HomeReportsBureau of Economic and Business Affairs2017 Investment Climate Statements...Cabo Verde

# 					2017 Investment Climate Statements: Cabo Verde			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

The archipelago of Cabo Verde is composed of 10 volcanic islands and eight islets located in the central Atlantic Ocean, some 450 kilometers west of Senegal. It has a land area of 4,033 square kilometers, and a 700,000 square kilometer Economic Exclusive Zone (EEZ).

This small African nation has a population of approximately 550,000 people spread over nine inhabited islands with limited natural resources. The country’s climate is extremely arid, and prolonged drought frequently affects its economy. Cabo Verde’s low proportion of arable land, scant rainfall, lack of natural resources, territorial discontinuity and small population make it a high-cost economy lacking economies of scale. Cabo Verde’s economy is vulnerable to external shocks and depends on development aid, foreign investment, remittances, and tourism. Despite that Cabo Verde achieved middle-income country status at the end of 2007.

The country enjoys political stability and has a history of parliamentary democracy and economic freedom that is unusual in the region. 2016 elections were free and fair, and there was a smooth transition of power. Good governance, prudent macroeconomic management, including strong fiscal, monetary and exchange-rate policies, trade openness and increasing integration into the global economy, and the adoption of effective social development policies have produced relatively positive results throughout the archipelago. The new government is preaching more proactive investment reforms. Broad political stability is expected to prevail in Cabo Verde, underpinned by strong democratic institutions and decent protection of human rights and civic freedoms. The business and investment climate continues to improve although there are bureaucratic and cultural challenges to overcome.

Economic reforms were and are aimed at developing the private sector and attracting foreign investment to diversify the economy and mitigate high unemployment. However, the government’s elevated debt level is limiting its capacity to finance any shortfalls. The economy is service-oriented, with tourism, transport, commerce, and public services accounting for more than 60 percent of GDP. Tourism alone accounts for approximately 25 percent of GDP, and it is expected to continue its strong performance.

There are few regulatory barriers to foreign investment in Cabo Verde, and foreign investors receive the same treatment as the nationals regarding taxes, license approvals and registration, and access to foreign exchange. Foreign investment in Cabo Verde is concentrated in tourism and light manufacturing. In terms of transportation, Cabo Verde’s strategic and geographic location places the country in a position to become a regional and international shipping hub for both passengers and cargo. Nevertheless, the country remains underserved, with insufficient and inefficient maritime interisland transportation. The energy sector in Cabo Verde is undergoing important regulatory changes and attracting investment which may result in a clearer framework to promote investment opportunities in the sector. As a regional leader in renewable energy, Cabo Verde has wind farms built on four islands. Currently, about 27 percent of the energy consumed in Cabo Verde comes from renewable sources. The government’s goal is to increase this number to 50 percent by 2020, which presents additional investment opportunities for American companies in this sector.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

The Government of Cabo Verde (GOCV) looks to both private and foreign investment to drive the country’s economic growth with a focus on tourism, transportation services, renewable energy, and export-oriented industries. A great effort has been made to promote a market-oriented economic model where all investors, regardless of their nationality, have the same rights and are subject to the same duties and obligations under the law. The newly elected government is investing in administrative decentralization, reduction of the state’s role in the economy and the empowerment of the private sector, improving the business climate to attract investments.

Cabo Verde Trade Invest (CTI), the agency responsible for investment promotion, is the one-stop shop for external investors. It provides investor assistance based on the One-Stop Shop approach, whereby all the services required for approving projects are centralized. The investor can express their interest in investing, attach the necessary documents for formalizing their project, and monitor all the project approval stages. The Investment approval process has been expedited within the revision of the external investment code. Although bureaucratic procedures have been simplified in a number of cases, there is still room for improvement. Through CTI, the government maintains dialogue with investors using personalized meetings, round tables, conferences, and workshops.

Services provided for the investor:

- Expression of interest in investment and upload of project documents
- Monitoring the investment process using a monitoring code
- Payment of certificate issuance fee

CI also provides to the investor/exporter support with the following services:

- Information about preferences of the country trade agreements Act (AGOA, ECOWAS, and others);
- Market information;
- Organization of and participation in exhibitions, fairs, congresses, conferences, seminars or other events in the field of exports of goods and services in the country;
- Contacts with other State institutions, providing or promoting partnerships, etc.;

Cabo Verde Trade Invest has an *After Care* service aimed at supporting investors after they obtain their Investment Registration Certificate and implement their investment project. CTI assists investors in their implementation process, in resolving bureaucratic issues in conjunction with other public institutions, and in establishing reinvestment and export processes such as:

- Obtaining operating authorization and licensing
- Obtaining tax and customs incentives
- Obtaining work permits for foreign workers
- Obtaining visas for company workers
- Assistance with obtaining housing for foreign workers
- Assistance with registering workers with social security
- Assistance to investors and their families in the process of settling in the country
- Assistance with obtaining premises for company offices
- Introduction to service providers, such as banks, lawyers, accountants, estate agents
- Export assistance

**Limits on Foreign Control and Right to Private Ownership and Establishment**

The country is investment-friendly and particularly appealing to foreign investors as all investors, regardless of their nationality, have the same rights and are subject to the same duties and obligations under the laws of Cabo Verde.

