans as spelt out in the current Constitution. The year 2012/2013 was a successful one for HELB as we registered satisfactory performance in our initiatives in the transformation of financing of higher education without altering the values on which we were founded; i.e. Accountability, Courtesy, Fairness and Transparency, Competence and Teamwork that continues to set us apart. Significantly, our progressive efforts intensify loans disbursement and to turn around loan recovery loans were realized through the application and enforcement of the Constitution 2010, enactment of Universities Act 2012, TVET Act 2013 and the recommendations in Sessional Paper No. 14 of 2012 on Education and Training. As a result of the above changes in Education sector, HELB has assessed it s capacity to achieve its mandate as a result of the changes in the operating environment through a mid-term review of 2009 2014 Strategic plan which could not sufficiently meet the new demands. I am therefore pleased to share our Strategic Plan 2013-2018, hinged on the progressive implementation of the Constitution taking into consideration other legal framework that has seen the higher education sector experience rapid expansion overstretching the services of HELB with the challenges to avail more funds to satisfy the increased demand for funding higher education. Education is the strongest and the most lethal weapon in reducing the gap between the rich and the poor Nelson Mandela We have set out strategies and key initiatives for the next five years as presented in our plan. For the 2013-2018 period, we shall continue to embrace a comprehensive Strategic map supported by detailed Key Results Areas (KRAs) in an effort to make HELB successfully achieve its mandate, Vision and Mission. The Strategy map details the Board and ii

3 Management visualization of how we see the future looking like during the plan period. The Strategic Plan is anchored, on among others, four pillars; Financial Sustainability, Customer Service Delivery; Internal Processes Re-engineering, Institutional Capacity and Corporate Governance I wish to assure our partners that, all the stake as a Board we are deeply committed to this strategic plan to availing loan for every Kenya enrolled in higher education. I am confident that with the support of the Government, other key players in the education sector and various stakeholders we will achieve what we have set out to do in this plan document. Finally, we remain committed to deliver quality service to all our stakeholders and remain on a sound financial base to support enhanced lending and loan recovery processes as our core functions. D. Ndegwa Wachira Chairman, Board of Directors With you all the way iii

4 BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT The current office holders are as follows Board of Directors 1. Mr. David Wachira Chairman, Board of Directors 2. Mr. Charles Ringera Chief Executive Officer and Board Secretary 3. Dr. Belio R Kipsang Principal Secretary, Ministry of Education, Science and Technology 4. Dr. Kamau Thugge Principal Secretary, National Treasury 5. Mr. Habil Okunda Olaka Chief Executive Officer, Kenya Bankers Association 6. Prof. David Some Chief Executive Officer, Commission for University Education 7. Ms. Victoria Chepseba Independent Member 8. Mr. Mwenda Thiribi Independent Member 9. Dr. Timothy Wachira Vice Chancellor Daystar University Representing Private Universities 10. Mrs. Jacqueline A Mugo OGW CEO, Federation of Kenya Employers Representing Federation of Kenya Employers 11. Prof. Mabel Imbuga Vice Chancellor Jomo Kenyatta University of Agriculture & Technology Representing Public Universities Heads of Division 1. Mr. Victor Lomaria Head of Operations 2. Mary Wachira-Muchee (Mrs) Head of Research, Strategy and Planning 3. Mr. Shem A Gichimu Head of Finance iv

5 Contents INTRODUCTION 1 HELB MANDATE, FUNCTIONS,VISION, MISSION & CORE VALUES 6 SITUATION ANALYSIS 10 2013-2018 STRATEGY MAP AND PILLARS 24 IMPLEMENTATION OF THE STRATEGIC PLAN 47 RISK MANAGEMENT 48 MONITORING AND EVALUATION 50 ANNEXES 52 v

6 EXECUTIVE SUMMARY The is a State Corporation established in July 1995 by an Act of Parliament HELB Act Cap 213A, with a mandate to provide financing for higher education in form of Loans, Bursaries and Scholarships to Kenyans studying in recognized institutions of higher learning. The Board has embraced Strategic Planning as a key performance improvement initiative in enabling successful delivery of its mandate. The current Strategic Plan w a s adopted in 2009 and was earmarked for implementation up to 2014. However, owing to changes prevalent in the operating environment and the need to assess progress in achieving the planned objectives, the Board found it prudent to conduct a mid-term review of the Strategic Plan. The review process indicated that only 30% of the Strategic plan had been achieved against an expected achievement of 50%. Due to the changed environment a decision was made to prepare a new Strategic plan taking into consideration requirements of Vision 2030, Kenya Constitution 2010, Universities Act 2012, TVET Act 2013 and the recommendation in Sessional Paper No. 14 of 2012 on Education and Training. After considering these emerging issues, HELB has formulated four main pillars which will guide its operation for the next five years. The Four Pillars are laying emphasis on Financial Sustainability, Customer Service delivery, Internal Business processes re-engineering and Institutional Capacity and Corporate governance. In the implementation of this Plan, HELB is committed to adhere to the legal and regulatory requirement as will be provided in the HELB Act Cap (213A) which is currently under review. The Strategic Plan will be implemented through departmental and individual work plans as outline in the Implementation matrix. The Monitoring and Evaluation component has been factored in, to ensure that periodical reports are available. This shall be done by the newly created Strategy, Research and Planning division. The monitoring and evaluation will ensure that any exogenous factor that may adversely affect the expected outcome of the implementation is addressed immediately. The Plan is organized into seven chapters. Chapter one present the background of HELB, report of the review of the strategic plan 2009-2014 including the challenges and the lessons vi

