Let's assume they're being completely honest: they'd love to contribute, and think it's a great idea, but genuinely cannot find the time amongst their other responsibilities.

That's bound to be disappointing, for both of you, because if it had worked out, it might have been great.

But ... it didn't.

So it's time to move on. Book a pizza, a drink, a workout --- whatever you do as friends when you need to talk, and fire your friend.

Speak decisively, and personally: "I've decided that I'm going to move ahead with <the project> with another developer. It's great that you were interested, and it'd be great to work together, but it's not working, and I'm going to take a different route".

You can explain that you're disappointed that it didn't work out, but that it's ok, and next time you (or they) have a project you could think about working together again. But be clear: this opportunity is over, and they've contributed nothing and are leaving with nothing.

It'll likely be a relief to you both to put it behind you.

Have this discussion after you've done the first 10 minute "what's going on" catchup thing. It shouldn't take more than 10 or 15 minutes max. And then try really hard to move on to other topics, and make it really clear that you don't hate them, you're still friends, and you can move past this minor thing without issues.

Good luck!