Africa-Press – Cape verde. The coordinator of the initiative at the African Development Bank (AfDB), Neima Ferreira, said today that the Lusophone Compact, a financing platform for Portuguese-speaking African Countries (PALOP), aims to promote more trade between the PALOP, Portugal and Brazil.
The compact “awakened among Portuguese-speaking countries the need for collaboration” because there is immense potential and the objective is to promote the private sector, bringing more trade between PALOP [Portuguese-speaking African Countries], Portugal and Brazil, this triangular trade that is ‘win-win’”, that is, advantageous for all parties, he said.
“Portugal and Brazil have knowledge in terms of industry, equipment” and other “know-how” that “they can transfer to the PALOP countries”, which, in turn, “have raw materials and other benefits”, he summed up, in what he considers to be an exemplary case: “if others do it, why not do it in Portuguese-speaking Africa”, he asked.
Neima Ferreira was speaking to Lusa, on the sidelines of the Investment Forum in Lusophone Africa, taking place since Thursday on the island of Sal, Cape Verde, organized by the International Finance Corporation (IFC), the World Bank’s arm for the private sector.
IFC is a partner of the AfDB in the Lusophone Compact, which brings together Portugal, Brazil and the six PALOP countries (Angola, Cape Verde, Guinea-Bissau, Equatorial Guinea, Mozambique and São Tomé and Príncipe) in co-financing actions, risk mitigation through guarantees and technical assistance for investment.
Within the scope of the compact, “the bank has already financed a global amount of 233 million dollars [214 million euros]”, since 2021, with five approved projects to which another seven may be added, in processing, in areas such as infrastructure, agriculture, industry and renewable energy.
In another aspect, there are technical assistance initiatives, for example, for entrepreneurship training in Guinea-Bissau and São Tomé and Príncipe or financing “startups” (technological innovation companies) and attracting digital nomads in Cape Verde.
The results are starting to be visible and the instrument aimed at the private sector and public-private partnerships has a supply to be filled, said Neima Ferreira.
“We often receive proposals as if we were a commercial bank rather than a development bank,” he said, pointing out the difference: in addition to analyzing financial viability and the ability of a developer to repay the loan, the compact analyzes “the impact of the project on the community and the country” in terms of job creation or environmental sustainability, among other criteria.
The range of support also includes financing for investment programs for companies that are already in a market and are seeking to expand to other parts of the PALOP geography.
Small businesses are an important part of Portuguese-speaking economies and often have difficulty accessing financing mechanisms, but, according to Neima Ferreira, the compact has implemented measures to include them.
“We are giving lines of credit and guarantees to commercial banks so that they can lend at more favorable interest rates to small and medium-sized companies, we are working indirectly”, pointing to the example of Angola in which “a loan of 10 million for SMEs” was approved.
Portugal has made available a guarantee of 400 million euros for the Lusophone Compact and has given pre-approval to cover a project that will benefit from financing of 100 million dollars (92 million euros) that is awaiting signature, the official indicated.
“The guarantee expired at the end of 2023 and there is already an agreement with the Portuguese Government, the renewal needs to be signed, which will be in the form of a new memorandum of understanding for 10 years”, he concluded.
Transatlantic relations had already been highlighted earlier in the week, when Cape Verde proposed to Brazil “the carrying out of a feasibility study” to transform the archipelago into a “Brazilian trade platform in West Africa and the mid-Atlantic”.
The proposal was announced by Filomeno Monteiro, Cape Verde’s Minister of Foreign Affairs, on Monday, when he received his Brazilian counterpart, Mauro Vieira, who began a tour of African countries in Praia.
The second day of the Lusophone Africa Investment Forum includes debates on energy transition and digital connectivity, as well as cooperation and promotion of public-private partnerships and attraction of foreign direct investment.
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