Building on Ambition – China helps build Cape Verde after independence

13 December 2013

Public infrastructures erected by China in Cape Verde, such as the government and presidential palaces, have become landmarks in the landscape and even part of the rich culture of the archipelago. Later this year, Cape Verdeans will be able to enjoy the most recent of these works: the National Stadium, which Chinese ambassador Su Jian describes as “the greatest construction after Independence” in the archipelago. It becomes reality – and a symbol in itself –at a time of dynamism in the ancient trade and economic relations, and of ambitions to raise it to new heights. New fields of cooperation are opening up in ports, industry, education and information technology.

The two countries have different stories of “success”. On one side is a small and arid archipelago, part of one of the poorest regions of the planet. Without natural resources – at least those that enrich nations – Cape Verde was obliged to use other weapons. The key ingredients to its unlikely success include developing key sectors in tourism, services, real estate and infrastructure construction. In addition, remittances, political stability, openness to foreign investment and an open economy have played an important part.

On the other side is the second largest economy in the world, which many herald as the next global superpower. It is the most populous country in the world and the third largest in territory – an economic giant.

So why is Cape Verde seen as “a faithful friend”, as the Chinese ambassador to Cape Verde, Su Jian, put it?

Cape Verde and China celebrated 37 years of diplomatic relations on 25 April. It is a relationship of “mutual trust”, “solidarity” and “friendship” that comes from the days of the archipelago’s struggle for independence, and that has gained strength from the 90s onwards. The early Chinese traders to reach the island were essential in the initial push. The success of these pioneers showed Beijing that in the west coast of Africa was a politically stable state, open to the world and with a privileged geo-strategic position. Nowadays, China is an indispensable partner of Cape Verde, as demonstrated by the numerous ongoing projects, completed infrastructures, grants and financing awarded.

The relationship is cherished by both parties and the desire is to keep cooperation going. Beyond assistance from China, bilateral pacts and partnerships are now fostered between companies that have strengthened ties between the Asian economic giant and the small archipelago, which was once considered a “case study” of development in Africa.

But rather than diplomatic relations kick-starting events, the history of economic cooperation begins with investments by Chinese traders. The first Chinese store appeared in 1995, in Praia, and today it is estimated that more than 400 Chinese entrepreneurs reside in Cape Verde, according to the Association of Chinese Traders Yanzhao. In a 2005 study, researchers Heidi Østbø and Jorgen Carling stated that the conditions of Cape Verde in the 90s attracted many small investors. “The purchasing power was relatively high due to remittances that many Cape Verdean received from relatives abroad,” they explain.

The high price levels benefited products from China at low prices, lower than those from Portugal and the European Union, and had an impact on trade in the archipelago. In the book “1999-2009: A Decade of Boost of the Sino-Lusophone Area” we read that “increasingly, a growing number of Chinese migrants are based in the archipelago, mostly originating from the region of Wenzhou in southern Zhejiang province, near the coast south of Shanghai.” The impact on society and the economy of Cape Verde was evolving, reflected not only locally but also among Chinese migrants. “We must emphasise the importance that small Chinese investors had in drawing attention to the potential of the country.”

China as a development partner
Stability, security and openness have been three key factors in the positive development of Cape Verde and China’s presence in that process.

“It must be acknowledged that Cape Verde meets very favourable conditions for our country to maintain investment and cooperation, namely the social and political stability, good governance, professionally prepared technical staff, along with policy that favours foreign investors,” says China’s ambassador to Cape Verde. Su Jian explains that these factors have created a “favourable environment” for the Chinese community. From that point until the beginning of closer cooperation, it was just a small step: about three years.

In 1998 an agreement was signed to encourage investment and a year later, in 1999, the agreement of trade and economic cooperation between the two countries was established.

Since then, China has invested in building state infrastructure. The Government Palace, the Palace of the Assembly, the National Library and the National Auditorium are some of the emblematic works built by China in Cape Verde. Currently in progress are the redevelopment of the Palace of the Presidency of Cape Verde and the National Stadium, works also financed under the cooperation agreements between the two nations.

Ambassador Su says that this cooperation has returned “significant” results, and that cooperation is not limited to the construction of infrastructure. “The essential forms of such cooperation can be identified in the execution of projects, short-term training, medical assistance, technical cooperation, supply of materials/equipment, scholarships, humanitarian aid, etc.” The presence of China extends to various sectors. Besides the construction of infrastructure, the Chinese government has supported the development of health, education, the energy sector, telecommunications, transport, ports, the fishing industry and tourism.
New forms of cooperation
Chinese aid comes in many cases in the form of loans, accompanied by the training and deployment of technicians. Last year, the two governments agreed a loan of 51 million dollars, with interest at 2%, and a loan of 12 million dollars without interest for the construction of social housing in Cape Verde. These concessional loans illustrate one of the strategies used in the cooperation between the countries. In addition, in 2007 China also announced debt forgiveness amounting to 3.2 million euros invested in the territory.

