Cape Verde: Islands at the center of the world

Special Advertising Supplement

One of the world’s smallest nations faces a moment of transformation. No longer a sleepy backwater, Cape Verde is now a middle income country andthe newest member of the WTO, with great plans to leverage its advantages and location for the 21st century.

Islands at the center of the worldCAPE VERDE

March/April 2010

2 Cape Verde

ick up just about any “How toSucceed” book and the first thingyou’ll read is about the importance ofhaving a plan. Well, by that yardstick

Cape Verde is off to a good start. This tinyAfrican island nation, seemingly lost in the mid-dle of the Atlantic Ocean, has big ambitionsand a pretty fair idea of how to fulfill them.

Less than two generations after winningindependence from Portugal, and twodecades after establishing a multi-partydemocracy, Cape Verde is often hailed as abeacon in a continent beset by seeminglyendless forms of bad government.

“Few places... demonstrate the promise ofAfrica better than Cape Verde,” US Secretaryof State Hillary Clinton said during a landmarkvisit to the archipelago last year. “Some placeshave certain aspects that can be comparable.But no place has put it all together, with goodgovernance, transparency, accountability, therule of law, a democracy that is delivering forits people, lifting them out of poverty, puttingthem now in a category of middle-incomecountries in the world.”

Does Cape Verde have problems, amid thewaving palms and idyllic beaches? Of course.The country’s per capita gross domestic prod-uct (GDP) is just US$4,000, less than a tenthof the U.S. level. Unemployment, poverty, andinequality are all pretty high. And to makematters worse, there are few natural resources, most land is no good for farming,and some is little better than a desert. So whatis there to be optimistic about?

“Cape Verdeans have an open outlook toward the world,” said Prime Minister JoséMaria Neves. “If the United States does

something, then Cape Verdeans will soonask why they can’t do it as well. This forcesany government to do more and more.Theattitude of wanting to do more — that is the engine of growth for Cape Verde.”

Many Cape Verdeans reckon this globaloutlook is rooted in their history. The islandswere uninhabited until 1462,when Portuguesesailors reaching farther and farther down theAtlantic in their tiny caravels stumbled uponthem and founded the first settlement. Quicklythe archipelago’s position some 600 kilometersoff the west coast of Africa dictated a centralbut inglorious role for Cape Verde in globaliza-tion — as a slave entrepôt on the route to theNew World.

Hub, hub, hurrah?Location has always been a dominant factorfor Cape Verde, and it remains so today. Butnow smart young Cape Verdeans with busi-ness degrees, not bullwhips, are in charge.They use words like “good governance,”“leverage,” and “public-private partnership.”

Some people look at the map, rememberthat the excellent deep-water harbor atMindelo used to be an important 19th-cen-tury coaling station and a center forAtlantic navigation, and suggest that CapeVerde could become a 21st-century freighthub with container vessels transshippingcargo for delivery up and down the WestAfrican coast. Maybe, but it’s an idea thathas yet to set the shipping world alight.

Others see a 21st-century hub, yes, butfor modern offshore financial services. And this is where good governance comes in. Cape Verde won praise from the

Business and political leaders in Cape Verde are thinking strategically;they see their country’s future in terms of its international advantages.The goal is to find the right niche markets.

Introduction


“The Desire to Do More —That Is the Engine of Growth”

P

A land of tradition (from top): a house in Boavista; a fish market; salt flats; a main avenue in Santiago (page 3).

Cape Verde 3

Special Advertising SupplementOmar Camilo

4 Cape Verde


International Monetary Fund in 2009 forits economic management during the crisis.It has graduated from low to middleincome status in U.N. tables and is joiningthe World Trade Organization. Severalyears of focused government spending havemore than doubled average incomes overthe last 20 years, in U.S. dollar terms, whileincreasing life expectancy.

Many of the problems that plague so manyAfrican countries — corruption, political insta-bility, and institutional insecurity — have beenlargely resolved. So what better niche marketthan offshore banking services, both for WestAfricans looking for a safe haven that is clos-er than the Caymans and international investors looking for a foothold into Africa?

The government has been investingheavily — heavily, that is, for a country of just430,000 people — in ports and airports, including a US$38 million upgrade for themain airport. But the main goal is to promotetourism and inter-island travel and make import-export operations easier. PrimeMinister Neves holds a degree in administra-

tion from a top Brazilian business school, and many of the country’s movers and shakers speak pragmatically of incremental, grassroots improvements.

