Cape Verde’s Economic Renaissance: Tourism Surge Powers Growth While Nation Embraces Digital Future

Strong Economic Recovery and Tourism Growth

Cape Verde’s economy has demonstrated remarkable resilience, achieving a robust 7.3% GDP growth, primarily driven by surging tourist arrivals. The country has also managed to reduce inflation to 1% – its lowest level in recent history – which has helped reduce poverty below pre-pandemic levels.

The tourism sector has shown exceptional performance, with tourist arrivals growing by 16.5% to reach 1.18 million visitors. The nation is confidently moving toward its target of 1.2 million tourists in 2024, while simultaneously promoting growth in related sectors such as agriculture, agribusiness, fishing, and creative industries.

Digital Transformation and Infrastructure Development

The country is making significant strides in digital development through the Digital Cabo Verde Project (DCVP), supported by a $20 million IDA investment. This initiative aims to strengthen the nation’s digital competitiveness and improve digital public services by enhancing the legal framework, connectivity, digital skills, and entrepreneurship.

Looking ahead to 2025, the country is set to unveil several major developments, including a new cruise terminal in São Vicente and the introduction of international hotel brands such as Sheraton and New Horizon. The tourism sector will receive a further boost with the commencement of EasyJet operations from Lisbon and Porto.

Sustainable Development and Gender Equality

Despite making impressive progress in health and education, gender disparities persist in the labor market, with women earning up to 14.4% less than men and remaining underrepresented in formal and high-paying sectors. However, studies indicate that closing these gender gaps could potentially boost GDP by up to 12.2% and improve productivity across various sectors, particularly tourism.

Under the Cabo Verde Ambition 2030 plan and the Strategic Plan for Sustainable Development, the nation is focusing on sustainable tourism, renewable energy, and the growth of blue and digital economies. The country has set ambitious environmental targets, aiming to achieve 50% of its electricity from renewable sources by 2030 and 100% by 2040.

Economic Outlook and Challenges

While the outlook is generally positive, the country faces several downside risks, including potential commodity price spikes from geopolitical tensions, inflationary pressures, weaker tourism demand, and the pace of state-owned enterprise reforms. Climate-related shocks remain a significant concern, given the country’s high vulnerability.