The African Development Bank and the Portuguese government have signed a guarantee agreement that will be extended to the African Development Bank under the Lusophone Compact. The Compact provides a big boost to business development initiatives for the Bank’s non-sovereign portfolio in its Portuguese-speaking African member countries.
The signing took place in the presence of the President of the Republic of Mozambique, Filipe Nyusi, the Prime Minister of Portugal, António Costa, and other members of their respective delegations, during a business and investment forum organized within the framework of the 5th Luso-Mozambican summit, held on Friday 02 September.
Under the agreement, Portugal will provide guarantees of up to €400 million exclusively to African Development Bank-financed projects approved under the agreement. The Compact targets the private sector in Portuguese-speaking African member countries (Países Africanos de Língua Oficial Portuguesa or the PALOPs), including Angola, Cabo Verde, Equatorial Guinea, Guinea-Bissau, Mozambique and São Tomé and Príncipe.
The program is designed for new non-sovereign operations in these Portuguese-speaking countries and will allow the Bank to optimize the allocation of its risk capital to these countries. The program would allow individual Bank projects to be covered up to the full maturity of the loan (up to 15 years) and up to a maximum of 85% of the total principal amount of the bank loan, in accordance with criteria pre-determined eligibility. .
Expressing his pleasure to participate in the opening session of the Forum, President Nyusi said that the visit of the Portuguese Prime Minister and the large business delegation that accompanied him reflected the relations between Mozambique and Portugal at the political and diplomatic level. .
“We are moving in the right direction to institutionalize and leverage economic diplomacy as a bilateral business and strategic platform that empowers and strengthens economic relations by facilitating and bringing together entrepreneurs from these two countries,” President Nyusi said.
Prime Minister António Costa said: “With this agreement and others that are signed here, the conditions are created for the Mozambican and Portuguese governments to be ready to strengthen the capacity of Portuguese companies to invest and develop Mozambique.
The program will also see the Bank diversify and grow its non-sovereign portfolio over the medium to long term in countries where its private sector interventions are most needed.
“We are very pleased to sign this guarantee agreement with the African Development Bank, a crucial development partner for the efforts of the Portuguese cooperation policy aimed at supporting our partner countries in achieving their development objectives,” said the Secretary of State for Foreign Affairs and Cooperation for Portugal, Francisco André.
“Our belief is that this risk mitigation instrument will help boost the investment potential of the private sector in Portuguese-speaking African countries and support inclusive and sustainable private sector growth,” said the Secretary of State for Business. tax authorities of Portugal, Mr. António Mendonça Mendes. .
“This is another remarkable step under the Lusophone Compact initiative aimed at maximizing adequate support and strengthening the Bank’s existing efforts in Compact member countries. In addition, this guarantee is expected to significantly strengthen the Bank’s non-sovereign portfolio in Portuguese-speaking member countries in Africa,” said Deputy Director General for West Africa, Dr. Joseph Ribeiro.
Nana Spio-Garbrah, acting head of client solutions at the African Development Bank, said the signing supported the Bank’s drive to significantly increase private sector interventions in Portuguese-speaking countries, especially after the economic effects of the COVID-19 pandemic and the continued implications for Africa. of the Ukrainian-Russian crisis. It’s wonderful to see our shareholders continue to support the Bank in these innovative ways,” said
The Lusophone Compact, a financing platform involving the African Development Bank, Portugal and the six signatory PALOPs, provides risk mitigation, investment products and technical assistance to accelerate private sector development in member countries. The initiative came into effect in December 2018.
The Portuguese government has announced that it intends to “deepen bilateral relations and sign several cooperation instruments at the Luso-Mozambican summit”.
The theme of the Business Summit is “Mozambique and Portugal: Promoting and Enabling Opportunities, Investments and Partnerships”