Turning Southern Africa’s Infrastructure Plans into Bankable Projects
Southern Africa does not lack infrastructure ambitions. The harder problem is getting projects far enough through feasibility studies, engineering, legal structuring and financial modelling for somebody to finance them.
Afreximbank and the Development Bank of Southern Africa are putting up to US$10 million each into a new Joint Project Preparation Facility designed to work on precisely that part of the development cycle. The two institutions will jointly identify and prepare infrastructure and industrial projects in South Africa and the wider Southern African region, taking selected schemes from early concepts towards investment readiness.
The amounts involved are small compared with the eventual capital cost of power networks, transport corridors, mineral-processing plants or digital infrastructure. That is partly the point. Project preparation sits upstream of construction finance, where relatively limited expenditure can determine whether a proposal develops into a technically credible and financeable project or remains on a government wish list.
South Africa’s own infrastructure pipeline demonstrates the problem. In the first three submission windows of the country’s Budget Facility for Infrastructure during 2025/26, 42 projects representing R438.8 billion in capital costs were received. Only ten were accepted into the pipeline, with the remainder either returned to their sponsors or referred to preparation facilities for further development.
Briefing
- Afreximbank and DBSA can each contribute up to US$10 million to the Joint Project Preparation Facility.
- The facility will initially concentrate on South Africa and the wider Southern African region.
- Priority sectors include power and energy, transport and logistics, ICT and strategic minerals beneficiation.
- Projects will receive technical, financial and legal preparation intended to move them towards bankability.
- Prepared projects may subsequently seek finance from Afreximbank, DBSA, commercial lenders, development finance institutions or private investors.
Preparing Projects Before Financing Them
Infrastructure finance tends to attract attention when the numbers become large: billion-dollar loans, sovereign guarantees, concession agreements and major construction contracts.
Long before any of those appear, somebody has to establish what is actually being built, whether it is technically feasible, what it will cost, how risks will be allocated, where revenues will come from and whether environmental, regulatory and legal requirements can be satisfied.
The new Joint Project Preparation Facility will operate in that gap. Afreximbank and DBSA will jointly originate, screen and prioritise potential projects before supporting the technical, financial and legal work required to address barriers to bankability. The initial sectors include power and energy, including energy-transition projects; transport and logistics; information and communication technology; strategic minerals beneficiation; and other areas agreed by the institutions.
That gives the arrangement a broader remit than conventional public infrastructure. Industrial and export-oriented projects are explicitly included, reflecting Afreximbank’s mandate around African trade and industrialisation.
The regional element brings its own complications. Transport, electricity and trade infrastructure frequently crosses national boundaries or depends upon infrastructure on the other side of them. A port investment may rely on rail capacity hundreds of kilometres inland, while a mineral-processing development may require additional electricity generation and transmission. Border infrastructure achieves little if connecting roads, customs systems or logistics facilities remain constrained.
South Africa’s Infrastructure Pipeline
The agreement arrives while South Africa is attempting to improve the machinery through which infrastructure projects are developed, appraised and financed.
National Treasury has reconfigured its Budget Facility for Infrastructure from annual submission cycles to quarterly windows while strengthening the conditions applied to approved projects. The government is also trying to establish infrastructure as a more recognisable investment class rather than treating every scheme principally as a call on the national budget.
That effort is beginning to produce different financing structures. South Africa’s inaugural sovereign infrastructure and development finance bond raised R11.8 billion in December 2025, according to the 2026 Budget Review. Treasury has also been developing mechanisms intended to bring development-finance and private capital into infrastructure alongside conventional public funding.
The projects passing through the BFI show how much work remains upstream. With 42 submissions worth R438.8 billion producing ten projects accepted into the pipeline during the first three 2025/26 windows, the filtering process is substantial. Referral to preparation facilities does not necessarily indicate a poor project. Engineering, financial structuring, procurement planning or other work may simply not have advanced sufficiently for a funding decision.
DBSA already operates in this territory. Among its project-preparation activities, the bank manages preparation funding for potential Infrastructure Fund projects, including programmes intended to develop municipal schemes to implementation stage and mobilise private-sector participation.
Its procurement activity gives a practical indication of what that work involves. DBSA has sought transaction advisers for bankable feasibility studies, cost-benefit analysis, financial modelling, project preparation and procurement documentation. Decisions made through that process can eventually shape procurement strategy, financing requirements and operating costs long after construction has finished.
From US$20 Million to Larger Capital Pools
A maximum combined contribution of US$20 million does not finance much physical infrastructure at regional scale. Used for preparation, however, it does not need to.
The facility is intended to prepare projects that can subsequently approach much larger sources of capital. Afreximbank and DBSA may provide downstream finance themselves, but projects can also be presented to private investors, commercial lenders and other development finance institutions. Any subsequent funding remains subject to separate appraisal and approval.
Preparation therefore does not guarantee construction, nor does participation in the facility mean a project has already passed the investment tests that future lenders will apply. It does provide funding for early technical and commercial work that project sponsors can struggle to finance themselves.
That becomes particularly relevant where private investment is expected to form part of the eventual capital structure. Investors can price construction, operational and market risks, but first they need enough information to understand them. Good preparation cannot eliminate those risks, but it can make them visible.
An Expanding Financial Relationship
The Joint Project Preparation Facility deepens an existing relationship between the two development banks.
