Cape Verde News

Prime Minister at ECOWAS annual summit meeting

Between 26-28 July the Prime Minister, Carlos Veiga, was at the 19th annual summit meeting of the Economic Community of West African States (ECOWAS) attended by the heads of state and government of the other 15 member states in Abuja, Nigeria. Besides jointly discussing the problem of the civil war taking place in Liberia, Carlos Veiga pressed for the need to organise a ministerial level meeting of all the member states to take place as soon as possible to produce a unified approach in tackling the problem of drug trafficking in the West African region. The Prime Minister's suggestion was accepted enthusiastically and a ministerial level summit meeting of all member states will take place in Praia, Cape Verde, early in 1997. Carlos Veiga also stressed that an independent auditor and administrator should be employed to manage the 'ECOWAS Fund' which is intended to be transformed at a later date in to the 'West African Development Bank'. He also stated his belief that "Africa must be constructed by Africans, the solution to our problems depends on us alone" and said that he believes there is no reason for so-called "Afro-pessimism between us".

The economic policies adopted earlier this year by the government of the Movimento para a Democracia (MPD) which, in its own description are of "strictness and austerity", have been vehemently attacked by the leading parliamentary Opposition, the Partido Africano da Independencia de Cabo Verde (PAICV). For a country which could always be relied upon to pay its debts promptly, Cape Verde is now for the first time in arrears with its debts and total outstanding debt has risen from US$135 million to nearly $200m in 1995. The MPD, led by the Prime Minister, Carlos Veiga, has responded that if the Cape Verde continues to fail to meet its debt repayment and debt-servicing requirements then the Multilateral lending institutions (IMF, etc.) will oblige Cape Verde to begin following an even stricter officially imposed Structural Adjustment Program such as is seen in Guinea-Bissau and Sao Tome e Principe with even more severe austerity programmes taking place.

The government wishes to narrow the worsening trade gap which has almost doubled from $128m in 1991 to around $250m in 1995 due to a massive surge in imports of secondary goods. The very high level of imports of motor vehicles, electrical appliances, furniture, canned food and drink and meat has largely been payed for on loan from the local banking institutions who arrange lines of credit from the international banks. Accordingly, the foreign exchange reserves are alarmingly low and government borrowing, both national and international, has resulted in the accumulation of debt and associated debt-servicing costs.

Earlier this year, the Minister for Economic Co-ordination, Gualberto do Rosario, announced strict austerity measures to set Cape Verde's economy back on an even keel by enforcing import quotas on 26 key secondary goods intending to dramatically reduce the overall level of imported goods. Furthermore, he announced at the presentation of the Orcamento de Estado (State Budget) for 1996 that government borrowing would be restricted to within 4.4% of gross domestic product. Last year goverment borrowing was around 14%.

The PAICV leader, Aristides Lima, and also trade union leaders have complained that the government's tough economic polices to reduce goverment borrowing are hitting the population too hard. In March the government announced price increases on the sale of some primary goods sold to the local market through the State-owned food and distribution company 'Empresa Publica de Abastecimento' (EMPA) which are particularly sensitive to the spending abilities of those living under the poverty line (about 40% of the population) such as cooking oil (15%), flour, rice and sugar (10%). The government stated that the cost to import these goods had gone up and that for the last 2 years they had been sold to the local market at less than cost price thus creating losses for the State.

The State subsidises the sale of gasoline and diesel (derve) to the only two petroleum companies operating in Cape Verde, 'Shell-Cabo Verde' and 'Enacol'. These subsidies enable the companies to sell fuel to the public at reduced (fixed) prices. In mid-August the Minister for Economic Co-ordination, Gualberto do Rosario, announced that the recent hike in the exchange rate of the US dollar (by which all petroleum goods are purchased) and the increase in delivery costs had forced the government's decision to increase consumption taxes on fuel. He said that the State has been selling fuel to the two retailers at less than cost price creating a loss of $2.4m. Drivers now have to pay CVEsc40 (forty Cape Verde escudos) per litre for diesel (up 25%) and CVEsc75 per litre of gasoline (up 19%). This is equivalent to US$1.80 per US gallon for diesel and $3.35 per US gallon of gasoline. Butane gas, primarily used for cooking, now costs 20% more at CVEsc1,060 per bottle. Gualberto do Rosario also guaranteed that the rise in fuel prices would not lead to an increase in bills for the supply of electricity and water (desalinated) by 'Electra' (Empresa Publica de Electricidade e Agua). Recent events in the Gulf which seem set to delay the sale of Iraqi oil and which have pushed up the price of oil may well lead to the government announcing a further increase in the price of fuels.

