Sustainable Infrastructure Projects: The Bankability Issue
12. May 2017
This blog post by Fida Rana argues that more often than not, the discussion on sustainable infrastructure projects tends to centre on the “sustainable” issues only, with little focus on financing. However, it is very difficult to escape the bankability topic when it comes to financing infrastructure projects. The term “bankable” is perhaps one of the most frequently used words when it comes discussing financing for sustainable infrastructure projects.
Yet the term may be somewhat misleadingly, as perhaps by the semantics of the term “bank,” many tend to associate the issue of bankability with bankers: "Let the bankers discuss and deal with the bankability aspect of the project.” This sentiment is a misconception at best. Commercial bankers and other commercial infrastructure debt providers do not make a project bankable. Rather, their task is to assess the bankability of a project and, if found acceptable, provide the financing. If it is not deemed bankable, they will move on in search of other projects. The fate of the bankability of any infrastructure project is set at a much earlier phase of project life: at the project development stage.
This brings forward an interesting question: if bankers appear at a later stage of the project cycle, how can the bankability of a project in the development phase be ensured?