Index of "1996 Country Commercial Guides"
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U.S. Department of State 
Cape Verde Country Commercial Guide 
Office of the Coordinator for Business Affairs 
 
 
 
                    COUNTRY COMMERCIAL GUIDE: CAPE VERDE 
 
                                July 1995 
 
Prepared by: 
Economic-Commercial Section 
American Embassy Praia 
Department of State 
Washington D.C. 20520-2460 


 
                 COUNTRY COMMERCIAL GUIDE: CAPE VERDE 
 
I.  Executive Summary 
 
Faced with one of the world's poorest natural resource bases, aggravated 
by sustained drought, Cape Verde has little option but to depend almost 
completely on imports for industrial production and inputs.  Lack of 
water serves as a great constraint to economic activity, as does a set 
of other infrastructural and human resource deficiencies. 
 
However, to overcome those constraints, the Government of Cape Verde has 
embarked upon a major program of modernization of its infrastructure and 
transport sectors, thus providing excellent trade and investment 
opportunities. 
 
Traditionally, services have been the backbone of Cape Verde's economy, 
accounting for about 60 percent of GDP in the 1980s.  Commerce alone 
accounted for approximately 22 percent, and public services for about 13 
percent. 
 
The opening up of the economy in 1991 marks a crucial milestone in Cape 
Verde's economic history.  The Third National Development Plan was 
launched in 1992, following the successful transition to a multiparty 
system, and was supported by the government's own adjustment program 
aimed at: (a) liberalizing and diversifying the economy; (b) restoring 
macroeconomic and financial balance; and (c) reducing the size of the 
public sector in the economy, in favor of private sector development. 
Authorities are committed to integrating Cape Verde more fully into the 
global economy through foreign investment and export-oriented industry, 
fishing and tourism. 
 
According to IMF officials, preliminary results are positive as economic 
growth appears to have picked up steadily from an estimated 1 percent in 
1991 to some 4.5 percent in 1994. 
 
The economy of Cape Verde is highly dependent on imports and its trade 
balance is characterized by a constant trade deficit, with exports 
equaling only 3 to 8 percent of total imports.  Imports consist of food, 
manufactured goods, fuels and other essentials.  Exports are mainly 
bananas, canned tuna, fresh and frozen fish, lobster and salt.  In 1994 
imports increased at an average rate of 8%.  This growth was greatly 
determined by private and public investment.  The total Capeverdean 
import market in 1994 is estimated to be USD204 million and its major 
trading partner was Portugal. 
 
The process of trade liberalization initiated in 1991 with the reform of 
the economic sector concluded in 1994 with the publication of a short 
negative list of products that are still subject to import licensing, 
and with the new government's policy of encouraging diversification of 
import markets, many importers have expressed an interest in 
establishing relations with U.S. suppliers.  
 
However, aside from the expected cultural differences, several other 
factors have constituted major roadblocks to doing business with U.S. 
companies.  First, lack of access to commercial credit is the universal 
complaint among Capeverdean importers who are accustomed to soft payment 
terms from their Portuguese suppliers.  Second, the high costs of 
transportation may unnecessarily burden profit margins.  Third, 
importers fear that the reduced size of the domestic market may not be 
appealing to American suppliers.  Fourth, although not decisive but to 
some extent inhibiting, there is the language barrier.  In sum, 
Capeverdean businessmen tend to be conservative and there is a lack of 
private sector leadership and organization. 
 
Despite all the above mentioned constraints, Cape Verde's economic 
reform policies appear to be paying off as everywhere one looks, new 
enterprises are being created, investment projects are being 
implemented, construction is booming, and businessmen are eager to 
explore new import markets.  Furthermore, trade opportunities are likely 
to increase as tourism, fisheries and export-oriented industries get 
established in the country. 
 
Country Commercial Guides are available on the National Trade Data Bank 
on Cd-Rom or through the Internet.  Please contact STAT-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
Internet, please use the following world wide web address: 
WWW.STAT.USA.GOV. CCGS can also be ordered in hard copy or on diskette 
form from the National Technical Information Service (NTIS) at 1-800-
553-NTIS. 
 
 
II.  Economic Trends and Outlook 
 
Over the past three years, the Capeverdean economy has undergone a 
period of transformation and restructuring characterized by a shift in 
the government's role in the economy.  The new government is hoping to 
achieve its role of effective policy maker and provider of basic social 
services through:  1) streamlining public administration; 2) reforming 
the public enterprise sector; 3) promoting the role of the private 
sector in the economy; 4) developing the government's policy making and 
analytical capability; and 5) limiting government investment to 
developing basic infrastructure to facilitate the expansion of private 
sector activities and basic social services. 
 
