Cape Verde Economy

Cape Verde Economy

Public finances, state budget – income, expenditure, balance for the last 5 years

State budget

(in billion CVE) 2015 2016 2017 2018 2019
Total revenue 44.6 44.6 40.93 42.3 66.7
Total expenses 57.2 57.2 43.36 61.1 72.6
Budget deficit (in % of GDP) -3.9 -3.8 -3.0 -3.1 -2.0

Source: Cape Verde Ministry of Finance

Balance of payments (current, capital, financial account), foreign exchange reserves (last 5 years), public debt to GDP, foreign debt, debt service

(million CVE) 2015 2016 2017 2018 2019
Current account -7,860.9 -6 114.1 -12,187 -8,294.9 -460
Goods -47,838.6 -53,236 -63 186 -64 181.6 -65,607
Services 20,602.8 23,625.5 27,780 29,165.4 37 331
Revenues -5,869.5 -5,633.9 -6,525 -4,062.2 -4 175
Capital account 1 883 1,315.8 1,543 1431.7 990
Financial account 9,185 -14,900.8 -6,004 -12,088.3 -15,580
Foreign exchange reserves 59,692 54,793 57,221 58,249 16,116
Public debt to GDP (%) 123.0 128.6 125.3 127.9 120.0

Source: Banco de Cabo Verde

Cape Verde’s foreign debt amounted to EUR billion in March 2020. The main creditors are international organizations (48.7%), other states on a bilateral basis (23.4%) and banks (27.9%). About a third of the total amount of loans goes to Portugal and its banks. Check ebizdir for economical facts of Cape Verde.

Banking system (major banks and insurance companies)

The central bank is Banco de Cabo Verde (BCV), which was established in 1975. It closely coordinates its activities with government policy. The most important commercial banks are Caixa Económica do Cabo Verde, Banco Comercial do Atlántico, Caixa Geral de Depositos and Banco Interatlántico.

Since 1998, the exchange rate of the domestic currency – the Cape Verdean escudo (Escudo Caboverdeano – CVE) – has been tightly linked to the euro, at a rate of 1 EUR = 110.265 CVE. In the payment system, in addition to the domestic currency, EUR and USD are also quite often accepted, as well as debit and credit cards by VISA and MasterCard.

Tax system

The tax system is standard, in some areas (tourism, fishing, duty-free zones) there are a number of tax breaks and benefits. The basic corporate income tax rate is 25%, the average after deduction of non-taxable items is 18.1%. The personal income tax rate ranges between 16.5% and 27.5%. The VAT rate is 15%.

Current and detailed information is available on the World Bank website.

Cape Verde: Foreign Trade and Investment

Trade balance (in thousands of CVE)

Trade balance for the last 5 years – exports, imports, balance

2015 2016 2017 2018 2019
Importation 60,059 63,965.3 77 206 76,274 78 301
Export 6,646 5,962 4,893 7,060 6,071
Re-export 14,656 11,961 20,907 23,769 28 138
Coverage of imports by exports (in %) 11 9 6.3 9.3 7,8
Balance -53,413 -58,064 -72,313 -69,125 -72,230

Source: INE CV

Territorial structure – position in (k) EU

The countries of the European continent have long been the main markets for Cape Verde’s exports, which absorb 96.4%. Spain is by far the largest buyer of Cape Verdean goods, in 2019 its share was 77.5% of total exports. Portugal is in second place with a share of 18.0%.

As for Cape Verdean imports, 79.6% come from Europe, 10.1% from Asia and Oceania, 6.2% from the American continent and only 2.0% from African countries. The main supplier of goods is Portugal with 42.0% (+1.4% year-on-year), followed by the Netherlands with 12.5% ​​and Spain with 10.5% (-22.4% year-on-year) of total Cape Verdean imports. Countries such as China (5.4%), France (2.2%), the USA (1.8%) and the Russian Federation (0.2%) also saw their exports to Cape Verde decrease in 2019.

Commodity structure

The most important export item in 2019 was canned fish (60.7%), followed by fish and seafood (16.2%) and clothing and footwear (10.6%).
The main imported items included fuel (11.8%), food (11.0%), reactors and boilers (7.5%), means of transport (6.4%), machinery and engines (5.9%), iron and its derivatives (5.5%), cereals (4.5%), milk (4.2%), plastics (3.5%), meat (3.3%) and alcoholic beverages (3.0%) ).

Free trade zones (VT parks, investment zones)

The activity of the company in the duty-free zone is regulated by Act 99/IV/93. A company producing goods or providing services for export can only operate in the duty-free zone regime.

Investments – foreign direct investments in the territory (sectoral and territorial structure)

Cape Verde ranks first in West Africa in terms of investment per capita. In recent years, the annual inflow of foreign direct investment has exceeded USD 100 million, in 2007 and 2008 it even hovered around USD 200 million. Traditionally, most investments flow into the field of tourism.

Investments – conditions for entry of foreign capital (restrictions, incentives for investors)

The Republic of Cape Verde has many prerequisites for the successful implementation of investments. Its advantage is a stable political and economic environment, the exchange rate of the domestic currency CVE is firmly tied to the EUR. The country has a Special Partnership Agreement with the EU and is an active member of ECOWAS. Other advantages include the strategic location of the archipelago not far from the coast of West Africa and approximately halfway between Europe and South America.

The investment climate is relatively favorable, the government is trying to attract investors with a number of incentives, including tax holidays and duty-free imports in some sectors. With the exception of the sectors exhaustively listed in the Constitution (there is, however, the possibility of concessionary activities), access to foreign capital is free. The country has four international and four regional airports, three international ports, a relatively advanced telecommunications network and industrial zones with available land.

Cape Verde Economy