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Overview

Located 500km off the west coast of Africa, Cabo Verde is a ten-island archipelago, nine of which are inhabited. With a population of about 491,233 (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 (25% of GDP), coupled with considerable social development due to strong social policies since the 1970s.

Until 2019, Cabo Verde was considered one of the champions among Sub-Saharan African countries in terms of poverty reduction, but is currently challenged by the impacts of COVID-19 and the Ukraine crisis.  Poverty projections based on economic growth suggest that poverty rates, measured by the $5.5 a day (2011PPP) poverty line, declined by 6 percentage points between 2015 and 2019, from 41% to 35%.

Political Context

Cabo Verde is considered an example of democracy in Africa, largely due to its political stability. Electoral processes have been 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-year periods (1975-1991 and 2001-2016). The Movement for Democracy (MpD), a liberal and right-wing party was re-elected for a five-year term in the legislative elections of April 2021 with Ulisses Correia e Silva reappointed as Prime Minister. The Independent and Democratic Cabo Verdean Union (UCID) represents the third political force in the country.

The PAICV-supported candidate, José Maria Neves, was elected president on October 17, 2021, and took office on November 9, 2021.

Cabo Verde conducted three peaceful elections, with electronically transmitted results, between October 2020 and October 2021.

The next legislative and presidential elections will be held in 2026.

Economic Overview

The economy’s recovery from the COVID-19 pandemic strengthened in 2022, with growth reaching 17.7%. On the demand side, exports (mainly tourism) and private consumption accounted for growth. Stronger than expected recovery of the tourism sector, with tourist arrivals surpassing 2019 levels, dictated growth. On the supply side, growth was underpinned by accommodation, commerce, and transport sectors, which together accounted for 67% of GDP growth. The rebound in 2022 was accompanied by a reduction in poverty (using the national absolute poverty line) compared to 2020 (3.2 percentage points to reach 28.1% in 2022), despite the spike in inflation. Headline inflation reached 7.9% (y/y) in 2022, fueled by high international oil and commodity prices triggered by Russia’s invasion of Ukraine. Food inflation peaked at 15.7% while energy inflation increased to 23.8.

The fiscal deficit narrowed to 4.0% of GDP in 2022, supported by increased fiscal revenues. Total revenue increased 19.3% driven by personal income and VAT taxes, while total expenditure increased 6.1%, largely due to measures taken to protect the most vulnerable from rising food insecurity and to control fuel and energy prices. Public debt declined from 144 % of GDP in 2021 to 120.9 % in 2022, driven by GDP growth.

Real GDP growth is projected at 5.6% in 2023 (4.6 % in per capita terms). Over the medium-term, growth will be supported by the implementation of structural reforms aimed at improving public sector efficiency and the business environment. The outlook is subject to substantial downside risks stemming from the lingering inflationary impact of Russia’s invasion of Ukraine and weaker external demand in tourism markets, which could undermine the fiscal consolidation and weaken growth. Climate-related shocks will remain a concern, given the country's high vulnerability. Inflation is expected to decline from the 2022 peak, as the effects of high international oil and food prices ease. Headline inflation is projected at 4.5 %.

Last Updated: Oct 05, 2023

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

*Amounts include IBRD and IDA commitments
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Additional Resources

Country Office Contacts

Main Office Contact
World Bank Office/United Nations Building
PO Box 62
Meio de Achada Santo Antonio
Praia, Cabo Verde
(+238) 260-96-00
(+238) 260-96-54
For general information and inquiries
Marco Antonio Medina Silva
+238-260-96-00
For project-related issues and complaints