Cape Verde on the road to greater economic diversity
Cape Verde and its dependence on the tourism sector
Just a few months ago, it was hard to imagine what Cape Verde looked like before it was discovered as a real estate hotspot by foreign investors due to the ever-increasing number of tourist arrivals on these tropical islands. Real estate developers and hotel management companies have invested billions in the infrastructure of the islands of Sal and Boa Vista. Airports were expanded and the road network improved. Government-stimulated major development plans were drawn up and dozens of large 5* hotel resort complexes and marinas were built. The islands have achieved an unprecedented economic boom, while they further developed their status as a top tourist destination. This of course has had a major positive impact on the Cape Verdean economy. Tourism's direct contribution to the GDP rose above 20% last year, while the indirect contribution was over 40%. Cape Verde was moving towards a bright future of economic stability and building a reputation of being one of the world's major tourist destinations.
But this was a few months ago. The large resorts and airports on the sandy islands of Sal and Boa Vista now have the appearance of large empty monuments from a glorious past. Tourist resorts have become haunted villages, and the many workers, who already struggled with their €150 salary and rising living costs before the crisis, now face a new era of economic and social desperation. With its booming economy, Cape Verde also attracted many African immigrants, mainly from nearby Senegal, who are also entirely dependent on the tourism industry. Large tour operators such as TUI or hotel chains such as RIU, responsible for the biggest part of tourism arrivals on the islands and therefore having advertised themselves more than once as being the protectors of Cape Verde's economic and social development, have left the islands for what they are shortly after one of their British customers appeared to be the first case of COVID-19 in Boa Vista.
Cape Verde and tourism. What alternatives are there?
The large tour-operators will of course return when the crisis is over and money can be made again. And yes, they will bring millions of new holidaymakers to the islands and support the further development and economic prosperity of Cape Verde. But at the same time, Cape Verde must learn a lesson from this. Foreign investors and tour operators will only be there as long as there is money to be made. This is the nature of things. As soon as another crisis hits the islands and affects tourism, they will be the first to disappear. Cape Verde must therefore now develop a sustainable Plan B, which will make the islands less dependent on tourism, and enable the islands to survive when tourism and foreign investment come to a halt. The country's income from tourism, while it flourishes, should not only be invested in new tourism projects or infrastructure improvements in the main tourist resorts of Sal and Boa Vista, but must be invested in the sustainable improvement of the islands other economical sectors. Due to the coronavirus crisis, Cape Verde has learned the hard way how dangerous it is to heavily rely on just one single main stream of income.
But what does Cape Verde offer as a possible alternative to tourism? Not much at first glance. But if we dive deeper into it, there must be something. Perhaps the population: the potential of any economy is the people, and the Cape Verdean population has gone through many crises. Some of these crises were more difficult than we can imagine. The first crisis was at the same time the beginning of Cape Verde, when Portuguese explorers discovered and colonized these uninhabited islands in the 15th century, making it a prosperous centre for slave trade, privateers and pirates. This lasted until the end of the transatlantic slave trade in the 19th century. Understanding the origins of the Cape Verdean people, which was slavery, is an understanding of the tremendous strength which the population has today, as well as the willpower and creativity to overcome difficult times. This is also reflected by their culture, with Cape Verdean music still being an important export commodity, also beyond Césaria Evora. Names like Ferro Gaita, Tcheka or Maria de Barros are among the Cape Verdean artists conquering today's World Music charts. The stimulation of Cape Verde's cultural sector, which mainly includes music and dance, but also art painting, would certainly be a sustainable way to add to the prosperity of some regions and population groups of the islands. It also remains a great way of marketing the islands and ensuring they remain on the cultural, economical and social world map.
Cape Verde and the power of the sea
Cape Verde are not just the islands. Cape Verde, officially known as the Republic of Cabo Verde, is also the surrounding ocean and remains an important location on the international Atlantic trade routes. Cape Verde must continue to manifest itself as one of the major transshipment hubs with growth potential and business opportunities in the areas of bunkering, short-sea shipping, port development and related services such as training, crewing, logistics, finance, ship brokerage and insurance.
When thinking of the surrounding oceans, fishing obviously also comes up. Fisheries already play a very important role in the economy and society of Cape Verde. Fishing offers many jobs, supports the livelihoods of countless families and also provides them with food. There are approximately 5,000 full-time fishermen on the islands, which guarantees a total annual catch production of around 25,000 tons, with tuna representing around 66% of the total catch. Exports of fish and fishery products are estimated at around EUR 70 million and represent approximately 80% of the country's merchandise.
Potential in agriculture, scientific research as well as green tourism
Agreed, on the landside, Cape Verde offers very little natural resources or raw materials and therefore little potential revenue streams. But there are ways to create or stimulate new economic sectors on some of the Cape Verdean islands. Existing service sectors that are not related to the tourism industry could be further developed by attracting new business through tax-incentives. With its major storage centres, Cape Verde can encompass more training, insurance and brokerage related to international shipping and attract freight forwarding. Call centres have proven to be a successful economic stimulator in other African countries and could have the same significance for Cape Verde.
But also the further improvement of the agricultural sector is not impossible. Recent studies show that small dams could effectively contribute to the agricultural development, because the increased availability of water naturally would increase production and income within this sector. While basic crops, such as corn and beans, are already produced sufficiently for local consumption, their production could be increased and exported to neighbouring countries in western Africa. More of the irrigated crops such as sugar cane and tomatoes could be grown for export and other commercial purposes such as distilleries, all together providing a varied stream of income through agricultural products.
Increased farming activity could also have another benefit. Long periods of drought, exposure, erosion and soil degradation have caused desertification to increase in recent decades, leading to even more erosion. Irrigation and agricultural activities can help stop this vicious cycle.
And then there is science and research. With unique biospheres such as the volcanic island of Fogo or the island of Maio, international research is already conducted on the islands. International scientific facilities could be attracted. This would not only help research, but could also help develop a more sustainable approach to tourism by introducing the concept of organised rural and ecological tourism to Cape Verde. Rural tourism and tourist activities on a smaller scale become increasingly popular and today's pandemic crisis will only reinforce this trend.
The virus will be gone someday soon and tourism will pick up again. But another virus, or another sort of crisis may affect the very fragile tourism industry again in the future. It is important that Cape Verde uses the upcoming surge in tourism arrivals as investment capital for a sustainable plan B which will allow increased prosperity while tourism lasts, and function as a life insurance whenever tourism takes a break.
The fact is that much can be done to reduce Cape Verde's dependence on large international investment and tourism companies. Like any crisis, this crisis also offers opportunities. It is now up to the Cape Verdean government and people to seize their renewed opportunity for economic independence.