Monthly salaries payed to civil servants have been payed two to three weeks late in the months of June, July and August. The Prime Minister, Carlos Veiga, explained that there were not enough funds held in the Treasury to meet the necessary payments as certain State-owned firms had been payed late for their goods and services. The government has stuck to its policy to limit its borrowing from the central bank, the Banco de Cabo Verde. Dr.Veiga stated he believes that the September salary payments will mark a return to the normal schedule at the middle of the month.

The number of civil servants working in the Public Administration rose from 7,800 in 1990 to 11,300 in 1995, representing around 8% of the total labour force. In the same year public spending on the civil service reached CVEsc3.4 billion ($42m) oer annum.

National Development Plan III (1992-1996) officially expired in August and the next Plan is set to begin in January 1997. The key concepts of National Development Plan IV were contained in the Programa do Governo approved last April, but the details of the next Plan are still being drawn up and are to be approved by the Assembleia Nacional (parliament) this December. A series of regional and sectoral forums have been taking place over this summer attended by the public and President Mascarenhas, the Prime Minister and other members of the government to help them formulate a detailed National Development Plan which will serve the best interests of the Islands.

President Mascarenhas and the Prime Minister, Carlos Veiga, attended a joint forum organised by the five local municipal councils on Santiago Island (Praia, Sao Domingos, Santa Cruz, Santa Catarina, Tarrafal) titled "Forum para o Desenvolvimento de Santiago" (Forum for the Development of Santiago). Several conclusions of the forum will be formally presented to the Government for possible inclusion in National Development Plan IV, such as:

-- The delegates agreed that the future development of Santiago Island should not be marginalised as they claim it has been in the past. They state that, proportionately, the smaller less populated islands have been granted far more development funding than Santiago on which around 200,000 people live (about half the population of the archipelago) and which is naturally better suited for agricultural development having the majority of suitable terrain.

-- The new international airport at Praia opening by the end of 1998 (already contracted at $22.5m) is the primary infrastructure necessary for the development of Santiago and will also benefit Fogo, Brava and Maio by improving accessibility. Around two-thirds of all passengers disembarking at Sal transfer on local flights down to Praia often with long passenger waiting lists and baggage transportation difficulties. The development of tourism on Santiago Island is seen as the key for economic growth, so much so that the delegates concluded that the prevised 2,200 metre runway should be extended to 3,000 metres to accommodate larger aircraft carrying more tourists from Europe and North America.

-- The Port of Praia should be enlarged and modernised to keep up with the requirements of the growing population of the island and to support development of tourism and light-manufacturing. The port at Mindelo (Porto Grande) on Sao Vicente has recently undergone enlargement and modernisation ($13.2m) and is bigger than the Port of Praia, however, Sao Vicente Island has a much smaller population than that of Santiago at around only 55,000. The Port of Praia also handles more cargo than Porto Grande.

-- A new Central Hospital should be constructed in Praia offering a much wider diversity of treatments and beds than the existing Dr.Agostino Neto hospital. Currently, about 250 patients needing treatment not available in Cape Verde are sent to Portugal. Two more hospitals should be set up in the interior of Santiago Island. A hospital was opened in summer 1995 in Assomada.

-- Large dams should be constructed to form reservoirs in water catchment areas and to reduce the amount of run-off of rainwater which causes soil erosion damage.

