Bringing Finance to the Table

Silver, Marshall; ,

Bringing Finance to the Table

by Marshall Silver, Pres.; Geotech International, Chicago, IL,

Serial Information: Worldwide Projects, 1993, Vol. 1, Issue 1, Pg. 32-34

Document Type: Feature article

Abstract:

Advice for companies whose marketing efforts have won them overseas projects�with the condition that they arrange financing for those projects. The competition for the few projects funded by multilateral development banks is fierce and political, and these projects are tracked closely by companies and their governments' trade officials. Engineering and construction competence exist worldwide. With money seemingly nowhere to be found, companies without plans for financing the work shouldn't bother. Among the possibilities: commercial banks, which are showing renewed interest in projects in developing countries, though they now require a strong financial base for repayment and an equity participation in the venture. Supplier credits require a friendly and often long-term relationship between design firm and supplier. Export credits and government guarantees are almost impossible to obtain for infrastructure and industrial projects. Multilateral and bilateral grants do not provide large sums, except perhaps in the former Soviet bloc. Countertrade�varying in complexity from direct barter to purchases of products made from the project�is another possibility. There is much more technology in the West available for sale than there are countertrade goods to exchange for it, however. In general, Western firms should take on rice, coal, steel or other commodities whose prices may be depressed or whose sales potential is down thanks to poor quality or oversupply�anything can be sold at the right price. Semi-finished or finished goods are much less useful. Countertrade negotiations are tricky, the legal structure of such deals is complex, and moving efficiently through the system always takes a good local agent and expert help.

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