THE vice president of the African Development Bank (AfDB), Mateus Magala, says two lines of credit worth $70 million in total have been opened in Angola and Mozambique under the ‘Lusophone Compact’.
The Lusophone Compact is an innovative model for financing projects in African Portuguese-speaking countries, in which Portugal, which has a guarantee of €400 million in the state budget for this year, and the AfDB, play a major role in the financing, preparation, monitoring and execution of projects.
‘The projects in Angola and Mozambique are more advanced, with two lines of credit recently approved by the AfDB totalling US$70 million [€58 million] to support small and medium enterprises in these countries through commercial banking,’ Mateus Magala said in an interview with Portuguese news agency Lusa from Abidjan, the bank’s headquarters.
‘These projects are strategically aligned with the national development plans of each country, as well as with the AfDB’s five operational priority areas, the High 5s: to Light Up and Power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of Life for the People of Africa,’ Magala added.
The vice-president of the AfDB did not specify by name which projects would be financed under this innovative model for supporting projects in Portuguese-speaking African countries.
‘In general, potential structuring projects were identified in all PALOP countries in the areas of infrastructure, agriculture, energy, health, finance and industries, for a global amount of $3bn [about €2.5 billion],’ the banker replied when asked which projects would be financed.
‘The ADB is the main financier of the Lusophone Compact projects, through the resources allocated to the countries and the leverage it makes through partnerships with other economic agents, including the private sector,’ Magala explained.
‘The €400-million guarantee provided by the Government of Portugal will mitigate the risk of potential projects which involve some Portuguese participation or co-participation, leveraging the existing resources of the AfDB for these countries by up to six times, thus increasing the number of private projects and AfDB-financed public-private partnerships in these countries,’ the vice president of the Africa’s largest multilateral bank detailed.
In practice, the AfDB also acts as a fundraiser, since the bank’s participation in the projects reduces the perceived risk, thus lowering the overall cost of investments and financing.
‘The AfDB will mobilise additional financial resources from other international financial institutions to finance Compact projects. One accelerating platform is the Africa Investment Forum, which brings together global investors and the promoters of structuring projects in Africa,’ Magala noted. This platform can draw in other partners, including African and non-African development financial institutions such as the European Investment Bank.
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