Cabo Verde, 500 kms off the coast of Senegal, is small geographically (166/195), but quickly earning a reputation as an attractive destination for tourists and tourism investors globally and regionally.
Since 2005, tourism has more than tripled in both volume and receipts outpacing much of the rest of Africa and proving to be a competitive contender for the sun, sea and sand resort segment. For Cabo Verde and several other countries in Africa, tourism is an important key to attracting investment and growing their economies – more attractive than overall economic growth and investment for the continent.
In April 2016, The Economist published a special report on “Business in Africa” which offered a less than rosy, but cautiously optimistic picture of the prospects for doing business and investing in Africa.
Foreign direct investment is growing, but not at the same pace as past years and increasing moderately compared with other regions. And along with investment, economies are growing at varying rates with Cabo Verde showing a good level of GDP of approximately US$1.8 bn (World Bank 2014 est.) and per capita GDP of $6400 (2014 PPP est.). Cabo Verde’s growth is forecast to continue growing above three and four per cent for the next few years, a percentage faster than the world average, but slightly less than the average for sub-Sahara Africa. Growth in commodities and manufacturing in countries such as South Africa and Nigeria skew the averages.
Almost 76% of Cabo Verde GDP is generated by services, of which travel and tourism accounts for 40% of total GDP, thus over half of services. Compared with other countries in Africa, Cabo Verde ranks third for the contribution of tourism to GDP.
The World Travel & Tourism Council forecasts substantial growth and contribution to GDP steadily over the next decade to 2025. Annual direct and total contributions to GDP from tourism will average 5.9 percent and 6.1 percent respectively, which still place the country above the top quarter of countries worldwide.
With some of the highest levels of GDP contribution from tourism in Africa and a position of 13th worldwide on the direct contribution in 2015, it is not surprising to see that Cabo Verde has also experienced fast growth in international arrivals. From 2005-2015, Cabo Verde arrivals increased 163 percent at a compound annual growth rate of 11.3 percent – well above competitors.
Some of the growing interest in visiting Cabo Verde stems from terrorist incidents and civil conflict in Egypt, Tunisia and Turkey, which have resulted in cancellations for beach holidays in these markets.
The country has positioned itself as a winter destination for sun seekers especially from the UK, Germany, and Italy. It is especially an alternative to the Canary Islands or the Caribbean. Nearly 70 per cent of all international arrivals in 2014 were from six countries: UK (20%), Germany (14%), France (12.7%), Portugal (12.3%), and Belgium (10.4%). And nearly 22 % were concentrated in a “not specified” category. Among the key generating markets, as the following chart shows, these countries (apart from Portugal), Austria and Switzerland countries generated substantial arrivals increases from 2010 to 2014. Although Austria and Switzerland accounted for increases, they still accounted for only 1.1% or less of the total number of visitors.
Cabo Verde, especially the evolving destinations of Boa Vista and Maio, are well-positioned to welcome visitors that had planned on these other countries. It is also helpful that in 2015, the World Economic Forum’s Travel & Tourism Index ranked Cabo Verde as the safest destination in the world in terms of incidence of terrorism.
The country’s rapidly growing popularity as a destination has also been fueling increased interest in investing in Cabo Verde, particularly on the islands Boa Vista and Maio. Cabo Verde has been attracting between US$80 MN and US$210 MN annually in foreign direct investment. In 2015, with the signing of a major new resort development on Santiago Island by the Macau Legend Development company, total FDI for 2015-16 is registering a substantial increase. This interest is being boosted by tourism investment incentives offered by the Government and the development of special zones facilitated by the Boa Vista and Maio Islands Tourism Development Corporation, SA (SDTIBM). The forecast for the next decade is optimistic for visitors, residents, operators and investors. It is a good time to be in tourism and be a tourist in Cabo Verde – and set to continue evolving.
Next: Tourism Investment Incentives in Cabo Verde and Cabo Verde Tourism Project Updates