7 learnt. Chapter two deals with the mandate of HELB, the statement of corporate identity including the Vision and Mission statements and the Core values. Chapter three deals with the situational analysis which looks at the current situation both within the institution and at the Macro level. The analysis has been done using both the PESTL and SWOT analysis. It also looks at the stakeholders analysis. Chapter four present the Strategy Map Framework and the four Strategic Pillars. It also includes the implementation matrix with the strategic initiatives together with the Activities, Key Performance indicators, timelines, person responsible and the budget requirement. Chapter five deals with implementation of the strategic plan, while chapter six deals with Risk management indicating the risk profile and the mitigation measures. Chapter seven deals with monitoring and evaluation of the plan. Mr. Charles Ringera Chief Executive Officer and Board Secretary vii

8 LIST OF ABBREVIATIONS CEO CUE CRB DUC GoK HELB HELF HOD ICT JAB KRA KU & CPB MTP NHIF NSSF PESTLE SWOT SMS TIVET USLS UFB Chief Executive Officer Commission for University Education Credit Reference Bureau Differentiated Unit Cost Government of Kenya Higher Education Loans Fund Heads of Division/Department Information Communication Technology Joint Admission Board Kenya Revenue Authority Kenya Universities & Colleges Placement Board Medium Term Plan National Health Insurance Fund National Social Security Fund Political, Economic, Social, and Technological Legal Strengths, Weaknesses, Opportunities, Threats Short Message Service Technical, Industrial, Vocational and Entrepreneurship University Students Loans Scheme University Funding Board viii

9 1.0 CHAPTER ONE: INTRODUCTION 1.1 BACKGROUND was established by an Act of parliament Cap 213A of 1995. To enable HELB respond to the challenges of providing adequate financing to students pursuing higher education, an organizational review was done in 2005, which culminated into a restructuring process implemented in 2006/2007. At the same time, the first Strategic plan was to end in 2008. A new Plan covering the period 2009-2014 was prepared. Due to the changing environment in the country with the enactment of the Kenya Constitution 2010 and the enactment of the Universities Act 2012 and the TVET Act 2013, together with the recommendations of the Sessional Paper no. 14 of 2012, HELB found it necessary to carry out a Mid-term review of the Strategic Plan 2009-2014. This commenced in September 2012. The terms of reference during this exercise were to review the level of accomplishment and give the necessary recommendations on the way forward. 1.2 REVIEW OF 2009-2014 STRATEGIC PLAN The Board had identified five (5) key objectives to focus on during the five year period (2009-2014). In the plan, the objectives were broken down into strategies. The specific strategies were further broken down into detailed action plans that outlined the various activities, timeframes, key performance Indicators and responsibilities. While the HELB s Strategic Plan was supposed to be formally assessed twice or once a year, assessment and evaluation did not take place during the entire implementation period of two and half (2½) years. In best case scenario, performance data should be available at the departmental level, while others are determined at the aggregate or corporate level. However, evaluation of the strategic objectives focused on the data available at the corporate level which was not readily available. Majority of the data was available in the departments and not at the corporate level. It is evident from the review process that several intents were achieved through different fronts as a result of deliberate and concerted efforts, policy initiatives and direction given by the top management and support from all HELB staff. It emerged that even though there was achievement of some of the set objectives, the performance monitoring and evaluation lacked coordination from a central point. This was because 1

10 there was no ownership of the monitoring and the evaluation process of the Corporate Plan. 1.3 ACHIEVEMENT LEVEL The five (5) strategic objectives as outlined in the Strategic Plan 2009-2014 that were evaluated to determine the level of achievement are: 1. To finance all qualifying students. 2. To improve financial base by mobilizing funding from external stakeholders to bridge the financing deficit between loaning levels and available resources. 3. To improve productivity of the human capital by anchoring functional workplans on an effective Performance Management System. 4. To formulate and implement communication strategy. 5. Carry out continual improvement of infrastructure. Some of the major achievements noted during evaluation of the Strategic Plan 2009/10-2014 are summarized under the strategic objectives as indicated here below; Strategic Objective 1: To finance all qualifying students. In order to achieve the above strategic objective several strategies were planned which included; Strategy 1: Finance 100% of the enrollment to universities HELB only managed to finance 39% of the enrolled students to the universities. Strategy 2: Maximize Loan Recovery- various activities were implemented the key one being networking with partners that included KPLC, NSSF, Nairobi Water, NHIF, Alumni and taking other measures which made the recovery to realize more than 10 % annual growth. Strategy 3: Develop and upgrade various loan products to suit different types of clients - Alternative loans were availed at 12% for the postgraduate students. More effort was made to Partner with banks like NBK, KCB and CBA to avail loans to students and their parents who could not qualify for the HELB loans. The plan was not vigorously pursued. 2

