Developing bankable projects through EDF

 In today’s rapidly evolving global economy, countries are constantly seeking ways to enhance their competitiveness and stimulate economic growth.

One way of achieving this is solidifying investments in critical sectors to speed up the level of economic activities.

However, lack of bankable, investment-ready pipeline projects is one of the major bottlenecks in attracting private capital to key infrastructure projects that could accelerate economic transformation.

As the demand for investments for the realisation of public and private projects remains high, developing and implementing bankable and investment-ready projects remains key.

This requires substantial capital to be injected into the project preparation and development phases, which are critical parts of the project investment lifecycle.

Project preparation is one of the riskiest parts in the project life cycle, yet it remains a critical enabler of infrastructure development.

Recognising the importance of this, the Export Development Fund (EDF) designed the Project Preparation Facility (PPF), a comprehensive support system designed to foster the growth of bankable projects in key strategic sectors of the economy including agriculture, tourism and mining dubbed ATM strategy.

In this article, we will discuss the key features and benefits of this facility and explore how it contributes to the creation of economic assets and infrastructure development.

Enhancing Malawi’s project pipeline

Encouraging greater private sector investment is fundamental to accelerating sustainable infrastructure development in Malawi. Achieving our national developmental goals as stipulated in Malawi 2023, will require increased investment in socially, economically and environmentally sustainable infrastructure.

The main barrier to increased investment of this kind is not the lack of available finance per se, but rather a lack of well-prepared and investment-ready ‘bankable’ projects that could easily attract investors. Malawi holds immense opportunity for private investment.

The country has a young and growing population and abundant natural resources that could support business investments. But the lack of pipeline of projects that are truly investment ready remains a challenge.

Nowadays attracting private capital requires that investors be presented with bankable and investment-ready projects. A well prepared project is one that is structured to ensure good risk allocation and commercial viability. This gives investors the confidence to appropriately consider the risks and mitigating factors in determining its feasibility.

One way of dealing with this challenge is through PPFs. They are increasingly being used as tools to provide technical support and funding for this important pre-investment stage. The primary objective of PPF at EDF is to help the country develop and expand its pipeline of bankable projects.

By providing financial, strategic and technical support, the EDF PPF aims to ensure that a greater number of projects in the country reach financial closure.

This support is crucial, as many promising projects often face challenges in securing the necessary funding and expertise to move forward. The EDF’s PPF facility acts as a catalyst, bridging the gap between project conception and financial viability.

Financial, strategic and technical support

The EDF PPF offers a range of support services to project promoters, both in the public and private sectors. One aspect of the facility is the provision of financial support to cover the costs associated with project preparation, including feasibility

This includes assistance in project structuring, risk assessment and market analysis. By leveraging the expertise of EDF and its network of industry professionals, project promoters can make informed decisions and develop robust project plans that attract potential investors.

Furthermore, the facility provides technical support to ensure that projects meet international standards and best practices. This includes technical feasibility assessments, engineering design and quality control. By adhering to these standards, projects are more likely to attract financing and achieve successful implementation.

De-risking projects.

When talking about project bankability, the issue of risk is crucial. A project is bankable, whether from public or private sources, when its risk-return profile meets investors’ criteria.

The EDF PPF helps in preventing project failure by providing resources and expertise to properly plan and assess project viability before implementation.

It enables project promoters to conduct thorough analysis of project objectives, risks, and feasibility, identifying potential challenges early on.

By ensuring comprehensive planning, the PPF reduces the likelihood of project failure due to inadequate preparation or unforeseen obstacles.

Capital-raising for project implementation

Another key benefit of the PPF is its support for capital-raising. Recognising that securing financing is often a significant hassle for project promoters, the facility is designed to assist in identifying suitable financing options and connecting them with potential investors.

This includes facilitating access to domestic and international financial institutions, venture capital funds and private equity firms.

By leveraging its extensive network, the facility increases the chances of successful capital raising, enabling projects to move from the planning phase to implementation.

Sectors of focus

Project preparation is a key enabler of the project delivery in any sector of the economy. The EDF’s PPF is available to both private and public institutions, with a specific focus on the creation of economic assets and infrastructure in various sectors.

These sectors include trade, manufacturing, agriculture, mining, tourism, information and communications technolog and telecommunications.

By targeting these sectors, the facility aims to address critical areas of economic development and contribute to the overall growth and competitiveness of the country.

Eligibility

The EDF PPF assists project promoters by supporting activities in the project preparation stage of the project cycle to successfully connect projects with implementation finance. Accessing the facility requires project promoters to have a legally registered business entity, ability to contribute at least 30 percent of the project preparation costs and have a pre-feasibility study done.

Conclusion

The EDF PPF is designed to play a vital role in unlocking the potential of bankable projects and driving economic growth in the country. By providing financial, strategic and technical support, the facility enables a greater number of projects to reach financial closure and successfully implement their plans.

Moreover, the facility’s focus on capital-raising and sector-specific development ensures that projects align with the country’s economic priorities.

As the country strives to enhance competitiveness in the global market, the PPF serves as a valuable resource in realising our economic aspirations. n

*Deliby Chimbalu is public relations specialist for Export Development Fund