BAD recommends betting on the diversification of the economy in Cape Verde

The African Development Bank (AFDB) believes that the diversification of the economy continues to be a priority for a steady and sustainable growth of Cape Verde’s economy, despite recognizing that the country must keep growth in the four percent this year, found the PANA is the official source at the end of the week.

In its report Economic Outlook for Africa, released in Abidjan, the economic capital of Cote d Ivore, the ADB argues that, in Cape Verde, the services represent about 70 percent of the GDP (Gross Domestic Product), and the tourism 20 percent.

Among the conditions favorable, the BAD and highlights the potential of tourism, which is 47 percent of exported goods and services, the impact of remittances and a “considerable increase” in foreign direct investment.

On the contrary, the BAD stresses from the point of view negative, the need to improve the factors productivity, currently in decline, diversification of the economy, to strengthen resilience to shocks from abroad, in particular those related to the climate or the dependency on trade with Europe.

Points also as a productivity factor in the successful completion of the restructuring of public companies, such as Cape Verde Airlines (travel agency) and the institute of social housing (IFH), whose debts amount to almost 20 percent of GDP.

However, the document of the ADB points to the fact that, in the wake of a weak GDP growth, an average of 1.8 percent, between 2010 and 2015, the cape verdean economy to recover in 2016, “by registering a growth of 3.8 percent driven by agriculture and services (mainly tourism)”.

“The domestic demand has shown signs of recovery, due to an increase in public spending and private credit,” adds the report.

Notes that this trend continues, with a growth of GDP to an estimated value of four percent in 2017, and, predictably, 4.1 percent, in 2018, stimulated by the recovery of tourism.”

However, the National Institute of Statistics (INE) of Cape Verde has revealed, last Friday, that the pace of country’s economic growth continued to accelerate in the last quarter of 2017, registering the highest value in the last 37 consecutive quarters, and to evolve positively compared to the second quarter.

According to data from the INE, the indicator of trust recorded the highest value of the last 23 consecutive quarters, which has evolved positively compared to the same period of the year 2016.

In relation to tourism, which constribui in more than 20 percent to the GDP formation, being already the largest economic activity of the archipelago, the INE reveals, that in the fourth quarter of 2017, the indicator of confidence in the sector bucked the upward trend of the last quarter.

However, the indicator is above the average of the series and evolved favourably compared with the second quarter.

The entrepreneurs point to the difficulties in finding staff with appropriate training and the excess of bureaucracy and the regulations state as being the main obstacles of the sector in the fourth quarter of 2017.