Diaspora, fast-forwardTextbooks describe Cape Verde as a placewith few natural resources, but many CapeVerdeans speak of one resource that the text-books ignore: their hundreds of thousands offellow countrymen (and women) who liveabroad, mostly in the United States. Many ofthem have levels of education and first-worldbusiness and professional experience that canbe invaluable to their native land. One suchexpatriate Cape Verdean has returned to theislands and started a company that he sayscan help transform the country.

“Cape Verdeans don’t know Cape Verde;they know the island where they were born, butvery few have traveled beyond that,” said Andyde Andrade, one of the entrepreneurs behind “Cabo Verde Fast Ferry.” It mightsound almost unreal to people living in ahighly interlinked first-world society, but

Introduction

Pedro PiresPresident, Republic of Cape Verde

“One Step at a Time”

President Pedro Pires, a historicleader of Cape Verde’s fight forindependence from Portuguesecolonial rule, looks with a certainsatisfaction at his country’sprogress and internationalrecognition. “I don’t know if this isexactly what I dreamed of, but it isthe result of a lot of hard work.” Pires is pleased that his country hasnow laid down solid economic,social, and institutional foundationson which to build its future. But,when questioned about popularsuggestions that his country couldbe on the threshold of some kind of“great leap forward,” Pires prefersa more cautious approach. “I thinkwe should move step by step. I guess I’m a gradualist, but going one step at a time isessential if we are always toconsolidate what we achieve.”According to a biographydistributed by the president’s office,one of Pires’s earliest politicallessons was seeing his fellowcitizens being taken, desperate andhungry, to work as contract farmlaborers on São Tomé and Príncipe,another Portuguese colony. Todayhe applauds his country’s firstuniversity. “We must create nationalcompetence to carry the countryforward, to progress.”

Cape Verde 5

Glimpses of Cape Verde(clockwise from top left):Mindelo Harbor on São VicenteIsland; tropical produce at SãoVicente’s Municipal Market;Fogo Island; the center of Praia,the national capital, on Santiago Island; the brandnew Poilão dam to helpimprove water supply; Sal Island, favorite haunt forEuropean sun worshippers.


Andrade thinks that sim-ply providing regular 20-knot ferries between the is-lands can help change just abouteverything. A tuna fisherman on one island willbe able to sell his excess catch on another, forexample. “Then he has more money to educatehis children, to feed his family, and he putsmore money into the economy, so there’s adomino effect where one industry forces another to grow, and people are less dependenton government.”

Fast connections between islands will

naturally help the tourist trade, which currently tends to be concentrated in just afew centers. For example, the ferries will carry foreign visitors to more remote islandswith potential for eco-tourism.

This is music to the ears of local businessbaron Gualberto do Rosário, who has ma-jor investments in tourism. He has long-range plans to develop international

tourism throughout the archipelago.“I understand that each island in Cape

Verde can develop its own specific market.Some of the islands like Sal, Boavista, andMaio might look alike, but they can quite eas-ily differentiate their product.”

In one location he sees a project with a PGA-listed golf course, and reckons he can temptcruise-liner passengers to stay and play.■

For many years, Cape Verde helpedto shape relations between the OldWorld and New. Initially it did soin ways remembered painfully, as akey slaving entrepôt, then later asan important staging post for morehonorable transatlantic navigation.Today the islands once again wishto influence hemispheric relations,

in part by leveraging their strategiclocation but perhaps even more soby emphasizing their emergence asa cultural bridge that blendsAfrican, European, and Americancultures. In so doing, the countryoffers itself as a stepping-stone inthe middle of the ocean.

U.S. Secretary of State HillaryClinton made a landmark visit toCape Verde last August, at theend of a seven-nation swingthrough Africa. During her visit,Clinton made it quite clear thatshe was impressed with what shesaw. Chatting with reportersabout her pre-trip StateDepartment briefings, Clinton recalled that most African nations

6 Cape Verde


Relations

had "many more problemsthan positives. In Cape Verde,there were so many more positives than problems."

The country receives widepraise for the progress it hasmade since becoming a multi-party democracy in 1991.According to the EuropeanCommission, “It has seen eco-nomic growth sustained byservices (especially tourism)and a marked improvement instandards of governance, bothin terms of democracy, humanrights, and fundamental free-doms on one hand, and interms of economic governanceon the other.” In 2007, the

European Council approved a“special relationship” with theisland nation. Closer relationswere justified, it said, by thecountry’s cultural heritage,democratic reforms, good gov-ernance, and “natural voca-tion to serve as a bridge be-tween Europe and the Africanand American continents, andthus as a transit point for goodsand people moving betweenEurope and the latter.”

