By Lesley Wroughton
WASHINGTON (Reuters) - The World Bank's private-sector lender approved on Tuesday a $50 million program that will provide risk guarantees to local banks in Africa to encourage funding for private schools, officials said.
The bank's International Finance Corp. (IFC) said loans for schools were expected to range from $10,000 to $500,000. The program will initially cover Cameroon, Ghana, South Africa, Nigeria, Mozambique, Tanzania, Zambia, Kenya, Senegal, Madagascar and Uganda.
Guy Ellena, IFC director for health and education, told Reuters that while most aid targeted public-school funding in sub-Saharan Africa, the IFC project wanted to address financing constraints for private schools where demand is growing.
"With its multicountry approach, it will help us respond more promptly and efficiently to market demand not just in individual countries but across the continent," he said.
The IFC said most sub-Saharan countries were off track in meeting globally agreed targets of universal access to primary education by 2015, and governments were looking to the private sector to help fill the gap.
Aida Kimemia, IFC senior investment officer, said local banks seeking new business were interested in lending to schools but perceived them as risky. With IFC risk guarantees, banks were now motivated to lend to schools, Kimemia added.
She said the IFC would consider working with local banks it had already done business with in Africa, but would also seek out banks that are already lending to schools.
"For this program to work, you need to have a good banking sector to find good partners as counterparties and you also need a strong private sector," she said.
Kimemia said it was important that banks structure the financing appropriately for schools. "Schools get their inflows in lumps so their money is seasonal and it is important to structure the loans to reflect that," she said.
To help schools expand enrollment and improve, Kimemia said the IFC would implement a two-year advisory program to improve schools' operations and banks' ability to lend effectively.
Technical assistance will include training banks in marketing, credit assessment, and loan monitoring; workshops aimed at marketing the program and training schools to develop business plans; and developing a local services provider to offer individual training to schools.
According to UNESCO, total primary enrollment for Sub-Saharan Africa is about 101 million students, with 10 percent in the private sector. Total secondary enrollment is 31 million students, of which 14 percent are in private schools.
