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Cape Verde: A Rare African Success

20th February 2008

Consisting of ten main islands and eight small islets off the west coast of Africa with a total area of 1,557 square miles (about the size of Rhode Island), the Cape Verde archipelago was uninhabited when Alvise Cadamosto, a Venetian mariner in the service of Portugal's Prince Henry the Navigator, made landfall in 1456. The 423,000 Cape Verdeans today are descendants of colonialists for Portugal who began arriving in 1462 to found Ribeira Grande (now Cidade Velha), the first European settlement in the tropics, as well Portuguese Jews exiled to the islands by Manuel I in 1496 and African slaves who were brought from Senegal, Gambia, and Guinea-Bissau.

Despite a poor natural resource base, including severe water shortages that have been exacerbated by recurrent cycles of drought (three major droughts in the 19th century killed more than 100,000 people and spurred emigration abroad, including, notably, to what were then thriving New England whaling ports like New Bedford, Massachusetts, and Providence, Rhode Island), last year Cape Verde became only the second country ever to be "graduated" by the United Nations from the ranks of the world's fifty "least developed countries" (LDCs) – diamond-rich Botswana was the first in 1994 – into the ranks of its moderately "developing countries." The decision was linked, at least in part, to the revision of the country's annual economic growth rate, estimated in 2006 by the International Monetary Fund at 6.5 percent, to an astounding 10.8 percent, primarily driven by the light industrial, services, and tourism sectors. Per capita gross domestic product (GDP) is slightly more than $2,000 – or $7,000, if one uses purchasing power parity (PPP) metrics – making Cape Verdeans the most prosperous people in the Economic Community of West African States (ECOWAS). According to the World Bank, between 2001 and 2006, poverty in Cape Verde declined 8 percent, while the literacy rate reached 79 percent (97 percent among the youngest cohort). Foreign investment as a component of GDP is three times more significant than economic assistance and the country's foreign exchange reserves at the end of 2007, an estimated $343.8 million, is more than enough for it to pay off its external debt should it choose to. In December 2007, the General Council of the World Trade Organization (WTO) cleared the path for Cape Verde's accession by approving a package of agreements which spell out the terms of the country's joining. Cape Verde is expected to become the WTO's 152nd member following ratification of the deal, which is expected by June of this year.

Writing in a guest column for news service at the end of 2006, Prime Minister José Maria Pereira Neves commented on his country's economic progress:

At Independence in 1975, Cape Verde was one of the world's poorest countries whose index of economic vulnerability was one of the highest in the world. Yet today, many outsiders convey their appreciation for our people's resilience urging us to be proud of our achievements, that as an African nation, we are succeeding where so many others continue to fail. We are removing obstacles to implementing a culture of good governance, democratic values and human development.

Indeed, today Cape Verde is a stable democratic state that is ranked among the best countries in Africa in Human Development and Governance Indicators. Moreover, we are the most advanced towards achieving the Millennium Development Goals. We have attained a 100 percent basic education rate for all (including girls) and enrollment in secondary school is at 70 percent.

The government leader attributed this success to the democratic politics that his country embraced in multiparty elections in 1991, after a being ruled as a one-party state from independence by the then-socialist Partido Africano da Independência de Cabo Verde (PAICV, "African Party for the Independence of Cape Verde"):

Cape Verde has achieved several peaceful elections and government transitions and enjoys a dynamic social system supported by a vibrant civil society that increasingly participates in the social and political life of the Nation. We are a nation in which conflicts are resolved peacefully and within the rule of law. We have a free press that is ranked by several international organizations among the best in Africa and are proud to compete on a level footing with many developed nations.

International observers confirm the prime minister's optimistic assessment. Cape Verde is ranked a "free country," scoring a 1 for both political freedom and civil liberties in Freedom House's scoring system (the scale is 1 to 7, with 1 corresponding to the highest and 7 the lowest level of freedom), making it the freest among the eleven Sub-Saharan African states (Benin, Botswana, Cape Verde, Ghana, Lesotho, Mali, Mauritius, Namibia, São Tomé and Príncipe, Senegal, and South Africa) characterized as "free" in the latest edition the annual report, Freedom in the World 2008. Moreover, among its African peers, Cape Verde has been in the category of the "free" the longest (South Africa, for example, only acceded to the rank in 1995, following its transition to majority rule and currently only scores a 2 on the two indices).

The democracy in Cape Verde is so mature that when, in the 2001 presidential elections, Pedro Verona Rodrigues Pires, the country's PAICV prime minister from 1975 until his defeat in the 1991 multiparty parliamentary elections, prevailed in the second round against the man who had defeated him a decade earlier, Movimento para a Democracia (MpD, "Movement for Democracy") leader Carlos Alberto Wahnon de Carvalho Veiga, by a mere twelve votes, the results were accepted peacefully (Pires was reelected in 2006 with a more comfortable 3,342-vote margin – out of nearly 170,000 ballots cast – against the same opponent). As Dr. Bruce Baker, director of African studies at Coventry University has noted in the Journal of Modern African Studies, "having two parties of fairly equal strength, as opposed to the ruling party dominance so common in Africa, has ensured lively debate in the National Assembly and meant that no government has been able to be complacent."

