Overview

  • Located 500 kilometers off the west coast of Africa, Cabo Verde is an archipelago of 10 islands of which nine are inhabited. The country has an estimated population of 520,500. Only 10% of its territory is classified as arable land, and the country possesses limited mineral resources.

    Political Context

    Politics in Cabo Verde have been largely consensus-oriented, and since its independence from Portugal in 1975, Cabo Verde has not experienced a single coup d’état. Elections are considered free and fair, and parties in power alternate regularly.

    The Government of Cabo Verde has been in office since the presidential and parliamentary elections of 2016, which led to a change with the victory of the opposition Movimento para Democracia (MpD) after 15 years of government under the Partido Africano da Independência de Cabo Verde (PAICV). These two parties dominate Cabo Verde’s political scene and are both fairly centrist. There is also a third party, the União Caboverdiana Independente e Democrática (UCID), which slightly increased its share of votes. Municipal elections were also held in August 2016. The MpD won 18 of 22 Municipalities, and they successfully supported the re-election of President Jorge Carlos Fonseca. 

    Economic Overview The country’s small population spread across a large water area constitutes a major constraint to growth and development. It limits economies of scale, and creates significant connectivity issues, as well as challenges for service delivery (including energy, water, education, health ).Despite the challenges associated with being a small island economy, Cabo Verde witnessed spectacular social and economic progress between 1990 and 2008, driven mainly by the rapid development of inclusive tourist resorts. During the period of 2009-2015, economic growth decelerated significantly, a result of the protracted impact of the global financial crisis. Countercyclical fiscal measures did not restore growth but instead led to a sharp increase in the stock of debt.

    Gross domestic product (GDP) growth recovery started in 2016 and was consolidated in 2017 as information from the Institute of National Statistics show that GDP grew by 4.7% and 4%, respectively.  The recovery is being driven driven consumption and strong export performance. At the sectoral level, real GDP expanded thanks to the dynamism of the electricity and water, tourism, financial and manufacturing sectors.The fiscal accounts recorded a deficit of 3.1% of GDP in 2017, slightly above the level achieved in 2016. Revenues climbed to record levels at 28.5% of GDP. However, this increase was offset by higher spending (31.6% of GDP), driven notably by the acquisition of assets associated with the restructuring of the social housing project, in the amount of 2.5% of GDP.

    Public debt decreased by 1.7 percentage point to 126.1% of GDP in 2017, owing to exchange rate appreciation. Nevertheless, the country remains at high risk of external debt distress

    Consolidating its achievements as a middle-income country and further strengthening the conditions for poverty reduction and boosting shared prosperity will be key challenges. With its small open economy, the country is vulnerable to the vagaries of global economic developments. Given the fixed exchange rate with the Euro, it will be vital for the country to rebuild fiscal buffers to absorb future shocks. Diversification within and beyond the tourism sector, and more flexible labor markets can help to absorb shocks.

     

    Last Updated: Nov 01, 2018

  • World Bank Group Engagement in Cabo Verde

    The current World Bank portfolio in Cabo Verde stands at $86 million (credits and grants) covering four national, including Access to Finance for Micro, Small and Medium Sized Enterprises, Competitiveness for Tourism Development, Transport Sector Reform Project, and Statements of expenditure-related fiscal management.

    International Finance Corporation (IFC) committed portfolio stands at $5.8 million. The IFC portfolio is composed of one operation.

     

    Last Updated: Nov 01, 2018

  • Development of the Transport Sector

    On June 30, 2013, the Road Sector Support Project (RSSP) closed satisfactorily with significant achievements at the institutional level. Specific reforms such as the creation of the Road Institute and of the Road Fund proved efficient and sustainable. Despite some cost overruns, the works financed under the RSSP were completed satisfactorily, and thanks to the strengthened capacity of the Road Institute, cost overturns became virtually non-existent for the last contracts financed under the credit.

    A follow-up project, the Transport Sector Reform Project was approved in June 2013 and benefited from an additional financing in May 2017. The project is supporting the scaling up of performance-based road maintenance on a larger section of the national network. The project will combine rehabilitation or upgrade of key road sections and routine maintenance into four-year performance-based contracts. It will also support the Government in laying the groundwork for the reform of transport state-owned enterprises and for the involvement of the private sector in the air and maritime transport subsectors.

     

    Last Updated: Nov 01, 2018

  • Cabo Verde's main bilateral donors are China, Luxembourg, Portugal, Spain, and the United States. Its major multilateral partners are the European Union, the African Development Bank, the United Nations, the World Bank and the International Monetary Fund. Cabo Verde also receives smaller commitments from Japan, Kuwait, Saudi Arabia, and Angola. Cabo Verde is strengthening South-South cooperation, especially with Brazil and China, to take advantage of its privileged strategic position for transatlantic trade.

     

    Last Updated: Nov 01, 2018

Api


LENDING

Cabo Verde: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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Additional Resources

Country Office Contacts

Main Office Contact
Corniche Ouest X
Rue Léon Gontran Damas
Dakar
Senegal
+221-33-859-41-00
For general information and inquiries
Mademba Ndiaye
Senior Communications Officer
+221-33-859-41-00
mademba@worldbank.org
For project-related issues and complaints
caboverdealert@worldbank.org