11 Strategy 4: Position HELB as agent for corporate bodies and donors for loans, bursaries and scholarship grants- Few donors were identified among them, Visa Oshwal, Ford Foundation, Funzo Kenya, the strategy was not vigorous pursued due to lack of internal required capacity. Strategy 5: Lobby increased Capitation the plan was to pursue government to allocate more funds to finance higher education, the contribution from the Government totaled Kshs.2.365 billion in 2013/14 against the requested amount of Kshs 14.5 billion which is equivalent to 15% of the expected amount. Strategic Objective 2 : Mobilize additional resources through financial market- there was an attempt to approach the market to finance education where a concept paper was prepared and presented for approval, but this was put on hold. There were other three strategies that include; consistently review interest rates, Risk management for loans/ Self-protection policy and Investment in property. The implementation of the strategies were not successful due constraints in terms of policy and prevailing macroeconomic conditions. Strategic Objective 3: Human Capital Capacity- A number of policies had been put in place for implementation to address weaknesses in the human resource management. Several initiatives on training on performance management, ICT and governance have been conducted for both Board members and management staff. ICT infrastructure systems were put in place while sound financial management system was improved to recognize the ICT integration to assist in decision making. Strategic Objective 4: Improve Communication by implementing the Communication Strategy. HELB has managed the corporate image positively through communication, promotion of Corporate Social Responsibility (CSR) activities, holding events for stakeholders and reaching out to government and private sector institutions and development partners in the promotion of education financing in Kenya. In managing communication, various channels that included print and electronic media were used. Strategic Objective 5: Continual improvement of the infrastructure. Information Communication Technology (ICT) was recognized as key to the communication strategy. This infrastructure has been strongly supported to improve facilities like website to strengthen external communication. Implementation of the Plan- The implementation of the plan was carried out with minimum focus and without close monitoring and evaluation process. Management 3

12 focused mainly on the government performance contract which was not in sync with the Strategic Plan and in this regards the overall achievement of the Strategic Plan 2009/10 2013/14 was approximately 30 percent compared to the expected 50% achievement level as a mid-term review benchmark. 1.4 CHALLENGES AND LESSONS LEARNT Section 1.3 above outlined the achievements noted, but in the process of realizing these results, several challenges remain and need to be addressed in the next Strategic Plan. Some of these are; (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Overreliance on Government capitation for funding; Inadequate funding due to limited student funding budgetary allocation; Lack of synergy within the functional areas leading to some level of inefficiencies; Uncoordinated effort between HELB disbursement system and University semester cycles; Lack of clarity on some roles and reporting lines and lack of internalization of the Strategic Plan resulting in gaps in the implementation; Incomplete records inherited from the parent Government Ministry leading to costly recovery efforts; Lack of compatibility of disparate software applications, which challenged a core requirement of a complete automated business process environment. The regulatory environment continued to challenge the organization due to limitation of the Board to achieve critical mandate. 1.5 WAY FORWARD Since the preparation of the Strategic Plan 2009-2014 whose mid-term review has just been concluded, it has been noted that the Kenyan Education Sector has witnessed major developments. Several reforms are also currently taking place which are expected to increase enrollment numbers at all levels. This is expected to put more pressure in the demand for funds to finance education in Post-Secondary institutions. In the context of these anticipated changes, the current Strategic Plan of HELB needs realignment to the 4

13 new education policies and legislations, and the resultant implications. It is against this background that the new strategic plan to guide HELB s direction in the next five years (2013-2018) has been prepared. Subsequent chapters therefore focus on charting a new direction for the Board. HELB bridges the gap between the rich and the poor through education 5

14 2.0 CHAPTER TWO: HELB MANDATE, FUNCTIONS,VISION, MISSION & CORE VALUES When the (HELB) was established by an act of Parliament CAP 213A of 1995, it took over all the function and the responsibilities of management of higher education financing which was by then being managed by the University Student Loans Scheme (USLS), a department in the Ministry of Education. Under the scheme, Kenyan students pursuing higher education at Makerere, Nairobi and Dar-es-Salaam universities received loans to cover their tuition and personal needs, which they would repay on completion of their education. However, it is important to note that, financing of higher education started in 1952 when the then colonial government awarded loans under the Higher Education Loans Fund [HELF] to Kenyans pursuing university education in universities outside East Africa notably Britain, the USA, the former USSR, India and South Africa. But USLS lacked the legal basis to recover matured loans from loanees. In addition, the general public and university students wrongly perceived that the loan was a grant from the government, which was not to be repaid. It is against this background that, HELB was established with the main mandate of sourcing for funds, allocating and disbursing to needy Kenyan pursuing higher education in recognized institution of higher learning. It also has the mandate of recovering all mature loans disbursed since 1974. HELB started operations with initial staff seconded from the Ministry of Education in August 1995 with funding from the World Bank. In November 1996 its first batch of employees were engaged. Initially it started with eighty (80) staffs that were disbursing loans to only undergraduate student in public universities under the government sponsored program. Currently HELB has one hundred and twenty (120) staff managing a total of eight (8) products for students in both public and private universities and in the TVET institutions. 2.1 MANDATE, OBJECTIVES AND FUNCTIONS OF HELB The Board derives all its mandate and functions from the HELB Act (Cap 213A). The functions are categorized into three types, namely: - Short term Medium term 6

