Cape Verde Attains Middle Income Country Status
Tunis, 28 October 2009 – The Board of Directors of the African Development Bank (AfDB) Group has approved Cape Verde’s 2009-2012 Country Strategy Paper (CSP), and elevated the country to Middle Income Country (MIC) Status, which entitles it to access resources from the Bank Group’s non-concessional and concessional windows.
The 2009-2012 CSP is set within the dual framework of the country’s Economic Transformation Strategy (STE) – a long-term structural vision and its 2008-2011 Second Poverty Reduction Strategy Paper (PRSP-II).
Based on two strategic pillars, the document focuses on good governance to enable the country consolidate its gains; and infrastructure that will sustain tourism as the engine of growth and improved economic competitiveness.
Within the framework of the first pillar, the Bank will support reforms geared toward strengthening public finance management, notably through a set of budget support programmes. It will also prop up the government’s modernization efforts, through a Data Centre Project that will provide the country with a unified and structured platform for enhanced digitalization. To improve the business climate and competitiveness as well as promote the private sector, the AfDB will, in addition to budget support measures, undertake targeted economic and sector work (study on the cost of insularity, private sector profile and a study on fiscal competitiveness of services, and budget support measures). It will also include lines of credit to Small enterprises and Public-Private Partnership investments.
The Bank will, under the second pillar, target transport, energy and water resources with due regard to the country’s vulnerability to climate change. Specifically, it will contribute to transport infrastructure development to international standards so as to reduce insularity costs and constraints, improve competitiveness and position the country as an international transport hub. The Bank will also help to increase energy production and reduced costs, as well as provide drinking water through desalination. Finally, to mitigate the effects of climate change, the African Water Facility (AWF) will finance a preliminary study that will guide government policy and the Bank’s project financing.
Having attained MIC status, following the CSP approval, the country now falls within “Category B” or “blend borrower” in accordance with the Bank’s lending policy, which gives it access to both AfDB and African Development Fund (ADF) resources. The country will also benefit from the Bank’s 2007 private sector development strategy and its 2008 strategic framework for increased support to MICs.
Cape Verde’s active portfolio in the Bank comprises 5 operations, including one at a closing phase. The entire portfolio amounts to UA* 17.53 million, of which UA 7.54 million has been disbursed. Although modest in size, the operations target specific intervention sectors.
* 1 UA (Unit of Account = 1.56606 US$ in October 2009