With this record, it is not surprising that Cape Verde was almost the first African country (Madagascar beat it by three months) and the third nation overall to qualify for and sign a compact with the Millennium Challenge Corporation (MCC), the innovative U.S. government corporation which rewards countries with assistance based on their performance on independent and transparent policy indicators for good governance, economic freedom, and investments in their people. The five-year compact, currently in the second year of its implementation, includes $10.8 million in funding for watershed management that will benefit more than 70,000 people, $78.7 million for infrastructure improvements which will impact 60,000 people, and $7.2 million to support policy reforms, the creation of a community college system, financial sector improvement, and other measures to encourage private investment. The latter is already beginning to have an effect: just last week, President Pires approved a public-private partnership between the state power company Electra and foreign investors to build four wind farms which, when completed, will supply 15 percent of the country's energy needs. Likewise last week Hilton Hotels Corporation announced the signing of an agreement to build a 268-room Hilton Worldwide Resort at Santa Maria on Sal Island which, when it opens in 2010, will be the first upscale international hospitality brand to operate in Cape Verde. A recent report from the U.S. Commercial Service was mildly optimist about prospects for the future:

Trade and investment opportunities are likely to increase as tourism, fisheries and export-oriented industries become established in the country creating new opportunities to support and enhance these sectors.

One of Cape Verde's most important assets is its location, which makes the country an invaluable crossroads for passengers moving across the Atlantic Ocean by air or sea. It holds an untapped potential as a launch site for doing business with Portuguese speaking African countries as well as countries in the West African region. The international airport at Sal could become an airline transportation hub for the region. With that in mind, the government has placed emphasis on the development of airports, ports and telecommunication facilities.

Following in the tradition of its 19th century forebears, the U.S. Navy has continued to spearhead security cooperation with Cape Verde. Last August, for example, the Oliver Hazard Perry-class guided missile frigate USS Doyle visited the archipelago. Sailors on the Doyle trained their counterparts from the Cape Verdean Coast Guard in visit, board, search and seizure (VBSS) procedures as well as damage control and firefighting techniques. Less than three months later, on November 17, the Los Angeles-class nuclear-powered attack submarine USS Annapolis became the first U.S. submarine ever to make a visit to Sub-Saharan Africa when it called at Praia. The Annapolis's historic visit came as part of U.S. Sixth Fleet's Africa Partnership Station (APS) initiative which involves training teams from various Navy, Marine, and Coast Guard commands, as well as personnel from several European allies, collaborating to enhance regional partnerships and support sustained, focused training aimed at building up African maritime capacities. The U.S. European Command (EUCOM) which, until the U.S. Africa Command (AFRICOM) achieved its "initial operating capability" on October 1, 2007, had responsibility for Cape Verde, has also carried out an extensive humanitarian assistance program, building a number of community centers as well as libraries and schools.

One of the perverse ironies of the current international system is that, with the exception of the funding it is getting from the MCC program, Cape Verde's good record of competent and transparent government risks costing it access to the soft terms and other preferential treatment that the world reserves for LDCs. And even its access to MCC funding could potentially by curbed since U.S. federal law states that only 25 percent of Millennium Challenge Compact assistance in any given year may be invested in assistance to lower middle income countries, the majority of funding being reserved for low income LDCs. As Prime Minister Neves has observed:

The economic progress Cape Verde has made as a result of stringent financial management, sound economic policies, and zero corruption ironically may affect the country's eligibility for continued high level of development assistance. For example, Cape Verde is not eligible for the recent programs for debt relief decided by the G8 because we have always honored and serviced our national debts. Because we honor our commitments, Cape Verde is now compelled to spend more on servicing past debts than it does on education or health. The trend to reduce development assistance to Cape Verde at the very moment when we need more and better targeted resources to help us confront new challenges will send a wrong message for the countries that are governing justly, investing in their people and following the rules.

Defying the odds stacked against it by nature, geography, and history, Cape Verde has proven itself to be an exception to the curses of bad governance and economic malaise which have bedeviled post-independence Africa. With the backing of its former colonial ruler, Portugal, as well as of the president of the European Commission, José Manuel Barroso, a former Portuguese prime minister, Cape Verde has even tried to make a case for entry into the European Union (EU). While EU admission is rather unlikely, it underscores this African country's remarkable achievement as a stable democratic state, aligned with the United States and its traditional allies, developing it economy transparently and responsibly trying – if not always succeeding – to provide adequate services to its citizens. Countries like Cape Verde deserve to have their levels of assistance increased, rather than decreased, as a result of their progress. After all, if aid resources are scarce, then they are better spent consolidating Africa's rare boot-strapping successes rather than wasted on the continent's self-destructive basket cases.