Cabo Verde's economy is on a roll, with real GDP expanding by a whopping 6.3% in 2025. This impressive growth is largely attributed to record tourism arrivals, robust private consumption, and improved fiscal performance. But while these achievements are commendable, the World Bank's latest report, 'Unpacking the Inter-Island Connectivity-Growth Nexus', reveals a critical vulnerability: Cabo Verde's economy remains heavily reliant on tourism, with weak inter-island connectivity acting as a significant constraint on productivity, market integration, and inclusive development. This is a problem, as it limits the economy's ability to diversify and create more job opportunities, particularly for young people, women, and workers in islands that are not heavily connected to tourism.
The report highlights unreliable and costly domestic air and maritime transport as a major obstacle to economic integration and tourism diversification. This is a critical issue, as it raises costs for businesses and households, limits domestic value chains, and concentrates economic activity in just a few islands. The result is a situation where growth is not being translated into broader job opportunities, particularly for those outside the main tourism centers.
To address these constraints, the report recommends strengthening regulation, modernizing transport concession frameworks, and expanding opportunities for private sector participation in air and maritime services. These reforms would improve the reliability, affordability, and predictability of inter-island transport, reducing costs for firms and households while enabling businesses to reach new markets across the archipelago. By strengthening links between tourism, agriculture, fisheries, logistics, and local services, better connectivity can help unlock more diversified private sector activity and support the creation of more, better, and more inclusive jobs, particularly for women and young people outside the main tourism centers.
However, the report also highlights the importance of stronger governance of state-owned enterprises (SOEs) to reduce fiscal risks, improve service delivery, and create an enabling environment for private investment and sustainable job creation. This is a critical point, as it shows that while improving connectivity is essential, it is not enough on its own. A comprehensive approach that addresses both connectivity and governance is needed to ensure the long-term resilience and sustainability of Cabo Verde's economy.
In my opinion, Cabo Verde's economy has the potential to become a true success story, but it will require a significant shift in focus towards improving inter-island connectivity and strengthening the governance of SOEs. By doing so, the country can unlock its true potential and create a more diversified, resilient, and inclusive economy that benefits all its citizens. But it will take bold action and a commitment to long-term thinking to make this happen.
