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Saturday, December 15, 2012

The Richest Countries in the World

According to the publication, Global Finance Magazine, the richest country in the world in 2012 is Qatar with a per-capita income of US$106,283 as measured on the basis of purchasing power parity (PPP), using data from the World Bank.

Cape Verde is listed among the Emerging and Developing Countries. Interestingly, this category also includes many island nations around the world. I have long suggested that rather than attempt to compare itself to Portugal (arguably the world's original pre-modern superpower which now is considered one of the weakest members of the European Union) and other European countries which is completely unrealistic, or African countries which are the least developed and among the poorest nations on Earth, Cape Verde should instead compare its performance on the world stage to island nations around the world, and in particular, pattern itself after successful, independent Caribbean nations.

My reasoning is very simple and is summarized in the following points:
  • The history of the Caribbean islands is almost identical to that of Cape Verde, discovered and colonized by Europeans, with ancestry rooted in Africa through slavery.
  • Cape Verde shares a remarkably similar culture (food, music, art) with the islands of the Caribbean, no doubt based on the African roots.
  • Island nations typically have limited or no natural resources because of the limited land mass and so their economies are challenged in similar ways...reliance on tourism and foreign investment as well as on the business savvy of the local residents.
  • Islands usually have relatively small populations with a history of poverty, so the labor pools are limited and thus a robust educational system is often a high social priority since it provides a pathway out of poverty (and often a pathway off the impoverished island for perceived greener pastures in first-world countries).
  • Many island nations have a modern history of immigration to foreign countries where the locals are educated and often return to contribute directly to their homeland, or otherwise provide support via remittances acquired through earnings in foreign lands.
  • Most of the nations of the Caribbean have been independent for about the same length of historical time as Cape Verde (although it would be fair to say that Cape Verde is about one decade younger in its independence than the Caribbean).
To demonstrate this point about Caribbean nations being the most appropriate model for the purpose of the development of Cape Verde, I have extracted the results from the list of the richest countries in the world to show how Cape Verde ranks against the Caribbean nations. I have also included the Seychelles and Mauritius which are two independent island nations in Africa, and I have shown where Portugal falls in comparison (is not at the top of the list as many might imagine). The list is ranked in terms of PPP (purchasing power parity) for 2012, the measure of per-capita wealth preferred by economists.



Cape Verde is at the very bottom of the list, save for the impoverished and disaster-prone country of Haiti. And it is also clear that even island nations which are one-fifth the population and one-tenth the land area of Cape Verde are significantly wealthier than Cape Verde on a per-capita basis (in other words, Cape Verde has a significantly inferior standard of living). The obvious question is why is this so? Why is it that Cape Verde appears to be about three to four decades behind almost all of the Caribbean islands in its development even though all have effectively started around the same time from the same point of lesser development and poverty?

