The hidden risks slowing Africa’s infrastructure pipeline

Across Africa, infrastructure projects rarely fail because the need is unclear. Roads must be built, power must flow, and hospitals must function.

Yet many projects stall between bid award and financial close, caught in the uneasy space where ambition meets the discipline of capital. It is in this stretch that bankability is tested and, too often, where confidence begins to unravel.

The cause of this loss of momentum is seldom dramatic; more often it is procedural, structural and, at times, human.

Procurement models differ, sovereign-backed projects follow different rules from public-private partnerships, and the conditions that supported a winning bid can shift before financing is secured. As interest rates rise, supply chains tighten and input costs fluctuate, lenders revisit their assumptions.

A project that satisfied value-for-money tests at the award stage can look far less certain months later.

Navigating this threshold requires experience that many project teams are still developing.

Those assembling infrastructure transactions do not always have the benefit of having guided one from bid to financial close before, and the arranger’s role extends well beyond structuring finance.

It involves anticipating investor concerns, navigating environmental approvals and coordinating parties operating on competing timelines.

This fragility is evident in recent transactions, including a large healthcare programme where financing was arranged in 2018, with the down payment secured that year, while export credit support was finalised later as environmental and technical requirements evolved.

During this period, shifting standards and additional diligence introduced uncertainty that could have derailed the project.

A similar dynamic played out in Mozambique’s liquefied natural gas project, where a $15 billion financing package had been signed before several export credit agencies withdrew amid environmental pressure.

Approvals had been secured, yet the debate over climate impact and governance reopened questions that financiers believed had already been settled.

Bankability is shaped as much by evolving standards and stakeholder expectations as by the underlying financial structure.

Within this context, export credit agencies remain central to managing risk, even though their role is not always fully understood.

Under export credit cover, sovereign borrowers expect longer tenors and lower pricing, but the down payment is often outside the cover, exposing lenders to sovereign risk on the uncovered portion. This creates a pricing gap between export credit-backed financing and local bank funding, which can be significantly more expensive.

Some sovereigns have responded by funding down payments in cash rather than borrowing locally, particularly during the period when the Organisation for Economic Co-operation and Development increased the maximum export credit cover from 85% to 95%.

However, blending local and export credit financing on competitive terms remains difficult.

As projects grow more complex, environmental and social requirements add another layer of scrutiny. These standards are non-negotiable for international financiers, yet projects often treat them as a late-stage compliance step rather than a design principle.

When environmental considerations are introduced after routes are fixed or assets designed, redesign costs escalate, timelines slip, and projects risk failing to secure approval altogether. Integrating these considerations from the outset strengthens investor confidence and improves the asset’s long-term resilience.

Blended finance structures and participation by development finance institutions were expected to ease these constraints, yet practical challenges persist.

In one southern African hospital project, a loan that could have been classified as a social loan, and attracted a wider pool of investors, was declined by the borrower due to reporting requirements and concerns about losing concessional benefits if compliance faltered.

The result was a return to conventional financing, illustrating how administrative burdens and risk perceptions can outweigh financial incentives.

Where coordination is weak, these challenges intensify. Banks, export credit agencies, development finance institutions and contractors frequently operate in parallel rather than through a single coordinating structure.

Without a lead arranger empowered to synchronise timelines, responsibilities and incentives, projects drift.

Against this backdrop, capital in 2026 is becoming more selective, favouring sovereigns with credible fiscal trajectories and consistent policy signals.

East Africa continues to attract attention, particularly Uganda, Rwanda, Tanzania and Kenya. In West Africa, Côte d’Ivoire remains strong, while Ghana’s restructuring is expected to restore investor confidence.

Nigeria may re-emerge in debt capital markets and South Africa’s infrastructure push, supported by a $8 billion Afreximbank financing envelope, is likely to crowd in private capital.

Sector priorities reflect both urgency and revenue potential, with energy and transport dominating the pipeline.

Health infrastructure is gaining momentum, shaped by pandemic-era lessons, and education is likely to follow.

Water infrastructure remains critically underfunded, often sidelined because it is not viewed as a self-liquidating sector, despite its foundational role in economic stability.

Projects that reach financial close tend to share two defining traits:

Clear developmental impact aligned with investor mandates; and
Credible economic returns, often through foreign currency revenues or secure repayment structures.

Projects that cannot demonstrate both social value and economic resilience struggle to mobilise capital, regardless of technical merit.

Africa’s infrastructure deficit reflects less a shortage of capital than a challenge in coordination and execution.

Capital is available and demand is clear, yet progress depends on preparing projects with financing in mind, integrating environmental considerations early, and aligning stakeholders behind a common structure.

Governments, sponsors and lenders must narrow the gap between bid award and financial close to translate infrastructure ambition into tangible progress across the continent.

Sekete Mokgehle is the head of export credit & insurance solutions at Nedbank Corporate and Investment Banking.

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