It follows a Master Risk Participation Agreement signed by Afreximbank and DBSA in February 2026 and South Africa’s accession to the Afreximbank Establishment Agreement during the same month. South Africa became Afreximbank’s 54th member state, while Afreximbank announced a US$8 billion country programme for the country.
The preparation facility moves that relationship further upstream, allowing the institutions to become involved while projects are still being shaped rather than when a transaction is already approaching finance. Technical and commercial weaknesses can then be addressed while designs, procurement strategies and financial structures remain open to change.
Kanayo Awani, Executive Vice President for Intra-African Trade and Export Development at Afreximbank, described project readiness as a central constraint on African infrastructure investment: “Africa’s infrastructure challenge is not only about shortage of capital; it is also about shortage of projects prepared to the standard required by investors and lenders. This JPPF addresses this critical constraint. By combining Afreximbank’s trade and industrialisation mandate with DBSA’s infrastructure-development expertise, we will help move priority projects from concept to investment readiness and mobilise the larger pools of public, private and blended finance required for implementation. For South Africa and the wider Southern Africa region, this is how project preparation becomes a practical instrument for industrialisation, export growth and regional integration under the AfCFTA.”
DBSA Chief Investment Officer Gregory Fyfe said the partnership was intended to strengthen the pipeline of bankable infrastructure and industrial projects, using the two institutions’ respective capabilities to improve preparation and attract public and private investment.
Regional Infrastructure and Trade
The inclusion of transport, logistics, energy, ICT and mineral beneficiation puts the facility close to the physical infrastructure required for deeper regional trade.
The African Continental Free Trade Area can reduce formal barriers between markets, but movement across those markets still depends upon roads, railways, ports, border facilities, electricity, telecommunications and logistics networks. Industrial development adds another layer, with production facilities requiring dependable access to power, water, transport and export gateways.
Those dependencies become particularly important in mineral beneficiation. Processing more material domestically rather than exporting it in raw form can require substantial supporting investment in electricity, water, industrial facilities and freight capacity. A technically viable processing plant can therefore depend upon infrastructure controlled and financed through entirely separate projects.
The Afreximbank-DBSA framework will initially concentrate on South Africa and Southern Africa, although projects elsewhere on the continent can be considered where both institutions see a strategic case. South Africa provides a substantial regional anchor through its ports, railways, roads, electricity system and industrial base, many of which also support trade routes used by neighbouring economies.
Building a Financeable Pipeline
The new facility is best understood as part of the infrastructure production line rather than another construction financing pot. Its success will depend on projects emerging from preparation with workable designs, credible costs, defined risks, appropriate procurement structures and enough financial substance to survive independent appraisal.
Some will still fail that test, and that is part of the function of project preparation. Feasibility studies and financial modelling can expose unrealistic demand forecasts, unaffordable costs, technical difficulties or risk allocations that cannot attract finance. Other projects may need to be redesigned, divided into different phases or returned to their sponsors for further work.
A preparation facility that discovers those weaknesses before procurement or construction has performed a useful function, even when the result is that a project does not proceed.
Southern Africa has proposed roads, power systems, logistics corridors, digital networks and industrial developments competing for finite public and private capital. The task is not simply to move more of them towards finance, but to establish which ones can withstand the engineering, commercial and financial scrutiny required to get there.
Key Industry Questions
- What is the Afreximbank-DBSA Joint Project Preparation Facility? It is a framework through which Afreximbank and DBSA will jointly identify, assess and prepare infrastructure and industrial projects, with each institution able to contribute up to US$10 million.
- What does project preparation include? Depending on the project, preparation can include feasibility and technical studies, financial modelling, legal structuring, environmental work, risk assessment, procurement planning and transaction advice required before financing or procurement.
- Which sectors will the facility target? Initial priorities include power and energy, transport and logistics, ICT and strategic minerals beneficiation, together with other sectors agreed by the two institutions.
- Where will projects be located? The initial focus is South Africa and the wider Southern African region, although the framework allows projects elsewhere in Africa to be considered where there is mutual strategic interest.
- Does support from the facility guarantee project financing? No. Downstream financing from Afreximbank, DBSA, private investors, commercial banks or other development finance institutions remains subject to separate appraisal and approval.
- Why is project preparation important to infrastructure investors? Investors and lenders need sufficiently developed technical, commercial, legal and financial information to assess project risks and determine whether an investment is financeable.
- Can US$20 million make a significant difference to infrastructure investment? The facility is not intended to pay for construction directly. Its capital is used upstream to prepare projects capable of seeking much larger pools of construction and investment finance.
- How does the facility relate to South Africa’s infrastructure programme? It complements wider efforts to strengthen South Africa’s pipeline of investment-ready infrastructure, including reforms to the Budget Facility for Infrastructure and attempts to increase development-finance and private-sector participation.
Strategic Takeaways
- Project preparation remains a measurable constraint in South Africa’s infrastructure pipeline, with many proposed schemes requiring further development before funding decisions can be made.
- The JPPF places Afreximbank and DBSA earlier in the project lifecycle, before conventional lending and investment decisions.
- Its sector priorities connect infrastructure development with trade, industrialisation and mineral processing rather than treating projects purely as public works.
- The facility’s relatively modest capital can potentially influence substantially larger investments if prepared projects subsequently secure construction finance.
- Effective project preparation also filters proposals, exposing schemes that require redesign or should not progress to financing.
