Benefits and barriers to digitalisation of loan bursary repayment in the National Manpower Development Secretariat (NMDS) of Lesotho

Abstract

The National Manpower Development Secretariat (NMDS) in Lesotho continues to face critical challenges in recovering disbursed student loan bursaries, largely due to its reliance on outdated, manual repayment methods such as cash payments, unenforced stop orders, and bank deposits. These inefficiencies contribute to persistently low recovery rates, affecting the sustainability of the NMDS fund and the country’s broader goals for higher education access. This study explored how digital payment systems can be adopted to improve the operational efficiency of loan bursary repayments and enhance recovery outcomes. Guided by the Unified Theory of Acceptance and Use of Technology (UTAUT) and the Diffusion of Innovations (DOI) theory, the research employed an interpretivist paradigm and a qualitative case study design. Data was collected through semi-structured interviews with seven purposively selected participants, including NMDS administrators and IT personnel. Thematic analysis revealed that while digitalisation offers transformative benefits—such as enhanced repayment tracking, reduced fraud, and streamlined administrative processes— it is hindered by low digital literacy, infrastructural gaps, funding constraints, and lack of regulatory enforcement. The study incorporated a comparative analysis of student loan repayment models in South Africa (NSFAS), Kenya (HELB), and Uganda (HESFB), revealing valuable lessons for phased implementation, automation of deductions, and strategic partnerships. The research concludes with a detailed implementation roadmap for NMDS, structured around short-, medium-, and long-term strategies. These include conducting a digital readiness assessment, piloting integrated systems, updating legal frameworks, and building digital capabilities. The findings offer practical guidance for policy reform and digital transformation in higher education financing and contribute to the growing body of knowledge on public- sector innovation in developing countries.