The archipelago of Cabo Verde is composed of 10 volcanic islands and eight islets located in the central Atlantic Ocean, some 450 kilometers west of Senegal. It has a land area of 4,033 square kilometers, and a 700,000 square kilometer Economic Exclusive Zone (EEZ).
This small African nation has a population of approximately 550,000 people spread over nine inhabited islands with limited natural resources. The country’s climate is extremely arid, and prolonged drought frequently affects its economy. Cabo Verde’s low proportion of arable land, scant rainfall, lack of natural resources, territorial discontinuity, and small population make it a high-cost economy lacking economies of scale. Cabo Verde’s economy is vulnerable to external shocks, and the country depends on development aid, foreign investment, remittances, and tourism. Despite that, Cabo Verde achieved middle-income country status at the end of 2007.
The country enjoys political stability and has a history of parliamentary democracy and economic freedom that is unusual in the region. Elections are free and fair, and there has always been smooth transition of power. Good governance, prudent macroeconomic management, including strong fiscal, monetary, and exchange-rate policies, trade openness and increasing integration into the global economy, and the adoption of effective social development policies have produced relatively positive results throughout the archipelago. The new government is preaching more proactive investment reforms. Broad political stability is expected to prevail in Cabo Verde, underpinned by strong democratic institutions and decent protection of human rights and civic freedoms. The business and investment climate continues to improve although there are bureaucratic and cultural challenges to overcome.
The government program includes a commitment to privatizing various sectors of the economy, and addressing macroeconomic challenges in order to provide 45,000 new jobs by the end of the term. The government has implemented some economic reforms aimed at developing the private sector and attracting foreign investment to diversify the economy and mitigate high unemployment, which in 2017 came down from 15 percent to 12.2 percent. However, signs of progress in creating jobs have been limited. Recent reforms to the national airline are starting to have positive impacts in the quality of the air transportation business, although in financial terms the major impacts will be felt primarily in coming years. Meanwhile, the government’s elevated debt level limits its capacity to finance any shortfalls. The economy is service-oriented, with tourism, transport, commerce, and public services accounting for more than 60 percent of GDP. Tourism alone accounts for approximately 25 percent of GDP, and it is expected to continue its strong performance.
There are few regulatory barriers to foreign investment in Cabo Verde, and foreign investors receive the same treatment as the nationals regarding taxes, license approvals and registration, and access to foreign exchange. Foreign investment in Cabo Verde is concentrated in tourism and light manufacturing. In terms of transportation, Cabo Verde’s strategic and geographic location places the country in a position to become a regional and international shipping hub for both passengers and cargo. Nevertheless, the country remains underserved, with insufficient and inefficient maritime interisland transportation and undeveloped deepwater ports. Although the government has promoted tenders that aimed at addressing the issue, there have been no changes to the current inadequate situation. The energy sector in Cabo Verde is undergoing important regulatory changes and attracting investment, which may result in a clearer framework to promote investment opportunities in the sector. As a regional leader in renewable energy, Cabo Verde has wind farms built on four islands. Currently, about 27 percent of the energy consumed in Cabo Verde comes from renewable sources. The government’s goal is to increase this number to 50 percent by 2020, which presents additional investment opportunities for American companies in this sector.
Cabo Verde’s constitution provides women the same rights as men, and in terms of women’s empowerment, it has fared exceptionally well when compared to the region. However, there are still inequalities in terms of opportunities, and domestic violence is a concern. Although women’s participation within central government is acceptable, they have less representation in local community associations and city councils. The youth literacy rate is 98.11 percent while female youth literacy rate is even higher at 98.73 percent.
|TI Corruption Perceptions Index||2017||48 of 180||http://www.transparency.org/
|World Bank’s Doing Business Report “Ease of Doing Business”||2017||127 of 190||http://www.doingbusiness.org/rankings|
|Global Innovation Index||2017||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country (M USD , stock positions)||2015||N/A||http://www.bea.gov/
|World Bank GNI per capita||2015||2 970