Press Releases
print

IFC Launches Program to Finance Private Schools in Africa through Local Banks


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


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 impact.

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.

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.