2021 Investment Climate Statements: Cabo Verde

Policies Towards Foreign Direct Investment

Cabo Verde seeks both domestic and foreign investment to drive economic recovery, diversification, and growth following the COVID-19 crisis.  The government’s Ambition 2030 strategy, completed in September 2020, emphasizes development of sustainable tourism, transformation of the country into a transportation and logistics platform, renewable energy, blue and digital economy, and export-oriented industries.  The government promotes a market-oriented economic model in which all investors, regardless of nationality, have the same rights and are subject to the same duties and obligations under the law.  Improvement of the business climate to attract investment remains an economic priority, as does reduction of the state’s role in the economy, though the COVID-19 pandemic has put plans to privatize state-owned enterprises on hold.    

In 2020, approved investment projects reached an all-time high of USD 1.5 billion, confirming investor confidence in Cabo Verde despite pandemic uncertainties.  Foreign investment continues to be concentrated in tourism and light manufacturing.  In 2020, 80 percent of the approved investment projects were in the tourism sector.  

Cabo Verdean law offers tax benefits for foreign citizens who decide to buy a second home in Cabo Verde and grants permanent residence to any foreigner whose investment exceeds 180 million escudos (USD 2 million).  The legal framework also establishes conditions for investment in the country by Cabo Verdean emigrants, including fiscal incentives.

Investment promotion agency Cabo Verde TradeInvest (CVTI) is a one-stop shop for all investors.  Through CVTI, the government maintains dialogue with investors using personalized and virtual meetings, round tables, conferences, and workshops.  CVTI offers investors a “One-Stop Shop for Investments” electronic platform and help in formalizing expressions of interest and monitoring the investment process.  It also provides investors and exporters information about trade agreements and benefits (including AGOA, ECOWAS), market information, details on trade fairs and events, and contacts with other state institutions and potential partners.  In addition, CVTI can assist with obtaining authorizations and licensing, tax and customs incentives, work permits for foreign workers, visas for company workers, registration of workers with social security, and introductions to service providers, such as banks, lawyers, accountants, and real estate agents.

For investments of less than USD 500,000, government entities ProEmpresa and the Casa do Cidadao (Commercial Registry Department) provide similar services.  

The International Business Center (Centro Internacional de Negocios – CIN) provides a set of tax and customs benefits for companies that do international business, with the aim of promoting, supporting, and strengthening the emergence of new industrial, commercial, and service provision activities in Cabo Verde.  

Limits on Foreign Control and Right to Private Ownership and Establishment

The Investment Law applies to both foreign and domestic investors, and it enshrines the principle of freedom of investment regardless of the nationality.  However, sectoral legislation imposes restrictions on some activities such as fishing and maritime transport.  The Investment Law further protects against direct and indirect expropriation.  Private property is protected from unilateral requisition and nationalization, except for public interest reasons, in accordance with the Law and the non-discrimination principle, subject to prompt, full, and fair compensation.

Other Investment Policy Reviews

During 2018, the United Nations Conference on Trade and Development (UNCTAD) conducted an Investment Policy Review (IPR) at the request of the Government of Cabo Verde.  The report contains strategic analysis on how Cabo Verde can utilize foreign direct investment (FDI) in the tourism sector to advance sustainable development objectives.  https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2248

Business Facilitation

Cabo Verde offers benefits to attract private-sector investment.  Although equality of treatment and non-discrimination are granted to all investors, certain investment projects, given their nature or size, may receive special treatment and support from the government.  

In an effort to reduce approval time for investment projects, the government has established a maximum period of 15 days for analysis and 30 days for approval of investment and export projects.  In addition, Cabo Verde has adopted measures to facilitate and stimulate business activity, including lowering the maximum personal income tax (IRPS) one percentage point to 24 percent, eliminating double taxation, and waiving tax installment payments for taxpayers who had negative results or began their business activity in the previous year.  Investments of at least 500 million escudos (USD 4.8 million) qualify for contractual benefits.  Those that create a minimum number of jobs or expand into new strategic sectors qualify for a 50 percent investment credit, which can be deducted over 15 years.

