"Project Finance" and economic developmentA case study

  1. Garayalde, María Luisa 1
  2. González, Sara 2
  3. Mascareñas, Juan 2
  1. 1 Universidad Pontificia Comillas
    info

    Universidad Pontificia Comillas

    Madrid, España

    ROR https://ror.org/017mdc710

  2. 2 Universidad Complutense de Madrid
    info

    Universidad Complutense de Madrid

    Madrid, España

    ROR 02p0gd045

Journal:
REVESCO: revista de estudios cooperativos

ISSN: 1135-6618

Year of publication: 2019

Issue: 131

Pages: 32-47

Type: Article

DOI: 10.5209/REVE.64302 DIALNET GOOGLE SCHOLAR lock_openDialnet editor

More publications in: REVESCO: revista de estudios cooperativos

Abstract

This work shows how is possible to finance and to organize development projects in heavily depressed areas using a “project finance” method. Project finance is the financing of a project based upon a non-recourse financial structure, in which project financial resources are paid back from the cash flow generated by the project. The paper shows a real case of application of this innovative management technique in a small Ethiopian agricultural village. It can be seen that the process goes far beyond simple financial calculation to fully enter into the management of all risks involved in the development project: underlying assets, participants, natural conditions, economic factors, regulatory changes, political interference, etcetera. The technique allows the self-financing of the development project because it is the asset itself that generates such financing and this allows to promote the creation of other similar assets that will improve the quality of life of the population In the case analyzed, the construction of a well can lead to the cultivation of four orchards that will not only improve the food quality of the population but will also allow the financing of the construction of new wells with their annexes orchards. This cycle ends once all the families of the village have their own orchards.

Bibliographic References

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Data source: Dialnet