Top hiring sectors in Cape Verde

It's an interesting question particularly because, outside of the Tourism sector, Cape Verde2s economy has been contracting since 2012. We are entering a pretty significant trough in the emerging recession. 2014 is probably going to get worse before it gets better. Jobs are being shed in all non-tourism sectors and government receipts are declining.

Part of the acceleration of the decline in the economy can be traced back to the fiscal actions taken in 2013 when the government, in their eternal wisdom, made the bone-headed move of increasing taxes, at a time when they should have reduced taxes. They effectively tripled value added taxes on the basic goods and services purchased by the average Cape Verdean. At the same time, the Central Bank made the equally bone-headed move of tightening the money supply which cause the banks to respond by choking of ALL access to credit. The result was a double whammy ... reduced spending by consumers and businesses, and reduced investments by entrepreneurs (no funding available). The construction sector was also effectively paralyzed except for public infrastructure and building projects. This was the classic recipe for a very, nasty economic slowdown with major increases in unemployment and business failures.

As for the Tourism sector, the recent (official) government statistics indicate that there was a DROP in the number of tourists in the 3rd quarter. This was a big surprise to a lot of people because the sector had been growing at a 25%+ clip. Local on the ground reports indicate that some hotels have been laying off local workers. However, my last blog article written in late 2012 noted that in the 2013 budget , there was a 150% increase on VAT on services provided to tourists (hotels, restaurants) and that the new VAT of 15% was among the highest in the competitive world for tourism. My feeling was that this would cause the travel agencies to begin diverting some clients away from Cape Verde (since the travel businesses would make less money as they could not raise package prices and would thus have to absorb the increase in taxes). My hypothesis appears to have been correct.

For the government, the tax increase resulted in a 15-20% DECLINE in annual tax receipts! The exact opposite of what they thought would happen, but exactly what any two-bit economist already knows ... you can't raise consumption taxes when the economy is weak and expect to get more tax revenue. People consume less!

So in conclusion, it is hard to say there are any promising JOB sectors at the moment. We are in a negative growth phase. The INVESTMENT sectors which remain the most promising are Renewable Energy and Agriculture because the money to support these sectors is coming from European governments, China, Japan and the US who are all throwing concessional loans at Cape Verde in these areas. You can make some good money supplying equipment and development services in these areas. But investors would not be advised to put any money into projects which are highly dependent on local consumer spending. Only projects directed at tourist spending will have a chance for sustainable success ... but even here, it requires some caution in case tourism also begins to decline.

My sense is that it will take about 2 years for the economy to BEGIN to recover from these calamitous and amateurish fiscal mistakes. The tourism sector should see flat to modest growth. The era of annual 25-30% tourism growth appears to be over.

Angelo

Julien wrote:

Hi,

let's talk about job opportunities in Cape Verde .

What are the top hiring sectors?

And according to you, what are the most promising job sectors, which will keep creating jobs in Cape Verde ?

Thanks in advance for sharing your experience,

Julien

Hi Angelo,

Thank you for your contribution.


Priscilla
Expat.com team