The World Bank in Cabo Verde

Cabo Verde, located 500 km off Africa's west coast, is a ten-island archipelago with an estimated population of 520,500 residing on nine islands.

Only 10% of its land is arable, and mineral resources are scarce. Since the 1990s, the country has made significant strides, largely due to the rapid growth of tourism, which constitutes 25% of its GDP.

Despite challenges from the COVID-19 pandemic and the Ukraine crisis, the government aims to eradicate extreme poverty by 2026, aligning with the United Nations' 2030 Agenda and the Strategic Plan for Sustainable Development 2022–2026 (PEDS II).

Political Context

Renowned for its democratic stability, Cabo Verde has experienced peaceful transitions between its two main political parties since gaining independence in 1975. 

In April 2021, the Movement for Democracy (MpD) was re-elected, with Ulisses Correia e Silva continuing as Prime Minister. José Maria Neves, backed by the African Party for the Independence of Cabo Verde (PAICV), assumed the presidency on November 9, 2021. 

The most recent local elections were held in December 2024. The next legislative and presidential elections are scheduled for 2026.

Economic Overview

Cabo Verde's economy continues to be propelled by tourism and growth is estimated to have accelerated to about 7.8% in 2024, driven by strengthening in tourism activity and a gradual recovery in agricultural activity after years of drought. Tourist arrivals reached an estimated 1.2 million (+20% year-on-year), with a growing share opting for non-all-inclusive stays. Services accounted for about 78% of output (+6.1 percentage point of growth), with hotels and transport representing more than half.

Service exports (+20% year-on-year) and private consumption (+9.5% year-on-year) remain the primary drivers of growth. Strong service-sector growth, agricultural recovery, and low inflation likely reduced poverty to 14.4% in 2024. Tourism’s strong performance swung the current account balance from a 2.5% GDP deficit in 2023 to a 0.1% surplus in 2024. Inflation moderated significantly in 2024, with lower energy and food prices bringing average headline inflation down to 1% from 3.7% in 2023. The fiscal deficit widened to 1.1% of GDP in 2024 (0.3% in 2023) driven by higher public investment, spending related to local elections and expanded social programs. Revenues remained stable at 24.8% of GDP, supported by stronger than expected tax revenues. This, along with strong GDP growth, lowered central government debt by 6.9 percentage points to 109.6% of GDP (117% including SOEs’ guaranteed debt). Despite this, fiscal risks persist, including SOE support, rigid expenditures, and high debt-servicing costs.

Growth is projected to hit 6% in 2025, stabilizing near 5% in the medium term, supported by improved public sector efficiency and efforts to crowd in private investment, relying on structural reforms aimed at enhancing the business environment, with inflation converging at about 2%.

Increased public investments and continued roll-out of wage-bill reforms will widen the fiscal deficit to 1.5% of GDP in 2025. Despite this, sustained efforts to enhance tax collection, added proceeds from SOE restructuring, and commitment to contain expenditures will reduce the deficit to 0.6% of GDP by 2027, with a primary surplus of 1.1%. This should allow public debt —excluding SOEs’ guaranteed debt— to decline to 93.0% of GDP by 2027.

The outlook faces downside risks, such as commodity price spikes from geopolitical tensions, inflationary pressures, weaker tourism demand, and slow progress on SOE reforms, which could hinder fiscal consolidation and economic growth. Climate-related shocks remain a concern, given the country's high vulnerability.

Last Updated: Apr 14, 2025

World Bank Group Engagement in Cabo Verde

The Country Partnership Framework (CPF) approved in September 2019, prioritizes: (i) Accelerating human capital for inclusive, services-led growth; and (ii) Strengthening the environment for a more diversified economy.

The World Bank’s active portfolio in Cabo Verde includes ten projects totaling $299.2 million—$255.5 million for national projects and $43.7 million for regional initiatives.

The portfolio comprises multi-sectoral programs that support the country’s vision to become a diversified services and logistics hub powered by green energy. These programs support important infrastructure development in the energy, digital and transport sectors as well as transformative reforms to boost private investment, mitigate the impacts of external shocks and challenges associated with climate change.

The $75 million Resilient Tourism and Blue Economy Development Project helps the government, diversify tourism, and enhance resilience, and increase Small and Medium-Sized Enterprises (SME) participation in tourism-related value chains.

