Executive Summary

Measure	Year	Index/Rank	Website Address
TI Corruption Perceptions Index	2017	48 of 180	http://www.transparency.org/ research/cpi/overview
World Bank’s Doing Business Report “Ease of Doing Business”	2017	127 of 190	http://www.doingbusiness.org/rankings
Global Innovation Index	2017	N/A	https://www.globalinnovationindex.org/ analysis-indicator
U.S. FDI in partner country (M USD , stock positions)	2015	N/A	http://www.bea.gov/ international/factsheet/
World Bank GNI per capita	2015	2 970 USD	http://data.worldbank.org/ indicator/NY.GNP.PCAP.CD

• Expression of interest in investment and upload of project documents;

• Monitoring the investment process using a monitoring code;

• Payment of certificate issuance fee.

CI also provides the investor/exporter support with the following services:

• Information about preferences of the country trade agreements Act (AGOA, ECOWAS, and others);        

• Market information;

• Organization of and participation in exhibitions, fairs, congresses, conferences, seminars or other events in the field of exports of goods and services in the country

• Contacts with other State institutions, providing or promoting partnerships, etc.     

 

CI has an After Care service aimed at supporting investors after they obtain their Investment Registration Certificate and implement their investment project. CI assists investors in their implementation process, in resolving bureaucratic issues in conjunction with other public institutions, and in establishing reinvestment and export processes such as:

• Obtaining operating authorization and licensing;

• Obtaining tax and customs incentives;

• Obtaining work permits for foreign workers;

• Obtaining visas for company workers;

• Assistance with obtaining housing for foreign workers;

• Assistance with registering workers with social security;

• Assistance to investors and their families in the process of settling in the country;

• Assistance with obtaining premises for company offices;

• Introduction to service providers, such as banks, lawyers, accountants, estate agents;

• Export assistance.

For investments of less than USD 500,000, ProEmpresa and the Casa do Cidadao provide similar services for investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

The country is investment-friendly as foreign investors, regardless of their nationality, have the same rights and are subject to the same duties and obligations under the laws of Cabo Verde.

Other Investment Policy Reviews

No reviews have taken place under Organization for Economic Cooperation and Development (OECD) or the-United Nations Conference on Trade and Development (UNCTAD). The first review of the trade policies and practices of Cabo Verde under the World Trade Organization (WTO) took place on 6 and 8 October 2015.

Business Facilitation

Cabo Verde has made significant progress in recent years in simplifying its business registration process. The Commercial Registry Department (Casa do Cidadao), is a one-stop-shop where a company can be created and registered in less than a day. The overall business environment has become more efficient. The process for launching a business is more streamlined, and licensing requirements are less burdensome.

An information website on business registration is available at https://portondinosilhas.gov.cv/ and http://caboverde.eregulations.org/show-list.asp?l=pt&mid=1.

Step by step information on procedures, time and cost involved in starting a company can be found at http://www.doingbusiness.org/data/exploreeconomies/cabo-verde/starting-a-business/.

As the agency in charge for the promotion and facilitation of investment in Cabo Verde, CI is the first point of contact for foreign investment in Cabo Verde. It offers an Electronic Platform, “One Stop Shop for Investments,” which is important for the promotion, settlement, and monitoring of investments in the country. The platform aims to increase the efficiency and effectiveness of the investment processes, improving understanding and communication between CI, its customers, other stakeholders, public and private entities, and project developers of domestic and foreign investments. The “One Stop Shop” offers a single platform containing all the necessary services once scattered through various institutions.

CI’s website is where all information pertaining to investing in Cabo Verde can be found, including Cabo Verde's Investment Law, the Code of Fiscal Benefits, and the Contractual Tax Benefits-Incentives http://www.cvtradeinvest.com/en/. The platform is helping with de-bureaucratization of the investment process, ensuring that the process is completed within a maximum period of 75 days.

The State Budget law of 2017 contained measures to facilitate and stimulate business activity, including a one percentage point lowering of the maximum personal income tax (IRPS) to 24 percent, the easing of the Special Scheme for Micro and Small Businesses, and the introduction of new tax benefits.

Elimination of double taxation, release from payment in installments for taxpayers who had negative results or began their activity in the previous year, and elimination of the obligation to pay the minimum installment are some of the new measures undertaken by the 2017 State Budget law.

The tax benefit package included in the 2017 State Budget aims to make accessing the benefit easier than previously: it reduces the amount of investment to benefit from contractual benefits to 500 million escudos (USD 4.8 million) and reduces the requirements on number of jobs created and expansion into new strategic sectors of the 50 percent investment credit. It also extends the period for deduction of credit for investment to 15 years.

Outward Investment

Incentives for outward investment in developing countries are not included in the legislation, but they have been provided on an ad hoc basis.