The European Union (EU)has allocated €51 million to eco-nomic development and is coop-erating with Cape Verde in its ef-forts to combat drug traffickingand illegal immigration. ■

Foreign assistance can work wonders when it’s carefully targeted andwisely spent. In 2005, Cape Verde was selected as one of 19developing countries to share a US$6.9 billion pool of aid entrusted bythe U.S. Congress to a new agency called the Millennium ChallengeCorporation, or MCC. As the name suggests, the goal was to steer aidto poor countries that were committed to good governance, economicfreedom, and investment in their citizens.Cape Verde was awarded US$110 million for a five-year parcel ofprojects to capture and conserve rainwater, upgrade agriculture, buildthe local roads and bridges that farming families need to accessmarkets, schools and hospitals, help reform government bureaucracy,and strengthen microfinance institutions. “The MCA has been a factor for transformation, for profound changes;it has introduced strict control and transparency into public affairs,”said a senior member of the Cape Verde government, which is nowasking Washington for a program extension.

A Stepping-Stone in the Middle of the Ocean

The Millenium Challenge Account (MCA):Aid that hits the spot

Cape Verde seeks to play acentral role in today’s newglobalized world, leveraging notjust its strategic location but alsoits unique mix of African andEuropean cultures — that is, itslocal streetwise know-how, goodgovernance, and rule of law.

Cape Verde 7


This report coincides with the start ofyour 10th year in office. How has thecountry changed?I think the greatest gain is that CapeVerdeans have become very determined tosee their nation grow and modernize. At thesame time, what used to be an extremelyfragile country, economically speaking, cannow be called a viable country – one with apromising future.

And where is it heading?We want to build a country that is an inter-national services center in a varied range ofsectors, for example tourism, air and seatransportation, fishing and information tech-

nologies, while exploiting the riches and thepotential of our seas; I think that we willhave a very strong maritime economy. Thestarting point for all this is modernizing ourinfrastructure: water, sewage, telecommuni-cations, electricity, ports, airports, and high-ways. This will allow us to unify the nation-al market and leverage our vocation as acountry that bridges the gap between variouscontinents. It will also allow Cape Verde tobecome a business platform for the AfricanWest Coast region.

We also have to invest heavily in people,to develop our human capital and strength-en the business sector, because private com-panies are the engine of the economy; theybuild competitiveness.

You spoke with both U.S. PresidentBarack Obama and Brazilian PresidentLuiz Inácio Lula da Silva about the impor-tance of private investment. What are thepossibilities?Foreign direct investment (FDI) is essential,not just because of the resources but also because of the know-how and economic

dynamism that these investments create in acountry like Cape Verde. The crisis reducedinvestment, particularly in tourism real estate, but it’s bouncing back — the worst isover. We boosted public investment consid-erably to prepare the country for the moment when the crisis was over, and nowforeign investment is starting to reappear. Ithink 2010 will be very positive, both interms of FDI and economic growth.

What would you like your legacy to be? First, a country that’s more modern in everysense. Second, a country where there isdemocracy and freedom, where all peopleof talent contribute to overall developmentno matter what (political) party they are in.Building a modern country means having agovernment that works; it means freedomof speech; it means people with water andelectricity.

And your message for our readers?Come and visit Cape Verde! Enjoy the feel-ing of being at the center of the world, whereanything can happen. ■

“The center of the world, where anything can happen”

Interview

Peninsula Press talks with José Maria Neves,Prime Minister of Cape Verde

José Maria Neves, 49, has been primeminister of Cape Verde since February2001. Neves grew up and attended gradeschool on Santiago, Cape Verde’s biggestisland. He later won a scholarship toBrazil’s prestigious Getúlio VargasFoundation business school, earning abachelor’s degree in public administration.

Q&A


Opinion

Cape Verdeans are actively debating how best to develop their country and position it for success in the 21st century. There’s a greatfeeling that it’s in their hands now — no sitting around waiting for foreign aid — and certainly no lack of creative ideas. In this roundup, a selection of public and private leaders discuss advantages, challenges, plans, and policies.