This new course the government has embarked upon will hopefully lead to 
a private-sector-led economy. This  will be based on sound economic and 
sectoral policy reforms aimed at attaining macro-economic stability and 
creating market conditions.  Its objective is to build a strong economic 
base which can bring about sustainable growth, new jobs, increased 
export-earning capacity, and, in turn, reduce a high dependence on 
foreign savings. 
 
In the medium term, economic growth is likely to continue to come mostly 
from increasing efficiency in the existing domestic  and export services 
and activities following an increase in investment. Growth is expected 
to result from: 1) demand related to public investment in infrastructure 
(ports, airports, roads rehabilitation and maintenance) as well as 
modernization of telecommunications; (2) private investment in 
fisheries, tourism, services (including banking) and export processing 
(light manufacturing); (3) an increase in agricultural output with 
better use of irrigated land; (4) steady growth in private investment in 
housing; (5) continued growth of commerce; and (6) growth in services to 
international air and maritime transport. 
 
Over time, a better established and dynamic export-oriented economy led 
by the private sector is expected to be the engine of growth and 
employment creation. 
 
Balance of payments.  Cape Verde's balance of payments is characterized 
by structural imbalance on the trade account, substantial surplus on the 
service account, significant net private transfers, and considerable net 
ODA inflow.  Foreign trade is characterized by modest merchandise export 
earnings, significant service exports, and high merchandise imports.  
The merchandise export base is very small in value and diversity.  
Export earnings come predominantly from exports of fish and bananas.  
Traditionally Cape Verde's most substantial export earnings have come 
from non-factor services to international maritime transport, which have 
increased recently as a result of rising services to international air 
traffic.  The economy is highly dependent on imports of food, capital 
and intermediary goods.  Recently net factor income has been positive 
because of substantial interest earnings on external reserves.  Private 
transfers have increased greatly in recent years and have become the 
most important source of foreign exchange since 1988. 
 
Infrastructure situation.  The country's inadequate physical 
infrastructure has been a major roadblock to development.  The transport 
sector was the subject of a World Bank study which has been updated in 
the context of an $87 million transport and infrastructure project 
promoted and co-financed by the World Bank.  Limited port and airport 
facilities, and infrequent and costly air and maritime transport are 
serious constraints to the development of an outward-looking economy.  
Ports and airports in urgent need of repair and expansion are covered by 
the above mentioned project.  The largest airport is in Sal, which is 
able to accommodate large international aircrafts (747s).  A new and 
longer runway is being built in Praia and will be able to accommodate 
airbuses.  Other islands too are having their facilities upgraded.  
Mindelo's Porto Grande is being modernized under a new project.  
Equipment at the port includes three forklifts with 1.5 To 3 ton 
capacities.  A vessel's own gear is used for loading and unloading.  The 
port authority, Enapor, owns an "engine park" with two 8-ton cranes, one 
12-ton crane, one 25-ton crane, a 25-ton forklift for container 
operations and other equipment.  The telecommunications system which was 
saturated and substandard, is also being upgraded. 
 
 
III.  Political Environment 
 
With historical links dating back to the early 19th century, when the 
flow of immigrants first began to the United States, Cape Verde and the 
U.S. continue to enjoy warm, cordial relations.  This relationship has 
been enhanced by the emergence of a nascent but vibrant multi-party 
system which resulted in the first free and fair elections in 1991.  As 
a result of that balloting, a moderately centrist political movement -- 
the Movement for Democracy (MPD) -- captured a governing majority in the 
National Assembly and gained control of the Prime Minister's office as 
well as the other executive branch positions. 
 
Cape Verde has a mixed presidential/parliamentary system of government.  
Day to day authority for government policy and implementation, 
particularly economic, fiscal and social programs rests with the Prime 
Minister, his cabinet and the National Assembly.  The President of the 
country is elected directly by the people and serves as chief of state.  
He is responsible for foreign affairs and defense matters, but is 
required to consult closely with the government on these issues.  Cape 
Verde has a functioning judiciary which seems to operate independently 
and free of undue influence.  There is a Supreme Court, headed by a 
President of the court, which is spearheading the effort to broaden the 
concept of rule of law and the proper role of an independent judiciary 
in a democratic system of government. 
 
By all indications, corruption is rare.  Nevertheless, opposition 
political parties and businessmen with no connections with the governing 
party have accused the MPD of favoritism in the awarding of contracts 
and bids.  In particular, companies with ties to cabinet ministers and 
family members of the Prime Minister have been successful in obtaining 
what many consider an unusual number of government projects and 
contracts for services. 
 