Based on many years of my own personal observation and direct business experience in the Caribbean, Cape Verde and the United States, I would offer the following ten points of comparison where Cape Verde must improve in order to achieve its full potential on the world economic stage (click on the underlined links to read other articles and view videos in each subject area):
  1. Lack of effective development of basic infrastructure. In order for an economy to run like a well-oiled machine, there must be adequate supply of electric energy and water. There must be complete ease of movement of goods and labor around the country - and because Cape Verde is a group of islands separated by expanses of Ocean - this means a highly functional maritime and air transportation system in addition to effective road transportation within each island. Do not think for one minute that Cape Verde has bigger challenges in these areas. Many of the Caribbean islands have also had a history of inadequacy of infrastructure and several island nations have more islands than Cape Verde separated by greater ocean expanses! But these challenges have been conquered by the Caribbean islands. Instead, Cape Verde continues to suffer from frequent energy outages, water shortages, as well as ineffective road, maritime and air transportation services.
  2. Lack of ease of doing business. If it is difficult to invest in an economy and conduct business there, the money will flow to other deserving economies which more readily reward the hard work, time and valuable capital of the investors (local and foreign). Compared to the Caribbean region, Cape Verde is near the bottom of the list in terms of the ease of doing business! It is no wonder that Cape Verde's development is proceeding at the pace of a turtle when not enough is being done to change the situation. The diaspora of Cape Verde can be very instrumental in this regard...they can bring a lot of pressure to bear on government leaders because the country is highly dependent on their remittances.
  3. Inappropriate division of resources among the municipalities. All politics and economics is local, i.e., progress in any country starts at the local level before aggregating at the national level. Cape Verde is divided into municipalities in terms of local government, which is a common structure for economics and politics throughout the world. Yet gross inefficiencies exist in terms of how the country's financial resources are allocated between the municipalities and the national government. For example, the capital city of Praia and its surrounding areas fall within the Municipality of Praia. The capital hosts about one quarter of the entire population of the country and generates a significant portion of the GDP, as one would expect. However, the national government provides the city with a laughably small portion of the nation's receipts. The capital of a country is one its crown jewels. Yet, it is incomprehensible that there is no recognition at the national level that, as goes Praia so goes the country. With insufficient resources to conduct local affairs, municipalities eventually become mired in unsustainable debt.
  4. Price controls that strangle local and foreign businesses. Every economy in which widespread price controls are implemented has experienced massive economic imbalances including ineffective allocation of resources, scarcities, lack of investments in maintenance and innovation, and ultimate business failures...in other words, abject economic failure. It is not that selective price controls (usually associated with food products) are never seen in the Caribbean region, but when they are proposed there is usually a strong social debate about the merits because any economist worth their salt understands that price controls are usually a political quick-fix. Cape Verde must recognize that it is well past the point of development where such socialist tendencies are needed in its arsenal of economic tools. You can learn more about price controls in this economic lecture on YouTube. Even in the USA where the disastrous effects of price controls were experienced in the early 1970s, the US Government again imposed a price control on fuel in 2012 in a very localized area in the aftermath of Hurricane Sandy and the exact same consequences were again observed. And here is a recent example from Venezuela. So, while price controls are often done with the best of intentions, the negative consequences are bound to occur wherever they are practiced...it is one of the implied laws of economics. And these negative consequences are definitely acting in Cape Verde's economy regardless of whether or not the government chooses to acknowledge them.
  5. Cape Verde has failed to effectively market itself! The Caribbean and its people are well known all over the world via its musical ambassadors (e.g., RihannaNiki Minaj, Harry Belafonte), its sports figures (who in the world does not know Usain Bolt and the Caribbean athletes who put the region in the spotlight on the world Olympic stage with record breaking performances), its authors (V.S. Naipaul and Derek Walcott, Nobel Award winning author and poet respectively). Cape Verde too has its own ambassadors such as musicians Cesária Evora and Mayra Andrade and footballer Nani. These individuals have popularized their islands through their own individual talents and efforts on the world stage. But what I am talking about here is tourism...attracting legions of foreigners to the island where they will pump serious foreign currency into the local economy. Most of the governments of the Caribbean (ministries of tourism) have created major marketing programs. There are also well done efforts by private sponsors. Here are links to some amazing examples of marketing: The Bahamas, Trinidad & TobagoTrinidad & Tobago 2012Tobago, Grenada, Jamaica, Saint Vincent & the Grenadines, St Lucia, Antigua and Barbuda. If you look at any of these videos, they could as well be of Cape Verde...yet no such effective marketing is done for Cape Verde. Is it any wonder that an island as tiny as St. Lucia with one-third the population boasts as many annual tourists as Cape Verde and a standard of living that is three times as high? Instead, the only marketing offer that promotes the entire country is this video sponsored by Cape Verde Investments. You can see for yourself the difference. This video does nothing to sell Cape Verde to tourists and instead makes the incredible and unconvincing claim that Cape Verde is the "heart of the world". The video is a confusing mix of pitching investment opportunities and tourism...it succeeds at neither. This is not good marketing.
  6. No emphasis on Customer Service Excellence. I will not go into elaborate detail here, but the concept of customer service is virtually non-existent in Cape Verde. There is a concept called morabeza or the natural friendliness of the people, however, the talk does not sufficiently translate into a culture of service in the business setting. For an island nation whose economy is heavily dependent on services, it is imperative that this attitude be ingrained into workers throughout the country. The places where you will find good service are typically foreign-owned businesses (such as foreign hotel chains) where good service is not just cultivated, it is demanded by competitive international standards. Businesses owned by locals have apparently never been introduced to the concept of customer service, even though it seems that good service is a natural and logical competitive differentiator and catalyst for business growth.
  7. What does independence really mean? Cape Verde has been an independent, sovereign republic since 1975 after centuries of colonization by Portugal. Yet even 37 years after independence, Cape Verde is heavily reliant on Portugal in almost every aspect of life, and unfortunately, business. There is a stiff-upper-lip formality to the conducting of business affairs that belies the otherwise easy-going nature of an island setting. The atmosphere is nothing like the Caribbean where independence meant that the mental ties to specific colonial masters were quickly severed. It is not that there are no formal relations with former colonial powers, but in the Caribbean, the former colonizers are granted no special status. They are treated like every other foreign country. But in Cape Verde, the Portuguese continue to dominate virtually every aspect of how the country works because Portugal is looked at as the perfect model. It is as if the independence from Portugal was in name only. The implications for business here is that the Portuguese way of conducting business is ingrained. Unfortunately, Portugal is not the world icon of excellence in business and innovation. In future, Cape Verde must look to best in class practices rather than simply rely on Portugal's practices.
  8. Wastage of valuable resources on the wrong priorities. It has yet to be explained why a country of the size and limited wealth as Cape Verde requires an international airline and four international airports. Massive amounts of money are lost annually by the country's national airline, TACV, and by its airport authority, ASA. Yet, paradoxically, Cape Verdeans have a very hard time travelling or moving goods between the local islands. There are few national airlines among the Caribbean nations except among the wealthiest of the island nations that can afford it. In addition, Cape Verde squanders millions on national companies such as Electra, the water and energy utility. There has been much talk of privatization which would bring welcome investment, management talent and much needed technology and innovation into these economic sectors...but talking does not make things happen.
  9. The profit squeeze. Every successful business must make profit and a lot of it, otherwise it will never be sustainable. In order to make a profit, sufficient revenues must be earned to cover expenses. Since Cape Verde has few resources, most things must be imported, including the raw materials and goods that are eventually sold. However, the government appears to view this as a cash-cow and places substantial duties and fees on everything. And there is the value added tax (VAT) or IVA, as it is referred to in Portuguese, of 15%. In addition, the fees for services on the ports are tacked on on top of all this (most imports come into the ports). The end result is that businesses get trapped between the price regulation on one hand and the high costs of doing business on the other. Combined with the restrictive labor laws, the result is that it is very difficult to build a sustainable business and this restrains the economy from achieving the highest sustainable growth it possibly can.
  10. Lack of investment in education. The island nations of the Caribbean place a heavy emphasis on education and they invest resources heavily in the sector. In the Caribbean, education is free up to the secondary level and there are no "propinas" or monthly fees. Ironically, Cape Verde, which has a history of socialism, never saw fit to provide what might be the ultimate social benefit...a free education. In fact, a free education is the biggest investment a country can make in a capitalist economy. It is an investment that will pay for itself many times over because the human resources of an island which lacks physical resources become its biggest asset...a highly educated workforce provides a competitive edge in the world, because it attracts capital and creates wealth. However, the youth of Cape Verde are saddled with monthly fees for secondary education. The result is that those who can least afford it remain uneducated beyond the basic primary level. Or worse...people realize the importance of education for their future personal success, and they will do things that they may not otherwise do to secure the funds needed to pay school fees. In any event, the difference in approaches appear in the dramatically different literacy levels between residents of the Caribbean and residents of Cape Verde.
The point of this article is not to say that nothing is being done in Cape Verde to improve its development. Of course, much has already been done! The point is that much remains to be done and that the pace of attacking the problem leaves much to be desired. The government and people of Cape Verde appear very complacent about the situation. At this pace, Cape Verde risks becoming less and less competitive on the world stage, so while progress will continue, if other countries progress faster, Cape Verde will end up further behind its peers. The people of Cape Verde deserve better than what they are getting. But they will continue to get more of the same until they demand more.

33 comments:

specialconsult said...

Great articole congratulations I am a Cape Verdean citien living in Europe If this blog should present this content in Portuguese it should help Cape Verdean people to weak up

Angelo said...