Laws commit the government to paying its bills within 45 days; the law further commits the government to paying interest on late payments.  These measures were adopted to ensure predictability in the payment of the state’s obligations to companies.  The 2021 budget prioritizes expenditures on measures to support families, save companies and jobs in the context of the pandemic, and includes benefits to attract private sector investments and improve the business environment.

Registering a company is straightforward.  The Commercial Registry Department (Casa do Cidadao) is a one-stop shop where a company can be created and registered in less than a day.  Information on business registration procedures is available at https://portondinosilhas.gov.cv/ and http://caboverde.eregulations.org/show-list.asp?l=pt&mid=1.  Step-by-step information on procedures, time, and cost involved in starting a company can be found at http://www.doingbusiness.org/data/exploreeconomies/cabo-verde/starting-a-business/.  The CVTI website also offers information on investing in Cabo Verde, including Cabo Verde’s Investment Law, the Code of Fiscal Benefits, and the Contractual Tax Benefits-Incentives:  https://cvtradeinvest.com/.

Outward Investment

The government does not restrict domestic investors from investing abroad.  There is no information or data available on outward investments.

Cabo Verde has neither a bilateral investment treaty nor a taxation treaty with the United States.  

Cabo Verde has bilateral investment agreements with Angola, China, Cuba, Germany, Italy, Mauritius, the Netherlands, Portugal, and Switzerland.  It enjoys a special partnership with the European Union as a Peripheral Region Nation and is a member of ECOWAS.  Cabo Verde also has an agreement on mutual protection of investments with Hungary, published in February 2020.

Cabo Verde has tax treaties in force with Portugal, Macau, Spain, Guinea-Bissau, and Senegal. 

Transparency of the Regulatory System

Cabo Verde is a regional model of transparency and good governance.  The government is committed to improving conditions for foreign investment and encouraging a more transparent and competitive economic environment.  Laws to promote exports and free-zone enterprises stress the government’s commitment to encouraging investment in export-oriented industries.  The tax regime encourages entrepreneurial activity, and government policies support free trade and open markets.

In Cabo Verde, there is free online access to all laws through the government’s official register website.  This is viewable at https://kiosk.incv.cv/.

Regulations on economic activity sectors can also be viewed on the Cabo Verde TradeInvest website:  http://cvtradeinvest.com/.

Public finance and debt obligations are in line with international norms and standards on budget credibility, thoroughness, and fiscal transparency.  Cabo Verde continues to improve its processes for the planning, execution, and control of its budgets.  The Ministry of Finance uses a digital platform to publish public accounts.  With this web portal, any institution or citizen can observe the execution of the budget in real time.  A Public Finance Council independently assesses the sustainability of budget and policies.  Cabo Verde has an independent Supreme Audit Institution (SAI), which operates in accordance with International Standards of Supreme Audit Institutions and the Mexico Declaration and is responsible for verifying and publishing the government’s annual financial statements.

International Regulatory Considerations

Cabo Verde formally acceded to the World Trade Organization (WTO) in 2008.  Cabo Verde has not notified the WTO of any measures that are inconsistent with its Agreement on Trade-Related Investment Measures (TRIM)s obligations.

Cabo Verde is committed to integration into the Economic Community of West African States (ECOWAS) but has postponed the implementation of the ECOWAS Common External Tariffs to 2022 and does not foresee adoption of an ECOWAS single currency.

Legal System and Judicial Independence

Cabo Verde’s legal system is based on the civil law system of Portugal.  The 1992 constitution provides for a judiciary independent from the executive branch.  The judicial system is composed of the Supreme Court, the Constitutional Court, and regional courts.  Judges cannot be affiliated with political parties.

