Discover Cabo Verde

Cape Verde, an archipelagic nation in the central Atlantic Ocean, has cultivated a dynamic commercial environment despite its island character. While the economy grapples with inherent challenges, strategic initiatives aimed at diversification are fostering promising prospects for future growth.

Economy

Cape Verde’s economic landscape is classified as lower-middle-income by the World Bank. Tourism reigns supreme as the cornerstone industry, generating significant revenue and employment opportunities. The nation’s captivating beaches, volcanic landscapes brimming with dramatic beauty, and rich cultural heritage have solidified its reputation as a premier tourist destination, especially for European travelers seeking sun-drenched adventures. However, this dependence on tourism renders the economy susceptible to external fluctuations, such as global economic downturns or currency exchange rate variations.

Beyond tourism, other sectors contribute meaningfully to the economy, albeit to a lesser extent. These include:

• Fishing: The surrounding waters teem with marine life, making fishing a cornerstone source of sustenance and livelihood for many Cape Verdeans. The government is actively investing in modernizing the fishing industry to enhance efficiency and promote sustainable fishing practices, ensuring the long-term viability of this sector.

• Agriculture: Arid conditions and volcanic soil composition present limitations on agricultural production. However, the government is prioritizing advancements in irrigation systems and promoting the cultivation of drought-resistant crops to bolster domestic food security and reduce reliance on imports. Additionally, efforts are underway to cultivate the agro-processing sector, adding value to agricultural products and fostering economic development.

• Light Manufacturing: Small-scale light manufacturing exists, focusing on products like clothing, footwear, and processed foods. The government aspires to expand this sector by establishing industrial zones and offering enticing incentives to attract foreign direct investment (FDI). This targeted approach aims to create a robust light manufacturing industry that contributes significantly to the GDP.

• Remittances: As previously mentioned, Cape Verde’s diaspora community plays a vital role by sending remittances back home. These financial contributions serve as a crucial source of support for families and contribute to local spending, stimulating the domestic economy. The government is actively exploring avenues to leverage the skills and expertise of the diaspora community to further propel the nation’s development trajectory.

Recognizing the inherent limitations of an economy overly reliant on tourism, the government is actively pursuing economic diversification. This strategy fosters a more resilient economic landscape, less vulnerable to external shocks. A key component of this approach is nurturing the information technology (IT) sector. Investments are being channeled into education and training programs to cultivate a skilled workforce capable of meeting the demands of the burgeoning IT industry. Additionally, the government is actively promoting FDI by offering tax breaks and streamlining business registration processes. This two-pronged approach aims to attract investment in sectors with high-growth potential, such as IT, renewable energy, and business process outsourcing (BPO).

Infrastructure

The development of a robust infrastructure network is paramount for propelling Cape Verde’s economy forward. Here’s a closer look at the current state of affairs:

• Transportation:

  • Airports: All major islands boast international airports, ensuring convenient accessibility for tourists and investors. The principal international airport is strategically located on Sal Island, a key tourist destination.

  • Ports: Seaports play an indispensable role in the movement of goods and people. Praia, the capital city situated on Santiago Island, houses the largest port facility. These ports are critical for import and export activities, as well as for transshipment operations.

  • Roads: A network of paved roads connects major towns and cities, providing a basic level of connectivity. However, some areas rely on unpaved roads, which can be challenging to navigate during the rainy season. The government is prioritizing improvements to the road infrastructure to facilitate the seamless movement of people and goods across the islands.

• Communication: Mobile phone penetration is high in Cape Verde, and internet access is steadily improving. However, disparities exist in internet speeds between urban and rural areas, with urban centers generally enjoying superior connectivity. The government is actively working to expand broadband access, striving to bridge the digital divide and ensure improved internet speeds nationwide.

• Energy: Cape Verde is steadfastly seeking ways to reduce its dependence on imported fossil fuels. The nation is blessed with abundant sunshine and wind resources, making it well-positioned to develop renewable energy sources. The government is strategically investing in solar and wind power projects to create a more sustainable and secure energy future. This not only reduces reliance on imported oil but also contributes to the fight against climate change.

Financial System

Cape Verde’s financial system is undergoing modernization to keep pace with the evolving needs of the economy. Here’s a breakdown of the key institutions:

• Commercial Banks: A select group of commercial banks dominate the financial sector, offering a comprehensive suite of financial products and services, including loans, savings accounts, and money transfer services. These banks are primarily concentrated in urban areas.