Why Cabo Verde?
Introduction to Cape Verde as an Investment Destination
Cape Verde is one of the smallest nations in Africa with a population of just half-million people. Despite its small size, the nation boasts many accomplishments that exceed those of its African counterparts:
- The nation has a democratically elected government and is perennially recognized as one of the top three best governed nations in Africa;
- Its economy is among the fastest growing in Africa – prior to the global economic crisis of 2008-2010, the economy averaged a robust growth rate of 7% per year; the economy weathered the global economic storm, emerging relatively unscathed with its growth rate declining but remaining positive at a strong 4%;
- Cape Verde has been awarded a B+ rating by S&P, among the highest in Africa, and with a positive outlook;
- Cape Verde is one of the few African nations that have achieved the status of a Middle Income Country – most of her African peers are Lesser Developed Countries.
- The population is well educated – Cape Verde has several local universities where students pursue higher education. In addition, many students are educated in foreign institutions and return home for employment;
- The country is experiencing a tourism explosion – tourist visits numbered nearly 400,000 in 2010 and has been growing at a pace of well over 20% per year;
- Among African nations, it has one of the biggest Diasporas (immigrants living abroad) in relative terms with a size that exceeds the population living in Cape Verde – these immigrants annually remand a portion of their income back to the homeland to the tune of 10% of GDP!
What are the opportunity areas?
Yet, there are many areas in which challenges exist for Cape Verde. Each of these challenges represents a considerable opportunity for investors to step in with solutions. The areas of opportunity include:
- Information technology. The government has automated many of the administrative processes but additional automation is needed; local institutions have not tapped into the full potential of technology deployment; foreign companies could potentially operate server farms and service operations in Cape Verde using the human capital.
- Infrastructure. While the country has a solid basis infrastructure to support economic growth, there remain considerable weak spots that beg for solutions. Examples include: construction of roads and ports, deployment of water desalination plants; construction of a modern electricity grid; construction of power plants.
- Clean Technologies. Opportunities are found in the areas of bio-fuels, waste management, waste-to-energy, and renewable energy among others.
- Fisheries. Cape Verde’s waters sport a wide variety of edible fish. However local fishing, storage canning and exporting capabilities remain underdeveloped.
- Agriculture. While the country is arid and experiences low levels of rainfall, the use of modern agricultural technologies can significantly increase yields.
- Transportation. The 9 inhabited islands of Cape Verde need to be connected by a national system of fast ferries to facilitate the flow of human capital, labor, goods and tourists – the very essence of any economy. On several islands, the bus services are not well run or well maintained – there is a significant demand for public transportation services.
- Tourism. The exploding population of tourists are well served with hotels and properties which is the area into which most of the foreign investments has been directed. However, there are few services for tourists after they have settled into a hotel. Opportunities exist for deploying services to specifically serve tourists. Examples include tours, restaurants, shopping centers, water sports, entertainment centers, amusement parks, cinemas, and night-time shows among others.
- Communications. Cape Verdeans are well connected by telecommunications, by media (newspapers, radio & television) and by internet services, however choices are few, monopolistic and basic. A significant opportunity exists for the introduction of new choices and services.
- Education. There is a thirst for knowledge of various subjects among the Cape Verdean youth especially as it relates to acquiring new skills that lead to employment possibilities. Education of various subjects can be delivered in a structured environment.
- Health. The delivery and quality of health services has not kept up with the country’s economic advances. Introduction of new and efficient medical technologies, hospitals and other medical services will likely attract substantial numbers of doctors and patients. In addition, such offerings can be structured for medical tourism purposes.
- Consumerism. As Cape Verde’s residents achieve higher levels of education on average and as the per-capita income increases along with the size of the economy, local residents are beginning to demand the more sophisticated consumer goods and services that are found elsewhere in the world.
These opportunities in the local market are probably suited for smaller investments in the range of $1-50 million given the local population size and the size of the tourism market.
Are there bigger opportunities?
In addition to the local opportunities, Cape Verde potentially serves as a gateway to the massive and growing consumer markets on the African continent. The door to substantially greater investments in the range of $50-250 million is opened by virtue of Cape Verde’s strategic location off the west-coast of Africa in easy range of North-America, South-America and Europe. The trade agreements between Cape Verde and its African counterparts, between Cape Verde and the USA (AGOA), and the tax-favored incentives provided by the Cape Verde government afford investors a dramatic opportunity to reap huge rewards for well placed investments.
Access to Opportunities
Accessing the specific opportunities that are available for interested investors requires patience and an in-depth, practical knowledge about operating on-the-ground in Cape Verde. For this reason, investors should enlist the help of an advisor or an organization, like Hello Cape Verde, with the type of knowledge, experience and relationships that will allow investors to quickly and effectively progress through the various procedures necessary to capture specific opportunities while avoiding the pitfalls and entry barriers that would otherwise stop unassisted investors in their pursuits.