Cabo Verde, a “safe haven” among Portuguese-speaking countries

3 May 2016

Cabo Verde (Cape Verde), which is seen by analysts and the international community as a “safe haven” among Portuguese-speaking countries due to economic and political stability, is now at the beginning of a new term of office for the government, keen to improve the business climate.

The revival of private investment – both domestic and foreign – was set by the new Prime Minister of Cabo Verde, Ulisses Correia e Silva, as the primary objective of the action of his government, according to the Africa Intelligence Monitor newsletter.

To facilitate its implementation, said the same publication, policy, fiscal and other measures are due to be improved soon to improve the country’s business climate. The slowdown of the economy, and particularly its negative effects on investment and job creation negatively affected the previous government during the elections.

Credit rating agency Standard & Poor’s said Cabo Verde’s reputation as one of the most stable countries in Africa remains untouched, but the financial situation is considered delicate, especially because increased public debt. It doubled in the last 7 years to 120 percent of GDP at the end of 2015.

The recent debt trajectory has significantly exceeded S&P’s projections of 105 percent of GDP, and will continue to increase to a “peak” of 125 percent of GDP in 2017.

If investment levels recover and economic growth accelerates, the debt burden will be quickly diluted, so it is urgent for the government to improve conditions for investors, including international investors, taking advantage of occasions such as completion of the business summit between China and the Portuguese-speaking countries in Cabo Verde in 2017.

In January, the Portuguese Prime Minister, António Costa, chose Cabo Verde for his first official visit. This option had the political symbolism to demonstrate the diplomatic priority of relations with Portuguese-speaking countries and was “natural in view of the excellent bilateral relations between the two democratic states,” according to analyst Paulo Gorjão.

“Moreover, among the African countries with Portuguese as an Official Language (PALOP), Cabo Verde emerges as a safe haven, given that it is the Portuguese-speaking state that has the most mature and smooth relationship with Portugal,” said the analyst from the Portuguese Institute for International and Security Affairs (IPRIS), in a statement published last week.

The analyst even suggested a first attendance by Cabo Verde in the UN Security Council, with the Portuguese-speaking countries “in the first diplomatic line to support this claim if Prime Minister Ulisses Correia e Silva decides to proceed with an application.”

The new government took office in April, a few days after the inauguration of the Presidential Palace, in Praia, a project financed entirely by China similarly to other government buildings, the National Assembly, the National Stadium and other flagship facilities such as the Poilão dam.

At the time, President Jorge Carlos Fonseca told Macao magazine that Cabo Verde’s relations with China had been “privileged since independence,” with a tendency to become “increasingly important”.

“We are in a phase of extending and diversifying economic and financial cooperation. Anything involving the relationship between economic cooperation, companies, and business, it is important to shake up,” said the head of the Cape Verdean state when asked about his expectations for the business meeting between China and the Portuguese-speaking countries in 2017.

In December 2015 Jorge Fonseca attended the last Forum for Cooperation between China and Africa in Johannesburg, where he met with Chinese President Xi Jinping.

He told Macao Magazine an official visit to Bejing was being prepared. (macauhub/CN/CV)