Nearly a decade ago, I worked on a gas infrastructure transaction that, on paper, had everything going for it.
It was strategically important.
Demand was identifiable.
Long-term contracts were in place. Reputable lenders and development institutions were involved. By most conventional measures, it was considered bankable.
And yet, the project spent years in debt restructuring.
- Not because the asset failed.
- Not because demand disappeared.
- But because bankability had been assumed rather than deliberately built.
That experience has stayed with me, because it reflects a broader pattern across Africa’s infrastructure and energy landscape, one that is often misdiagnosed.
Africa’s infrastructure challenge is not a capital problem
Africa’s infrastructure deficit is frequently framed as a financing problem. From experience, it is not.
There is significant global and regional capital actively seeking African infrastructure exposure today. From development finance institutions and infrastructure funds to pension capital and local banks.
What remains scarce are projects structured to meet the risk, governance, and enforcement thresholds required by long-term capital.
When projects stall or struggle to reach financial close, the explanation is often attributed to investor appetite or global market conditions. More often, the cause is structural.
When structures fail under stress
Returning to that gas infrastructure transaction, the weakness only became visible under pressure. The project had signed contracts and identifiable demand. What it lacked was resilience.
Cashflows were exposed to delayed payments, extended receivable cycles, and macroeconomic volatility. Risk had been identified, but it remained concentrated at the project level.
This pattern repeats itself across African infrastructure. Contracts exist, but cash-collection mechanisms are weak. Currency risk is transferred wholesale to projects. Governance frameworks are referenced, but enforcement depends on discretion rather than process.
Long-term capital does not avoid Africa because of risk. It avoids risk that cannot be modelled, priced, or enforced.
Why risk mitigation often falls short
That transaction also highlighted the limits of commonly used risk-mitigation instruments.
Sovereign-linked guarantees and credit enhancements are frequently cited as solutions to bankability challenges. In theory, they are effective. In practice, they are often politically sensitive to enforce.
When stress emerges, calling on such instruments is viewed less as a contractual remedy and more as a policy failure. One with reputational and systemic implications for the sovereign. As a result, protections that exist on paper are treated as last-resort options that few are willing to exercise.
Structures that depend on remedies that cannot be realistically enforced are inherently fragile.
How bankability is actually built
If Africa is serious about scaling infrastructure delivery, the focus must shift from announcements to structure. In practice, bankability is built through a small number of deliberate technical choices.
First, cashflows must be protected before guarantees are relied upon. Escrow arrangements, letters of credit, revenue trapping, and automatic payment waterfalls should absorb stress early, before sovereign or third-party support is triggered. Guarantees should act as backstops, not substitutes for payment discipline.
Second, risk allocation must be explicit. Foreign exchange, demand, regulatory, and operational risks should sit with the parties best able to manage them, rather than being vaguely “shared.” Ambiguity may appear collaborative, but it increases uncertainty and raises the cost of capital.
Third, base-case assumptions must be conservative by design. Debt sustainability should hold under downside scenarios. Upside volumes, future offtakers, or policy improvements should benefit equity, not be required for viability. If a project only works when everything goes right, it is not bankable.
Fourth, governance must be automatic rather than discretionary. Step-in rights, cure periods, and enforcement triggers should operate by rule, not negotiation. Governance is not about formal structures; it is about execution certainty under stress.
Fifth, project preparation must be treated as a capital discipline. Technical, legal, and commercial risks should be resolved before financing is pursued, not retrofitted during distress. Weak preparation cannot be corrected with better term sheets.
Finally, local capital must be structurally integrated. Projects are more resilient when domestic institutional capital and blended-currency structures are embedded from the outset. This reduces foreign-exchange fragility and improves long-term durability.
From funding to structure
Africa does not lack infrastructure opportunities, and it does not lack demand. It also does not lack capital.
What it lacks, consistently, are structures that align cashflows, risk allocation, governance, and enforcement in a way long-term capital can trust and defend.
For project sponsors, this means investing more discipline upstream before financing is pursued, and resisting the temptation to push unmanageable risks down to the project level.
For policymakers, it means recognising that guarantees without credible enforcement mechanisms weaken bankability rather than strengthen it.
For development institutions, it means treating project preparation not as ancillary support, but as a core investment function.
Bankability is not a label applied at financial close. It is the outcome of deliberate technical choices made much earlier. Until those choices improve, Africa’s infrastructure challenge will remain less about funding, and more about structure.
- Oladele “Dele” Akinjo is an investment banker with 15 years of experience structuring capital market and infrastructure transactions across Africa.