**Other Investment Policy Reviews**

No reviews have taken place under Organization for Economic Cooperation and Development (OECD) or the-United Nations Conference on Trade and Development (UNCTAD). The first review of the trade policies and practices of Cabo Verde under the World Trade Organization (WTO) took place on 6 and 8 October 2015.

**Business Facilitation**

Cabo Verde has made significant progress in recent years in simplifying its business registration process. The Commercial Registry Department (Casa do Cidadao), is a one-stop-shop where a company can be created and registered in less than a day. The overall business environment has become more efficient. The process for launching a business is more streamlined, and licensing requirements are less burdensome.

Information website on business registration is available at: https://portondinosilhas.gov.cv/  and http://caboverde.eregulations.org/show-list.asp?l=pt&mid=1 .

Step by step information on procedures, time and cost involved in starting a company can be found at: http://www.doingbusiness.org/data/exploreeconomies/cabo-verde/starting-a-business/ *.*

As the agency in charge of the promotion and facilitation of investment in Cabo Verde, CI is the first point of contact for foreign investment in Cabo Verde. It offers an Electronic Platform, “One Stop Shop for Investments,” which is important for the promotion, settlement and monitoring of investments in the country. The platform aims to increase the efficiency and effectiveness of the investment processes, improving understanding and communication between CI, its customers, other stakeholders, public and private entities, and project developers of domestic and foreign investments. The “One Stop Shop” offers a single platform containing all the necessary services once scattered through various institutions.

Information pertaining to investment in Cabo Verde can be found on the CTI website , including Cabo Verde’s Investment Law, the Code of Fiscal Benefits, and the Contractual Tax Benefits-Incentives. The platform is helping with de-bureaucratization of the investment process, ensuring that the process is completed within a maximum period of 75 days.

The State Budget 2017 law contained measures that facilitate and stimulate business activity, including a one percentage point lowering of the maximum personal income tax (IRPS) to 24 percent, the easing of the Special Scheme for Micro and Small Business, and the introduction of new tax benefits.

Elimination of double taxation, release from payment in installments for taxpayers who had negative results or began their activity in the previous year, and elimination of the obligation to pay the minimum installment are some of the new measures undertaken by the 2017 State Budget law.

The tax benefit package included in the 2017 State Budget includes reducing the amount of investment to benefit from contractual benefits to 500 million escudos (US$4.8 million), and reduction of the number of jobs created, expansion into new strategic sectors of the 50 percent investment credit and extension of the period for deduction of credit for investment to 15 years.

**Outward Investment**

Incentives for outward investment in developing countries are not included in the legislation, but they have been provided on an ad hoc basis.

							2. Bilateral Investment Agreements and Taxation Treaties					

Cabo Verde does not have a bilateral investment treaty with the United States. However, as a member of ECOWAS, Cabo Verde will benefit from the TIFA agreement, which was signed in August 2014 but has not yet entered into force.

Cabo Verde has bilateral investment agreements with Angola, Austria, Belgium, China, Germany, Holland, Italy, Portugal, Russia, United Kingdom, Sweden, and Switzerland. Cabo Verde also enjoys a special partnership with to the European Union as a Peripheral Region Nation. Cabo Verde also benefits from the African Growth and Opportunity Act, also known as AGOA.

Taxable profit is computed according to the local accounting rules and adjusted for tax purposes. The taxation system in Cabo Verde is based on a worldwide principle, where foreign-source profits earned by resident companies are also subject to tax.

For the purposes of determining taxable income, there are two methods/regimes as follows:

Special regime for micro and small-sized companies:

Micro-sized company: An entity that employs up to five persons with an annual turnover (gross amount of sales and services) that does not exceed 5 million Cabo Verdean escudos (US$50,000).

Small-sized company: An entity that employs between six and ten persons with an annual turnover (gross amount of sales and services) of between 5 million and 10 million escudos (US$50,000 – $100,000).

Standard organized accounting is in line with local regulations and international standards.

							3. Legal Regime					

**Transparency of the Regulatory System**

Cabo Verde is a model for much of Africa because of its transparency and good governance. The government is committed to improving the conditions for foreign investment and to encouraging a more transparent and competitive economic environment. In 2016, Cabo Verde ranked 38th on Transparency International’s Corruption perception index, second among African nations, trailing only Botswana.

