The project should show a satisfactory financial profitability and be compatible with the country’s development goals. It should demonstrate:
- the existence of a buoyant market: demand, supply, business policy;
- comparative advantages in relation to competition;
- prospects for overall growth of the sector;
- costs and origin of workforce and raw materials;
- reliability of technology and project management;
- the financing plan and financial resources of the company.
- When the Bank is involved in financing a project, its loan should be covered by specific guarantees. The range of customary guarantees provided includes:
- personal guarantees:
- joint and several guarantee of key shareholders; collateral of guarantee funds;
- guarantee by a first-class bank;
- securities over the company’s property:
- pledging of working capital (including operating equipment);
- pledging of sound assets (sound receivables…);
- domiciliation of project’s revenues in one or several accounts deemed acceptable by the Bank.
THE PROJECT PROMOTER
The evaluation of the promoter involves analysis of:
- his entrepreneurial skills;
- his credibility;
- his motivation;
- his financial strength.
THE TECHNICAL PARTNER
BOAD requires the participation of a technical partner when the project calls for a technology that is not mastered by the promoter.
The technical partner shall be any natural or legal person willing to share its know-how for the success of the operation and train local staff to make optimal use of the production equipment. With respect to private project financing, BOAD requires the contribution of own resources. For projects under inception, these contributions shall at least range between 25% and 40% of total investments including the working capital, depending on sectors. For projects in progress, the minimum contribution will be assessed taking into account the company’s debt structure and the project risk.
The participation of a local bank or financial institution in the financing of the project supported by BOAD is essential for private projects.