Signed a €400 million guarantee agreement to support the Lusophone Compact

 On September 7th, the African Development Bank (AfDB) and the Portuguese Government signed a guarantee agreement to be granted to the AfDB under the Lusophone Compact. The Compact aims to provide a boost to the business development of initiatives that are part of the Bank's non-sovereign portfolio in the PALOP countries.

The Lusophone Compact signing  between Portugal and Mozambique took place in 2018, as reported by ALER, which was later extended to Cape Verde, Angola and São Tomé and Príncipe in 2019, reported here.

Under this agreement, the Compact aims to provide support for renewable energy projects and benefit the private sector in the PALOP for which Portugal will provide guarantees of up to €400 million exclusively to projects financed by the AfDB. 

The program was designed for new non-sovereign operations in Portuguese-speaking countries and will allow the Bank to optimize the allocation of its risk capital. Each project will be covered until the maturity of the loan (up to 15 years) and up to a maximum of 85% of the total principal amount of the bank loan, according to predetermined eligibility criteria.

The program will also allow the Bank to diversify and increase its medium and long-term non-sovereign portfolio in countries where its private sector interventions are most needed.

The Lusophone Compact is a financing platform that involves the African Development Bank, Portugal, and the six PALOP signatories, providing risk mitigation instruments, investment products and technical assistance to accelerate private sector development in member countries. The initiative began December 2018.

To discover more about "The Role of National Banks in Financing the Renewable Energy Sector" access the ALER Talk avalaible here.

Source: Transparência Journal