Located 500 Kms off the west coast of Africa, Cabo Verde is a ten-island archipelago, nine of which are inhabited. With a population of 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 (25% of GDP), coupled with considerable social development due to strong social policies since the 1970s.
Until 2019, Cabo Verde could be considered one of the champions among Sub-Saharan African countries in terms of poverty reduction. 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 %.
Cabo Verde is considered an example of democracy in Africa, much for 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. 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.
Prior to the COVID-19 global economic crisis, Cabo Verde experienced robust economic growth driven by a thriving tourism sector and strong structural reforms, but the crisis brought the economy to a standstill in 2020. The COVID shock negatively impacted the country through the tourism sector, which represents 25 % of GDP and drives around 40 % of overall economic activity; and through the reduction of FDI, a critical source of external finances and a key driver of growth. As a result, the economy contracted 14.8 % in 2020.
Real GDP is estimated to have increased by 7 % in 2021, reflecting a gradual recovery of the tourism sector as well as a ‘base effect’.
On the demand side, private consumption, and investment-led economic growth measures, supported by the gradual reopening of the economy, and the progressive resumption of FDI projects helped the recovery.
On the supply side, commerce and construction sectors boosted economic growth. The overall fiscal deficit stood at 8.8 % of GDP, and public debt increased to 155.3 % of GDP in 2021, with the need to resort to additional external concessional loans to finance the public investment program and issuance of treasury bonds in the domestic market.
The economy will likely grow at a slower pace in 2022, reflecting the impact of the Ukraine crisis. Real GDP growth is projected at 4.0 % in 2022, but above potential (4,5 %) in 2023 and 2024, with real GDP per capita expected to return to the 2019 level in the latter year.
Last Updated: Apr 29, 2022