In health, the touchstone of Chinese aid is the construction of the Center for Consultation and Maternity in Agostinho Neto Hospital, Praia. Besides the construction of this important infrastructure, the two countries have a 1983 protocol contemplating the presence of Chinese medical teams in Cape Verde, which started in 1984. The agreement was renewed with the completion of Agostinho Neto Hospital, which receives medical teams from China, renewed every two years. In addition, China has also provided medicines as well as medical and hospital equipment. Last year this same unit received equipment valued at 1.5 million dollars, allowing it to have an intensive care unit.

Another of the most outstanding works of this cooperation is in the field of energy, one of the strategic sectors for the Cape Verdean government, according to their plan for 2011–2016. The Poilão dam, delivered to the Government of Cape Verde in May 2006, is an important infrastructure for energy production and the development of agriculture. Last year the Chinese government also funded the construction of solar power stations in the city of Praia, an investment of about $ 800,000. According to Ambassador Su Jian, there were still “training programmes for employees and Cape Verdean technicians in the fields of environment, energy, agriculture, etc”.

Indeed, when investing in education and training, the Cape Verdean government also enlisted the help of their Asian “friend”. Since 1996, several students from Cape Verde were accepted at Chinese universities. Between 2005 and 2006, about eight students were sent over, and between 2007 and 2008 their number had increased to 41. For Su Jian, China has formed “a group of young people who today contribute to the development of Cape Verde”. It is estimated that about 100 Cape Verdean fellows are currently attending Chinese universities, and in April last year a new agreement for cooperation in higher education was signed, in this case focused on research, postgraduate studies and training for college teachers. In addition to these programmes, China has participated in the construction of major infrastructure for education and culture, such as the Auditorium and the National Library. Currently in the construction phase is the Sal educational complex, a huge professional school dedicated to tourism.

The construction of a cement factory in Santa Cruz on the island of Santiago is another large investment. The production unit is being developed by China Building Material Industrial Corporation for Foreign Econo-Technical Cooperation, an investment that is said be around 80 million dollars. Although the agreement is dated November 2006, construction has not yet started due to controversy about its location. Maio Island wishes to claim the installation of the cement plant for itself, as the plant will be fed from the exploitation of limestone – by a Chinese company – from that same island.

Recent cooperation agreements are also to be found in the military sector, and the ministries of Defence signed several agreements from the 90s onwards. China has been a major help in upgrading Cape Verde’s military equipment in recent years. The military cooperation protocol signed in 2010 provided for a supply of equipment worth 1 million dollars. In July 2012 China provided logistical and communications material to the military of Cape Verde, in an agreement  also providing a way for military officers from Cape Verde to receive military training in China. On 14 May 2013 a new protocol was signed providing for the donation of 50 million dollars in military equipment. This money is intended for the purchase of two patrol boats for the Coast Guard, the construction of a production unit of uniforms and the assembly of four modern gyms in different military bases in the archipelago.

The patrol of the waters is a major issue for Cape Verde. The sea is one of the main resources of the country and a priority for the government. Cape Verde wants China to be a part of this project and Chinese interests in using the Cape Verdean ports are clear. Ambassador Su Jian highlights the “geostrategic” importance of Cape Verde, “its location and influence in Africa, and two steps from Europe and South America”. The Ambassador highlighted the fact that China has already funded the purchase of scanners (by a Chinese company) for ports in Praia, S. Vicente and Sal, a technology that allows monitoring without intrusion into containers. The link in the ports sector goes even further. “The CNFC, the largest Chinese sea company, started repairing their boats in Cape Verde, and in 2009 opened an office in São Vicente, which operates fish transhipment and the exchange of sailors, along with the purchase of services and logistics materials to the fleet.” He confirmed that the “CNFC is a customer and wants to be a partner of excellence for Cabnave”.

Last year two companies began negotiations, driven by the Cape Verde government, which had as its main objective the entrance of CNFC in the capital of Cabnave, something that has not taken place as yet. A strategic project for the government of Cape Verde is the modernisation of the port of Mindelo, Sao Vicente. ESAPOR – the company that controls the Cape Verdean ports – and the government have sought to find partners in China for this project. Even the Prime Minister of Cape Verde, José Maria Neves, went to China last year seeking investors.

Tourism is one of the most important sectors for the development of Cape Verde. It is a major contributor to positive development after independence and remains a good bet for the government. In the strategy outlined for 2011–2016, the Cape Verde executive aims to “attract foreign investment for tourism” as a priority. In 2012, China became number one on the list of the world’s largest consumers of tourism, with around 83 million Chinese travelling the world. As Ambassador Su Jian tells us: “In recent years, the ambassador of Cape Verde in Beijing has organised several sessions to promote tourism in the Chinese market.” In October 2007 China and Cape Verde signed a memorandum to “Level the Tourism Cooperation”, which culminated in the inclusion of Cape Verde in the list of tourist destinations recommended by Beijing. China has collaborated with several projects launched to create new infrastructure for tourism in the region. This month it was announced that tourism professionals of Cape Verde, Mozambique and Guinea-Bissau will receive training at the Macao Tourist  Office, from July to September.

Main Infrastructure Built by China in Cape Verde

Agostinho Neto Hospital, Praia:

Valued at $ 4.5 million, the construction of the consultations area and maternity unit at Hospital Agostinho Neto was completed in October 2010. According to the Chinese ambassador to Cape Verde, Phase 2 of the works will soon be launched, also under cooperation agreements.

Poilão Dam, Ribeira Seca:

Located in the Watershed of Ribeira Seca, on the island of Santiago, the dam can store 1.2 million cubic metres of water and can irrigate 65 hectares of land. It is 26 metres high, 15 metres long and can store up to 1.7 million cubic metres of water. The structure fits in the framework of Technical and Economic Cooperation agreements, signed between the two countries, and the value of the project was around 3.5 million euros. It was delivered to Cape Verde in May 2006.

Educational Complex of Sal Island:

A huge vocational school, with a footprint of 21,000 m2, with capacity for 1,800 students. Besides the building, the Chinese government will also provide equipment and furniture.

Government Palace:

The Palace of the Government of Cape Verde, along with the Palace of the Assembly, the National Library and the National Auditorium, is one of the most striking works by China, who have supported the renovation and construction of public infrastructure needed in the country.

National Stadium:

The new stadium will have 15,262 seats, a large electronic screen of 105 m², four towers of 50-metre floodlights, automatic sprinkler systems, lighting, audiovisual and sound equipment, as well as eight 400-metre athletic fields and a soccer field boasting international conditions. The project is valued at over 12 million.

Presidential Palace:

The works have not started yet but the agreement is already signed for the redevelopment of the Presidential Palace of Cape Verde, also known as Palace of the Plateau, and the official residence of the President.

Future Relations

With the impasse in the cement industry, the National Stadium and the renewal of the Presidential Palace are the most emblematic works in progress, with regard to Sino-Cape Verdean ties. The National Stadium is for ambassador Si Juan “the greatest work erected in Cape Verde after independence”, allowing the realisation of “national and international level matches, competitions in athletics and football, as well as shows and cultural events, among other forms of concentration of the population”.

The future promises further collaborations between private entities of the two countries. Besides the cooperation between Cabnave and CNFC, which is being encouraged by both governments, other partnerships are in motion that are seen as beneficial to both sides. The Operational Unit for the Information Society (NOSI) of Cape Verde, has collaborated with the Chinese telecommunications giant HUAWEI (the second largest worldwide supplier of telecommunications equipment). This cooperation is essential for starting a cluster of information technology and communication projects in Cape Verde, with the inauguration of the NOSI Data Center expected soon.

Chinese cable television provider BOOM TV already services the island of Santiago and will soon reach the island of S. Vicente.

In the energy sector, a partnership is being promoted between Electra, the power and water utility in Cape Verde, and Goldwind, a Chinese company linked to renewable energy.

All these cases show that Chinese companies can enter the Cape Verdean market through cooperation. The opposite relationship may not be as visible. In 2009 Cape Verdean businessman Jorge Benchimol Duarte stated that “the programme of cooperation of China and Cape Verde is made between the two states, often steering clear of companies.” When asked about these difficulties, the Chinese ambassador to Cape Verde replies: “According to statistics from China Customs, in 2012 bilateral trade between China and Cape Verde stood at 57 million dollars, an increase of 15.7% compared to the value of the previous year. ” It further states that “to facilitate the entry of Cape-Verdean companies in the Chinese market, the Chinese government assured Cape Verde exemption from tariffs to 442 products” of export of the archipelago. In 2011 there was a 600% increase in Cape Verde exports to China, according to the observatory of the Portuguese-speaking countries. However it is worth noting that China does not appear in official statistics among the main export destinations of the archipelago, which are in Europe, especially in Spain and Portugal.

In July 2007, José Maria Neves, Prime Minister of Cape Verde, highlighted the modernisation of various sectors, including “roads, ports, airports, electricity, water, sanitation and telecommunications”. In almost all sectors there was investment from China. The Asian giant invested about 210 million dollars in Cape Verde between 2000 and 2011. These figures place China clearly as a major development partner of Cape Verde.

It is certain that the “friendship” between the two nations is seen as beneficial by both sides, and that projects, agreements and intentions point to a continuation of this healthy partnership between the small African archipelago and the giant Asian sub-continent.

Ambassador Su Jian has no concrete numbers. “In recent years, Chinese companies have made investments in the sectors of telecommunications, construction, tourism, trade, fishing, among others. Private investment played a prominent role. Considering that the shapes of these investments were very diverse, it was difficult for a while to make a full calculation.” However the diplomat sees this cooperation as “increasingly widespread”, reaffirming that the partnership between the two countries is to continue. “The Chinese government has been encouraging and supporting companies and banking institutions of our country to strengthen mutual beneficial cooperation with Cape Verde.”
(By Antonio Escobar and Jorge Kimbamba Simões/Macauhub)