Cabo Verde’s Economic GrowthSince gaining independence in 1975, Cabo Verde’s economic growth has brought about great improvements to the welfare of the poorest in the country. During the 1970s, the GDP per capita was $190; this figure rocketed dramatically to over $3,600 before the 2010s ended. However, despite the growth to a middle-income country, the nation still had 35% of the population living below the poverty line in 2019. Here are the main reasons why the economic growth of the island is promising not only for Cabo Verde’s poorest but also for the rest of Africa.

A Lack of Natural Resources

Cabo Verde cannot rely on its natural resources as it is lacking compared to the countries closest to it. Only 11% of all of its land mass is suitable for agriculture, fresh water has very few sources, and frequent draughts prove to be major issues in the conservation of resources. The main natural valuables of the nation only include salt, limestone and pozzolana — used in making cement.

Due to these limitations, Cabo Verde has had to use clever strategies to ensure resources do not become scarce. 90% of all food is imported, so the only food source that they have an abundance of — fish — is protected. 21% of all foreign investment from 1994 – 2000 was used on fishing infrastructure, including developing large processing plants for the freezing and storage of fresh fish.

Energy demands are almost entirely met by imported petroleum fuel. The ECOWAS Center for Renewable Energy and Energy Efficiency, established in 2009, was created to improve the renewable energy capability of Cabo Verde. Strong wind has enabled the use of wind turbines on the national grid, solar-powered systems have been introduced into villages, and a 20-70kW/m wave strength allows for untapped potential into a new avenue.

The natural problems of Cabo Verde should serve as an indication for other countries on how to effectively preserve resources to boost the economy. Despite having very little, Cabo Verde’s economic growth has been contributed to by the smart planning of the postcolonial government.

The Focus on Tourism

Tourism is the single most important sector of Cabo Verde’s economy. Nearly 5% of the economic growth in 2022 was due to the service of accommodation and restaurants — the highest of any category.

Over 700,000 tourists visited Cabo Verde in 2022, 90% of the record-breaking 819,000 figure from 2019. An impressive vaccination program allowed Cabo Verde to speed up its reopening to visitors in 2021. The Cabo Verde government is expecting these numbers to surpass 1.2 million in 2026 as the funding for tourism sites and resorts grows each year.

An increase in tourism only brings positivity to the nation as, in 2019, 39% of total employment was in the travel and tourism sector. (From January to September 2022, around $105 million was generated in foreign investment, compared to only $60 million in the same period for 2021. With a majority of this investment directly impacting tourism, the number of jobs will increase, and thousands more will be employed, impacting the lives of those living along the poverty line.

Cabo Verde still has a way to go if it wants to be as successful as another African island nation in terms of tourism — the Seychelles. Seychelles has a much lower poverty rate than Cabo Verde so the success story has already been created, and with more time the government is hoping to further boost the economy and lower the poverty rate again.

Consistent Fall of Poverty

In 2001, the poverty rate was just under 60%. Only 14 years later the number was 35%. Almost a decrease of half in less than two decades is incredibly impressive and highlights how the work of strategic implementations can allow an economy to thrive and people to succeed.

Cabo Verde’s location makes the country very vulnerable to key natural hazards so the economy is still volatile. The World Bank introduced a Catastrophic Deferred Drawdown Option (Cat DDO) to provide Cabo Verde with the funding necessary to deal with a natural disaster. Since 2018, the Cat DDO has been utilized to introduce policy reforms and update the data systems used to identify risks.

Even with the highly susceptible environmental conditions, Cabo Verde has had a consistent fall in poverty since gaining independence. In 1989, the number of people living in extreme poverty was around 14%. In 2015, the figure was just over 2%.

There is no sign of stopping the reduction in poverty from the government. Prime Minister Ulisses Correia e Silva made a statement in February highlighting the need to eradicate extreme poverty from Cabo Verde by 2026.

He stated, “We must eliminate extreme poverty in Cabo Verde, reduce absolute poverty, in the name of human dignity, but also of the positive impacts at the level of people’s quality of life, public security, increased productivity of families and happiness of people.”

Cabo Verde’s economic growth is a testament to the dedication of the government, foreign aid workers and investors that envision a more prosperous future for the nation. Other countries in the region can certainly benefit from the knowledge and experience of plans carried out by Cabo Verde, especially regarding conservation and creating tourism spots that will get their economies thriving.