Laws to promote exports, incentives to export, and free-zone enterprises stress the commitment of the government to encourage investment in export-oriented industries. The overall entrepreneurial environment benefits from high levels of regulatory flexibility and efficiency. The tax regime encourages entrepreneurial activity, and government policies support free trade and open markets. Although bureaucratic procedures have been simplified in a number of cases, there is still room for improvement.

The Investment Law – Law n. 13 / VIII / 2012 of 11 July 2012 – establishes the general basis for accelerating and facilitating investment in Cabo Verde, as well as the rights, guarantees and incentives to be granted to investments. These laws establish the principle of equal treatment for both national and foreign investment and confirm the government’s commitment to the creation of a dynamic business environment. The Industrial Development Statute regulates the granting of incentives and simplifies the investment approval process.

In addition, the code for Fiscal Benefits, Law no. 26 / VIII / 2013, January 21 and the amendments made by Law 102 / VIII / 2016 of January 6 and by the State Budget for 2017 establish the principles and rules applicable to tax benefits, establish the content and set the corresponding rules for granting and monitoring. Laws to promote exports, incentives to export, and free-zone enterprises stress the commitment of the government to encourage investment in export-oriented industries. The overall entrepreneurial environment benefits from high levels of regulatory flexibility and efficiency. The tax regime encourages entrepreneurial activity, and government policies support free trade and open markets

The following is the government official register site for the entity responsible for the official publication of all approved laws: https://kiosk.incv.cv 

Laws on economic activity sectors can also be consulted on the following websites:

Legispalop: http://www.ecosphere-consult.com/en/legis-palop 

Cabo Verde Trade Invest website: http://cvtradeinvest.cv 

In Cabo Verde there is free access to all laws through the Government Official Register Site.

**International Regulatory Considerations**

Cabo Verde is a member of UNCTAD’s international network of transparent investment procedures, with relevant regulations and procedures detailed online . Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time, and legal bases justifying the procedures.

In January 2008, four years after the United Nations Resolution 59/210 recommendation, Cabo Verde graduated from Least Developed Country status to Lower Middle Income Country status. On May 26 of the same year, five months after the World Trade Organization (WTO) approved its application; Cabo Verde’s legislature unanimously ratified the agreement and formally acceded to the WTO. Cabo Verde has not notified the WTO of any measures that are inconsistent with its TRIMS obligations.

**Legal System and Judicial Independence**

Due to Cabo Verde’s being a Portuguese colony until 1975, its legal system is based on the civil law system of Portugal. Therefore it has systematic codification of its general law. The 1992 constitution provides for a judiciary independent from the executive branch. The judicial system is composed of the Supreme Court, Constitutional court and the regional courts. There is no interference from the government and judges cannot be affiliated with political parties.

The Supreme Tribunal (Court) of Justice has a minimum of five members, one appointed by the president, one appointed by the National Assembly, and three appointed by the Supreme Council of Magistrates. The Ministry of Justice and Labor appoints local judges. The judiciary generally provides due process rights; however, the right to an expeditious trial is constrained by a seriously overburdened and understaffed judicial system. Criminal defendants are presumed innocent and have the right to counsel, to a public, non-jury trial, and to appeal. Cabo Verde has modern commercial and contractual laws.

The right to private ownership and establishment is guaranteed under the constitution. Property rights are recognized and guaranteed by several Cabo Verdean laws, as well as by the constitution. There is a legal entity that records secured interests in property, both chattel and real estate. There is also a legal system that protects and facilitates acquisition and disposition of all property rights.

The judicial system in Cabo Verde is transparent and independent. There is no government interference in the court system.

**Laws and Regulations on Foreign Direct Investment**

Foreign investment is regulated by the Cabo Verde Investment Law (Decree-Law No 13/VII/2012) and the Law of Industrial Development. These laws establish the principle of equal treatment for both national and foreign investment and confirm the government’s commitment to the creation of a dynamic business environment. The Industrial Development Statute regulates the granting of incentives and simplifies the investment approval process. In addition, the codes for Fiscal Benefits (Laws: No. 26/VIII/2013, 102/VIII/2016, and State Budget 2017) establish the principles and rules applicable to tax benefits, establish the content, and set the corresponding rules for granting and monitoring. Laws to promote exports, incentives to export, and free-zone enterprises stress the commitment of the government to encourage investment in export-oriented industries. The overall entrepreneurial environment benefits from high levels of regulatory flexibility and efficiency. The tax regime encourages entrepreneurial activity, and government policies support free trade and open markets. Although bureaucratic procedures have been simplified in a number of cases, there is still room for improvement. The investment approval process has been expedited within the revision of the external investment code.