15 Long term The short-term functions include: a) To set the criteria and conditions governing the granting of loans including the rate of interest to be charged; b) To receive and consider all loan applications from eligible persons (students) who wish to pursue higher education; c) To approve and/or reject such applications in accordance with the provision s of the Act; d) To determine the maximum number of eligible persons to be granted loans in any one particular year; e) To invest any surplus funds not currently required for the running of the Board in any investment authorized by law; f) To recover matured loans. The medium functions include a) To establish a Revolving Fund; b) To solicit for funds and other assistance to promote the functions of the Board; c) To enter into contracts with financial institutions for the purpose of disbursement and recovery of the loans. Long-term functions include a) To establish links with other bodies and /or organizations within and outside Kenya as considered necessary for the purpose of realizing the goals of the Board. This is to enable HELB to become a fully-fledged financial institution on student financing to attract syndicated funds from development partners, global financial institutions and big ticket donors. 2.2 STATEMENT OF CORPORATE IDENTITY statement of corporate identity is an articulation of the uniqueness of the organization A which identifies the basis of the organization s brand. The corporate identity has immense value to HELB in terms of acceptance and positioning in the society and this value will need to be appreciated and built upon. The corporate identity promotes the Vision, Mission and Core Values of the Board. 7

16 Taking into consideration, the mid-term review recommendations and emerging issues the following are the new Vision, Mission and Core Values of HELB. The Vision statement A Vision is a desired future status of the Board that will guide the thinking, decision making and the way the Board would like to conduct business to achieve its future dreams. The Vision statement of the Board is: A loan available for every Kenyan enrolled in higher education Mission Statement A Mission statement states the purpose for the existence of HELB. It specifies the end results that the Board is seeking to achieve, for whom and how it will go about it and what resources are required. The new Mission statement is: To provide affordable loans to Kenyans pursuing Higher Education through adequate mobilization and prudent management of resources HELB transforms lives 8

17 Core Value Statement To support achievement of the Vision and Mission, the Board will have to be guided by appropriate values. These are set of guiding principles that will be shared and practiced by staff and stakeholders. In consideration of the changed environment, the core values were identified as; Accountability Courtesy Transparency & Fairness Competence Teamwork Employees will be accountable to key stakeholders of HELB and adhere to the highest ethical standards in performing their duties. They shall; - Act in good faith - Demonstrate highest level of integrity - Create an atmosphere of trust & confidence Employees will endeavor to be courteous to all customers at all times. While discharging duties, they shall be: - Respectful - Attentive - Polite - Calm - Tactful Employees will strive to exercise fairness in service delivery. They shall: - Treat all customers equally - Ensure equity through providing equal opportunities for all - Ensure absence of double standards Employees will strive to offer service with utmost competence. In the conduct of every aspect of their tasks, they must: - Act with care and diligence - Display professional skills Employees will maintain open communication and maximum cooperation internally and externally. Staff shall strive to ; - Value contribution of others - Have clear communication - Maintain openness and accessibility to stakeholders - Have active participation 9

18 3.0 CHAPTER THREE: SITUATION ANALYSIS 3.1 NATIONAL DEVELOPMENT AGENDA AND KENYA VISION 2030 The Government of Kenya (GoK) has recognized the important role education and training play in maximizing the potential of human resource for individual, community and national development. This has been discussed in various policy and development documents which emphasized the need for efficiency and better management in the utilization of public resources to enable the Government achieve its strategic objectives of growth, productivity and improvement in service delivery. The same objectives are currently encapsulated in Vision 2030 blue print, where education has been recognized as an enabler in realization of its goals. Its main objective is to transform the country into a modern, globally competitive, middle income country, offering a high quality of life for its citizens by the year 2030. To achieve this goal, the Government intends to put in place measures that will raise the national GDP growth rate from the current 5.1% to more than 10% by 2017. The Government is committed to achieving the International development Commitments such as the eight (8) Millennium Development Goals (MDGs) and increasing the transition from secondary to university level from 3% in 2008 to 10% by 2024 as outlined in Sessional Paper No.14 of 2012. Pursuant to this focus, HELB will play a vital role in financing education in post-secondary institutions. It is worth noting that HELB is currently able to support only 19% of the students who qualify for admission to the Public and Private universities leaving the rest to seek alternative financing for their post-secondary education. Currently the funding of university education by the government is based on uniform costing as opposed to unit cost for all courses offered at the Colleges. This does not also take in to account the need for support for different individuals as the sponsorship qualification is on merit only. This result into provision of grants to all government sponsored students admitted to Public universities based on merit. The grant from the government is not repayable and thus it is a sunk cost that cannot be available to future generations. The resultant implication is unsustainability of higher education financing by the government. During the Plan period HELB intends to lobby for more funding to be channeled through its student finance distribution system for onward disbursement as loans repayable upon completion of 10