The next round of democratic elections are scheduled for the end of 
1995, with the presidential voting set for early 1996.  Some local 
elections might take place earlier this year.  Polling is inexact and 
political predictions are highly imprecise.  However, all indications 
point to another victory for the governing MPD, although with a less 
than the large majority the party gained in the 1991 elections.  the 
next major party--the leftist African Party for the Independence of Cape 
Verde (PAICV)--is the former ruling party repudiated in the 1991 
balloting.  The PAICV had controlled the country under a one-party 
system since Cape Verde's independence from Portugal in 1975.  Few 
political observers expect the party to attract enough votes to capture 
the government.  The major uncertainty for the governing party is the 
potential impact of a group of dissident MPD members that have formed a 
new, slightly left of center party--the Party of Democratic Convergence 
(PCD)--that may siphon off more liberal supporters concerned about the 
social impact of the government's economic and privatization policies.  
The PCD is not expected to win, but could (if it captured enough votes) 
deny the MPD a working majority in the new National Assembly.  There are 
several other national and island-based political organizations and 
movements that should exert only marginal influence on the outcome of 
the elections. 
 
 
IV.  Marketing U.S. Products and Services 
 
Although there are no official commercial contracts with American 
enterprises yet, there is a great demand for American goods and 
services.  U.S. Products have reached the Capeverdean market either 
through bilateral cooperation projects, or informally through the 
Capeverdean community in the U.S. (New England mainly).  There is one 
experience of a local businessman who, together with relatives residing 
in the U.S., have created an import/export company which has been 
supplying irregularly the local market with American products, mainly 
foodstuffs. 
 
Distribution and marketing facilities are not yet fully developed, but a 
limited number of agents do currently conduct business with foreign 
firms and some have been inquiring about representing American firms. 
 
Private sector enterprises can purchase goods directly or through an 
agent, while public sector companies are required by law, to make their 
purchases through tenders. 
 
Therefore, opportunities do exist for companies willing to develop their 
own marketing, distribution and maintenance networks. 
Exporters should be aware that agents and distributors commonly 
represent several product lines. 
Branches of foreign companies may not be established until they are 
registered with the registrar of companies. 
Joint ventures are allowed and encouraged in many sectors, namely in the 
fisheries, airline business and telecommunications. 
 
The most common forms adopted by businesses in Cape Verde include: 1) 
Branch of a Foreign Company; 2) Joint-Venture; 3) Limited Liability 
Company and 4) Stock Corporations.  Other business forms include 
regional offices, sole proprietorships, local agency or distributorship 
arrangements, and state or partially state-owned companies.  Franchises 
are not a factor as yet in the Capeverdean environment. 
 
Advertising is made mainly through newspapers, television and radio.  
There are two widely read weekly private publications and an official 
one which comes out three times a week.  Television is government 
controlled and it broadcasts some six hours a day.  There is a state-
owned radio station with headquarters in Praia, the capital of the 
country, and a private one in Mindelo, the second largest urban center. 
 
 
V. Leading Trade Prospects for U.S. Business 
 
1.  Best prospects for non-agricultural goods and services: 
 
1 - General Consumer Goods (GCG) 
2 - Airport Ground Support Equipment (APG) 
3 - Port/Shipbuilding Equipment (PRT) 
4 - Hotel/Restaurant Equipment (HTL) 
5 - Telecommunications Equipment (TEL) 
6 - Telecommunications Services (TES) 
7 - Architecture/Construction/ Engineering Services (ACE) 
8 - Travel/Tourism Services (TRA) 
9 - Commercial Fishing Equipment (CFE) 
10- Renewable Energy Equipment (REQ) 
11- Management Consulting Services (MCS) 
12- Automotive Parts/Service Equipment (APS) 
13- Autos/Light Trucks/Vans (AUT) 
14- Computers Peripherals (CPT) 
 
Consumer goods offer the prospect because of lower tariff and non-tariff 
barriers.  Additionally, higher living standards are stimulating the 
demand for importation of many non-traditional consumer items. 
Supporting equipment for light manufacturing, tourism, fisheries, 
transportation and telecommunications which constitute the focus of the 
country's economic development strategy. 
 
2.  Agricultural Products: 
Corn 
Rice 
Beans 
Edible Oil 
Milk Powder 
Sugar 
Wheat 
Canned and Prepared Vegetables 
 
3.  Significant Investment Opportunities: 
The ongoing privatization of the telecommunications company provides one 
of the best opportunities for foreign investment.  Early this year, the 
government took the first step on the privatization of the state-owned 
telecommunications company, CTT, which consisted of the separation of 
the postal services from the telecommunications services.  In order to 
attract foreign investment a $60 million modernization project of the 
telecommunications network is being implemented.  Biddings will be 
announced sometime in the near future. 
 
Other state-owned companies to be privatized are the insurance company, 
the commercial bank and the national airlines company.  International 
Market Insights (IMIs) will be produced as the process goes on. 
A major $87 million infrastructure project funded by the World Bank 
generate important market opportunities for port and airport support 
equipment. 
 
