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| RWA Schools BRD |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 26715 |
| Company name | Banque Rwandaise De Developpment |
| Country | Rwanda |
| Sector | Education Services |
| Environmental category | FI |
| Department | Health and Education |
| Status | Pending Disbursement |
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| Date SPI disclosed | March 27, 2008 |
| Projected board date | April 28, 2008 |
| Previous Events | Signed: May 22, 2008
Approved: May 22, 2008 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
This proposed investment involves the establishment of a risk sharing facility with the Banque Rwandaise du Developpment (BRD or the Bank) in Rwanda. Under the facility BRD will make loans to eligible private education institutions (pre-primary through tertiary) and to companies which support the education sector, e.g. accommodation providers. The project is a replication of similar facilities implemented in Ghana and Kenya and is in line with IFC’s objective to adopt a wholesale approach through risk sharing to support education in SSA
Under the proposed terms of the Facility, BRD would be responsible for generating a portfolio of education loans. IFC’s participation would involve taking risk on 40 percent of the senior tranche of that portfolio. This exposure would be protected by a first loss provided by BRD.
In parallel, PEP Africa will design, raise funds for and implement an advisory services (AS) program to assess the scope and funding needs of the education sector and to improve the credit quality of participating schools.
Education is a priority area for BRD. The proposed facility will enable it to grow its portfolio at a faster pace than it would do on its own and provide the Bank and the borrowers with much needed advisory services. |
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| Project sponsor and major shareholders of project company |
| BRD was established in 1967 to promote economic development in Rwanda. It has a capital base of RWF 3 billion ($5.5 million), shareholders’ funds of RWF 5.8 billion ($10.7 million) as of Sept 30, 2007 and its shareholders comprise the Government of Rwanda (48.12%), local public institutions (7.65%), development financial institutions, including DEG and FMO (33.75%) and the private sector (10.49%). A rights issue is underway to increase the Bank’s capital to $9 million equivalent. With the exception of the government and public institutions, all other shareholders have decided to increase their shareholding. As a result the government and government owned companies will see their equity reduced to around 40%. |
| Total project cost and amount and nature of IFC's investment |
| BRD’s existing exposure to schools is about RWF 3.5 billion ($6.3 million); with IFC risk participation and technical assistance program it plans to double this to RWF 7 billion ($12.6 million) over the next 3 years. Assuming a first loss protection of 7% and IFC senior risk share of 40%, IFC’s maximum expected commitment to the program will be approximately $4.7 million equivalent. |
| Location of project and description of site |
| BRD is located in the Central Business District of Kigali, the capital of Rwanda. |
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| Anticipated development impact of the project |
The Government of Rwanda’s five year Education Sector Strategic Plan (ESSP 2006 – 2010) calls for increasing primary school enrolment rates and secondary school transition rates, currently 51% and 15% respectively. In this context, an array of actions have been planned to expand education services to all levels, with emphasis on basic education and on improving the quality of its services. These actions include; building and equipping classrooms, revising and adapting programs, training trainers and management personnel, providing textbooks, science and ICT equipment, with emphasis on science and technology education. Encouraging the private sector to invest in education and expand opportunities for increased numbers of students, particularly at secondary and higher levels is one of the strategies that the GoR has formulated to realize its goals in education.
The proposed investment will contribute to GoR’s development objectives by improving private Rwandan schools’ access to finance and terms of borrowing. Business development and planning advice as well as skill training to improve schools’ financial and operational management will enable efficient assessment by the bank and reduce the risk in lending to schools. In so doing, the facility will widen access and improve the quality of private schools in Rwanda. |
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| IFC's expected development contribution |
The Facility is expected to have the following substantial impact on both the education and financial sectors:
- increased access for underserved markets and populations;
- improved quality of education services; and
- demonstration effect. |
| Environmental and social issues - Category FI |
This investment has been classified as a Category FI investment according to IFC’s Environmental and Social Review Procedure. The applicable requirements are:
- The IFC FI Exclusion List(s);
- The applicable national environmental and social Laws and regulations, with special emphasis on life and fire safety.
IFC will also review, if required, the capacity of the FI to manage environmental and social risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the Sponsor will be required to:
- Develop and/or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to disbursement to the satisfaction of IFC;
- Identify responsible, qualified persons to manage and implement the SEMS;
- Commit to implement the SEMS, to ensure that its investments/activities in the education sector are in compliance with the Applicable Performance Requirements;
- Commit to take action to remedy any gaps in SEMS implementation on an ongoing basis;
- Submit a periodic report to IFC as per a format to be provided by IFC on their education portfolio. |
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| For inquiries about the project, contact: |
Mr. Emmanuel Karuranga, Director
Risk and Credit management Department
E-mail: e.karuranga@brd.com.rw |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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