- The barren archipelago of Cape Verde is blessed by its geographic location. The nature-given potential for tourism and fisheries within the framework of political stability could prove the way out of current poverty, international bankers hold.
The African Development Bank (ADB) yesterday published its review of the 2002-2004 Country Strategy Paper for Cape Verde, one of the best governed and richest countries within its sphere of financing. Nevertheless, all is not well in the Cape Verdean economy, the ADB strategy paper revealed.
The ADB board noted that "poverty remains a major concern" since it affects 30 percent of the archipelago's population. Consequently, the Bank stressed "the need to speed up the completion and implementation of the Poverty Reduction Strategy Paper" in order to face the challenges of poverty and reach the international goals set to fight poverty.
The influential Tunis-based Bank also noted with concern the ups and downs of the economic growth rate in Cape Verde lately. The GDP growth rate had been "uneven over the 2000-2002 period, falling from 6.8 percent in 2000 to 3.3 percent in 2001, before rising again to 4.5 percent in 2002," ADB directors noted.
In addition, the Bank noted that the problem of Cape Verde's domestic debt, especially to the private sector, "is a constraint to the country's financial stability." Moreover, Cape Verde should "address the domestic debt issue and complete the implementation of its privatisation program to enable the private sector to play a more dynamic role," the Bank said in its critique. The board further encouraged the authorities to "pursue efforts aimed at good governance and corruption control."
Behind this soft critique and kind advices, the ADB directors however found much more positive signs in Cape Verde's economic development and future than in most other countries that it has been reviewing lately.
The ADB board had "appreciated" the Cape Verdean government's reform efforts, "thanks to which inflation was kept at 1.8 percent in 2002" compared with 4.4 percent in 1999, "the budget deficit was reduced from 11 percent of the GDP in 1999 to 1.9 percent in 2002, as was the current account deficit from 14.9 percent in 1999 to 11.3 percent in 2002."
Other than many continental African countries, Cape Verde has a real chance to escape the poverty trap within the coming decade. Political stability, democracy, good governance, economic growth and geographic advantages create a solid fundament for future growth. Especially Cape Verde's vicinity to Europe gives hope of a boom for the tourism and fisheries industry.
The ADB board therefore encouraged Cape Verdean authorities to "better tap the island country's potential particularly in tourism and fisheries." To that end, the Bank called on the country to "make the most of its political and social stability as well as its geographic location," and to persevere in the path of strengthening its institutional capacities and conducting economic reforms.
Cape Verde lately has deepened its cooperation with the European Union, where it aspires a special status with help from its former colonial power, Portugal. Economic ties and a firmly based democracy may be helpful in this process. Further, Cape Verde is deepening its ties with Spain and the neighbouring Canary Islands to build the necessary infrastructure for a growing tourism boom.
The ADB review thus focused on the natural advantages possessed by Cape Verde, in addition to the enormous potential of political stability and transparency. The Bank invited the Cape Verdean government to speed up the implementation of projects already started - in particular concerning the fight against poverty - "so as to boost their development impact and effectiveness."
The ADB board further approved the strategy proposed in the 2002-2004 strategy paper for Cape Verde, which "aims at supporting poverty alleviation actions by targeting the agricultural and rural development sector, and capacity building." Under these programmes, the board approved of the continued economic support - both loans and grants - for Cape Verdean authorities.
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