I attended the Expo. While the Expo highlighted a number of cultural aspects of Cape Verde, I decided to sit in on workshops designed to showcase the opportunities in Cape Verde available to US investors. A number of Cape Verde diplomats and government officials were on hand to discuss the opportunities in detail and to describe the various efforts that the government had been undertaking in support of increased FDI (foreign direct investments) in the country.
Here are some highlights of a workshop covered by Mr. Rui Cardoso Santos, President of Cabo Verde Investimentos, the arm of the government that coordinates all FDI projects:
- Despite all of the attention given to BRIC, Africa is actually one of the fastest growing economies in the world when the continent is taken as a whole and is expected to see its total GDP grow from US$1.6 trillion in 2008 to over US$2.6 trillion by 2020 as described in the Monitor report, "Africa from the Bottom Up."
- "Cape Verde is a model for the new emerging Africa, Hilary Clinton, 2009.
- Cape Verde is within 3-4 hours of Brazil, the African mainland, and southern Europe and can thus serve as an effective base from which to access those markets.
- "There are economic several sectors in which the government is currently focused including: Transportation and Logistics; Financial Services; Information and Communications; Tourism,; Renewable Energy; and Fisheries.
- Cape Verde has a well regulated financial system and the market capitalization represented on the local stock exchange is about 20% of GDP.
- Cape Verde is "actively seeking US brands" to become investors in any of the many large commercial projects that are available today.
- There are some very strong incentives for eligible tourism projects, including a 5-year corporate tax free holiday, and a 50% discount on corporate taxes in years 6 through 10. Thereafter, business income is taxed at a moderate 25%; there are also tax exemptions on reinvested dividends and property taxes.
- For investments outside the tourism sector there are also incentives but they are not as favorable as for tourism investments, however the legislature is looking to introduce more favorable incentives for large non-tourism projects as tourism now attracts 95% of total non-remittance FDI.
- The Cape Verde government has actively engaged in privatization and historically has privatized over 50 state companies. They are now looking at the possibility of privatizing the national airline, TACV, and idea I had used an example of the benefits of privatization in a previous post.
- There are a number of major FDI projects on the horizon outside of tourism. For example, Petro Brazilian is investing 45 million in a bio-fuels project. Though there appears to be little publicly available information at this time, my guess is that it may be based on converting corn or cane into fuel as Cape Verde has a rich agricultural base and this is an area in which Brazil has a strong reputation.
With the investment and business opportunities so abundantly clear to major investors in the European Union, Brazil and China who see the proximity of Cape Verde to the massive markets in Europe, Brazil and Africa as a huge potential play, the absence of US investors on the scene is literally shocking.
This is probably the result of US investors' lack of awareness about Cape Verde and the scarcity of outreach programs aimed at educating the US market. This Expo was one small effort in the steps needed to change this state of affairs. And by all measures, the Expo appears to have been a success as an initial stepping stone.
Some tips that I would offer as suggestions for future consideration by Expo organizers:
- Develop a business Expo with a focus on investment opportunities in specific industries;
- Reach out to US business associations in these areas;
- Construct an agenda designed to provide top down education about Cape Verde, its governance, business advantages, and specific investment opportunities;
- Showcase examples of successful projects undertaken by major investors from Europe and invite the leader of a top European brand such as Tompson Travel or RIU Hotels and Resorts to hold a workshop;
- Hold meet and greet receptions for seminar attendees with key government officials (Cabo Verde Investimentos & Bolsa de Valores, etc), and other successful foreign investors;
- Hold the expo in a city that is more accessible for US business travelers, and preferably at the airport hotel;
- Do not hold the conference over a weekend (especially a holiday weekend) when most US business travelers expect to be at home relaxing;
- Offer a prize(s) of an all-expenses-paid business-pleasure trip(s) to Cape Verde with the goal of actually getting a few attendees to visit Cape Verde and explore what it has to offer.