A USAID-funded five year $6.1 million project, the Export Development 
Services (EDS),  has been very important making significant progress 
towards creating business opportunities for US companies. 
 
The Government of the United States acknowledges the contribution that 
outward foreign direct investment makes to the U.S. economy.  U.S. 
foreign direct investment is increasingly viewed as a complement or even 
a necessary component of trade.  For example, roughly 50 percent of U.S. 
exports are sold by American firms that have operations abroad.  
Recognizing the benefits that U.S. outward investment brings to the U.S. 
economy, the government of the United States undertakes initiatives, 
such as Overseas Private Investment Corporation (OPIC) programs, 
Investment Treaty Negotiations and Business Facilitation Programs, that 
support U.S. investors. 
 
 
VI.  Trade Regulations and Standards 
 
Tariffs and import taxes. In August 1991, import tariffs were 
streamlined.  The previously cumbersome system (including over 80 rates 
with specific tariffs) was replaced by 10 ad valorem rates ranging from 
5% to 50%. In addition to these duties, importers have to pay a fixed 7% 
for general emoluments and a consumption tax on goods of non-priority, 
ranging from 5% to 20%. 
 
Customs valuation is made in accordance with the definition of Brussels' 
convention. 
 
Import licenses. With the recent publication of a negative list 
comprised of goods considered strategic (food items, ie.Corn, rice and 
sugar; petroleum products; arms or munitions; etc.), 90% of imports have 
been liberalized.  For liberalized products, the prior import license 
has been replaced by a simple declaration of importation. 
Export controls.  Given the significant structural deficit of the trade 
balance, there are no controls on exports.  On the contrary, a new law 
passed in 1993 provides a variety of incentives to exports. 
Documentation.  
 
1)  Commercial invoice-two copies 
 
2)  Pro forma invoice-may be required by the importer to obtain an 
import license. 
 
3)  Bill of lading/air waybill 
 
4)  Insurance certificate-it is required that transport insurance on 
imports be placed with the state insurance company whenever goods are 
under the ownership of a Capeverdean national. 
 
5)  Import license-six copies of the import license for controlled 
goods; four copies of the declaration of importation for liberalized 
goods. 
 
6)  Phytosanitary certificate and its copy. 
 
Temporary entry.  Temporary entry is authorized for cooperation 
projects, diplomatic missions and to temporary foreign workers. 
Import restrictions.  Narcotics are prohibited from being imported into 
Cape Verde. Pharmaceuticals may only be imported by public institutions. 
Standards.  Cape Verde uses 220 v 50 cycles for electricity and the 
metric system of measurement.  Operating standards usually follow the 
Portuguese or European norm. 
 
Free trade zones/ warehouses.  
 
A decree law in may 1989 created the legal basis for a free trade zone.  
Entrepot activities can be undertaken, such as the storage of goods 
without payment of duties, with storage periods ranging up to four 
years.  Recently, a new law established the system of free-zone 
enterprises referring to enterprises that export goods or services and 
which may apply for free-zone status without being located at specific 
free zones. 
 
Membership in free trade arrangements.  Cape Verde is a member of the 
Economic Community of West African States (ECOWAS) and it benefits from 
the Generalized System of Preferences and the Lom? Convention, thus 
providing investors with preferential access to West Africa, the United 
States and Europe. 
 
 
VII.  Investment Climate 
 
Openness to foreign investment.  The government looks to private 
investment as the future engine of economic growth in Cape Verde.  It 
seeks to attract investment that will modernize the country's economic 
structure and stimulate any and all business activities.  This favorable 
attitude towards private initiative is embodied in an attractive legal 
foreign investment package passed between 1989 and 1994 which specifies 
that neither discrimination nor distinction will occur between foreign 
and national investors.  Recently, the government refined these laws and 
related regulations in order to expedite approval for new investments 
destined to start up new ventures or expand existing ones.  In the new 
law all sectors of activities are now open to foreign investment. 
 
Conversion and transfer policies.  Current law provides that upon 
request to the Bank of Cape Verde, revenue/profits, capital gains, and 
loan repayments may be transferred overseas within 60, 90, and 30 days, 
respectively.  The Bank of Cape Verde will pay interest on all transfers 
with waiting periods of more than 30 days, starting on the 31st day.  
Timely transfers may not always be possible when requests cover large 
sums and affect Cape Verde's balance of payments; in such instances, the 
government will order that the transfer be made in installments, 
generally every three months over a period of no longer than two years. 
 