-- A stone crushing plant needs to be established to provide sand and ballast for construction. Up to now, sand and ballast has been extracted by building companies (illegally) from beaches around Santiago Island which is becoming a scarce resource and is damaging tourism potential as well as destroying the environment for turtles to lay their eggs and hence forcing them into extinction. Furthermore, often the sand taken from beaches is heavily laden with salt and needs washing with fresh water which is hardly ever done due to the relatively high cost of fresh water. This could lead to structural weakness of buildings.

-- One single electricity generating station should be established to supply all of the energy needs of the whole of Santiago Island. Engineers point out that it is more expensive to establish separate electricity generating stations spread out among numerous communities than to have one network supplying the whole of the island. This fact has been pointed out for other islands.

Sectoral forums have taken place with the aim of providing information useful for the completion of National Development Plan IV. Senior government ministers have been present at these meetings. In May, the Associacao Nacional dos Municipios de Cabo Verde (ANMCV) held its second congress to discuss decentralisation of power to local councils attended by all 16 local municipal councils, except Sao Vicente, of which the local mayor, Onesimo Silveira, is in dispute with the MPD government over issues concerning the media. The State and private-owned organs of the national media attended a forum in June to discuss ways of improving the "comunicacao social". One conclusion of the forum was that it would be better to amalgamate the State-owned television and radio companies, TNCV and RNCV, in order to limit the duplication of running costs. The state-owned national news agency "Cabopress" and the newspaper "Novo Jornal Cabo Verde" it was concluded should also amalgamate for the same reason. A "Forum das Organizacoes da Sociedade Civil" attended by numerous non-governmental organisations took place in August to discuss how these organisations can assert themselves better in order to benefit more Cape Verdean society. Representatives of Cape Verdean communities living abroad attended a three-day seminar in Praia at the beginning of August nominated "Primeira Semana do Emigrante e Comunidades Cabo-verdianas". One key area discussed concerned potential investment opportunities in Cape Verde for the relatively affluent emigrant communities resident in the USA and Europe.

The 'Comissao Eventual de Reforma do Parlamento' (Eventual Committee on Parliamentary Reform) which comprises both parliamentary members of the MPD and the PAICV is set to begin meetings this October. The Committee will draft legislation on parliamentary reform to be included under ammendments to the Constitution which are planned for approval in November 1997. Among a range of areas intended for reform, one reform will see a reduction in the number of seats in parliament after the current mandate with all deputies receiving a full-time salary. At present only 10 deputies out of the total of 72 receive a full-time salary with the remainder earning their income from other sources. Besides enabling deputies to give more of their attention to parliamentary matters, full-time employment by parliament would avoid the regrettable situation whereby many deputies gain their sole income from their employment in the civil service or companies in which the State is a majority shareholder, thus creating opportunities for the potential abuse of powers. Reform will also oblige the government to present its Orcamento de Estado (State budget) to parliament for approval in the month of December, ready for the following year.

In August, European Union (EU) Ambassadors from nine member countries (Austria, Belgium, France, Germany, Holland, Italy, Portugal, Spain and the United Kingdom) were in Cape Verde to announce that EU donations under the Lome IV agreement will be increased to Ecu30 million during Phase Two which will run from 1996 to 2000. Phase One provided Ecu27m and ran from 1990 to 1995. This was the second ever joint meeting in Cape Verde of the majority of EU member ambassadors, the first such meeting took place in November 1995. Bilateral aid donations to Cape Verde from EU member states will also increase over the next five years. The total of multilateral and bilateral aid from EU members is set to increase by as much as 30% over the next five years which will belay fears previously expressed that aid donations to Cape Verde were about to decrease. The United States Agency for International Development (USAID) recently announced that it will fund $15.7m of food aid to Cape Verde over the next five years (see "Food Aid Approval Announced - Sep. 13" at start of Cape Verde "Unofficial" Home Page) after it had been feared that USAID might cease all food aid to Cape Verde this year as well as causing a set back with its announcement that it would close down its field office in Praia from September 1996. The EU ambassadors expressed their satisfaction with Cape Verde's pragmatic handling of EU development aid donated under Phase One of the Lome IV agreement and the Prime Minister, Carlos Veiga, invited the ambassadors to return to Praia in November to give their appraisal of Cape Verde's next National Development Plan (number IV) which will run for 4 years from January 1997.