The Ministry of Justice and Labor appoints local judges.  The judiciary generally provides due process rights; however, an overburdened and understaffed judicial system constrains the right to an expeditious trial.  Cabo Verde has modern commercial and contractual laws.  The judicial system in Cabo Verde is transparent and independent.  There is no government interference in the court system, but judicial decisions are often delayed by years.

The right to private ownership and establishment is guaranteed under the constitution.  Property rights are also recognized and guaranteed by several Cabo Verdean laws.  There is a legal entity that records secured interests in property, both chattel and real estate.  The legal system also protects and facilitates acquisition and disposition of all property rights.

Laws and Regulations on Foreign Direct Investment

Cabo Verdean laws concerning FDI include the Investment Law of 2012, which applies to both foreign and domestic investors, and preserves the principle of freedom of investment.  The Industrial Development Statute regulates incentives and the investment approval process.  Other relevant legislation includes Law n. 41 / 2016 of 2016, which defines the mandate of Cabo Verde TradeInvest as a one-stop shop for external investors.

Competition and Antitrust Laws

Regulatory agencies in charge of and responsible for competition-related concerns differ according to sector.

The law protects competition in all economic activities.

Expropriation and Compensation

The Investment Law protects against direct and indirect expropriation.  Private property is protected against requisition and nationalization, except for public interest reasons (Investment Law, art. 6.1).  Under the law, in the event of expropriation, the government is to compensate the owner on the basis of prevailing market prices or the actual market value of the property.  To date there have been no cases of unlawful expropriation or claims of discriminatory behavior against foreigners by the government.  

In case of noncompliance of investment projects, the law states that land can be recovered by the state and made available to new investment projects.

Dispute Settlement

ICSID Convention and New York Convention

In 2011, Cabo Verde became a contracting state to the ICSID convention.  Cabo Verde is not a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Investor-State Dispute Settlement

Disputes between the government and investors concerning the interpretation and application of the law which cannot be resolved amicably or via negotiation are submitted for resolution by the judicial authorities, in accordance with Cabo Verdean law.  Disputes between the government and foreign investors on investments authorized and made in the country are settled by arbitration if no other process has been agreed upon.

International Commercial Arbitration and Foreign Courts

The law favors arbitration as a mechanism for settling investment disputes between the Government of Cabo Verde and foreign investors, under national and international dispute resolution rules, and the courts recognize and enforce foreign arbitral awards.  Generally, arbitration will be carried out in Cabo Verde and in Portuguese unless the parties agree on another location and language.  The decision of the single referee or the arbitration committee is final and there is no appeal.  In 2018, the Tax Arbitration Center was created to resolve disputes regarding tax matters.

Bankruptcy Regulations

Cabo Verde law provides for a reorganization procedure and a framework that allows creditors more involvement in insolvency proceedings.  The World Bank’s 2020 Doing Business Report ranked Cabo Verde 168th in the category of Resolving Insolvency.

Investment Incentives

Cabo Verde reduced the corporate income tax rate to 22 percent from 25 percent in 2019.  The Investment Law establishes incentives for investment in the country by Cabo Verdean emigrants as well as a framework for a one-stop shop for emigrants.

Foreign Trade Zones/Free Ports/Trade Facilitation

Companies must obtain authorization and define areas of economic activity in industrial, commercial, or financial services to be eligible to take part in Special Economic Zones.  Fiscal benefits and incentives will be issued on a case-by-case basis in a maritime special economic zone the government is planning.  The International Business Center (CIN) will assess the investments and incentives that apply.  

The government also plans to create a tax-free Special Economic Zone for Technology (ZEET) with special incentives to attract international companies.

Performance and Data Localization Requirements

Access to work and residence permits for foreign workers, managers, and investors is regulated by the Labor Code and Law 80/VIII/2014.  Foreigners are required to apply for a work permit, but the authorization process is not onerous.  There is no “forced localization” in any sector in Cabo Verde.  Investors are granted work and residence permits independently of the amount they invest.

