Kenya Schools

completed

_x000C_The proposed project is an initiative to provide local currency financing and technical assistance to private educational institutions in Kenya. It is the second such initiative in the education sector after IFC’s pilot school financing facility in Ghana, committed in June 2005. IFC would provide risk-sharing of up to 120 million Kenya Shillings ($1.7 million equivalent) to K-Rep Bank (K-Rep or the Bank) on loans extended to eligible private schools in Kenya. These loans will be used to finance construction, purchase of educational materials, and other capital expenditures. In parallel with the financing facility, a comprehensive technical assistance program is under preparation. The program will be designed to: - strengthen schools’ financial, management, and educational capacities; - improve the business environment for private education; and - foster the development of an independent provider of educational services to private schools. Technical assistance will also be provided to the Bank to build its capacity to conduct due diligence of educational institutions and monitor its education portfolioCurrently, few local banks are lending to private primary and secondary 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-sharing 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 Kenya 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.