Cabo Verde Repatriation of Funds and Income Transfer

Investment law mandates central bank approve transfers within 30 days or pay interest at LIBOR rates on delayed capital

Cabo Verde's Investment Law guarantees foreign investors the right to convert and transfer abroad all income and capital from registered investments, with the central bank required to authorise transfers within 30 days or pay interest at 30-day LIBOR rates on delayed amounts. The framework covers dividends, capital gains, loan repayments and compensation, creating one of Africa's most explicit profit repatriation regimes.

The guarantee depends on two conditions: investors must comply with all legal obligations and register investments with the Banco de Cabo Verde. Registration occurs electronically through Cabo Verde TradeInvest the day after the Investment Registration Certificate is issued. Failure to register forfeits transfer rights entirely.

What can be transferred

The Investment Law specifies transferable income and capital across five categories. Operating income includes net operating profits, dividends and interest on capital. Fees and commissions cover royalties and payments for services related to the investment.

Capital returns encompass proceeds from share sales and income from partial or total sale of any investment component. Financing and repayment provisions allow transfer of initial capital, additional capital used to maintain or increase the investment, and loan repayments including associated interest. Compensation covers payments resulting from expropriation or losses.

The comprehensiveness matters because many emerging markets restrict capital repatriation through narrow definitions of transferable funds. Some jurisdictions allow dividend transfers but restrict capital repatriation. Others permit transfers only after tax clearances that take months. Cabo Verde's framework covers the full spectrum from operating profits to liquidation proceeds.

The 30-day rule and interest liability

The central bank must authorise transfers within 30 days from the request date or receipt of additional information requested. This deadline has teeth: if the 30-day period passes, the Banco de Cabo Verde becomes liable to pay interest calculated at the 30-day LIBOR rate on the amount deposited in legal financial institutions in the country.

The accrued interest is transferable simultaneously with the capital. This creates financial incentives for prompt processing rather than bureaucratic delay. The interest liability shifts costs from investors to the central bank for administrative failures.

The Portugal-Cabo Verde bilateral investment treaty provides additional clarity. A transfer is deemed "without delay" if effected within the period normally necessary for completion of requisite formalities, which cannot exceed 90 days from submission of the transfer request. This creates dual timelines: 30 days for central bank authorisation, 90 days for actual transfer completion.

Balance of payments safeguard

The framework includes a safety valve. If the amount to be transferred would likely cause serious disturbances in the balance of payments, the Governor of the Banco de Cabo Verde may exceptionally mandate equal consecutive quarterly remittances over a maximum two-year period.

This provision addresses a legitimate concern for small economies with limited foreign exchange reserves. Cabo Verde's international reserves reached approximately six months of import cover in 2024. A sudden large capital outflow could destabilise the currency peg to the euro, which anchors monetary policy.

The safeguard is tightly constrained: it requires gubernatorial decision, can only apply when balance of payments disturbance is likely, must use equal quarterly payments, and cannot extend beyond two years. This prevents indefinite deferral while allowing temporary phasing of extraordinary transfers.

The central bank can also subject certain larger transfers to prior verification. Transactions exceeding CVE1m for private unilateral transfers, transfers exceeding CVE5m as revenues or service payments (excluding interest on authorised loans), and pre-payments or final settlements of current transactions more than three months in advance when the instalment exceeds CVE1m all require verification.

Foreign workers and repatriation rights

The repatriation guarantee extends to employees. Foreign workers and Cape Verdean workers who lived abroad more than five years at hiring have the right to convert into freely convertible currency and transfer abroad income derived from services rendered to companies financed with resources from abroad.

Two conditions apply: workers must have fulfilled all tax obligations, and the resources financing the employer must be duly registered with the Banco de Cabo Verde. This creates parallel obligations—the investment must be registered and taxes must be paid.

The provision matters for businesses recruiting specialised foreign talent. Engineers, executives and technical specialists often negotiate contracts in hard currency with guaranteed transfer rights. Cabo Verde's framework provides statutory backing for these arrangements rather than leaving them to contractual enforcement.

Foreign currency accounts and transaction flexibility

Foreign investors can open accounts denominated in convertible currency with financial institutions authorised in Cabo Verde. These accounts can perform all transactions with others abroad, providing operational flexibility for businesses with international supply chains or customers.

Credit movement restrictions apply: accounts can only be credited via transfers from abroad or from other foreign currency accounts in the country with authorised financial institutions. This prevents circumvention of capital controls through domestic currency conversion.

The Banco de Cabo Verde regulates opening and operation of these accounts. Commercial banks including Ecobank offer multi-currency accounts in Cape Verdean escudos, US dollars and euros. Non-residents can open accounts remotely, often requiring power of attorney for a local lawyer or agent.