In Cabo Verde there is free access to all laws through the Government Official Register Site.

International Regulatory Considerations

Cabo Verde is a member of UNCTAD’s international network of transparent investment procedures [http://caboverde.eregulations.org/]. Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps, name and contact details of the entities and persons in charge of procedures, required documents and conditions, costs, processing time, and legal bases justifying the procedures.

In January 2008, four years after the United Nations Resolution 59/210 recommendation, Cabo Verde graduated from Least Developed Country status to Lower Middle Income Country status. On May 26 of the same year, five months after the World Trade Organization (WTO) approved its application, Cabo Verde’s legislature unanimously ratified the agreement and formally acceded to the WTO. Cabo Verde has not notified the WTO of any measures that are inconsistent with its TRIMS obligations.

Legal System and Judicial Independence

Cabo Verde was a Portuguese colony until 1975; consequently, its legal system is based on the civil law system of Portugal, and it has sys********tic codification of its general law. The 1992 constitution provides for a judiciary independent from the executive branch. The judicial system is composed of the Supreme Court, the Constitutional court, and the regional courts. There is no interference from the government, and judges cannot be affiliated with political parties.

The Supreme Tribunal (Court) of Justice has a minimum of five members, one appointed by the president, one appointed by the National Assembly, and three appointed by the Supreme Council of Magistrates. The Ministry of Justice and Labor appoints local judges. The judiciary generally provides due process rights; however, the right to an expeditious trial is constrained by a seriously overburdened and understaffed judicial system. Criminal defendants are presumed innocent and have the right to counsel, to a public, non-jury trial, and to appeal. Cabo Verde has modern commercial and contractual laws. Cases brought to court often linger for years.

The right to private ownership and establishment is guaranteed under the constitution. Property rights are recognized and guaranteed by several Cabo Verdean laws, as well as by the constitution. There is a legal entity that records secured interests in property, both chattel and real estate. The legal system also protects and facilitates acquisition and disposition of all property rights.

The judicial system in Cabo Verde is widely seen as transparent and independent. There is no government interference in the court system, but judicial decisions are often delayed by years.

Laws and Regulations on Foreign Direct Investment

Foreign investment is regulated by the Cabo Verde Investment Law (Decree-Law No. 13/VII/2012) and the Law of Industrial Development. These laws establish the principle of equal treatment for national and foreign investment and confirm the government’s commitment to the creation of a dynamic business environment. The Industrial Development Statute regulates the granting of incentives and simplifies the investment approval process. In addition the codes for Fiscal Benefits (Laws: No. 26/VIII/2013, 102/VIII/2016, and State Budget 2017) establish the principles and rules applicable to tax benefits, establish the content, and set the corresponding rules for granting and monitoring. Laws to promote exports, incentives to export, and free-zone enterprises stress the government’s commitment to encourage investment in export-oriented industries.

During the past year, there have been a few changes in regulations encouraging free investment initiatives, creating Special Zones to encourage private investment outside municipal urban areas, creating Special Economic Zones for the implementation and operation of specific economic activities according to their nature, and establishing the regime of the rights and obligations of the investor. There has also been a clarification of the concept of an Investor's Certificate, and the right to transfer funds abroad from any investment or reinvestment made in Cabo Verde has been strengthened.

Competition and Anti-Trust Laws

The regulatory agencies are the bodies in charge of y responsible for competition-related concerns.

The law establishes the regime of protection of competition applicable to all economic activities, carried out on a permanent or occasional, in private, public and cooperative basis.

Decree Law 53/2003 substituted Decree-Law Nº 2/99 of February 1.
Issue date: 24/11/2003
Date of Entry into force: 23/01/2004

Expropriation and Compensation

Cabo Verde laws allow for expropriation if done for public interest. In the event of expropriation, the government will compensate the owner on the basis of prevailing market prices or the actual market value of the property on the day of expropriation. Compensation may be repatriated at the exchange rate in effect on the day of expropriation.

There have been no cases of illegal expropriations, and the government has never shown any pattern of discriminating against foreigners.

Dispute Settlement

ICSID Convention and New York Convention

In 2011, Cabo Verde became a contracting state to the International Centre for the Settlement of Investment Disputes (ICSID convention). Cabo Verde is not a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Investor-State Dispute Settlement

Representatives from the Brazilian telecommunications company Oi and the government of Cabo Verde are trying to work towards the resolution of a boardroom dispute relating to the country’s telecommunication company, Cabo Verde Telecom (CVT). According to the government of Cabo Verde, the Portuguese company that held 40 percent of the company violated agreements by agreeing to sell its shares held in CVT to Oi without the prior permission of the Cabo Verde authorities.

