Few words are used more often in project finance, and understood less precisely, than “bankable”. Sponsors hear it as a compliment that their project has not yet earned, or as a gate that lenders keep closed for reasons of their own. In practice it means something narrower and more useful: a lender, looking only at the project and its contracts, can see where every material risk sits, who carries it, and why the cash flows should still be there to repay the debt when things go wrong.
That definition matters because infrastructure in Sub-Saharan Africa is almost always financed on a limited-recourse basis. The lenders’ claim is on the project company — its contracts, its assets and its revenue — not on the sponsor’s balance sheet. So the project has to stand on its own, and the paperwork is how it proves it can.
A project is a bundle of contracts
Strip away the engineering and a power plant, a toll road or a water treatment works becomes a set of promises. The offtaker promises to buy what the project produces at an agreed price. The construction contractor promises to deliver a working asset by a date, for a price. The operator promises to keep it running to a standard. The host government promises the licences, the land and, sometimes, support if the offtaker cannot pay. Lenders read these promises together, looking for the gaps between them.
The gaps between the contracts are where deals fail.
The gaps are where deals fail. A power purchase agreement that allows the utility to curtail output without compensation leaves revenue exposed. A construction contract that caps the contractor’s liability for delay well below the cost of that delay leaves the project to absorb the difference. A land lease shorter than the debt tenor leaves the lender without security in the final years. None of these makes a project bad, but each has to be closed, priced or insured before the project is bankable.
Revenue that someone is obliged to pay
The single most important question in most infrastructure deals is who pays, and what obliges them to. A long-term offtake agreement with a creditworthy counterparty converts an asset into a cash flow that can be financed. Where the counterparty is a state utility with a weak balance sheet — common across the region — lenders will look for something behind it: a government support agreement, a liquidity facility that covers missed payments, or political risk cover.
Projects that sell into a market rather than to a single contracted buyer can still be financed, but they are financed differently, usually with more equity and shorter, more conservative debt. Sponsors who understand this early can design the commercial structure to suit the capital they want, rather than discovering late that the capital they approached cannot accept the risk they built.
Construction is where the money is most at risk
Before the asset is built, it earns nothing, and the capital already spent is only as good as the promise to finish. That is why lenders favour an engineering, procurement and construction contract that is fixed-price and date-certain, with a single contractor responsible for delivering the whole plant, liquidated damages that genuinely compensate for delay and underperformance, and security such as performance bonds behind those obligations. An independent engineer, appointed for the lenders, will test the design, the budget and the schedule before financial close and will monitor progress after it.
A sponsor who has run a competitive process for the construction contract, and can show why the chosen contractor and price are credible, removes one of the largest uncertainties from a lender’s review.
The site, the permits and the people
Lenders will ask for clear rights to the land for longer than the life of the debt, and for every licence and permit the project needs to be built and operated, with their conditions and expiry dates. International lenders and development finance institutions will also expect an environmental and social impact assessment carried out to the IFC Performance Standards, with a plan for managing what it finds. This is often the longest item on the critical path, and the one sponsors most often start too late.
A model that others can audit
The financial model is where all of this becomes numbers, and lenders will have it audited. A bankable model is transparent rather than clever: its assumptions are sourced, its structure is conventional, and a reviewer can trace every output back to an input. It shows how the project performs in a base case and how it holds up under the sensitivities lenders will run — lower output, higher costs, delay, currency movement — and it computes the debt service coverage that lenders will size their loan against.
When sponsors ask us what they can do to shorten the path to financial close, the honest answer is rarely a single fix. It is the discipline of treating every contract, permit and assumption as something a sceptical reader will test, and preparing the evidence before they ask. Projects prepared that way are not guaranteed capital, but they are the ones that capital can say yes to.
