IFC is working to help African countries meet the Millennium Development Goal of offering primary education to all by 2015 by partnering with banks and schools to place more students in more classrooms.
The private sector has an important role to play in meeting the challenge of universal education, especially in Africa where governments alone are unable to provide universal education for rapidly-growing populations.
But even private schools in Africa face difficulties raising funds to pay for buildings, teachers, textbooks, and other essential facilities. Many also lack the expertise and staff to effectively manage their operations, making them ill equipped to educate students.
GROWTH IN RWANDA
The tiny country of Rwanda is no exception. Rwanda has made gains in the education sector in recent years by improving the reach and quality of its school curriculum and by introducing capitation grants.
Its net enrollment rate of over 95 percent in primary schools is already among the highest in the world. But much more can be done to improve enrollment in secondary schools and give Rwanda’s young people the skills they need to drive the country’s growing economy.
In order to address the challenges in Rwanda, IFC in late May signed an agreement with Banque Rwandaise de Développement to help it improve the business environment for private education in the country.
The transaction, which makes good on a pledge IFC CEO Lars Thunell made to the government when visiting the country last year, is the first initiative of its kind in Rwanda.
As part of the transaction, IFC will invest up to 2.6 billion Rwanda francs ($4.8 million) in a risk-sharing facility, which will enable the Banque Rwandaise de Développement to increase its investments in schools to 7 billion francs.
IFC is also designing an advisory program to help strengthen the financial, management, and educational capacities of private schools in Rwanda and develop an independent provider of education services.
In addition, IFC will provide advisory services to help the bank build capacity for conducting due diligence for educational institutions and monitor its portfolio. The transaction will provide local operators with access to long-term financing, enable them to build additional facilities and purchase equipment, and address some of the other challenges that they have been facing.
"This initiative demonstrates IFC's effective combination of investments and advisory services in undertaking small-scale projects that have a high development impact," said Thierry Tanoh, IFC Director for Sub-Saharan Africa.
AFRICA SCHOOLS PROGRAM
The transaction is part of the IFC Africa Schools Program, a $50 million integrated investment and advisory services program that encourages local banks to provide local currency financing to private primary, secondary, vocational, and tertiary schools.
In the next three years, IFC hopes to support about 500 schools and over 100,000 students across the continent. It will provide local partner banks with unfunded risk participation facilities in local currency to address the financing constraints of private primary, secondary, vocational, and tertiary schools.
Based on IFC's earlier experience, individual loans to schools are expected to range from $1,000 to $500,000 in local currency equivalent.
The program is already operating successfully in Kenya and Ghana, where of 3.5 million students aged six to 15, about 20 percent are enrolled in private schools. In Ghana, IFC has financed 11 schools with combined enrollment of 6,000 students.
For more information contact:
Houtan Bassiri
Communications Officer
Johannessburg, South Africa
Tel: +27-11-731-3179
Email: HBassiri@ifc.org
