Cabo Verde economy Strategic vs. Non-Strategic Sectors

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Strategic vs. Non-Strategic Sectors in Cabo Verde: The Roadmap to 2030

Cabo Verde is a Small Island Developing State (SIDS) with a service-based economy, where services represent approximately 75% of GDP. Recognizing the risk of depending too heavily on a single industry, the government has identified specific "catalytic sectors" intended to accelerate sustainable development, diversify the economy, and reduce vulnerability to external shocks.

1. The Strategic Sectors (The "Catalytic" Engines)

Strategic sectors in Cabo Verde are defined by their ability to create high-value jobs, attract foreign investment, and take advantage of the country's location in the mid-Atlantic.

A. Tourism: The Anchor Sector

Tourism is clearly the economy's main driver, contributing roughly 25% to GDP directly (and up to 44% when indirect effects are included).

• Strategic Shift: The strategy is to move away from relying solely on sun-and-beach all-inclusive resorts concentrated on Sal and Boa Vista toward a diversified, high-value model.
• New Niches: Strategic priorities now include nautical tourism, health tourism, and digital nomadism. The government aims to reach 1.2 million tourists by 2026.

B. The Blue Economy: The New Frontier

With a maritime territory making up over 99% of the nation's total area, the Blue Economy is identified as the second major driver of development.

• Strategic Focus: This sector goes beyond traditional fishing to include maritime logistics, bunkering (ship refueling), ship repair, and aquaculture.
• Key Project: The Special Maritime Economic Zone in São Vicente (ZEEM-SV) is the flagship project designed to transform the island into a logistics hub for the Atlantic.

C. The Digital Economy: The Connectivity Hub

Cabo Verde aims for the digital economy to contribute at least 25% to GDP by 2030.

• Strategic Assets: The strategy uses the country's connection to submarine fiber-optic cables (like EllaLink) to become a digital hub linking Africa, Europe, and the Americas.
• Infrastructure: Investments include the Cabo Verde Technology Park (TechPark) in Praia and Mindelo and the creation of a Special Economic Zone for Technologies (ZEET) to attract tech companies.

D. Renewable Energy: The Enabler

Energy is a strategic sector not only for investment but for national survival and competitiveness. Cabo Verde depends on imported fossil fuels for energy generation, creating high costs and vulnerability.

• Strategic Goal: The National Program for Energy Sustainability aims to exceed 50% renewable energy by 2030.
• Investment: This sector is open to independent power producers (IPPs), focusing on wind, solar, and eventually green hydrogen.

2. Transitional Sectors (Moving from Traditional to Strategic)

These sectors have historically been low-productivity or subsistence-based. The government's current strategy is to "transform" them into strategic assets through modernization and formalization.

A. Agriculture: From Subsistence to Market

Historically, agriculture has been a minor contributor to GDP (around 4-5%) due to water scarcity and dependence on rainfall.

• The Shift: The current strategy is "Agriculture Transformation." This involves moving away from traditional rain-dependent subsistence farming toward modern, technology-driven agriculture using desalinated water and drip irrigation.
• Goal: The objective is to supply the tourism industry (hotels currently import roughly 80% of food) and develop high-value export products.

B. Industry: From Weakness to Opportunity

Manufacturing has historically been weak, representing a small fraction of the economy.

• The Shift: The new industrial policy focuses on export-oriented light manufacturing. This includes processing fish (canneries), textiles, and footwear, taking advantage of trade agreements like the US AGOA and the African Continental Free Trade Area (AfCFTA).
• Target: To increase the industrial sector's contribution to GDP to 13% by 2026.

3. The State's Role: "Strategic" Ownership vs. Privatization

The definition of "strategic" also applies to state ownership. Historically, the government controlled key network industries. However, the current policy is to streamline the state's role to reduce financial risk and improve efficiency.

• State-Owned Strategic Assets: The government retains control over critical infrastructure such as the transport and distribution of electricity (though generation is opening to private investors) and port administration (ENAPOR).
• Sectors Slated for Privatization: The government is actively working to reduce its presence in competitive sectors. This includes the privatization or concession of port operations, handling services, and the state airline TACV.
• Establishment Conventions: For private investors, a project is legally considered "strategic" (and thus eligible for exceptional tax benefits and contractual stability) if it exceeds 3 billion CVE (approximately €27 million) and creates significant employment.

Cabo Verde economy Strategic vs. Non-Strategic Sectors

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Cabo Verde economy Strategic vs. Non-Strategic Sectors

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Cabo Verde economy Strategic vs. Non-Strategic Sectors

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