Kenya Schools 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 IFCs 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 portfolio  Currently, 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. IFCs 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. The proposed project will have a substantial impact on both the education and financial sectors in Kenya.   First, it will help improve the educational quality and financial and managerial capacity of private primary and secondary schools in Kenya. In doing so, the project will enable schools to obtain financing from the formal banking sector and widen access to much-needed quality education. The enormous demand for private schools is currently unmet, in large part because schools have little access to affordable, long- or medium-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.   Second, the projects technical assistance component will also help schools strengthen their educational management capacities, thus setting a standard for the private sector, and improving the business environment for private education.   Third, the project will introduce to the financial sector a means of delivering medium-term local currency financing to educational and other institutions. Finally, this project would further demonstrate the applicability of this risk-sharing model for reaching small education providerswhich comprise the vast majority of private providersthroughout Africa (and other regions). IFC could thus continue to expand education financing to other African countries with similar markets and constraints.