Kampala, Uganda – A Ugandan fintech company, FURAHA, has launched an affordable school fees loan product, offering hope to parents struggling to pay tuition fees.
The cost of education in Uganda can be overwhelming, with tuition fees paid every term or in a lump sum for the year. However, financial challenges make it difficult for some parents or guardians to meet these expenses, leading to a reliance on borrowing.
FURAHA’s loan product is designed to address this issue, offering affordable loans with lower interest rates. The company has partnered with PegPay of Pegasus to make lending for tuition easier, convenient, and cheaper.
According to Yustus Aribariho, a co-founder at FURAHA, the lack of proper financing mechanisms is a major problem, with only about 10% of children enrolled in Primary One able to complete Senior Six.
“We’re not just talking about access to credit, but what that credit is used for,” Aribariho said. “The current focus on providing small loans to individuals has failed to address the real challenges facing people in Africa.”
Aribariho highlighted the example of education, where the cost of school fees is a significant burden for many families. He noted that UNESCO estimates that the education funding gap in Sub-Saharan Africa is $70 billion, with 60% of children unable to access quality education due to financial constraints.
FURAHA has partnered with Pegasus, a payment platform, to create a purpose-driven lending platform that addresses this specific need. The platform assesses creditworthiness and provides loans that are paid directly to schools, reducing the risk of misuse and ensuring that the funds are used for their intended purpose.
Ronald Azairwe, Managing Director of PegPay, described the partnership as a “natural fit” that addresses a critical need in the education sector.
“Furaha has come in to say, ‘We know you want to pay this money, we will make it available to you now, and then you can pay it over time,'” Azairwe explained. “This helps parents to plan and budget, and it also helps schools to receive their fees in a timely manner.”
Azairwe also highlighted the potential for the partnership to expand beyond school fees, citing examples such as rent and utility bill payments.
FURAHA’s CEO, Denis Musinguzi, said that processing a school fees loan takes just a few minutes, thanks to the use of data from the National Identity Card to verify creditworthiness.
“The process is quick and easy, with customers simply needing to provide their national ID number, take a scan of it, and take a selfie,” Musinguzi said. “Furaha then provides a credit limit, which can be used to pay for school fees in weekly or monthly installments.”
Ian Fernandes, Co-Founder of Furaha, emphasized the need for collaboration between different sectors to achieve financial inclusivity agendas.
FURAHA’s ambition is to impact 10 million kids across Africa in the next five years, a goal that the officials believe is achievable with the right partnerships and approach.
