Projects & Infrastructure Finance

The Bank provides Project and Infrastructure financing through various products and structures that rely primarily on the project’s cash flows for repayment. The Bank’s project financing structures are tailored to the project’s financing and operational requirements and also to investor preferences particularly on the need to warehouse projects into Special Purpose Vehicles (SPVs) in order to facilitate the ring-fencing of the project assets and attendant cash flows as a mechanism to provide comfort to investors over the term of the project financing structure.

In a typical project financing structure, the Bank combines equity contributions by the project sponsor with debt and credit enhancements to finance the construction and operation of an infrastructure project. The Bank will primarily focus on the cash flows of the financed project, once operational, as the source of repayment rather that the sponsor’s balance sheet. However, to enhance the credit structure and attractiveness of a project to investors, the Bank may in certain situations identify and ring-fence uncommitted cash flows from the project sponsor’s existing operations and commit them towards debt service. Typical tenures for project finance loans will range from five (5) to seven (7) years including grace periods. Access to long term funds and credit lines with tenors of more than seven (7) years will allow the Bank to also provide longer tenors on its project and infrastructure finance loan facilities.

The Bank also facilitates the undertaking of infrastructure projects through Public-Private Partnerships (PPPs) where the Bank provides technical direction in the packaging, procurement and financing of the project and structuring the PPP arrangements. Implementing projects through PPPs allows the use of long term capital with tenors stretching between 20 to 30 years.

Products

The Bank offers the following products under Project and Infrastructure Finance:

  • Term Loans
  • Mezzanine funding
  • Co-financing/syndication
  • Equity participation/ Shareholder loans
  • Loan guarantees
  • Infrastructure/project bonds/commercial paper
  • Climate finance

Approach to Financing Projects

Projects that the Bank will finance will first go through a robust preparation process where they will be screened, appraised and packaged to ensure project bankability before they are marketed for investment or financed directly by the Bank.

Project bankability will be appraised based on the following factors:

Technical scope: definition of the project including needs analysis and output specification, technical designs, track record of proposed technology, risks and mitigation measures, and availability of raw materials and support skills.

Implementation: promoter’s track record and capability to implement the planned project, information on timing of key project milestones and proposed contract management arrangements during the project’s operational life cycle.

Procurement: compliance with procurement legislation/regulations.

Environmental and Social impact: compliance with applicable legislation and information on environmental and social impact assessment (ESIA).

Market for project outputs: analysis of the market and demand (or offtake potential) of the project’s products/services over the project’s life, including affordability.

Regulatory approvals/licenses/permits -

Investment costs: information on project costs and its detailed components, and comparison with cost of similar projects for reasonableness.

Legal Feasibility and Financial Viability: information on statutory/regulatory issues, regulatory approvals (permits, licenses, borrowing certificates, land rights, Government undertakings, etc) and the project’s financial viability and economic rationale.

The Bank will take the above issues into account in analyzing project financing options and structuring a sustainable financing package. Once financed, the Bank will monitor project implementation and draw lessons for future project implementation.

Applications requiring funding for project preparation should be channeled through the Bank’s Project Preparation and Development Fund (PPDF). Guidelines for lodging funding applications under the PPDF facility can be found on the Bank’s website under the following link:

https://www.idbz.co.zw/downloads/IDBZ%20PPDF_Operational%20Guidelines_with%20Annexures_FINAL_05%2007%202016.pdf