United Economic Preparation Fund

01 The readiness gap

The binding constraint on development finance is rarely capital — global markets hold trillions searching for yield, and every serious survey of institutional investors finds appetite for emerging-market infrastructure that dwarfs the deals actually available. The constraint is bankability: projects without feasibility work, institutions without the legal authority to contract, markets without baseline data to price against, frameworks that would take a court a decade to interpret.

That readiness gap, not the capital gap, is what most often stops development at the starting line — and it is structurally underfunded for a simple reason: nobody owns it. Governments budget for assets, not for the studies that precede them; investors pay for diligence on deals that exist, not for creating deals; donors fund visible things. Preparation is everyone’s prerequisite and no one’s line item.

The United Economic Preparation Fund exists to be that line item. It is small next to the investment portfolio — $180 million deployed against $26.6 billion committed — and it punches absurdly above that weight, because every dollar of successful preparation unlocks many multiples of investment that could not otherwise have been underwritten at all.

02 What the Fund finances

Four categories of groundwork, each of which converts intent into something an investment committee can underwrite. The categories are defined tightly because “preparation” attracts scope creep the way any pooled money does.

Feasibility and structuring dominate the spend — roughly two-fifths — because it is the category with the most direct conversion path: a completed bankable feasibility study is, almost by definition, a deal the pipeline can price. Legal-framework engagements are fewer and slower but the highest-leverage of all: one sound concession law serves every project that will ever use it, in perpetuity, for the cost of a single mid-size study.

The data category is the quiet one and the most underrated. A commitment cannot demonstrate results against a baseline that was never measured; entire sectors in some member economies had no reliable demand, price, or outcome data before Fund engagements built the measurement. Those baselines now serve not only coalition commitments but every investor and ministry that touches the sector.

• Feasibility & structuring — engineering studies, demand analysis, financial modelling, transaction advisors
• Legal & regulatory frameworks — the concession laws, PPA templates, and licensing regimes a deal must stand on
• Institutional readiness — the capacity work a counterpart needs before it can own a commitment
• Data & baselines — the measurements against which results will later be judged

03 How it works, end to end

The mechanics are deliberately simple. A member authority identifies a priority that is not yet bankable; the regional secretariat scopes the readiness gap — which of the four categories, what work, what cost, what timeline; the Fund’s committee approves the engagement under its delegated authority; the work runs, supervised by the secretariat; and the output — a structured, de-risked, documented opportunity — enters the coalition pipeline through the normal underwriting gates.

The last clause carries the discipline: preparation buys no approval. A prepared deal that fails the four tests is declined exactly as an unprepared one would be, and roughly one in eight prepared engagements ends that way. The separation keeps both sides honest — the Fund cannot inflate its conversion rate by leaning on the committee, and the committee cannot treat preparation spend as sunk-cost pressure.

Median span from engagement approval to pipeline entry is fourteen months. The Fund tracks the number obsessively, not to rush the work but because preparation that drifts past two years usually signals a problem money cannot fix — a political window closed, a sponsor gone soft — and the engagement review exists to call that early.

04 The funding model

Preparation is financed with grants, because charging for groundwork kills exactly the projects that need it most: a ministry that could pay for its own bankable feasibility study generally does not need the Fund. But the grants convert to recoverable advances where a transaction closes — reimbursed from financial close as a project development cost, the standard treatment in commercial project finance.

Roughly forty percent of deployed preparation capital has been recovered this way and recycled into new engagements, a rate that rises as the portfolio matures. The model gives the Fund a half-life much longer than its nominal size: it is not an endowment being spent down but a revolving pool being slowly, imperfectly, usefully replenished by its own successes.

Contributions to the Fund come from members and partner institutions, and — a governance point worth noting — carry no earmarking. A contributor cannot direct its money to a region or sector; the pool is allocated by the Fund’s committee against readiness need. Several prospective contributors have walked away over that rule. The rule has stayed.

05 What conversion looks like

Sixty-eight percent of completed preparation engagements have converted into committed transactions — a rate the coalition watches closely in both directions, because either extreme would signal failure. Too low would mean preparation is subsidising wish-lists that were never going to be deals; suspiciously high would mean the Fund only takes cases so easy they barely needed it.

The engagements that do not convert are not written off as waste, and the accounting is honest about why: they leave frameworks, data, and institutional capability behind. A concession law drafted for a port that never closed still governs the next port. A demand study for a stalled corridor priced three later deals. Failure at preparation scale costs hundreds of thousands and teaches; failure at commitment scale costs hundreds of millions and scars. Buying information cheaply is most of what the Fund is for.

06 Governance and discipline

The Fund runs under its own committee with delegated authority — preparation decisions are too small and too fast for the main Investment Committee’s cadence — but under the coalition’s single set of standards: the same integrity screens, the same safeguard exclusions, the same disclosure. It cannot finance anything the main portfolio would be barred from touching.

