African Development Bank Group Approves EUR400 million Lusophone Compact Guarantee program to boost private sector development

The new Compact offers a big boost to business development initiatives for the Bank’s non-sovereign portfolio in its Portuguese-speaking African member countries
The Board of Directors of the African Development Bank ( Group on Wednesday approved the Lusophone Compact Guarantee Program (LCGP or the Compact), with a maximum risk exposure of up to EUR400 million. The new Compact offers a big boost to business development initiatives for the Bank’s non-sovereign portfolio in its Portuguese-speaking African member countries.

The program is designed for new non-sovereign operations (“NSOs”) in the Lusophone  countries of Africa, notably Angola, Cabo Verde, Equatorial Guinea, Guinea- Bissau, Mozambique, and São Tomé and Príncipe, ( known as the PALOP), and enables the Bank to manage its risk capital over the next five years 2021-2025, while at the same time diversifying and growing its NSO portfolio over the medium to long-term.

The Bank has been active in the development of specialized risk sharing vehicles, initiatives and  programs which can facilitate the use of risk transfer on specific types of Bank portfolios or assets, and this program is expected to increase the number of private sector and Public Private Partnership (PPP) projects in the PALOP as well as trade between stakeholder countries.

“Over the past five years, the Bank has been committed to exploring ways to increase its lending capacity while proactively managing its credit exposures and headroom more efficiently, and mobilizing additional financial resources and investors to the continent’s development,” Bank Vice President for Corporate Services, Mateus Magala, said.

As the anchor member of the Lusophone Compact, the Government of Portugal would act as the guarantor of this program, for exclusive use by the Bank. The LCGP would allow for individual Bank projects to be covered for up to the full maturity of the loan (up to 15 years) and up to a maximum of 85% of the total Bank loan principal amount, in accordance with pre-determined eligibility criteria.

The Guarantee forms a very important pillar of the wider Lusophone Compact aimed at promoting and enhancing the use of financing, risk mitigation and technical assistance instruments, to unlock private sector financing.

The Lusophone Compact initiative is built on a five-year General Memorandum of Understanding (“MOU”) that was signed by the Bank, the Government of the Republic of Portugal (“GOP” or “Guarantor”) and the PALOP countries to attract and unlock private sector investment and trade in, and among PALOP nations. The initiative became effective in December 2018. The PALOP remain the least economically integrated within their respective geographical regions and despite their deep shared history, even among themselves.

This new Guarantee Compact is seen as a valuable tool that will serve as an additional instrument to intensify the Bank’s efforts in the financing of critical transformative NSOs in the African Lusophone countries.

The program complements other Bank  initiatives to support member countries to strengthen their investment climates, increase investments and to facilitate pipeline development.

“Given the adverse impacts that the COVID-19 pandemic has had on the African continent and the need to build resilience as fiscal pressures rise, the private sector plays a critical role in the process of economic recovery. Initiatives such as the LCGP will play a strategic role in equipping the Bank through a programmatic guarantee to avail headroom to contribute to boosting economic resurgence in these countries,” Samuel Mugoya, Bank Director, Syndication, Co-financing and Client Solutions, noted.

Angola to Sign Lusophone Country-Specific Compact

On 10 July 2019, The Governments of Angola and Portugal and the African Development Bank, will sign a Country-Specific Compact designed to accelerate the inclusive, sustainable and diversified growth of Angola’s private sector.

The Lusophone Compact is a financing platform, involving the African Development Bank, Portugal, and the six Portuguese-speaking countries of Africa (PALOPs): Angola, Cabo Verde, Equatorial Guinea, Guinea-Bissau, Mozambique and Sao Tome and Principe. It provides risk mitigation, investment products and technical assistance to accelerate private sector development in Lusophone African countries.

The signing of the compact follows a Memorandum of Understanding of a Development Finance Compact for Portuguese-Speaking Africa, signed during the Bank’s 2018 Africa Investment Forum held in Johannesburg, South Africa.

The compact signing ceremony will be a highlight of various events to be held at the Luanda International Fair(, aimed at invigorating Angola’s private sector and promoting economic growth. The event will convene entrepreneurs, development finance institutions and partners, investors, key public and private sector players.

