COURSE TITLE:
Finance for Development
COURSE
NUMBER:
IBUS 6303
SEMESTER:
Spring 2012
CRN:
67198
MEETINGS:
Thursdays, 7:10 – 9:40
Funger 221 (2201 G Street NW)
COURSE
DESCRIPTION:
This course is a hybrid of traditional class lectures/discussion and a project
practicum with the U.S. Agency for International Development (USAID).
Each class session is divided into a segment with content from the body of
knowledge at the nexus of finance and development and a segment
addressing issues from USAID’s initiative to unlock commercial finance
for development goals.
Topics include: capital flows and development; the effects of financial
development on economic growth; project finance in public-private
partnerships; innovative financing mechanisms for economic
development; and microfinance.
The projects are from the Strategic Transactions Group (STG) of the
Office of Development Credit, which is taking the lead for all matters
related to development finance at USAID. Project assignments will be on:
(1) Real Estate Financing Vehicles for Sub-Saharan Africa, and (2)
Facilitating Financing for Agricultural SMEs in Sub-Saharan Africa.
Students will be required to work extensively in teams of 4-5 people to
address these issues throughout the semester. Representatives of USAID
will be engaged in monitoring the project work, and will serve as
resources for project development.
1
COURSE
OBJECTIVE:
The overall objective of the class is to have students acquire analytical
tools in international finance and simultaneously apply them to
development projects. Secondary objectives are to have students become
more familiar with modern approaches to development and the nature of
project work in a development organization.
PREREQUISITE:
Substantial completion of master’s program requirements, including
familiarity with corporate finance, financial accounting, microeconomics,
and macroeconomics.
PROFESSOR:
Reid W. Click
Associate Professor of International Business and International Affairs
OFFICE:
Funger Hall 401P
Telephone: (202) 994-0656
FAX: (202) 994-7422
E-Mail: rclick@gwu.edu
OFFICE HOURS:
Wednesdays, 4:00-6:00, and by appointment
CLIENT
CONTACT:
COURSE
MATERIALS:
Chris Lee
Head, Strategic Transactions Group
U.S. Agency for International Development
Telephone: (202) 712-1704
E-Mail: chlee@usaid.gov
There is no textbook for the course. Instead, we will be working from
contemporary articles and cases. Several assignments come from each of
these two books:
1. Project Finance in Theory and Practice: Designing, Structuring,
and Financing Private and Public Projects, by Stefano Gatti,
Academic Press, 2008. This is on reserve in Gelman Library; you may
want to purchase your own copy ($71.93 in hardback at Amazon).
This is referenced as Gatti below.
2. Innovative Financing for Development, edited by Suhas Ketkar and
Dilip Ratha, The World Bank, 2009. This is available free on the
internet. This is referenced as Ketkar and Ratha below.
2
Most items are on reserve in Gelman Library, and anything that can be
made available as an e-reserve is available through Blackboard at
blackboard.gwu.edu.
A casepack containing two items is available from Harvard Business
School here: http://cb.hbsp.harvard.edu/cb/access/12052299 .
There will also be occasional handouts posted on Blackboard.
EVALUATION:
In accordance with University regulations, each student will receive a
grade of A, B, C, D, or F (with + or - as appropriate). Grades will be
based on:
Class Participation
Project I Preliminary Presentations: Issues
Project I Final Presentations: Countries
Project I Final Concept Papers
Project II Proposal Ideas
Project II Final Deliverables
Final Exam
TOTAL
3
100 points
50 points
50 points
75 points
25 points
100 points
100 points
500 points
COURSE OUTLINE
Class Session
1
January 19
2
January 26
3
February 2
Topic and Reading Assignment
Introduction
Ocampo, Kregel, and Griffith-Jones,
Ben Hubbard, USAID (confirmed)
“Overview,” from International Finance
• Role of private capital in US
and Development, United Nations
international development
Publications, 2007, pp. 1-15. The whole
strategy
book is on reserve in case you want to
• Briefing on USAID
pursue any topics covered.
Development Credit
Authority
Honohan and Beck, Making Finance
Work for Africa, World Bank, 2007.
Chris Lee, USAID (confirmed)
• Chapter 1, “Setting the Scene,”
• Briefing on Strategic
pp. 1-24.
Transactions Group
• Chapter 2, “African Financial
• Briefing on Project I:
Systems: Depth, Breadth, and
concept papers on Real
Efficiency,” pp. 25-70.
Estate Financing Vehicle for
This book is available free on the
Sub-Saharan Africa
internet. Chapters 3 and 4 are
recommended for participants who want
to pursue topics in this area.
Public-Private Partnerships:
Discussion of “Real-Estate
Introductions
Investment Trusts,” Darden School
of Business Technical Note (in
Gatti, Chapter 1, “Introduction to the
casepack from Harvard Business
Theory and Practice of Project Finance,” School)
pp. 1-17.
Brief discussions of Project I issues.
Gatti, Chapter 2, “The Market for
Project Finance: Applications and
Sectors,” p. 19-29.
Gatti, Chapter 3, “Project
Characteristics, Risk Analysis, and Risk
Management,” pp. 31-61.