19 studies. This will ensure sustainability of higher education financing as revolving Fund to support future generations. There has been rapid expansion in the higher education sector in Kenya. More people are now seeking higher education than in the past. This has overstretched the services of institutions in this sector including HELB which is faced with the challenge of availing more funds in order to satisfy the increased demand for funding of post-secondary education. The Kenya Constitution 2010 also present a new dimension for HELB to implement its mandate as outlined in various Education Acts. This has informed HELB when preparing this Strategic Plan 2013/14-2017/18 to focus on achieving its mandate by addressing the changing education environment. 3.2 ROLE OF HELB IN ACHIEVING KENYA VISION 2030 The Kenya Vision 2030 is the development blue print for the period 2008-2030 which aims at transforming the country into a modern, globally competitive, middle income country, offering a high quality of life for its citizens by the year 2030. To achieve this goal, the Government intends to put in place measures that will raise the national GDP growth rate from the current 5.1% to o v e r 10% by 2017, creating more employment opportunities and bringing more equitable development in all regions of the country. SOCIAL PILLAR (Investing in the People of Kenya) SOCIAL PILLARS SECTORS (Building A Just Cohesive Society) Education and Training Health Environment Housing and Urbanization Gender, Children and Social Deve lopme nt Youth and Sports Labor (Manpower Development) Figure 1-The Vision 2030 social pillar with education as the main enabler (Source-Vision 2030 secretariat) 11

20 (i) (ii) The government takes cognizance of the fact that provision of quality education, training and research is critical to achieving the Vision 2030 goals. In provision of quality education and training, HELB will play a key role by ensuring that There is increased access to higher education by providing financing to all Kenyan enrolled in higher education institutions. This will ensure that there is active participation in economic activities by all Kenyan since they will have the requisite knowledge; (iii) More funds are channeled to finance students in the TVET institution who will be a major input in providing the technical skills required in achieving a middle level economy. 3.3 MAJOR CHALLENGES THAT MAY AFFECT HELB OPERATIONS In striving to fulfill the mandate of HELB, in contributing to the National development, the following challenges may adversely affect the overall performance. (i) (ii) (iii) The global financial crises which may lead to a decline in the foreign exchange earnings, slowing the national economic growth, hence affecting the level of employment which would in turn affect the repayment of HELB loans. With rising domestic unemployment, Kenyans may in turn seek alternative employment opportunities outside the country which will complicate loan recovery matters for HELB. The ever rising inflation rates due to increase in fuel and food prices. This may result to Kenyans placing first priority to the purchase of basic needs, leading to low repayment of HELB loans and at the same time increasing demand for HELB loans due to insufficient/inadequate family income. This is due to the ever rising inflation rate leading to an increase in the cost of living. Currently inflation is at 7.76% and the macroeconomic policies are geared toward maintaining it below double digit. The Kenyan economy has been growing at a very slow pace of 2.8% in 2009 to 5.1% in 2012 against a target of 6.2%. The forecast is that it will grow at more than 10% by 2017. The high population growth rate together with increased rural urban migration in search for employment which is unmatched with an equal fast creation of economic opportunities. This has led to a high unemployment rate amongst the youth and widespread poverty. This in turn increases the demand side for higher education financing both in number of applicants and the amount allocated to applicants. 12

21 (iv) (v) Economic growth and development depend on the peace and stability within and outside our borders. Lack of this may hamper the social welfare of our citizen which may affect the impact of HELB loans to the nation as beneficiaries may not be able to utilize their knowledge to engage in economically gainful activities. Varying government priorities in allocation of resources. The government concentrates more on provision of funding to basic education up to secondary school level. This leaves the post-secondary education with inadequate funding. This is due to the belief that provision of basic education is more beneficial to the society while for higher education is more beneficial to the individual. There are also other high priority service provision areas such as security and infrastructure. 3.4 PROBLEM STATEMENT This section analyses the various problems that HELB is intending to address by implementing the 2013/14-2017/18 Strategic plan. 3.4.1 INCREASE ACCESS AND EQUITY Currently the Board covers only 19% of the students attaining C+ and above in KCSE. At the same time the amount being allocated is low compared to the ever rising cost of living and the high tuition fees charged to self-sponsored students. HELB target to increase this coverage to 36% by 2018 and at the same time increase the average amount from the current Kshs 37,000 to Kshs 50,000 per year. As per the current Universities Act 2012, the Board is expected to finance students based on Differentiated Unit Cost (DUC) model, but this continues to be challenging given the low capitation and as such this planning document is based on uniform costing and not DUC. To achieve the coverage of students in terms of numbers from the current 19% to 36% by 2018 for those who have attained minimum university entry (C+), the Board has planned to grow the current student financing budget of Ksh.5.4 billion to Kshs 19.054 billion by 2018 through deployment of various strategies. Below is the projected student and operating financing requirements for HELB up to 2018. This includes one billion per year in 2014/2015 and 2015/2016 for construction of HELB headquarter. 13

