Cabo Verde's Tourism challenges

Cabo Verde's Tourism Trap: Success That's Running Out of Water

Tourism generates roughly 25 per cent of Cabo Verde's economy. Hotels and resorts on Sal and Boa Vista attract hundreds of thousands of visitors annually. The all-inclusive model works—sun, beaches, and reliable service draw Europeans seeking winter warmth.

But the infrastructure holding this system together is breaking under the weight of its own success.

Tourists on Sal use five times more water than locals. The island has the highest waste generation per capita in the country, expected to more than double by 2035. Hotels on Sal and Boa Vista produce 42 per cent of all waste sent to landfill on those islands. One international hotel chain in Boa Vista generates more waste than the entire city of Sal Rei.

Power cuts are frequent on Sal, the main tourist destination. In 2016, only 35 per cent of Boa Vista's population had access to the public water network—this on an island building massive resorts for foreign tourists.

The model that drove tourism growth is now its biggest constraint. And the infrastructure problems preventing diversification beyond Sal and Boa Vista make it nearly impossible to spread tourism's benefits across the archipelago.

Water: Expensive and Scarce

Over 80 per cent of drinking water in Cabo Verde comes from desalination—converting seawater into fresh water using diesel-powered plants. This process is energy-intensive and expensive. Water costs hotel operators between €4 and €7 per cubic metre, among the highest rates in Africa.

Tourism accounts for an estimated 51 per cent of total energy use on Sal. Much of that energy goes to desalination. The more tourists arrive, the more water is needed, the more energy is consumed, the more expensive both become.

This creates a vicious cycle. Tourism demands water. Water requires energy. Energy comes from imported diesel. Diesel prices fluctuate with global oil markets. When oil prices spike, water becomes more expensive, squeezing hotel margins and raising costs for locals.

On Boa Vista, where major resort development has occurred over the past 15 years, the public water network reached only 35 per cent of residents in 2016. Resorts had water. The surrounding population did not.

A planned floating hotel project in Baía das Gatas illustrates the problem. The developers are installing their own desalination plant producing 20 cubic metres per day because they can't rely on the public network to supply water consistently.

When private developers must build their own water infrastructure because the public system can't deliver, that's not a minor inconvenience. It's a fundamental constraint on growth.

Electricity: Expensive and Unreliable

Cabo Verde has some of the highest electricity tariffs in Africa—around 34.5 cents per kilowatt-hour for residential customers in 2022. Commercial rates are similar or higher. Hotels report electricity costs as high as 40 cents per kilowatt-hour.

Compare that with South Africa at roughly 10 cents per kilowatt-hour, or Portugal at 15 to 20 cents. Cabo Verdean hotels pay double or triple what competitors elsewhere pay for the same power.

Despite electrification rates reaching 95 per cent of the population, service quality is poor. Power cuts happen regularly, especially on Sal. The state utility, Electra, recorded commercial losses of 24.4 per cent of electricity generated in 2022—meaning nearly a quarter of power produced was lost to theft, inefficiency or non-payment.

For tourists, a power cut is an annoyance. For hotels operating on thin margins, unreliable electricity means backup generators, increased fuel costs, spoiled food, and unhappy guests who leave negative reviews online.

Tourism can't expand sustainably when basic utilities are both expensive and unreliable.

Waste: Nowhere to Put It

Sal has no recycling facilities. Waste management across the archipelago is fragmented and insufficient. Collection systems on major islands—Santiago, Sal, Boa Vista, São Vicente, Santo Antão—are inadequate for current needs, let alone future growth.

Hotels in Sal and Boa Vista generate 42 per cent of total waste on those islands. One hotel chain in Boa Vista produces more waste than an entire town. And the island's waste generation per capita is expected to more than double by 2035.

Where does it all go? Landfills without proper environmental controls. The very beaches and natural environment that attract tourists are being degraded by the waste tourism generates.

