A Principled Approach to Infrastructure Project Preparation Facilities

The report argues that a shortage of capabilities and funding for early-stage project preparation creates a paradox where private investment is available but the pipeline of bankable projects is scarce. It proposes five principles for successful IPPFs: clear objectives, self-sustainable financing, excellent portfolio management, cost-efficient advisory services, and stringent governance. The document details various business models—ranging from aid-based to venture capital—and suggests a tiered financial structure (Grant, Junior, and Senior tranches) to attract diverse investors by mitigating risk.

• There is a significant financing gap for early-stage project preparation in Africa; while the PIDA portfolio faces early-stage costs of $3.1 billion, existing African IPPFs have a capacity of barely $0.2 billion, leaving a gap of approximately $2.9 billion.
• The report identifies five key principles for IPPF success: clear objectives and a focused strategy, a self-sustainable financing model, excellence in portfolio management, cost-efficient and value-adding advisory services, and stringent governance and accountability.
• To achieve financial sustainability, IPPFs should move away from heavy reliance on grants and adopt recovery mechanisms. These include the 'Aid Organization model' (no recovery), 'Social Business model' (at-cost recovery), and 'Venture Capital model' (recovery plus return or equity stakes).
• IPPFs can optimize resources by using a 'cascade approach' to portfolio management, where projects must pass stage-gate reviews to move from identification to pre-feasibility, then to feasibility, and finally to procurement and financing.
• To attract private investors, the report suggests a tiered financial structure: a Grant tranche (first-loss buffer for donors), a Junior tranche (second-loss for development banks/impact investors), and a Senior tranche (risk-adjusted returns for private investors).
• Stringent governance is required to prevent conflicts of interest, particularly when private-sector parties involved in preparation later bid for construction or operation. Recommended mitigations include 'Chinese walls' and restricting the investor base to financiers only.
• The report highlights the Africa50 Platform as a model that combines project development (A50PD) and project finance (A50), creating a 'one-stop shop' that reduces the average project-development phase from 7-10 years to 3-4 years.

APA

World Economic Forum (2015). A Principled Approach to Infrastructure Project Preparation Facilities. http://www3.weforum.org/docs/WEF_African_Strategic_Infrastructure_Initiative_2015_IPPF_report.pdf

Chicago

World Economic Forum. A Principled Approach to Infrastructure Project Preparation Facilities. 2015. http://www3.weforum.org/docs/WEF_African_Strategic_Infrastructure_Initiative_2015_IPPF_report.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=A Principled Approach to Infrastructure Project Preparation Facilities |date=June 2015 |url=http://www3.weforum.org/docs/WEF_African_Strategic_Infrastructure_Initiative_2015_IPPF_report.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2015principled, author = {{World Economic Forum}}, title = {{A Principled Approach to Infrastructure Project Preparation Facilities}}, institution = {World Economic Forum}, year = {2015}, month = jun, url = {http://www3.weforum.org/docs/WEF_African_Strategic_Infrastructure_Initiative_2015_IPPF_report.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }