HomeReportsBureau of Economic and Business Affairs2023 Investment Climate Statements...Cabo Verde

# 					2023 Investment Climate Statements: Cabo Verde			

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													EXECUTIVE SUMMARY											

                -  EXECUTIVE SUMMARY 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Toward Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2. Bilateral Investment and Taxation Treaties 
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Antitrust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention and New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                -  6. Financial Sector                    -  Capital Markets and Portfolio Investment 
                  -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct                    -  Additional Resources 
                  -  Climate Issues 
                -  9. Corruption                    -  Resources to Report Corruption 
                -  10. Political and Security Environment 
                -  11. Labor Policies and Practices 
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs 
                -  13. Foreign Direct Investment Statistics 
                -  14. Contact for More Information 

## EXECUTIVE SUMMARY

The Government of Cabo Verde welcomes international investment, provides prospective investors “one-stop shop” assistance through its investment promotion agency Cabo Verde TradeInvest, and offers incentives and tax breaks for investments in multiple sectors, most notably tourism and information and communication technology. Growth accelerated in 2022, as tourism inflows from Europe increased and the COVID-19 pandemic receded, helped by an efficient vaccination rollout throughout the country. However, increases in food and energy costs stemming from Russia’s invasion of Ukraine could hinder economic recovery and raise pressure on the government to continue subsidies to reduce the impact on consumers. Cabo Verde’s political stability, democratic institutions, and economic freedom lend predictability to its business environment. Free and fair elections, good governance, prudent macroeconomic management, openness to trade, increasing integration into the global economy, and the adoption of effective social development policies all contribute to a favorable climate for investment. Cabo Verde receives high marks on international indicators for transparency and lack of corruption. There are few regulatory barriers to foreign investment in Cabo Verde, and foreign investors receive the same treatment as Cabo Verdean nationals in the areas of taxes, licenses and registration, and access to foreign exchange. The country’s strategic location and growing (though still limited) connectivity with other West African nations could make it a potential gateway for investors interested in a foothold from which to expand to the continent.

As 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 with few economies of scale, the country relies on foreign investment, imports, development aid, and remittances. Despite the challenges, in 2007 the country became only the second ever to graduate from least developed country status, and it met most of its Millennium Development Goals by 2015. As the COVID-19 pandemic has demonstrated, the economy’s dependence on tourism, which accounted directly for 25 percent of GDP and more than 40 percent indirectly pre-pandemic, makes it vulnerable to external shocks. The government is resuming implementation of plans to privatize state-owned enterprises. In July 2022, the government signed a 40-year concession agreement with international airport management firm Vinci airports, and it could issue privatization tenders for ports management, the electric utility, and the state-owned pharmaceutical company later in 2023. While the business and investment climates continue to improve, there remain bureaucratic, linguistic (relatively few English or French speakers), and cultural challenges to overcome.

The Cabo Verde Ambition 2030 plan and the government’s Strategic Plan for Sustainable Development (PEDS II) for 2022 – 2026 highlight opportunities in sustainable tourism, renewable energy, blue and digital economies, and transportation. Cabo Verde aims to generate 50 percent of its electricity from renewable sources by 2030 and 100 percent by 2040. Diversification of the economy remains a priority, but still high public debt levels of an estimated 127.2 percent of GDP in 2022 limit government funding capacity.

							1. Openness To, and Restrictions Upon, Foreign Investment					

### Policies Toward Foreign Direct Investment

Cabo Verde seeks both domestic and foreign investment to drive economic recovery, diversification, and growth following the COVID-19 crisis. The government’s Ambition 2030 strategy and its 2022 – 2026 development program emphasize development of sustainable tourism, transformation of the country into a transportation and logistics platform, growth of renewable energy, expansion of blue and digital economies, and promotion of export-oriented industries. The government promotes a market-oriented economic model under which all investors, regardless of nationality, have the same rights and are subject to the same duties and obligations under the law. Improving the business climate to attract investment remains an economic priority, as does reducing the state’s role in the economy. The government is planning a succession of state-owned enterprise privatizations long delayed by the COVID-19 pandemic – nine in total by 2026.

In 2022, Cabo Verde TradeInvest approved investment projects worth a record USD 3.8 billion. Compared to 2021, foreign direct investment rose almost 60 percent in 2022 to USD 133.6 million. It continues to be concentrated in tourism.

Cabo Verdean law offers tax benefits and grants permanent residence to foreign citizens with an investment exceeding 180 million escudos (USD 2 million). In December 2021, the government approved creation of a permanent residence permit for foreigners who own second homes in Cabo Verde. The new law also allows for exemption from excise duties on assets. The legal framework establishes conditions for investment in the country by Cabo Verdean emigrants, including fiscal incentives.

Investment promotion agency Cabo Verde TradeInvest (CVTI) is a one-stop shop for all investors. Through CVTI, the government maintains dialogue with investors using personalized and virtual meetings, round tables, conferences, and workshops. CVTI offers investors a “One-Stop Shop for Investments” electronic platform and help in formalizing expressions of interest and monitoring the investment process. It also provides investors and exporters information about trade agreements and benefits (including those related to the U.S. African Growth and Opportunity Act (AGOA) and Cabo Verde’s membership in the Economic Community of West African States (ECOWAS)), market information, details on trade fairs and events, and contacts with other state institutions and potential partners. In addition, CVTI can assist with securing authorizations and licensing, tax and customs incentives, work permits for foreign workers, visas for company workers, social security registration for workers, and introductions to service providers, such as banks, lawyers, accountants, and real estate agents.

For investments of less than USD 500,000, government entities Pro-Empresa and the Casa do Cidadao (Commercial Registry Department) provide similar services.

The International Business Center (*Centro**Internacional**de**Negocios* – CIN) provides tax and customs benefits for companies that do international business, with the aim of promoting, supporting, and strengthening the emergence of new industrial, commercial, and service provision activities in Cabo Verde.

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

The Investment Law applies to both foreign and domestic investors, and it enshrines the principle of freedom of investment regardless of nationality. However, sector-specific legislation requires that foreign operators have at least 51 percent participation from Cabo Verdean partners in the fisheries sector and at least 25 percent in interisland maritime transport. The Investment Law further protects against direct and indirect expropriation. Private property is protected from unilateral requisition and nationalization, except for public interest reasons, in accordance with the law and the principle of non-discrimination, subject to prompt, full, and fair compensation.

An approval process serves as a screening mechanism for inbound foreign investment. The process begins with submission of a formal expression of interest to investment promotion agency Cabo Verde TradeInvest in accordance with the Investment Law. Relevant government entities (depending on the sector and of the nature of the investment) then conduct an integrated review of the investment project and provide an opinion. If the opinion is favorable, Cabo Verde TradeInvest, in coordination with relevant agencies, approves the project and issues an investor certificate no later than 45 days from the submission of interest. Tourism-related projects can obtain tourism utility status in addition to the certificate, and for investments considered of special national interest based on the volume of investment and number of jobs created, the government may offer exceptional fiscal and other incentives.

### Other Investment Policy Reviews

During 2018, the United Nations Conference on Trade and Development (UNCTAD) conducted an Investment Policy Review (IPR) at the request of the Government of Cabo Verde. The report contains strategic analysis on how Cabo Verde can utilize foreign direct investment (FDI) in the tourism sector to advance sustainable development objectives. https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2248

Civil society organizations have not conducted any other reviews of investment policy concerns in the last five years.

### Business Facilitation

Cabo Verde offers benefits to attract private-sector investment. Although equality of treatment and non-discrimination are granted to all investors, certain investment projects, given their nature or size, may receive special treatment and support from the government.

In an effort to reduce approval time for investment projects, the government has established a maximum period of 15 days for analysis and 30 days for approval of investment and export projects. In addition, Cabo Verde has adopted measures to facilitate and stimulate business activity, including lowering the maximum personal income tax (IRPS) one percentage point to 24 percent, eliminating double taxation, and waiving tax installment payments for taxpayers who had negative results or began their business activity in the previous year. Investments of at least 500 million escudos (USD 4.8 million) qualify for contractual benefits such as reduction of or exemption from customs and stamp duties, property taxes, and some other fiscal duties. Those investments that create a minimum number of jobs or expand into new strategic sectors qualify for a 50 percent investment credit, which can be deducted over 15 years.

The law commits the government to paying its bills within 45 days and interest on late payments to ensure predictability in the payment of the state’s obligations to companies. The 2021 budget prioritizes expenditures on assistance for families and support for companies and jobs in the context of the pandemic. It also includes benefits to attract private sector investments and improve the business environment.

Registering a company is straightforward. 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. Information on business registration procedures 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/. The CVTI website also offers information on investing in Cabo Verde, including Cabo Verde’s Investment Law, the Code of Fiscal Benefits, and the Contractual Tax Benefits-Incentives: https://cvtradeinvest.cv

### Outward Investment

The government does not restrict domestic investors from investing abroad. There is no data available on outward investments.

							2. Bilateral Investment and Taxation Treaties					

Cabo Verde has neither a bilateral investment treaty nor a taxation treaty with the United States.

Cabo Verde has bilateral investment agreements with Angola, China, Cuba, Germany, Italy, Mauritius, the Netherlands, Portugal, and Switzerland. It enjoys a special partnership with the European Union as a Peripheral Region Nation and is a member of ECOWAS. Cabo Verde also has an agreement on mutual protection of investments with Hungary, Guinea-Bissau, and Equatorial Guinea.

Cabo Verde has tax treaties in force with Portugal, Macau, Spain, Guinea-Bissau, Senegal, and Luxembourg.

Cabo Verde is a member of the Organization for Economic Cooperation and Development (OECD) Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and joined the October 2021 Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy.

							3. Legal Regime					

### Transparency of the Regulatory System

Within the region, Cabo Verde receives high marks on indicators of transparency and good governance. The government has taken steps intended to improve conditions for foreign investment and encourage a more competitive economic environment. Laws to promote exports and free-zone enterprises aim to encourage investment in export-oriented industries. The tax regime provides incentives for entrepreneurial activity, and government policies support free trade and open markets.

Environmental issues are a priority in Cabo Verde’s sustainable development strategic planning. Legislation requires promotion of an ecologically balanced environment by private companies. Local companies and foreign investment projects must complete environmental-impact studies for assessment of potential impacts by relevant government authorities.

The government encourages disclosures from companies on the social and corporate governance aspects of their businesses. Many companies, including those operating in telecommunications, banking, pharmaceuticals, and laboratories, disclose such information in reports available online.

There is free online access to all laws through the government’s official register website, https://kiosk.incv.cv/.

Regulations pertaining to economic activity can also be viewed on the Cabo Verde TradeInvest website, https://cvtradeinvest.cv/

Cabo Verde’s regulatory agencies do not solicit comments on proposed regulations from the general public, according to the World Bank.

Public finance and debt obligations are in line with international norms and standards on budget credibility, thoroughness, and fiscal transparency. Cabo Verde continues to improve its processes for the planning, execution, and control of its budgets. The Ministry of Finance uses a digital platform to publish public accounts. With this web portal, any institution or citizen can observe the execution of the budget in real time. A Public Finance Council independently assesses the sustainability of the budget and policies. Cabo Verde has an independent Supreme Audit Institution (SAI), which operates in accordance with International Standards of Supreme Audit Institutions and the Mexico Declaration and is responsible for verifying and publishing the government’s annual financial statements.

### International Regulatory Considerations

In February 2022, Cabo Verde submitted its instrument of ratification of the Agreement Establishing the African Continental Free Trade Area (AfCFTA).

Regionally, Cabo Verde is committed to integration into ECOWAS but has announced postponement of implementation of the ECOWAS Common External Tariffs to a later time and does not foresee adoption of an ECOWAS single currency.

Cabo Verde formally acceded to the World Trade Organization (WTO) in 2008. Cabo Verde has not notified the WTO of any measures that are inconsistent with its Agreement on Trade-Related Investment Measures (TRIM)s obligations.

### Legal System and Judicial Independence

Cabo Verde’s legal system is based on the civil law system of Portugal. The 1992 constitution provides for a judiciary independent from the executive branch. The judicial system is composed of the Supreme Court, the Constitutional Court, and regional courts. Judges cannot be affiliated with political parties.

The Ministry of Justice appoints local judges. The judiciary generally provides due process rights; however, an overburdened and understaffed judicial system constrains the right to an expeditious trial, and judicial decisions are often delayed, sometimes for years. Cabo Verde has modern commercial and contractual laws. The judicial system in Cabo Verde is transparent and independent. There is no government interference in the court system.

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

### Laws and Regulations on Foreign Direct Investment

Cabo Verdean laws concerning FDI include the Investment Law of 2012, which applies to both foreign and domestic investors and preserves the principle of freedom of investment. The Industrial Development Statute regulates incentives and the investment approval process. Law 41/2016 defines the mandate of Cabo Verde TradeInvest (https://cvtradeinvest.cv) as a one-stop shop for external investors.

### Competition and Antitrust Laws

In Cabo Verde, the law protects competition in all economic activities. The Government created the Competition Authority in June 2022, and its board members took office in September 2022. The Authority’s mission is to ensure the application of rules for the promotion and defense of competition and the protection of the rights and interests of consumers. It has regulatory, supervisory, and sanctioning powers applicable to public and private companies in all sectors of trade, industry, and services. It is also responsible for investigating and deciding on sanctions against practices that restrict competition (such as cartel-type agreements or abuses of dominant positions) as well as approving or prohibiting merger operations between companies. Dispute resolution decisions may be challenged before the judicial or arbitration courts, depending on the case. According to the law, the Authority should make available in a web page all data and information related to its activities, including but not limited to regulations, statistics, cooperation agreements signed with other parties, budget, and annual reports. There were no significant competition cases in 2022.

### Expropriation and Compensation

The Investment Law protects against direct and indirect expropriation. Private property is protected against requisition and nationalization, except for public interest reasons (Investment Law, article 6.1). Under the law, in the event of expropriation, the government is to compensate the owner on the basis of prevailing market prices or the actual market value of the property. To date there have been no cases of unlawful expropriation or claims of discriminatory behavior by the government against foreigners.

In case of noncompliance of investment projects, the law states that land can be recovered by the state and made available to new investment projects.

### Dispute Settlement

#### ICSID Convention and New York Convention

In 2011, Cabo Verde became a contracting state to the ICSID convention. In 2018 Cabo Verde became a state party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).

#### Investor-State Dispute Settlement

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

#### International Commercial Arbitration and Foreign Courts

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. Courts recognize and enforce foreign arbitral awards. Generally, arbitration is conducted in Cabo Verde and in Portuguese unless the parties agree on another location and language. The decision of the single referee or the arbitration committee is final and not subject to appeal. In 2018, the Tax Arbitration Center was created to resolve disputes regarding tax matters.

### Bankruptcy Regulations

Cabo Verdean law provides for a reorganization procedure and a framework that allows creditors involvement in insolvency proceedings.

							4. Industrial Policies					

### Investment Incentives

In 2019, Cabo Verde lowered its corporate income tax (CIT) rate from 25 percent to 22 percent. The Investment Law provides incentives for both foreign investors and Cabo Verdean emigrants. For industrial activity, these incentives include corporate tax credits of up to 50 percent of eligible investments, with the possibility of carrying forward unused credits for up to 10 years. Additionally, there are property tax exemptions on immovable property used exclusively for industrial purposes, as well as customs duty exemptions on machinery and raw materials.Renewable energy projects in Cabo Verde can benefit from various incentives, such as corporate income tax credits of up to 30 percent of eligible investments and property tax benefits. There are also customs tax benefits for renewable energy projects and the acquisition of new electric vehicles (EVs) for collective passenger transport.

Cabo Verde’s renewable energy production has seen a steady increase, reaching 18.3 percent in 2020 and 19.6 percent in 2021. The country is currently developing 40 MW of solar and wind capacity and has installed 6 MW of distributed generation within the past five years. In addition, the first MW of battery energy storage has become operational. The government has introduced incentives for electric vehicle (EV) adoption, resulting in the number of EVs increasing from 0 to 74 and the submission of 36 applications for EV incentives under the Project to Promote Electric Mobility in Cabo Verde (ProMEC program). Plans are in place to install 44 public charging stations.

The National Program for Energy Sustainability (PNSE) aims to transition Cabo Verde to a secure, efficient, and sustainable energy sector by 2026. This ambitious plan encompasses institutional strengthening, market reform, strategic infrastructure investment, renewable energy development, and energy efficiency promotion. It also emphasizes business development and research and development (R&D) within the energy sector. By 2026, Cabo Verde aims to reduce energy dependence by at least 12 percent, produce at least 35 percent of its electricity from renewable sources, and reduce energy intensity by at least 10 percent.

### Foreign Trade Zones/Free Ports/Trade Facilitation

Companies must obtain authorization and define areas of economic activity in industrial, commercial, or financial services to be eligible to take part in special economic zones. Fiscal benefits and incentives will be available on a case-by-case basis for participation in the government’s Maritime Special Economic Zone in Sao Vicente (ZEEEM-SV). The International Business Center, responsible for oversight of new industrial, commercial, and export-oriented activity, will assess investments and incentives that apply.

In May 2022, the Cabo Verdean government approved a decree-law to create a Special Economic Zone for Technology (ZEET), with a hub in Praia and an extension on the island of São Vicente. The ZEET is intended to attract major technology companies to produce services in Cabo Verde and sell them to the rest of the world. The ZEET will offer tax benefits and other facilities for investors, as well as opportunities for Cabo Verdean talent in the Information and Communication Technologies (ICT) sector. The ZEET is associated with the TechparkCV public company overseeing construction of business centers, incubation centers, and data centers, as well as technological real estate ventures, in the cities of Praia and Mindelo. Inauguration of the TechPark is slated for the third quarter of 2023.

In June 2022, a law created the Special Economic Zone for the Island of Maio (ZEEIM). The law establishes the legal regime for the zone’s organization, development, and operations, as well as the applicable tax and customs benefits. The Cabo Verdean government has announced the creation of the Special Economic Zone of Volcanism to boost development in the Fogo/Brava region. The decision was made in 2022 during a meeting of the government’s Council of Ministers, which approved the resolution to create an inter-ministerial committee involving the municipalities of Fogo and Brava to propose legislation for the creation of this zone.

### Performance and Data Localization Requirements

Labor Code and Law 80/VIII/2014 regulate access to work and residence permits for foreign workers, managers, and investors. Foreigners are required to apply for a work permit, but the authorization process is not onerous. There is no “forced localization” in any sector in Cabo Verde. Investors are granted work and residence permits independently of the amount they invest.

The regime for foreign hires differs depending on category. The Labor Code regulates residence permits for foreign workers, managers, and investors. There are four categories of permits for foreigners: investors, employees, independent professionals, and highly qualified employees.

							5. Protection of Property Rights					

### Real Property

Access, use, and transfer of land and real estate are recognized under the constitution, Civil Code, and Legislative Decree 2/2007 (Land Law). Anyone, regardless of nationality, may acquire ownership rights or obtain special permits to occupy and use land.

A legal entity records secured interests in property. Ownership documents (*Certid**a**o**de**Registo**Predial*) are obtained through the land registry department, including an official map with the property’s exact location (*Planta de**Localizaç**a**o*). A tax information certificate (*Certid**a**o****Matricial*) is requested from the municipality.

If property is unregistered, it is possible to register it with a certificate confirming it is not registered in anyone else’s name (*Certidao****Negativa*) and a tax certificate confirming status of the property tax payment. Under its second Millennium Challenge Corporation compact, Cabo Verde finalized a land information management system for the country and clarified parcel rights and boundaries for the islands of Sal, Boa Vista, and Maio and rural and high-potential tourism zone parcels on the island of Sao Vicente. Clarification work is ongoing on the remaining parcels on the island of Sao Vicente with government funds, and there are plans to continue clarification of rights and boundaries on the island of Santiago.

### Intellectual Property Rights

Cabo Verde is not listed in the United States Trade Representative (USTR) Special 301 Report or the Notorious Market Report.

Legislation on intellectual property rights (IPR) aligns with international standards. Revisions of the legal framework accord with provisions of World Intellectual Property Organization (WIPO) agreements and those of the WTO. The body responsible for standardization in Cabo Verde is the Institute of Quality and Intellectual Property (IGQPI), https://igqpi.cv/.

Officially, the IGQPI protects against IP infringement, but enforcement capacity is limited due to resource constraints including inadequate digitization (though online registration and search of trademarks were made available recently), judicial system capacity constraints, and lack of awareness of intellectual property rights among businesses and consumers.

Cabo Verde is party to international copyright treaties.

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/.

							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 an account with a bank in Cabo Verde before buying stocks or bonds from BVC.

Foreign interests may access credit under the same market conditions as Cabo Verdeans.

The IMF’s April 2021 country report on Cabo Verde noted that “the government did not impose or intensify restrictions on payments and transfers for current international transactions nor introduce multiple currency practices. Similarly, it did not conclude bilateral payment agreements inconsistent with Article VIII nor impose or intensify import restrictions for balance of payments purposes.”

### Money and Banking System

Cabo Verde has a small financial sector supervised and regulated by the Central Bank of Cabo Verde (BCV). According to the latest data from BCV, 82.8 percent of Cabo Verde’s adult population has a bank account. Internet-based tools and services in the banking sector continue to grow in Cabo Verde, particularly since the onset of the COVID-19 pandemic, changing the model of the client-bank relationship. New information and communications technology products, particularly internet and mobile banking, allow customers online alternatives to in-person support.

There are seven commercial banks operating in Cabo Verde. Two banks – Banco Comercial do Atlantico (BCA) and Caixa Economica de Cabo Verde (CECV) – together held 56.9 percent of market share in 2021, according to BCV data last released in 2021.

Legislation approved in January 2020 terminated the issuance of restricted licenses for offshore banking operations for non-residents, calling for generic licenses and operations with resident clients. Existing offshore banks were compelled to adjust to the new requirements or face revocation of their license and enforced administrative liquidation. As a result, there are currently no offshore banks operating in Cabo Verde.

In March 2023, the parliament approved legislation that allows digital banks in Cabo Verde and provision of online financial services under the supervision of the BCV.

To establish a bank account, clients must provide proper identification and obtain a taxpayer number from the Commercial Registry Department (*Casa do**Cidadao*), a process that takes approximately 10 minutes. Bank credit is available to foreign investors under the same conditions as for domestic investors. The private sector has access to credit instruments such as loans, letters of credit, and lines of credit.

### Foreign Exchange and Remittances

#### Foreign Exchange

Foreign investors have the right to convert their investments to any other freely convertible currency and transfer them. The government provides foreign investors 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 repatriation of undisputed dividends, profits, and capital from foreign investment operations. To receive these benefits, an investor must qualify for foreign investor status through the government’s investment promotion agency, CVTI.

Regulatory legislation specifies that for a company’s first five years of operation, its dividends may be freely transferred overseas without tax and that for the next 15 years dividends may be expatriated with a flat tax rate of 10 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 country’s currency, the escudo, is pegged at the rate of 110.27 to the euro. This fixed exchange rate arrangement is under the Credit Facility Contract, granted to Cabo Verde by Portugal and managed by a joint Cabo Verdean and Portuguese body called the Commission on the Agreement for Exchange Cooperation (*Comissao**do**Acordo**de**Cooperaçao**Cambial* – COMACC). In 2018, the government liberalized foreign exchange operations in Cabo Verde, allowing the free movement of money overseas.

#### Remittance Policies

Current law permits a foreign investor to request transfer of loan repayments, revenues and profits, and capital gains overseas from the BCV within 30, 60, and 90 days, respectively.

### Sovereign Wealth Funds

The government created a Sovereign Private Investment Guarantee Fund in 2019. The fund aims to guarantee the issuance of securities, in particular debt securities, by private commercial companies to fund large private investments. The General Auditor of the Securities Market (AGMVM) oversees the fund and aims to maintain a rating of at least “A” from financial rating agencies. Initial share capital of approximately USD 120 million is guaranteed by the state.

							7. State-Owned Enterprises					

Starting in the mid-1990s, Cabo Verde implemented a series of reforms transforming a centrally planned economy into a market-oriented economy. Since then, the number of major enterprises of which the state is a majority owner has decreased from 40 to six. State-owned enterprises (SOEs) generally operate in key sectors such as utilities, transportation, telecommunications, and the transportation sector. They are generally managed by a board of directors nominated by the minister in charge of the respective sector. These boards of directors have between three and five members. SOEs are generally evaluated based on their economic or financial performance. All SOEs are required to produce annual reports and must submit their accounting records to independent auditors. Not all directors are political appointees, but they must maintain the confidence and support of the government.

SOEs are expected to follow commercial considerations and provide non-discriminatory treatment in their transactions. While Cabo Verde has taken steps to improve SOE transparency and governance, adherence to these principles may vary. SOEs from Cabo Verde have limited international presence and are unlikely to make significant direct investments in the United States due to the country’s small economy and limited resources.

Cabo Verde is not a party to the Government Procurement Agreement (GPA) within the framework of the WTO. In principle, it tries to adhere to the OECD Guidelines on Corporate Governance.

### Privatization Program

After putting privatization plans on hold due to the COVID-19 pandemic, the government concluded a concession agreement for the management of its airports in 2022. The government is resuming plans to privatize the port management functions of the port authority ENAPOR, the pharmaceutical company EMPROFAC, and the electric utility ELECTRA, by the end of 2023. Other SOEs on Cabo Verde’s list for privatization, partial divestment, concession, or public-private partnership by 2026 are the renationalized carrier Cabo Verde Airlines, shipyard repair facility CABNAVE, airport services firm CV Handling, telecommunications provider CV Telecom, commercial bank Caixa Economica, and the water and power utility of the island of Boa Vista (AEB).

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

							8. Responsible Business Conduct					

The private sector, government, and regulators are increasingly aware of the importance of environmental and corporate 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. During the height of the COVID-19 pandemic, private companies supported vulnerable populations with essential goods. Women represent 37.5 percent of elected parliamentarians, 33 percent of the government, and more than 30 percent of leadership in businesses.

### Additional Resources

Department of State

- Country Reports on Human Rights Practices ( https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/ )
- Trafficking in Persons Report ( https://www.state.gov/trafficking-in-persons-report/ )
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ( https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/ )
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ( https://www.state.gov/u-s-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises/ )
- Xinjiang Supply Chain Business Advisory ( https://www.state.gov/xinjiang-supply-chain-business-advisory/ )

Department of the Treasury

- OFAC Recent Actions ( https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions )

Department of Labor

- Findings on the Worst Forms of Child Labor Report ( https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings  )
- List of Goods Produced by Child Labor or Forced Labor ( https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods )
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World ( https://www.dol.gov/general/apps/ilab )
- Comply Chain ( https://www.dol.gov/ilab/complychain/ )

### Climate Issues

Cabo Verde has a national climate strategy and several related plans as well as government-declared protected areas to preserve the country’s natural resources and ecosystems. The National Environmental Action Plan offers strategic guidance to address key environmental challenges such as loss of marine biodiversity and water scarcity. Adaptation to climate change is a key priority for Cabo Verde, and there are several policies and strategies to increase the country’s adaptive capacity, including the National Environmental Action Plan, Strategic Water and Sanitation Plan, National Basic Sanitation Plan, National Adaptation Program of Action, Strategic Plan (and action plans) for Agriculture Development, and the Growth and Poverty Reduction Strategy. Priorities in these strategic documents include improvement of water security, waste treatment, and land and marine-based food security; enhancement of marine protected areas, defense of marine resources and coastal zones, and use of spatial planning for mitigation of, and adaptation to, climate impacts; and mitigation of climate-related disaster vulnerabilities and climate-related health risks.

Cabo Verde updated its Nationally Determined Contributions to climate action and its implementation roadmap in 2020. The updated contributions include reduction of greenhouse gas emissions by 20 percent below the business-as-usual scenario by 2030, or by 30 percent with international support, and realization of a decarbonized net-zero emissions economy by 2050. Beyond private investment to achieve these goals, other areas for private sector engagement include control and reduction of waste production, involvement in waste implementation policies, introduction of innovative financial products (blue bonds, desalination bonds, debt-for-climate swaps, blue funds, loan/credit products for energy saving or energy efficient investments), participation in annual conferences with donors and development banks to explore climate-related investments, and involvement in technology development transfer and capacity building.

The government’s new strategic plan, PEDS II, aims to institutionalize climate governance at national and local levels, integrate climate change into policies and plans, reduce emissions by 10 percent, and strengthen adaptation measures. It includes policies to improve climate governance, increase local resilience, mitigate emissions, provide education, and raise awareness. The plan also aims to have at least five municipalities implement gender-sensitive climate adaptation plans and to provide at least 70 percent of the population access to climate information and alerts, prioritizing vulnerable groups.

Renewable energy projects may benefit from a corporate income tax credit for up to 30 percent of the eligible investment and property tax incentives. There are additional customs benefits for renewable energy projects and acquisition of new electric vehicles for collective transport of passengers.

The country’s Public Procurement Code includes a preference for goods, services, and practices that promote environmental protection and ecological solutions.

							9. Corruption					

Cabo Verde has signed and ratified the UN Convention against Corruption. Under Cabo Verdean law, giving or accepting a bribe is a criminal act punishable by up to eight years in prison. The Penal Code details punishments for crimes committed by an official during the exercise of public duties. The Penal Code and the Electoral Code address corruption in the context of electoral crimes, particularly the offering of advantages to voters by political parties or other actors involved in elections.

Cabo Verde’s Public Procurement Code requires that public officials involved in a public procurement process provide written disclosure of any personal interest resulting from a special connection to a bidder or potential bidder and recuse themselves from participation in the process.

In 2020, the Cabo Verdean government provided for the creation of the Corruption Prevention Council, though the Prime Minister noted in March 2023 that it was not yet fully staffed. Other institutions active in combating corruption include the Judicial Police, the Prosecuting Council, and the courts.

Cabo Verde moved up four places in Transparency International’s 2022 Corruption Perceptions Index, ranking 35th out of 180 countries, third in Africa, and second among Portuguese-speaking countries.

### Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

Luis Jose Tavares LandimAttorney General (*Procuradoria Geral da Republica*)CP 268 Praia – Cabo VerdePhone +238 261 1665Luis.Landim@pgr.gov.cv

Contact at international organization:

Cristina AndradeSenior National CoordinatorUNODC – United Nations Office on Drugs and CrimeAv OUA, ASAPraia – Cabo VerdePhone + 238 260 9644cristina.andrade@un.org

							10. Political and Security Environment					

Cabo Verde is a model of political stability with a tradition of peaceful transitions of power. There have been no political, social, or religious conflicts resulting in violence in recent years. Civil liberties are generally protected, but access to justice is impaired by an overburdened court system, and crime remains a concern.

							11. Labor Policies and Practices					

Labor is widely available in Cabo Verde. Unskilled labor represents 30 to 40 percent of the total labor force. Technical, managerial, and professional talent with English and French language skills is more difficult to find. Unemployment, particularly youth unemployment, is a significant challenge, aggravated by the toll the COVID-19 pandemic took on the tourism sector and small business, though there are signs of recovery.

Migrants from China, Guinea-Bissau, Senegal, Nigeria, and Guinea may receive wages below minimum wage and work without contracts, creating vulnerabilities. The government continues efforts to reduce vulnerability to exploitation of migrants from West Africa employed in the construction and hospitality sectors and increase their integration into society. According to a 2020 International Labor Organization (ILO) study, women, who represented more than 50 percent of qualified workers, earned on average 7 percent less than men. According to the latest data from the National Statistics Institute, the unemployment rate in 2022 was 12.1 percent, 14 percent for women and 10.3 percent for men. The underemployment rate for women was of 14.6 percent compared to an overall underemployment rate in 2022 of 12.6 percent.

Activity in the informal economy – mostly in urban areas in sectors such as small industry, commerce, informal sales, and other services – accounted for 12 percent of GDP. Women constitute a majority of informal economy workers. As part of its post-pandemic relaunch plan for the private sector, the government is assessing mechanisms to promote transition from the informal to formal economy and raise employer compliance with tax and social security obligations.

Cabo Verde has ratified all of the ILO’s eight fundamental conventions. Minimum wage is currently 13,000 escudos (USD 141) per month. The National Social Security Institute (INPS) manages unemployment benefits. 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 mandatory. Larger employers generally respect this restriction, but agricultural and domestic laborers often work longer hours.

Labor strikes are generally peaceful. All workers except those in restricted sectors are free to form and join unions without interference from the government. The government respects workers’ right to strike, but the law allows the government to act in emergency situations or when essential services might be affected. Few companies have adopted collective bargaining, but the ILO has worked with local unions and government bodies to provide guidance on conducting dialogue between parties. The Directorate General for Labor (DGT) has a conciliation mechanism to promote dialogue. There have been no instances in which labor laws were waived in order to attract or retain investment.

The World Bank, International Monetary Fund (IMF), and African Development Bank (AfDB) consider the rigidity of labor laws and severance pay requirements to be an obstacle to industrial investment and development.

March 2023 legislation establisheda legal regime for public employment. The law mandated an increase in maternity leave from 60 to 90 days, the introduction of 10-day parental leave, the introduction of teleworking or hybrid work, and the possibility of remaining in public service up to the age of 70 when the employee agrees and if it is in the interest of the Public Administration.

							12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs					

DFC does not currently support any investment projects in Cabo Verde. DFC’s predecessor agency, the Overseas Private Investment Corporation (OPIC), signed an insurance agreement with Cabo Verde in 1985.

							13. Foreign Direct Investment Statistics