Located 500 Kms off the west coast of Africa, Cabo Verde is a 10 islands archipelago nine of which are inhabited. The population is about 483,628 (2021 Census). Only 10% of its territory is classified as arable land and mineral resources are limited.
The fragmentation of its territory creates significant connectivity issues, as well as challenges for service delivery, including energy, water, education, and health.
Cabo Verde has witnessed significant economic progress since 1990, driven in large part by the rapid development of tourism (20% of GDP), coupled with considerable social development due to strong social policies since the 1970s.
Cabo Verde is considered an example of democracy in Africa, much for its political stability. Electoral processes have taken place without disturbances, held regularly, with peaceful alternation of power between the two major parties. The African Party for the Independence of Cabo Verde (PAICV), responsible for colonial liberation, of leftist ideology, governed for two 15 years periods; the Movement for Democracy (MpD), a liberal and right-wing party, governed for two terms in the 1990s, returned to power in 2016, and is currently the political force that supports the government. The Independent and Democratic Cabo Verdean Union (UCID) represents the third political force in the country.
Legislative elections, held on April 18, 2021, re-elected MpD with an absolute majority. Presidential elections are scheduled for October 18, 2021 with eight candidates running for office to replace President Jorge Carlos Fonseca (since 2011).
DPrior to the COVID-19 pandemic, Cabo Verde experienced robust economic growth driven by a thriving tourism sector and strong structural reforms. Between 2016 and 2019, growth averaged 4.7 % (3.4 in per capita terms) supported by favorable global conditions coupled with strong structural reforms, mainly around the SOE sector. On the demand side it was driven by net exports and private investment and consumption. On the supply side growth was driven by tourism activities and growth in domestic non-tradable services. The privatization efforts of the government helped support investor and consumer confidence. The sustained and robust economic growth led to a decline in poverty from 24.5 % in 2015 to 11.5 % in 2019.
Driven by the shutdown in the tourism sector, GDP contracted by 14.8 % in 2020 (15.7 % in per-capita terms) – one of the largest reductions in Africa. The country relies heavily on tourism, which represents 25 % of GDP and drives around 40 % of overall economic activity. Overall, the services sector contracted by 19 % while industrial output declined by 2 %. Hospitality and restaurants contracted by 71 % whereas transport and communication fell by 33 %. The crisis reversed the progress in poverty reduction achieved since 2015.
The overall deficit (including grants) increased from 1.8 % in 2019 to 8.9 % in 2020, driven mainly by the impact of the crisis on fiscal revenue. Consequently, fiscal financing needs for 2020 increased substantially, opening a large fiscal financing gap, which was filled mainly by concessional borrowing and grants from Development Partners.
Last Updated: Oct 12, 2021