Expropriation and compensation.  In the event of expropriation, or 
acquisition of privately owned property by the government for the 
public's interest, the government will compensate the owner fairly, on 
the basis of prevailing market prices, or the actual market value of the 
property on the day of expropriation.  Compensation will be prompt and 
may be repatriated at the exchange rate in effect on the day of 
expropriation.  (Note:  Given the almost complete repudiation of the 
former ruling party and its governance through a one-party system with 
total control of the economy, it is strongly unlikely that any 
government would consider confiscation of private property as a policy 
of development.) 
 
Dispute settlement.  Disputes between foreign investors and the 
government will be settled either through a single referee or an 
arbitration commission.  Referees may be foreigners.  If so, they may 
not have the same nationality as the parties involved in the dispute.  
Should there be difficulty in reaching an agreement over the nomination 
of the referees, referees may be appointed by a recognized national body 
or international organization, with the ultimate authority being the 
International Center of Settlement of Investment Disputes (ICSID).  
Generally, the arbitration will be carried out in Cape Verde and in 
Portuguese, unless another site and language is requested and agreed 
upon by both parties.  The decision of the single referee or the 
arbitration committee is final and cannot be appealed. 
 
Performance requirements/incentives.  The government does not place a 
premium on investments that respond to a long list of overall 
development objectives.  Instead, it favors investments that are either 
export-oriented or diversify geographically and technologically the 
country's industrial bases.  Incentives to firms that export their 
entire output are the most generous, but all firms, regardless of the 
location of their markets, can benefit from the following incentives: 
 
--  No corporate income and complementary taxes during the first three 
years of operations. 
 
--  No taxes on profits reinvested in the same or in other industrial 
establishments based in cape verde. 
 
--  No restrictions on imports as long as Cape Verde's reserves of 
foreign exchange are not required to purchase the imports. 
 
--  Duty-free imports of construction materials and capital equipment, 
destined to start up new industrial activities. 
 
--  Tariff exemptions on raw materials and other inputs imported for 
production during the initial two years of operation, with progressively 
higher custom duties in the successive three years of operation (equal 
to 25, 50 and 75 percent of the full rate). 
 
--  Rebates on custom duties paid for imported raw materials and other 
imports used in the production of goods destined to be sold overseas. 
 
--  Provision for private, bonded warehouses; operators of such 
warehouses may pay custom duties at the moment sales are made locally 
(instead of relying on a duty drawback system). 
 
--  No approvals or tariffs for exporting/re-exporting industrial 
products (other products require registration). 
 
--  Provision for freely recruiting foreign workers, up to 10 percent of 
the total work force; foreign workers, in turn, benefit by the 
repatriation of up to 70 percent of the salary earned while working, 
repatriation of up to 100 percent of the salary earned while on 
vacation, and duty-free import of personal goods and one car. 
 
--  Tax deduction for expenses incurred in training of local workforce. 
 
Right to private ownership and establishment.  The right to private 
ownership and establishment is guaranteed in the constitution. 
 
Protection of property rights.  Protection of property rights is 
guaranteed in the constitution. 
 
Regulatory system: laws and procedures.  The basic Capeverdean 
legislation affecting foreign investment is contained in the External 
Investment Law and the Law of Industrial Development.  These laws 
establish the principal of equal treatment for foreign investment, 
affirm the government's commitment to a dynamic business environment and 
the industrial development statute to regulate the granting of 
incentives and a simplified investment approval process.  The industrial 
statute defines the approval process and incentives for industries, with 
special consideration for export-oriented industries.  The entrepot law 
permits the creation of areas both for industry and warehousing, where 
merchandise is considered to be extraterritorial and thus not subject to 
customs duties.  Recently approved laws on promotion of exports, on 
incentives to exports and on single-factory free zones stress the 
commitment of the government to encourage investment in export-oriented 
industries. 
 
The investment approval process has been greatly expedited with the 
recent revision of the external investment code.  The Center for 
Investment and Export Promotion, Promex, has become a one-stop shop for 
external investors.  In general, external investment operations are 
subject to prior authorization from the minister in charge of planning.  
An application is submitted to Promex, and within thirty days the 
investor should get a reply.  If government action is not forthcoming, a 
tacit approval is assured. 
 
In order to benefit from incentives regarding capital transfers, 
external investment operations must be registered at the Bank of Cape 
Verde. 
 
Efficient capital markets and portfolio investment.  There is no capital 
market as yet in Cape Verde. The World Bank is currently assisting the 
government of Cape Verde to restructure its financial sector.  The first 
step in this process has been the division of the Bank of Cape Verde, a 
monobank system, into a central and a commercial bank.  The postal 
savings and loan system has also been restructured and modernized.  No 
stock market or stock exchange exists in Cape Verde.  Venture capital or 
other private financial services are also absent.  Bank credit is 
available to foreign investors under the same conditions as those for 
national investors. The private sector has access to some credit 
instruments such as loans, letters of credit and lines of credit.  The 
legal accounting systems are clear but are not totally consistent with 
international norms. 
 
