Cabo Verde Needs $163 Million Annually for Economic Diversification: AfDB

Cabo Verde requires an annual investment of approximately $163 million, equivalent to 7.3% of its 2024 GDP, to accelerate its economic structural transformation and enhance resilience, according to a report by the African Development Bank (AfDB). This funding aims to reduce reliance on traditional sectors and foster more robust, sustainable growth. The AfDB's Country Focus Report 2026 highlights capital mobilization as a key challenge for diversifying the nation's economic base. To achieve an economic growth rate increase from around 4% to 7% annually, the report emphasizes a significant rise in investment, coupled with productivity gains and human capital development.

However, the AfDB notes that the total financing needs are substantially higher when all national development priorities are considered, reaching an estimated $1.4 billion per year. This broader figure encompasses investments in housing, urban and territorial development, social protection, human development, healthcare, national security, tourism infrastructure, sanitation, water supply, and digital platform consolidation, as outlined in the National Development Program 2022-2026 (PEDS II). To meet these extensive financial requirements, the AfDB suggests strategies including strengthening domestic resource mobilization, improving public finance management, deepening financial inclusion, formalizing the informal economy, utilizing public-private partnerships, developing regional capital markets, and leveraging diaspora investment and climate finance instruments.

The report recommends reinforcing reforms to improve the business environment and points to the potential of the blue economy, fisheries, information and communication technologies, and the financial sector as crucial areas for diversification beyond tourism. While Cabo Verde's tax revenues have doubled between 2020 and 2025 to 66.1 billion escudos, the AfDB indicates this growth is insufficient. The informal sector, representing about 34.9% of GDP, presents an opportunity for increased state funding through its reduction, broadening the tax base, and reviewing tax exemptions. Ultimately, closing financing gaps will depend on increased public resources, a credible regulatory environment, reduced investor risk, and mechanisms to attract large-scale capital for economic transformation.