Banking & Finance, Health Services, Utilities and The Stock Market in Cape Verde

Banking & Finance in Cape Verde

The Bank of Cape Verde is the primary financial institution of Cape Verde. The rights of the bank are described in Article 94 of the Constitution which states that “The Bank of Cape Verde shall be the central bank which shall have the exclusive right to issue money and collaborate in the definition and implementation of the monetary, financial and exchange rate policies in accordance with the law.”

The Financial Services sector in Cape Verde is in the early stages of development. This is historically because of the lack of investment from foreign institutions and low domestic demand. Corporate and consumer spending in the sector are at fairly low levels compared to other developing nations.

However, in recent years this is all beginning to change. Due to the huge inflow of foreign investment in property and land, the demand for financial services has never been higher. The Europeans that have invested in Cape Verde are demanding all the services that are common place in the developed world.

There has also been a significant increase in foreign trade, as well as continuing investment in the development of infrastructure. Tourism in Cape Verde has also increased tremendously, so the financial services sector is growing to meet the extra demand. The competitiveness and range of financial products is definitely on the increase.

Mortgage rates have come down over the last few years even though the European Central Bank (ECB) has actually been increasing its Base Rates. Foreign banks are starting to expand into the region bringing much need completion to the Cape Verdean financial services sector.

There are currently four banks with 30 branches operating in Cape Verde, most of them concentrated on the islands of Santiago and Sao Vicente. In addition to the banks, there are three non-bank financial institutions and two insurance companies.

The non-bank financial institutions in Cape Verde consist of a risk capital company (A Promotora), a foreign exchange agency (Câmbios 24 Horas) and a company issuing credit cards (Sociedade Interbancària e Sistemas de Pagamentos).

The commercial banking system in Cape Verde is largely privatized, although the state retains a substantial minority interest. Control is vested in Portuguese banks and insurance companies.

All banks in Cape Verde offer similar basic financial products. All four banks endeavour to mobilise funds from the Cape Verdeans that live abroad. Although no Cape Verdean bank has branches abroad, they can nevertheless also benefit from an extensive network of shareholders. These are mainly the Portuguese banks.

As a result, international money transfers to and from Cape Verde are not that expensive by international standards. In order to increase the attractiveness of non-resident accounts, the Government has granted tax holidays on interest on these accounts.

Health Services in Cape Verde

Cape Verde is an emerging country with an under developed health service. The overall expenditure on health as a percentage of GDP is fairly low. As government revenues increase driven by foreign investment in Cape Verde, health services should receive a larger budget.

A breakdown of the number and densities of workers in the health sector is shown:

The above chart illustrates the need for further investment and increase in the National Health Expenditure.

The World Health Organisation has been investing and promised further support for control of life threatening conditions such as AIDS and Tuberculosis.

Utilities in Cape Verde

Electricity is reasonably plentiful in Sal, Santiago and parts of Sao Vicente (namely Mindelo), though less constant on other islands such as Maio and Boa Vista. More investment in this area is needed as the population in islands such as Sal and Boa Vista is increasing substantially. This has been mainly driven by the development of the property market and the tourism industry.

Water in Cape Verde comes from desalination plants. The vast majority of new buildings have water tanks. Water is generally delivered by truck and then pumped around the buildings as needed. Mains water is limited to the centre of some of the major conurbations. The government is extending the mains water supply.

The Cape Verde Stock Market

The Bolsa de Valores de Cabo Verde, S.a.r.l. (BCV) is the principal stock market of Cape Verde. It is located in Praia.

The Cape Verde Stock Exchange (BVC) started its activities in December 2005, trading 44 treasury bonds and three corporate equities. The corporate equities, or stocks, included two banks and a tobacco company.

The operating structure of the Cape Verde stock exchange combines the auctioning system with quote-driven systems in order to support larger liquidity. The market deployed huge efforts to re-structure itself in line with the best practices and most relevant international guidelines.
All platforms are credible ones and some are used by Euronext Lisbon and Interbolsa. The BVC is a member of the most relevant international institutions that discipline capital markets concerns.

Banking & Finance, Health Services, Utilities and The Stock Market in Cape Verde -- last updated June 08