Thank you for your comment. Please note that my blog is presented in the language of the reader's preference if they use the TRANSLATE button at the top of the page. In fact, the third biggest source of readers of the blog are Portuguese speakers in Portugal and Cape Verde. The largest following is from the USA (I presume many are in the diaspora) and the UK.

I have read a lot of the content on your website and it is also excellent. Cape Verde needs to wake up to the reality of global competition. But investors are discovering the place anyway.

Please share my blog with your connections, especially in Angola. CV needs more tourists and investors from Angola. You can share my blog on Facebook with the share button, or visit me at http://www.facebook.com/Investincv .

Much appreciated!

Anonymous said...

Partially agree with your comments; however, is there any Caribbean country with more islands than Cabo Verde? Answer: there's none!

Cabo Verde has to replicate the same investment in 9 of the 10 populated islands and, you didn't take that account into your dissertation.

Also, I seriously doubt you assertions that Cabo Verde is well behind the Caribbean as a whole in terms of education.

Are Jamaicans better educated than Cape Verdeans? I would submit they're not!

Angelo said...

Thanks for your comments. They are truly appreciated. Let me try to answer your questions in terms of the context of the article and a discussion that reinforces the point of the article. (PART 1)

The Bahamas has over 700 islands. True, most of them are not populated and are just rocks in the sea, LOL, but many of the islands are as populated at CV i or more so. In essence, that model is quite similar to Cape Verde in terms of the infrastructure and economic challenges posed.

But the issue is not whether there are 3 islands or 20 in an archipelago. There is an assumption in Cape Verde that every island has to be effectively "equal" to all of the others. You make that assumption yourself when you say that Cape Verde has to replicate the same investment 9 times. I believe that this is completely false in terms of building a viable country and a viable economy.

A good example is airports. There is absolutely no reason to build 9 international airports simply because there are 9 islands. That's a huge economic mistake. Instead, what you really need is 1 or 2 international airports. BUT, that means there must be a highly effective and excellent DOMESTIC air service so you can get to quickly and easily get to domestic destinations after arriving on an international flight.

Your primary supposition is that because Cape Verde's population centers are separated by water, that somehow that changes how MUCH investments must be made and by a factor equal to the number of populated islands that exist. That is simply not correct, it would be a highly impractical one as you yourself admit. What separation by water does change is WHAT you invest in! Not as much how much you should invest. In other words, it is the NATURE of the solutions, not the amount of them!

Angelo said...

(PART 2) Finally, on the subject of education, I don't know about you, but I have seen both education systems up close and I can tell you that it is pretty clear that Cape Verde's education system is very far behind those typically found in the Caribbean. First, the amount invested in education in Cape Verde is not comparable to what is invested in the Caribbean. And I'm talking about all levels of the educational system from kindergarten all the way through to post-graduate degrees.

How many doctors, lawyers, civil engineers, chemical engineers, mechanical engineers, business administrators, etc are produced by the University of Cape Verde (UNICV). How many by the University of the West Indies (UWI)? Have you ever walked into a computer lab at UNICV and seen the conditions there? Take the same tour at UWI in Jamaica, or Barbados or Trinidad. There is no comparison.

Note, I did not claim that every resident in Jamaica is better educated than every resident of Cape Verde. Your comment seemed to imply that. Plus, I am not saying that Cape Verdeans do not have access to education outside of Cape Verde. I'm talking about the educational facilities within the countries made available to its residents, and the type of educational results that are achieved in general. Are there Cape Verdean and Caribbean students who excel and compete with the best in the world DESPITE the specific educational conditions they might find themselves in. Of course there are! I know several.

But, to answer your question directly, Jamaica has an average literacy rate of 88% while Cape Verde's is 85%. Note that Jamaica is one of the least literate islands of the Caribbean. I don't know if you picked it intentionally. But several other islands have achieved literacy rates bordering on 100%. So yes, the fact is that Cape Verde is very, very far behind the Caribbean as a whole in terms of education.

None of this is meant to disparage CV or Cape Verdeans and there are many complex reasons why things are the way they are. I only state the facts based on the data I see in research and from various reliable sources. And I can verify many of these observations from my own personal experiences since I have lived and worked for many years in both Cape Verde and the Caribbean. So I think I bring a unique perspective to the questions and issues at hand in the context of how Cape Verde compares to the Caribbean.

Angelo said...

(PART 3)
My fundamental point is twofold: 1) Cape Verde has a lot of catching up to do to best-in-class island economies; 2) Cape Verde's government should LEARN from solutions that have already been tried and proven elsewhere and adapt them to Cape Verde's reality.

Instead, Cape Verde's government and society tend to solve problems by modelling itself after large, non-island, European countries (Portugal in particular) and then pat itself on the back when it compares itself to even poorer African countries. This helps no-one and will not allow Cape Verde to achieve its full potential.

Again, thank you for your comments. It's a complex issue and your opinion is appreciated. Have you never wondered why Cape Verde does not have any kind of cultural or trade exchanges with its sister islands in the Caribbean? Unless we can have a dialogue, there can be no learning and no progress.

Angelo said...

For more information on educational performance in general, I also would refer readers to the following websites and articles:


One Caribbean country appears on the list which is restricted to just 65 countries, based on the PISA test taken by 15-year olds. Cape Verde's education minister should be encouraged to have students here take the test

http://www.guardian.co.uk/news/datablog/2010/dec/07/world-education-rankings-maths-science-reading

The following organization is called Webometrics and ranks universities across the world (including UNICV, Jean Piaget, ISCEE, and each campus of UWI). You can find the rankings, methodology and objectives on their site.

http://www.webometrics.info/en

Again, the questions are what can we learn from this and how can CV's institutions (in this case, its educational institutions) learn from those who are ranked higher?

Anonymous said...

Not trying to detract from your data but, let's be serious for a moment here; the Bahamas has over 3000 islands!!! But how many of them are inhabitated?

It's true you don't have to have 9 international airports in Cape Verde; that was not my contention,the assumption is all yours.

But you do need 9 water utility investments, 9 road building programs, 9 energy/power plants or more, 9 maritime ports, hence my assertions of 9 of almost everything;you don't need such
in the Caribbean.

Moreover, Caribbean islands have more natural resources, including water,despite some like St Lucia and Barbados being far smaller.