A project focused on Improving Connectivity and Urban Infrastructure ($40 million) is enhancing urban and territorial infrastructure, as well as improving rural road access and connectivity. The Renewable Energy and Improved Utility Performance Project — with a total cost of $51.5 million, of which $7 million is funded by the World Bank Group, $7 million by the Canada Facility, $2 million by the Global Infrastructure Facility, and $35 million mobilized from the private sector — is supporting the government in its sector reform and privatization efforts, as well as in achieving its energy transition objectives.

International Finance Corporation (IFC)

More recently, IFC has significantly increased its engagement in Cabo Verde, achieving record levels of investment $110 million in fiscal year 2024 (including mobilization). In July 2023, IFC committed a sustainability-linked loan of EUR 20 million and an interest rate swap of $6 million to Cabo Verde Airports SA to support the first phase of the rehabilitation and expansion of the country's airport infrastructure. Additionally, in December 2023, IFC committed $37.7 million (including mobilization) to finance the Oasis Atlantico Group. IFC has also undertaken an advisory project in the tourism sector to enhance the framework for strategic tourism development and investment on Boa Vista Island. In March 2024, partnering with five Cabo Verdean banks, IFC delivered training to 69 micro, small, and medium-sized enterprises. Finally, IFC and the World Bank jointly developed the Cabo Verde Private Sector Diagnostic Report (CPDS), which was published in March 2024.

Last Updated: Apr 14, 2025

Education and Social Protection

Under the CPF’s human capital focus area (“accelerating human capital for inclusive, services-led growth”), the portfolio has prioritized preparing the workforce for an economy based on the provision of high-quality services, while promoting social protection and productive inclusion.

The multi-sectoral Human Capital Project – HCP (P175828), approved in April 2022, builds on results and lessons from past investments in the education and social protection sectors. The HCP aims to specifically support youth and women, and particularly those from poor and vulnerable households, by improving access to basic services and labor market-relevant training. To date:

• Over 30,000 students now use the new secondary education curriculum;
• Over 1,700 youth are enrolled in professional training courses aligned with the needs of the private sector;
• Over 2,100 vulnerable households have benefited from the productive inclusion program, gaining access to training, and start-up grants;
• The rehabilitation of 114 houses in Praia improved access to basic services such as water, electricity, and sanitation;
• 321 children now access quality childcare services.

Health

Thanks to the control of the pandemic and the high vaccination rates, the COVID-19 Emergency Response Project was restructured in June 2023, and the funds will strengthen the health system's capacity to manage public health emergencies and other health challenges, including noncommunicable diseases. Activities are being implemented towards the improvement of the population’s access to health care, including:

• Construction of health centers;
• Technical assistance for a hospital public-private partnership feasibility study;
• Purchase of a CT scanner;
• Development of the country’s first digital health strategy.

Since March 2024, Cabo Verde has been benefiting from the first phase of the Health Security Program in Western and Central Africa, co-financed by the Pandemic Fund, with an overall envelope of $28.74 million.

Economy resilience and diversification

Under the CPF’s macroeconomic and private sector development focus area, the World Bank portfolio has supported improvements to fiscal and macroeconomic resilience, promoted enabling conditions for private sector-led growth, and worked to improve the competitiveness of tourism, the main economic sector.

The flagship $75 million Resilient Tourism and Blue Economy Development Project (P176981), approved in June of 2022 and ongoing until June 2028, supports diversified private sector development within and beyond tourism, including the blue economy. It adopts a spatial approach and builds on the Government of Cabo Verde’s Tourism Operational Plan spanning (2022–2026) as well as the Government of Cabo Verde’s Blue Economy National Investment Plan.

Achievements include:

• Rehabilitation of piers and multipurpose quays for recreational nautical tourism and fishery use;
• Rehabilitation of fish markets;
• Rehabilitation of hiking trails and historical heritage sites;
• Improvements in key tourism-related transport accessibility infrastructure.

The Access to Finance for Micro, Small, and Medium Enterprises (MSMEs) Project (P163015) in the amount of $25 million, concluded in June 2023, provided critical support to develop the financial infrastructure in Cabo Verde and expand access to finance for MSMEs. The support to the creation of the first partial credit guarantee company in Cabo Verde was instrumental in helping new and existing MSMEs maintain and access credit. Complementary investments included:

• A new credit registry to improve credit information;
• A new equity fund to help local MSMEs access longer term capital.

