WHY looking for funding or credit when about one per cent only get the finances? What do financiers look for in a project plan before inking a loan deal?
How can a project sponsors, small or larger, private or public, stand out and be that one per cent? Is the quality of project write-up a problem?
Are project preparations and packaging to attract funding not good enough? Are financial institutions scared to provide loans amidst increasing levels of nonperforming loans?
What need to be done to raise that one per cent to at least twenty five per cent?
To what extent can Regional commissioners and District commissioners coordinate their offices to be able to write project documents that will help to unpack existing potential within their authority?
These questions look as if are common, but getting a viable project that will convince a financier to release funds has never been easy.
I continuously speak with industrialists, and all seem to share the same hindrance: securing finance is difficult recurrently spotting collateral issue and rate of interest charged as main blockade.
Non talk about quality of project preparation and research surrounding assumption used to validate return on investment.
A number of industrialists further maintain that increased levels of non-performing loans amongst banks scares banks to extend loans to project plans and this makes chances of getting finance these days to continue to be very slim, especially to start-ups industries.
I might be wrong, but always my reaction when discussing with nervous project sponsors, has been, how are project prepared and what are chances for an industrialist to turn his or her an idea into a reality?
If a project is well prepared, well packaged and assumptions make sense, such write-ups will always appeal to investor or a sponsor or a venture capitalist.
Writing a proposal for business case for business to run through for three to five years or more years, if assumptions used are not convincing, can make or break business case before it even gets off the ground.
A well construed project write-up will always appeal to funders or financial institutions. In real world, it is essential to be aware on quality of write-up that would attract attractive to financiers.
Development projects put forward by private actors or public institutions or government agencies to secure financing are all treated equally before financiers. Return on investment is key component.
Although there could be many reasons, a financier would argue that without robust project identification, preparation and realistic assumptions, projects plans seeking finance will continue to be more than wishes.
Financier or venture industrialist on such ventures remains cold to issue finance. 24th Annual Research Workshop organised by REPOA’s for 2019 had a work-up theme.
Taking part in the two days’ workshop and listening to distinguished presenters prompted my point of view to try assessing what would take for local economic development to be realised, specifically where unpacking potentials for accelerated transformation of the economy.
Dignified and opened by the Vice President, Samia Hassan Suluhu, interesting academic research papers, some very technical for a lay-man to grasp its logical contents, were presented and discussed.
Some of these papers formed basis for what would take to transform Tanzania into the nation we craving to see in future.
But one key question that kept echoing to my mind was unpacking potential especially for LGAs to bring needed changes by utilising geographical regional endowments.
When it comes to local economic development issues, RC and DCs are indirectly heavy-handed to oversee and bring out projects proposals that would be more attractive to investors or investments to their areas of controls.
Much as RCs in partnership with strategic stakeholders have started to initiate business forums, as recently held business forum in Lindi to charm for investors, one key contest remains on what quality of projects preparation is in place that would attract an investor?
Ability to unpacking economic potentials in my opinion will remain one of the most important tests for RCs or DCs career as President Appointee.
In the spirit of local economic development being able to entice or raising finance appetite to a project through angel investors, private equity, or venture capital can put RC or DC on a path to great accelerated transformation of Tanzania.
Much as there are capacities that RCs and DCs are required to manage to unpacking potentials in their areas, few suggestion offered here are worth considering should these appointees target to bring regeneration and unpack economic potential in their regions.
At the 2 days’ workshop, organised by REPOA for 2019, unpacking economic potential at local level may appear to be simple undertaking, but in an ideal world, RCs and DCs should give themselves at least enough time to prepare bankable projects or put together project package before seeking finance from financial institutions or approaching a partner for project that might be favouring public private partnerships model of ownership and operation.
Without question, RCs and DCs need to be aware that the more potential an investor believes in their proposals they present as part of unpacking economic potentials the higher the assessment will receive when enticing industrialist or financier to consider their next move.
RCs and DCs should ensure they have a believable, actionable project or strategic plan that shows significant growth and based on my experience this is what will excite investors.
For RCs and DCs it is important to keep in mind that plan put forward should be both ambitious and reasonable. Investors and industrialist will be turned off if are presented with farfetched numbers or assumptions that doesn’t acknowledge market realities.
Unpacking economic potentials is process that, in addition, needs vigorous leadership and analysis capability. Attracting financer or rising investment appetite exclusively in prevailing business environment almost always takes longer than RC or DC may desires.
The typical deal closes process lasts about six months, but can take much longer, particularly if suggested project is brown field. RCs and DCs be mentally prepared for a long and winding road paved with rejection if projects will not be well prepared and well packaged.
There will be countless economic, legal, technological, markets and emotional hurdles that you will have to overcome to get the best result as you work hard to unpack economic potentials for what REPOA termed as accelerated transformation of Tanzania.