I. Macroeconomic Framework
The tourism industry of the country is on a solid growth trend which is already considered significant and strategic in respect to the socioeconomic development of the Cape Verdean society.
The Government is highly committed to transform Cabo Verde into a tourism destination of top international standards. To fulfill that goal it is foreseen the implementation of a set of programs specifically tailored to enhance all the ancillary services, namely health care, safety, transport, communications, banking, hotel businesses and restoration services.
1.1 Share of GDP Farbe
The following table illustrates the share of tourism in the gross domestic product (GDP) between 1989 and 2000; meanwhile recall that 1998 figures are estimates and 1999 and 2000 are forecasts:
Source: INE, Governance: 1998 Report and the NDP (mid term evaluation, June 1999)
1.2 Balance of Payment
The performance of the sector over the years reveals a credit balance. Thus the sector is regarded as one way to limit or reduce the national debt.
According to the 1997 census on entrepreneurial activities taken by the National Institute of Statistics, the industry employed 8,769 people distributed as follows: Hotels and related establishments, 1,067; restaurants and pubs, 6,814; nightclubs, 776; and travel agencies, 112.
From 1995 to the first quarter of 1999 the number of accommodations raised from 64 to about 87. The overall accommodation capacity has doubled over said period to top 3,590 beds corresponding to 1,971 rooms.
In respect to the number and distribution of rooms the following picture emerges: Sal supplies 44.5% of the total; Santiago 23.1%; S. Vicente 13.4% and Boa Vista 7.3%. The remainder 12% is scattered over the other islands (Source: The department of Tourism of Promex).
2.2 Distribution according to the Municipalities
The following table illustrates the distribution of accommodations according to municipality.
The next table provides additional information on the different accommodation establishments in the archipelago.
Table 1: Accommodation units according to Municipality (Number of rooms and beds)
According to a survey, hotels and related establishments are serviced as follows:
2.1.3. Occupancy Rates
The mean national occupancy rate is close to 80%. For Santiago, such annual rate is close to 70%; Sal it is around 75%-80%; S. Vicente it is approximately 50% and for the remaining islands said rates do not exceed 35%. The recent opening of new international air routes by the domestic airline, TACV, has favored a significant rise of the national rate of occupancy.
2.1.4. Accommodation Rates
Rates vary from 1,200 ECV to 8,900 ECV per day for a single bedroom; 1,600-10,200 ECV for a double bedroom; and from 3,500 ECV to 16,500 for 1-3 persons suit or triple bedroom. The above rates include full breakfast (ranging from 240 ECV to 1,800 ECV) and represent the mean for the dull, average and high seasons. Rates charged during the high season have gone up slightly.
The Atlantic Hotel is the only such establishment owned by the State. Ongoing specific studies will draft its transformation into a School-minded Hotel establishment. This is a long standing idea people want to see shaped into a project. Said studies have the technical support of consultant’s services firms based in Macao and the Canary Islands. It is expected that the Ministry of Tourism, Transport and Sea will furnish the project’s financial arrangements to the European Community for backing before the end of 1999.
Foreign investment is playing an important and decisive role in respect to the acquisition of existing hotel establishments as well as the implementation of new projects, thus contributing to raise hotel standards and supply of accommodation units. Thanks to a set of incentives for investment – such as fiscal and customs duties – on offer coupled with the efforts deployed by Promex in respect to the attraction of foreign investment, European investors are demanding Cabo Verde as an investment destination to build their accommodation units and develop ancillary services.
2.1.6 Availability of Land.
Tourism Development Areas.