At project closing:

• Over 2,000 MSMEs benefited from credit guarantees (exceeding the target of 1,800);
• Over $45 million in credit was guaranteed (surpassing the target of $35 million.

Transport and Urban

The Improving Connectivity and Urban Infrastructure in Cabo Verde project (P178644), signed on November, 2023, aims to enhance access to climate-resilient transport and urban infrastructure with a total financing of $40 million. It includes the rehabilitation of roads in several islands, such as Fundura – Ribeira da Barca and Pingo Chuva – Saltos – Arribada in Santiago Island, or the construction of a penetration road in Ribeira Caibros on Santo Antão Island. It also includes the upgrading of urban centers, waterfronts, and key urban areas (such as Joao Teves, Achada Igreja, Mosteiros, Tarrafal de São Nicolau), as well as technical assistance for a variety of connectivity and planning items, such as the development of detailed urban plans and the National Housing Information System.

Statistics

The HISWA project is a regional initiative that includes seven West African countries, including Cabo Verde, and two regional organizations (African Union and ECOWAS). Its main goal is to improve how these countries collect and use official statistics, making them more reliable and in line with international standards. For Cabo Verde, the $15 million project started in September 2020, and will run until December 2025. So far, the project has made good progress in improving key statistical results by supporting:

• The harmonization, data collection, quality improvement, dissemination and use of core social and economic statistics.
• Country-specific activities aiming at improving the administrative data system.

Energy

Cabo Verde has achieved 97% electricity access but remains heavily dependent on imported fossil fuels (80%) and suffers high system losses (24% in 2023). To address these issues and reduce fiscal risks, the government has moved forward with the restructuring and privatization of the national utilities ELECTRA and AEB (Águas e Energia de Boa Vista).

The Renewable Energy and Improved Utility Performance Project (REIUP) aims to:

• Improve transparency in the sector;
• Support the energy transition;
• Lower service costs by reducing generation costs and non-technical losses;
• Attract private investment and expertise;
• Enhance service quality.

As part of this restructuring, three new entities have been created and became operational on May 31, 2024:

• EPEC – responsible for thermal power generation;
• ONSEC – manages energy purchasing, transmission, and dispatch;
• EDEC – handles electricity distribution and retail.

Under REIUP, the government is developing solar and battery energy storage system (BESS) projects on the islands of Fogo, Santo Antão, Maio, São Nicolau, and Brava. These include:

• 4.65 MWp of solar PV (to be operational by May 2025);
• 18 MWh of storage (phased until March 2026).

In addition:

Rooftop solar PV systems and energy efficiency upgrades are being installed in 32 public health facilities, totaling 616 kWp, with full completion expected by June 2025.

Complementing these efforts, the World Bank is providing technical assistance in collaboration with the National Directorate of Industry, Commerce and Energy (DNICE). This includes:

• Identifying solar and wind projects for near-term tenders;
• Assessing strategies to attract private sector participation;
• Maximizing the socio-economic benefits of renewable energy development.

Digital

The Digital Cabo Verde Project (DCVP) was approved with a $20 million IDA investment and aims to strengthen Cabo Verde’s digital competitiveness and improve digital public services by enhancing the legal framework, connectivity, digital skills, and entrepreneurship.

Key achievements include:

• Cabo Verde advanced its digital framework with laws on e-transactions, digital signatures, and infrastructure sharing;
• Organizations like “Núcleo Operacional para a Sociedade de Informação – NOSi” and programs like “Web labs” training 14,000 students in digital skills;
• The Consular Portal marked a key milestone, streamlining diaspora services, cutting processing times, and boosting e-payments.

To build on these successes, an Additional Financing (AF) of $20 million is being prepared. The AF will scale up digital services, consolidating them into a single transactional platform to enhance efficiency, accessibility, and transparency.

Last Updated: Apr 14, 2025

Cabo Verde’s major multilateral partners are the European Union, the African Development Bank, the United Nations, the World Bank Group, and the International Monetary Fund. Development assistance is further coordinated through the Budget Support Donor Group (Grupo de Apoio Orçamental - GAO) mechanism, which includes active participation of Luxembourg, Portugal, Spain, the European Union, the African Development Bank, and the World Bank Group.

Last Updated: Apr 14, 2025