The Bank will be represented by Corporate Services and Human Resources Vice President and Chair of the Lusophone Compact Steering Committee, Mateus Magala, while the Angolan Government will be represented by Hon. Pedro Luís da Fonseca, Minister of Economy and Planning. H.E. Teresa Ribeiro, Secretary of State for Foreign Affairs and Cooperation, will sign for Portugal.

Mozambique: African Development Bank comes through with climate risk insurance solutions post cyclone

“We are committed to supporting Mozambique to seek sustainable solutions to climate vulnerabilities, through access to sustainable financial products”Atsuko Toda – Bank Agriculture, Finance and Rural Development Director

Following the devastating cyclones, Idai and Kenneth, which hit the central and northern parts of Mozambique, its government requested support from the African Development Bank for long-term assistance on the management of climate disasters.

A high-level mission led by Atsuko Toda, Director of the Department of Agriculture, Finance and Rural Development visited Maputo, Mozambique, from 28th  to 29th of April – the second mission by the Bank to the nation in the same month.

While in Mozambique, the delegation met with the Minister of Finance, Adriano Maleiane and other government institutions such as the Meteorological Institute and the National Disasters Management Institute (INGC). The delegation also met development partners, local banks and financial intermediaries.

“We want to create a coalition of partners that can assist the country to be more resilient to climate change,” Toda said.

During the mission, a funding package of $1 m for emergency aid was officially delivered to INGC through the Ministry of Finance, as a first phase response from the Bank to the Mozambique government. The funds will be used to purchase tents and supplies for homeless in the areas most affected by cyclone Idai.

In the aftermath of the cyclone, the Bank announced a special relief fund of $1.7 million for Mozambique, specifically for the immediate humanitarian relief effort in the worst affected areas. In the second phase, the Bank will set up a response and reconstruction programme, committing up to $100 million for Mozambique, Malawi and Zimbabwe to kick-start economic recovery and rehabilitation.

Speaking at the ceremony, Adriano Maleiane, Minister of Finance, said, “As this ceremony takes place, humanitarian assistance to victims of Cyclone Idai is continuing, while in the north, more specifically, in the province of Cabo Delgado, search and rescue operations for those affected by the Kenneth cyclone, that struck parts of our country last week are ongoing.”

Other support to Mozambique will include technical assistance to the government – in collaboration with the United Nations, the European Union and the World Bank – for the survey of the damage caused by the cyclones, and a resource mobilization effort led by Bank President Akinwumi Adesina. The Bank will also lend support to capacity building in disaster risk management by the African Risk Capacity (ARC) and provide assistance with disaster risk insurance options.

Maleiane said more than 1.5 million people were affected by Idai, most of whom lost their homes completely. In addition to the deaths, the cyclone destroyed over 600 public and private infrastructure such as schools, health facilities and access roads.

At least 188 676 people require health assistance after Cyclone Kenneth pummels north-eastern Mozambique

The World Health Organization said at least 188 676 people are in need of health assistance or are at risk of disease in Mozambique after the destruction by Cyclone Kenneth.

Homes are flooded in the aftermath of Cyclone Kenneth, at Wimbe village in Pemba. Photo credit: The National

At least 17 health facilities are damaged and the number is expected to increase as inaccessible areas open up. In the worst-affected districts of Quissanga, Macomia and Ibo, entire villages are reportedly devastated with up to 4 199 houses destroyed and over 38 000 partially damaged.

Cyclone Kenneth, the second category 3 cyclone to hit Mozambique within five weeks, brought widespread destruction and displacement and exacerbated health risks in the north-eastern province of Cabo Delgado after making landfall on 25 April. 

The cyclone struck populations already vulnerable due to a fragile health system and weak water and sanitation infrastructure.

The situation of people in villages along the coast is similar, such as Ponta Pangane and Mucojo, which are also beach attractions. The deluge of rains over the past three days has flooded many parts of Pemba city and the districts of Mecuge and Mecufi. 

Due to lack of accessibility, the full extent of damage to the health system and the heightened health risks is not yet known. The World Health Organization (WHO) is conducting evaluations, alongside the Ministry of Health, to generate the most up-to-date health information. 

