Across Africa, many infrastructure projects have struggled because investors were unwilling to accept sovereign and political risk. Partial Risk Guarantees (PRGs) have become one of the tools that bridge that gap. Rather than financing projects directly, they cover specific government-related risks—such as payment defaults, breach of contract, or restrictions on foreign currency transfers—allowing commercial lenders to participate with greater confidence.
The result is straightforward: projects that once appeared too risky become financeable.
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Uganda’s Bujagali Dam
When Uganda developed the 250 MW Bujagali Hydroelectric Project, attracting international lenders was one of the biggest challenges. Investors were concerned about long-term government obligations, contractual enforcement, and political risk.
The World Bank’s Partial Risk Guarantee addressed those concerns by covering specific sovereign risks instead of commercial ones. Construction, operational performance, and project delivery remained the responsibility of developers and lenders.
That distinction mattered. The guarantee helped mobilize commercial financing on terms Uganda would have struggled to secure independently. Today, Bujagali remains one of East Africa’s most important power assets and a cornerstone of Uganda’s electricity supply.
Kenya Power Used a PRG to Improve Financing
Partial Risk Guarantees are not limited to new power plants. Kenya Power used an IDA-backed guarantee during the refinancing of existing debt. The objective was to improve the quality of its financing.
With part of the sovereign risk covered, lenders were prepared to extend repayment periods and offer lower financing costs. The utility gained access to longer-term capital without requiring the government to provide a full sovereign guarantee.
The transaction demonstrated another important use of PRGs: improving the structure of existing debt rather than simply funding new infrastructure.
Ghana’s Eurobond
The concept also applies beyond the energy sector. In 2020, Ghana issued a US$1 billion Eurobond supported by a US$400 million IDA Partial Risk Guarantee.
At a time when international markets were volatile, the guarantee increased investor confidence in part of the issuance. That support helped Ghana access international capital markets under better terms than would otherwise have been possible. The guarantee simply reduced enough uncertainty to attract investors that may otherwise have stayed away.
Read Also: Understanding Partial Risk Guarantees in Project Finance
Regional Power Projects Are Using the Same Approach
Across West Africa, similar guarantee structures have supported regional electricity projects under the West African Power Pool. Cross-border transmission lines require multiple governments, utilities, regulators, and long-term power purchase agreements to work together. That complexity creates additional political and contractual risks.
Guarantees have helped mitigate those risks by backing government obligations under PPAs, supporting currency convertibility, and strengthening confidence among international lenders. The result has been greater private participation in regional transmission infrastructure and stronger electricity trade between neighboring countries.
