Santa Maria, Cabo Verde, March 14, 2025 (Lusa) - The Lusophone Compact, a financing platform for Portuguese-language African countries (PALOP), aims to promote more trade between PALOP, Portugal and Brazil, Neima Ferreira, the initiative's coordinator at the African Development Bank (AfDB), told Lusa on Friday.
The compact "awakened the need" for collaboration among Portuguese-speaking countries "because there is immense potential and the aim 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”," she said.
"Portugal and Brazil know 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”, she summarised, in what she considers to be an exemplary case: “if others are doing it, why not do it in Portuguese-language Africa?”, she asked.
Neima Ferreira was speaking on the sidelines of the Lusophone Africa Investment Forum, which has been taking place since Thursday on the island of Sal, Cabo Verde, organised by the International Finance Corporation (IFC), the World Bank's private sector arm.
The IFC is the AfDB's partner in the Lusophone Compact, which brings together Portugal, Brazil and the six PALOP countries (Angola, Cabo Verde, Guinea-Bissau, Equatorial Guinea, Mozambique and Sao Tome and Principe) in co-financing actions, risk mitigation through says and technical assistance for investment.
As part of the compact, "the bank has already financed an overall amount of $233 million [€214 million]" since 2021, with five projects approved and another seven in the pipeline, in infrastructure, agriculture, industry and renewable energies.
On another front, there are technical assistance initiatives, such as entrepreneurship training in Guinea-Bissau and Sao Tome and Principe or funding for startups (technological innovation companies) and attracting digital nomads in Cabo Verde.
The results are starting to be visible and the instrument aimed at the private sector and public-private partnerships has an unfilled supply, said Neima Ferreira.
"We often receive proposals as if we were a commercial bank and not a development bank," she said, pointing out the difference: as well as analysing financial viability and a promoter's ability to repay the loan, the compact analyses “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 funding for investment programmes for companies already in a market and looking to expand to other parts of the PALOP geography.
Small businesses are an important part of the Portuguese-speaking economies and often struggle to access funding mechanisms. Still, 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 favourable interest rates to small and medium-sized companies, we are working indirectly," pointing to the example of Angola where “a loan of 10 million for SMEs” was approved.
Portugal has made a €400 million guarantee available for the Lusophone Compact and has given pre-approval to cover a project that will benefit from funding of US$100 million (€92 million) awaiting signature, she said.
"The guarantee expired at the end of 2023 and there is already an agreement with the Portuguese government, but the renewal has yet to be signed, which will be a new memorandum of understanding for 10 years," she concluded.
Transatlantic relations had already been highlighted earlier in the week, when Cabo Verde proposed to Brazil "to carry out a feasibility study" to turn the archipelago into a "Brazilian trade platform in West Africa and the mid-Atlantic".
On Monday, the proposal was announced by Filomeno Monteiro, Cabo Verde's Minister of Foreign Affairs, 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 today includes debates on energy transition and digital connectivity, as well as cooperation and the promotion of public-private partnerships and attracting foreign direct investment.
*** Lusa travelled at the invitation of the International Finance Corporation (IFC), an institution of the World Bank *** LFO/ADB // ADB.
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