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  • Closed Compact Report:  Closed Compact Report: Cabo Verde Compact
  • July 2017

Compact Changes

Cabo Verde’s compact proposal was ambitious in size and scope, with activities in three sectors spanning four of the country’s nine inhabited islands. Because of the compact’s complexity, MCC’s strict five-year time limit on disbursements, and budget limitations, some significant project adjustments were needed. In many cases, the Government of Cabo Verde secured alternative funding for projects that required re-scoping or reallocation.

  • Following completion of feasibility studies, estimated project costs for the Port of Praia Activity more than doubled from the amount agreed to in the compact budget. This was partly due to inaccurate assumptions from pre-feasibility studies (such as the condition of the land for the site of the cargo village and the recommended structure for the breakwater for the port), and partly due to a dollar depreciation against the Cabo Verde Escudo. The Port Activity was also affected by significant delays in procuring consultants to finalize designs. As a result, MCC determined in January 2008 that the compact could only finance Phase I of the project, which included rehabilitation of Quay 2 and construction of a new Cargo Village and Access Road. The Government of Cabo Verde financed Phase II works − which included extending the quay and creating space for a new two-berth specialized terminal container storage area − using a concessional loan guaranteed by the Government of Portugal. Phase II works were completed in 2013.
  • In April 2008, MCC and the Government of Cabo Verde reduced the number of road segments to be rehabilitated under the Infrastructure Project from five to three. This change occurred after MCC discovered deficiencies in original design documents and new designs – which included the introduction of safety measures and other improvements and compensation for unforeseen acquisition of land adjacent to the roads – that contributed to an increase in the cost per segment of almost 40 percent. The increase in cost was also a result of the depreciation of the dollar against the Cabo Verde Escudo. Road segments that were selected for compact funding were those with the highest ERRs. The Government of Cabo Verde identified alternative sources of funding for the remaining two segments.
  • In April 2008, the Private Sector Development Project’s Partnership to Mobilize Investment Activity was substantially re-scoped. The Government of Cabo Verde’s Review Committee for the Partnership evaluated and declined to recommend proposed International Finance Corporation (IFC) priority investments for MCC funding. At the Government’s request, the Activity was cancelled and approximately $4.4 million was transferred from the Private Sector Development Project to the Infrastructure Project’s Roads and Bridges Activity.
  • Due diligence studies conducted after the compact was signed but before funds were disbursed for the Watershed Management and Agricultural Support Project found a potentially high risk of saltwater intrusion into fresh water aquifers in project intervention zones. This was due to the number and placement of planned production wells that would supply water to participating farmers in support of drip irrigation activities. To mitigate the risk of saltwater intrusion into freshwater aquifers, the project was re-structured in February 2008 to construct 28 surface water catchment reservoirs, dikes and contour walls throughout the three intervention watersheds (Paul, Faja and Mosteiros) for the capture and distribution of rain, spring and well-fed freshwater resources.