The Government of Cabo Verde welcomes international investment, provides prospective investors “one-stop shop” assistance through its investment promotion agency Cabo Verde TradeInvest, and offers incentives and tax breaks for investments in multiple sectors, most notably tourism and information and communication technology. Growth accelerated in 2022, as tourism inflows from Europe increased and the COVID-19 pandemic receded, helped by an efficient vaccination rollout throughout the country. However, increases in food and energy costs stemming from Russia’s invasion of Ukraine could hinder economic recovery and raise pressure on the government to continue subsidies to reduce the impact on consumers. Cabo Verde’s political stability, democratic institutions, and economic freedom lend predictability to its business environment. Free and fair elections, good governance, prudent macroeconomic management, openness to trade, increasing integration into the global economy, and the adoption of effective social development policies all contribute to a favorable climate for investment. Cabo Verde receives high marks on international indicators for transparency and lack of corruption. There are few regulatory barriers to foreign investment in Cabo Verde, and foreign investors receive the same treatment as Cabo Verdean nationals in the areas of taxes, licenses and registration, and access to foreign exchange. The country’s strategic location and growing (though still limited) connectivity with other West African nations could make it a potential gateway for investors interested in a foothold from which to expand to the continent.
As 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 with few economies of scale, the country relies on foreign investment, imports, development aid, and remittances. Despite the challenges, in 2007 the country became only the second ever to graduate from least developed country status, and it met most of its Millennium Development Goals by 2015. As the COVID-19 pandemic has demonstrated, the economy’s dependence on tourism, which accounted directly for 25 percent of GDP and more than 40 percent indirectly pre-pandemic, makes it vulnerable to external shocks. The government is resuming implementation of plans to privatize state-owned enterprises. In July 2022, the government signed a 40-year concession agreement with international airport management firm Vinci airports, and it could issue privatization tenders for ports management, the electric utility, and the state-owned pharmaceutical company later in 2023. While the business and investment climates continue to improve, there remain bureaucratic, linguistic (relatively few English or French speakers), and cultural challenges to overcome.
The Cabo Verde Ambition 2030 plan and the government’s Strategic Plan for Sustainable Development (PEDS II) for 2022 – 2026 highlight opportunities in sustainable tourism, renewable energy, blue and digital economies, and transportation. Cabo Verde aims to generate 50 percent of its electricity from renewable sources by 2030 and 100 percent by 2040. Diversification of the economy remains a priority, but still high public debt levels of an estimated 127.2 percent of GDP in 2022 limit government funding capacity.
|TI Corruption Perceptions Index||2022||35 of 180||http://www.transparency.org/research/cpi/overview|
|Global Innovation Index||2022||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2022||N/A||https://apps.bea.gov/international/factsheet|
|World Bank GNI per capita||2021||USD 3,190||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|