You don't wish to compare Cape Verde with Trinidad, full of oil and gas, do you? Or with far bigger and natural resources richer Bahamas or even Jamaica? Compare Cabo Verde with another land destituted of almost anything but her own people and, then we'll talk.

My singling out the Jamaicans on the educational standards was intentional as I know plenty of them over here in London; now I have lived in Cape Verde for 5 long years hence it's my personal and empirical evidence that Cape Verdeans are, on the whole, better educated than Jamaicans, despite the 85 to 80% statistical viewpoint.

Statistics are just that; numbers and you can read into them what you will.

China is since last year the world's 2nd bigget economy in terns of GDP, surpassing Japan; does that mean that the Chinese are now richer and more develped than the Japanese? You tell me based on your reliance on statistical data. I have been to both places and can assure you that China is miles behind Japan, notwithstanding a now bigger GDP!

Not submitting that Cape Verde doesn't need to improve but, considering their very low starting point I still believe they've done far better than the Caribbeans, who have far more resources.

For clarification of any doubt:

I am a Brit;
I'm not an Economist;
I'm a Solicitor instead.

Regards.







Angelo said...

While I appreciate your opinion, I respectfully disagree with your point of view, counselor. I think you have missed my point. It was simply that Cape Verde has a lot to learn from what's been accomplished in the Caribbean.

First of all you are not correct when you say that Cape Verde needs 9 of everything. That is linear thinking. You yourself agreed with my example that Cape Verde doesn't need 9 international airports, yet you insist that it needs 9 of everything else, e.g., 9 power plants, 9 road building programs, etc. And that is exactly how Cape Verde's government thinks. That is just plain wrong. To solve complex problems, one must think creatively. Not enough of that happens here.

Now, of course, it does makes sense to compare Cape Verde the Caribbean as a whole, or even island by island. Why not? Even to Trinidad, an island flush with natural resources. Either way, there is a lot to be learned.

I have lived and worked in BOTH places. You have only lived in Cape Verde. You have not owned a business in either place. Have you? Yet you contend that Cape Verde has done far better than the Caribbean. It's just your opinion. What is it based on? You are wrong. Cape Verde has done far worse than the Caribbean. You should actually go live there and see for yourself. The facts and the data speak for themselves.

Take the example of Grenada. Both Cape Verde and Grenada started off independence around the same time, 1974 vs. 1975. What natural resources does it have besides agriculture? None. In fact, Cape Verde's economy has more agricultural output. Both economies are service oriented (80% vs. 75%). Yet with a population of just 1/5th of Cape Verde's, Grenada produces about 75% of the economic output of Cape Verde.

How do you explain this? It is quite simple. First, Cape Verde, though independent has never truly been independent of Portugal. Thirty-eight years later, Portugal still dominates almost every aspect of life here in Cape Verde. But England does not dominate every aspect of life in Grenada. Far from it. In addition, Grenada has done a massively better job of attracting foreign direct investments (FDI) and tourists. Even if Cape Verde needed 9 of everything (a false notion), a large part of the answer is FDI. You do not do these things with your own money; instead you attract foreign investors. Instead, Cape Verde's government tries to do it all and does a poor job of facilitating private industry.

Please take the time to read the other articles in the blog. Many of these issues are discussed. In fact, my latest article on FDI will clearly demonstrate that Cape Verde is far behind Grenada when in comes to attracting investors. Grenada turns out to be best in class in this area. It is not just my opinion. This is from studies conducted by the World Bank.

What is Grenada doing that Cape Verde is not? And why would Cape Verde not learn from or follow such best-in-class practices?

Angelo said...

(Part 2) Regarding education, I am not swayed by an argument that is based on your knowledge of some Jamaicans who live in London. Are they representative of all Jamaicans? Maybe you are hanging out with the wrong crowd in London. Quite funny, actually!

But seriously, the point about education was not about the educational levels of Jamaicans who live in London. It is about Jamaicans who live in Jamaica. Cape Verdeans who live in Cape Verde, and so on. It's about education within the countries.

And as you know, the educational system in most of the Caribbean countries is based on the educational system in England. And the educational system in Cape Verde is based on that of Portugal. So be careful about what point you are making. I doubt you meant to say that Portugal's system of education has been systematically better than that of England over the years.

There is no data that bears that out. In fact, I provided you with a link to recent PISA test results: http://www.guardian.co.uk/news/datablog/2010/dec/07/world-education-rankings-maths-science-reading. Even as Britain's educational standards have fallen over the years (no doubt because of the Jamaicans in London who are taking the test...LOL), British students still outperform their Portuguese peers.

But this was not meant to be a comparison of the British and Portuguese educational systems. Let's cut to the chase. How many V S Naipauls and Derek Walcotts have been produced by Cape Verde's educational system? That is just to name a few of the literary greats who came out of the educational system in the region.

P.S. Walcott was educated at the University of the West Indies in Jamaica, of all places.

Angelo said...

(Part 3) My apologies for having to respond to your comment with 3 of my own. But I simply could not let your comments about the Bahamas go unanswered.

The number of islands (as opposed to rocks) is probably debatable. But we both agreed that the majority of the Bahamian islands (whether the number is 700, 3000, or something in between) are uninhabited.

However, there are 12 inhabited islands. Few people can name more than one or two of the inhabited islands of the Bahamas because the Bahamas does not make a big deal of the fact that people reside on multiple islands. It is a whole different way of thinking. They market the country as "The Bahamas"...that's all anybody really needs to know. As a tourist, does it really matter to them which island you go to? As long as you go there, enjoy the Bahamian experience, leave with a lighter wallet and come back for more, that's really all that counts! In terms of tourism, that is.

In Cape Verde, the thinking is literally fragmented when it comes to how the country is viewed. So for example, when it comes to tourism, there is an attempt to market each island separately. That just spreads resources too thin and leads to a confusing marketing story. There is no overriding or holistic tourism strategy.

In addition, in the Bahamas, they do not need 12 of everything, or almost everything, which would be the logical conclusion based on your perspective! There is no thinking that every island must be "equal." That is one giant flaw in how Cape Verde views itself. And it is reflected in your statement about needing 9 of everything, one for each island. That makes no economic, investment or moral sense when the populations of each island are unequal.

Let's also talk about resources. What natural resources does the Bahamas have? There is no arable land for crops because there is no fresh water!