Tourism development areas (owned by) in the municipalities are available for the development of investment projects in the sector of tourism. Allocation of land fits into one of the following category:
The municipalities of Brava, Paúl and S. Domingos do not own urban land. In the municipalities of Praia and S. Vicente, the sales of building plots located in tourism development areas are subject to the terms and conditions set forth under their respective rules and regulations as approved by the competent authority (Municipal Assembly) and published in the official gazette. With regards the municipality of Praia, refer to the addendum to the Official Gazette numbered (Suplemento B.O. nº.).24/92, (Addendum to the official gazette numbered 24/92); and in respect to the municipality of S. Vicente, B.O. numbered 1/93, Series II. The publication of the latter regulations was prompted by instructions provided by the Municipal Assembly and includes a price- list of building plots (sales and long term lease). As concerns the municipality of Praia, said price-list was published in an Addendum to the B.O. Numbered 12/92, Series II and reports to sales only.
In respect to the tourism development area of Santa Maria in the island of Sal, a Tourism-tailored Management Plan was drafted, with technical support provided by CABOCAN, a firm from the Canary Islands. Said firm is charged with the implementation of infrastructure projects in said site, such as the development of a small network of roads, supply of drinking water and establishment of a power grid as well as residual water treatment.
Rates vary according to distance from the shore. The minimum is 3,000 ECV per square meter of plot located nearest to the shore.
2.1.7 Construction Costs (Hotels)
Cost estimates are normally based on the number of rooms the unit will have. The following table illustrates the average construction costs of two top hotel standards of three different sizes.
Unit: US dollars
Such estimates might be slightly higher in Sal on account of lack of qualified workers and slightly lower in the case of S. Vicente due to a relatively high abundance of construction material such as sand and cracked stone.
2.2 Restaurants, Pubs, Nightclubs and Travel Agencies
2.2.1Restaurants, Pubs and Nightclubs
Around 3,352 establishments are equipped with a bar and restaurant. Most of them are in Santiago, S. Vicente and Sal. Of the above total 40.7% are family size owned pubs; 37% of them are pubs equipped with restaurant services; and 22% are restaurants. There are 29 nightclubs scattered around the country.
2.2.2 Travel Agencies
Eighteen (28) travel agencies serve the tourism market. Its number is growing steadily. A list of the most important ones follows:
100, Av. Amilcar Cabral C.P. 470
Rua Guerra Mendes, 4
Av. Cidade Lisboa, C. P. 901
Rua Serpa Pinto nº40 1ºandar C. P. 58 B
Rua Roberto Duarte Silva
C. P. 161
Rua 5 de Julho nº 84
C. P. 51
Av. Amilcar Cabral C. P. 27
Plateau - Praia
Av. Cidade de Lisboa
2º Esq. Fazenda
Rua Vila Franca de Xira C.P nº 2
Achada Santo António, C.P. 202/A
Rua Cândido Reis - Plateau
Aeroporto Amilcar Cabral
Rua 1º de Junho nº 10
Santa Maria, C.P.84
Rua 5 de Julho C.P. 147
3, R/C Estrada do Morro Cural - Zona Centro
Rua Senador Vera Cruz nº 57 C. P. 421
C. P. 373
Loja nº 3 Hotel Posrto Grande
Av. António Aurélio Gonçalves
Rua Cristiano Sena Barcelos, 719,
Nº 93 C.P. 20
Largo de Santa Isabel
Vila do Tarrafal
Vila Ribeira Brava
C.P 33 Ponta do Sol
2.2.3 Tour Operators
Established in March 1996, Morabitur – Travelling and Tourism – is the first domestic tour operator to enter business. This tour operator, its "Utilidade Turística" (tourism utility status) granted, is ready to handle the domestic tourism market. It sells two tour packages: One is designed to cover the specificities of each and every island; and the other is to address the needs of national citizens on holidays or business trips abroad, the end goal being to help them travel the world over at fair rates.
This tour operator has moved its main office from the capital city of Praia to Espargos in Sal Island as of the first quarter of 1999.
2.3 Average rate of meals per island
S. Antão: 620 ECV; S. Vicente: 750 ECV; S. Nicolau: 550 ECV; Sal: 950 ECV; Boa Vista: 650 ECV; Santiago: 750 ECV; Fogo: 600 ECV; Brava: 450 ECV; and Maio: 600 ECV.
