Cabo Verde boost position amongst Africa’s most open economies

12 February 2014

Cabo Verde (Cape Verde) has boosted its position in Africa in the latest version of the world’s main economic freedom index, at a time when important Chinese investments are about to be launched.

In the 2014 edition of the Index of Economic Freedom put together by the Wall Street Journal and the Heritage Foundation, Cabo Verde is the third best-ranked sub-Saharan African country and even manages to be listed ahead of Portuguese-speaking countries such as Portugal itself.

According to the Economist Intelligence Unit, “Cabo Verde’s good performance is not surprising, given the immense social and economic stability recorded over the last decade.”

In its latest report on Cabo Verde, the EIU noted that the archipelago was well-placed in all 10 categories that contribute to the overall score on the index, particularly in terms of monetary, fiscal and investment freedom.

Businesses in Cabo Verde have a “relatively low” tax burden, with competitive rates of corporate tax (35 percent for individuals and 25 percent for companies,” the EIU noted.

Against 2013, Cabo Verde managed to improve in seven categories, particularly in labour, investment and public spending, which allowed to rise five places in the overall ranking.

The index was published at a time when significant investments by Chinese companies are expected in Cabo Verde, particularly in the privatisation of airline Transportes Aéreos de Cabo Verde (TACV).

The announcement of Chinese interest was made by Cabo Verde’s Minister for Finance and Planning, Cristina Duarte, cited by the Cape Verdean press, but she did not name the company.

According to Cape Verdean newspaper A Semana, representatives of Okay Airways, a private Chinese airline were in Cabo Verde in November 2013 and toured the country’s airports accompanied by representatives of TACV and airport company ASA.

The Chinese airline plans to take a stake in the Cape Verdean flagship airline and operate the routes that TACV ahs to Africa, Europe, Brazil and the United States, as well as carrying Chinese trade cargo to Africa.

The China Road & Bridge Corporation (CRBC) will build a deep water port, a cruise ship terminal and repair the Cabnave shipyard on the Cape Verdean island of São Vicente, the Cargo News website reported in January.

In the last few weeks, the Cabo Verde government lent its “unquestioning” support to the tourism investment project by a Macau businessman on the islet of Santa Maria, off the coast of the city of Praia.

The investment is especially welcome given that the Cape Verdean economy, as noted by the EIU, is showing signs of a slowdown and the authorities are facing some financial difficulties as well as difficulties negotiating with unions.

“Advances in the transformation of Cabo Verde into a modern, diversified and competitive economy, as the government wants it to be, will be slow, partly due to strong resistance to reforms by unions and current interests,” the EIU economists said. (macauhub)