– Oliver Rayner
Photo: Flickr

How to Help People in Cabo VerdeWhen analyzing progress created from global trade, employment opportunities and local equality, the world witnesses how to help people in Cabo Verde.

Tourism and Trade
With only 10 percent of land in Cabo Verde suitable for agriculture, it is essential for Cabo Verdeans to get support from outside sources. Thus, the fight to help people in Cabo Verde relies heavily on foreign support, trade and tourism.

As of May 2017, the Cabo Verde government has made efforts to create a trade, business and transport hub. Without witnessing the benefits that tourism created, the effort to increase trade would not exist. The poverty rate dropped from 37 percent in 2003 to 27 percent in 2008, largely because of Cabo Verde’s tourism sector.

To support Cabo Verde in its rise above poverty, the World Bank Group (WBG) committed funds for analytical work that enables accountable and strategic goals for reducing poverty. These activities would provide Cabo Verdeans with easier access to food and help ensure economic growth through trade and tourism.

The increase in tourism and trade helps develop more jobs for the locals. With low agricultural opportunities, Cabo Verdeans struggle to find employment: however, trade brings in consumer goods, allowing Cabo Verdeans to seek employment.

The new Cabo Verde government leaders, put in place after the 2016 election, are addressing the country’s macroeconomic challenges, with hopes of securing 45,000 jobs by 2021. To do so, the government teamed up with the United Nations and agreed to sign an annual work plan, aiming to reduce poverty and promote the new democratic government in Cabo Verde.

Reducing poverty and addressing how to help people in Cabo Verde means providing all Cabo Verdean adults the chance to be employed. Simply creating more job opportunities is not enough if the female population is not permitted to support their families and their country’s economy.

In 2015, Cabo Verde joined Step It Up for Gender Equality, meant to empower women and fight gender-based violence. The Government of Cabo Verde fights to implement the Gender-Based Violence Law and to provide women with equal roles within the country.

Cabo Verdeans have seen improvements in regards to female health because there was a decrease in the maternal mortality rate from 0.036 percent in 2006 to 0.026 percent in 2011. Hopefully with the new outlook on gender equality, those numbers will drop even further.

Cabo Verdeans are benefiting gradually from the World Bank Group granting Cabo Verde $78 million in 2017, the aid of the United Nation’s work plan and from the empowerment gained from Step It Up for Gender Equality. The progress in global trade, employment opportunities, and gender equality all contribute to the efforts of helping people in Cabo Verde alleviate poverty.

Brianna White

Photo: Flickr

Poverty in Cabo VerdeCabo Verde, also known as Cape Verde, is an archipelago located off the west coast of Africa comprised of ten islands, nine of which are inhabited. Cabo Verde has a population of nearly 520,500 people.

Only seven percent of this population lives below the dollar-a-day poverty line, meaning that most citizens have enough income to purchase the bare minimum of food, clothing and shelter.

Those living in poverty mainly rely on agriculture for their livelihoods. Only ten percent of Cabo Verde has arable land, which means that farms often have poor soil or receive inadequate rainfall.

Poverty in Cabo Verde is primarily a structural problem resulting from the lack of natural resources and the country’s narrow economic base.

According to the United Nations Development Programs (UNDP), Cabo Verde ranks third out of the 43 sub-Saharan African countries. This places it firmly in the medium development bracket. However, the country is still working to come back from the post-global crisis recovery.

Tourism Decline and Poverty in Cabo Verde

The country’s current leading industry is tourism. Tourism slowed from its 2014 rate of 3 percent to about 1.5 percent in 2015, cutting the industry profits in half. Pressures on the country’s public finances in 2016 foretell increases in debt.

However, while the macroeconomic climate is doing poorly and many continue to live within the poverty bracket, Cabo Verde is seeing progress. Since its independence, Cabo Verde has made huge strides in its economic development, health care and education initiatives. Life expectancy has increased from 69 years in 2001 to 73 years in 2016.

The government of Cabo Verde is currently making an effort to turn the islands into a center for trade and transport. Meanwhile, the tourism industry is projected to increase to around a 4 percent rate for 2016. These initiatives are expected to have a positive impact on the economy and poverty in Cabo Verde.

Kayla Provencher

Photo: Flickr