The Higher Education Loans Board (HELB) is set to partner with the Kenya Revenue Authority (KRA) in a fresh push to recover unpaid loans from the informal sector.

🇰🇪 Breaking It Down

When quizzed during a KTN interview on July 8 on the informal sector, HELB Chairperson Ekwee Ethuro said the sector has long remained a thorn in the institution's side, as informal earners, unlike formal employees whose loans are automatically deducted, have largely slipped through the cracks.

“That's why we are exploring the partnerships, and the KRA partnership is a very viable one,” stated Ethuro.

Adding, “They have better systems, a greater outreach, and if you buy something, KRA will be knocking on your door.”

📌 What You Need to Know

For years, HELB has struggled to track down beneficiaries who never landed formal jobs after school. These are Kenyans running businesses in the jua kali sector or the gig economy or working informally, often invisible to standard payroll deduction systems. Ethuro revealed that over 380,000 beneficiaries have defaulted on their loans, with more than 124,000 classified as "chronic defaulters", which includes over 83,000 who have not paid in over a decade, now blacklisted with the Credit Reference Bureau (CRB), locking them out of banking facilities, primarily driven by rising youth unemployment. Hence, this is where KRA comes in as the taxman relies on data-led enforcement rather than traditional audits.  By utilising automated data-matching tools and digital integrations, KRA effectively unearths hidden turnover and uncovers traders who actively evade taxes using mobile money and till tracking, cracking down on churned accounts and lifestyle and asset audits.

Ethuro explained that KRA's wide reach means it can pick up financial footprints that HELB alone cannot access, in that if someone makes a significant purchase, KRA's systems are likely to notice. Importantly, the board insists this is not about intimidation or threats of jail time for defaulters. Instead, HELB wants the process to feel like a fair exchange between the institution and the people it once supported. The shift of focus comes after the HELB partnered with the KRA to enforce mandatory salary deductions in the formal sector, with employers being directed to submit staff details, commence deductions from loan defaulters' salaries, and remit the funds by the 15th of every month.

In March 2026, HELB intensified its crackdown, penalising non-compliant employers, as organisations failing to declare employees with outstanding loans or forward required deductions now face a Ksh3,000 monthly fine per employee, backdated to the worker's date of employment. Even so, Ethuro emphasised that these defaulters owe a combined outstanding loan portfolio of Ksh20 billion, and the board has experienced progress in terms of collections due to the measures put in place by the board, including the incorporation of fintech technology and proper collaboration with the employers.

📰 Source: Kenyans.co.ke