22 Table 1.1 Funding requirements 2012-2018 Projected Funding Requirement upto 2018 Year No of KCSE with C+ and above 1st time applicant funded Continuing student TVET student Total student budget KES M CAPEX & OPEX KES M Total budgetary requirement KES M Inbased university Open University 2012/2013 123,500 40,800 80,676 10,249 5,459 642 6,101 2013/2014 169,520 32,776 101,000 13,000 6,944 1,009 7,953 2014/2015 204,506 41,115 200 113,576 16,500 7,744 1,966 9,710 2015/2016 315,900 75,198 300 131,976 22,000 10,279 2,055 12,334 2016/2017 359,632 102,705 450 180,779 27,500 13,052 1,152 14,204 2017/2018 406,968 137,687 500 247,328 38,000 19,054 1,260 20,314 Source: HELB 14

23 3.4.2 INSTITUTIONAL MANAGEMENT AND LEADERSHIP HELB is an established and reputable institution of financing higher learning in Kenya. Its operations are guided by her mandate whose achievement requires adequate planning. This is required to assist in matching the increased demand for student financing with the existing resources. HELB will put in place stringent control measures to ensure that the scarce resources are utilized prudently. It will also ensure that effective leadership in all operational areas is put in place as the institution concentrate on mobilizing resources to close the ever widening gap between the demand and the available resources. 3.4.3 LINKAGES AND PARTNERSHIPS HELB is working with limited number of partners, but for the purpose of meeting its mandate, a number of linkages and partnerships particularly with financial institutions, industry, community organizations, institutions of higher learning, middle level colleges and training centers will be established. Through these collaborations, HELB will be able to engage into joint education financing projects and create awareness of its products and services. In this regard, HELB will formulate a linkages policy/strategy which will guide the establishment and operations of collaborations through MoUs and other partnership agreements. 3.5 EXTERNAL ENVIRONMENT ANALYSIS In the volatile environment which we operate in, it is challenging to predict the future. This external environmental analysis assesses the conditions and changes expected to prevail in the operating environment and for which HELB have no control. The PESTL analytical criterion is used in this analysis. It assesses five key elements in the operating environment namely; Political, Economic, Social, Technological, and Legal (PESTL) factors expected to have potential impact on the Board s operations either positively or negatively. The outputs of the PESTL analysis are the key opportunities and threats for the Board. 3.5.1 POLITICAL FACTORS Going by the political temperatures and developments, trends indicate that the Kenyan political context is likely to remain both complex and volatile. HELB needs a favorable political environment if it is to fulfill its mandate. Political factors that may affect operation include; 15

24 (i) (ii) (iii) (iv) (v) The adoption of the Constitution 2010, has brought with it transition dynamics and a number of processes will require time before settling down; Impact of the relationship between the National and the County government; Political challenges and expectations for the government which is the first one under the Kenya Constitution 2010; Changes in the administration of education sector and the implication of the various Education Acts including establishment of new bodies (UFB and TVET Funding board) to manage education financing both for the universities and the TVET institutions; Fiscal policy issues such as budget allocation where the government and the parliament may have differing priorities. 3.5.2 ECONOMIC FACTORS Economic growth in the plan period is expected to average about 5-10% per annum provided that the political environment remains relatively peaceful and stable. There will be sustainable economic growth, if the government has sound Macro-economic Policies and effectively implement National plans including MTP II projects. This is expected to generate adequate government revenue through taxes. The factors that may affect this and in turn affect HELB operations include; (i) (ii) (iii) (iv) 16 Global financial crisis which may affect the level of economic growth thus reducing the employment level of our graduates leading to low loan recovery. This may also result into inadequate funds allocation from the exchequer; Continually rising inflation rates leading to high cost of living which in turn may affect the national government budget allocation due to competing priorities leading to budget cuts and expenditure freezes. Inflation rise may be as a result of declining value of the Kenya currency. Slow economic growth may reduce government revenue leading to inadequate budgetary allocation from the exchequer; Lack of adequate employment opportunities due to slow economic growth may lead to brain drain to the developed countries thus reducing loanee who are servicing their loans and reduced government revenue due to reduced taxes. This may lead into inadequate exchequer allocation.

25 3.5.3 SOCIO-DEMOGRAPHIC FACTORS The social environment is imbued with some significant challenges such as levels of poverty and dimension of poverty gaps and regional imbalances. The factors that may affect the operation of HELB include; (i) (ii) (iii) (iv) Mainstreaming of gender, persons with disabilities, members of marginalized communities and minority group may affect the beneficiaries of HELB loans in terms of loan repayment due to cultural beliefs; Impact of HIV& AIDS affects the Socio-cultural environment making an indelible dent on productive labor at all levels of society leading to a high number of dependents. These are expected to take up more resources leaving fewer resources to economically productive activities; The rural-urban migration and the factor of brain drain vide migration of professionals and highly qualified medical personnel are also challenges identified within this arena especially at this time when the counties need more skills if they are to develop and become economically stable; The increasing population growth of youth of age 15-35 years continues to increase demand for access to education in post-secondary institutions leading to increased d e m a n d for funds to finance this education. 3.5.4 TECHNOLOGICAL FACTORS Information Communication Technology (ICT) as a major input in acceleration of economic growth by providing an effective and efficient service delivery channel has seen rapid advances, development and expansion for both hardware and software. These rapid changes may lead to; (i) (ii) (iii) (iv) Increase in cybercrimes and frauds leading to insecurity of data and information; Increased access to services being provided by HELB at a lower cost of operation; Increased cost of procurements of ICT equipment requiring frequent upgrade; Unmatched coverage with the technological knowhow skill especially in areas where the poverty and illiteracy level is high. This leads to low uptake of product/services being provided through online medium in those parts of the country. 17