International Commercial Arbitration and Foreign Courts

Disputes between the government and any investor concerning the interpretation and application of the law, which cannot be resolved amicably or via negotiation, are submitted for resolution by the judicial authorities, in accordance with Cabo Verdean laws. Disputes between the government and foreign investors on investments authorized and made in the country, if no other process has been agreed upon, are settled by arbitration.

The law favors arbitration as a mechanism for settling investment disputes between the government of Cabo Verde and foreign investors, under national and international dispute resolution rules, and the courts recognize and enforce foreign arbitral awards. Generally, arbitration will be carried out in Cabo Verde and in Portuguese, unless the parties agree on another location and language. Arbitration is generally accepted as a dispute resolution mechanism. The decision of the single referee or the arbitration committee is final and there is no appeal.

Legislation:

• The principal national arbitration statute in Cabo Verde is the Arbitration Law No. 76/VI/2005 of 16 August 2005;

• Law No. 89/IV/93 of 13 December 1993 provides that disputes between the State of Cabo Verde and foreign investors shall be resolved through arbitration and conciliation subject to Cabo Verde arbitration law;

• Decree-Law No. 35/2010 of 6 September 2010 provides that disputes related to the validity, interpretation, and non-fulfillment of insurance agreements may be addressed by arbitration;

• Decree No. 8/2005 of 10 October 2005 provides for institutional arbitration.

Bankruptcy Regulations

Cabo Verde made resolving insolvency easier by adopting a law that introduces a reorganization procedure and facilitates continuation of the debtor’s business during insolvency proceedings. The law also allows creditors greater participation in important decisions during insolvency proceedings. The law, published in December 2015, entered into effect in September 2016 and positively affected Cabo Verde’s rating on the Doing Business Report 2018.

• International Industrial Center and International Trade Center:

• 5 percent for entities with five or more employees;
• 3,5 percent for entities with twenty or more employees;
• 2,5 percent for entities with fifty or more employees.

• International Service Delivery Center:

• 2,5 percent for entities with two or more employees.

These benefits are applicable for revenue generated by activities between entities established and operating at CIN-CV or non-resident entities without formal establishment in Cabo Verde.

Entities that are shareholders of companies licensed and operating in CIN-CV are exempt from revenue tax on:

• Profits already taxed under special tariffs;

• Interest and other forms of revenue and/or losses caused by the under exploitation of revenue and/or assets placed at their disposal.

Customs Benefits

Companies licensed under the CIN-CV can benefit from import customs duties exemptions on the following goods:

• Material and equipment directly related to the installation, expansion, or remodeling of the project not intended for sale, including metallic structures, construction materials, sanitary equipment, electrical equipment, and complementary accessories and spare parts;
• Industrial equipment, machinery, instruments, and utensils, and their respective accessories and spare parts;
• Brand new mass transport vehicles (for urban transport) and heavy duty vehicles (for logistics purposes);
• Material for the packaging of manufactured goods;
• Raw materials and derivatives as well as finished and semi-finished materials and products needed for the production of the final product;
• Imports of goods, products, and raw materials by the companies installed and operating in the CIN-CV that do not require an import license.

International Business Center Licensing

The license application may requested by the legal entity/person or a representative acting on his behalf for the company/branch that will be registered at Cape Verde TradeInvest.

Performance and Data Localization Requirements

Foreigners are required to have an authorized work permit to work in Cabo Verde. However, the authorization process is easy and affordable.

There is no “forced localization” in any sector in Cabo Verde.

Data protection still lacks sufficient legislative support.

• Credit institutions (banks and other institutions that are qualified by law);

• Special credit institutions (credit unions and savings banks);

• Nonbanking institutions;

• Insurance companies;

• Stock Exchange.

In the 1990s, the statute of International Financial Institutions (IFI) was created for institutions whose activities are directed primarily at non-residents. Most IFI banks in Cabo Verde are foreign branches or subsidiaries of Portuguese banks, which were established in Cabo Verde to benefit from tax advantages in their transactions with non-residents.

The onshore segment is composed of seven banks:

• Banco Comercial do Atlantico;

• Caixa Economica de Cabo Verde;

• Banco Interatlantico;

• Banco Cabo-Verdiano de Negocios;

• Banco Angolano de Investimentos;

• Ecobank-Cabo Verde;

• Banco Espirito Santo-Cabo Verde.

There are 10 non-bank institutions:

• A venture capital management company – A Promotora;

• Three currency exchange offices;

• Cotacambios de Cabo Verde;

• Arisconta - Cambios Lda.;

• Girassol - Cambios Lda.;

• A company that issues credit cards and handles the payment system - SISP;

• A leasing company, Promoleasing - Sociedade de Locacao Financeira SA;

• Three securities fund management companies;

• Innovation Box;

• Sociedade de Gestao de Fundos de Habitacao de Interesse Social;

• Novagest SA;

• A money transfer agency - Global Money Transfer-Cabo Verde SA.

