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Cape Verde A new chapter begins 2008 has been quite a year for West Africa’s fast-growing economy, as it entered the World Trade Organization this year and achieved “Middle Income” status.
tiny archipelago of ten islands and five islets in the midAtlantic Ocean, Cape Verde has a population of just 400.000, but has big plans to take its place on the world stage. The country, blessed with beautiful beaches and a warm, temperate climate, is currently witnessing hotel and apartment construction on an unprecedented scale, and is projected to become a tourism Mecca within the coming decade. This year in particular, the West African country has had much to celebrate. Not only has it been upgraded to Middle Income Country status by the World Bank, but it also became a member of the World Trade Organization in July. The good news comes two years after the re-election of José Maria Pereira Neves, head of the African Party for the Independence of Cape Verde, who, since first taking office in 2001, has taken the country to new heights: recording growth of between 6 and 7% in recent years—which has allowed the population to benefit from a GDP per capita that is three times higher than most of their African neighbors—and earning Cape Verde a reputation as one of the best governed countries in Africa, according to the World Bank. “The challenge now is to insert the country into the global economy. For that, we intend to modernize the infrastructures, improve the qualifications of our human resources, and develop the business field,” says Prime Minister Neves. “This is something we want to achieve with the help of private investors, either from here or abroad. We would like them to invest in all sectors: tourism, transport, commerce, financial services, technologies and fisheries. We would expect strong investment from China in all of these respects.” China already has a strong presence on the island, in retail and fisheries, in particular, and has been involved in the construction of secondary schools and hospitals, a national stadium and a concrete factory, as well as facilitating an e-government project. The Far-Eastern partner has also built the islands’ first dam barrage. Now, however, Neves is keen to involve the Chinese in tourism, finance and the infrastructure
sector, particularly the port authority, Enapor. At a meeting with Prime Minister Neves this year, Premier Wen Jaibao said: “China is willing to carry out reciprocal cooperation with Cape Verde in shipping, communications, tourism and the José Maria Pereira Neves, Prime Minister
service sectors. These industries are crucial for Cape Verde’s economic development, while China boasts advantages in these areas.” Foreign investment is expected to reach U.S.$7.8 billion between 2007 and 2011, according to the country’s foreign investment promotions agency, creating around 32,000 jobs. The services sector has the greatest weighting, making up 74% of the economy. An efficient, privatized transport system is therefore crucial, Neves believes, both to fully capitalize on the country’s enviable “gateway” location, and its important tourism potential. “Cape Verde has a strategic position in the middle of the Atlantic, between north and south. We intend to transform the area into a corridor of peace and cooperation for development. We have a strong role in the field of tourism and transport, by air and by sea,” he says. “As far as tourism is concerned, we want the Cape Verde product to be different; to be of the highest quality. It is within these two sectors in particular that we are working.” Cristina Duarte, Minister of Finance and Public Administration, notes how Cape Verde must also enlarge its production base if it is to achieve a sustainable economy, and this presents another challenge. “Cape Verde is a highly vulnerable, insular island nation with ecological and agricultural vulnerability due to low rainfall. Only 10% of our land is suitable for farming and we produce only 20% of our food needs,” she says. “Cape Verde is also dependent on external flows, aid, and immigrant remittance flows. About 80% of foreign investments are financed
Electric and Water Company • Generation, Transmission and Distribution of Electricity on all country. • Production and Distribution of Desalinated Water for domestic use on S. Vicente, Boavista and Sal islands and in Praia town/Santiago island. • Waste Water collection and treatment in Praia town/Santiago island. Av. Cidade de Lisboa, CP 131 - A, Praia - Cabo Verde Tel.: +238 261 4008 Fax.:+238 261 4752 www.bi.cv
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through official development assistance and the remittance represents more than 10% of our GDP. We have geographic discontinuity, and also lack economies of scale; our population is not much more than a neighborhood in New York, for example.” The country’s competitive advantages—location, maritime potential and climate—will therefore be fully exploited in the coming years. Manuel Inocêncio Sousa, Minister of Infrastructure, Transport and Sea is overseeing the major works going on in air, sea and highways, to ensure the necessary connections are in place for both Cape Verdeans and visitors. New international airports have recently opened on Boa Vista and São Vicente to complement the international airports of Praia, the country’s capital and Sal, while domestic airports are either being built or upgraded. The Ministry is also hoping to get Chinese investment on board to upgrade the ports at Praia, Sal, Boa Vista, Santo Antão and Brava. “We want to build a deepwater port in São Vicente so that we can receive big ships and large containers. This project has been given to the private sector and we have already made contact with Chinese enterprises that have expressed interest,” he says. “We would however, like to see more Chinese companies investing here.”
