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IFC Increases Support for Private Education in Ghana


In Washington, D.C.
Ludi Joseph
Phone: +1 (202) 473-7700
E-mail: ljoseph@ifc.org

In Accra
Kofi Tsikata
Phone: +233 21 229681
E-mail: Ktsikata@worldbank.org
 
In Johannesburg
Houtan Bassiri
Phone: +2711 731 3179
E-mail: hbassiri@ifc.org


Accra, Ghana/Washington, D.C., May 18, 2007—IFC, the private sector arm of the World Bank Group, has increased its commitment to high-quality private education in Ghana with a second investment in The Trust Bank Limited that will support lending to private schools.

Despite a strong demand for private education, most private schools in Ghana are unable to meet their growth projections. They are limited by their inability to access the long-term, local currency financing they need to build additional facilities and purchase equipment. Short-term loans from local markets put a strain on cash flows and adversely affect the schools’ capacity to operate effectively. IFC’s aim is to alleviate this constraint by sharing TTB’s risk, thereby encouraging longer-term financing to private schools.

The project consists of a follow-on investment in the structured risk-sharing facility established in June 2005 and is the second such initiative in Ghana’s education sector. The investment will be complemented by an IFC Advisory Services program to prepare participating schools to borrow from the formal sector, by strengthening their financial and managerial capacities.

The new project will increase IFC’s risk participation up to 31.4 billion Ghanaian cedis (about $3.4 million equivalent), covering about half of the portfolio of loans extended by TTB to eligible private schools to finance construction, purchase of educational materials, and other capital expenditures.

TTB’s Managing Director, Isaac Owusu-Hemeng, said, “Demand from private schools has been much greater than expected and, with IFC’s support, we will extend our lending beyond the Accra region, reaching even more schools than under the 2005 pilot project.  Well-run private schools outside Accra often face greater financing constraints because the banking sector is less familiar with those markets.”

Guy Ellena, IFC Director for Health and Education, noted, “IFC has been an innovator in Ghana’s private education sector.  This unique approach to financing schools has recently been replicated successfully in Kenya. The goal is to help apply it throughout Sub-Saharan Africa in the near future.”

Thierry Tanoh, IFC Director for Sub-Saharan Africa, added, “The combination of IFC investment and advisory services has proved to be an effective approach in financing small-scale projects that have a high developmental impact.”

About IFC

IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products have committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit www.ifc.org.

IFC in Ghana

Since Ghana became a member in 1958, IFC has invested over $650 million in more than 40 projects. IFC’s strategy in Ghana includes supporting private provision of infrastructure, deepening the domestic financial sector, expanding opportunities for microenterprises and small and medium businesses borrowing through local financial institutions, promoting the development of nontraditional exports, and enhancing the business environment.