Every engagement is disclosed at approval: counterpart, category, budget, intended pipeline outcome. Results — conversion, recovery, time-to-bankability — are published in the annual report beside the investment book, and the Independent Evaluation Panel samples completed engagements on the same cycle as commitments. A small fund with big leverage is exactly the kind of vehicle that drifts when nobody is looking; the Fund’s design assumes someone is always looking, and arranges for it.

07 Reading the exhibits

The two exhibits below show where preparation money goes and what becomes of it. Spend concentrates in feasibility and structuring — the shortest path from study to deal — while the conversion funnel shows the honest arithmetic: of sixty-one completed engagements, forty-one have converted to committed transactions, twelve remain in active pipeline, and eight closed unconverted with their frameworks and data retained. The Fund’s target is not a prettier funnel; it is a bigger one.

08 A worked example: from ministry memo to financial close

The Fund’s clearest explanation is a case. A member finance ministry flagged a port-rail interchange as a national priority: commercially promising, entirely unbankable — no demand study newer than a decade, no concession framework, a port authority that had never run a competitive tender. The regional secretariat scoped a three-part engagement: $2.1 million across a demand-and-engineering study, concession-law drafting support, and a tendering-capacity module for the authority.

Nineteen months later the package entered the pipeline: an investment-grade feasibility file, a concession framework enacted by the member’s legislature, and an authority that had run a mock tender under supervision. The commitment closed at $185 million with two co-financiers — and the preparation advance was recovered at financial close as a project development cost. The multiple on that engagement was roughly ninety to one; the portfolio average is lower and the principle identical.

The counter-case matters equally. A parallel engagement for an industrial-water project closed unconverted when the anchor tenant withdrew — $600,000 spent, no commitment. What remained: a water-demand baseline now used by three other financiers, and a drafted tariff framework the regulator adopted anyway. The Fund’s accounting counts that as a partial return, publicly, because pretending otherwise would teach the wrong lesson about what preparation is for.

09 What preparation cannot fix

The Fund declines engagements where the missing ingredient is not readiness but reality. No feasibility study fixes a project whose economics do not close at any capital cost the coalition could offer. No legal drafting fixes a counterparty that does not want the framework — enacted-then-ignored laws are worse than none. And no preparation money fixes absent political ownership: if the member authority’s commitment is a signature rather than a priority, the engagement will produce beautiful documents for a shelf.

The scoping stage screens for exactly these, and roughly a third of requests stop there — redirected, where possible, to what would actually move them: sometimes a capacity engagement first, sometimes a smaller intermediated structure, sometimes an honest conversation about sequencing. Saying no at scoping is the Fund’s second-cheapest way to buy information. The cheapest is asking the ministry what happens to the project if the Fund does nothing — an answer of “someone else will prepare it” is a decline on additionality grounds, and a welcome one.

10 The Fund and the capacity office: the division of labour

Newcomers reasonably ask where preparation ends and capacity development begins, since both build institutional readiness. The line is the commitment. Capacity components ride inside commitments, funded from the deal, building the institutions that will operate what the deal finances. The Preparation Fund works before any commitment exists — its institutional-readiness category builds counterparties to the point where they can enter a commitment at all.

In practice the two hand off deliberately: a Fund engagement that readies a port authority is often designed with the follow-on capacity component already sketched, so the authority experiences one continuous programme rather than two funders. The join is invisible to the counterpart and heavily managed behind it — which is roughly the coalition’s ambition for all of its internal plumbing.

11 Where readiness gaps concentrate next

The Fund publishes a forward view alongside its results, because preparation is by nature a leading indicator: where readiness money flows today, commitments follow in eighteen months. The current engagement book points at three concentrations. Grid-integration readiness across África and the Américas, where renewable generation pipelines have outrun the transmission studies and dispatch frameworks they connect to. Digital-public-infrastructure legal frameworks in Asia, where member demand for identity and payments rails has met statute books written for paper. And climate-adaptation baselines everywhere — the measurement layer that adaptation finance cannot be underwritten without, and which almost no market participant will fund because it is pure public good.

That last category is the Fund at its most counter-commercial and most necessary: baseline data that benefits every future financier equally is exactly the groundwork nobody’s balance sheet wants to carry alone, and exactly what a pooled, member-owned vehicle exists to hold. The 2027 engagement plan weights it accordingly, and the coalition’s research desk publishes the resulting datasets openly — readiness, once financed, belongs to everyone who can build on it.

Members with priorities that fit any of the three concentrations can open a scoping conversation through their regional secretariat at any point in the year; the Fund’s committee meets monthly, and a well-defined readiness gap can move from request to approved engagement inside a quarter. The forward view exists to be claimed against, not admired.