Portfolio investment in Cape Verde is extremely limited and depends on 
the limited ability of the Bank of Cape Verde. Even the social security 
funds are kept in non-interest bearing accounts because the Bank of Cape 
Verde is unable to effectively lend and guarantee the proper interest 
return to the accounts. 
 
Political violence.  One of Cape Verde's strengths lies in its political 
and social stability. 
 
Bilateral investment agreements.  Cape Verde has bilateral investment 
agreements with Austria, Germany, Holland, Portugal and Switzerland. 
Agreements with Italy and Russia are being negociated. 
 
OPIC and MIGA.  Cape Verde is a member of the Multi-lateral Investment 
Guarantee Agency (MIGA) and it benefits from the loan guarantee program 
of the Overseas Private Investment Corporation (OPIC). 
 
Labor.  Creating jobs is one of the fundamental concerns of the 
Capeverdean government.  It therefore proposes to stimulate national 
production and foreign investments to create jobs and promote 
entrepreneurial initiatives.  The cost, productivity, and availability 
of labor is favorable.  Prevailing wages, although not among the world's 
lowest, are competitive at under USD 0.70 per hour. 
 
Foreign-trade zones/free ports.  Taken together the following five laws: 
the external investment law, the industrial development law, the 
industrial statute, the entrepot law, and the law of free-enterprises 
constitute a package of free zone legislation in everything but name.  
They constitute a strong package of incentives for export-oriented 
industrial firms, which permit broad flexibility of location.  A new law 
was approved introducing the free-zone enterprise status for enterprises 
that produce goods and services exclusively for export or to sell to 
other free enterprises in Cape Verde. 
 
Capital outflow policy.  The regulatory legislation specifies that for 
the initial five years of operation, dividends may be freely expatriated 
without tax, and that for the next fifteen years dividends may be 
expatriated with a flat tax of ten percent.  Incentives for investment 
in developing countries are not included in the legislation but they 
have been provided on an "ad hoc" basis. 
 
Foreign direct investment.  As of March of 1995, foreign investment 
projects, either operating or being implemented, was approximately USD 
40 million.  In addition to that, new projects have been approved, 
totalling USD 42 million. 
 
Major foreign investors.  Most important foreign investors have come 
from Portugal and other European countries.  Asian investors from Hong 
Kong have recently increased their presence and visit the country in 
search of opportunities. 
 
 
VIII.  Trade and Project Financing 
 
Banking system.  Financial services to the private sector are limited, 
with the result that the existing system is considered inadequate to 
efficiently and effectively satisfy the private sector's needs for 
credit.  Until 1993, the Capeverdean financial system comprised two 
public institutions, the Banco de Cabo Verde (BCV) and the Caixa 
Econ?mica de Cabo Verde (CECV).  The BCV was the principal financial 
institution in the country, combining the functions of a central bank, 
commercial bank and a development bank.  The BCV, however, has limited 
experience and expertise with the essentials of a modern economy, 
especially in investment and export policy.  As a result, entrepreneurs 
who want to start a new business or expand an existing one are 
indirectly discouraged from doing so.  The CECV operated somewhat like a 
savings bank. 
 
With the liberalization of the economy and the subsequent reform of the 
financial sector, the BCV was separated, in September 1993, into a 
central bank  and a commercial/investment bank called the Commercial 
Bank of the Atlantic (BCA).  While this was an encouraging sign, the 
bank remained majority state-owned, and because of the lingering 
bureaucracy, major changes that would directly benefit private sector 
customers have not been felt.  The BCA corresponds with some twenty 
international banks. In the U.S. it corresponds with American Express 
and City Bank. 
 
The CECV has undergone a complete restructuring and modernization.  Its 
new statutes changed it from a public institution into a corporation and 
a universal bank.  The portion of the share capital reserved for the 
private sector has not been raised.  The CECV is, however, expected to 
be privatized sometime in the near future.  It currently offers normal 
banking services, including international operations which began last 
year. 
 
The CECV's light structure is allowing it to offer relatively quick 
service which is highly beneficial to the development of the private 
sector.  The CECV corresponds in the U.S. with the Chemical Bank and the 
Bank of Boston. 
 
Legislation which allows for establishing private banks was passed in 
March 1993.  There are no restrictions on establishing foreign banks.  
The law requires authorization from the central bank and that 50% of the 
workers be Capeverdean nationals. 
 
Although the legislation does not foresee any foreign exchange controls 
affecting trade, in practice, due to the fragility of the Capeverdean 
economy, there may be at times some constraining measures. 
 
