Reference Glossary

Infrastructure Finance Glossary

Complete reference for project finance, development finance, blended capital, and capital markets terminology used by DFIs, lenders, and sponsors on Kenya infrastructure projects.

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Overview

Contractors Who Understand How Projects Are Financed Bid Better and Get Paid Faster

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Payment Security

DFI-funded projects with escrow accounts and sovereign guarantees offer significantly stronger payment security than domestically funded projects. Understanding the payment mechanism allows contractors to price financing risk correctly in their bids.

Drawdown Timelines

LTA certificates, No Objection procedures, and DFI disbursement cycles add 4"“8 weeks to payment certificate processing on international projects. Contractors who factor this into cash flow projections avoid liquidity crises mid-project.

DSCR Implications

Lender DSCR covenants restrict distributions to sponsors when coverage ratios fall below thresholds. This can affect payment of subcontractors who hold equity in the SPV "” understanding this structure helps contractors negotiate direct payment provisions.

Bid Finance Structuring

Contractors bidding as part of a consortium on DBFOM or BOT contracts need basic project finance literacy to engage meaningfully with the financial model, assess equity return requirements, and negotiate contractor-supplier interfaces that work within the concession structure.

Full Reference Library

Complete Contractor Knowledge Base

Access all five Top Notch reference glossaries covering the full range of technical, legal, financial, and commercial knowledge required by contractors on Kenya infrastructure projects.

Use it when you need a short summary, a strong metrics band, and a clean follow-through area that explains what the numbers mean.

Eng.

Engineering Glossary

Civil, structural, power, and specification terms

EPC

EPC Contracting

FIDIC, variation, claims, completion terms

Legal

Legal Glossary

Contract law, arbitration, FIDIC dispute terms

Tax

Tax & Customs

Kenya tax, duty, HS codes, AEO terms

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Funding Vehicle Pages

Read more about the specific funding structures active in Kenya's infrastructure market:

That keeps the section easy to scan while still giving enough context for stakeholders who need a little more detail before taking action.

DFI-Backed Finance

World Bank, AfDB, IFC, and bilateral DFI procurement procedures and contractor opportunities.

Gulf & GCC Finance

SFD, IsDB, KFAED, and UAE fund procedures including Shariah-compliant structures.

Kenya NIF

National Infrastructure Fund "” sovereign-guaranteed payment security and procurement.

Submit EOI as Contractor View DFI Funding Page

Finance Glossary FAQ

Common Project Finance Questions

Answers to the finance and DFI structure questions contractors most frequently ask when preparing bids or entering joint ventures on Kenya infrastructure projects.

What is blended finance and why does it matter for contractors?

Blended finance combines concessional DFI capital with commercial finance to make projects viable that would otherwise offer returns too low for private investment. For contractors, blended finance projects are typically more stable and better creditworthy than purely commercial projects "” the DFI involvement brings discipline, environmental standards, and payment monitoring.

What is a Lender's Technical Advisor and how do they affect my payments?

The LTA is an independent engineering firm appointed by the lenders to review progress and certify drawdown requests. No LTA certificate = no drawdown = no contractor payment. LTA certification typically adds 2"“4 weeks to the payment cycle on DFI-funded projects. Factor this into your cash flow projections.

What is the difference between a sovereign guarantee and a partial risk guarantee?

A sovereign guarantee is the government's unconditional commitment to pay if the project entity defaults. A Partial Risk Guarantee (PRG) from the World Bank/IDA is a more specific instrument that covers only defined government-related risks "” non-payment by KPLC under a PPA, regulatory failures, or termination event payments.

What is an offtake agreement and why is it critical for contractors?

The offtake agreement (e.g., a Power Purchase Agreement) is the source of the project's revenue certainty "” the lenders fund the project because the offtake agreement provides predictable cash flows. Contractors on BOT or concession projects need to understand that the offtake agreement revenue directly determines the project's ability to service debt and fund operations, including contractor payments.

What does Financial Close mean in practice for the construction start?

Financial Close is the prerequisite for a Notice to Proceed on DFI-funded projects. If Financial Close is delayed, the construction start is delayed "” and most EPC contracts prohibit contractors from mobilising at their own cost before Financial Close unless they accept full mobilisation risk.

What is the difference between concessional and commercial DFI loans?

Concessional loans (from IDA, AfDB's ADF, SFD, IsDB) are offered at significantly below-market rates (0"“2% interest) with tenors up to 40 years and grace periods up to 10 years. Commercial DFI loans (from IFC, Proparco, BII) are closer to market rates (SOFR + 3"“5%) with shorter tenors of 10"“15 years. The funding source does not change the contractor's payment rights, but it affects the project's financial viability and therefore payment risk.

What is a sukuk and can it be used for infrastructure in Kenya?

A sukuk is a Shariah-compliant financial instrument where investors receive income from an underlying asset rather than interest. Kenya issued its first sovereign sukuk in 2021. Sukuk are increasingly used to finance infrastructure in Kenya, particularly on IsDB-funded projects. Contractors on IsDB-funded projects may encounter sukuk structures as the primary financing vehicle.

What is the revenue waterfall and why does it matter for contractors?

The revenue waterfall is the contractually specified order in which project revenues are disbursed. Operating costs and reserve account top-ups typically rank ahead of contractor payments in some SPV structures. Contractors holding equity in a project SPV need to understand the waterfall to know when they will receive distributions from project cash flows.

View DFI Funding Guide

Related Finance Resources

Further reading on infrastructure finance structures and funding vehicles active in Kenya:

DFI Finance Guide

World Bank, AfDB, IFC procurement and contractor engagement.
Gulf Capital Guide

SFD, IsDB, KFAED and Shariah-compliant project finance.
Kenya NIF Guide

National Infrastructure Fund payment structures and sovereign guarantees.
EPC Contracting

FIDIC contract mechanics, performance bonds, and payment terms.

Submit EOI as Contractor View DFI Funding Guide