Cabo Verde - Foreign Ownership Restrictions

Restrictions on Foreign Ownership in Cabo Verde: A Guide for Investors

For international investors, Cabo Verde offers one of the most open investment environments in West Africa. The country's legal framework is built on equal treatment, giving foreign investors the same rights, duties, and obligations as local investors. However, while there's no broad list prohibiting foreign investment, certain strategic sectors have ownership limits or operational requirements to protect local interests.

Here's what investors need to know about ownership rules.

The General Rule: 100% Foreign Ownership is Standard

Under the Investment Law (Law No. 13/VIII/2012, amended by Decree-Law No. 34/2013), foreign direct investment (FDI) is generally unrestricted in almost every sector.

• No Mandatory Local Partner: Except in specific sectors listed below, foreign investors don't need a local Cabo Verdean partner. You can own 100% of a company's shares.
• Legal Protection: The law guarantees protection against nationalization or expropriation, except when required for public necessity (which requires fair compensation).

Sector-Specific Restrictions

While the economy is open, the government maintains specific limits on foreign participation in sectors considered critical to national interests or local livelihoods.

A. Inter-Island Maritime Transport Connections between the islands are considered strategically important.

• Ownership Cap: Companies operating inter-island maritime transportation must have at least 25% Cabo Verdean ownership.
• Cabotage Restrictions: National maritime transport (cabotage) is generally reserved for national shipping companies. However, if no national companies are available, the maritime administration may allow foreign shipowners to operate these routes on an exceptional basis.

B. Fisheries Fisheries are a vital export sector and source of local income.

• Ownership Cap: Foreign ownership in the fisheries sector is limited to 49%.
• Licensing: Fishing in national waters requires a specific license. While industrial fishing attracts international fleets (particularly from the EU and Japan), they operate under fisheries partnership agreements or specific licenses rather than through direct ownership of local fishing resources.

C. Critical Infrastructure (Telecoms & Energy) While not strictly "closed" to foreign ownership by law, these sectors have high barriers to entry due to government control and concession agreements.

• Telecommunications: The market is technically open, but the state-owned Cabo Verde Telecom (CV Telecom) holds a 20-year concession to manage the public infrastructure network (signed in 2022). Competitors must negotiate access to this network, creating a practical barrier for new foreign entrants wanting to build independent infrastructure.
• Energy: Independent Power Producers (IPPs) are allowed and encouraged (especially for renewables). However, the state-owned utility Electra maintains a monopoly on transmission and distribution in most areas, meaning foreign investors typically operate through Power Purchase Agreements (PPAs) rather than owning the grid.

 Financial Sector Restrictions

Following international scrutiny (such as the "Luanda Leaks" investigation), Cabo Verde has tightened banking regulations to align with international transparency standards.

• End of "Offshore" Banking: The government passed laws to close banks that held "restricted licenses" (serving only non-residents). Banks must now serve local residents or face closure. This prevents foreign investors from setting up shell banks solely for moving external capital without engaging with the local economy.

Repatriation of Profits

While not an ownership restriction, the ability to take money out depends on following proper procedures.

• Mandatory Registration: Foreign investors have the right to convert currency and send profits home (dividends, royalties, sale proceeds). However, this right is conditional on registering the investment with the Banco de Cabo Verde (Central Bank) through the trade agency Cabo Verde TradeInvest. Failing to register the investment when you enter can result in being unable to repatriate funds later.

Investors should consult with Cabo Verde TradeInvest for the most current regulations regarding their specific project.