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African Development Bank, Portugal and Guinea-Bissau sign compact to accelerate diversification, private sector development
The African Development Bank and the governments of Portugal and Guinea-Bissau 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 in Bissau on 27 July, between Geraldo Martins (Minister of Economy and Finance of Guinea-Bissauand AfDB Governor), Teresa Ribeiro (Secretary of State for Foreign Affairs and Cooperation of Portugal) and Serge N’Guessan (AfDB Deputy Director General for the region). Portugal’s Foreign Minister, as well as the Guinea-Bissau Ministers of Foreign Affairs, Justice and Agriculture attended the ceremony, which received extensive local and regional press coverage.
Minister Martins described the occasion as “an important first step for the Compact in Guinea-Bissau,” noting that the country would plan, with Portugal and the Bank, to host a launch event with the private sector in the near future, to ensure that local stakeholders have a full understanding of the tools available.
“Our new government is committed to supporting the private sector, and the Compact will be a key tool in that effort,” Martins 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. The Guinea-Bissau signing followed on those of Mozambique, Cabo Verde and Angola, over the past months. Sao Tome and Principe became the last country to sign.
According to N’Guessan, “the Compact will help address bottlenecks that limit private sector development and diversification. It will support private investments in sectors the government has deemed priorities, in its Terra Ranka national plan, such as the agriculture and fisheries value chains and tourism, as well as the infrastructure necessary to support those projects.”
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, Ribeiro 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 Guinea-Bissau MOU identifies a list of potential private sector and PPP investment projects, which will be analysed by the Lusophone Compact country focal points from the Bank, Guinea-Bissau and Portugal and prioritized for further support.
The MOU also provides for technical assistance projects to accelerate private sector and PPP growth. In Guinea-Bissau and elsewhere, project preparation has been identified as one of the main impediments to making projects bankable.