Lusophone Compact seeks to accelerate private renewable energy projects in PALOP countries

Africa, considering its vulnerability to climate change, remains at the forefront of energy transition. The PALOP countries follow this trend, structuring ambitious plans for the adoption of renewable energy. However, their structural constraints, that negatively impact the private sector, hinder a dynamic and inclusive movement in this direction.

Therefore, the African Development Bank (AfDB), the Government of Portugal and the governments of the six PALOP countries, Angola, Cape Verde, Guinea-Bissau, Equatorial Guinea, Mozambique and São Tomé and Príncipe formed in 2018 the Lusophone Compact (CL), an agreement for the development of the private sector in these countries. The CL responds to the socio-economic development imperatives of each of the PALOP countries, always emphasising the need for favourable conditions for private sector growth. 

CL operates as a framework, a gateway that is always open, for private companies to submit their projects. Once submitted and analysed, they are taken to the AfDB to verify the appropriate financial and non-financial instruments to support them. This creates a specialised channel for constant dialogue between the Portuguese-speaking business community and the multilateral bank.

In the same way, CL operates in collaboration with other entities dedicated to supporting sustainable development in the PALOP. In March 2023, the CL team made a mission to Lisbon, where it participated in the Business Seminar of the Lusophone Compact, to present the available instruments and prospect new business. It also met with ALER to explore potential partnerships in the financing and or assistance to renewable energy projects.

The Compact creates a privileged space for the development of renewable energy by the private sector in the PALOP. Of the existing projects in the Compact's Pipeline, six are proposals for the creation, expansion, or enhancement of renewable energy, exploring the PALOP's potentials in generation by renewable matrices such as solar and hydroelectric power.

CL’s role in promoting the Cahora Bassa Hydroelectric project in Mozambique stands out. Approved in 2022, the project was valued at USD 520 million and will receive USD 100 million in financing from the AfDB; in addition, the project will be the first to benefit from the Lusophone Compact Guarantee (LCG), a special instrument for mitigating risk to projects financed by the AfDB.

Strengthening the role of the private sector in Portuguese-speaking African countries is essential to ensure long-term growth. At the same time, encouraging the adoption of renewable energies is essential to achieve sustainable development. CL brings together the necessary means to develop the private sector of renewable energies in the PALOP, accelerating high-impact projects for the benefit of Africa and Africans.