Laws pertaining to investment can also be found at Cabo Verde Trade invest website  including Cabo Verde’s Investment Law, The Code of Fiscal Benefits, and other legislation and regulations regarding the investment incentive regime.

**Competition and Anti-Trust Laws**

The regulatory agencies are the bodies in charge of and responsible for competition-related concerns.

The law establishes the regime of protection of competition applicable to all economic activities, carried out on a permanent or occasional, in private, public and cooperative basis. Decree Law 53/2003

Issue date: 24/11/2003

Date of Entry into force: 23/01/2004

It substituted Decree-Law No 2/99 of February 1.

**Expropriation and Compensation**

Cabo Verde laws allow for expropriation if done for public interest. In the event of expropriation, the government will compensate the owner on the basis of prevailing market prices or the actual market value of the property on the day of expropriation. Compensation may be repatriated at the exchange rate in effect on the day of expropriation.

There have been no cases of illegal expropriations, and the government has never shown any pattern of discriminating against foreigners.

**Dispute Settlement**

*ICSID Convention and New York Convention*

In 2011, Cabo Verde became a contracting state to the International Centre for the Settlement of Investment Disputes (ICSID convention). Cabo Verde is not a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

*Investor-State Dispute Settlement*

Representatives from Brazilian telecom company Oi and the government of Cabo Verde are trying to work towards the resolution of a boardroom dispute relating to the country’s telecommunication company, Cabo Verde Telecom (CVT). According to the government of Cabo Verde, the Portuguese company that held 40 percent of the company ‘violated’ agreements by agreeing to sell its shares held in CVT to Oi without the prior permission of the Cabo Verde authorities.

*International Commercial Arbitration and Foreign Courts*

Disputes between the government and any investor concerning the interpretation and application of the law which cannot be resolved amicably or via negotiation are submitted for resolution by the judicial authorities, in accordance with Cabo Verdean laws. Disputes between the government and foreign investors on investments authorized and made in the country, if no other process has been agreed upon, are settled by arbitration.

The law favors arbitration as a mechanism for settling investment disputes between the government of Cabo Verde and foreign investors, under national and international dispute resolution rules and the courts recognize and enforce foreign arbitral awards. Generally, arbitration will be carried out in Cabo Verde and in Portuguese, unless the parties agree on another location and language. Arbitration is generally accepted as a dispute resolution mechanism. The decision of the single referee or the arbitration committee is final and there is no appeal.

Legislation:

- The principal national arbitration statute in Cabo Verde is the Arbitration Law No. 76/VI/2005 of 16 August 2005.
- Law No. 89/IV/93 of 13 December 1993 provides that disputes between the State of Cabo Verde and foreign investors shall be resolved through arbitration and conciliation subject to Cabo Verde arbitration law.
- Decree-Law No. 35/2010 of 6 September 2010 provides that disputes related to the validity, interpretation, and non-fulfillment of insurance agreements may be addressed by arbitration.

Decree No. 8/2005 of 10 October 2005 provides for institutional arbitration.

**Bankruptcy Regulations**

Improvements to Cabo Verde’s investment climate include the passing of the bankruptcy law in December 2015 that entered into effect in September 2016. This should help improve its rating on the World Bank’s Doing Business Report, which currently ranks Cabo Verde at the bottom of the list (189).

							4. Industrial Policies					

**Investment Incentives**

Foreign investment is regulated by the Cabo Verde Investment Law (Decree-Law No 13/VII/2012) and the Law of Industrial Development. These laws establish the principle of equal treatment for national and foreign investment and confirm the government’s commitment to the creation of a dynamic business environment. The Industrial Development Statute regulates the granting of incentives and simplifies the investment approval process. In addition the codes for Fiscal Benefits (Laws: No. 26/VIII/2013, 102/VIII/2016, and State Budget 2017) establish the principles and rules applicable to tax benefits, establish the content, and set the corresponding rules for granting and monitoring. Laws to promote exports, incentives to export, and free-zone enterprises stress the commitment of the government to encourage investment in export-oriented industries.

The Tax Benefits Law foresees specific tax benefits for investments made in the industry sector provided that these are made under the Investment Law. Tax benefits available to the industry sector relate to Corporate Income Tax (CIT or IUR), Property Tax (IUP), Stamp Duty, and Customs Duties. Additionally, the investor has access to other tax incentives (not specific for industry sector), namely, the contractual regime for investment projects, job creation, donation regimes, internationalization and the International Business Center.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

The Free Enterpot Trade Law Act, Law no. 99/V/ 993, which established a set of tax and customs benefits granted to companies under this regime, was repealed by Cabo Verde in order to comply fully with the World Trade Organization regulations. In order to promote international trade and foster investments with export potential, Cabo Verde promoted by law (Decree Law n. 32/2013) the creation of international trade and industrial centers where it confers a set of incentives, in terms of tax benefits for companies, tax benefits for, exemption from stamp duty, VAT exemption and customs incentives.

