The Preparation Trap: Why Zambia’s 300 MW Solar Project Is Stuck
New policy analysis by Fizzo Chidakwa, The Preparation Trap: no rule excludes African cities from preparation finance, yet a 300 MW plant fits no route.
Executive Summary
Project preparation finance in Africa reaches municipalities, and it reaches public sponsors of power generation, but only on conditions that a large municipally sponsored plant cannot satisfy together. Drawing on the published criteria of six facilities, Zambian statute, and a comparison between Cape Town's Paardevlei project and Kabwe Municipal Council's 300 MW Kafulamase solar plant, this analysis finds that no rule excludes a municipal sponsor. Instead, four constraints compound: project scale, project stage, sponsor capacity, and a national approval framework that conditions every external route on prior approval. It recommends that the sponsor phase the project within the leading facility's investment range, that SEFA pilot a window for sub-sovereign sponsors, and that Zambia test existing institutions before creating any new one.
Key Findings
Roughly eighty percent of African infrastructure projects fail at the feasibility and business-planning stage, before any financier appraises them.
Preparation absorbs 5 to 10 percent of project investment and typically takes three to seven years.
No published rule of the six preparation facilities reviewed excludes a municipal sponsor.
Kabwe's 300 MW plant, at an indicative USD 240 million, sits above SEFA's documented investment range of USD 30 million to 200 million.
Documented municipal preparation support sits at the feasibility stage, which Kabwe has already completed.
Zambian law conditions every external preparation route on prior ministerial and Treasury approval but does not prohibit it.
Without a preparation instrument, councils fall back on non-binding investor agreements that leave the public side carrying the preparation cost and risk.
African energy projects are usually described as failing for want of capital. This analysis starts from a less familiar fact: most of them fail before capital is asked to form a view. Across African infrastructure, fewer than one in ten projects reaches financial close, and roughly eighty percent fail at the feasibility and business-planning stage. Preparation, meaning feasibility, environmental and social assessment, land assembly, regulatory fees and transaction advice, absorbs 5 to 10 percent of project investment and takes three to seven years. It has to be paid for before any financier appraises the result.
As climate finance takes centre stage at COP31 in Antalya, the paper asks who pays for that first step when the sponsor is a city.
A 300 MW plant and a council that cannot pay the fees
Chidakwa leads the project team at Kabwe Municipal Council in Zambia, which is developing 300 MW of solar generation at Kafulamase on about 320 hectares of council land, at an indicative cost of USD 240 million. The council has procured its feasibility study and environmental assessment itself, and has applied for a waiver of the statutory environmental fee because it cannot fund that process from its revenue.
It would be easy to call this a story of two closed doors. The paper argues for something narrower and harder to fix: both doors are open, but only on conditions the project cannot meet together.
Both routes are open, within limits
On the energy side, the Sustainable Energy Fund for Africa (SEFA) supports public-sector sponsors whose projects become independent power producers or public-private partnerships. But it asks beneficiaries to fund at least 30 percent of pre-investment costs and targets projects of USD 30 million to 200 million. Kabwe's plant sits above that range, and the council cannot meet the cost share. Other energy facilities are narrower still, closed by mandate or reachable only through national programmes.
On the municipal side, the routes are real. The C40 Cities Finance Facility supported Cape Town's Paardevlei project, and the African Development Bank's Urban and Municipal Development Fund granted Windhoek USD 485,000 in 2023 to prepare 60 MW of solar with battery storage. But that documented support sits at the feasibility stage, which Kabwe has already passed. Paardevlei fitted the municipal route because it was modest, early and backed by a metropolitan budget.
No rule excludes a municipal sponsor. Four constraints compound instead: project scale, project stage, sponsor capacity, and a national approval framework. In Zambia, a council needs the Minister's prior approval for any grant or loan from outside the country, Treasury authority for any loan and parliamentary approval for external borrowing. Because land is vested in the President, a council cannot freely borrow against the land it holds.
What a council does instead
The paper's most candid section describes what happens in the gap, and Chidakwa writes it as someone whose institution has done it. Without a preparation instrument, a municipality reaches for the one arrangement available at no cost: a non-binding agreement with an investor. The investor gains an option and commits nothing. The council keeps the preparation cost, the regulatory obligations and the completion risk, and records the signature as progress. The cost of that arrangement falls on ratepayers, who are party to none of it.
Creditworthiness is the wrong test
The strongest objection is that cities are simply not creditworthy. The paper tests that view. The facilities' published criteria cite mandate, project structure and fiduciary capacity, not sponsor creditworthiness, and a non-repayable preparation grant carries no repayment risk at all. Zambia's government itself identifies the creditworthiness of the electricity buyer, not the project sponsor, as the largest obstacle to financial close.
Who should change what
The first changes lie with the sponsor and need no new instrument. Kabwe should size a first phase within SEFA's range, structured through the special purpose vehicle it already plans, and seek the required approvals once a qualifying facility is identified. Councils should negotiate the sharing of preparation costs as a substantive term in investor agreements.
The second lies with SEFA, which sets its criteria: a time-limited pilot, with a published evaluation, that admits sub-sovereign sponsors and accepts land and completed studies as their contribution to pre-investment costs. The third is domestic. Zambia's Ministry of Energy should test whether its planned Energy Sector Procurement Framework can carry a municipal sponsorship track before any new preparation window is created.
The full analysis, including six figures, a comparison with Cape Town's Paardevlei project and the Zambian legal pathway, is available to download.
Publication Documents & Downloads
ETA_Policy_Analysis_Chidakwa_The_Preparation_Trap.pdf
Suggested Citation
Chidakwa, F. T. (2026). The Preparation Trap: Why a 300 MW Municipal Solar Plant Fits Neither Route to Project Preparation Finance. ETA Fellows Programme Signature Analysis. Energy Transition Africa.