MEFMI Conducts E-learning course on Financial Negotiation Skills and Techniques

Over the past decade and half, the development financing landscape facing developing countries, including those in the MEFMI region, has changed considerably. There has been reduced concessional financing from traditional multilateral and bilateral financiers while new creditors are emerging. However, the lending terms of these creditors and other forms of financing (eg. international sovereign bonds) are not concessional, leading to high debt servicing by governments and elevated vulnerabilities. To partly address these challenges, there is need for governments to negotiate the best financing terms during negotiations of loan contracts. However, some governments do not have the necessary mix of skills to undertake effective negotiations. To build capacities of governments and central banks in this area, MEFMI offered a 5-week E-learning course on Financial Negotiation Skills and Techniques.

The main objective of the Course was to introduce participants to the key elements of financial negotiation, including loans and grants. Specifically, the course aimed to:

• Enhance participants’ understanding of the changing global financing environment.
• Introduce participants to the key aspects of financial negotiation.
• Introduce participants to the financing terms and conditions of various creditors and their areas of interest.
• Enhance participants’ capacity to evaluate and compare different financing options, and
• Enhance participants understanding of the role of different players in negotiations, including lawyers, sector ministries, Ministries of Finance and Economic Planning, and Central Banks

The course covered the following modules:

• Introduction to Loan Cycle: The module focused on debt creation processes by expounding the different stages of the loan cycle from conception of the borrowing need up to the point a loan matures.
• Sources of financing: The module introduced participants to the various financing options available to governments in developing countries, outlining the terms and conditions of the alternative borrowing.
• Negotiation Theory and Practice: The module aimed to equip and familiarize participants with negotiation skills, with special emphasis on how to prepare for such negotiations.
• Anatomy of project and legal agreements: The module focused on the structure of loan agreements such as clauses or articles and aimed to familiarise participants with key project documents which form part and parcel of every project financing package.
• Debt Renegotiation: The module introduced participants to the process of debt restructuring.

A total of 41 participants from central banks and Ministries of Finance and Planning participated in the course. The course mentors were Ms Yvonne Quansah of the Ministry of Finance in Ghana and Ms Josephine Tito of the MEFMI Secretariat.

The main output of the Course was that it enhanced the participants’ understanding of the key issues relating to negotiating loan contracts. MEFMI expects the participants to use the knowledge and skills gained during the course to effectively participate in negotiating loans, leading to favourable financing terms and lower debt service costs.

Going forward, MEFMI plans to offer a similar course in the first quarter of 2020 in response to high demand from its client institutions. The course will be offered in English and Portuguese concurrently. The offering in Portuguese aims to increase the participation of officials from Angola and Mozambique. In addition, MEFMI plans to increase in-country interventions in this area in the future to address the knowledge and skills gap in this area.