26 3.5.5 LEGAL AND REGULATORY FRAMEWORK The Constitution of Kenya (2010) articles 43.1(f), 53.1(b) and 55(a) makes education a right of every Kenyan while the Kenya Vision 2030 underscores the importance of education in ensuring relevant human and social capital for sustainable development. The legal framework that may affect the operation of HELB include (i) (ii) (iii) (iv) The Universities Acts (2012) and TVET Act (2013) requirement that all students should be funded by HELB. This is not matched with the required resources allocation; The current age of majority where an adult is a person at age of eighteen years and above. This is the only person who can engage in a contractual obligation. This is resulting into a number of university students being locked out of the HELB loans as they are admitted to university when they are below the age of majority and hence cannot borrow from HELB; The provision in the Constitution on gender issues and the one third requirement rule. HELB has to adhere to this requirement, both at the time of funding students and at the time of recruiting staff; The requirement that the salaries and benefit for the Public service and State Corporation are being managed by the Salaries and Remuneration Commission. This will lead to flight of the best brain from the public service to the private sector as the equalized remunerations are too low to attract and retain the best brains. 3.6 SWOT ANALYSIS SWOT analysis is a framework for generating strategic alternatives (options) from a situation analysis. SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. The SWOT analysis classifies the internal aspects of an organization as either strengths or weaknesses and the external situational factors as either opportunities or threats. The SWOT for HELB is outlined here below; 3.6.1 INTERNAL ENVIRONMENT ANALYSIS Internal environment analysis assesses the key organizational assets, resources, skills and processes that represent either strengths or weaknesses. These were identified as follows: 18

27 3.6.2 Strengths: a) Customer friendly culture b) Skilled and knowledgeable staff and Board on HELB operations; c) HELB is the only Government agency for financing higher education; d) Competitive products and services; e) Leverage on technology; f) Mandate anchored on law/ enabling legislative environment. 3.6.3 Weaknesses: a) Over dependency on GOK budgetary support; b) Weak loan compliance/inspection mechanism; c) Incomplete records making it difficult to trace loanees; d) Inadequate infrastructure and systems integration; e) Weak validation process; f) Low financial literacy and product knowledge by the market; g) Insufficient risk analysis and management system; h) Inefficient business processes; i) Inadequate communication with stakeholders. 3.7 EXTERNAL ENVIRONMENT ANALYSIS The analysis of the external environment of HELB focuses on five key dimensions, namely, Political, Economic, Social, Technological and Legal (PESTL). The outputs of the PESTEL analysis are the key opportunities (positive or favorable conditions existing in the external environment) and threats (negative or unfavorable conditions). Below is the summary of the opportunities and threats. 3.7.1 Opportunities: a) Government of Kenya support b) Breadth and depth of development partners c) Collaboration with corporate foundations and Individual d) Devolved funds (county and constituency) 19

28 e) Financial market f) Property investment g) Growing Customer base h) Exploit technological advancement i) Enabling legislative framework j) Integration of the national registration/identification 3.7.2 Threats: a) Political risk b) Competing government priorities c) Macro-economic risk inflation, interest rate, and forex risk d) Unemployment and under employment e) Competition from financial institutions and other financing agencies f) Migration of loanees to other countries g) Technological risks h) Fraud risk effect on reputation/image 3.8 STAKEHOLDERS ANALYSIS HELB recognizes the existence of a number of stakeholders with diverse interests and influence on the conduct of its activities. The major stakeholders identified include students, staff, government, the industry, development partners, corporates and other institutions of higher learning, all who will contribute to the performance of the HELB. The table below outlines the expectations of both the stakeholders and HELB. To achieve HELP HELB recover past loans 20

29 Table 1.1 Stakeholder analysis Stakeholder Stakeholder Expectations HELB Expectations Students Quality and fast services delivery Availability of finances or loans for their education Adequate funds for Variety of academic programmes Healthy, safe and secure service provision environment Defined programmes schedules and on time payment Academic excellence Discipline Compliance with the funds rules and regulations sanity and order Timely education Loan repayment Effective communication Staff Sustainability of HELB Healthy, safe and secure working environment Security of tenure and defined career progression Training and development opportunities Welfare services Equity Adequate remuneration structure Commitment to HELB goals Meritocracy Loyalty and sustainable service Quality Customer service Adherence to core values 21

