Cabo Verde Compact

Expanding Opportunities through Microfinance in Cape Verde

In Cape Verde, MCC and its MCA counterpart have initiated a two-part strategy designed to support Cape Verde's long-term economic transformation through programs targeting microfinance development and improved access to credit for farmers.

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MCC and Cape Verde: A Partnership for Policy Reform

The partnership with MCC created new incentives for Cape Verde to continue policy reforms at the national level and new opportunities to pursue them at the sector level as part of its investment program.

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In July 2005, the Millennium Challenge Corporation signed a five-year, $110 million compact with the Government of Cape Verde aimed at contributing to the transformation of their economy from aid-dependency to sustainable, private-sector led growth. The strategic investments in three projects will improve the country’s investment climate and reform the financial sector; improve infrastructure to support increased economic activity and provide access to markets, employment, and social services; increase agricultural productivity and raise the income of the rural population; and carry out some key policy reforms needed for sustained economic growth. The compact in Cape Verde entered into force (EIF) in October 2005, formally initiating the five-year timeline for project implementation. The compact closed out in October 2010.

Cape Verde was selected as eligible to develop a second MCC compact on December 9, 2009.

  • Signed:
    July 4, 2005
  • Entry into Force:
    October 17, 2005
  • Completed:
    October 17, 2010

Financial data as of March 31, 2011.

Integrate internal markets and reduce transportation costs by improving transportation networks through road and bridge infrastructure on the islands of Santiago and Santo Antão and upgrading the Port of Praia

  • Invest in roads and small bridges to ensure improved transportation links to social services, employment opportunities, local markets, and ports and airports; and
  • Make improvements to the Port of Praia, which handles half of the island nation’s cargo, including construction of new facilities and installation of new security equipment.

Develop the private sector by reducing obstacles to private sector investment and reforming the financial sector

  • Remove constraints to private sector investment through policy reforms such as the creation of a commercial credit information bureau:
  • Enable the Government of Cape Verde to make reforms in the financial sector to help increase access to financial services, especially microfinance, and expand access to the primary market for government securities; and
  • Strengthen microfinance institutions so they may become sustainable.

Increase agricultural productivity on the islands of Santo Antão, Fogo, and São Nicolau by improving water management and soil conservation, strengthening agribusiness development services, and increasing access to credit and capacity of financial institutions

  • Increase the capture, storage and distribution of rainfall water; and
  • Mobilize agricultural support activities such as marketing, applied research, pest-control, training and extension services, and credit.
  • May 5, 2004

    MCC selects Cape Verde as eligible for compact assistance.

    The MCC Board of Directors selects Cape Verde as eligible to apply for MCA assistance. The MCC Board considered both past and current policy performance in the areas of just and democratic governance, economic freedom, and investing in the health and education of their people. Cape Verde was selected among a pool of 68 countries with a per capita income of $1465 or less.
  • June 12, 2005

    MCC Board approves Cape Verde compact proposal

    The over $110 million, five-year compact with Cape Verde focuses on increasing rural incomes of the poor by increasing agricultural productivity, integrating internal markets, reducing transportation costs, and developing the private sector through the mobilization of private sector investment and financial sector reform.
  • July 3, 2005

    MCC Cape Verde compact signed

    MCC and the Republic of Cape Verde signs a five-year, $110 million compact aimed at contributing to the transformation of the island-nation's economy from aid-dependency to sustainable, private-sector led growth. The strategic investments in three projects will improve the country.
  • October 16, 2005

    MCC-Cape Verde compact enters into force

    The entry into force signals the beginning of the important implementation phase and the start of the five-year clock
  • January 30, 2006

    A CODEL lead by Nancy Pelosi visits Cape Verde

    Congresswoman Nancy Pelosi is briefed on the MCC compact in Cape Verde where she praises civil society engagement in compact implementation.
  • June 30, 2006

    Breaking ground: Start of construction of Assomada/ Rinc

    The Assomada/ Rincao road - 16 kilometers long - will serve the people of the coastal village of Rincao in accessing one of the largest markets in Cape Verde - Assomada - as well as in accessing schools and social services.
  • July 31, 2006

    Public outreach activities and HIV awareness campaign start on Santiago roads

    In an effort to mitigate the negative impacts of projects that improve transportation networks, such as an increase in HIV/AIDS rates, through both sex with migrant workers often found on construction crews and through opening previously inaccessible communities, MCA-CV implements an extensive HIV/AIDS awareness and prevention campaign to complement the MCC-funded construction of roads. These outreach activities and campaign are also extended to the bridges and port activities.
  • April 30, 2007

    Breaking ground: Works for Santo Antao bridges and roads commence

    Construction of the bridges will help integrate internal markets,reduce transportation costs by improving transportation networks, and provide access to local services such as hospitals. The estimated number of bridge beneficiaries on Santo Antão Island is 37,354.
  • June 30, 2007