**Performance and Data Localization Requirements**

Foreigners are required to have an authorized work permit to work in Cabo Verde. However, the authorization process is easy and affordable.

There is no “forced localization” in any sector in Cabo Verde.

Data protection still lacks sufficient legislative support.

							5. Protection of Property Rights					

**Real Property**

Property rights are recognized and guaranteed by several Cabo Verdean laws, as well as by the constitution. There is a legal entity that records secured interests in property.

Property documents are obtained in the land registry certificate (Certidao do Registo Predial), official map with the property’s exact location (Planta de Localizacao) and the tax information certificate (Certidao Matricial).

If the property is not registered, it is necessary to obtain a certificate confirming that the property in not registered in anyone’s name (Certidao pela negative) and a tax certificate confirming this (Certidao matricial). With these two documents, it will be possible to register the property.

Cabo Verde is in the process of implementing its second MCC Compact, worth US$66.2 million. US$17.3 million of this total is dedicated for the Land Management for Investment Project. This investment is expected to improve Cabo Verde’s investment climate by refining the legal, institutional and procedural environment to create conditions for increased reliability of land information, greater efficiency in land administration transactions, and strengthened protections of land rights. The project consists of developing and implementing a new land information management system, and clarifying parcel rights and boundaries on targeted islands with high investment potential.

The Land Management and Investment Project supports the government’s efforts in creating a single reliable and easily accessible source of land rights and land boundaries information, which is expected to strengthen Cabo Verde’s investment climate for large and small investors, and reduce land registration time and costs.

In 2016, the government made transfers of property less costly by lowering the property registration tax.

**Intellectual Property Rights**

The designated intellectual property protection office in Cabo Verde is called the Institute of Quality Management and Intellectual Property. It was formerly known as the Patent and Trademark Office. The government decided to merge the previous Intellectual Property Institute with the Institute of Quality Management in the context of a state and public administration reform.

The Executive justified the merger with need to rationalize structures, reduce costs and optimize synergies existing in the fields of industrial property and copyright, with the areas of quality management systems. All powers and duties in the area of intellectual property of the IPICV were transferred to the new authority.

Cape Verde is a member of the Convention establishing the World Intellectual Property Organization since July 7, 1997; TRIPS Agreement, since July 23, 2008; and the Hague Convention abolishing the requirement of legalization of public documents since September 13, 2008.

The country does not publish data on seizures of counterfeit and pirated goods; but these are usually covered by the media.

For additional information about treaty obligations and points of contact at local IP offices (http://www.igqpi.cv/ ), please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

U.S. Embassy Contact:

Molly RunyonPolitical/Economic Officer, U.S. EmbassyPraia, Cabo Verde+238 260 8925RunyonAR@state.gov

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

Limited capital market and portfolio investment opportunities exist in Cabo Verde. The Cabo Verdean stock market, Bolsa de Valores de Cabo Verde (BVC), is fully operational. It has been most active in the issuance of bonds. Foreign investors must open a bank account with a local bank in Cabo Verde before buying stocks or bonds from BVC.

The regulatory system does not stop the free flow of financial resources. Foreign interests may access credit under the same market conditions as locals. However, foreign investors typically bring capital in from outside the country.

The financial sector is supervised and regulated by a single institution: the Central Bank of Cabo Verde. The financial sector consists of:

- Credit institutions (banks and other institutions that are qualified by law)
- Special credit institutions (credit unions and savings banks)
- Nonbanking institutions
- Insurance companies
- Stock Exchange

In the 1990s, the statute of International Financial Institutions (IFI) was created for institutions whose activities are directed primarily at non-residents. Most IFI banks in Cabo Verde are foreign branches or subsidiaries of Portuguese banks, which were established in Cabo Verde to benefit from tax advantages in their transactions with non-residents.

The onshore segment is composed of seven banks:

- Banco Comercial do Atlântico
- Caixa Económica de Cabo Verde
- Banco Interatlântico
- Banco Cabo-Verdiano de Negócios
- Banco Angolano de Investimentos
- Ecobank-Cabo Verde
- Banco Espírito Santo-Cabo Verde

There are 10 non-bank institutions:

- A Venture capital management company – A Promotora
- Three currency exchange offices   - Cotacambios de Cabo Verde
  - Arisconta – Câmbios Lda.
  - Girassol – Câmbios Lda. 
- A company that issues credit cards and handles the payment system – SISP
- A leasing company Promoleasing – Sociedade de Locacao Financeira SA
- Three securities fund management companies   - Innovation Box
  - Sociedade de Gestão de Fundos de Habitacao de Interesse Social
  - Novagest SA 
- A money transfer agency – Global Money Transfer-Cabo Verde SA

