(AfDB) - São Tomé and Principe signed, on Thursday, a country-specific memorandum of understanding for the implementation of the Lusophone Compact aimed at accelerating inclusive, sustainable, and diversified private sector growth.

São Tomé is the fifth nation to ink the agreement, after Mozambique, Cabo Verde, Angola, Guinea-Bissau.  The agreement was signed by Hon. Osvaldo Vaz,  São Toméan Minister of Planning, Finance and Blue Economy, African Development Bank Country Manager for Angola and São Tomé and Príncipe, Joseph Ribeiro; and Portugal’s Ambassador in São Tomé and Príncipe, Luís Gaspar da Silva.

The Lusophone Compact is an initiative championed by the African Development Bank to accelerate inclusive, sustainable, and diversified private sector growth in the Portuguese-speaking African countries (PALOPs): Angola, Cabo Verde, Equatorial Guinea, Guinea-Bissau, Mozambique and São Tomé and Príncipe.

The signing ceremony was attended by over 50 participants including representatives of the São Toméan Government, members of the diplomatic corps, financial institutions, private companies and project sponsors, the Compact for São Tomé.

Minister Vaz highlighted the Government’s role in the implementation of the Lusophone Compact and how to foster private sector-led economic growth, by attracting foreign private investment, as well as creating a conducive business environment through more sector-friendly regulation. “This is a task that should mobilise all Sao Tomeáns and our partners, among whom we are pleased to recognize the African Development Bank present here, through its support in many operations which we appreciate…and we also want to acknowledge, and thank Portugal's role as our historic partner which will provide the necessary guarantees to cover risks and participate in project financing.”, he further added.

The initiative also aims to unlock the PALOP’s growth opportunities by supporting the countries’ economic integration within their geographic regions and across Africa, anchored by three pillars, which include risk mitigation, investment products, and technical assistance. 

"We have to look at the continental context in which we just signed this Compact - the Africa Continental Free Trade Area - that will facilitate intra-regional trade. Therefore, it is important that each country can have a dynamic private sector that can export goods and services to other countries. This would be where the Lusophone Compact could play an important role," Ribeiro said.

For Portugal’s Ambassador, the private sector is an irreplaceable partner in boosting economic growth and sustainable development. “The Lusophone Compact meets the needs for promoting private investment and at the same time, materialises the spirit of partnership that should guide development cooperation,” he said.

To kick start the implementation of the Lusophone Compact, the Government of Portugal has committed a EUR 400 million guarantee to cover African Development Bank-financed projects in PALOPs, which will leverage private investments, creating room for the Bank to finance more bankable projects and technical assistance programmes.

The general Memorandum of Understanding for the Development Finance Compact for Portuguese-Speaking Africa (“Lusophone Compact”), was signed in November 2018 during the Africa Investment Forum.

Ezekiel Odiogo, Head of Private Sector Investment Operations, Africa Investment Forum, noted that the Lusophone Compact could be a key accelerator for the development of the PALOPs, and that investment opportunities in PALOPs will be showcased at the 2019 Africa Investment Forum, scheduled in Johannesburg, South Africa from 11-13 November.

A pipeline of projects for implementation under the Lusophone Compact in São Tomé and Príncipe includes private, and PPP projects in the agriculture, renewable energy, and infrastructure sectors.