30 Government Quality human resource capacity for National development Proper utilization and accounting of government contributions Quality services Financial products innovation Regular and adequate funding Development of policies that contribute positively to the governance of the institutions Enabling working environment Peace and stability Sound Macroeconomic policies Financiers and Partners Efficient use of donations and grants Funded project outputs accountability Professionalism & integrity in fund management Sustainability Stewardship Mutual benefits Sustained funding Universities and Colleges Quality graduates Adequate financial support for students Financial Solutions to development and operational problems. Effective policies Sustainable partnerships Collaboration Effective communication Support in policy implementation Responsibility & Accountability Competitors Civil Society Fair competition for potential finances Good Corporate Social responsibility Fair competition for potential funds Cooperation 22

31 HELB as an institution strongly believes that the stakeholders identified are critical to the realization of its vision. The Board will carry out stakeholder analysis on a continuous basis in order to identify changing needs to ensure cooperation and support in the achievement of its Mission and realization of its Vision. In order to address the issues presented by internal and external environment, HELB will put in place risk mitigating strategies to ensure that these issues do not hinder the Board from achieving its goals. To achieve HELP HELB recover past loans 23

32 4.0 CHAPTER FOUR: 2013-2018 STRATEGY MAP AND PILLARS In this strategic Plan 2013-2018, HELB will strive to fulfill its mandate by focusing on four (4) major pillars. The Pillars and KRAs will be the performance driving forces which the Board seeks to deploy to achieve its Mission and Vision, and deliver value to customers. The pillars are: Financial Sustainability Customer Service delivery Internal Processes re-engineering Institutional Capacity and Corporate Governance 4.1 STRATEGY ROAD MAP In implementing this strategic plan, the Board, Management and staff will heavily rely on a comprehensive Strategic map supported by detailed Key Results Areas (KRAs) in an effort for HELB to achieve its mandate, Vision and Mission. The Strategy map captures the Board and Management visualization of the strategy clearly to ease communication to staff and stakeholders. Composed of two columns of Pillars and KRAs, the matrix is composed of clear rows which elaborate the individual KRAs that the Board will pursue to realize this strategic plan Here below is the strategy map that will guide the implementation of the Strategic Plan Education is the strongest and the most lethal weapon in reducing the gap between the rich and the poor Nelson Mandela 24

33 Strategy Map Framework Financial Sustainability Revolvability Alternative Resource Mobilization Sustainability Cost Efficiency Customer Service Product / Quality Price / Affordability Placement / Availability Promotional Decentralization Internal Processes Re-engineering Customer Relationship Management Automation / Innovation Standard and Innovations Efficiency Institutional Capacity and Corporate Governance Corporate Governance Enterprise Risk Management Performance Management Framework Human Capital Organizational Capital Pillars Key Results Areas (KRAs) Figure 2- Strategy map framework indicating the Pillars & KRA s 4.2 THE PILLARS AND THEIR IMPLEMENTATION MATRIX This section explains in details each pillar and how it will be implemented by providing the various Strategic initiatives, activities, key performance indicators, accountable person, timelines and budget requirement. 4.2.1 Financial Sustainability pillar strong financial base is important for HELB in providing adequate financing to all A Kenyans who are enrolled in institutions of higher learning. As economic pressures continue to push up inflation rates, the cost of living increases, this calls for the HELB to continuously revise its allocations to students who apply for its financing. However, this can only be achieved if the Board has a strong financial base and the capacity to raise additional funds to meet the budget requirements. The unpredictability of national budget allocation underpins the need for the Board to look for alternative sources of 25




34 financing to fulfill its mandate. In strengthening financial sustainability, the Board will have to effectively manage its main asset base which stands at Kshs.33.5 billion as at June 2013. If well managed this strong financial base presents the Board with an opportunity to provide future financing for higher education. However, the quality of this portfolio is an issue which needs to be addressed urgently. It is estimated that about 39% of the portfolio is not performing and continue to accumulate, which will put the Board s operations at risk. To ensure that HELB operate as a Development Financing Institution for higher education financing as recommended by the presidential task force on Parastatal reforms, the board will commence the transformation process by preparing and seeking the necessary legal and regulatory framework. This will enable the Board to operate as a financial institution by ensuring that all higher education financing from all the sources are channeled through its systems. At the same time the Board is expected to evolve to a deposit taking institutions as savings by both parents and the students wish to save fund for their future children education or their own education. The operationalization will be completed by June 2015. Here below is the implementation matrix for this pillar: Strategic Objective: To grow the annual student budget portfolio from the current Kshs 5.4 billion in 2012/2013 to Kshs 19.054 billion and to increase the coverage of students with C+ and above from the current 19% to 36% by 2018 Key Result Area Strategic Initiative Activities Key Performance Indicator (KPI) Accountability Timeline Budget (Kshs in millions) per year Revolvability Increase performing loan portfolio from 55% to 70% Inspection of employers Establish and strengthen collaborations with Key Stakeholders Increased compliance and recovery levels Increased compliance and recovery levels LRRM/LSM Quarterly - periodically LRRM Quarterly - periodically 5 5 Create a special debt collection unit Increased compliance and recovery levels LRRM/ICTM Jun-14 10 26

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