The EU donations will mainly fund infrastructure developments in Praia (sanitation Ecu6m) and on Santo Antao (roads and electricity Ecu8m). Ecu3m is intended for private sector development, notably to train employees working in the financial field and to transform the existing Praia airport into the venue for the annual 'Feira Internacional de Cabo Verde' (Cape Verde International Trade Fair). The new industrial parks at Mindelo and Praia will also receive further development funding. The EU also gives funds to support the development of exports and donates food aid (in 1995 the EU donated 4,000 tonnes of corn and 1,100 tonnes of vegetable oil). Emergency aid is also granted, such as during 1995 when the EU donated funds and technical assistance to combat the cholera epidemic (now terminated) and to assist those affected by the eruption of the normally dormant volcano on Fogo Island. Between 1993-95 the EU donated a total amount of Ecu350,086 to support Cape Verde's exemplary drive for "Human Rights and the Development of Democracy".

Confeccoes Porto Grande, Lda. based in Mindelo which sews together 6,000 high-quality mens shirts each week for export to Germany, hopes shortly to take over the cutting and finishing process from its parent-company operating in Portugal. The shirts produced will then become 100% "Made in Cape Verde". Confeccoes Porto Grande recently purchased the State-owned Confeccoes Morabeza plant for CVEsc40 million ($0.5m) which shut down in December 1995. The enlarged company, which began operating in August 1995, will double its employees to 200.

An 18 month $4m contract to construct 60 appartments in Tira Chapeu in the western suburbs of Praia financed 93% by a free-of-interest 50-year loan from China and the remainder by the Cape Verdean government sponsored agency, 'Instituto de Fomento e Habitacao' which procures finance and housing for the most needy began in July. The construction contract has been awarded to the Chinese construction company 'Hua Xi' who constructed the Palacio da Assembleia Nacional (parliament) in the late 1980's. China has provided $20m of free-of-interest loans to Cape Verde over the last 20 years of which the majority has been used to finance the construction of the parliament building and the Palacio do Governo which contains several key government ministries.

Japan announced in July that it would be increasing its annual contribution of funds to purchase rice from 100 million Yen up to 150 million Yen ($800,000 up to $1.2m) corresponding to 1995. The funds will purchase over 2,000 tonnes of rice which will be sold by the government to the local market and the revenue will be used to finance national development projects. Japan also donates around $2m of funds annually for the purchase of agricultural and sanitation equipment among other areas.

The academic year 1997/98 could see the establishment of the first university in Cape Verde which would offer a wide range of under-graduate courses as well as a few post-graduate. The 'Universidade Lusofona de Humanidades e Tecnologias' based in Lisbon, Portugal, would offer tuition to students to study in Praia at an approximate estimated fee of $150 per month.

Sponsorship by local businesses is envisaged to be the major potential provider of student's grants, however, it is imagined that the government may pay grants for local students to study at the university in Praia as it would cost less than to send students overseas. During 1995/96 some 1,660 Cape Verdean students were reading at universities in Brazil (654), Portugal (614), Cuba (208), Russia, France, Germany, USA, Senegal and Morroco among others. Of these the Cape Verdean government provided grants for 700 students with the remainder payed for privately or by donations from other nations. The government increased student's grants in July from $350 to $400 per month. Total government expenditure on providing university level education for students during 1995/96 amounted to 400 million Cape Verdean Escudos ($5m). There is great demand for university level education in Cape Verde, so the cheaper overall costs to provide degree courses within Cape Verde would mean that a greater number of students would be able to continue studying beyond upper-secondary school level.

The United Nations Development Programme (UNDP) has produced its annual Human Development Report for 1996 giving social and other indications for 174 countries and which produces an Index based on estimates of GDP per head, life expectancy and educational attainment. Cape Verde is placed 122nd on the Human Development Index (last year 123rd) and is the sole African lusophone nation placed in the lower-middle income bracket. With a GDP of $920 per capita, a life expectancy of 65 years and adult literacy estimated at 68%, Cape Verde is ranked the eighth most developed sub-Saharan African country behind Mauritius, Seychelles, South Africa, Botswana, Gabon, Zimbabwe and Congo.

