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Economy of Cape Verde

Cape Verde has few natural resources and suffers from poor rainfall and limited fresh water. Only 4 of the 10 main islands (Santiago, Santo Antao, Fogo, and Brava) normally support significant agricultural production, and over 90% of all food consumed in Cape Verde is imported. Mineral resources include salt, pozzolana (a volcanic rock used in cement production), and limestone.

The economy of Cape Verde is service-oriented, with commerce, transport, and public services accounting for more than 70% of GDP. Although nearly 70% of the population lives in rural areas, agriculture and fishing contribute only about 9% of GDP. Light manufacturing accounts for most of the remainder. An amount estimated at about 20% of GDP is contributed to the domestic economy through remittances from expatriate Cape Verdeans.

Since 1991, the government has pursued market-oriented economic policies, including an open welcome to foreign investors and a far-reaching privatization program. It established as top development priorities the promotion of market economy and of the private sector; the development of tourism, light manufacturing industries, and fisheries; and the development of transport, communications, and energy facilities. From 1994 to 2000 there was a total of about $407 million in foreign investments made or planned, of which 58% were in tourism, 17% in industry, 4% in infrastructure, and 21% in fisheries and services.

Fish and shellfish are plentiful, and small quantities are exported. Cape Verde has cold storage and freezing facilities and fish processing plants in Mindelo, Praia, and on Sal.

Cape Verde's strategic location at the crossroads of mid-Atlantic air and sea lanes has been enhanced by significant improvements at Mindelo's harbor (Porto Grande) and Praia’s harbor, and at Sal's and Praia's international airports. New international airports were opened in Boa Vista (December 2007) and Sao Vicente (December 2009). Ship repair facilities at Mindelo were opened in 1983. The major ports are Mindelo and Praia, but all other islands have smaller port facilities. In addition to the international airport on Sal, airports have been built on all of the inhabited islands, although the airports on Brava and Santo Antao are now closed. All other airports enjoy scheduled air service. The archipelago has 3,050 kilometers (1,830 mi.) of roads, of which 1,010 kilometers (606 mi.) are paved, most using cobblestone.

The Government of Cape Verde has launched an ambitious plan to reduce the country's dependence on imported fossil fuels through increased energy production from renewable resources. Through private-sector investment and government-supported projects, Cape Verde intends to generate at least 50% of electricity from renewable sources by the year 2020, up from the current level of 3.2%.

Future prospects depend heavily on the maintenance of aid flows, the encouragement of tourism, remittances, outsourcing labor to neighboring African countries, and the momentum of the government's development program.

On November 22, 2010, the International Monetary Fund (IMF) approved a 15-month Policy Support Instrument (PSI) to consolidate macroeconomic stability, maintain fiscal discipline, and achieve sustained growth for Cape Verde. The PSI is designed for countries that may not need IMF financial assistance, but still seek IMF advice, monitoring, and endorsement of their policy frameworks based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners.

GDP (2009 forecast): $1.909 billion.
GDP per capita (2009 forecast): $3,770.
Real GDP growth rate (2009 forecast): 4%.
Inflation (2009 forecast): 3.5%.
Natural resources: Salt, pozzolana, limestone, fish, shellfish.
Agriculture: Products--bananas, corn, beans, sugarcane, coffee, fruits, vegetables, livestock products.
Industry: Types--fish and fish products, clothing, shoes, beverages, salt, construction, building materials, ship repair, furniture, metal products, tourism.
Trade (2009): Exports--$36.7 million: re-exported fuel, fish and crustaceans, clothing, shoes and shoe parts. Imports--$746.3 million: consumer goods, intermediary goods, capital goods, petroleum. Major trading partners, exports--Spain 62%, Portugal 34%, France 3%, United States 1%. Major trading partners, imports--Portugal 48%, Netherlands 17%, Spain 10%, Brazil 4%, Germany 2%.
Fiscal year: Calendar year.
Currency: Escudo (CVEsc 79 = $1 as of February 2010), which is pegged to the Euro.
Economic aid received: $161 million (2005). Largest donors--Portugal ($43 million); European Union ($22 million); World Bank-IDA ($21 million); Luxembourg ($15 million); Netherlands ($10 million); the United States (more than $110 million).

Geography of Cape Verde

The Cape Verde Islands are located in the mid-Atlantic Ocean some 450 kilometers (about 300 mi.) off the west coast of Africa. The archipelago includes 10 islands and 5 islets, divided into the windward (Barlavento) and leeward (Sotavento) groups. The main islands in the Barlavento group are Santo Antão, São Vicente, Santa Luzia, São Nicolau, Sal, and Boa Vista; those of the Sotavento group include Maio, Santiago, Fogo, and Brava. All larger islands but Santa Luzia are inhabited.

