The Cape Verde financial sector has evolved significantly in only a few decades to emerge as a dynamic regional centre, says Julio Martins Junior, of Lisbon-based Raposo Bernardo & Associados.
“The Bank of Cape Verde until the 1980s was both the central and only operating commercial bank in the territory, but since when the financial sector has restructured significantly and encouraged the operation of private commercial banks, credit institutions and insurance companies.”
In a first step towards establishing Cape Verde as an international finance centre, the 1990s saw the enactment of a legal framework establishing International Financial Entities (IFIs) and the creation of the Cape Verde Stock Exchange, he explains. A second phase of development has now begun, with the publication of a new Financial “White Book”, a financial services development action plan, and impending legislation affecting the insurance sector. The intention, says Xavier de Pina, is to make the sector even more sophisticated, international and competitive.
“A financial platform based on an attractive tax system, in line with OECD principles, and benefiting from bi-lateral treaties, a special partnership agreement with the EU and strong links to the US and West Africa, clearly offers opportunities across the banking, funds, capital markets and insurance sectors.”
Cape Verde IFIs already offer specific tax benefits to the company, its shareholders and clients, and the ability to transfer funds internationally.
Nonetheless issues still persist for foreign investors. “Beyond the need for better communication and travel links, investments might benefit from a further improvement in tax efficiency, and the upgrading of some legislation – such as the securities code,” notes Xavier de Pina.
But in the face of the obvious geographic constraints, there is growing investment in the country’s airports and telecoms network, he says. Cape Verde’s progression continues and the increasing sophistication of its financial services sector is a significant element of this process.