    Publication of the Harmonized Procurement Law

    A public sector-wide harmonized procurement law based on MCA practices passes. This new law establishes an integrated strategy for equal tender opportunities to ensure transparency and efficiency of public spending. MCA-CV trained approximately 400 procurement, auditors, and commercial agents on all islands to ensure proper implementation of the new law.
  • September 9, 2007

    Publication of microfinance legislation

    Microfinance Legislation: As a condition precedent to providing technical assistance to microfinance institutions (MFIs), the Cabinet of the Government of Cape Verde approves a microfinance law that, among other improvements, authorizes MFI collection of savings.
  • December 30, 2007

    Creation of a road maintenance fund for the maintenance

    A Road Maintenance Fund for the maintenance and rehabilitation of the country's road network financed by a levy on fuel is established by Parliamentary Law in response to the compact condition precedent.
  • February 10, 2008

    Breaking ground: Construction begins on Orgaos/Pedra Badejo roads

    The Orgaos-Pedra Badejo road stretches 10 kilometers long and six meters wide and will serve the people of one of Santiago Island’s agriculturally productive valleys by increasing access to markets as well as improving access to schools and social services.
  • February 16, 2008

    Congressman Patrick Kennedy visits MCA projects

    Congressman Patrick Kennedy (MA) pays a visit to Cape verde. "Representing a significant number of Cape Verdean-Americans who live in Rhode Island’s first congressional district, I had an opportunity to visit Cape Verde and was greatly impressed by the professionalism with which Millennium Challenge Corporation projects were executed by the Cape Verdean government,” says Kennedy.
  • February 28, 2008

    Congressman Barney Frank visits Cape Verde

    Congressman Barney Frank and seven accompanying Members of Congress visit Cape Verde conveying continued U.S interest in and support for Cape Verde. Congressman Frank is briefed about the MCC compact.
  • March 31, 2008

    Conclusion of the rehabilitating of the Rural Extension Centers

    Three centers located in in Fajã (São Nicolau), Ribeira de Ilhéu (Fogo), and Paul (Santo Antão) are rehabilitated and fully equipped to train and provide technical assistance to farmers in the three watershed intervention areas.
  • May 31, 2008

    Citizen's House began offering individuals and businesses electronic access to government services

    The Citizen’s House represents a paradigm shift in citizen and business access to a variety of government services. Registering a business - a service which previously took an average of 52 days — now takes an hour. An immediate benefit of this accomplishment was the satisfaction of the business start up indicator for MCC eligibility in FY10.  MCC funded equipment, software, and technical assistance for citizens and businesses to access public services.
  • July 16, 2008

    Launching of the Technical Assistance to MFIs operating in the agriculture intervention areas

    Eight Microfinance Institutions (MFI) are identified for technical assistance operating in the agriculture intervention areas on the islands of Fogo, Sao Nicolau, and Santo Antao. It provides new microcredit methodologies, new credit management, and monitoring abilities that improved the institutions' work as well as their clients lives through the use of credit in a more efficient and innovative way.
  • October 5, 2008

    Breaking ground: Construction begins on Cruz Grande/Calhetona road on Santiago Island

    This 14 kilometer road will connect two municipalities in the interior of the island of Santiago: Sao Miguel and Santa Catarina. This connection will allow access to one of the most important markets in Cape Verde - Assomada - as well as schools, hospitals, and other services. It is a very important infrastructure project for tourism development in the coastal locality of Calheta in Sao Miguel.
  • October 7, 2008

    First microcredit loan disbursed

    Under the access to credit component, a $600,000 line of credit was made available to farmers for drip-irrigation installation and agribusinesses. The line of credit was disbursed through the microfinance institutions and the first microcredit loan was disbursed through the MFI named SOLDIFOGO.
  • November 10, 2008

    Breaking ground: Works for Phase I of the Port of Praia begins

    MCC funded improvements to the Port of Praia, which handles half of the island nation’s cargo. The improvements to the Port of Praia, combined with the concurrent privatization of port services, are expected to increase the efficiency of the port and to prevent a bottleneck to growth in commerce, in particular in the tourism industry.
  • January 19, 2009

    National Water Commission's Resolution establishes the water price for the three intervention areas

    The Government of Cape Verde introduces a fee for the use of scarce irrigation water. The water fee will be used to finance the operations and maintenance of infrastructure guaranteeing access to water for drip irrigation and sustainability for farming.
  • January 30, 2009

    Beginning of MCC support for the modernization of public administration

    Cape Verde will expand its e-government system to elevate efficiency and transparency in its procurement system to world-class standards. MCC will support NOSi (Operational Nucleus for the Information Society), the Cape Verdean agency responsible for e-government, by providing equipment, software, and technical expertise. More than $1 million of compact funds have been spent to strengthen Cape Verde’s e-government system.
  • June 5, 2009

