Question

QUESTION 3
a) From a financial intermediation stand point, explain why developing countries finance. projects largely
through government borrowing from international banking market, and multilateral institutions?
[5 marks]
b) Using examples of public infrastructure projects in Ghana, differentiate between offtake agreement and
concession agreement. [5 marks]
c) Explain why project finance is largely for public infrastructure projects but financed by the private sector in
the 20th and 21st centuries? [5 marks]
d) Why are pension funds more suitable sources of Project finance? [5 marks]

Answer 1

A-The high payment cost of infrastructure is a prime reason for government borrowing through the international market due to lenders experience in the closed capital market and are officially backed by credit agencies

B- Concession agreement is agreement provided for providing services like toll, mobile services whereas offtake agreement is for long term agreement between the project company and business taker

C-In the 20th and 21st century saw a cash flow trend towards Public-private partnership projects. The procurement and monetization through private sector used financial model payment for assistance in project cashflow

D- Pension funds are suitable for optimal planning for long term  portfolio and is used for saving for partly cover financing  needsuitable for project fiannace