Cape Verde: how they view it

Manuel Inocêncio Sousa Minister of Infrastructure, Transport, and Telecommunications

José Maria Veiga Minister of Environment,Rural Development, and Marine Resources

Call it a secret weapon. For Cape Verdeans, their “diaspora”— comprised principally of fellow countrymen living in theUnited States — can prove essential to promoting theislands’ development. Nobody knows how many CapeVerdeans are in the United States; some say 100,000,others put it higher. While that figure constitutes well under1 percent of the total foreign-born U.S. population, it equalsalmost a quarter of Cape Verde’s populace. Fátima Veiga,Cape Verde’s ambassador in Washington, says they are wellintegrated: “They can continue to play an important rolenot only in the development of Cape Verde, but also in thedevelopment of relations between the two countries.” CapeVerdeans living abroad not only send money home, theyalso represent a pool of educated citizens that the countrywants to entice back to help with national development.

José Maria Veiga eats, sleeps, anddreams water. It is, after all, theroot of many of his problems.Strange, perhaps, that a nation ofislands in the middle of the oceanshould worry about a shortage ofwater, but the situation in CapeVerde is critical. The government isinvesting in building dams to storethe short, sharp torrential rains thatsometimes fall on the islands. One ambitious idea is to pumpwater uphill on Fogo, an island that

Cape Verde is thinking big, but it’salso thinking smart. Finance MinisterCristina Duarte sees a niche for hercountry as an international financialspringboard into Africa. “We have all the conditions to be aregional financial center: credibleand efficient institutions, politicalstability, and a macroeconomicframework that’s well establishedeven after such a severeinternational crisis.” But Duarte doesn’t plan to competewith the big global money centers.“We want to leverage our geographicposition, market stability, andinstitutional framework and say tothe world, ‘We can be a financialgateway to the region.’”

Government for the people

“An important role inthe development ofrelations with theUnited States”

“We have never had a politicalcrisis ... here, there isdemocratic rule of law”

“There are so manysustainablethings we candream of that couldcompletelychange ourdestiny”

Fátima Veiga Ambassador of Cape Verde to the U.S.

Cristina Duarte Minister of Finance

“A financial gateway to the region”

Cape Verde is ayoung democracy.

Unlike many other Africannations, however, it has a

forward-looking governmentsector that ranks relatively

low for corruption and isgrappling to

bring economic development.

8 Cape Verde

Even for investors used to braving emerging markets,Africa often suggests an additional degree of risk. Butthere’s no way that vision — whether right or wrong — should be extended to Cape Verde.“This country has nothing to do with the problems that normally frighten investors away from Africa,” said Sousa. “Anybody who knows our country knows that the worriespeople often have about the African continent in generalare in no way applicable to Cape Verde. Ever since webecame independent in 1975, we have never had apolitical crisis ... here, there is democratic rule of law.”

Cape Verde 9


is little more than a giant volcanosticking out of the ocean. But55,000 people live there. “It rainsa lot there, but the water just runsinto the sea. We could userenewable energy sources — wind,the sun, even the energy of thevolcano — to pump the water backup from the coast to where peoplelive, for irrigation,” says Veiga.“There are so many sustainablethings we can dream of that couldcompletely change our destiny.”

These days, the whole world is concerned aboutshipping security. For Franklim Spencer, the manwho runs Cape Verde’s ports, that could be amajor selling point.“We have been audited and approved by theAmerican Coast Guard and by U.S. maritimeauthorities. ... We have the best security system in the region,” Spencer says. And it could improveeven more still. He has container scanners onorder and in a couple of years will take delivery of a purpose-built 52-meter rapid patrol vessel.

Jorge Lopes Manager, Operational Nucleus of Information Society

Cape Verde depends heavily on foreign investment, but thatdynamic could change one day. “The time will come when CapeVerde must become a country that also invests abroad,” predictsGualberto Rosario, who in addition to being a former prime ministeris head of one of the country’s leading business groups. His firm’sinvestments lie in air transportation, in-flight catering, and varioustourism developments — not to mention tourism projects in Brazil, a couple of banks, a joint venture with Libya, and more.“We think 2010 might be a bit difficult, because Cape Verde is still impacted by the crisis in other countries, for example Italy,Portugal, and the United Kingdom. But as they recover, tourism will grow again.”

Forget Silicon Valley, think Silicon Islands. Cape Verde has built an electronic governmentproject so advanced it has been studied byHarvard University and the World Bank. The aimis to do everything online — pay your taxes,

plus check your driver’s license or even yourchild’s attendance at school. And all with a single password. According to Lopes,“Electronic government is an essentialinstrument for offering quality services.”