The offshore market comprises of nine institutions licensed to operate, eight in banking activities and one acting as fund manager:

• Banco Fiduciario Internacional;

• Banco Sul Atlantico;

• Banco Portugues de Negocios;

• Banco Montepio Geral;

• Banco Espirito Santo;

• Banco Privado Internacional;

• Caixa de Credito Agricola Mutua;

• Atlantic International Bank);

• CA Finance SA (fund manager).  

Banking, insurance, and securities market regulations comply with international regulations and meet international best practices. Foreign investors have the same access to credit in the local market. However, foreign investors are often discouraged by the high interest rates. Credit above certain values may dictate partnerships of more than one bank, and sometimes requires the participation of a foreign bank. Both local and foreign investors complain about the lack of commercial products to support investment.

Money and Banking System

Cabo Verde has a small but relatively sound, efficient, and well-managed financial sector supervised and regulated by a single institution: the Central Bank of Cabo Verde.

The onshore segment is composed of seven banks:

• Banco Comercial do Atlantico;
• Caixa Economica de Cabo Verde;
• Banco Interatlantico;
• Banco Cabo-Verdiano de Negocios;
• Banco Angolano de Investimentos;
• Ecobank-Cabo Verde;
• Banco Espirito Santo-Cabo Verde.

Overall, the banking sector is still relatively small, with a limited supply of financial products. However, it is relatively well-managed and exhibits stable performance indicators. Credit risk is mainly controlled through a limited exposure and strict compliance with prudential ratios. In March 2017, shortly after a political transition, the BCV took strong and adequate actions when Novo Banco’s non-compliance threatened Cabo Verde’s banking sector. The measures taken prevented contagion of the sector and reinforced the authority of the banking watchdog institutions.

Banks have branches in all inhabited islands, which are also served by an extensive network of ATM and widely available POS machines. Debit cards, credit cards, and prepaid Visa cards are available through all banks. International credit cards are seldom accepted except on the major tourist destination islands of Sal and Boa Vista.

Establishing a bank account is easy as long as the client provides proper identification independent of nationality and obtains a taxpayer number from the Casa do Cidadao. Bank credit is available to foreign investors under the same conditions as for national investors. The private sector has access to some credit instruments such as loans, letters of credit, and lines of credit. Local and foreign investors complain about the lack of commercial products for accessing credit. The legal guidelines for accounting systems are clear but are not totally consistent with international norms.

According to data from BCV, since 2012 more than 90 percent of the Cabo Verdean population has been serviced by banks, following a long positive trend. Technological innovation in information and communications technology (ICT) has contributed to the revolution in the banking industry with significant impacts on the services traditionally offered by banks. Internet-based tools and services in the banking sector continue to grow in Cabo Verde, gaining an increasing importance and changing the model of the client-bank relationship of the past. New ICT products allow customers to make certain decisions without the constraints of working-hours and from any place with internet access.

Foreign Exchange and Remittances

Foreign Exchange Policies

Foreign investors have the right to convert their investment to any other freely convertible currency and transfer all of their income. The government gives foreign investors important guarantees, such as privately managed foreign currency accounts, which can be credited from abroad or from other foreign accounts in Cabo Verde. In addition, it allows undisputed repatriation of dividends, profits, and capital from foreign investment operations. To receive these benefits the investor has to qualify for foreign investor status through the government’s investment agency, CI.

The regulatory legislation specifies that for the first five years of operation, dividends may be freely expatriated without tax and that for the next fifteen years dividends may be expatriated with a flat tax rate of ten percent. Incentives for outward investment in developing countries are not included in the legislation, but they have been provided on an ad hoc basis.

Cabo Verde’s exchange-rate fluctuation risk is as low as the escudo has been pegged to the euro since its introduction in 1999 at the rate of 110.27 escudos per euro. This fixed exchange rate arrangement is a credit facility granted by Portugal to Cabo Verde – Credit Facility Contract – and managed by a joint Cabo Verdean and Portuguese body named the Commission on the Agreement for Exchange Cooperation (Comissao do Acordo de Cooperacao Cambial – COMACC). Both residents and non-residents may hold foreign exchange accounts, subject to government approval and regulations. Most payments and transfers have been liberalized. Cabo Verde is looking at the possibility of introducing the use of the euro in the local economy. The euro is already accepted as form of payment in the most touristic islands and in the main hotels and restaurants of the country.

Remittance Policies

Current law permits a foreign investor to request transfer loan repayment, revenue/profits, and capital gains overseas from the Bank of Cabo Verde (central bank) within 30, 60, and 90 days, respectively.

Sovereign Wealth Funds

Cabo Verde does not maintain a sovereign wealth fund.