2016 Index of Economic Freedom

Cabo Verde

overall score66.5
world rank57
Rule of Law

Property Rights75.0

Freedom From Corruption57.0

Limited Government

Government Spending66.9

Fiscal Freedom78.1

Regulatory Efficiency

Business Freedom61.3

Labor Freedom43.6

Monetary Freedom84.5

Open Markets

Trade Freedom68.2

Investment Freedom70.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 0.5 million
  • GDP (PPP):
    • $3.3 billion
    • 1.0% growth
    • 1.6% 5-year compound annual growth
    • $6,324 per capita
  • Unemployment:
    • 9.2%
  • Inflation (CPI):
    • -0.2%
  • FDI Inflow:
    • $78.1 million
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Substantial restructuring and the relatively dependable rule of law have facilitated Cabo Verde’s transition to a more open and flexible economic system. Property rights are strongly protected in comparison to other economies in the region, and the small island economy’s substantive reforms have reduced corruption and enhanced the quality of the regulatory environment.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 66.5 (up 0.1 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 57th
  • Regional Ranking: 3rd in Sub-Saharan Africa
  • Notable Successes: Rule of Law and Open Markets
  • Concerns: Management of Public Spending and Labor Freedom
  • Overall Score Change Since 2012: +3

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Background

Cabo Verde is a stable, multi-party parliamentary democracy. Jose Maria Neves of the African Party for Independence of Cabo Verde was appointed prime minister by the president in 2001 and again in 2006 and 2011. Opposition leader Jose Carlos Fonseca of the Movement for Democracy won the presidential election in 2011. The Cabo Verde islands have few natural resources. Services dominate the economy, and most of the country’s food is imported. Cabo Verde’s expatriate population is larger than its domestic population. Ongoing economic reforms aim to boost foreign investment and diversify the economy.

Rule of LawView Methodology

Property Rights 75.0 Create a Graph using this measurement

Freedom From Corruption 57.0 Create a Graph using this measurement

Broad political stability is underpinned by strong democratic institutions and decent protection of civic freedoms. Cabo Verde has relatively high levels of transparency and low levels of corruption compared to other African nations. Private property is reasonably well protected. The constitutionally independent judiciary is generally respected, but the judicial system is inefficient, and the case backlog causes significant delays.

Limited GovernmentView Methodology

The top personal income tax rate is 35 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax. The overall tax burden equals 18.5 percent of total domestic income. Government spending amounts to 33.2 percent of total domestic output, and the budget deficit equals over 8 percent of GDP. Public investment stimulus programs have added to a public debt that now exceeds annual economic output.

Regulatory EfficiencyView Methodology

The business start-up process has been simplified, and the cost of launching a business now equals about 20 percent of average annual income. Despite efforts to increase labor market flexibility, the unemployment rate remains persistently high. The market determines most prices. The state subsidizes electricity, water, and a state-owned airline, but in 2015, the IMF praised efforts to improve their operational performance.

Open MarketsView Methodology

Cabo Verde’s average tariff rate is a relatively high 10.9 percent. Domestic and foreign investors are generally treated equally under the law. Several state-owned enterprises have been privatized since the 1990s. Banking continues to expand, and the number of non-performing loans has decreased. With credit generally allocated on market terms, small and medium-size enterprises have increasingly adequate access to financing.

Country's Score Over Time

Bar Graph of Cabo Verde Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Cabo Verde to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Mauritius74.7-1.7
2Botswana71.11.3
3Cabo Verde66.50.1
4Rwanda63.1-1.7
5Ghana630.0
6Seychelles62.24.7
7South Africa61.9-0.7
8Namibia61.92.3
9Madagascar61.1-0.6
10Côte d'Ivoire 601.5
11Swaziland59.7-0.2
12Benin59.30.5
13Uganda59.3-0.4
14Burkina Faso59.10.5
15Gabon590.7
16Zambia58.80.1
17Tanzania58.51.0
18Senegal58.10.3
19Kenya57.51.9
20Nigeria57.51.9
21The Gambia57.1-0.4
22São Tomé and Príncipe 56.73.4
23Mali56.50.1
24Djibouti56-1.5
25Mauritania54.81.5
26Niger54.3-0.3
27Cameroon54.22.3
28Burundi53.90.2
29Togo53.60.6
30Guinea53.31.2
31Mozambique 53.2-1.6
32Comoros52.40.3
33Sierra Leone52.30.6
34Liberia52.2-0.5
35Guinea-Bissau51.8-0.2
36Malawi51.8-3.0
37Ethiopia51.50.0
38Lesotho50.61.0
39Angola48.91.0
40Democratic Republic of Congo46.41.4
41Chad46.30.4
42Central African Republic45.2-0.7
43Equatorial Guinea43.73.3
44Republic of Congo 42.80.1
45Eritrea42.73.8
46Zimbabwe38.20.6
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