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Introduction

The Cape Verde Islands are located in the mid-Atlantic Ocean, about 500 km off the west coast of Africa. The archipelago includes 10 islands, covering a combined area of 4,033 square kilometres with a population of 512,000. Praia, the capital, is the country’s political, economic, cultural and financial centre. Cape Verde’s resources mainly include wind energy, solar energy, sea salt, basalt, limestone, kaolin and marine fisheries.

Cape Verde’s currency is the Escudo. The ForeignExchange Law of Cape Verde states that the Escudo is freely exchanged in local banks. The Euro is the guarantee currency in Cape Verde with a fixed exchange rate of € 1 = 110.265 escudos and US$ 1 = 79 escudos. RMB cannot be exchanged directly with the local currency. Incoming and outgoing foreign exchange is not subject to declaration, and no special taxes should be paid for remittance.

Investment Environment

Cape Verde is a member of ECOWAS, and there is huge market potential for investment in Cape Verde. According to the Strategic Plan for Growth and Poverty Reduction for 2013-2016 formulated by the Cape Verdean government, Cape Verde aims to achieve the following objectives in the next few years: maintain an average annual GDP growth rate of 5% or above, an inflation rate of about 2.5%, and the proportion of government debt to GDP will be controlled within 90%. The National Transformation Plan formulated by the Cape Verdean government covers seven areas for major development namely tourism, marine economy, aviation services, information and communications technology, financial services, creative economy and agricultural trade.

Cape Verde has a service-based economy, with the value of service industry accounting for 71.9% of its GDP. Cape Verde’s national development strategy focuses on the development of private enterprises with priorities given to the development of tourism, agriculture, education, health and infrastructure. Tourism has become a major source of economic growth and employment in Cape Verde, and the tourism infrastructure has developed rapidly. Foreign investment in tourism accounted for 85% of Cape Verde’s foreign investment and the value of tourism takes a relatively high shares of the GDP.

Economy and Trade

The main export destinations of Cape Verde are Spain, Portugal and the United States, and the main source of imports are Portugal, the Netherlands, China and Spain. The imported goods mainly include food, industrial products, vehicles and equipment and fuel, and the exported products mainly include fuel, shoes, clothing, fishes and animal skins.

Cape Verde is a member state of ECOWAS and the Cotonou Agreement and maintains a special partnership with the EU. The goods originating in Cape Verde have free access to ECOWAS and enjoy the treatment of most-favoured-nation tax rate in the EU.

The Ministry of Tourism, Industry and Energy of Cape Verde (General Administration for Trade) is the authority responsible for trade. The key areas of foreign investment which the government of Cape Verde encourages mainly include infrastructure projects, tourism facilities that can create new job opportunities, industrial projects and emerging industries. Foreign investors enjoy equal treatment as domestic investors. Cape Verde is one of the West African countries which has attracted the largest amount of foreign investment, and many enterprises value the special geographical location and the stable political and social environment in Cape Verde. Cape Verde’s FDI mainly comes from Portugal, Spain and Italy.

To attract both domestic and foreign investment, Cape Verde has established two industrial parks. The industrial park in Cape Verde is just starting up, domestic and foreign investments enjoy equal policy treatment and tax reduction and exemption policies for a period of 5-10 years according to different sectors.

According to Chinese customs statistics, the major commodities exported by China to Cape Verde now tends to include furniture, automobiles and building materials, rather than light industrial products and daily necessities as previously. The commodities imported by China from Cape Verde mainly include coffee, tea, mate tea and spices.

Annual Indicators

2013(a) 2014(a) 2015(a) 2016(b)
Area Sq Km 4.033 4.033 4.033 4.033
Population (m) 507 514 521 527
GDP (US$ bn) 1,851.0 1,858.1 1,572.6 1,644.4
Real GDP growth (%) 1.5 -0.2 0.1 -1.6
Exports of goods fob (US$ m) 184.2 253.3 149.2 156.3
Imports of goods fob (US$ m) 805.6 857.4 630.7 692.1
Consumer Price (end-period;%) 1.5 -0.2 0.1 -1.6
Current Account Balance (US$ m) -107.5 -168.5 -73.1 -114.6
Exchange Rate R:US$ (end-period) 83.05 83.11 99.43 99.40

(a)Actual. (b) EconomistIntelligence Unit estimates

Main Destinations for Exports (2015) (a) % of total
Australia 82.8
Spain 8.6
Portugal 2.2
Ireland 1.5
Main Destinations for Imports (2015) (a) % of total
Portugal 29.7
Australia 26.2
Netherlands 11.1
Spain 5.6

(a) Derived from partners’ trade returns.

Main Produts (2015)

Principal Exports (2015) (a) US$ m Principal Imports (2015) US$ m
Fuel (re-export) 70.1 Consumer goods 222.8
Fish & Crustaceans 56.7 International goods 122.1
Clothing 5.4 Capital goods 73.7
Shoes & Shoes parts 3.8 Petroleum 66.4

Trade Exchanges between the R.P.C and Cape Verde (USD 10,000)

Year Total Exports* Imports**
2014 5123 5122 0.3
2015 4332 4330 2.3

* China’s export value from Cape Verde
** China’s import value from Cape Verde

Source:

  • Guide for Countries and Regions on Overseas Investment and Co-operation – Cape Verde
  • Chinese Academy of International Trade and Economic Co-operation of Ministry of Commerce
  • Investment Promotion Agency of Ministry of Commerce
  • Economic and Commercial Counselor’s Office of the Embassy of China in Cape Verde
  • China Statistical Yearbook 2016
  • The Economic Intelligence Unit – Country Report
  • The Macau Statistics and Census Department