Africa holds some of the world’s most underutilised energy and agricultural resources, home to vast solar potential, the largest untapped hydropower and geothermal reserves, and the second-largest share of arable land. Yet, the continent continues to register the lowest per capita energy consumption globally, and investment in critical sectors remains limited.
“Projects with sound fundamentals, bankable financials, credible governance, and visible impact can attract better capital, faster.”
Africa is at a turning point. With an abundance of natural and human resources, the continent has the potential to reshape its economic trajectory through well-structured infrastructure investments. However, despite clear opportunities, capital mobilisation for even viable projects remains a challenge constrained by systemic risk and deeply rooted perceptions.
This piece examines the key attributes of a bankable project, the unique investment hurdles Africa faces, and strategies that can derisk the continent to unlock its potential.
What makes a project bankable?
A bankable project gives investors a clear line of sight to capital recovery and acceptable returns. Essential elements include predictable cash flows, offtake agreements, credible sponsors, and comprehensive feasibility studies. Investors ultimately ask: Will I get my capital back, and what’s the return?
Globally, sound financial metrics can often secure funding. But in Africa, investors demand more: sovereign guarantees, liens on assets, and more stringent contractual protections. This stems from a trust deficit linked to policy unpredictability, weak legal systems, and limited recourse in the event of disputes. As a result, bankability assessments extend beyond the financials to broader institutional and political risks.
The infrastructure investment conundrum
Unlike equities or short-term financial instruments, infrastructure projects operate over longer time horizons—allowing for deeper due diligence. Yet, in practice, development finance institutions (DFIs) and investors often delay capital disbursement, overestimating the window for execution.
These delays inflate costs and undermine viability. Extended timelines mean costlier inputs, outdated technology, and regulatory shifts that threaten the original investment rationale. Currency depreciation erodes real value, while poorly monitored execution increases the chance of failure. Collectively, these dynamics compound the perception of risk and make African infrastructure less attractive to capital.
The trust deficit: Perception vs. Reality
Despite posting a lower sovereign default rate than some emerging markets, Africa still struggles to attract investment at competitive terms. A key reason is the scarcity of reliable and accessible data.
Without sector-level insight, investors rely on perception, which skews risk assessments and inflates capital costs. Most databases are limited to the banking and extractive sectors. This information gap creates a cycle: poor data raises perceived risk, which deters investment, reinforcing underdevelopment. Even well-regarded research institutions often lack coverage across the sectors that matter most to African growth.
Derisking Africa: Where to start
Africa’s infrastructure gap is estimated between $130 billion and $170 billion annually. At the same time, institutional assets on the continent – pension funds, insurers, and sovereign wealth funds – exceed $1.6 trillion (AFC, 2025). Over $500 billion in foreign capital is already Africa-focused (McKinsey, 2023). Yet, annual infrastructure investments remain below $30 billion. The mismatch is striking.
Read also: Shettima says Africa needs trust, bankable projects to unlock global capital
Addressing this requires structural and perceptual fixes. Several strategies can improve bankability and attract capital:
1. Invest in data availability and transparency
Credible data is foundational to investment decisions. Institutions like the African Union and DFIs should build sector-specific databases and publish accessible, independently verified data. For instance, the energy sector continues to see disproportionate investment in generation, while transmission and distribution remain underfunded—weakening the entire value chain. Better data could redirect capital where it is most needed.
2. Streamline capital disbursement
Delays in disbursement discourage investor participation. DFIs and financiers must balance diligence with speed. AfDB’s authorised capital is $318 billion, yet only $11 billion was deployed in 2024—the highest yet. Over the last decade, Afreximbank has disbursed just over $22 billion. These gaps must be closed to meet Africa’s infrastructure needs.
3. Develop standardised project blueprints
Governments and regional bodies should promote infrastructure templates tailored to African contexts—covering repayment strategies, expected returns, risk mitigation frameworks, and technical standards. Having pre-vetted, ready-to-execute projects reduces information asymmetry and lowers the barrier to entry for investors.
4. Support first-mover initiatives
DFIs and governments should back pilot projects in high-risk, high-impact sectors—logistics, green tech, digital infrastructure, and agribusiness. Success stories serve as proof of concept. The Dangote Refinery and Ethiopia-Djibouti railway show that complex projects can succeed with the right execution. A smaller example—a temperature-controlled storage facility in Uganda or DR Congo—could unlock agricultural trade and catalyse replication across regions.
5. Foster innovation through R&D
The continent’s dependence on primary commodities reflects an innovation gap. Targeted investment in research and development, especially in agriculture, clean energy, digital services, and healthcare, can transform productivity. For example, soil testing tools could improve crop yields and attract private capital. Similarly, tackling diseases such as acute respiratory infections—which claim nearly 900,000 children under five in Africa annually—offers both impact and commercial opportunity.
6. Stabilise the Macroeconomic Environment
Predictable fiscal and monetary policies, along with effective legal frameworks, are prerequisites for long-term investment. Ironically, some infrastructure investment depends on the very infrastructure being absent, such as electric vehicle deployment hinging on power supply. Improvements in core infrastructure create a reinforcing cycle that supports broader economic participation.
Reframing Africa’s investment narrative
Africa is not a single investment destination. It is a continent of 56 countries and over 3,000 ethnic groups, each with its own political, social, and economic dynamics. Investment strategies must adopt a bottom-up lens, avoiding overgeneralisation. Risk-return profiles vary widely and must be assessed accordingly.
Africa is competing with other regions for capital. While its opportunities are vast, so too are investor expectations. To shift the narrative, the continent must invest in derisking, transparency, and innovation. Projects with sound fundamentals, bankable financials, credible governance, and visible impact can attract better capital, faster.
The window is open. But turning potential into progress depends on execution. Bankable projects are not just investment vehicles; they are critical levers for Africa’s economic transformation.
Sodiq Opeyemi Lala, Infrastructure Investment Professional, lalasodiq@gmail.com