So why is the Bahamas, the 3rd wealthiest country (per capita) in the Western Hemisphere behind the US and Canada? It was not always that way. How did they do it? They became independent only two years before Cape Verde.

Tourism and international banking backed by a massive influx of foreign investor capital. That's how. But it is easy for me to say. What does it take in the execution? As you will read in my other blog articles, they had to do a top class job in two areas: 1) marketing the country as a tourist destination, and 2) attracting investors and making it easy to do business there.

Unfortunately, Cape Verde does not do a very good job in these two critical areas. On the subject of tourism, there is almost no government spending in the area of marketing Cape Verde to tourists. Instead, they rely almost exclusively on the tour operators such as Thomson and others to do it for them. Compare that with Bahamas' approach.

I contend that the third thing which has made a huge difference in the development of Cape Verde vs the Caribbean is the colonial masters. Portugal was a socialist country while the UK has always been capitalist. Portugal is now among the weakest countries in Europe, despite is history as one of the world's superpowers. Portugal cannot hold a candle to the UK. Yet, Cape Verde based its entire current system on Portugal and has not severed its psychological ties to that country. This is like a stone around the neck of Cape Verde and at some point they will have to cut it loose.

Anonymous said...

For a country without resources the Bahamas seem to be doing quite well with salt, aragonite, timber and...Arable land (apparently there's none)!!!

Care to explain how are water and/or electricity going to be generated in Sao Vicente without an island provider? Are they going to transport it from Santiago?

Can you drive from Sao Nicolau to a Praia hospital? Leave Santo Antao for class in Brava, returning in the afternoon?

But then again, according to you there's no need to have schools/lyceums in each island.

Cape Verde doesn't have drinking water, or agriculture, absolutely zilch to speak off. The country is basaltic rock formations without almost anything, especially fresh-water. Whichever vegetation there is was planted after the independence.

The country cannot feed itself, for God sake! Is that the case for Caribbean countries?

Are you aware that in 75 the country was regarded as non-viable?

Which Caribbean country can compare with that? I'll be happy with a single example.

Caribbean countries on the other hand have plenty of water and agricultural products.

You're right on one thing though. It's not just that Jamaican students are taking the test in London, LOL; due to their low scoring, the average concerning Afro-Caribbean students sunk to the bottom of the league table in the UK.

You can thank Jamaican students for that.

Maybe it's not just that Jamaicans cause Afro-Caribbean to stand at the bottom, by being outperformed by African students but, Asians raising the scores to dizzy heights. Could this explain why British students do so much better than Portuguese students?

Really sorry but we're not sensitive and politically correct like you are in the States. We like to call a spade a spade.

Nobody is saying Cape Verde doesn't need to improve; however, given the enormous handicaps they've done quite well indeed.

Lastly, in the UK a Counsellor is called a Barrister.

Angelo said...

My apologies to you, Barrister. I certainly did not mean to offend you or strike a nerve. Your response suggests that you were a bit angry. Let's try to keep the discussion civil.

There's nothing politically correct about my blog. I believe I have called it as I see it in Cape Verde. There's no need to put the words in my mouth...I have never claimed that Cape Verde hasn't done well, otherwise I would not be writing this blog. Fell free to read the other articles where I trumpet the accomplishments. But CV can certainly do much better. No one would dispute that. Not even here in Cape Verde. In fact, the purpose of this blog is not to sugar coat anything, as you have seen. By painting a balanced picture, including where there are serious problems, it helps to provide smart, creative investors with ideas for how they can invest and make money by solving problems. I do not believe you are reading my blog from the perspective of an investor. You have a different agenda. But that is OK. Everyone is welcome to comment from any angle.

The Bahamas has little arable land and not much agriculture or hard industry to speak of. Like Cape Verde, it is a net importer. And relatively speaking, Cape Verde produces more agricultural and industrial output as a percentage of its GDP. I'm not sure where you are getting your facts from. If you think that the only vegetation here in CV was planted after independence, you are dead wrong! Cape Verde has had agriculture since it was discovered. Why do you think it was called Cape "Verde"? Perhaps you have only visited Sal and Boa Vista. They fit the description you gave. But Santiago, São Nicolau, Brava, Fogo and half of Santo Antão are quite green and full of vegetation. See my other blog called "The Great Cape Verde Adventure" for beautiful photos of lush green. But to be sure, that's not to say that Cape Verde is the tropics. And it has certainly experienced periods of massive drought. But it is certainly not what you described and drought is not and has not been a permanent condition. There is not much annual rainfall here but the rain does come during a specific period, and when it does, certain islands are inundated, so much so that there is a lot of destruction from soil erosion and direct destruction due to floods!

Can Cape Verde feed itself? Indeed it can! The problem is under-investment in the agricultural sector, coupled with a lack of reliable and effective maritime transport infrastructure to move agricultural products from the islands (where crops are grown) to other islands (where more hungry mouths are waiting to eat it). Most of the food eaten in the hotels in Sal and Boa Vista are imported from the Canary Islands duty free! Do you not see a problem with this? Or an investment opportunity? In recent news, it was only this month that we saw the first shipment of several tons of agricultural product from Santo Antão to Sal and Boa Vista. Those investments should have been made years ago! Read about it right here http://www.asemana.publ.cv/spip.php?article85360&ak=1

Angelo said...

(Part 2) Your example about schools on every island is besides the earlier point about not needing 9 of everything. Obviously, schools are needed. Not just 9 of them, but in practically every community. That's true everywhere in the world. Your other examples are good ones and prove my point. You certainly do not need a major hospital in São Nicolau. There is not a sufficiently large population (12,000) to make this financially feasible by any measure. Does every town in the UK have its own major hospital? Of course not. Instead, here in CV, what you need are probably 3 major hospitals in the more densely populated islands and reliable, low-cost, scheduled transportation connections from the islands without major hospitals to those that do have major hospitals. Here's a question for you...with half a million tourists annually arriving and equally split between Sal and Boavista, do we need a major hospital on both those islands? No. You need a major hospital on one of them but with ready air or sea connections to get tourists from one island to the other. Those traveler populations can potentially support such an investment. Currently there is no reliable medical service in either place. There has been an under-investment in medical services. But the bottom line is that you do not need 9 major hospitals, one for every island. Instead, you need sufficient beds, nurses and doctors to serve the size of the total population and with reliable, efficient ways to reach the islands where such services are located.