The offshore market comprises of nine institutions licensed to operate, eight in banking activities and one acting as fund manager:

- Banco Fiduciário Internacional
- Banco Sul Atlântico
- Banco Português de Negócios
- Banco Montepio Geral
- Banco Espírito Santo
- Banco Privado Internacional
- Caixa de Credito Agricola Mutua
- Atlantic International Bank
- CA Finance SA (fund manager)

Banking, insurance, and securities market regulations comply with international regulations and meet international best practices. Foreign investors have the same access to credit in the local market. However, foreign investors are often discouraged by the high interest rates. Credit above certain values may dictate partnerships of more than one bank, and sometimes requires the participation of a foreign bank.

**Money and Banking System**

Cabo Verde has a small but relatively sound, efficient and well managed financial sector supervised and regulated by the Central Bank of Cabo Verde (BCV).

The onshore segment is composed of seven banks

- Banco Comercial do Atlântico
- Caixa Económica de Cabo Verde
- Banco Interatlântico
- Banco Cabo-Verdiano de Negócios
- Banco Angolano de Investimentos
- Ecobank-Cabo Verde
- Banco Espírito Santo-Cabo Verde

Overall, the banking sector is still relatively small, with a limited supply of financial products. However, it is relatively well-managed and exhibits stable performance indicators. Credit risk is mainly controlled through a limited exposure and strict compliance with prudential ratios. In March 2017, the BCV acted promptly when Novo Banco began to show signs of non-compliance. The measures taken prevented contagion of the sector and reinforced the authority of the banking watchdog institutions.

Banks have branches in all inhabited islands, which are also served by an extensive network of ATM and widely available POS machines. Debit cards, credit cards, and prepaid Visa cards are available through all banks.

Establishing a bank account is easy as long as the client provides proper identification independent of nationality. Bank credit is available to foreign investors under the same conditions as for national investors. The private sector has access to some credit instruments such as loans, letters of credit, and lines of credit. The legal guidelines for accounting systems are clear but are not totally consistent with international norms.

According to data from the Banco de Cabo Verde, by 2012 more than 90 percent of the Cabo Verdean population was serviced by banks, following a long positive trend. Technological innovation in information and communications technology (ICT) has contributed to the revolution in the banking industry with significant impacts on the services traditionally offered by banks. Internet-based tools and services in the banking sector continue to grow in Cabo Verde, gaining an increasing importance and changing the model of the client-bank relationship of the past. New digital habits are formed as access to ICT allows customers to make decisions in day-to-day interactions without working- hours limitations and to realize a great variety of operations from any place with internet access.

**Foreign Exchange and Remittances**

*Foreign Exchange*

Foreign investors have the right to convert their investment to any other freely convertible currency and transfer all of their income. The government gives foreign investors important guarantees such as privately managed foreign currency accounts, which can be credited from abroad or from other foreign accounts in Cabo Verde. In addition, it allows undisputed repatriation of dividends, profits, and capital from foreign investment operations. To receive these benefits the investor has to qualify for foreign investor status through the government’s investment agency, CI.

The regulatory legislation specifies that for the first 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 rate of ten percent. Incentives for outward investment in developing countries are not included in the legislation, but they have been provided on an ad hoc basis.

Cabo Verde’s exchange-rate fluctuation risk is low as the escudo is pegged to the euro since its introduction in 1999 at the rate of 110.27 escudos per euro. This fixed exchange rate arrangement is a credit facility granted by Portugal to Cabo Verde – Credit Facility Contract – and managed by a joint Cabo Verdean and Portuguese body named Comissao do Acordo de Cooperacao Cambial (COMACC). Both residents and non-residents may hold foreign exchange accounts, subject to government approval and regulations. Most payments and transfers are subject to controls.

Cabo Verde’s recently elected government is looking at the possibility of introducing the use of the euro in the local economy. The euro is already accepted as form of payment in the most touristic islands and in the main hotels and restaurants of the country.

*Remittance Policies*

Current law permits a foreign investor to request transfer loan repayment, revenue/profits, and capital gains overseas from the Bank of Cabo Verde (central bank) within 30, 60, and 90 days, respectively.

**Sovereign Wealth Funds**

Cabo Verde does not maintain a sovereign wealth fund.

							7. State-Owned Enterprises					

Starting in the mid-1990s, Cabo Verde implemented a series of reforms that have transformed a centrally-planned economy into a market-oriented economy. The number of state-owned enterprises (SOEs) has decreased from forty in the 1990s to six today.

