Cape Verde - Foreign investment

Prior to 5 July 1975, Portuguese corporations were the principal investors in the islands. On that date, foreign corporate landholdings were nationalized by the government. During the 1990s, the shipbuilding and repair yard at Mindelo was jointly owned by the government and Portuguese investors; the fish freezing plant was jointly owned by the government and Dutch investors; and the clothing factory by the government and 107 Cape Verdean nationals living abroad. Private enterprise is now encouraged by the government and has been a major objective of the on-going privatization effort. In 1993, to further encourage investment by Cape Verdean emigrants, the government created favorable tax conditions for such investors. A 100% tax exemption was granted to the first five years of a foreign exportation operation. After five years, a foreign-owned exportation company must pay a 10% tax, which after 10 years was capped at 15%. Foreign-owned industrial endeavors received an exemption for the first three years of operation, with progressively higher customs duties afterwards (25%, 50%, and 75%). The tourism and fishing industries were also granted tax breaks. By the mid-1990s, most sectors of the economy were open to foreign investment, with highest priority given to light manufacturing, tourism and fishing.

In 1997, the inflow of foreign direct investment (FDI) was $11.6 million and fell to $8 million in 1998. However, the increase in privatization sales increased FDI flow to record levels of $53.3 million and $21.2 million, in 1999 and 2000, respectively. The economic slowdown in 2001 combined with the worldwide decline in FDI flows and tourism helped bring Cape Verde's FDI to a reported $700.000.

Most FDI has been in tourism (54%), with manufacturing accounting for 15.5% of FDI. The main sources recently have been Italy, Portugal, Spain (Canary Islands), and Hong Kong.

Cape Verde launched a stock exchange in 1999, but it has never been operative.

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