The structure
A large African infrastructure project is typically financed by several development institutions alongside commercial lenders and export credit agencies. Each has its own mandate, approval process, policy requirements, and documentation preferences.
Assembling them is the work, and it is where timetables are won or lost.
Sequencing
A lead arranger matters. One institution taking the lead — running the diligence, coordinating the common terms, chairing the lender group — compresses the process considerably. Projects without a clear lead tend to run parallel diligence streams that reach inconsistent conclusions.
Board calendars are fixed. Each institution has board or credit committee dates. Missing one costs a quarter. The critical path is usually the slowest institution's next available date, not the negotiation itself.
Common terms agreement. A single set of covenants, events of default, and intercreditor arrangements across lenders with different standard forms. Negotiating it takes time but prevents the far worse outcome of inconsistent covenants across facilities.
Where it slips
Environmental and social standards. Institutions apply performance standards with different interpretations. A project that satisfies one may need further work for another, and the requirements are discovered sequentially rather than upfront.
Procurement rules. Some institutions require their own procurement procedures for contracts financed by their funds. Where this is discovered after contracts are awarded, it is expensive.
Currency and hedging policy. Institutions differ on whether they lend in local currency, what hedging they require, and who provides it.
Sanctions and integrity screening. Screening of sponsors, contractors, and counterparties can surface issues late. It is better run early.
Practical measures
- Establish the full lender group and its requirements before advancing documentation
- Map every board calendar at the outset and work backwards
- Run environmental and social diligence to the strictest applicable standard from the start
- Confirm procurement rules before awarding contracts
- Assume 18 to 30 months from mandate to financial close for a first-of-kind structure, and plan the development budget accordingly
What it buys
The process is slow and it is not arbitrary. Institutions bring tenor, cost, and risk appetite that commercial markets do not offer for these assets, and their presence draws commercial lenders who would not take the risk alone. The time cost is the price of the capital structure, and it should be budgeted rather than resented.