Clearly you need an energy source on São Vicente, but there is no need to build a large independent energy plant on Santo Antão. That community could be supplied in a more creative way across the very short straight (less than 8 nautical miles) between SV and SA. The cost would be considerably less that a new plant. As an executive of a renewable energy and water desalinization company here in Cape Verde, I can assure you that they do not need 9 separate energy plants as you proposed. However, the government must create the framework for a business structure that would discourage separate smaller plants on each island (smaller plants are considerably less efficient than larger ones) and encourage much larger ones with more creatively contemplated energy distribution structures.

Your example of connecting Santo Antão to Brava is actually going along the right creative path, although there is no practical reason to directly link those two particular islands. The real question is whether it is viable to directly link Santo Antão and São Vicente, Brava and Fogo, Sal and Boa Vista, Praia and Maio. The answer is yes...that is part of how you solve many of these problems. Yet, two of those links do not exist on an effective basis. And one is quite recent. So the answer is, yes, it is certainly possible to create transportation connections that might allow a worker to travel daily from one island where they live to another that has the jobs (although it might be more practical given salary levels to do such a commute weekly...and in fact many people do this between SA and SV ... so the model already exists!) But that type of thinking is not prevalent. Instead, the thought is that every island should be "self-contained" as if each is its own "little nation" ... it is a ridiculous notion. No investor would agree with this notion and it will never happen via FDI.

Angelo said...

(Part 3) Oh well. Here we go again with my 3 part responses. LOL.

Finally, I think you have beaten the Jamaicans in the UK to death, deservedly or not. It was completely besides the point of my article. Again, the article discussed the amount of investments in education and the quality of education within the countries. How Jamaicans, Asians and Africans fare in the UK educational system has got nothing to do with the point made in my article. You've provided no information to refute my point about comparative education within the countries.

Again, thanks for expressing your point of view. Please read my other articles and remember, this is not about whether Cape Verde is better or worse than anywhere else on earth or even about how far it has come. It is about how much further it needs to go, what are some of the successful models that can be brought to bear on the challenges here, and what does that imply about investment opportunities that can attract FDI to this country.

That is the context of my blog. If you are interested in investing here, let me know as I may be able to help. I've worked directly in the energy, water, construction, maritime transportation and tourism sectors. I have done extensive research on the export, financial, tourism, agriculture and viticulture sectors (my viticulture research is published on the Facebook page of "Cape Verde Wine"...please share it with your colleagues). And I've consulted to several large foreign and local entrepreneurs.

I wish you a pleasant day. Feel free to share my blog article with your colleagues and those who have visited Cape Verde and ask them to contribute to the discussion as well.

Angelo said...

Quite off topic, Barrister, I'm curious about your perspective on Jamaicans in the UK. It seems that they outrun you Brits on the track, score more goals and hit more sixes off your medium pacers. Thank, God Michael Holding no longer whizzes those bouncers by the heads of the poor English cricketers. Any thoughts on those Jamaican phenomena?

Anonymous said...

In this country we split the legal profession into Barristers and Solicitors; it would appear you're the one not reading properly.

As for getting angry, please change the record; Americans and their cohorts are well known to resort to this sort of tactic in an argument. You're not attempting irony on a Brit, are you?

My working life may involve obtaining information from clients,Plaintiffs/Defendants; however, do you really think you could get me rattled? Came on now!

Most of my time is spent dealing with interim applications or judgements in default, yet I think that FDI is not entirely alien to my little intellect; China is the world's biggest recipient of it and, this has propelled them to where they are today.

However, I suppose you know better than I do, FDI flows to places with a guarantee of very high returns. Are you suggesting Cape Verde is one of those places? Because if you are I might as well believe in fairies!

The Caribbean benefited and still benefits greatly from its closeness to the US market, as well as the Canadian one. It's also obvious that the US has been a major economy, i.e. the worlds biggest in terms of GDP for most of the last century until today,

Let's not get into unnecessary history lessons; Europe as an economic force is relatively an infant.

The rewards from proximity to the American market have never been available to Cape Verde and you know that European investment in Cape Verde has just begun.


Perhaps we should delve on the tax heaven statute of many a Caribbean country as a source of income?

Or on the massively violent and corrupt societies, generated by such highly instructed individuals?

Cape Verde's crime scene pales by comparsion; please don't trust me!


I'm a tad perplexed by your statement that "Clearly you need an energy source on São Vicente, but there is no need to build a large independent energy plant on Santo Antão. That community could be supplied in a more creative way across the very short straight".

Please elaborate on this? Or is this merely empty prattle?

Your reliance on statistical data is commendable; I think I have already mentioned to you that China is now the world's 2nd biggest economy by GDP. Are Chinese people rich? Is China an advanced country in terms of technology and capital goods? Feel free to digress on that one too.

Cape Verde may have a higher agricultural output than the Bahamas as claimed but, are they capable of feeding themselves without massive amounts of foreign aid? Please, do not tell me they can; I lived there in Praia, not in Sal/Boavista. I also visited all of the country including Santa Luzia.

I was there 5 years, not 5 minutes, thus you’d have a tough time lecturing me about the country for that matter.

If you're a national I think there's a pressing need for some history lessons; Cape Verde is called Verde not because Cadamosto found luxurious vegetation. Cape Verde is Verde because of its location just outside the Cape bearing a similar name in...Senegal. And that one is really green! I have been there for your information.

Get real, Cape Verde is dry, rocky and mountainous, ill-fitted for agricultural exploits. There are no mineral resources other than salt and pozzolana; fish resources are limited to around a miserly 20,000 tons per annum. Drinking water comes at a premium. The country will never be able to produce enough to feed itself, regardless of what you may say or statistical data you pull off a hat.

What they do have is a highly instructed populace, who have been able to transform massive disadvantages in their own benefit. The Caribbean had it very good by comparison.

You're right that Jamaicans can outrun us Brits, for the moment at least. But seriously, when did you last watch a cricket match? About a century ago?

And Jamaican footy players in England? Are you serious or just trying to pull my leg? Are you still thinking John Barnes?

Angelo said...

