The Board of Directors of the African Development Bank has agreed to award to the Republic of Cabo Verde, a €20-million loan to finance the first phase of the country's Private Sector Competitiveness and Local Economic Development Program (PSC-LED).
The objective of the program is to spur private sector and local entities to make greater contribution to growth and employment and to support the National Development Plan's private sector- led development.
The program pays particular attention to the domestic private sector, leveraging on the comparative advantages of each of the country's islands and ensuring spatial distribution of economic opportunities.
Cabo Verde faces several challenges that could hamper its economic growth in the medium term. The country faces a series of structural constraints relating to the small size of its domestic market, the fragmentation of the country into several islands, and modest natural resources over which the authorities have little or no control. Apart from structural challenges and environment-related issues, the authorities need to control debt levels by and by improving the management of public enterprises and major public investment projects to ensure better achievement of the desired effects in terms of economic growth; and diversification of the economy by creating conditions conducive to private sector development.
The project will help address some of these challenges as well as support the implementation of the country's overall development strategy, which will be achieved through specific improvements in the ease of doing business and competitiveness, as well as through greater local economic development and more effective decentralization process.
Presenting the report to the Board, the Director of the Governance department, Abdoulaye Coulibaly highlighted the overall impact of the program that will bolster Cabo Verde's private sector competitiveness.
"In a well-coordinated process together with other partners, the Bank has put emphasis on competitiveness enhancement while at the same time ensuring that the spatial distribution of economic opportunities resulting from reforms is evened-out across islands to ensure inclusivity. In this regard local economic development is crucial."
The African Development Bank is active in Cabo Verde. Most economic activities in the country are conducted by small informal firms. The Government has invested heavily in the country's infrastructure in recent years, and the challenge now is to enable the private sector to utilize them for growth, job creation and poverty reduction.
The Bank's portfolio in Cab Verde comprised 11 operations covering value at US$114 million at the end of April 2018. This includes a private sector project - the Carbeolica Wind Project valued at €15 million. The ICT sector is the lead sector representing 32.7% followed by Transport (29.7%), Governance (22.7%), Energy (10.4%), Social (1.6%), water and sanitation (0.8%).