While heavy rains and flooding continued, WHO and UNICEF sent tents, a water purification unit, body bags, disposable gloves and water purification powder, enough to purify 1 000 000 litres of drinking water.

A WHO team of epidemiologists, public health specialists and logisticians originally deployed to Beira in response to Cyclone Idai, which left more than 1 000 people dead, have been re-deployed to Cabo Delgado to assess cyclone Kenneth’s impact on people’s health. 

Due to the heavy rains and latrine exposure, the Provincial Health Directorate is stepping up efforts for a cholera treatment centre in Pemba and Macomia as a preparatory measure. They will also set up a field hospital in Macomia with support from Médecins Sans Frontières (MSF), equipped with one month of supplies. 

“There is still time to manage the risk of cholera, but we need to act now,” says Dr Djamila Cabral, WHO Representative in Mozambique. “We had an incredibly quick response in Beira, and we need to do the same work in Cabo Delgado.” 

A cholera risk assessment will be conducted for Cabo Delgado Province and the priority districts to determine urgent needs for medical supplies, where cholera treatment centres and oral rehydration posts are needed and which populations to target for vaccinations in case of need.

WHO and the Provincial Health Directorate have created disaster response subcommittees for epidemiological surveillance, logistics, management of medicines and health supplies, communication, immunization, human resources, endemic diseases and data management.

UN appeals for international support as flood waters rise in wake of second Mozambique cyclone

OCHA/Saviano Abreu: Macomia district, in Cabo Delgado, Mozambique, has been hard-hit by Cyclone Kenneth, which made landfall on 25 April.

With Mozambique and Comoros battling heavy rains and raging flood waters in the wake of Cyclone Kenneth – the second major storm to hit southern Africa in the past six weeks – the United Nations and its humanitarian partners are supporting national authorities in assessing needs and providing help.

UN Spokesman Stéphane Dujarric said on Sunday that Secretary-General António Guterres is appealing to the international community for additional resources, critically needed to fund the response to the twin tragedies in the immediate, medium- and longer-term.

“The Secretary-General is deeply saddened at reports of loss of lives and destruction in Mozambique and Comoros as a result of tropical cyclone Kenneth, six weeks after Cyclone Idai made landfall in Mozambique, Malawi and Zimbabwe,” the Spokesman said in a statement.

The UN chief also extended his condolences and solidarity to the families of the victims and to the governments and peoples of Mozambique and Comoros.

In a flash update earlier Sunday, the UN World Food Programme (WFPsaid the cyclone, with powerful winds that ripped the roofs off homes, caused the death of at least five people in Mozambique’s Pemba city, Macomia district and on Ibo Island, according to Government reports.

Some 3,500 homes in Comoros have been totally or partially destroyed and there are reports of electrical outages, road blockages and at least one bridge collapse, according to WFP.

Mozambique hit by Cyclone Kenneth. Video credit: VOA

The UN and its partners have been in the region since late March, after Cyclone Idaimade landfall near Beira City in central Mozambique. The long-lived cyclonecontinued across land as a Tropical Storm and hit eastern Zimbabwe, southeastern Malawi and parts of Madagascar with heavy rains and strong winds.

Last Friday, UN Emergency Relief Coordinator Mark Lowcock lamented that Cyclone Idai had devastated central Mozambique, killing more than 600 people, unleashing a cholera epidemic, wiping out crops in the country’s breadbasket, forcing a million people to rely on food assistance to survive, and causing massive destruction of homes, schools and infrastructure in one of the world’s poorest countries.

He stressed that Cyclone Kenneth marks the first time two cyclones have made landfall in Mozambique during the same season, further stressing the Government’s limited resources. Malawi and Zimbabwe are also expected to experience heavy rains and flooding caused by Cyclone Kenneth.

“Cyclone Kenneth may require a major new humanitarian operation at the same time that the ongoing Cyclone Idai response targeting three million people in three countries remains critically underfunded,” said Mr. Lowcock, adding:  “The families whose lives have been turned upside down by these climate-related disasters urgently need the generosity of the international community to survive over the coming months.”