Africa Schools Program

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	25887
Company name	Africa Schools Program
Country	Africa Region
Sector	Education Services
Environmental category	FI
Department	Health and Education
Status	Pending Signing

Date SPI disclosed	May 7, 2007
Projected board date	June 12, 2007
Previous Events	Approved: June 12, 2007

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Private schools in Sub-Saharan Africa face major development constraints due to the limited availability of medium and long term tenors appropriate for capital investments. Many schools also require technical assistance to improve their financial, managerial and administrative capabilities, and to improve operational efficiency. The IFC Africa Schools Program (the Program), a $50 million integrated investment and advisory services program, will address these constraints by encouraging local banks to provide local currency financing to private primary, secondary, vocational and tertiary schools at tenors suitable for capital investments. The Program would also help partner banks develop business lines in an unfamiliar asset class or, for banks already familiar with the education sector, grow their education portfolios at a pace otherwise not possible on their own. Through the proposed program IFC expects to significantly increase its impact by extending financing to hundreds of schools over a three year period.

Anticipated development impact of the project

The Program will have powerful effects on both the education and financial sectors in many African countries. First, the proposed project will have a strong development impact in helping to improve the financial and managerial capacity and educational quality of private schools. In doing so, the project will widen access to much-needed quality education. The Program is expected to reach approximately 500 schools, enrolling 100,000-150,000 students. Illiteracy in many of the targeted African countries is still more than 40%, and government spending on basic education has not kept up with population growth. According to World Bank estimates, many countries in Sub-Saharan Africa are not on track to meet the Millennium Development Goal of universal primary completion by 2015 at current enrolment and spending rates. The enormous demand for private schools is currently unmet, in large part because schools have little access to affordable, long-term financing and little training in financial management. This project will address both shortcomings, and, with respect to the latter, demonstrate sound practices throughout the sector.

IFC's expected development contribution

The IFC Africa Schools Program is expected to encourage partner banks to lend to the under-served education sector at tenors (3-4 years) appropriate for capital investments. The IFC advisory services program will continue to prepare schools to borrow from the formal sector and improve the educational quality of schools, which, apart from the obvious social benefits, will make schools less risky borrowers. Thus, IFC is creating the basic conditions for long-term lending in the education sector. Further, IFC’s risk participation will help improve options for local currency financing.

Environmental and social issues - Category FI

This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.

As this project is at a conceptual phase, it is envisioned that as each partner bank is identified, during appraisal, IFC will, for existing FI project sponsors, review the capacity of the FI to manage environmental and social risks and assess their implementation of their Social & Environmental Management System (SEMS). As some target countries may not have effective environmental or fire and life safety legislation (Nigeria instituted its National Building Code only in January 2007) it may be necessary for IFC to provide some further guidance on environment, life and fire safety. If required, IFC will suggest supplemental actions to address any gaps in the SEMS and may consider technical assistance targeted at these issues as well. This approach may be adjusted as the project becomes more defined.

Based on the review, the project will be required to:

Develop and/or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to commitment 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 school sector are in compliance with the applicable 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.

Likely applicable requirements would include a combination of:

- The IFC FI Exclusion List;
- The applicable national environmental and social laws and regulations with special emphasis on life and fire safety, waste management, OHS for construction and safe drinking water.

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