For some 180 million years,apparently, nobody set eyeson Cape Verde’s beautifulislands. After they werediscovered by Portuguesesailors, the islands served forcenturies as a vital stagingpost for sailing ships. Buttoday, transatlantic jetlinerspass far overhead and flightsinto and out of Cape Verde areessentially geared to theislands’ tourist trade. MárioLopes is one of several CapeVerdeans who look at the mapand see not isolation but awonderful strategic locationroughly three and a half hours

from Europe and Brazil, closeenough from the UnitedStates, and right beside Africa.“The Cape Verde government

has the strategy ofconstructing a hub, to be aplatform for air transportationbetween the continents,” hesaid. “Look at the advantageswe have: our geographicposition; economic, political,and social stability; and gooddialogue with other nations.”ASA, the airportadministration companyheaded by Lopes, has investedheavily in security andinfrastructure upgrading.

Mário Paixão Lopes President, Aeroportos e Segurança Aérea (ASA)

Gualberto do Rosário President, GDP-SGPS

Seeking business niches

“Cape Verde has the strategyof constructing a hub, to be aplatform for air transportationbetween the continents”

“Electronic government is an essential instrument for offering quality services”

Franklim Spencer President, Cape Verde PortManagement Company, ENAPOR

“Cape Verde must become a country that alsoinvests abroad”

In a country thatimports just abouteverything, the potentialfor economic growthshould be great. But business leaders must decide carefully what can and can’t be doneand seek to leveragelocal advantages.

“Audited and approved bythe American Coast Guardand by U.S. maritimeauthorities”

10 Cape Verde


Spotlight on Cape Verde

1. SANTO ANTÃO Mountainous, rugged, spectacular, breathtaking ... tourists rave about

the beauty, but the island is more for hikers than beach loungers.There is some local agricultural production, including traditional rum.

Ten islands and quite a few rocks. Add them all together and they’re onlyslightly larger than New York’s Long Island, counting all four counties. Butwhile some 7.7 million people live on Long Island, Cape Verde is home to less than half a million. Who are they? Mainly the descendents of Portuguese sailors,settlers, slave owners, and slaves themselves. They’re spread throughout thearchipelago, but the islands are up to 200 kilometers apart, so many local peopleknow just their own. Check out Cape Verde on a map and it’s easy to see thatthe islands form two groups; four in the south called the Sotavento or leewardislands (Brava, Fogo, Maio, and Santiago), plus six farther north called theBarlavento (windward) group: Boa Vista, Sal, Santo Antão, Santa Luzia, SãoVicente, and São Nicolau — fine old Portuguese names from the days of sail.

9. FOGOA one-word tourist guide: “volcano.”Also “big” and “periodically active.”

Last eruption: 1995. Nevertheless, morethan 50,000 people live on Fogo; there is

good farming land and the islandproduces sought-after cheese, coffee,and wine. Rain can be torrential but it

runs off, leaving the land parched, so oneCape Verde politician has a plan to

irrigate the fertile slopes with dams andpipelines, powered by alternative energy

(see page 8).

10. BRAVAThe smallest inhabited island in Cape Verde, Brava used to be a thriving

whaling center, with ships from Europe and America dropping by. Interestingly,this led to an early Cape Verdean diaspora to the United States, as peoplehitched rides west on returning whalers, many settling in New England.

Another claim to fame is as the birthplace of Eugénio Tavares (1867-1930), thecountry’s most famous poet. Perhaps the key factor about Brava, apart from

frequent earthquakes, is its intimidating neighbor: Brava lies just 10 kilometersdownwind of Fogo, which is rather close for a major, active volcano.

2. SÃO VICENTEWith some 80,000 inhabitants,

who live mainly in and around Mindelo, Cape Verde’s best port, São Vicente is the

country’s second-most populous island. Whenthe archipelago was a hub for Atlantic shipping,

it was largely centered on Mindelo. There is somemanufacturing — clothing, footwear, and

canned fish for export — and the government ispromoting an industrial zone at Lazareto. The

island is good for sports, principally windsurfing,cycling, hiking, horseback riding, and golf,

and popular culture. Cape Verde’s best-knownsinger Césaria Evora is from here.

Every island tells a story ...

