East African Business Week (Kampala)
Alex Ngarambe
29 November 2008
Kigali, Rwanda — The International Finance Corporation (IFC) and Rwanda Bank of Development (BRD) have launched a risk sharing facility worth US$4.8million to finance private schools.
The facility will allow BRD to increase its lending to private schools to Rwf7billion (US$13million).
The ministry of education has backed this programme by providing BRD with US$3 million to help it grow its private sector education portfolio.
"The government of Rwanda sees an importance for private schools particularly at secondary and tertiary levels. IFC's advisory programme is key to helping these private institutions improve their management systems and the quality of education they provide," the permanent secretary in the ministry of education, Claver Yisa said at the function held in Kigali last week. On top of money, IFC will also provide advisory services to qualifying schools to help them prepare business plans to present to BRD to get financed. It will also strengthen their financial management and generally improve the quality of the education services.
IFC will as well work with BRD to help the bank evaluate new business proposals and monitor the performance of its education portfolio.
The programme is targeting to give out loans to 100 schools in the next two to three years. The schools will be allowed to borrow a maximum of Rwf 300million (US$540,540) to be paid back in ten years.
This programme was modelled after similar programmes in Kenya and Ghana where IFC has also mobilized local currency financing. There is a market survey going on in Uganda and they hope to start before the end of next year. "This initiative demonstrates IFC's effective combination of investments and advisory services in undertaking small-scale projects that have a high development impact," IFC's senior operations manager, Ignace Bacyaha said.
BRD has put conditions for schools that would wish to get loans such as a feasibility study of the project. IFC is a member of the World Bank Group that fosters sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital and providing advisory and risk mitigation services to businesses and governments.
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