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TTB School Facility
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 25766
Company nameGhana School Finance Facility
Sector1Elementary and Secondary Schools
Environmental categoryFI
Date SPI disclosedApril 2, 2007
Projected board dateMay 2, 2007
Previous EventsSigned: May 17, 2007
Approved: May 11, 2007
  Overview     Sponsor/Cost/Location     Development Impact     Contacts     Attachments  

Project description
The proposed project is follow-on investment to provide local currency financing and technical assistance to private K-12 and vocational schools in Ghana. IFC would provide risk participation of up to GHC22 billion ($2.4 million) to The Trust Bank (TTB, the Bank, or the company) on loans extended to eligible private schools. These loans will be used to finance construction, purchase of educational materials, and other capital expenditures. In parallel with the financing facility, a technical assistance program will be provided:

- to strengthen schools’ financial, management, and educational capacities;
- to improve the business environment for private education; and
- to foster the development of an independent provider of educational services to private schools.

Currently, few local banks are lending to private primary, secondary and vocational schools, and those that do, generally lend for less than two years. Thus, even if schools are able to secure bank financing, the tenor of that financing is generally not long enough to support expansion or modernization projects. Such projects thus proceed in a piecemeal fashion, resulting in a great deal of inefficiency and lost potential revenue. Further, expansion by such means cannot keep pace with the huge growth in demand for private schooling. IFC’s risk participation would be structured to encourage the Bank to extend maturities to 3-5 years, tenors more appropriate for financing capital investments.

Despite the impressive growth of private schools in Ghana over the past 15 years, most remain fundamentally weak in their financial and managerial capacities, as well as in their ability to develop more effective educational delivery mechanisms. The majority of schools has minimal financial expertise, weak information systems, if any, and limited opportunities for teacher training and curriculum development. The technical assistance program designed in conjunction with the financing facility is intended to address many of these shortcomings for participating schools, and, in addition, to strengthen the environment for private school operators.

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