The model of rapid, often unplanned coastal development has overwhelmed infrastructure. Resorts were built faster than waste systems could expand. Now the islands face environmental degradation that threatens the natural capital—pristine beaches, clear water—that makes tourism viable in the first place.

Inter-Island Transport: The Diversification Killer

Cabo Verde is nine inhabited islands. Tourism is concentrated on two: Sal and Boa Vista. The other seven islands—Santiago, São Vicente, Santo Antão, Fogo, Brava, São Nicolau, Maio—see far fewer tourists despite having significant natural and cultural attractions.

Why? Because getting between islands is expensive, unreliable and time-consuming.

Domestic air transport capacity dropped over 60 per cent in 2021 and 37 per cent in 2022 following the pandemic. It hasn't fully recovered. Maritime transport is worse—unreliable links, inconsistent schedules, and delays of three to six hours are common.

On Sal, marine traffic uses one small jetty with basic equipment. Ships sometimes wait up to two weeks to unload. Port facilities don't operate around the clock and charge high tariffs. The cost to transport a container from Praia (on Santiago) to Sal is €1,000. Shipping the same container from Lisbon to Sal costs €2,000. Think about that: it's only twice as expensive to ship from Europe than from one Cabo Verdean island to another.

For tourists, poor inter-island transport means visiting multiple islands requires careful planning, tolerance for delays, and extra expense. Most visitors stay on whichever island they flew into. The "internal circuit"—tourism flowing between islands—barely exists.

For local producers, it's even worse. Hotels on Sal and Boa Vista import 80 per cent of their food and beverages because logistics from producing islands—Santiago, Santo Antão, Fogo, which hold 83 per cent of agricultural land—are unreliable. There's no dependable maritime cargo system. Refrigerated containers are scarce. Schedules are irregular. Costs are high.

So fresh vegetables, fruit, fish and meat that could be sourced from other islands get imported from Europe instead. Tourism money leaks out of the economy while local farmers can't access the market literally next door.

What the Government Is Trying to Do

The authorities recognise these problems and have launched initiatives to address them, though success varies.

Energy transition: The government targets 54 per cent of electricity generation from renewables by 2030. Investments include the Cabeólica wind farm, solar projects, and a large-scale battery storage system with 26 megawatt-hours capacity. Import duties and VAT are waived on renewable energy equipment to encourage private investment.

Independent solar projects achieve generation costs between €31 and €52 per megawatt-hour, compared with the regulated grid tariff of €255 per megawatt-hour. That's five times cheaper. Hotels investing in their own solar capacity can slash electricity costs dramatically.

Waste management: The National Strategic Plan for Waste Management covers 2015 to 2030. Environmental and climate resilience are being integrated into planning through Integrated Tourism Development Zones, which require specific environmental regulations. New wastewater and sewage rules are being implemented for ports and marinas.

Progress is slow. Plans exist, but implementation lags. The waste keeps piling up faster than solutions arrive.

Inter-island connectivity: The Tourism Operational Programme for 2022 to 2026 focuses on resolving insufficient infrastructure and deficient connectivity, with a budget of €200m. A new state domestic airline is planned for 2025 with subsidised tariffs to stimulate tourism on less-visited islands.

The Mindelo Cruise Terminal is under construction, expected to be completed by 2026. This aims to boost yachting and cruise tourism on São Vicente. Yacht tourists spend significantly more—$300 to $400 per day—than typical leisure travellers, who averaged just €41 daily in 2019.

The World Bank's Resilient Tourism and Blue Economy Development Project reached $75m in funding by 2024, the largest World Bank project in Cabo Verde's history. It focuses on structural infrastructure integrating climate resilience.

These are significant commitments. But they're playing catch-up with problems that have been building for years.

Digital Connectivity: The One Bright Spot

Cabo Verde has robust digital infrastructure. Fibre-optic submarine cables provide connectivity. Internet penetration reached 65 per cent of the population in 2023. The telecommunications network is well-structured.

