Cape Verde’s macro-economic situation is marked both by the United Nations decision to upgrade Cape Verde from the group of Least Advanced Countries (LACs) to that of the Middle-Income Countries (MICs) in 2008, and by a favourable macro-economic indicator trend, largely due to improved policies since 2001. Poverty is more pronounced in rural areas affecting over half the rural population (51%), 30% of whom are very poor. The main factors of poverty are unemployment, low school enrolment rates and qualifications, large households, the sector of activity and gender. The incidence of poverty is greater among women-headed households. At sectoral level, most of the country's poor are concentrated in the agriculture and fisheries sector, followed by commerce and construction. Owing to restrictions imposed by  traditional destination countries, emigration is increasingly oriented towards urban areas, leading to a transfer of poverty and various types of pressure in respect of employment, sanitation, housing and other social services.

Development Policy

Cape Verde has fairly satisfactory health and education indicators compared to other African countries and middle-income countries. The country has virtually attained the Millennium Development Goals for education, and could attain the health goals. The social protection system is based on labour-intensive works and social security.  The government’s programme, based on the RBCSP for the 2005-2007 period, aims to support growth and reduce poverty by half by 2015 through the following five priority thrusts:

• promoting of good governance with a view to enhancing efficacy and ensuring equity;
• strengthening competitiveness with a view to sustaining growth and creating employment;
• developing the human capital
• improving basic infrastructure for regional planning and development and environmental protection
• enhancing the efficiency and sustainability of the social protection system.

Bank Group Strategy

In keeping with the government’s Programme, the selective approach adopted by the Bank to orientate its operations over the 2005-2007 period led to the retention of a single pillar: promote the competitiveness of the economy and the private sector.  The Bank will contribute to that through:

• an improved macro-economic framework and modernization of the administration by the consolidation of reforms in the areas of governance and public financial management;
• greater competitiveness of economic activities, higher productivity and least cost access to high quality factors of production, in particular electricity and labour; and,
• promotion of SMEs in the growth sectors, with the assistance of the Bank’s private sector window. This window will take advantage of the overall context of an improved business climate to provide assistance for the development of SMEs as well as synergy with the Bank’s public sector operations. With regard to upgrading qualifications and the adequacy of the work force, ADF may consider strengthening the employment training system if Cape Verde’s performance is satisfactory and additional resources are available.

Furthermore, the Bank will maintain dialogue with the government in the following areas:

• issues concerning Cape Verde’s situation in relation to its MIC status as from 2008;
• improving the business climate and the development of PPPs in infrastructure and the social sectors;
• the consolidation of governance;
• gender issues;
• regional integration; and
• portfolio enhancement.