The institution with the mandate often matters more than the institution with the money

Capital is often the most visible constraint in development projects. It is also frequently the easiest constraint to name: the project needs more debt, more equity, a guarantee, concessional finance or a larger public contribution. But in complex systems, capital is only one part of the transmission mechanism. The institution with the mandate can matter more than the institution with the money when the binding constraint sits in decision rights, coordination, regulation or implementation.

A major project can involve a ministry or agency with the formal mandate, a finance institution providing capital, a regulator controlling a critical permission, a private operator responsible for delivery, and several public bodies responsible for complementary infrastructure or services. If their responsibilities are not aligned, additional money can simply finance a better-funded version of the same execution problem.

TAY therefore starts with a different question: who has the authority to move the constraint?

That question separates the institution that can finance an intervention from the institution that can make it happen. It also identifies where a project needs capital, where it needs a decision, and where those two things have been incorrectly treated as the same problem.

A CONCRETE KENYAN CASE

Kenya's public-private partnership framework makes the distinction unusually clear. The PPP Directorate provides process leadership, project-preparation support, procurement guidance, negotiation and project oversight, while the Contracting Authority under whose mandate a project lies remains responsible for identifying, developing, implementing and monitoring it. The PPP Committee provides programme-level oversight. The Directorate therefore does not replace the mandate-holder; it strengthens the system around that mandate.

The Rironi to Nakuru to Mau Summit Highway illustrates why that architecture matters. The Government retains ownership, regulatory control and step-in rights, while the private partner is structured to design, finance, construct, operate and maintain the road for the concession period. The arrangement deliberately separates public authority and long-term ownership from private financing and operating risk.

The investment question is consequently larger than whether private capital is available. The project requires an institutional chain in which the public authority can exercise its mandate, the PPP institutions can structure and govern the transaction, the private partner can perform its contractual obligations, and the risk allocation remains credible to lenders and users.

TAY maps six functions before treating a project as finance-ready:

Mandate : Which institution is legally and operationally responsible for the outcome?

Decision right : Which institution can approve, regulate, procure, allocate, or change the condition that is constraining progress?

Implementation responsibility : Who must turn the decision into a functioning service, asset or operating system?

Risk bearer : Who carries construction, demand, regulatory, fiscal, operational or political risk when assumptions fail?

Capital provider : Who supplies public, commercial, concessional, guarantee or equity capital, and on what terms?

Outcome : What measurable economic or public value is the system expected to produce?

The order matters. Capital is deliberately placed after mandate, decision right and implementation responsibility because financing cannot substitute for authority or execution.

FROM MANDATE TO OUTCOME

A useful institutional map can be read as a transmission chain:

Mandate → Decision right → Implementation responsibility → Risk allocation → Capital structure → Outcome.

If the chain breaks between mandate and decision right, the project may be waiting for a policy or regulatory decision rather than money. If it breaks between decision and implementation, the problem may be institutional capacity or contract management. If it breaks at risk allocation, lenders may price uncertainty out of the transaction. If it breaks at capital structure, the project may genuinely require a different financing instrument.

This is why institutional analysis belongs inside investment analysis rather than in a separate governance appendix.

For development finance institutions, institutional architecture affects the design of the intervention itself. Project preparation, transaction advisory support, guarantees, policy reform and capacity building can all be part of the route to mobilising capital. Kenya's PPP framework explicitly assigns project-preparation, structuring, procurement and contract-management functions across the PPP Directorate and Contracting Authorities rather than treating financing as a standalone activity.

For investors, the same architecture becomes an execution-risk assessment. A project can have an attractive demand profile and still be difficult to finance if the public authority cannot make required decisions, enforce agreements, manage interfaces or sustain the regulatory conditions assumed by the model.

For governments, the implication is equally important: institutional clarity can be a form of capital mobilisation. When roles, decision rights and risk allocation are credible, private and development capital can be deployed against a clearer set of obligations.

The institution with the mandate does not always matter more than the institution with the money. It matters more when the binding constraint is one that money alone cannot remove.

That distinction prevents a common analytical error: treating every development problem as a funding gap.

A stronger assessment asks whether the constraint is financial, institutional, regulatory, operational, market-based, or some combination. It then identifies the institution that can alter that constraint and tests whether the capital structure supports the required decision and delivery architecture.

The result is a more useful definition of bankability. A project is not bankable merely because a financing package can be assembled. It becomes investable when the institutions controlling the transmission mechanism can make the commitments, decisions and operational actions on which that financing depends.

WHAT TO WATCH

For future TAY assessments, five signals deserve particular attention:

1. Whether the legally responsible institution has an active decision and delivery structure.
2. Whether project-development responsibilities are clearly separated from financing responsibilities.
3. Whether regulatory and contractual decision rights match the risks allocated to each party.
4. Whether complementary agencies can act on the same implementation timetable.
5. Whether the expected economic outcome can be traced back to identifiable institutional actions rather than only to the volume of capital committed.

Institutional mandates can overlap, political incentives can change, contracts can be renegotiated and implementation capacity can deteriorate. A governance map is therefore not a one-time project document. It should be refreshed when mandates, regulations, contracts, financing structures or operating conditions change.

The central TAY test remains simple: before asking who will fund the project, identify who can make the system work.

A useful institutional map must go beyond naming agencies. For each consequential decision, it should identify the legal authority, the official who can exercise it, the information required, the parties who must be consulted, the risk borne, the budget available and the mechanism for resolving disagreement. This distinguishes a mandate that exists in law from an institution that has the capability and incentives to act. Where the authority is fragmented, the remedy may be a protocol, delegated decision right or statutory clarification:not a new financing facility.

The map should follow the project through its lifecycle. The institution that originates a project may not be the institution that procures it; the financier may not control the regulatory permission; the operator may not be responsible for complementary infrastructure. A financing agreement that allocates a risk to a party without the authority or capability to manage it creates an implementation problem that may later appear as delay, cost overrun or renegotiation. Contractual risk transfer is credible only when matched by control, capacity and enforceable incentives.

If decisions are delayed because authority is unclear, clarify decision rights and escalation. If a regulator lacks technical capability, targeted support and retained expertise may be more relevant than additional project debt. If agencies cannot sequence complementary investments, a time-bound delivery arrangement with explicit accountability may be needed. If a project lacks credible preparation, finance should support feasibility and independent review before procurement. These interventions have different costs and should not be treated as interchangeable forms of technical assistance.

For public-private partnerships, the institutional test includes procurement authority, affordability, value for money, fiscal-risk oversight, contract management and the ability to monitor service standards over time. A project should not be described as privately financed in a way that obscures public guarantees, demand commitments, termination payments or future operating obligations. Institutional weakness can turn apparently transferred risks back into public liabilities.

Before a major commitment, require a clear accountable owner, verified authority for critical decisions, a delivery timetable agreed with complementary agencies, a funding and operating plan, a risk register with capable risk bearers, and outcome measures linked to the project's purpose. When milestones slip, diagnose the specific institutional failure before adding money or resetting the schedule. Review the map whenever regulations, contracts, mandates, political leadership or operating conditions change.

This is not an argument that institutions matter more than capital in every case. Some projects genuinely lack funding, and some institutions are capable but constrained by fiscal space or market conditions. The point is to test which constraint is binding. Capital is productive when it reaches an institution able to act and when that action changes a measurable outcome; institutional reform is valuable when it unlocks a credible public or commercial result rather than creating another layer of process.

Mandates can overlap, political incentives can change, institutional capacity can weaken and contractual or regulatory conditions can change over a project lifecycle.