Three islands--Sal, Boa Vista, and Maio--generally are level and very dry. Mountains higher than 1,280 meters (4,200 ft.) are found on Santiago, Fogo, Santo Antão, and São Nicolau.

Sand carried by high winds has created spectacular rock formations on all islands, especially the windward ones. Sheer, jagged cliffs rise from the sea on several of the mountainous islands. Natural vegetation is sparse in the uplands and coast, but interior valleys support denser growth.

Rainfall is irregular, and the archipelago suffers periodic droughts and consequent food shortages. The average precipitation per year in Praia is 24 centimeters (9.5 in.). During the winter, storms blowing from the Sahara sometimes cloud the sky, but sunny days are the norm year round.

Official Name: Republic of Cape Verde
Area: 4,033 sq. km. (1,557 sq. mi.), slightly larger than Rhode Island.
Cities: Capital--Praia (pop. 94,757). Other city--Mindelo (pop. 62,970).
Terrain: Rugged volcanic islands.
Climate: Dry, temperate.

Government of Cape Verde

The Cape Verde constitution--adopted in 1980 and revised in 1992, 1995, and 1999, 2009, and 2010--forms the basis of government. The president is head of state and is elected by popular vote for a 5-year term. The prime minister is head of government and proposes other ministers and secretaries of state. The prime minister is nominated by the National Assembly and appointed by the president. Members of the National Assembly are elected by popular vote for 5-year terms.

Cape Verde enjoys a stable democratic system. The Movement for Democracy (MPD) captured a governing majority in the National Assembly in the country's first multi-party general elections in 1991. The MPD was returned to power with a larger majority in the general elections held in December 1995. In 2001 legislative elections, the PAICV regained power. Nationwide municipal elections were held March 21, 2004.

In January 2006, Cape Verde held a successful round of parliamentary elections, followed by successful presidential elections on February 12, 2006. The National Electoral Commission (NEC) judged both elections free and fair. The leading parliamentary opposition party filed a court case in an attempt to overrule the NEC on the grounds of alleged fraud; this action ultimately failed. Three parties now hold seats in the National Assembly--PAICV 41, MPD 29, and Cape Verdean Independent Democratic Union (UCID) 2. Municipal elections were held in May 2008, with the Movement for Democracy party taking many of the seats within the municipalities. The next round of parliamentary elections will occur February 6, 2011, followed by presidential elections before August 6, 2011.

The judicial system is comprised of a Supreme Court of Justice--whose members are appointed by the president, the National Assembly, and the Board of the Judiciary--and regional courts. Separate courts hear civil, constitutional, and criminal cases. Appeal is to the Supreme Court.

Principal Government Officials
President--Pedro Verona Pires
Prime Minister--Jose Maria Neves
Defense Minister--Maria Cristina Lopes Almeida Fontes Lima
President of the National Assembly--Aristides Lima
Minister of Foreign Affairs--Victor Borges
Ambassador to the United States--Fatima Lima Veiga
Ambassador to the United Nations--Antonio Lima

Cape Verde maintains an embassy in the United States at 3415 Massachusetts Avenue, NW, Washington DC 20007 (tel. 202-965-6820) and one consulate at 535 Boylston Street, Boston MA 02116 (tel. 617-353-0014).

Type: Republic.
Independence: July 5, 1975.
Constitution: 1982; revised 1992, 1995, and 1999.
Branches: Executive--president (head of state), prime minister (head of government), Council of Ministers. Legislative--National Assembly. Judicial--Supreme Court, lower courts.
Administrative subdivisions: 17 administrative districts.
Political parties: African Party for the Independence of Cape Verde (PAICV); Movement for Democracy (MPD); Party for Democratic Convergence (PCD); Party for Democratic Renovation (PRD); Party for Labor and Solidarity (PTS).
Suffrage: Universal over 18.

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History of Cape Verde

In 1462, Portuguese settlers arrived at Santiago and founded Ribeira Grande (now Cidade Velha)--the first permanent European settlement city in the tropics. In the 16th century, the archipelago prospered from the transatlantic slave trade. Pirates occasionally attacked the Portuguese settlements. Sir Francis Drake sacked Ribeira Grande in 1585. After a French attack in 1712, the city declined in importance relative to Praia, which became the capital in 1770.

