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

Country Context

A group of islands in the North Atlantic Ocean just west of Senegal, Cabo Verde has been committed to achieving impressive socio-economic gains in areas like literacy rates, educational attainment, life expectancy, and per-capita income. However, despite significant progress since independence, at the time of compact development, Cabo Verde continued to suffer from high levels of poverty and unemployment. This socio-economic dichotomy was reflected in increasing income disparities between men and women and between urban and rural populations, with approximately 40 percent of the country’s rural population living in poverty. The Cabo Verde economy relied heavily on foreign aid and remittances from the Cabo Verdean community abroad, which together accounted for roughly 25 percent of the country’s GDP.

Cabo Verde has suffered from a poor natural resource base, including serious water shortages exacerbated by cycles of long-term drought and poor soil for agriculture on several of the islands, requiring people to import most of what they consumed. The country’s inadequate transportation infrastructure was another key challenge, with the population spread across eight of the nine islands. This geographic discontinuity inhibited the development of a common national market, increased the costs of production, and hindered the flow of resources from more prosperous islands to more rural and poor islands. Given the constraints in other sectors resulting from the country’s geography and small population, sectors such as tourism, financial services, transportation and fisheries were expected to serve as future engines of Cabo Verde’s growth. However, in order to achieve the goal of developing these target sectors, large investments were needed to strengthen human resources and upgrade infrastructure, together with relevant policy reforms to improve the investment climate.

To help address these issues, the 2005 MCC-Cabo Verde Compact was designed to improve the country’s investment climate and reform the financial sector; strengthen 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 key policy reforms needed for sustained economic growth. The Government established MCA-Cabo Verde to lead the implementation of the compact.[[Under the MCC country ownership model, MCC’s counterparts are responsible for implementing MCC-funded programs. Partner governments establish entities known as accountable entities (MCAs) to manage implementation for compact projects.]]

Projects were based on Cabo Verde’s national development goals, particularly to transform their economy from aid-dependency to sustainable, private-sector led growth. The projects resulted from a broad and meaningful consultative process conducted by the Cabo Verdeans that included senior national and local government representatives, private sector leaders, non-governmental leaders and sector specialists. The compact was focused on the islands of Santiago, Santo Antão, Fogo, and São Nicolau.

At the end of the compact in October 2010, the Government of Cabo Verde and MCC had disbursed 98.6 percent of the anticipated compact funds with nearly 385,000 people expected to benefit from these investments.

  • Original Amount at Compact Signing:
  • Amount spent:

  • Signed:
    July 5, 2005
  • Entry Into Force:
    October 18, 2005
  • Closed:
    October 17, 2010

  • 384,765Estimated beneficiaries over 20 years
  • $85,000,000Estimated net benefits over 20 years

    “Estimated Net Benefits” is the sum of all projected net benefits accruing over the life of the project, typically 20 years, evaluated at a 10% discount rate. Estimates are reported in millions of US dollars in the year that the ERR analysis was completed.