AfDB, Portugal Seal New €400m Deal To Boost Business In Six African Countries

(AFRICAN EXAMINER) – African Development Bank (AfDB) and the Portuguese government have signed a new €400 million guarantee agreement to boost business in six Portuguese-speaking countries in African.

The deal which was consummated under the under the Lusophone Compact aims at promoting business ventures in Angola, Cabo Verde, Equatorial Guinea, Guinea-Bissau, Mozambique, and São Tomé and Príncipe, also known as Países Africanos de Língua Oficial Portuguesa or the PALOP.

The Compact offers a big boost to business development initiatives for the AfDB’s non-sovereign portfolio in its Portuguese-speaking African member countries.

As a financing platform, the Compact provides risk mitigation, investment products and technical assistance to accelerate private sector development in the member countries. The initiative became effective in December 2018.

The signing was witnessed by President of the Republic of Mozambique Filipe Nyusi, Prime-Minister of Portugal, António Costa, and other members of their respective delegations, during a business and investment forum organized as part of the 5th Luso-Mozambican Summit, held penultimate Friday with theme,
“Mozambique and Portugal: Promoting and enabling Opportunities, Investments and Partnerships”.

Under the agreement, Portugal will provide guarantees of up to €400 million exclusively to AfDB-financed projects approved under the arrangement. The programme is designed for new, non-sovereign operations in these Lusophone countries and will enable the Bank to optimize allocation of its risk capital to these countries.

The programme would also allow for individual bank projects to be covered for up to the full maturity of the loan (up to 15 years) and up to a maximum of 85 percent of the total bank loan principal amount, in accordance with pre-determined eligibility criteria.

In addition, it will also see the Bank diversifying and growing its non-sovereign portfolio over the medium-to-long term in countries where its private sector interventions are most needed.

\Expressing his pleasure at participating in the opening session of the Forum, President Nyusi said the Portuguese prime minister’s visit, and the important business delegation that accompanied him, reflected the relationship between Mozambique and Portugal at the political and diplomatic level.

“We are moving in the right direction to institutionalize and operate the economic diplomacy as a bilateral corporate and strategic platform that empowers and strengthens economic relations by facilitating and bringing together entrepreneurs in these two countries”, he said.

Similarly, the Prime Minister António Costa said with this and other agreements that are signed, the conditions are therefore created for the readiness of the Mozambican and Portuguese governments to strengthen the ability of Portuguese companies to invest and develop Mozambique.

In his remarks, the Secretary of State for Foreign Affairs and Cooperation for Portugal, Francisco André said: “We are very pleased to sign this guarantee agreement with the African Development Bank, a development partner that is crucial for the Portuguese cooperation policy’s efforts to support our partner countries in achieving their development goals”.

Secretary of State for Tax Affairs for Portugal, Mr. António Mendonça Mendes noted that their conviction is that this risk mitigation instrument will contribute to boost the potential for private sector investment in the African Portuguese speaking countries and support inclusive and sustainable private sector growth.

Deputy Director General for West Africa, Dr. Joseph Ribeiro described the agreement as another remarkable milestone under the Lusophone Compact initiative to maximize adequate support and enhance the Bank’s existing efforts in Compact member countries.

“In addition, this guarantee is expected to significantly boost the Bank’s non-sovereign portfolio in Portuguese-speaking member countries of Africa”, he added.
Acting Manager for Client Solutions, for the AfDB, Nana Spio-Garbrah, said the signing underpinned the Bank’s drive to significantly increase private sector interventions in Portuguese speaking countries particularly after the economic effects of the COVID-19 pandemic and ongoing implications for Africa of the Ukraine-Russia crisis.

“It is wonderful to see our shareholders continue to support the Bank in these innovative ways”, Sio-Garbrah stressed.