Infrastructure Development in Cape Verde
Tourism and property development is the most important source of income for Cape Verde. For this reason, and in recognition of the importance of sustainable tourism, the Cape Verdean Government has committed itself to providing for the development of new and existing infrastructure.
The main focus of the infrastructure development to date has been transport. There are now new international airports in operation on Santiago and Boa Vista. Sao Vicente will also be opening their new airport in the latter part of 08. Travel between the islands can be made by domestic flights or by boat. As of November 2006, there are international flights between the UK and Cape Verde.
The main areas for further attention are electricity and water supply, road building and the development of the ports in islands such as Sal and Boa Vista.
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.
There are also plans for the development of the healthcare and the financial system in Cape Verde. The development of the infrastructure has been helped by various international donors and partners.
Development Picture and Donor Coordination
Cape Verde's major bilateral donors are Portugal, the USA, Luxembourg, the Netherlands, and Austria. The European Union, Africa Development Bank, United Nations, the World Bank and the IMF are the major multilateral partners. In December 2004, a UN resolution announced that Cape Verde would graduate to middle income status in January 2008. The government subsequently set up a government and donor support group to help ensure a smooth transition to middle income status. In June 2007, the group adopted a declaration of support for “a long term international effort to support Cape Verde’s socioeconomic transformation agenda through increasing market access, facilitating new forms of financing, and providing continued support for poverty reduction programs and to reduce Cape Verde’s vulnerabilities.”
A Budget Support Group (BSG) was created in 2005, and included the World Bank, the European Union, and the Dutch cooperation. The coordinated approach used by the BSG to align and harmonize their support for poverty reduction around the Growth and Poverty reduction and Strategy Paper, has played a catalytic role in bringing in new partners. As a result, BSG was expanded in 2007 to a total of six partners, as the African Development Bank, Austria, and Spain cooperation joined the group. The BSG expanded further when the Portuguese Cooperation announced in December 2007 that they will join too. During the last three years, around 25 percent of foreign aid was in the form of budget support.
The World Bank Group’s role
As of March 2008, the World Bank had approved 22 projects for Cape Verde amounting to US$255.9 million equivalent, of which about US$247 million equivalent had been disbursed. Nineteen projects have been closed, and the current portfolio of three projects represents about US$43.5 million equivalent, with an undisbursed balance of about US$10.2 million. These three credits are for projects in (a) HIV/AIDS, (b) Growth and Competitiveness, and (c) Road Sector Support.
Overall, Cape Verde's portfolio performance is the best in the Africa Region. The Bank’s Country Assistance Strategy for 2005-08 is aligned with Cape Verde’s Growth and Poverty Reduction Strategy Paper (GPRS). Under this CAS, the Bank has introduced a series of Poverty Reduction Support Credits to support the GPRS, notably to strengthen public financial management, decentralization, judicial services, social services, and social safety nets. Two PRSC credits were approved in 2005 and 2006. A Third Poverty Reduction Support Credit of US$10 million equivalent was approved by the Board of Executive Directors on March 27, 2007. Analytical work has included a Public Expenditure Review update, an Investment Climate Assessment, an Infrastructure diagnostic, and a Fisheries Sector Review. The Bank is currently preparing a full Public Expenditure Review (FY08), and a Rural Development Assessment and a Poverty Assessment to be completed in FY09. A new CAS is being prepared to be presented to the Bank’s Board in FY08, which would be built on the Government’s 2nd GPRS, also under preparation.
As of June 2007, the International Finance Corporation (IFC) has a portfolio in Cape Verde of around US$4.8 million, mainly a loan to Caixa Econômica de Cabo Verde (CECV), the second largest bank in Cape Verde. The Government has selected IFC through PEP-Africa (Public Enterprise Partnership) to finalize the design and to implement the PSD/competitiveness component of the Millennium Challenge Corporation (MCC) program. The program is expected to open opportunities for increased investments in Cape Verde and would consist in designing a strategy to stimulate SME competitiveness and growth in tourism, transport services, and the financial sector. IFC is considering access to finance projects to complement the MCC initiative.
Infrastructure Development in Cape Verde – last updated June 2008 |