General Financing Availability. Although financing is generally 
available for short term private sector projects, one of the greatest 
obstacles commercial lenders are faced with is lack of  access to 
credit.  Consequently, it is the general rule that medium to long term 
public sector projects are financed by multilateral financing 
institutions such as the World Bank, the African Development Bank or by 
foreign aid programs.  Current non-discriminatory credit facilities 
available in Cape Verde include bank loans, letters of credit and lines 
of credit (the BCA itself provides no lines of credit). In order to 
promote development of private sector, several lines of credit are being 
established such as the one assisted by the World Bank to allow the 
participation of the local private sector in the privatization process 
underway. 
 
How to finance exports/Methods of Payment. Traditional trade finance 
instruments such as letters of credit, documentary collections and funds 
transfers are available to the exporter.  Although an irrevocable letter 
of credit eliminates the commercial risk of an export sale, and to some 
extent it also protects the buyer, it is not the most attractive 
instrument to the importer due to its high cost and to the time that it 
may take.  So the American exporter should consider the possibility that 
the European competitor may be willing to offer payment terms more 
favorable to the buyer. 
 
Types of Available Export Financing Insurance.  Several federal 
agencies, as well as certain state governments, offer loan guarantee 
programs and other types of financing assistance for exporters.  The 
U.S. Department of Agriculture's Commodity Credit Corporation (CCC) 
administers the export credit guarantee program (GSM-102) to insure 
financing for sales of U.S. agricultural products.  Other Washington-
based agencies offering financing and insurance programs include the 
International Finance Corporation (IFC), the Overseas Private Investment 
Corporation (OPIC), the U.S. Small Business Administration (SBA), the 
Export-Import Bank of the United States (Eximbank). 
 
Project Financing.  The U.S. Trade Development Agency (TDA), the World 
Bank and the African Development Bank provide funds to finance 
feasibility studies and other planning services for major projects that 
are economic development priorities of the country. 
 
List of Capeverdean Banks and their U.S. Correspondents 
Banco Comercial do Atlantico - American Express 
                               Citibank 
Caixa Economica de Cabo Verde - Chemical Bank 
                                Bank of Boston 
 
 
IX. Business Travel 
 
Business hours.  Government, banking and industry hours are Monday and 
Tuesday 8:00 am to 12:30 pm and 2:30 pm to 6:30 pm and Wednesday to 
Friday 8:00 am to 12:30 pm and 2:30 pm to 6:00 pm.  Commerce hours are 
Monday to Friday 8:00 am to 12:30 pm and 3:00 pm to 7:00 pm and Saturday 
9:00 am to 1:00 pm. 
 
Travel advisory and notes.  U.S. citizens must have visas and 
inoculations against yellow fever. Typhoid, tetanus and gamma globulin 
immunizations are strongly recommended.  Capeverdean escudos are not 
convertible outside the country. 
 
Holidays: 
January 1, New Year's day 
January 20, National Heroes' day 
Ash Wednesday 
Good Friday 
May 1, Labor day 
July 5, Independence day 
August 15, Assumption day 
November 1, All Saints' day 
December 25, Christmas 
 
Business infrastructure.  Regular direct flights connect Sal island with 
New York, Lisbon, Amsterdam, Paris.  Direct flights link Praia with 
Dakar, Bissau and Banjul. Scheduled domestic air service connects Sal, 
Praia and Mindelo with most of the other islands.  International 
shipping companies make regular stops at Mindelo and Praia.  Small 
vessels operate inter-island services. 
Cape Verde can be direct-dialed.  International access code: 011.  
Country code: 238. 
Cape Verde is 4 hours ahead of EST in winter and 3 hours ahead in 
summer. 
 
 
X: Appendices 
 
Appendix A: Country Data 
 
Population (mid-1995 estimate) :  411,000 
 
Population growth rate (1985-1989) :  2.2% 
 
Religions:   catholic, protestant 
 
Government system:  democratic republic 
 
Language:   Portuguese (official); Creoulo (national) 
 
Workweek:   Monday-Friday 
 
Appendix B: Domestic Economy 
 
GDP (1994 est.)  :  USD 151 million 
 
GDP growth rate (1994):  4.5% 
 
GDP per capita :  USD 367 
 
Government spending as percent of GDP (1994 est.):  11% (IMF) 
 
Inflation (1994)  :  3.6% 
 
Unemployment (1994)  :  26% 
 
Foreign Exchange Reserves (1993)  :  USD 73.3 million 
 
Average Exchange Rate for USD (1994)  :  1USD = 82.1CVE 
 
Foreign Debt (1993) :  USD 143.7 million 
 
Debt Service (1994) :  USD 10.4  million 
 
U.S. Economic Assistance (1995):  USD 5.5 million 
 
U.S. Military Assistance (1995) 
 
International Military Educational Training:   USD 75,000 
 
Appendix C:  Trade (1994) 
 
Country Exports (goods):  USD 1.8 million 
 
Total Country Exports* :  USD 50.9 mil. 
 
