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
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.”
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