Public-Private Partnerships (continued)
Gatti, Chapter 5, “Valuing the Project
and Project Cash Flow Analysis,” pp.
101-146. This chapter contains
important technical information.
Project Work
Introduction
4
Brief discussions of Project I issues.
4
February 9
Public-Private Partnerships (continued)
Property, Land Reform, and Landgrabbing in Sub-Saharan Africa
Gatti, Chapter 6, “Financing the Deal,”
pp. 147-231. Although long, there is not Rohit Malpani
much technical material.
Oxfam America (confirmed – first
half of class)
Due to illness, the speaker was
Jonathan Jacoby
“Land and Power: The Growing
Scandal Surrounding the New Wave
of Investments in Land,” Oxfam
America Briefing Paper, September
2011.
5
February 16
6
February 23
No lecture/discussion assignments
tonight: all time is dedicated to project
work.
International Capital Market
Development: Brady Bonds
This material was actually covered
March 1 because the Public-Private
Partnership material needed to be
finished.
SalomonSmithBarney, “A Primer on
Brady Bonds,” March 9, 2000.
Bekaert and Hodrick, “Country Credit
Spreads,” pp. 529-539 of International
Financial Management,
Pearson/Prentice-Hall, 2009.
5
Other materials to be announced and
distributed.
Real Estate Investment in Zambia
Eric Postel, Assistant Administrator
for the Bureau of Economic Growth,
Agriculture and Trade, USAID
(confirmed)
Preliminary team reports on issues in
Real Estate Financing Vehicle for
Sub-Saharan Africa
“Distressed Agriculture Asset
Revitalization Program (in Nigeria)”
Michael Caspani, USAID
Discussions of Project I countries.
7
March 1
International Capital Market
Development: Ratings and Rating
Agencies
Brief discussions of Project I
countries.
Gaillard, A Century of Sovereign
Ratings, Springer, 2012. Chapters 2-4
(pages 3-38) should provide sufficient
background, but the whole book is on
reserve in case you want to pursue any
topics covered.
8
March 8
March 15
9
March 22
Ratha, De, and Mohapatra, “Shadow
Sovereign Ratings for Unrated
Developing Countries,” Chapter 5 of
Ketkar and Ratha, pp. 99-141.
No lecture/discussion assignments
tonight: all time is dedicated to project
work.
Spring Break
Bond Markets in Developing Countries
Paul Freedman, Senior Corporate
Counsel, The AES Corporation
(confirmed – second half of class)
Team presentations on country
targets in Real Estate Financing
Vehicles for Sub-Saharan Africa
Submit Concept Notes on Real
Estate Financing Vehicle for SubSaharan Africa
Briefing from Megan Rapp, USAID,
concerning Project II: Concept
Papers on Facilitating Financing for
Agricultural SMEs in Sub-Saharan
Africa
Recommended Africa Business Conference at GW
March 23-24
“Ways Forward to Sustainable Business in Africa”
http://www.gwsbafricaconference.com/index.html
6
10
March 29
Structured Finance
Brief discussions of projects, and of
the Africa Business Conference.
Ketkar and Ratha, “Innovative
Financing for Development:
Overview,” Chapter 1 of Ketkar and
Ratha, pp. 1-23. As an overview, this is
light reading.
Ketkar and Ratha, “Future-Flow
Securitization for Development
Finance,” Chapter 2 of Ketkar and
Ratha, pp. 25-57. This is the main
assignment for the class.
11
April 5
12
April 12
Fitch Ratings, “Future Flow
Securitization Rating Criteria,” June 24,
2011.
Topics in Structured Finance
Ratha, Mohapatra, and Plaza, “Beyond
Aid: New Sources and Innovative
Mechanisms for Financing
Development in Sub-Saharan Africa,”
Chapter 6 of Ketkar and Ratha, pp. 143183.
Microfinance
Romi Bhatia, Senior Advisor for
Diaspora Partnerships, USAID
(confirmed)
Helms, “Introduction,” Chapter 1 of
Access for All: Building Inclusive
Financial Systems,” Consultative Group
to Assist the Poor, 2006, pp. 1-15.
Helms, “Poor and Low-Income
Clients,” Chapter 2 of Access for All:
Building Inclusive Financial Systems,”
Consultative Group to Assist the Poor,
2006, pp. 17-33.
7
Project II Proposal Ideas (1 page)
due (and brief discussion)
Brief discussions of projects, and of:
Morvant-Roux, “Is Microfinance the
Adequate Tool to Finance
Agriculture?” In The Handbook of
Microfinance, pp. 421-436.
13
April 19
Impact Investing
Brief discussions of projects.
Randall Kempner, Aspen Network of
Development Entrepreneurs
(confirmed – first part of class)
14
April 26
Acumen Fund: Measurement in Impact
Investing (A), HBS Case 310011
(case discussion – second part of class)
No lecture/discussion assignments
tonight: all time is dedicated to project
work.
8
Hand in and present final Concept
Papers on Facilitating Financing for
Agricultural SMEs in Sub-Saharan
Africa