A growing financial sector Cape Verde’s small financial sector has five commercial banks, including new arrival Espírito Santo, and remains highly concentrated with the two largest, Banco Comercial do Atlântico and Caixa Económica de Cabo Verde, controlling 89% of the total assets and deposits. Banking reforms initiated in the 1990s led to the privatization of Banco Comercial do Atlântico Cristina Duarte, Minister of Finance and Public Administration
and Caixa Económica de Cabo Verde, although the government has retained a large stake in the latter. There is a good mix of foreign and domestic players in the sector, which has been strengthened by improved regulations and an autonomous monetary policy. Confidence in the banking system is very high, as it is well supervised and very liquid, and the government has plans to liberalize the movement of largely Portuguese capital, so that Cape Verde can become an international financial hub. The largest bank in Cape Verde, the dynamic and innovative Banco Comercial do Atlântico (BCA) has a long history on the islands, with links that go back to when Cape Verde was a Portuguese colony. It was created in its present form in 1993, as a result of the separation of commercial and supervision components being carried out by the Bank of Cape Verde, and has agencies on all 9 of the islands. “Our shareholder base is one of our strengths,” says João Real Pereira, Chairman and CEO of Banco Comercial do Atlântico. “We are 10% owned by the state, 55% by Caixa Geral de Depósitos (CGD)—Portugal’s largest bank— ,10% by Garantia, and 25% by investors on the Stock Exchange, which includes 3% of our employees. When BCA was privatized, the objective was that CGD could bring technology needed to the market, and
The new international airport of Boa Vista welcomes tourists from all over the world.
today, we are proud to have a very up to date system.” The bank has no plans to expand within the region, but is concentrating on the domestic real estate boom, facilitating the financial needs of both investors and developers. Banco Interatlântico (BI) is also part of Caixa Geral de Depósitos, and will celebrate its tenth anniversary next year. BI is a Portuguese bank that has grown with the aim of being close to its clients—one that makes the difference in the Cape Verdean context. “We strongly invest in corporate projects and are intending to be geared toward private investors with high incomes,” says Fernando Marques Pereira, president of the administrative board of Banco Interatlântico. “We are always launching new products and want to help Cape Verdean companies augment their capital, particularly those involved in tourism and distribution.” BI is strongly contributing to the development of the country, supporting many projects, related to tourism—particularly hotel construction and residential tourism—as well Portuguese companies that invest in Cape Verde. It is now increasing the number of its workers and agencies in order to be able to cope with the needs of the growing economy. BI also helps the community in a practical context, collaborating with the Education Department on schools projects and helping local institutions. “We aim to become a regional Cape Verdean bank,” Marques says. Finally, he adds: “We have already received some Chinese entities and are taking care of their projects. We are definitely interested in facilitating more Chinese business. Cape Verde is a country with political and macroeconomic stability, and people know very clearly where they are going. It is also very well situated geographically, and I am sure the Chinese will want to seize the opportunities within this context.” The second largest bank on the market, Caixa Económica de Cabo
Five reasons to invest in Cape Verde 1 It is a growing country with a vision of development, with strong confidence and ambition. 2 It has a balanced, stable economy. 3 Its currency is pegged to the Euro. 4 It follows and has adopted the Maastricht criteria when managing its macroeconomy. 5 It has a unique location that offers the perfect gateway to three continents with a multicultural population.
SPECIAL ADVERTISING SECTION Verde was privatized in 1999, and has transformed into a worldwide commercial bank, with the freedom to offer all banking products and services. The bank, 46% state-owned, recently underwent
a product called Micro Price, which is not economically viable, but it helps the Cape Verdeans.” The bank is also cultivating its image as a regional leader.