The regime for foreign hires differs depending on category.  The Labor Code regulates residence permits for foreign workers, managers, and investors.  There are four categories of permits for foreigners:  investors, employees, independent professionals, and highly qualified employees.

Real Property

The access, use, and transfer of land and real estate are recognized under the constitution, Civil Code, and Legislative Decree 2/2007 (Land Law).  Everyone, regardless of nationality, may acquire ownership rights or obtain special permits to occupy and use land.

A legal entity records secured interests in property.  Property documents are obtained in the land registry (Certidão de Registo Predial), including an official map with the property’s exact location (Planta de Localização).  A tax information certificate (Certidão Matricial) is requested at the municipality.  

If the property is unregistered, it is possible to register the property with a certificate confirming that the property is not registered in anyone else’s name (Certidao Negativa) and a tax certificate confirming this.  Under Cabo Verde’s second Millennium Challenge Corporation compact, the islands of Sal, Boa Vista, and Maio, and the rural and high potential tourism zone parcels on the island of Sao Vicente, finalized a land information management system and clarified parcel rights and boundaries.  Cabo Verde now ranks 69th in Registering Property in the World Bank’s Doing Business Report.

Intellectual Property Rights

Legislation on intellectual property rights (IPR) aligns with international standards.  The legal framework has been revised in accordance with provisions of World Intellectual Property Organization (WIPO) agreements and those of the WTO.  The body responsible for standardization in Cabo Verde is the Institute of Quality and Intellectual Property (IGOPC).  

Officially, the IGOPC protects against IP infringement, but enforcement capacity is quite limited due to resource constraints including poor digitalization (though online registration and search of trademarks were made available recently), weakness of the judicial system, and lack of awareness of intellectual property rights among businesses and consumers.

Cabo Verde is a party to international copyright treaties.  Cabo Verde is not listed in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.  

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Capital Markets and Portfolio Investment

Limited capital market and portfolio investment opportunities exist in Cabo Verde.  The Cabo Verdean stock market, Bolsa de Valores de Cabo Verde (BVC), is fully operational.  It has been most active in the issuance of bonds.  Foreign investors must open an account with a bank in Cabo Verde before buying stocks or bonds from BVC.

Foreign interests may access credit under the same market conditions as Cabo Verdeans.

Money and Banking System

Cabo Verde has a small financial sector supervised and regulated by the Central Bank of Cabo Verde (BCV).  According to data from BCV, more than 90 percent of the Cabo Verdean population is served by banks.  Internet-based tools and services in the banking sector continue to grow in Cabo Verde, particularly during the COVID-19 pandemic, changing the model of the client-bank relationship.  New ICT products allow customers alternatives to in-person support as well as making certain decisions outside of working hours and through the internet.

Banking represents more than 80 percent of the assets of the entire Cabo Verdean financial system.  Two banks – Banco Comercial do Atlantico (BCA) and Caixa Economica de Cabo Verde (CECV) – together held 67.3 percent of the market share in credit and 71.8 percent in deposits pre-pandemic.

Legislation approved by the National Assembly in January 2020 terminated the issuance of restricted licenses for offshore banking operations, calling for generic licenses and operations with resident clients.  BCV subsequently informed that banks with a restricted license (offshore), serving non-residents would have to adjust to the new requirements.  Otherwise, BCV would revoke their authorization and enforce administrative liquidation.  Offshore banks operating in Cabo Verde have until December 2021 to complete the transition.    

To establish a bank account, the client must provide proper identification and obtain a taxpayer number from the Commercial Registry Department (Casa do Cidadao), a process that takes approximately 10 minutes.  Bank credit is available to foreign investors under the same conditions as for domestic investors.  The private sector has access to credit instruments such as loans, letters of credit, and lines of credit.

