Setting up a company - Local Partner Requirements

Local Partner Requirements in Cabo Verde: A Guide for Investors

For international investors, a key question when entering a new market is whether they must partner with a local company. In Cabo Verde, the general investment system is characterized by openness and equal treatment. However, specific strategic sectors maintain strict ownership caps that require local partnership.

1. The General Rule: 100% Foreign Ownership is Permitted

Cabo Verdean law generally does not require foreign investors to have a local partner. The Investment Law establishes the principle of free investment, stating that investment is unrestricted in most sectors regardless of the investor's nationality.

• No Mandatory Joint Ventures: Foreign investors are free to set up 100% foreign-owned subsidiaries. There's no local ownership requirement to operate a standard business.
• Legal Structures: Investors can incorporate a Single-Shareholder Company (Sociedade Unipessoal), allowing a single foreign individual or entity to hold 100% of the shares.
• Evidence in Practice: Multiple industrial and service companies in Cabo Verde operate with 100% private/foreign capital. Examples include various manufacturing firms in São Vicente (in clothing, footwear, and food processing) and major tourism developments.

2. The Exceptions: Sectors with Local Partner Requirements

While the general economy is open, specific strategic sectors have legal restrictions on foreign ownership, effectively requiring a local partner.

A. Inter-Island Maritime Transport

Cabotage (transport between islands) is considered strategically important for national connectivity.

• The Restriction: Inter-island maritime transport is generally reserved for national shipping companies. The law requires at least 25% Cabo Verdean ownership in companies operating in this sector.
• Exception: If no national shipping companies exist to meet the need, the maritime administration may exceptionally authorize foreign shipowners to operate national maritime transport.

B. Fisheries

Given the importance of the Blue Economy, the industrial fishing sector is protected.

• The Restriction: There's a 49% limit on foreign participation in fisheries. This means foreign investors looking to enter the industrial fishing market must form a Joint Venture where the majority stake (51%) is held by national interests.
• Licensing: Fishing in national maritime waters requires a fishing license and prior authorization from the relevant fishing authority.

3. Public-Private Partnerships (PPPs): The Strategic Partner Model

In sectors like energy, infrastructure, and logistics, the government often acts as the "local partner" through Public-Private Partnerships (PPPs) or concession agreements. This isn't a regulatory requirement for all entrants, but rather the standard model for large-scale infrastructure projects where the state retains asset ownership but delegates management to private investors.

• Renewable Energy: The government actively promotes PPPs for utility-scale projects to meet its 2030 renewable energy targets. A prime example is Cabeólica S.A., a wind energy company established as a partnership between the State of Cabo Verde, the national utility Electra, and foreign investors (Africa Finance Corporation and Finnfund).
• Infrastructure: Recent major deals, such as the 40-year concession of Cabo Verde's airports to Vinci Airports, follow this model of long-term partnership rather than outright privatization of the asset.
• Agribusiness: The government is establishing a new agricultural logistics company through a PPP model to improve the supply chain between producers and the tourism sector.

4. Voluntary Joint Ventures: Why Investors Choose Local Partners

Even where not legally required, many foreign investors choose to partner with local entities to reduce risks and navigate the challenges of operating in an island archipelago.

• Navigating Bureaucracy: Local partners can speed up licensing processes and help navigate complex customs and tax regulations, which are frequently cited as challenges by businesses.
• Access to Land: In the tourism sector, while foreign investors can own land, partnering with local entities or the state (through establishment conventions) often makes it easier to access prime development zones (ZDTIs) and clarifies land ownership issues.
• Industrial Joint Ventures: There's a history of successful industrial facilities set up as Joint Ventures between Cabo Verdean and foreign entrepreneurs, serving both the national market and exports to ECOWAS.

Cabo Verde Invest setting up a company Local Partner Requirements

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Cabo Verde Invest setting up a company Local Partner Requirements

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Cabo Verde Invest setting up a company Local Partner Requirements

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