The industrial landscape
Manuel Inocêncio Sousa, Minister of Infrastructure, Transport & Sea
a reorganization after the acquisition of Instituto Nacional de Previdência Social of 31% of its shares. Its new President, Emanuel Miranda, is concentrating on excellence, quality, and delivering more innovative services. “Today the banking system in Cape Verde is very dynamic and competitive,” he says. “We mustn’t lose sight of the fact that while we could be the first bank to launch a product in the market, the next day, all banks will be offering the same thing. This is why we want to offer better quality than our competitors, with specific characteristics that no other bank will be able to offer. Services such as receiving customers, better accessibility for our clients, and seizing new technologies to offer better access to a banking product have to be developed.” The bank recently met with one of the most important banks in China to discuss partnership opportunities. “We cannot close ourselves to the local market,” says Miranda. “We have to turn ourselves to the international market and seize that development. We must be able to attract foreigners here and establish partnerships with them. We would definitely like a Chinese bank to come here and establish a partnership with a local bank. It would be good for the country, bearing in mind the strength China has in the financial and commercial sector all over the world.” The image of Caixa Económica as a modern, socially responsible bank is very important to Miranda. “As an institution, we are strongly engaged with social matters. To see the efficient social development of the country, not just an economical one, is very important. We want to contribute to this, to be able to solve problems. For example, we offer
After independence in 1993, the industrial sector in Cape Verde was born, with garment and shoe production factories. Industry accounted for 20% of GDP in 2000. Besides salt refining, Cape Verdean manufactures frozen and canned fish, tobacco, bread and biscuits, and soft drinks. Rum is also produced from locally grown sugarcane. In 2002, the African Development Bank granted Cape Verde a U.S.$3.3 million loan to finance its economic reform programs that year, including privatizing industries. Created in 1996, Sociedade Caboverdiana de Tabacos (SCT) is one of the leading industrial companies in Cape Verde. Introduced on the Stock Exchange in 2005, SCT has signed an exclusivity agreement with the government giving them exclusive access to the market until 2012, when it will be deregulated. Distributor of five brands, including Marlboro and two own brands within its portfolio, SCT has established itself as a major player covering 90% of the market and intends to reinforce its presence through diversification, with the help of international joint alliances and partnerships. “Our main objective is to move to areas outside of our core business, although that doesn’t mean we will not develop the tobacco side further,” says Júlio Carlos Andrade, MD of SCT. “We are looking at other profit-making avenues. We already have the know-how concerning tobacco, which gives us the confidence to move on and keep doing our best.”
Modernizing Utilities As the name suggests, Electra is the public utility responsible for electricity, as well as water transportation and distribution, and wastewater treatment. Created in 1982, the company has suffered from fuel increases and mismanagement—in 2006, the government had
LOCATION OPTIONS SAFETY AT THE CROSSROADS OF MAJOR SHIPPING ROUTES For many years now, Cape Verde’s central position has made the archipelago an important crossroads for passenger and cargo vessels crossing the Atlantic.
C A P E V E R D E P O RT S C.P. 82, Mindelo, S. Vicente, Cabo Verde Tel.: +238 230 75 00 • Fax: +238 232 43 37 E-mail: firstname.lastname@example.org • www.enapor.cv
CAPE VERDE to step in and salvage a failed privatization attempt—but is now slated for privatization Mário Paixão Lopes, President, ASA
again and already in discussions with investors, including the Chinese. Energy in Cape Verde is very expensive, due to the difficult transport conditions and minimal production centers, so improving transport and distribution, through new investments is vital, according to Electra’s president of the executive board, Antão Manuel Fortes. “We have started some projects with the government’s support, and are considering renewable sources of energy, such as wind production and biofuels. Our geographic make-up makes distribution a complicated issue, but we are confident that new investments will be forthcoming so that we can meet the needs of our population.