Foreign Exchange and Remittances

Foreign Exchange

Foreign investors have the right to convert their investment to any other freely convertible currency and transfer all their income.  The government gives foreign investors important guarantees, such as privately managed foreign currency accounts, which can be credited from abroad or from other foreign accounts in Cabo Verde.  In addition, it allows undisputed repatriation of dividends, profits, and capital from foreign investment operations.  To receive these benefits, the investor has to qualify for foreign investor status through the government’s investment promotion agency, CVTI.

Regulatory legislation specifies that for a company’s first five years of operation, its dividends may be freely expatriated without tax and that for the next 15 years dividends may be expatriated with a flat tax rate of 10 percent.  Incentives for outward investment in developing countries are not included in the legislation, but they have been provided on an ad hoc basis.

Cabo Verde’s exchange-rate fluctuation risk is low as the country’s currency, the escudo, is pegged at the rate of 110.27 to the Euro.  This fixed exchange rate arrangement is under the Credit Facility Contract, granted to Cabo Verde by Portugal and managed by a joint Cabo Verdean and Portuguese body named the Commission on the Agreement for Exchange Cooperation (Comissao do Acordo de Cooperaçao Cambial – COMACC).  In 2018, the government liberalized foreign exchange operations in Cabo Verde, allowing the free movement of money overseas.

Remittance Policies

Current law permits a foreign investor to request transfer, loan repayment, revenue/profits, and capital gains overseas from the BCV within 30, 60, and 90 days, respectively.

Sovereign Wealth Funds

The government created a Sovereign Private Investment Guarantee Fund in 2019.  The fund aims to guarantee the issuance of securities, in particular debt securities, by private commercial companies to fund large private investments.  BCV will oversee the fund, which is to maintain a rating of at least “A” from financial rating agencies.  The initial share capital of approximately USD 120 million is guaranteed by the state.

Starting in the mid-1990s, Cabo Verde implemented a series of reforms that have transformed a centrally planned economy into a market-oriented economy.  Since then, the number of major enterprises of which the state is a majority owner has decreased from 40 to six.  State-owned enterprises (SOEs) are most active in the transportation sector.  They are generally managed by a board of directors nominated by the minister in charge of the respective sector.  These boards of directors have between three and five members.  SOEs are generally evaluated based on their economic or financial performance.  All SOEs are required to produce annual reports and must submit their books to independent auditors.  Even though not all directors are politically appointed, they must maintain the confidence and support of the government.

Cabo Verde is not a party to the Government Procurement Agreement (GPA) within the framework of the WTO.  In principle, it tries to adhere to the Organization for Economic Cooperation and Development (OECD) Guidelines on Corporate Governance.

Privatization Program

The government continues to look at privatizations and concessions as tools to bring new dynamics to the economy, through new business and investment opportunities for the domestic and international private sectors. 

 Both foreign and domestic investors can participate in the public bidding process, which is transparent and non-discriminatory.  On hold due to the COVID-19 crisis are the privatizations or concessions for the management of the national port and airport authorities (ENAPOR and ASA, respectively), the pharmaceutical company (EMPROFAC), and the electric and water utility (Electra).

The private sector, government, and regulators are increasingly aware of the importance of environmental and corporate social responsibility in Cabo Verde.  The government encourages companies to engage in responsible business conduct.  Many companies conduct campaigns to promote social awareness in areas such as health, environmental protection, and cultural preservation.  Throughout the COVID-19 pandemic, private companies supported vulnerable populations with essential goods.  Women represent 24 percent of elected parliamentarians and 35 percent of leadership in businesses.  