Hello once again Anonymous. I think I did strike a nerve for some reason. For someone who was not offended, your response seems to suggest otherwise. You've ended almost every sentence in your last response with innuendos and insults left an right. It's not my idea of a civil discourse.

Again, thanks kindly for taking the time to read my article and expressing yourself. Have a great day!

Anonymous said...

Firstly, I'm not Cape Verdean.

Your "you're getting angry" does nothing to advance your cause.

Secondly, I was just de-constructing your assertions jabbing back, i.e. using your own tactics and appear to have stricken a chord. This is a part of what I do in my line of work.

Thirdly, never said that the Caribbean are not richer nor reveal "higher" standards in certain areas at this stage of development.

However, I do disagree with your submissions and conclusions into the cause/effect of this issue.

I am a British person who knows Cape Verde extremely well (and Caribbean’s for that matter). I know how much more effort Cape Verde has had to make in order to reach their current developmental state; Caribbean’s did not have to struggle that much, that's a fact, even if you disagree with me.

UK relationship with our colonial subjects was one of a "stiff upper lip" versus servitude; Portugal on the other hand had what I call a "sexual relationship" with its colonies, especially Cape Verde.

Yet, you so simplistically dismiss it, going to the point of suggesting Cape Verde do a "la Caribbean" in its dealings with Lisbon.

It was always going to be easier to cut off any emotional ties between us and Caribbean’s because there were none to begin with; you can't uphold the same in Cape Verde and Portugal's case.

Take for example Angola, 14.5 times bigger than Portugal, one of the world’s richest in terms of natural resources. Angola tried severing ties with Portugal, replacing them firstly with the USSSR after independence and a few years ago with Communist China. Truth of the matter Angola is back into the fold, courting Portugal all over again. Suddenly it is as if no war of independence had to be fought; Portugal is back en vogue with a vengeance.

Motives: historical ties so strong that even Angola with so much riches couldn't sever.

Now whether this is good or bad only time will tell.

Keep up the good work but please do bear in mind that Cape Verde is indeed unique and, is doing far better than it should; it simply lacks the bare essentials, apart from its population of course. Not like what you had the guts to state, that Cape Verde has done far worse than the Caribbean’s.

This statement belongs to yourself and you alone.

Regards.

Angelo said...

Well done. That is a much more civil tone and I appreciate it. Thank you.

You may know Cape Verde well enough for having lived here for five years. However, you have not claimed to have lived or worked in the Caribbean, so I cannot see that you could have the perspective of someone who has.

Regarding the cause of Cape Verde's current situation, I state no opinions on the matter. I have simply stated what is plain to see to anyone who lives, works and conducts business here. And I have supported those observations not with data pulled out of a hat, but by sharing observations, data and measurements taken by unbiased organizations who are supposedly the authorities in their respective areas. I've done this throughout my blog articles wherever I point to examples of models which are more advanced and from which Cape Verde can take away some best-practices or solutions that seem to have been applied successfully in island nations elsewhere.

I would grant you that I have indeed expressed a personal opinion about Cape Verde's psychological relationship with Portugal, unsupported by independent studies and the like. So it is not something I have dismissed at all. I have confronted it head on. But the opinion I expressed is not just my own - it is also held pervasively among Cape Verdeans themselves.

I do disagree with your assertion that former British colonies in the Caribbean did not have a strong emotional connection to the Brits. The facts do not seem to bear that out. For example, there was an article in the British media that related the love Jamaica has always had and still has with the UK; so much so that the majority of Jamaicans suggest that Jamaica would be better off today if they had remained a colony. (http://www.dailymail.co.uk/news/article-2009487/We-stayed-Britain-Shock-poll-reveals-60-Jamaicans-think-theyd-better-colony.html).

Another example is Barbados. There is no Caribbean nation more British than the British themselves...all you have to do is visit. Yet, it is independent of the UK and comfortably so.

So, perhaps as you said, the British did not have any love of their colonies or may have kept it at the emotional distance of a "stiff upper lip", but I can assure that the reverse was not true.

And, I agree with your analogy of Portugal's relationship with its colonies as a "sexual relationship", but only if you meant it in the manner of rape and sexual servitude!

The respective legacies of Portugal and of Britain have been a major factor in the difference between these two regions and, having literally and personally seen and lived the effects in both places, I have concluded that it is one of the reasons for the difference in the pace of progress in each of these two regions and of how easy or hard each region has had it.

It takes political will to sever colonial ties in the manner that was done in the Caribbean (and it was not just from Britain, there were former French and Spanish colonies too). Cape Verde could very well have done it, and can still do it, but it has not had the political will. The result is that Cape Verde's progress even today is still hampered by its continued psychological ties to Portugal. It is still a "mental" colony of Portugal even though it is technically a Republic.

Angelo said...

(Part 2)
As for Angola, it would appear that Angola is not courting Portugal as if Portugal would once again be its colonial master. Instead, I would suggest that Angola is courting Portugal as if to be its financial master. Look at the example of Isabel Dos Santos buying up Portuguese business and commercial assets as if on a shopping spree.

I would not say that Portugal is back in vogue in Angola. Instead, I would characterize it by saying that Angola is now in vogue in Portugal with thousands of Portuguese graduates and workers fleeing Portugal in search of new lives and careers in Angola, and with many Portuguese conglomerate now seeking their business fortunes there. Quite a turn of the tables. That's my read of the situation from afar based on what I have read. But that is just an opinion as I have not talked to any Angolans about the matter and I have never lived in Angola (or Portugal).

At the end of it all, we can agree to disagree. You say that Cape Verde is doing better than it should, and I say that Cape Verde is doing worse than it could. From either perspective, it suggests that there are opportunities here for creative investors and entrepreneurs and that is entirely the purpose of my blog.

So, while we may disagree, I thank you for supporting my objective. I enjoyed your perspective on the matter.

umer younus said...

very nice post i really like it it gives me alot of information....... 2013 richest country in the world

Angelo said...

Umer, you're welcome. Your blog is pretty good too. I just tried the advice on how to increase bandwidth. I'll see how it goes then spread the word about your blog post.

Anonymous said...

Angelo - presumably of Cape Verdean ancestry by way of New Bedford, Mass, provides by far the best analysis of Cape Verde`s failings and the reasons for them, available on the Internet.

