Portugal signs in July in Mozambique a guarantee of 400 million euros for the Lusophone Compact, says ADB
“The Portuguese Government will publicly launch the signature of the guarantee. It will be done in Mozambique from 11 to 13 [de julho] within the scope of the Mozambique Portugal summit, with the presence of the first development”, the President of the African Bank of Resources (BAD) for corporate and human services told Lusa, on the sidelines of the Mozambican meetings of the ADB, in Accra.
The Lusophone Compact Guarantee Program, through which Portugal provides financial guarantees of 400 million euros for investments in Portuguese-speaking African Countries (PALOP), was approved by the ADB in December 2020, but Magala says that it has only now had the endorsement by the rating agencies.
At the statutory meeting of the Compact, which took place during the meetings, Portugal announced that “the guarantee of 400 million euros that was scrutinized by the rating agencies (…) has been approved”.
“It’s a good thing and it’s necessary,” said the coordinator of the Compact for Financing Development for Portuguese-speaking African Countries, or Lusophone Compact.
The Lusophone Compact is an initiative launched at the end of 2017 by the ADB and the Portuguese Government to finance projects launched in Portuguese-speaking countries with the financial support of the ADB and with guarantees from the Portuguese State, thus ensuring that the lowest cost of financing and with less risk.
The main objective of the initiative is to increase the development of the private sector in the six Portuguese-speaking African countries – Angola, Guinea-Bissau, Cape Verde, Mozambique, São Tomé and Príncipe and Equatorial Guinea – through three instruments: risk mitigation for unlock investment, direct financing of private investments and technical assistance to bolster private sector growth.
400 million investment aid, they look at their ability to pay and this 400 million serves as an investment.
“If I have a million, I can ask for a million, but if I have 100,000 dollars, they don’t give me a million. With that 400 million euros, we can leverage 1.2 billion or more”, he explained.
Without advance numbers, he also stated that, since it was created before Mag of millions of euros, the Compact sign projects of “advance numbers, we are already guaranteed to ourselves before” of millions of euros.