Santiago

Cape Verde 11

3. SANTA LUZIAThis small island is tucked between São Vicente and SãoNicolau. People used to live here more than 200 yearsago, but they ruined the soil. The population is nowofficially zero, although rumor has it that a loneshepherd still roams the island with his flock of sheep.

6. BOAVISTAThe third largest island, but home to just 6,000 people – the land is poor, usually

consisting of desert, and the population was declining before modern tourism workedits miracle. Now there are several developments capped by a 750-room international

hotel, and even more planned. The largest city is Sal Rei — literally ‘Salt King’ —harking back to the island’s glory days as a salt producer.

Boavista is known for marine turtles and traditional music.

4. SÃO NICOLAUThis small, somewhat economicallydepressed island is beautiful and as yetwithout major tourism development. Great for bird watching and deep-seafishing — the blue marlin is a favoritetarget. And of course hiking and cycling.


7. MAIOQuite a poor island with large salt flats, but with some remaining forest,and good traditional farm produce, in particular cheese. The island hasspectacular beaches and rugged desert scenery, so there’s potential foreco-tourism. The government has set up an agency to promotesustainable tourism, and projects are starting to appear.

5. SALProbably the best known of the Cape Verde islands, at least for

sun worshippers flying in to the international airport fromEurope – there’s virtually year-round sunshine. Just over 20,000

people live on Sal, and tourism is by far the principal activity.Modern tourism developments abound, particularly at the

former fishing town of Santa Maria. From just over 1,000 in 1990,the local population now hovers close to 20,000. But the island’s

tourist economy took a heavy hit during the crisis.

8. SANTIAGOThe largest and most populous of the 10islands, with roughly a quarter of CapeVerde’s total land area and half of the

total population. Some 120,000 people,roughly half the island’s population, livein Praia (the name means ‘Beach’), whichis the country’s capital. Just a few milesalong the coast is Cidade Velha, or “OldCity.” This used to be the capital untilpeople there got fed up with constantpirate attacks. Today Cidade Velha is a

World Heritage Site. The UNESCO citationnotes it was “the first European colonialtown to be built in the tropics, and marksa decisive step in European expansion at

the end of the 15th century towards Africaand the Atlantic area.”

12 Cape Verde


Prepare for successIn our research for this special supplement, we identified six areas that appear to be key for economic development — in addition, of course, to continuedattention to good governance, education, health, and the reduction of inequality.

When your country is split between 10 islands, and your future is tied to foreign visitors of various kinds, then ports and airports take on a whole new importance.For Cape Verde, infrastructure is the nameof the game. The government is investingheavily in ports and airports, both to helpCape Verdeans get around their country andto help tourists arrive and depart easily.

“Until 2005 we had just one internatio-nal airport, on Sal Island, so tourists con-centrated there,” said Manuel InocêncioSousa. “We wanted to get all the islandsinvolved in developing tourism, so wedrew up an airport expansion plan.”

The government also wants to improveinter-island travel by introducing faster ferries, thus offering an economical alterna-tive to flying; the islands lie anywhere fromless than 50 kilometers to more than 200 kilometers apart.

Finally, investments will upgrade thecountry’s ports for cruise liners and cargovessels. Finance Minister Duarte reckonssome US$400 million will be invested overthe next three years, after which the govern-ment will privatize port management. If theyopted for privatization just now, she argues,only second-rate bidders would come for-ward: “We don’t want that. We want to pickfrom the best and most credible operators.”

In 20th-century terms, Cape Verde is an energy-poor country with few solutions. Ithas no coal, oil, or gas, so it imports some2,000 barrels of oil a day in petroleum products, adding a further burden to thebalance of payments. But shift gear into a21st-century mind-set, and suddenly thingsdon’t look so bad.

Renewables are the answer. Thanks toCape Verde’s location in the Atlantic, wind israrely in short supply on the islands. As a result, the government has signed a €65million deal with InfraCo, an infrastructuredevelopment company funded mainly bythe World Bank and European govern-ments, to build four wind farms coming onstream in 2011. The planned 28 megawatts(MW) should supply roughly a quarter of thearchipelago’s power requirements.

“We aim to keep reducing our depend-ence on petroleum, and we set a target of2011 to have around 25 percent penetrationof renewables, then reach 50 percent by2020,” Abraão Lopes, Cape Verde’s director-general of industry and energy, told reporters after signing the InfraCo deal.

Every 1 MW of generating capacity installed in a site with steady winds couldsave the country around €400,000 a year inimported petroleum derivatives, Lopes said.

