Washington, D.C., June 13, 2007 —
IFC, the private sector arm of the World Bank Group, announced that its
Board of Directors has approved a landmark project to finance private schools
in Sub-Saharan Africa through local banks. Because of the successful financing
of similar projects in the region, IFC is scaling up its efforts to launch
a three-year Africa Schools Program that will include about 500 schools
and enroll over 100,000 students, significantly increasing its reach and
Private schools in Africa face major
development constraints due to limited medium- and long-term financing
for capital investment. IFC’s $50 million integrated investment and $6
million advisory services program will provide local partner banks with
unfunded risk participation facilities in local currency to address these
constraints. It will also encourage them to finance private primary, secondary,
vocational, and tertiary schools and grow their education portfolios.
Guy Ellena, IFC Director for Health
and Education, said, “The Africa Schools Program builds on the successes
of smaller projects in Ghana and Kenya. This new initiative will help IFC
increase its operations and boost its development impact. With its multicountry
approach, the program will help us respond more promptly and efficiently
to market demand from low- and middle-income households across the region.”
While all countries are eligible, the
program will initially focus on Cameroon, Ghana, Kenya, Madagascar, Mozambique,
Nigeria, Senegal, South Africa, Tanzania, Uganda, and Zambia. Criteria
will include countries where there is high student enrollment in private
schools and where IFC has existing school financing programs or local offices,
and could quickly develop investment opportunities.
“The Africa Schools Program addresses
two major shortcomings—the lack of affordable long-term financing for
the education sector and the schools’ lack of training in financial management,”
said Thierry Tanoh, IFC Director for Sub-Saharan Africa. “This education
program will also help grow local financial markets by using local banks
to deliver local currency financing.”
Based on IFC’s earlier experience,
individual loans by partner banks to schools are expected to range from
$1,000 to $500,000 in the local currency equivalent. To be eligible for
financing, schools will need to meet the originating bank’s underwriting
criteria and comply with local environmental, social, and safety standards.
IFC will also design and implement a
two-year advisory program to improve the operating efficiency of schools
and the ability of partner banks to lend effectively. Advisory services
will be tailored for each market, and will include workshops aimed at preparing
schools to develop strategic business plans and training a local services
provider to deliver school development services. Partner banks will also
be trained in marketing, credit assessment, and loan monitoring.
IFC and the World Bank will collaborate
in implementing the program, ensuring its compliance with education sector
policies in respective countries and jointly evaluating its impact. This
will help recognize private schools as valuable stakeholders and contributors
to the sector.
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.