Government interference in state-owned enterprises (SOEs) in Cabo Verde is relatively minor. With the exception of certain industries which remain protected (e.g., freight handling at the airport, port authority, importation of pharmaceutical products, and distribution of electricity), private and state-owned enterprises compete freely and without major interference from the government. In these liberalized markets, both private and state-owned enterprises have the same access to credit, markets, and business opportunities. SOEs in Cabo Verde are most active in the transportation sector. SOEs are generally managed by a board of directors which is nominated by the Minister in charge of the respective sector. These boards of directors have anywhere from three to five members. Overall, there is little government interference in the day-to-day management of SOEs and they are generally evaluated based on their economic or financial performance. However, even though most directors are not politically appointed, they must maintain the confidence and support of the government. All SOEs are required to produce annual reports and must submit their books to independent auditors.

Cabo Verde is not party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization (WTO). Cabo Verde tries to adhere to the OECD’s guidelines on Corporate Governance. In general, there is fair competition between SOEs and private sector enterprises.

**Privatization Program**

Previous instances of privatization have come either through private sector sales or through liquidation. The two main utility companies, Electra (electricity and water) and Cabo Verde Telecom, the country’s three banks, and the main state-owned entities in the tourism sector were sold off in the 90’s. All privatization or liquidation processes ran smoothly with the exception of Electra, which reverted to government ownership. The decision to repossess Electra resulted from a breach of contract with the Portuguese investor. Consensual agreement was reached during the negotiations.

The government sold its shares of fuel company Empresa Nacional de Combustiveis (ENACOL) and local bank Banco Comercial do Atlantico (BCA) via the stock exchange. Despite government aspirations to privatize the national airline, TACV, this prospect is on hold, as are the privatizations of the port authority ENAPOR and the pharmaceutical company EMPROFAC. The elections in March 2016 resulted in the election of the center-right Movement for Democracy (MpD), which may be more ideologically disposed to expediting the privatization of state-owned enterprises. The MpD led the 1990s privatization reforms.

Both foreign and national investors can participate in the public bidding process, which is transparent and non-discriminatory.

							8. Responsible Business Conduct					

The private sector, government, and regulators are becoming increasingly aware of the importance of environmental and social responsibility in Cabo Verde. The government encourages companies to engage in responsible business conduct. Many companies conduct campaigns to promote social awareness in areas such as health, environmental protection, and cultural preservation. For instance, all investment projects are required to provide an environmental impact study prior to approval. However, companies’ specific CSR efforts in Cabo Verde tend to be more reactive than proactive. For example, a recent outbreak of dengue fever in the country was met by public awareness campaigns launched by some local companies.

In terms of women’s issues, Cabo Verde is a leader in the region. During previous governments, women have achieved equal representation in ministerial level positions. Unfortunately, in the current Cabinet, there has been a decline in the number of women in government (3/12). While there is still room for improvement, Cabo Verdean women are well represented among businesses in the country, especially relative to other countries in the region.

Cabo Verde does not adhere to the OECD guidelines for multinational enterprises.

							9. Corruption					

In 2016, Cabo Verde ranked 38th on Transparency International’s Corruption perception index, the second best ranking for an African nation, with only Botswana receiving higher marks. Cabo Verde has signed and ratified the U.N. Anticorruption Convention.

Corruption is a crime punishable by law. Giving or accepting a bribe is a criminal act and conviction could result in up to eight years in prison. To combat corruption effectively, the Cabo Verdean government established the High Authority against Corruption, and Parliament has added three additional prosecutors to enforce the law. Other institutions active in combating corruption include the Judicial Police, the Prosecuting Counsel and the courts. Though there periodically have been rumors of alleged corruption, corruption or the bribery of political officials and/or public servants is not a major issue of concern in Cabo Verde.

Cabo Verde signed and ratified the U.N. Anticorruption Convention (2003) and the OECD Convention on Combatting Bribery (2008).

*Resources to Report Corruption*

Contact at a government agency that is responsible for combating corruption:

Oscar TavaresAttorney General<Produradoria Geral da RepublicaCP 268 Praia – Cabo Verde+238 261 1665

Contact at “watchdog” organization that monitors corruption:

Cristina AndradeSenior National CoordinatorUNODC – United Nations Office on Drugs and CrimeAv OUA, ASA<Praia – Cabo Verde+238 260 9644cristina.andrade@unodc.org

							10. Political and Security Environment					

Cabo Verde’s greatest strengths are its political and social stability. There have never been any political, social, or religious conflicts resulting in violence. The country enjoys political stability and has a history of parliamentary democracy and economic freedom that is unusual in the region. 2016 elections were free and fair, and there was a smooth transition of power. Good governance, prudent macroeconomic management, including strong fiscal, monetary and exchange-rate policies, trade openness and increasing integration into the global economy, and the adoption of effective social development policies have produced relatively positive results throughout the archipelago. The new government is preaching more proactive investment reforms. Broad political stability is expected to prevail in Cabo Verde, underpinned by strong democratic institutions and decent protection of human rights and civic freedoms. Next elections will be in 2020.

