The Board of Directors of the African Development Bank Group on Wednesday, October 9, 2013 approved a €15-million general budget support loan for Cape Verde, to help the country finance its Public Corporate Governance and Investment Promotion Support Programme (PAGEPPI).
The Programme aims to help Cape Verde to consolidate its macroeconomic framework and foster growth by improving public corporate governance in State-owned enterprises and promoting private investment.
The PAGEPPI's operational objectives are to improve public corporate governance so as to streamline public expenditure and promote private investment to spur economic growth and foster job creation.
The PAGEPPI will tackle challenges posed by fiscal deficit, which is a source of public indebtedness, by improving the management of State equity participation in State-owned enterprises and streamlining the public investment portfolio. It will also make the private sector the growth driver through innovative, investor-friendly and PPP-based mechanisms targeting foreign investors and local MSME project developers.
On completion, the Programme is expected to strengthen public corporate governance and improve the operational and financial performance of State-owned enterprises. This will help to reduce the burden on the State budget and corresponding risks on public finances. The Programme is also expected to clarify the State's role as both a shareholder and a regulator as well as to implement international and local investment promotion measures that will create a more attractive environment for economic activities and private sector development.
The Programme will enhance Cape Verde's overall development strategy which rests on economic diversification based on competitive clusters. In particular, it will support governance and private sector development reforms that constitute two main pillars of the government's Growth and Poverty Reduction Strategy Paper (GPRSP) 2012-2016.
The PAGEPPI is consistent with, and complements, the Bank's sector-wide operations with the private sector window and technical assistance projects (mostly financed with MIC TAF resources), thereby creating a multiplier effect enabling stakeholders to implement planned reforms. It will make sustained impact in terms of institutional development and knowledge acquisition by supporting human and institutional capacity-building reforms.
The Programme will benefit the entire population in terms of better public corporate governance which will have a positive impact on the quality of public services, especially water and electricity. It will help contain the tax burden by fostering resource mobilization through the reduction of State-owned enterprises' losses and streamlining of public investment. It will foster higher private sector contribution to GDP growth by improving the business climate and promoting investment.
The Programme is a general budget support operation which is part of the multi-year framework of reforms initiated by the Government with the Bank's medium-term support through a programmatic approach adopted by all TFPs implementing general budget support operations in Cape Verde. This operation of €15 million in 2013 is the first phase of the Programme.
The Bank's portfolio in Cape Verde at the end of July 2013 comprised six active national operations including two energy sector projects, the Praia Airport Expansion and Modernization Project, the Technological Park Project, a MIC TAF support for MSME Development and an African Water Facility study, for a total amount of UA 67.32 million. The sector distribution of the portfolio is as follows: ICTs (40.1%), transport (37.2%), energy (19.7%), water and sanitation (1.8%) and multi-sector (1.2%).