This enables a sector that bypasses physical constraints entirely: digital nomads and remote workers. The government launched the CaboWork digital nomad visa to attract people who can work from anywhere. If you don't need to move goods or people between islands, Cabo Verde's geography stops being a problem.

Investment in high-speed connectivity, particularly in rural areas, could support growth in digital services and remote work. This represents genuine diversification away from traditional tourism.

What This Means for Tourism Growth

Tourism can't keep expanding on Sal and Boa Vista without addressing water, electricity, and waste constraints. Those two islands are already stressed. Doubling capacity would require doubling desalination, doubling electricity generation, and doubling waste management—all before considering the environmental impact.

Diversifying tourism to other islands requires solving inter-island transport. Without reliable, affordable connections, tourists won't visit Santiago's culture, Santo Antão's hiking, or Fogo's volcano. The attractions exist. The infrastructure to reach them doesn't.

The government's approach—Integrated Tourism Development Zones with pre-built infrastructure, renewable energy incentives, improved connectivity—makes sense. But implementation is slow, funding is limited, and the scale of investment needed is enormous for a country with a $2bn economy.

Where Investment Makes Sense

For investors, the constraints define the opportunities:

Self-sufficient resort development: New tourism projects in Integrated Tourism Development Zones come with essential utilities and tax incentives. Properties with their own water storage, renewable energy generation, and waste management systems command premium rates and higher occupancy. Guests pay extra for reliability.

Renewable energy for hospitality: Given electricity costs of 34 to 44 cents per kilowatt-hour, any hotel or resort can justify solar or wind installation. The payback period is short. Tax exemptions on equipment imports make it cheaper.

Niche tourism on less-developed islands: Poor mass-market connectivity creates space for high-value niche tourism. Yachting around São Vicente, eco-tourism in Santo Antão, adventure travel in Fogo. These don't require moving thousands of people—just hundreds willing to pay more for unique experiences.

Logistics infrastructure: The inability of local producers to supply hotels is a major gap. Investment in cold chain logistics, processing facilities, and reliable inter-island transport could capture hotel food spending currently going to imports. The market exists. The infrastructure doesn't.

Digital services and remote work: Robust submarine cable connectivity and the digital nomad visa create opportunities that bypass physical constraints entirely. Co-working spaces, serviced apartments, and high-speed connectivity in attractive locations can capture this growing market.

The Sustainability Question

Tourism generates a quarter of GDP. It's Cabo Verde's economic engine. But the current model—concentrated on two islands, dependent on expensive desalination, producing mountains of waste, importing most food—isn't sustainable at larger scale.

The archipelago can't absorb unlimited tourism growth without solving infrastructure constraints. Water and electricity must become cheaper and more reliable. Waste management must expand. Inter-island transport must improve.

These aren't quick fixes. They require patient capital, public-private partnerships, and realistic timelines. The government's plans address the right problems. But implementation will take years, and tourism keeps growing faster than infrastructure can keep up.

The risk is that success becomes self-limiting. Tourism grows until water runs short, electricity becomes too expensive, waste overwhelms landfills, or environmental degradation destroys the beaches that attract visitors in the first place.

Cabo Verde's tourism sector isn't failing. It's succeeding too fast for its infrastructure to support. That's a better problem than no tourism at all. But it's still a problem, and one that will eventually constrain growth if not addressed.

The islands have sun, beaches, and stability. What they need now is water that doesn't cost a fortune, electricity that doesn't cut out, and a way to move people and goods between islands without burning through cash. Until those fundamentals improve, tourism will remain concentrated on two islands operating near the edge of their infrastructure capacity.

That's profitable in the short term. But it's not a foundation for long-term growth.

Facts & Figures

Cabo Verde Tourism: The Numbers Behind the Boom

Tourism in Cabo Verde has exploded over the past decade. More than one million visitors arrived in 2023—a record. The sector generates 25 per cent of GDP and drives economic growth across the islands.