SPECIAL ADVERTISING SECTION and adopt new technologies to serve all of the port’s clients.” Spencer wants a complete reorganization of the country’s transport system, using the concept of a platform. “Let’s not forget that a port is not only used for loading and unloading of goods,” he says. “It has to be a big platform that would be able to offer properly all the services to the exporters, importers and distributors. We want our ports to become international: the sea, air and domestic ones, as well as being able to offer a high quality service. We are counting on the investment from the private sector in order to be really able to compete in this area.” The Enapor president also wants to capitalize further on the country’s strong naval heritage. “In the past, Cape Verde had a very important role on the unloading of coal in São Vicente but we lost the dominance to other ports,” he explains. “We want a strong platform so that we are able to compete with Dakar and with the Canary Islands. That’s why we have different expansion and development projects
Spanish entity AENA. ASA (Airports and Air Navigation Company) was created in 1984, and began operating as a stock company in 2001. Its main role, then and now, is to support and enhance the attractiveness of Cape Verde in order to boost tourism and business, positioning the country as a major transportation hub, and a unique tourism destination. The company manages 7 airports—four of them international. “The opening of the new airport at Boa Vista has exceeded all our expectations and we expect the traffic to increase three- or fourfold in the coming years,” says Mário Paixão Lopes, ASA’s chairman. The company is now actively seeking to manage the airports in partnership with private entities, while maintaining the infrastructure and air traffic control. “We already have a good model and continue to be a solid, autonomous company that keeps contributing to the country’s development, making significant investments in modernizing its services and infrastructure and investing in
Ports undergo major change In the meantime, Enapor, the port management company, has been busy with plans to expand and modernize the ports of Praia and Palmeira (Sal), Sal Rei (Boa Vista) and Porto Novo, and embark on new developments in Fogo and Brava. The ambition of the company, which posted a profit of 200 million Escudos (U.S.$230 million) last year and recorded growth of between 10% and 12%, is to turn Cape Verde into a transshipment hub. It has recently increased talks with the Chinese company Cosco for the development and management of a naval terminal in São Vicente, which will include a commercial and industrial zone. Cape Verde is still expected to be China’s third economic and commercial zone in Africa after Egypt and Nigeria. “The master plan for the high-scale facilities includes massive modernization and is estimated to cost some 300-450 million,” says Enapor’s president, Franklim Spencer. “In order to deal with the natural increase in traffic and volume of business, we have to make sure the infrastructure is adequate, outfit our ports with the necessary superstructures,
“ASA is a solid, autonomous company that continues to make significant investments in its services, infrastructure and staff,” Mário Paixão Lopes, Chairman, ASA under way. Cape Verde has shown most interest in boosting cooperation with China in shipping and fishing areas as China wants to set a regional fishing center in São Vicente. These are our current priorities.” The Port Authority chairman ranks security and staff training high on his agenda.
Taking tourism to the limit As tourism takes off in Cape Verde, the Airport Authority has launched a new development plan to help it cope with increased traffic and provide premium quality services to its clients. New safety standards are already being implemented, and three new international airports have opened in the last three years. Others are undergoing either expansion or upgrades, in a bid to connect the islands and deal with the projected influx of traffic. A major investment has been made in radar vigilence in collaboration with the
Are you looking into investing in Cape Verde? Talk to BCA or BNU.
Banco Comercial do Atlântico (BCA) Cabo Verde. Tel: +238 260 85 50 email@example.com www.bca.cv
SOCIEDADE CABOVERDIANA DE TABACOS, SA
Banco Nacional Ultramarino (BNU) Macau. Tel: +853 28355111 www.bnu.com.mo
P.O. BOX 270, Sao Vicente, Cape Verde Tel: +238 232 33 49 / 50 / 87 Fax: +238 232 33 51 firstname.lastname@example.org www.sct.cv
our human resources capacity,” says Paixão. “In the coming years, ASA will continue to be a profitable company that will contribute to the social and economic development of Cape Verde and its inse rtion into the world economy. We want to contribute to the cultural, economic and social development between the different continents.” ASA’s strategy then, in collaboration with the Ministry of Infrastructure, is to transform Cape Verde into a service country for air transportation—but to achieve this, it has to improve its standards on all levels. “We are very happy with how our infrastructure is evolving, and of course, with the high degree of security found in and around our airports,” Paixão says. “Our collaboration with AENA has been essential, and has strongly contributed to reinforce our global security. “We would like to thank the European Development Bank for its support too—since 2004, we have had a state-of-the-art air traffic control system.“ Looking ahead to 2015 then, Paixão foresees world-class infrastructure throughout the islands, with a number of airlines in operation, both domestic and international. “At present we have Transportadora Aérea do Cabo Verde (TACV) and Halcyon Air operating here. However, more international agreements are due to be signed with international carriers, with new destinations abroad being reached. “If the Chinese can help us offer stronger capacity and help move Cape Verde further towards becoming a regional gateway, we will welcome them with open arms.” Business Focus
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Isle of Sal
Isle of Boa Vista
Isle of S˜ao Vicente
Isle of Santiago
S˜ao Vicente Sal S˜ao Nicolau
From island to island, to the world Boa Vista
Cape Verde is a land full of opportunities and ASA provides the means to seize them. As the driving force behind the country’s transport network, we’re the backbone of the economy and the key to future growth. We want to create harmonious and efficient links between the sectors, using the best technology. Why not join us on our journey? Maio Santiago Fogo Brava
Aeroportos e Segurança Aérea Sal Island, Cape Verde. email@example.com www.asa.cv
Cabo Verde report November 2008