Cabo Verde’s economy is vulnerable to external shocks and depends on development aid, foreign investment, remittances, and tourism. The economy is service-oriented with commerce, transport, tourism, and public services accounting for about three-fourths of GDP. Tourism is the mainstay of the economy and depends on conditions in the eurozone countries. Cabo Verde annually runs a high trade deficit financed by foreign aid and remittances from its large pool of emigrants; remittances as a share of GDP are one of the highest in Sub-Saharan Africa.
Although about 40% of the population lives in rural areas, the share of food production in GDP is low. The island economy suffers from a poor natural resource base, including serious water shortages, exacerbated by cycles of long-term drought, and poor soil for growing food on several of the islands, requiring it to import most of what it consumes. The fishing potential, mostly lobster and tuna, is not fully exploited.
Economic reforms are aimed at developing the private sector and attracting foreign investment to diversify the economy and mitigate high unemployment. The government’s elevated debt levels have limited its capacity to finance any shortfalls.
Cape Verde was designated as AGOA Eligible Country on October 2nd 2000. Cape Verde has been declared eligible for Apparel Provision on August 28th 2002 and benefits the Lesser Developed Country Special Rule for Apparel (3rd country fabric) and Lesser Developed Country Rule for Certain Textile Articles (Category 0). Regarding the Category 9 Textile Products, Cape Verde is not yet eligible to export Handloomed / Handmade, nor the folklore annex and ethnic printed fabrics.