Both residents and non-residents may hold foreign exchange accounts. Banks provide international IBANs for international transfers, integrating Cape Verdean accounts into global banking infrastructure. This eliminates the friction of correspondent banking delays or restricted payment routes common in some African markets.

Exchange rate mechanics

Transfers occur at the exchange rate in force on their effective date. The exchange rate is based on the cross-rate resulting from exchange rates the International Monetary Fund would use for exchanging the respective currency in Special Drawing Rights.

This IMF-based methodology provides objective pricing rather than central bank discretion. The Cape Verdean escudo's peg to the euro at CVE110.265 per €1 creates fixed rates for euro-based transfers. Transfers in other currencies use the euro-SDR-currency cross-rate.

The mechanism prevents a common abuse where central banks offer unfavourable official exchange rates for capital repatriation. By anchoring to IMF SDR rates, Cabo Verde eliminates implicit taxation through exchange rate manipulation.

Registration as the critical gateway

Every provision depends on registration with the Banco de Cabo Verde. Registration occurs electronically through Cabo Verde TradeInvest the day after the Investment Registration Certificate is issued. This creates a bright-line rule: registered investments enjoy full transfer rights; unregistered investments have no transfer rights.

The registration requirement serves multiple purposes. It allows the central bank to track foreign investment stocks and flows for balance of payments accounting. It creates an official record for tax compliance verification. It establishes investment legitimacy for dispute resolution purposes.

For investors, registration is non-negotiable. The transfer guarantee provides no value without it. The electronic processing through Cabo Verde TradeInvest simplifies administration but creates a single point of failure if systems or procedures break down.

Comparison with regional practice

Cabo Verde's repatriation framework is more explicit and enforceable than most African jurisdictions. Many countries guarantee profit repatriation in investment laws but lack implementing regulations, clear procedures or time limits. The 30-day authorisation deadline with LIBOR interest liability for delays is unusual.

Nigeria, Africa's largest economy, experienced chronic foreign exchange scarcity from 2016-2023 that left companies unable to repatriate profits despite legal guarantees. South Africa imposes no restrictions but requires Reserve Bank approval for amounts exceeding certain thresholds. Kenya guarantees repatriation but periodic dollar shortages create delays.

Cabo Verde's framework includes balance of payments safeguards but makes them exceptional rather than routine. The two-year maximum deferral and quarterly instalment structure prevent indefinite blocking. The interest liability for processing delays creates bureaucratic accountability.

Risks and implementation questions

Legal guarantees matter only if implemented consistently. The 30-day timeline depends on central bank capacity, systems reliability and political will. Economic crises can turn exceptional balance of payments provisions into routine practice, as Zimbabwe and Argentina have demonstrated.

The foreign exchange reserves requirement is critical. Cabo Verde's reserves reached six months of import cover in 2024, above the three-month minimum considered adequate. But reserves can deplete quickly during external shocks. The COVID-19 pandemic showed how tourism-dependent economies face sudden stop problems when visitor arrivals collapse.

The registration requirement creates potential for administrative discretion. If Cabo Verde TradeInvest delays issuing Investment Registration Certificates, the central bank registration doesn't occur and transfer rights don't vest. A single bureaucratic bottleneck can nullify the entire framework.

Tax compliance requirements for repatriation create enforcement leverage. Investors must have "complied with all obligations to which they are subject" to transfer funds. Tax disputes can block repatriation until resolved, creating negotiating asymmetry between government and investor.

The credibility question

Cabo Verde has maintained its euro peg for 27 years and achieved upper-middle-income status in 2025. Political stability and democratic governance rank among Africa's highest. Public debt declined from 147 per cent of GDP in 2021 to 110 per cent in 2024. These factors support implementation credibility.

The bilateral investment treaty network with nine countries including Portugal, Germany, Italy, Netherlands and Switzerland provides additional recourse. Treaty breaches can trigger international arbitration at ICSID, raising reputational and financial costs for violations.

Yet small economies face structural vulnerabilities. A single large investment liquidation could trigger balance of payments concerns justifying delayed transfer. Tourism sector volatility creates foreign exchange unpredictability. Climate vulnerability and water scarcity pose long-term risks.

The competitive positioning

For investors evaluating African markets, Cabo Verde's repatriation framework offers unusual certainty. The 30-day deadline with interest liability, comprehensive list of transferable funds, foreign currency account flexibility and IMF-based exchange rates create transparent mechanisms.

The framework serves investors who prioritise capital mobility over market size. Companies pursuing West African digital services, Portuguese-speaking market strategies or Atlantic logistics find value in guaranteed repatriation despite limited domestic demand. The legal architecture compensates for structural constraints.

Whether the framework attracts substantial foreign investment depends on factors beyond repatriation rights. Market size, labour costs, infrastructure quality and sector opportunities all matter. But for capital that does arrive, the repatriation guarantee reduces a major emerging market risk: the inability to exit. The door in remains open, and crucially, so does the door out.