Prime Minister Carlos Veiga and the Minister for Economic Co-ordination, Gualberto do Rosario, visited Angola in June with representatives from Cape Verde's Chambers of Commerce and local businesses. A the fifth Mixed Angola/Cape Verde Committee meetings joint areas for economic cooperation such as trade, finance, joint venture investment, education and training were discussed. Technical cooperation on improving the fishing, agricultural and health sectors were also considered. Carlos Veiga and Gualberto do Rosario had meetings with senior members of the Angolan government and with President Eduardo dos Santos.

Cape Verde acquired its second coast guard airplane from the Angolan Armed Forces in July after negotiating a deal under which two of Cape Verde's military transport planes were exchnged for the 'Bandeirante' airplane produced by Brazil's 'Embraer' aircraft manufacturer. The new aircraft will join with the existing 'Dornier' surveillance airplane to survey Cape Verde's 734,265 sq km maritime zone.

A tenth session meeting took place in Praia in September of the Mixed Cuba/Cape Verde Committee led by the Cape Verdean secretary of state for foreign affairs, Jose Luis Jesus, and the Cuban vice-minister for foreign investments and economic collaboration, Noemi Benitez de Mendonza. Over the last 20 years Cuba has donated Cape Verde much technical assistance, most notably in the fields of education and health. Many Cape Verdean students have benefited from free tuition at Cuban universities, particularly those studying medicine. There were 208 Cape Verdean students in Cuba during the academic year 1995/96. Agreements were signed by the Cuban and Cape Verdean representatives to continue Cuban technical assistance which also spreads into the areas of justice, agriculture, social communication (the media), youth and sports.

The Minister of the Sea, Helena Semedo, signed in July a heads of agreement with 'Skaarup' the large shipping manufacturer and operating group from the USA. The heads of agreement announces the intention to form two companies in Cape Verde, one of them, Cape Verde Acquisitions Company (CVAC), will build, lease or finance the building of cargo vessels and the other company, Cape Verde Shipping Company (CVSC), will operate as a merchant shipping company. Within two years it is intended that CVAC will see the building of two cargo vessels large enough to transport 250 freight containers of 20 feet in length. The building of vessels designed for transporting grain is also envisaged. The state will hold, initially for the first 12 months, 75% of the shares of CVAC with 'Skaarup' holding the remaining 25%. After the initial period the state intends to sell 24% of its shares to private foreign investors who should possess expertise in ship building. When the merchant shipping company, CVSC, is formed the state will hold 50% of the shareholding and 'Skaarup' 20% with the remaining 30% intended to be subscribed by foreign investors. No figures were available at the time of printing concerning the levels of capital investment intended.

During this quarter the government will arrange the sale of 25% of the shares of Cabo Verde Telecom (CVT) to the public. Portugal Telecom International acquired 40% of CVT for $20m in December 1995. Of the 25% share issue, 5% will be handed over to current employees of CVT and of 'Correios Cabo Verde' (the post office company which was formerly joined with CVT), another 5% will be sold to Cape Verdean emigrants and the remaining 15% is intended for sale to Cape Verdeans resident in the archipelago.

The government has also announced that it intends to sell the state's majority shareholding in the Hotel Atlantico on Sal as well as in the holding company 'Hotel Mar' which owns the Hotel Bel Horizonte on Sal, the Hotel Praia-Mar on Santiago and the Hotel Xaguate on Fogo. A tender was released in November 1995 for the sale of the state's shareholdings, however, no buyer emerged. The government therefore decided to approach suitable buyers directly and has received some positive interest from a group of Canadian investors associated with the 'Thomson Corporation' who have already formed a company registered in Praia called 'Cape Verde Investments and Development Corporation'. The Canadian investors have also expressed an interest to construct and operate hotels on Sao Vicente and Boa Vista islands.