Additional Resources

Department of State

• Country Reports on Human Rights Practices (https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/)
• Trafficking in Persons Report (https://www.state.gov/trafficking-in-persons-report/)
• Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities (https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/)
• North Korea Sanctions and Enforcement Actions Advisory (https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf)

Department of Labor

• Findings on the Worst Forms of Child Labor Report (https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings )
• List of Goods Produced by Child Labor or Forced Labor (https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods)
• Sweat & Toil:  Child Labor, Forced Labor, and Human Trafficking Around the World (https://www.dol.gov/general/apps/ilab)

Comply Chain (https://www.dol.gov/ilab/complychain/)

Cabo Verde has signed and ratified the UN Convention against Corruption.  Under Cabo Verdean law, giving or accepting a bribe is a criminal act punishable by up to eight years in prison.  To combat corruption effectively, the Cabo Verdean government established the High Authority against Corruption, and the National Assembly has added three additional prosecutors to enforce the law in this area.  Other institutions active in combating corruption include the Judicial Police, the Prosecuting Counsel, and the courts.

Resources to Report Corruption

Contact at government agency responsible for combating corruption:
Luis Jose Tavares Landim
Attorney General (Procuradoria Geral da Republica)
CP 268 Praia – Cabo Verde
Phone +238 261 1665

Contact at international organizations:
Cristina Andrade
Senior National Coordinator
UNODC – United Nations Office on Drugs and Crime
Av OUA, ASA
Praia – Cabo Verde

Cabo Verde is a model of political stability with a tradition of peaceful transitions of power.  There have been no political, social, or religious conflicts resulting in violence in recent years.  Civil liberties are generally protected, but access to justice is impaired by an overburdened court system, and crime remains a concern.

Labor is widely available in Cabo Verde.  Unskilled labor represents 30 to 40 percent of the total labor force.  Technical, managerial, and professional talent with English and French language skills is more difficult to find.  Unemployment, particularly youth unemployment, is a significant challenge, aggravated by the toll the COVID-19 pandemic has taken on the tourism sector and small business.  During the pandemic, the government implemented a furlough mechanism, providing for 70 percent of the salaries of laid off workers (35 percent covered by the employer and 35 percent covered by government social security) until the end of December 2020.  In January, the government announced the extension of the furlough regime until the end of March, reducing the contribution of the employer to 25 percent and increasing the government’s contribution to 45 percent.  The government estimated that unemployment rose to 20 percent in 2020 from 11.3 percent in 2019 and 12.2 percent in 2018.  

Cabo Verde has ratified all of the International Labor Organization (ILO)’s eight fundamental conventions.  Minimum wage is currently 13,000 CVE (USD 141) per month.  The National Social Security Institute (INPS) manages unemployment benefits.  The legal workweek is limited to 44 hours for adults, with 12 consecutive hours per week for rest, and premium rates of pay for overtime mandatory.  Larger employers generally respect this restriction, but agricultural and domestic laborers work longer hours.  

Labor strikes are generally peaceful.  All workers except those in restricted sectors are free to form and join unions without interference from the government.  The government respects workers’ right to strike, but the law allows the government to act in emergency situations or when essential services might be affected.  Few companies adopted collective bargaining, but the ILO has worked with local unions and government bodies to provide guidance on conducting dialogue between parties.  The Directorate General for Labor (DGT) has a conciliation mechanism to promote dialogue.  There have been no instances in which labor laws were waived in order to attract or retain investment.

The World Bank, International Monetary Fund (IMF), and African Development Bank (AfDB) consider the rigidity of the labor laws and severance pay requirements to be an obstacle to industrial investment and development.  

Cabo Verde does not impose local employment quotas.

DFC does not currently support any investment projects in Cabo Verde.  DFC’s predecessor agency, the Overseas Private Investment Corporation (OPIC), signed an insurance agreement with Cabo Verde in 1985. 

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

* Source for Host Country Data: National Statistics Institute (INE) and Cabo Verde Central Bank (BCV)

Table 3: Sources and Destination of FDI

Table 4: Sources of Portfolio Investment

Data not available.

Economic and Commercial Section
U.S. Embassy Praia – Cabo Verde
Rua Abilio Macedo no 6
Tel: +238 260 8900
PraiaEconComm@State.gov