One of my friends who worked under FAO auspices in Cape verde for many,many years ascribes the weaknesses to three factors.
l Salazar`s Portugal
2 The influence of Russia in the immediate independence era
3 The Marxist thinking of the PAICV

He believes that only younger Cape Verdeans, especially those who have lived abroad can break free of the straitjacket on independent and business thinking imposed by these three short-sighted regimes.

Salazar taught people not to ask questions. The Russians taught them to rely on dogma rather than facts. PAICV has ensured that incompetents come to head state institutions simply because of their contacts or their role in the PAICV movement.

No colonial power so ill prepared its subject people for independence. An island group, whether in the Caribbean or Atlantic lacking indigenous resources, can only rely on the ingenuity and experience of its leading cadres. This is where Cape Verde falls down.

Angelo said...

Thank you Anonymous. You should have revealed your name. But in any event, please share my blog article with your friends and colleagues. As many people of Cape Verdean descent should read this blog as possible. If more people were to recognize these issues but were to DEMAND CHANGES, we would see an effect similar to the Arab Spring but without the violence. That's how changes happen everywhere. The people have to say out loud that they will no longer accept things the way they are.

capeverdeinfo said...

I should like to add that I am not the Anonymous who is a British solicitor, presumably connected to the failed Sambala project in Santiago, in some way But if you find this forum via Google you can only publish under that pseudonym. It seems to be a fault of the blog interface.

The World Bank also believes that the Cape Verdes should learn from the Caribbean. It despatched Gilles Filleatrault, a French Canadian who had formerly run BWIA on a $1m salary with equivalent perks, including lodging in Senegal, to save TACV.

He bravely started new routes to Stansted and Fortaleza without any notion of how to sell the capacity. The planes flew almost empty and the profits which TACV had been able to earn on medium-haul, where its planes are not full of free-loading ministers and bureaucrats, disappeared. After a while, so did he.

capeverdeinfo said...

Unfortunately the people living in Cape Verde, especially if the work in a state enterprise are only too willing to accept the abysmal service which one obtains from the airline, the ports, the airoports, the custome, the electricity and telephone utilities, the police and almost everything else run by the Government.

They have a deeply ingrained no-work ethic will take decades to eradicate.

Angelo said...

Thanks for your comments Cape Verde Info. I have also visited your website from time to time. It is well done.

As for the glitch with Blogger, it's not really a glitch. It is just that they give limited options for log readers to "officially" sign comments. Notwithstanding this, readers can simply sign their name at the end of a comment if they don't wish to remain anonymous.

The example you gave of Filiatreault is interesting. He was at BWIA for just 17 months before he was summarily dismissed. If TACV had really done its homework, they would have known the man was completely incompetent and should not have been hired. BWIA (now Caribbean Airlines after absorbing Air Jamaica) is now in the black.

I concur 100% with your comments about the "deeply ingrained no-work ethic"...but these things can be changed quickly by real leaders via incentives! Freakanomics has some interesting examples showing that many long-practiced behaviors and attitudes are the way they are because the incentive structure is set up in such a way as to reward the behavior.

In my opinion, the two biggest reasons for these business and service atrocities are: 1) the socialist labor laws which bestow total power with employees over employers, and 2) Cape Verdean workers are NEVER held accountable for results or for anything for that matter. Look at what happened with the national football team and the dream of participating in the 2014 World Cup. Was the coach fired? Was the president of the FCF booted out? No and No.

Angelo
^^^^^^^^(how readers can sign comments if the only choice of "Comment as" drop-down is "Anonymous")

capeverdeinfo said...

I do not believe that these wealth-destroying attitudes will be easy to change. They clearly will not change until the people at the top of organisations, who got there because of their kinship or support for PAICV are replaced by people who understand the foreign concepts of service and work rate.

As you say there is acceptable service really only in foreign-owned businesses. Where competition is permitted these generally take over the market from the local state business, in time. You can see what Angolan owned TMais is doing to the local telephone company where they delight in saying No or Amanha.

Many expatriates prefer to employ German or British workmen, who charge European rates for household repair tasks. The biggest self-service hotels employ only Africans in menial jobs and Europeans in manager roles. This is all very sad for Cape Verde. But as you have suggested few of the leadership cadres understand the issue.

Angelo said...

CapeVerdeInfo. Once the labor laws are changed so people don't have guaranteed lifetime jobs and people have to actually work to earn their salaries or risk being fired, you can rest assured things will change.

Right now, Cape Verdean workers have no incentive to be productive. Instead the incentives you have is to sit on your fanny, provide horrible service and collect a monthly check - because you can't be fired except at considerable cost and headaches for your employer. Yet, people wonder why just about every small local company here eventually goes out of business. The answer is obvious.

In any event, it all comes down to the incentives. Incentives dictate behavior. Change the incentives and you will change the behavior. However, the real question is whether they have the political courage to change the labor law, and if so how long will that take?

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Cape Verde Tips said...

I am grateful to a colleague for sharing the link to this blog with me, now I shall share it with subscribers to my 'Expats Cape Verde' newsletter.

I am a British Expat on Sal whose chosen to live here and I try and provide and share information with other English speakers about things that are happening or have happened on Sal or Cape Verde via my two websites: 'Expats Cape Verde' and Cape Verde Tips'.

It's great to read this blog and the comments, though I have not read through them all as yet.

As someone who lives and works here, I know how frustrating things can be, lack of the right information, lack of customer service training from sections that will remain nameless and shameless, wasted time and the lack of organisation and so on. Although some things have improved over the last 7 years, many other things haven't, they need to be addressed and improved as the blog writer says, in order to help Cape Verde to grow and not be left behind.

I understand how difficult it is for locals to earn a living here and to be honest its not easy for Expats but expats have some advantages, even if we all do not speak Creole or Portuguese.

I am fortunate to have been in a position to understand the importance of customer care. I just hope that others will introduce training programmes' for nationals who could really do with learning these skills.

I do compare UK services with here, sometimes I make excuses for people or services, but its gone on too long. Realistically, things must change in Cape Verde. That is the challenge!

I have newsletter subscribers who are from many different countries who speak various languages as well as English, I hope they too share the blog and comments with contacts in their own country.

Very interesting blog and comments. Thank you.

Angelo said...

Hi Cape Verde Tips. I appreciate that you took the time to comment and contribute your personal experiences!

Angelo

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