Republic of Cabo Verde

Cabo Verde is an archipelago of ten volcanic islands and five islets in the Atlantic Ocean off the coast of Senegal. Although the country has a land area of just 4,033 km2, its exclusive economic zone extends for around 200,000 nautical miles (approximately 370.4 kilometres) from the coast of each island and covers a surface area of 730,000 km2. This exclusive economic zone is characterised by great depths and high underwater peaks, with a small continental shelf. The capital, Praia, is located in Santiago, which is the largest island in the archipelago and home to most of the country's population.

Although most of the islands have rugged terrain and volcanic soils, some are flat and sandy, with sparse vegetation and a hot, dry climate. Only 10% of the territory is classified as arable land. Annual rainfall is around 182 mm in Praia and even lower on the other islands, which severely limits surface and borehole water resources. The islands of Santo Antão and São Nicolau, located in the north-west, are a relative exception, as they are more exposed to oceanic humidity. Although the rate of connection to the water network is high in Cabo Verde, meeting the population's water needs and managing water resources are major challenges. The fragmentation of the territory leads to major connectivity problems and poses other constraints in terms of the provision of services, particularly access to energy, education and health.

These formerly uninhabited islands were discovered and colonised in the 15th century by the Portuguese. Cabo Verde then became an important crossing point for the slave trade, and later a supply port for whaling and transatlantic shipping. After independence on 5 July 1975 and an attempt at unification with Guinea-Bissau, the country established a one-party system, which lasted until multi-party elections were held in 1990. Today, Cabo Verde is recognised for the stability of its democratic system, one of the strongest in Africa.

In 2021, the resident population of Cabo Verde was around 491,233, but this figure is constantly rising. Forecasts, pending the next census, show an ageing population and negative net migration. With a net migration rate of -0.6 migrants/1,000 inhabitants in 2023, migration is a historical constant. The number of Cape Verdeans living outside the country exceeds the population on the archipelago: around 700,000 people live mainly in the United States or Europe.

In terms of economic development, the dependence of the government and Cape Verdeans on external resources, such as international aid, remittances and tourism, means that the country's economy is vulnerable to external shocks, geopolitical tensions and climatic risks.

Despite these structural constraints and limited natural resources on land, Cabo Verde has managed to record relatively strong economic growth since the 1990s, with growth of 5.1% in 2023. GDP per capita rose from USD 842 in 1990 to USD 3,503 in 2008. Although growth stagnated between the global economic crisis and 2021 (USD 3,293 in 2021), it has picked up again, with a forecast of USD 4,321.6 in 2024. Cabo Verde's growth has been made possible by its gradual integration into the world economy, a development strategy based on foreign investment, its maritime resources and more inclusive social policies. This enabled it to join the group of middle-income countries in 2008.

However, the balance of trade remains heavily in deficit, with imports 15 times greater than exports by 2022. Although the country has seen a recovery since the Covid pandemic, with the current account balance falling to 2.9% of GDP in 2023, due to the recovery in tourism (forecast at around 25% of GDP in 2024), and inflation falling (from 7.9% in 2022 to an annual average of 3.7% in 2023), poverty and inequality remain major challenges.

While human development indicators are relatively good for the West African region (ranked 127th out of 192 countries in 2021, with a human development index of 0.662), progress in terms of social indicators is weak. In 2007, 26.7% of the population was considered poor, with half of these people living in extreme poverty. In 2023, the extreme poverty rate was still high, with 11.1% of the population living on less than USD 1.90 per day, in purchasing power parity. The unemployment rate in 2023 was 13%, mainly affecting young people, 29.2% of whom aged between 15 and 35 were unemployed (IMC 2022). Implementation of reform programmes in the public sector and public enterprises is slow. The availability and quality of the country's human resources are undermined by the large number of Cape Verdeans leaving the archipelago in search of better prospects.

In this context, the cooperation programmes between Cabo Verde and Luxembourg in favour of vocational training, employment, climate action, access to health and basic resources (water and energy) are relevant.

Cabo Verde has been a partner country of Luxembourg's cooperation programme since the late 1980s, and a general cooperation agreement was signed in 1993. The first Indicative Cooperation Programme (ICP) was signed in January 2002 to define the cooperation relationship between Cabo Verde and Luxembourg. The first interventions focused on water, secondary and technical education and health. Today, the programmes implemented by LuxDev in Cabo Verde focus on vocational training and employment, as well as sectoral support for water and sanitation. Under the new ICP V signed in 2021, Luxembourg has extended its support to the energy transition, governance and climate action sectors.

Source: World Bank