MCC-Cape Verde Partnership

Owing to strong political institutions and reform-driven growth, Cape Verde is one of few African countries that has gained relative stability in recent years despite limited resources. The island country is progressing adequately against its Millennium Development Goals and is poised to achieve most targets by 2015. Poverty levels have declined from 37 percent in 2000 to 27 percent in 2010. Largely resource-deficient, Cape Verde’s economy is driven mainly by tourism, transport and remittances. Owing to a high volume of migrants to the United States and Europe, overseas remittances are estimated to account for 9 percent of Cape Verde’sgross domestic product. Despite Cape Verde’s notable performance, several factors continue to restrain its growth. Scarce resources, harsh climate conditions and insufficient exploitable terrains have limited the country’s industrial base and revenue generating options. Further, the country’s insular topography have made transport and energy infrastructure problematic and costly to maintain. The island country’s reliance on tourism and remittances has also had a negative impact on its economic growth. Because of the global financial downturn, tourism revenues and remittance flows to Cape Verde have been declining. These conditions have greatly undermined prospects for Cape Verde’s sustained growth beyond 2013, according to World Bank projections. The country’s economic growth has already slowed from 5 percent in 2011 to 4.3 percent in 2012. Cape Verde was among the first countries selected for a compact with the Millennium Challenge Corp. in 2005. Following the successful completion of its first compact in 2010, Cape Verde was, in 2011, the first country deemed eligible for a second compact. The current compact, Cape Verde II, was signed in February 2012 and implemented in November of the same year. Pursuant to the second compact was the creation of the Millennium Challenge Account-Cape Verde II in 2012. Since Cape Verde is still in the initial stages of its second compact, MCC has yet to set quarterly targets. Funding levels For its second compact with Cape Verde, MCC earmarked $66.2 million to finance two focal projects. The bulk of the funding will be coursed through Cape Verde’s government in collaboration with MCA-Cape Verde II which will serve as the program monitor and evaluator as well. Click on the image to view a larger version of the table. On top of the compact funding, $4 million has been allocated to finance program facilitation activities such as feasibility studies, procurement, monitoring and evaluation, among other overhead costs. Cape Verde’s government or MCA-Cape Verde must first provide the necessary documents before MCC can release the compact implementation funding. As of June 2013, nearly $3 million has already been committed from the total compact funding, with more than $1.7 million expended to date. Funding priorities MCC’s two-pronged approach will work to spur inclusive sustainable growth in Cape Verde by improving the country’s water and sanitation infrastructure and land administration systems. 1. The Water, Sanitation and Hygiene Project aims to streamline and improve Cape Verde’s water and sanitation delivery systems by reforming national regulatory bodies and public utilities as well as scaling up infrastructure efforts for the country’s WASH sector. 1. The Land Management for Investment Project seeks to reduce red tape-induced delays in Cape Verde’s land administration by modernizing land information management systems while developing the country’s property rights procedures and institutions. Click on the image to view a larger version of the table. Devex analysis Over the next four years, MCC will continue its commitment to build on past successes in Cape Verde and reinforce the country’s growth potential through the second compact. In the short term, increasing household income and encouraging greater private sector investment by improving water and sanitation infrastructure as well as upgrading land administration will continue to be MCC’s priority in Cape Verde. By 2032, MCC is projecting more than 604,000 beneficiaries will see their household incomes increase by $113 million. Coordination and collaboration between Cape Verde’s government and previous development partners such as the World Bank, Spain and the Canary Islands will continue for the Land Management Investment Project in the short term. Since Cape Verde is still in the initial stages of its second compact, MCC has yet to set quarterly targets. Contact: Helder Santos, Managing Director MCA-Cape Verde II Tel: (+238) 262 14 25 Email: Helder.M.Santos@mca.cv Join the Devex community and gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.