But the numbers also reveal uncomfortable truths: extreme geographic concentration, dependence on a handful of operators, and infrastructure struggling to keep pace with growth.

Here's what the data tells us about Cabo Verde's tourism sector since 2015.

Visitor Growth: From Strong to Explosive

2016: 644,429 tourists
2017: 716,000 tourists
2022: More than 835,000 tourists—exceeding 2019 pre-pandemic levels by 2%
2023: More than 1 million tourists—a historic milestone

Growth rates:

2022 saw nearly 400% growth compared to 2021 (post-pandemic rebound)
2023 saw 20.3% growth over 2022
2023 arrivals were 23.4% higher than 2019

Overnight stays:

2016: 4.1 million overnight stays—a 200% increase over 2006
November 2024: Overnight stays increased 24% compared to baseline

What this means: Tourism recovery post-Covid wasn't just quick—it set new records. The archipelago is now welcoming more visitors than ever, placing unprecedented pressure on infrastructure.

Economic Impact: The Engine of Growth

Tourism contributes roughly 25% of GDP (22% in 2018)
In 2022, GDP grew 17.7%, underpinned by strong tourism activity
Services associated with tourism grew nearly 21% in 2022
In 2023, accommodation, transport, and public administration contributed 3.2 percentage points to GDP growth

The Covid crash:

2020 GDP contracted 20.8%—the largest decline in Cabo Verde's post-colonial history, driven almost entirely by the tourism collapse

Investment signals:

Tourism is the largest recipient of investment tax credits, averaging 0.185% of GDP between 2019-2021
7,175 new hotel rooms are planned over the next three years
The potential food market for tourism is worth more than €60 million annually—but hotels currently import 80% of food and beverages

What this means: Tourism isn't just important—it's the entire economic model. When tourism stopped in 2020, the economy collapsed. The recovery has been strong, but the concentration of risk remains extreme.

Geographic Concentration: Two Islands, 95% of Tourists

2016: 91% of all tourist nights were on Sal and Boa Vista
2023: 95% of all guests stayed on Sal and Boa Vista

What this means: Tourism growth hasn't spread across the archipelago—it's intensified on the same two islands. Santiago, São Vicente, Santo Antão, Fogo, and others see minimal tourism despite having significant attractions. The infrastructure constraints keeping tourists on Sal and Boa Vista also prevent economic benefits from reaching other islands.

Industry Concentration: A Few Big Players Control Everything

90% of guest accommodations are dominated by three or four global resort chains
One international group controls:
- 33% of all rooms on Sal
- 73% of all rooms on Boa Vista

Market concentration:

31% of visitors in 2022 came from the United Kingdom—the single largest source market
Total accommodation stock in 2017: 11,467 rooms and 23,158 beds
Employment in accommodation sector in 2017: 7,463 staff

What this means: Cabo Verde's tourism isn't just geographically concentrated—it's structurally concentrated. A handful of international operators control most rooms. If one or two major chains pull out or reduce capacity, the impact would be severe. And with UK visitors representing nearly a third of arrivals, economic or political changes affecting British tourists could significantly dent the sector.

The Bottom Line

Cabo Verde's tourism sector has achieved remarkable growth:

Visitor numbers have more than tripled since 2010
The sector generates a quarter of GDP
Poverty has fallen as tourism has grown

But the model is fragile:

95% of tourists visit just two islands
A handful of operators control most capacity
Infrastructure on Sal and Boa Vista is near breaking point
Average spending per tourist remains very low
The entire economy rises and falls with European tourism demand

The government's plans—diversifying to other islands, attracting higher-spending niche tourists, building renewable energy, improving connectivity—address the right problems. But implementation is slow, and tourism keeps growing faster than infrastructure can support.

Cabo Verde has built an economic miracle on sun, sand, and stability. Now it needs to build the water systems, electricity grids, waste management, and inter-island transport to sustain it.

The numbers show impressive growth. They also show an economy with all its eggs in one very crowded basket.