Cap Verd: Invertir
FDI flows to Cape Verde have declined significantly due to the Covid-19 pandemic (-28.1% y-o-y in 2020), given the predominantly EU origin and focus on the tourism sector. Nevertheless, according to UNCTAD’s World Investment Report 2022, FDI inflows recovered in 2021, when the country welcomed USD 118 million in foreign investments, marking an increase of 14.5% compared to the pre-pandemic level of 2019. In the same year, the total stock of FDI was estimated at USD 2.4 billion, around 126% of the country’s GDP. The primary sectors attracting FDI in Cape Verde include tourism, renewable energy, and real estate. Other sectors that have received FDI include agriculture, fisheries, and services. In terms of countries investing in Cape Verde, Portugal is the largest foreign investor, followed by Spain, the Netherlands, and France. Other countries that have invested in Cape Verde include Brazil, China, and the United States. Investments from China are on the rise, focusing on the tourism and infrastructure sectors, as well as the construction of a special economic zone (Coface). Some notable FDI projects in Cape Verde include the construction of a new international airport on the island of São Vicente, the development of a wind farm on the island of Santiago, and the construction of several new hotels and resorts throughout the country. According to the latest data available by the Central Bank, in the second quarter of 2022, foreign direct investment in the country (including reinvested profits) stood at PTE 2,531 million compared with PTE 2,237 million in the corresponding period of the previous year. The increase in FDI inflows was due to the increase in real estate investment (by PTE 357 million) and in shares and other equity investments (by PTE 45 million) which compensated for the decrease in investments by emigrants (PTE 185 million). The investment carried out in the country was mainly in the tourism and real estate sectors, in the islands of Santiago Boavista and Sao Vicente. The capital invested came mainly from Portugal and Angola.
The country enjoys remarkable political and economic stability, as well as robust institutions. Moreover, growth in some sectors, such as public works, tourism and fishing has created new opportunities. Both foreign and domestic investors are subject to the Investment Law, which guarantees the freedom to invest irrespective of nationality. However, certain sectors have their own legislation, which mandates that foreign investors in the fisheries sector must have a minimum of 51% participation from Cabo Verdean partners, while interisland maritime transport requires a minimum of 25%. However, as an archipelago state, Cape Verde is highly fragile and vulnerable to climate change, thus requiring additional resources to build resilience. The Government has continued to implement its privatisation programme, even though few investors have shown interest. Additionally, the State has decided to reduce taxes and administrative procedures, while also improving electrical infrastructure. Even though there is room for improvement, the regulatory environment and incentives are attracting tourism investors and major new projects. Under the Investment Law and the Law of Industrial Development, national and foreign investors are treated equally. Additionally, Cape Verde has been actively seeking foreign investment through various initiatives, including the establishment of the Cabo Verde Special Economic Zone (ZEEC) and the creation of a new investment promotion agency, Cabo Verde TradeInvest. In February 2020, Cape Verde was removed from the "blacklist" of tax havens in the European Union. Cabo Verde ranks 47th out of 176 countries in the 2023 Index of Economic Freedom.
| Cape Verde | Sub-Saharan Africa | United States | Germany | |
|---|---|---|---|---|
| Index of Transaction Transparency* | 1.0 | 5.5 | 7.0 | 5.0 |
| Index of Manager’s Responsibility** | 5.0 | 3.5 | 9.0 | 5.0 |
| Index of Shareholders’ Power*** | 6.0 | 5.5 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
| Foreign Direct Investment | 2020 | 2021 | 2022 |
|---|---|---|---|
| FDI Inward Flow (million USD) | 68 | 104 | 136 |
| FDI Stock (million USD) | 2,470.3 | 2,373.2 | 2,290.9 |
| Number of Greenfield Investments* | 1.0 | 0.0 | 1.0 |
| Value of Greenfield Investments (million USD) | 28 | 0 | 11 |
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Zero-rated items include: import of goods whose supply qualifies for exemption; services in connection with the import of goods where the value of such services is included in the taxable amount; import of gold by the central bank; import into ports by sea fishing undertakings of their catches, unprocessed or after undergoing preservation for marketing but before being supplied; import of goods under diplomatic and consular arrangements that qualify for exemption from customs duties; import of goods for the fuelling and provisioning of sea-going vessels and aircraft; supply, modification, repair, maintenance, chartering, and hiring of aircraft used by airlines operating both on domestic and international routes, and the supply, hiring, repair, and maintenance of equipment incorporated or used therein; the supply of goods for the fuelling and provisioning of such aircraft; services meeting the direct needs of such aircraft or their cargoes; etc.
| Single Income Tax (IUR) | Progressive rate from 16.5% to 27.5% An exemption from taxation applies to net income of up to CVE 220,000/year |
| CVE 0 - 960,000 | 16.5% |
| CVE 960,001 - 1,800,000 | 23.1% |
| CVE 1,800,000 and above | 27.5% |
| Cape Verde | Sub-Saharan Africa | United States | Germany | |
|---|---|---|---|---|
| Number of Payments of Taxes per Year | 30.0 | 36.6 | 10.6 | 9.0 |
| Time Taken For Administrative Formalities (Hours) | 180.0 | 284.8 | 175.0 | 218.0 |
| Total Share of Taxes (% of Profit) | 37.5 | 47.3 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
| Setting Up a Company | Cape Verde | Sub-Saharan Africa |
|---|---|---|
| Procedures (number) | 9.00 | 7.51 |
| Time (days) | 9.00 | 21.30 |
Source: Doing Business.
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Latest Update: November 2023