    Road Org

  • July 17, 2009

    Road Assomada/Rincão: The second road rehabilitated with MCC funds in Cape Verde is inaugurated

    Rincão was an isolated locality due to lack of infrastructure and access to major cities like Assomada. Fishing became Rincão’s main means to survive. Now, people of Rincão are able to finally develop their community, with a road that would connect them to greater commerce and community services. With this completed road, the future of Rincão has the potential to attract tourism-related investments.
  • August 13, 2009

    U.S. Secretary of State Hillary Rodham Clinton visits Cape Verde

    U.S. Secretary of State Hillary Rodham Clinton visits Cape Verde as part of an 11-day African tour. Secretary Clinton praises the government as "a model of democracy and economic progress in Africa."
  • December 7, 2009

    MCC names Cape Verde eligible for a second MCA compact

    "Cape Verde is the first MCC partner country to be selected as eligible for a second compact,” Mr. Yohannes said. "Cape Verde illustrates many of the characteristics of a strong partner and has consistently displayed good economic and political governance.  We look forward to building on the successes of Cape Verde’s current efforts to combat poverty.”
  • December 10, 2009

    Prime Minister Neves inaugurates bridges and road funded by MCA-CV on Santo Antao Island

    Four bridges and a 1 Kilometer road are completed and functional during 2009
  • February 2, 2010

    MCC CEO Daniel Yohannes visits Cape Verde

    MCC CEO Daniel Yohannes visits Cape Verde as part of his first trip since he was appointed by President Obama.
  • March 5, 2010

    Prime Minister Neves inaugurates the road Cruz Grande/Calhetona

    The construction of the road from Grande to Calhetona was critical because it provides access to Praia, the capital of Cape Verde, and allows the citizens of these two municipalities to have access to the Regional Hospital of Santiago Norte, the University of Santiago,and the market in Assomada. In the opposite direction, the development of domestic tourism, fisheries, and agriculture in the municipality of Sao Miguel will also be facilitated.
  • April 19, 2010

    Water distribution systems inaugurated in Paul (Santo Antao island)

    MCC funded activities to increase the capture, storage, and distribution of rainfall water, which will allow poor farmers to irrigate their fields and increase agricultural productivity.
  • June 30, 2010

    Executive Order lifting the 20-year millipede embargo for the island of Santo Antao approved

    The Government of Cape Verde approves a decree law to eliminate regulatory and legal obstacles to movement of inspected and certified horticultural products, including actions to lift the embargo on exports of horticultural products from Santo Antao. The Government of Cape Verde has approved a national decree lifting a more than 20-year embargo on inter-island agricultural exports from the island of Santo Antao, contingent upon the construction/operation of the MCC-funded post-harvest inspection center.
  • August 2, 2010

    Inauguration of MCA-CV funded agricultural infrastructure in Mosteiros, island of Fogo

    In ceremonies held by the Government of Cape Verde, the Ministry of Environment, Rural Development and Marine Resources, MCA, and MCC, the following infrastructure works are inaugurated: a rehabilitated rural extension center, which has been operating since August 2009 to meet the demands of farmers in the upper zone of Mosteiros watershed, 7 dikes, 7 reservoirs, and one water distribution system. The purpose of these infrastructure works are to promote sustainable management of natural resources, development of productive capacity and agribusinesses, improve adjustments to technological innovation, and strengthen synergies between services, beneficiaries, human resources, and financial services/ credit development.
  • October 12, 2010

    Post Harvest, Conservation, and Inspection Center in Porto Novo (Santo Antao) inaugurated

    The Post Harvest and Inspection Center is a key component for promoting the development of local horticultural production in Cape Verde. The center, located in Porto Novo in the Island of Santo Antao, has a capacity of 3,950 metric tons of storage per year and will offer services of cold storage, packing, grading and inspection to agricultural producers and intermediaries.  It is envisioned that the center will promote the benefits and practices of an integrated cold chain and serve as a point of connection between buyers and sellers, reducing post harvest losses significantly.  An integral part of this center is the inspection area where products will be treated based on well developed protocols and this would allow food inspectors to certify that the products leaving the island are free of millipedes, a pest that has limited inter-island trade for over 20 years.  The inauguration was held on October 15,2010 with the CEO's presence.
  • October 13, 2010

    Port of Praia inauguration of MCC-funded works

    The Port of Praia rehabilitation is the largest single activity of the Compact constituting about half of the $110 million budget. The Port Phase I contract was signed in July 2009 with works completed in September 2010, and inaugurated on October 14, 2010 with the CEO
  • October 14, 2010

    Compact closeout event

    An MCC delegation led by MCC CEO Daniel Yohannes celebrate the completion of the 5 year Cape Verde compact.