Its strategic location means that Cabo Verde is increasingly at the crossroads of the transatlantic narcotics trade. The country has partnered with United States and European law enforcement officials to fight transnational crimes promote human rights and assure continuous improvement of the security environment. Top U.S. priorities in Cabo Verde are maritime security, and increasing bilateral trade and economic development.

							11. Labor Policies and Practices					

Despite efforts to reform the labor market, the unemployment rate remains persistently high. With the national unemployment rate at 15 percent (2016), creating jobs is a major concern for the Cabo Verdean government. Unemployment among youth and highly skilled labor is even higher. The government is striving to stimulate national production and attract foreign investment to create jobs and support entrepreneurial initiatives.

The low cost, high productivity and wide availability of labor in Cabo Verde is economically enviable. Unskilled labor represents some 30 to 40 percent of the total labor force and is readily available. However, technical, managerial, and professional talent is more difficult to find.

In 2013, Cabo Verde’s Commission for Social Dialogue approved the archipelago’s first minimum wage and set it at 11,000 Cabo Verdean escudos (US$115) per month. The minimum wage went into force in January 2014. The law to introduce unemployment benefit in Cabo Verde came into effect in April 2016. The fund is managed by the National Social Security Institute (INPS).

The legal workweek is limited to 44 hours for adults, with 12 consecutive hours per week for rest and premium rates of pay for overtime. Larger employers generally respect this restriction, but agricultural and domestic laborers work longer hours. The law sets the minimum work age at 16, but child labor is a problem. Minors under the minimum age (18) cannot work at night, over seven hours per day, or in places that produce toxic products. However, enforcement by the government is limited in the formal sector and rare in the informal sector.

In recent years there have been some incidences of strikes, promoted by labor unions, but they were all peaceful. All workers are free to form and join unions of their choosing without interference from the government. The government respects the worker’s right to strike, but the law also provides for government interference in emergency situations or when essential services might be affected. Labors laws are respected and there have been no instances in which labor laws were waived in order to attract or retain investment.

Cabo Verde has ratified all of the International Labor Organization (ILO)’s eight fundamental conventions. The law protects the rights of workers to form or join unions of their choice without previous authorization or excessive requirements, to engage in collective bargaining, and to conduct legal strikes. The law allows unions to carry out their activities without interference. The labor code provides for protection against antiunion discrimination and for the reinstatement of workers. However, these rights are limited by other provisions. A “Civil Need” law states the government can force the end of a strike when there is an emergency or “to ensure the smooth operation of businesses or essential services of public interest.” Services provided by telecommunications, justice, meteorology, health, firefighting, postal service, funeral services, water and sanitation services, transportation, ports and airports, private security, and the banking and credit sectors are considered “essential,” which are beyond the intended scope suggested by the ILO’s respective convention. The Directorate General for Labor (DGT) has a conciliation mechanism to promote dialogue.

Worker organizations were independent of the government and political parties. There were no reports of violence, threats, or other abuses during the year by the government against union members or leaders. There was no reported evidence of antiunion discrimination. Public projects were contracted to private companies who hired workers directly. Workers that do not have a labor contract with public or private companies have no legal protection. Few companies adopted collective bargaining, but the ILO worked with local unions and government bodies to provide guidance on conducting a dialogue between parties. Labor unions complained the government sporadically restricted the right to strike for certain critical job categories. Cases can be protracted before they are finally resolved.

The rigidity of the labor laws and severance pays has been considered by the World Bank, IMF and African Development Bank to be an obstacle to industrial investment and development.

Cabo Verde does not impose local employment quotas. Work permits and visas are regulated by law, and easily obtained as long as the defined prerequisites are met. The costs are minimal. There are no conditions to invest other than the ones stated by law. The process is transparent and clearly legislated. Both foreigners and nationals have equal rights under those laws.

							12. OPIC and Other Investment Insurance Programs					

The Overseas Private Investment Corporation (OPIC) has signed an agreement with Cabo Verde. OPIC offers political risk insurance, which includes coverage for exchange inconvertibility, expropriation, and war.

Cabo Verde is also a member of the Multilateral Investment Guarantee Agency (MIGA).

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

** Source: Cabo Verde Central Bank (BCV) – Annual Report 2015*

*Table 3: Sources and Destination of FDI*

*Table 4: Sources of Portfolio Investment*

Data regarding sources of portfolio investment in Cabo Verde are unavailable.

							14. Contact for More Information					

Molly RunyonPolitical/Economic Officer, U.S. EmbassyPraia, Cabo Verde+2382608925RunyonAR@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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