Governments worldwide are vying to attract private sector capital to drive growth, infrastructure development and innovation. Amidst this competitive landscape, the ability of governments to present “bankable” projects — that is, projects deemed viable, profitable, and attractive to investors — is more crucial than ever.
This was a core focus of discussions during a WAIPA breakfast roundtable held as part of the Annual Investment Meeting 2024 in Abu Dhabi in May. The session was dedicated to advancing sustainable development in Least Developed Countries, Landlocked Developing Countries and Small Island Developing States. For these economies, private investment is essential to meeting their development needs and securing the necessary investment for their state-backed projects depends on having a pipeline of clearly identified bankable projects.
Bankable projects are those that have been thoroughly vetted and structured to ensure they are financially viable and capable of generating returns. These projects are backed by robust feasibility studies, clear regulatory frameworks and risk mitigation strategies. For investors, the bankability of a project translates to confidence that their capital will be used effectively and will yield anticipated returns.
Presenting bankable projects is essential for economic growth and development. Infrastructure, one of the primary areas where large-scale investment is needed, exemplifies this. Whether it’s building roads, airports, energy plants or digital networks, these projects require substantial funding that often exceeds government budgets. By making these projects bankable, governments can attract private investment to bridge the funding gap, thus accelerating development and improving public services.
Enhancing investor confidence
In an era where investors have a multitude of options, the clarity, and readiness of a project significantly influence investment decisions. A well-prepared, bankable project signals to investors that a government is serious, competent, and ready for business. It reduces the perceived risks associated with bureaucratic delays, legal uncertainties, and
financial mismanagement. As a result, investors are more likely to commit their resources, knowing there is a high probability of project completion and returns on their investment.
Bankable projects also promote sustainable development. By carefully planning and structuring projects to be financially viable, governments can incorporate long-term sustainability goals. This includes environmental considerations, social impact assessments, and governance structures that ensure transparency and accountability. Sustainable bankable projects attract not only traditional investors but also those focused on Environmental, Social, and Governance criteria, expanding the pool of potential capital.
Encouraging innovation and public-private partnerships
The creation of bankable projects fosters innovation and public-private partnerships (PPPs). Governments can leverage the expertise, efficiency and technology of the private sector to achieve public objectives. When a project is bankable, it is easier to negotiate and finalize PPP agreements, ensuring that both public interests and private returns are aligned. This collaboration can lead to innovative solutions and the efficient delivery of services and infrastructure.
One of the most compelling reasons for governments to focus on bankable projects is risk mitigation. Thoroughly vetted projects that meet bankability criteria are less likely to encounter unforeseen issues that can derail progress and increase costs. This careful preparation reduces the financial risks for both the government and investors, ensuring that projects are completed on time and within budget.
In the highly competitive global market for investment, governments that prioritize the development of bankable projects will be better positioned to achieve their development goals and enhance the well-being of their citizens. As such, it is incumbent upon governments to invest in the necessary expertise and frameworks to ensure their projects are not just viable, but bankable, paving the way for a prosperous future.