With the decline in the slave trade, Cape Verde's early prosperity slowly vanished. However, the islands' position astride mid-Atlantic shipping lanes made Cape Verde an ideal location for resupplying ships. Because of its excellent harbor, Mindelo (on the island of São Vicente) became an important commercial center during the 19th century.

Portugal changed Cape Verde's status from a colony to an overseas province in 1951 in an attempt to blunt growing nationalism. Nevertheless, in 1956, Amilcar Cabral, a Cape Verdean, and a group of Cape Verdeans and Guinea-Bissauans organized (in Guinea-Bissau) the clandestine African Party for the Independence of Guinea-Bissau and Cape Verde (PAIGC), which demanded improvement in economic, social, and political conditions in Cape Verde and Portuguese Guinea and formed the basis of the two nations' independence movement. Moving its headquarters to Conakry, Guinea in 1960, the PAIGC began an armed rebellion against Portugal in 1961. Acts of sabotage eventually grew into a war in Portuguese Guinea that pitted 10,000 Soviet bloc-supported PAIGC soldiers against 35,000 Portuguese and African troops.

By 1972, the PAIGC controlled much of Portuguese Guinea despite the presence of the Portuguese troops. The organization did not attempt to disrupt Portuguese control in Cape Verde. Following the April 1974 revolution in Portugal, however, the PAIGC became an active political movement in Cape Verde.

In December 1974, the PAIGC and Portugal signed an agreement providing for a transitional government composed of Portuguese and Cape Verdeans. On June 30, 1975, Cape Verdeans elected a National Assembly, which received the instruments of independence from Portugal on July 5, 1975.

Immediately following the November 1980 coup in Guinea-Bissau (Portuguese Guinea declared independence in 1973 and was granted de jure independence in 1974), relations between the two countries became strained. Cape Verde abandoned its hope for unity with Guinea-Bissau and formed the African Party for the Independence of Cape Verde (PAICV). Problems have since been resolved, and relations between the countries are good. The PAICV and its predecessor established a one-party system and ruled Cape Verde from independence until 1990.

Responding to growing pressure for pluralistic democracy, the PAICV called an emergency congress in February 1990 to discuss proposed constitutional changes to end one-party rule. Opposition groups came together to form the Movement for Democracy (MpD) in Praia in April 1990. Together, they campaigned for the right to contest the presidential election scheduled for December 1990. The one-party state was abolished September 28, 1990, and the first multi-party elections were held in January 1991. The MpD won a majority of the seats in the National Assembly, and the MpD presidential candidate Mascarenhas Monteiro defeated the PAICV's candidate by 73.5% of the votes. Legislative elections in December 1995 increased the MpD majority in the National Assembly. The party won 50 of the National Assembly's 72 seats. A February 1996 presidential election returned President Mascarenhas Monteiro to office. Legislative elections in January 2001 returned power to the PAICV. The PAICV now holds 40 of the National Assembly seats, MpD 30, and PCD and PTS 1 each. In February 2001, the PAICV-supported presidential candidate Pedro Pires defeated former MpD leader Carlos Veiga by only 13 votes.

People of Cape Verde

The Cape Verde archipelago was uninhabited until the Portuguese discovered the islands in 1456. Enslaved Africans were brought to the islands to work on Portuguese plantations. They were joined by entrepreneurs and refugees fleeing religious persecution in Europe, leading to a rich cultural and ethnic mix. The influence of African culture is most pronounced on the island of Santiago, where a little less than half the population resides. Sparse rain and few natural resources historically have induced Cape Verdeans to emigrate. It is believed that of the more than 1 million individuals of Cape Verdean ancestry, fewer than half actually live on the islands. Some 500,000 people of Cape Verdean ancestry live in the United States, mainly in New England. Portugal, Netherlands, Italy, France, Senegal, and Sao Tome and Principe also have large communities.

The official language is Portuguese, but Cape Verdeans also speak Cape Verdean Creole--which is based on archaic Portuguese but influenced by African and European languages. Cape Verde has a rich tradition of Cape Verdean Creole literature and music.

Nationality: Noun and adjective--Cape Verdean(s).
Population (2009 forecast): 506,000.
Annual population growth rate (2008 est.): 1.41%.
Ethnic groups: Creole (mixed African and Portuguese) 71%, African 28%, European 1%.
Religions: Roman Catholic, Protestant.
Languages: Portuguese (official); Cape Verdean Creole (national).
Education: Literacy (2008)--77%.
Health: Infant mortality rate (2008)--24.8/1,000. Life expectancy (2008)--72.5 yrs.

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