Sunshine is also plentiful in Cape Verde,a fact that thousands of European tourists

2

1 BUILD IT AND THEY WILL COME ... AND GO

ENERGY: KICK OUTTHE BARRELS

Cape Verde 13


At just 4,000 square kilometers, Cape Verdeis pretty small already. Much of the land issemi-arid, and only 10 percent is good for farming. Throw in frequent droughts that reduce fields to hardscrabble, and it’s notexactly a recipe for success. Indeed, morethan 40 percent of Cape Verdeans live off the land, but they generate just 6 percent of the country’s GDP.

“I think that with investments we canget that up to 10 or 15 percent of GDP,” saidJosé Maria Veiga, the minister responsiblefor agriculture. His room for maneuver isseverely circumscribed by lack of water, butVeiga noted that drip irrigation systemshave expanded from 50 hectares in 2000to 350 hectares today.

The country has been working with theMillennium Challenge Corporation (see page

6) to build basic hydraulic infrastructure andsave water, but much remains to be done.

Boosting the quantity and quality of thecountry’s farming output would have mul-tiple benefits. First and foremost, it wouldincrease rural incomes, thus helping to reduce inequality. It would also have an important impact on the trade balance, given that Cape Verde imports an estima-ted 80 to 90 percent of all that it consumes.But the ultimate goal for long-sightedplanners is an agricultural sector that integrates with tourism; currently, foreigntourists — both short-term visitors andthose who buy vacation homes on the is-lands — tend to consume mostly imports.

“Tourism in the past three or four yearshas been a growth engine for the economy,but we have not succeeded in linking this withother sectors,” said Finance Minister Duarte,recalling the case of an excellent mango far-mer on Fogo Island who lacked the infras-tructure to get his produce to the best mar-kets. She said that building this kind of basiclinkage was more important in the shortterm than investing in mega-projects.

Cape Verde has been sending owners ofsmall farms to study Brazilian experiencein farming, fish farming, and adding valueto farm products.

celebrate every year. Thus, the country hascontracted 7.5 MW of solar capacity to be installed in two farms.

However, Cape Verde’s alternativeenergy bonanza doesn’t stop there. Only 10percent of the island’s land is good for reg-ular farming, but much of what remains issurprisingly hospitable for jatropha, a hardyscrubland bush that is a 21st-century favoritefor producing biodiesel. In fact, the jatrophafrom Cape Verde has become so resilientover the centuries that today it is regardedas a prime strain.

And while some people object to petro-leum being mentioned as a 21st-century energy source, it may well figure in CapeVerde’s plans for the future, even though itdoesn’t have any now — or, to put it better,doesn’t have any yet. Some people think it’sworth taking a look beneath the waves, andCape Verde has discussed exploration withBrazil's Petrobras, a world leader in deep andultra-deep oil exploration and production.

3 FARMING: EVERYTHING TO GROW FOR

If the Romans had occupied Cape Verde, thecountry might now have a wonderful system ofaqueducts. But history took a different course ...Rains fall mainly from August through October inCape Verde, with the rest of the year being quite dry.Thus dams, storage systems, and distribution channels are needed throughout the country. Given that Cape Verde is split into 10 islands,the process of building this infrastructure is difficult, as each island needs itsown system. The country is receiving international help in this regard, in particular from the United States.

6 EVERYTHING STARTS WITH WATER

Looking for niche markets for a small island nation with great beaches, reliable institutions, and a huge market just over the horizon? Could CapeVerde evolve into a platform for international financial services and a gateway to Africa?

“We have a strong financial system, and that’s a good start,” said FinanceMinister Duarte, herself a former Citibank vice president.

Right now Cape Verde’s banks are fairly small and have concentrated moreon local mortgage and consumer finance, missing out on the larger corpo-rate deals. Tourism developments on the islands have been financed by banksin the United Kingdom, Ireland, Spain, and other European countries.

The first requirement is for local banks to build up their balance sheets tohandle bigger local projects. Next, officials could target the asset managementmarket in other Portuguese-speaking African nations, such as Angola,Mozambique, and maybe São Tomé and Príncipe.

14 Cape Verde


4 SUN, SEA, AND ... FINANCIAL SERVICES? 5

TOURISM: SAY NO TO THEMASS MARKET

Nothing like a good crisis to con-centrate the mind. Cape Verde’stourism industry, built mainly onvisitors from Portugal, the UnitedKingdom, Italy, and Germany,took a buffeting in the crisis.Demand for hotel rooms droppedslightly, but the vacation homes mar-ket was knocked sideways as foreign in-vestment into the sector fell by a third.And that’s the great market of the future, according toOlavo Correia, president of the association of Cabo VerdeReal Estate Tourism Promoters.