Country Imports (goods):  USD 87 million 
 
Total Country Imports* :  USD 186.4 million 
 
U.S. Exports (goods):  USD 4,905 
 
U.S. Imports (goods):  USD 1.8 million 
 
* Total values refer to goods and services 
 
Sources: Boletim do Comercio Externo, 1994 
         Midterm Evaluation of Third National Development Plan 
 
Appendix D: Investment Statistics (1994/95) 
 
Number of Investment        Value          Status 
Projects                 (million USD)            
 
11                          17.3           Operating 
 
11                          26.0           Invest.Underway 
 
16                          38.3           Authorized 
 
         TOTAL ...........  81.6 
 
 
 
Major foreign investors     Value 
 
Portugal                    26.6 
 
Italy                       18.1 
 
Hong Kong                    1.5 
 
Other countries*             35.4 
 
* Mainly European countries (Russia, France, Germany and Holland) 
 
Data Source:  The Capeverdean Center for Promotion of Investments 
(PROMEX). 
 
Appendix E:  US and Country Contacts 
 
1. Cape Verde's Contacts: 
 
U.S. Embassy: 
Economic Commercial Section 
Department of State 
Washington, DC 20521-2460 
Tel: (238) 61-56-16 
Fax: (238) 61-13-55 
 
Capeverdean Trade Associations: 
 
Associacao Comercial de Sotavento 
C.P. 78 
Praia, Cape Verde 
Tel. (238) 61-29-91 
Fax: (238) 61-29-64 
Mr. Orlando Mascarenhas, President 
 
Associacao Comercial de Barlavento 
C.P. 62 
Mindelo, S.Vicente, Cape Verde 
Tel. (238) 31-32-81 
Mr. Leonildo Monteiro, President 
 
Commercial Banks in Cape Verde 
 
Banco Comercial do Atlantico (BCA) 
International Division 
Avenida Amilcar Cabral 
Praia, Cape Verde 
Tel: (238) 61-49-53 
Fax: (238) 61-32-35 
 
Caixa Economica de Cabo Verde 
Ave. Cidade de Lisboa 
C.P. 199 
Praia, Cape Verde 
Tel: (238) 61-55-61 
Fax: (238) 61-55-60 
 
Other Capeverdean Agencies: 
 
Center for Investment and Export Promotion (PROMEX) 
C.P. 89-C 
Praia, Cape Verde 
Tel: (238) 61-57-52 
Fax: (238) 61-14-42 
 
Privatization Agency (G.A.R.S.E.E.) 
Cruzeiro, Praia 
Tel: (238) 61-23-19 
Fax: (238) 61-23-34 
 
National Institute of Tourism (INATUR) 
C.P. 294 
Praia, Cape Verde 
Tel: (238) 61-44-73 
Fax: (238) 61-44-75 
 
U.S. Government Agencies 
 
U.S. Department of Commerce 
International Trade Administration 
Philip Michelini, Desk Officer-Cape Verde 
HCHB Room H3318 
14 and Constitution Aves., NW 
Washington, DC 20230 
Tel: (202) 482-4388 
Fax: (202) 482-5198 
 
U.S. Department of Commerce 
International Trade Administration 
Multilateral Development Bank Operations 
Ms. Brenda Ebeling, Director 
HCHB Room H1107 
Tel: (202) 482-3399 
Fax: (202) 273-0927 
 
U.S Department of State 
Africa Bureau/WAL 
Room 4250 
Herb Thomas, Desk Officer - Cape Verde 
Tel: (202) 647-3391 
 
U.S.A.I.D., Department of State 
AFR/WA/PSEA 
Ms. Theresa Vandergriff 
New State, Room 3917 
Washington, DC, 20523/0033 
Tel: (202) 647-6154 
 
World Bank 
Mr. Thomas Kelsey 
Director, Commerce Liaison Office 
Office of the U.S. Executive Director 
1818 H Street, N.W. 
Washington, D.C. 20433 
Tel: (202) 458-0120/0118 
Fax: (202) 477-2967 
 
African Development Bank 
Mr. Mark Herrling 
Commercial Liaison 
U.S. and Foreign Commercial Service 
5 Rue Jesse Owens 
01 B.P. 1712 Abidjan 01, Cote d'Ivoire 
Tel: (225) 21-46-16 
Fax: (225) 22-24-37 
 
Embassy of Cape Verde in the United States 
3415 Massachusetts Avenue, N.W. 
Washington, D.C. 20007 
Fax: (202) 965-1207
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