AfDB, Portugal and Cabo Verde to accelerate diversification, private sector development

privatisaThe African Development Bank (AfDB) and the governments of Cabo Verde and Portugal have signed a country-specific memorandum of understanding to implement the Lusophone Compact, which aims to accelerate private sector development in Portuguese-speaking countries in Africa

The signing took place on Sal Island on 1 July, between Olavo Correia, vice-prime minister and minister of finance of Cabo Verde, Helena de Paiva, Portugal’s ambassador to Cabo Verde and Moono Mupotola, AfDB’s director for regional integration.

“We are confident that the Compact will assist us in diversifying and strengthening Cabo Verde’s economy in the coming years,” Correia said.

The Lusophone Compact is a financing platform, involving the AfDB, Portugal and the six Portuguese-speaking countries of Africa (PALOPs) such as Angola, Cabo Verde, Equatorial Guinea, Guinea-Bissau, Mozambique and Sao Tome and Principe. It provides risk mitigation, investment products and technical assistance to accelerate private sector development in Lusophone African countries.

Following the signing of the general Lusophone Compact at the Africa Investment Forum in November 2018, the Bank and Portugal are signing country-specific agreements with each PALOP, focusing on the needs of each country. Mozambique’s was signed in March 2019 and an agreement with Angola to be signed on 10 July.

According to Moono, “The Compact will help address Cabo Verde’s infrastructure bottlenecks that limit private sector development and diversification. That will transform sectors such as agriculture transformation, the blue economy and small industry to support inclusive growth and formal job creation for the youth and women of Cabo Verde.”

The Portuguese Government allocated US$448.87mn in guarantees and other risk-sharing mechanisms in the 2019 national budget to support the implementation of the Compact, de Paiva said.

Projects eligible under the Compact are expected to align with the Bank’s development priorities, relevant country strategy papers and national development plans and involve the host country and at least two other Compact signatories. The focus will primarily be on renewable energies, agribusiness and agricultural value chains, water and sanitation, infrastructures, tourism, financing and ICT.

The Cabo Verde MOU identifies a list of potential investment projects worth around US$470mn, which will be analysed by the Lusophone Compact country focal points from the Bank, Cabo Verde and Portugal and prioritized for further support.

The MoU provides for technical assistance projects to accelerate private sector and PPP growth. In Cabo Verde and elsewhere, project preparation has been identified as one of the main impediments to making projects bankable.

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