Correia thinks the country’s current 10,000-bed infrastructure could grow to around 30,000, boostingtourism from 300,000 visitors per year to roughly 1 million. “That’s the level when we can start talkingabout a real tourism industry,” he says.

But, Correia argues, the islands must choose care-fully and not just go for the mass market. “Residentialtourism is fundamental. I think it’s around 70 percent,meaning that it creates seven out of every 10 beds.

The crisis left a slew of suspended vacation-homeprojects. Going forward, Correia envisions the marketbeing much tighter and more competitive, with less financial leverage.

Cape Verde 15

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TRADITIONAL BANK SEES GREATPOTENTIAL IN SMALL FUTURE

SPANISH COMPANY FISHINGFOR PROGRESS; LANDING JOBS

If you want to think big, think small. That’s the strategy ofEmanuel Miranda, the economist who runs Cape Verde’ssecond-biggest bank, Caixa Economica. It’s the country’soldest financial institution. Originally a government bankcreated in 1928, it was later privatized but with substantial

state ownership and is now back under indirect state control but with slightly over 27 percent of its shares owned by Geocapital, a Macau-based holding company.Miranda is expanding and modernizing Caixa operations. However, the great excitementlies in a new state-controlled bank in which Caixa will be one of five shareholders. DubbedNovo Banco — New Bank — it will target the 50 percent of Cape Verde’s people and economy currently outside the traditional banking sector. “We see from examples of emerging economies like Brazil and Bangladesh and some African countries that this sector is very important for the expansion of financialinstitutions; traditional banks here aren’t prepared to deal with this segment, but the potential is enormous,” says Miranda.

As an archipelago in the middle of the ocean, Cape Verdeshould have a great fishing industry, but there’s awidespread feeling that its potential has yet to be fullyrealized. This situation may now be changing with anagreement signed in 2008 between the government and

a Spanish fish-processing company called Frescomar, which employs some 480 peopleon the island of São Vicente and is contributing substantially to the local economy.Under the deal, Frescomar invested in a new cold store, new machinery, and otherupgrades to boost its production of canned mackerel, melva, and tuna. For its part,the government pledged infrastructure investments.“The Cape Verde fishing industry can become one of the pillars of the country’seconomic development,” said Frescomar President Andrés Espinosa, “but this willhappen only with public investment in installations and private investment tomodernize the fishing boats, equipping them with more technology. We’re laying thegroundwork to make this happen.”

Emanuel Miranda CEO, Caixa Economica Bank

WHAT'S IN IT FOR THEM?

Andrés Espinosa President, Frescomar

For more than a quarter of a century, ASA (Empresa Nacional de Aeroportos e Segurança Aérea S.A.), the national airports and air safety company, has provided the best possible service to the air transportation industry, both on the ground and in the skies over Cape Verde. We are committed to developing a public-service business model, supporting progress in civil aviation and ensure the highest standards of air-traffic management are implemented across the nation’s growing network of domestic and international airports. Our dedication to our passengers’ safety and comfort and to maximizing efficiency in all our operations, including freight and cargo terminals and the Sal Oceanic Flight Information Region (FIR), is contributing to Cape Verde’s vision of becoming a vital transportation hub connecting four continents.

ensuring ensuring growth, growth, effiency effiency and safetyand safety

For more than a quarter of a century, ASA (Empresa Nacional de Aeroportos e Segurança Aérea S.A.), the national airports and air safety company, has provided the best possible servindustry, both on the ground and in the skies over Cape Verde. We are committed to developing a public-service business model, supporting progress in civil aviation and ensure the hmanagement are implemented across the nation’s growing network of domestic and international airports. Our dedication to our passengers’ safety and comfort and to maximizing efincluding freight and cargo terminals and the Sal Oceanic Flight Information Region (FIR) is contributing to Cape Verde’s vision of becoming a vital transportation hub connecting four


ensuring ensuringgrowth, growth,effiency effiencyand safetyand safety



ensuring ensuringgrowth, growth,effiency effiencyand safetyand safety



ensuring ensuringgrowth, growth,efficiency efficiencyand safetyand safety


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Cape Verde: Islands at the center of the world