African Development Bank, Portugal And Cabo Verde Sign Compact To Accelerate Diversification, Private sector development

The African Development Bank  and the governments of Cabo Verde and Portugal have signed a country specific memorandum of understanding for the implementation of the Lusophone Compact, which aims to accelerate private sector development in Portuguese-speaking countries of 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, the Bank’s Director for Regional Integration. It was witnessed by over 200 Cabo Verdean and international investors and lenders.

Correia described the occasion as “an important day for Cabo Verde,” noting that it demonstrated the country’s commitment to press forward with private sector growth, which is key for our country.

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

The Lusophone Compact is a financing platform, involving the African Development Bank, Portugal, and the six Portuguese-speaking countries of Africa (PALOPs): 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 will 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 Euro 400m 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. Focus will primary 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 $470 million, 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 also 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.