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Taking off for tomorrow
One of the world’s smallest nations is plotting a brilliant twenty-first century as a strategic stepping stone into Africa for investors from North America, Europe, and Asia. Niche service markets include finance, data centers, and transportation.
Key players Franklim Spencer enapor As president of the national ports agency, Spencer oversees nine ports that in 2010 handled 5,711 ships and 1.8 million tons of cargo. He is also responsible for modernization and expansion projects that are vital if the country is to become a strategic player in twenty-first-century logistics. “We will have logistics parks at all the ports, a transshipment terminal at Mindelo capable of receiving vessels carrying up to 3,000 containers, and all ports will be able to handle ships with up to 400 containers,” he said. Cargo security scanners and a fiftymeter Coast Guard cutter are also planned. Freight charges could fall by 25 percent, lowering investments costs throughout the economy.
Emanuel Miranda Caixa Economica Created in 1928 as an offshoot of the mail service, Caixa Economica is today the country’s second-largest bank, with shares held by a mix of state agencies and private investors. The goal, according to Board President Emanuel Miranda, is to help make Cape Verde an international financial center. “Our internationalization project starts with Portuguese-speaking countries, with the second step being the ECOWAS market,” Miranda said, referring to the fifteen-nation Economic Community of West African States. “Africa represents the future; the opportunities will be in this continent, and Cape Verde acts as a platform, a bridge for Europe, the U.S., China, and Brazil.”
ourism remains Cape Verde’s natural dollar-earner. But this ten-island nation of half a million people knows it needs more than just lazy sun-seekers if it is to achieve middleincome status within ten or fifteen years. Target markets include finance, data centers, and transportation. “Cape Verde has made great progress; we’re taking off,” said José María Neves, prime minister since 2001. He predicted reaching “cruising speed” by 2015, with incomes rising steadily. Uninhabited until the Portuguese happened along half a century before Columbus, Cape Verde enjoyed some moments of strategic importance in the days of slavery, sailing ships, and coal-burning steamships. But now that’s all distant history. Modern container vessels go straight past, intercontinental jets fly far overhead, and the twentieth century largely passed the islands by. After declaring independence from Portugal in 1975, the archipelago struggled along with fishing and some residual shiprepair business. For the past two decades, however, Cape Verde has sought to attract foreign investment, enact pro-market economic policies, and generally pull itself up by its bootstraps—albeit with significant help from the European Union, the World Bank, and the International Monetary Fund (IMF). “We have to be the best student in the class at everything,” said Neves, who is big on things like public-sector transparency and efficiency. “The country’s performance is its own best marketing.” Equally intent on promoting development is Finance Minister Cristina Duarte, a former Citibank VP in Angola. “Cape
Verde managed to ride out the international tsunami and survive,” she said. “Despite the crisis, we were able to maintain three things: public order, political stability, and our macroeconomic fundamentals.” Now a possible European recession spells another challenge. “For many years, foreign involvement has been mainly with European countries, be it in tourism, foreign direct investment, or remittances. But our main aid donors and sources of finance are those same EU countries that now face severe budgetary constraints. This has been a great lesson for us; we must diversify,” Duarte said, mentioning the United States, eastern Europe, and Asia as potential targets. Years of sound management have earned the resource-poor country substantial international assistance. “We export an intangible asset: our credibility,” Duarte said, with the proceeds being invested in roads, airports, health, technology, governance, and e-learning, all of which stimulate growth. Gross domestic product grew 5.6 percent in 2011 and is set to expand by a further 6.4 percent this year, according to the IMF. One strength lies in the massive diaspora. Hundreds of thousands of Cape Verdeans and their offspring live abroad, mostly in the United States. The money they send back is a major source of hard currency. Many expatriates have firstworld education and valuable business or professional experience, so the Cape Verde government has created a ministry specifically to leverage this asset. Infrastructure investment should help boost tourism, not least the lucrative cruise vessel stopovers. Hotel guests come mainly from the United Kingdom, Portugal, Italy, and France. Currently, three of
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the more easterly islands, Boavista, Sal and Santiago, receive some 95 percent of all hotel guests, but port improvements will help bring visitors to other islands. Tourism Minister Humberto Brito predicts Cape Verde will receive 500,000 visitors a year by 2013, up from 380,000 in 2010, and, is seeking to expand attractions. Fogo Island, for example, has a volcano—last eruption 1995—and produces a distinctive wine. Another attraction is the rich and unique culture, a legacy of the archipelago’s singular role in European and African history. And Cape Verde has given the world the Morna, a musical style made famous by the late Cesária Évora. “Our islands are all different; we can’t offer just sun and beaches,” Brito said. Jose Duarte, president of Cape Verde Investment, a state-run promotion agency, seeks to woo investors with his “clusterized vision of development,” and points to potential for an international financial center. The government is adamant that Cape Verde will not become an offshore tax haven; rather, it will leverage
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its political stability and newly upgraded fiber optics infrastructure as a financial services provider. Niches could include data centers and secure backup for mainland banking hubs like Accra, Abidjan, Lagos, and Dakar. This ties in with its growing capacity for telecommunications, creating the possibility for a cluster focusing on business processes, back offices, call centers, data centers, and technology parks. Another cluster is envisioned around maritime resources, including fishing, cargo transshipment (in particular once the deep-water port expansions are complete), insurance, oceanic minerals exploration, and possibly wave-powered electricity generation. Air services are another potential cluster, wrapping together air transport, tax-free zones, air transportation services, and maintenance. “If we want to transform Cape Verde into an international services center, we have to create conditions to stimulate the private sector and competitiveness,” said Infrastructure Minister José Maria Veiga.
CAPE VERDE ACCOMPLISHMENTS “We must be excellent at everything we do if we are to gain international recognition.”
Prime Minister José Maria Neves • First African nation to comply with International Monetary Fund objectives • First nation to comply with its Millennium Challenge Compact • Third-best country in sub-Saharan Africa (out of forty-six) in terms of business freedom (Index of Economic Freedom 2011) • One of the three least-corrupt countries in Africa—global rank is forty-five • One of Africa’s best-ranked countries for enforcing contracts • A WTO member since 2008 • Good relations with the IMF, USA, EU, and China For more information, please contact us at www.peninsula-press.com Text by Brian Nicholson; Pictures by Emanuele Giusto
One of the world’s smallest nations is plotting a brilliant twenty-first century as a strategic stepping stone into Africa for investors fro...