Cabo Verde

Cabo Verde, located approximately 500 km off Africa's west coast, is a ten-island archipelago (nine of which are inhabited) with an estimated population of 527,326.

Since the 1990s, the country has made significant socio-economic progress, largely driven by the rapid growth of tourism sector, which employs more than two thirds of the country’s population and contributes approximately 25% of GDP and up to 44% when considering indirect effects on the economy.

Despite challenges from the COVID-19 pandemic and global price shocks following the war in Ukraine, poverty rates in Cabo Verde have fallen significantly between 2015 and 2023, from 35.5% in 2015 to 24.8% in 2023 (according to official estimates from INE). The recovery in growth since 2021— particularly in the services sector — and remittances have contributed to the continued reduction in poverty.

Political Context

Renowned for its democratic stability, Cabo Verde has maintained a strong record of peaceful political transitions since gaining independence in 1975. The country’s political landscape has been largely shaped by two major parties. The African Party for the Independence of Cabo Verde (PAICV) and the Movement for Democracy (MpD), which have alternated in power through free and fair elections.

In April 2021, the MpD secured re-election, allowing Ulisses Correia e Silva to continue serving as Prime Minister. Later that year, José Maria Neves, backed by the PAICV, was elected President and officially assumed office on November 9, 2021.

The most recent local elections were held in December 2024, with MpD only winning seven municipalities, while the PAICV increased its leadership to 15 municipalities.

The next legislative and presidential elections are scheduled to take place in May and November 2026, respectively.

Cabo Verde's growth momentum remained strong in 2025, at an estimated 6.3%, driven by strong tourism activity as well as a peak in construction. Strong demand from European markets and expanded flight capacity has boosted arrivals to record levels.

Service exports and private consumption remain the primary drivers of growth. Growth in the service sector, which employs more than two-thirds of workers, and remittances inflows contributed to reducing extreme poverty to 9.5% in 2025 (from 10.3% in 2024).

Poverty declined from 53.8% in 2024 to 51.2% in 2025. Average inflation accelerated to 2.3% in 2025. The overall fiscal balance recorded a surplus of 1% of GDP in 2025, the first since 2007, owing to the final receipts from the airport concession fee. Revenue performance remained robust, reflecting greater value-added tax efficiency and income tax collection including payment of tax arrears.

The conflict in the Middle East will weigh on growth, which is projected to soften in 2026 to 4.8%. Tourism will remain the primary driver, although momentum is likely to slow as growth in the euro area weakens. Inflationary pressures are expected to pick up. Increased public investments and continued roll-out of wage-bill reforms will widen the fiscal deficit to 1.1% of GDP in 2026. Despite this, sustained efforts to enhance tax collection, added proceeds from SOE restructuring, and commitment to contain expenditures will reduce the deficit to 0.4% of GDP by 2028.

The balance of risks to this outlook remains tilted to the downside. Subdued growth in key European markets could weaken tourism demand, while continued price volatility in commodity markets and disruptions to global trade could put renewed pressure on inflation and the fiscal position. Cabo Verde remains highly susceptible to climate-related shocks, which could disrupt agricultural output and require additional unbudgeted spending.

The multi-sectoral Human Capital Project (HCP) aims to support youth and women from vulnerable households by improving access to basic services and labor-market training. With a financing of $29.75 million, the project supports initiatives combining social protection, education and skills development.

The Health Security Program (HeSP) aims at enhancing public health emergency preparedness and expanding access to quality healthcare. With a total financing of $28,74 million, the program supports initiatives to strengthen health security governance, advance the One Health Agenda, combat antimicrobial resistance, boost surveillance and laboratory capacity, promote digital health, and optimize emergency management and service delivery.

Tourism and Blue Economy

The $75 million Resilient Tourism and Blue Economy Development Project aims to unlock diversified private sector development within and beyond tourism, including blue economy value chains.

The Improving Connectivity and Urban Infrastructure Project aims to enhance access to climate-resilient transport and urban infrastructure. With a total financing of $81 million, the project supports road rehabilitation across several islands, the upgrading of urban centers and waterfronts, and the provision of technical assistance.

The Renewable Energy and Improved Utility Performance Project (REIUP) aims to increase renewable energy generation and support the energy transition. With a total financing of $31.40 million, the project supports public and private investments in renewables, battery storage, rooftop solar, energy efficiency in 32 health facilities, last-mile electrification, and sector reforms.

The Digital Cabo Verde Project (DCVP) aims to strengthen digital competitiveness and improve digital public services by enhancing the legal framework, connectivity, digital skills, and entrepreneurship. With a total financing of $40 million, the project supports digital transformation including internet connectivity, digital public infrastructure, and digital services.

The Country Partnership Framework (CPF) for FY20-25 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 eight projects totaling $283.76 million. The portfolio includes one Development Policy Financing (DPF) operation and seven Investment Project Financing (IPF) operations.

IFC has significantly increased its engagement in Cabo Verde, achieving record levels of investment of approximately $100 million in fiscal year 2026 (including mobilization). The IFC program in Cabo Verde focuses on key infrastructure and tourism development, In December 2026, IFC committed a sustainability-linked loan of EUR 80 million to Cabo Verde Airports SA to support the second phase of the rehabilitation and expansion of the country's airport infrastructure. In 2026, IFC also plans to deliver a financial management training program for SMEs in partnership with Pro-Empresa.

MIGA has no exposure in the country but actively continues to explore ways to mobilize investments in strategic sectors by providing political risk insurance and other risk mitigation instruments.