In 1998 a total of about 52,000 tourists entered the country. Of that figure 31% were Portuguese, 31% Italians, 12.4% Germans and 11% French.
Table 3:?Main tourism markets. Influx from issuing markets.
Source: Directorate General of Statistics (DGE)
The influx of tourists to Cabo Verde in 1999, was estimated for 67.042.
The major influxes of tourists occurs during the following seasons: Christmas holidays and New Year’s Day; Eastern holidays and the summer months of July, August and September. The dull season occurs during the months of May and November.
3.3?Length of stay
The average length of stay in the country is 8 days. Meanwhile, in respect to hotel units said length drops to 3 days with rates varying from 2,600 ECV to 9,000 ECV per day (May 1996 figures). Over half of the night-stays occur in establishments located in Sal, Santiago and S. Vicente, where occupancy rates come close to 70% - 80%.
IV.?Tourism Products of Cabo Verde / Natural Resources
4.1 Tourism Products of Cabo Verde
The development of the tourism industry in Cabo Verde shall rely on the following factors: (i) insularity; (ii) location; (iii) mild climate; (iv) relative abundance of untapped natural resources; and (v) high potentialities for the development of water sports.
"Sun and Beach" has been identified as the main tour product, namely in the easternmost islands, the ones best endowed to play that role. They also offer excellent conditions to engage in water sports and exhibit remarkable land features. Thus, tour packages and excursions can be promoted to take advantage of said conditions.
The following tourism market segments have been identified as the most charming and most likely to strive in Cabo Verde:
1.?(Traditional and active) Sun and beach: Its main features are the sun and beach; the climate; and water sports such as (scuba) diving, windsurfing and deep-sea fishery.
2.?Nature tourism: Its driving force rests on nature-based activities/ actions such as hiking, climbing, horse-back riding and ecology-friendly activities.
3.?Excursions and Tours: Its end goal is to visit or tour places and regions according to well conceived itineraries (short stops offered).
4.?Culture-driven tourism: This segment encourages social intercourse with Capeverdeans and knowledge of their habits, principally the folklore, festive celebration days, the Shrove Tuesday included, music festivals and gastronomy.
4.2 Natural Resources
A survey of the natural resources of Cabo Verde identified 93 geographic units and classed them according to their degree of attractiveness.
According to their natural charms the islands are classed into three groups:
1.?Beach-endowed islands: Boa Vista (accounts for 52% of the total length of white sandy beaches of the country); Sal (15.6%) and Maio (29.1%).
2.?Mountainous country: Brava, Fogo and S. Antão (they are almost 100% beach-free islands with steep topography).
3.?Mountainous but beach-endowed country: S. Nicolau, S. Vicente and Santiago.
In respect to sun and beach resources Cabo Verde is highly endowed. Additional features such as its mild climate, geographic location and quality of its beaches and marine ecosystem strengthen the attractiveness of the islands such as Maio, Sal Boa Vista and S. Vicente.
In respect to natural resources, the country is also highly endowed. Indeed, it is striking the diversity of geographical features among the islands and within any given one. The pollution-free environment reigning everywhere and the ecological interest of other areas coupled with the adequate safekeeping of their natural interest, are highly appreciated.
And in respect to excursion-tailored resources there are interesting itineraries in almost all the islands.
V. Development Strategy
Despite existing shortcomings, development potentials in the industry are sound. Small wonder the Government has elected tourism as the main development axis of its economic policy. Such importance is safeguarded in the country’s fourth National Development Plan (NDP) that advocates the development of Cabo Verde into a tourism destination of top international standard.
The policy for the sector calls for the following overall objectives and principles to be accomplished for the period of execution of said NDP:
The government has set as one of its core priorities the valorization of the natural resources of the country in such a way as to safe-keep the development needs of the sector of tourism. A set of major policies, highly relevant for the tourism industry, is being executed in domains such as transports (air services, inter-islands shipping and portage by land) health, sanitation, infrastructure (namely energy and urban infrastructure projects) and others such as culture, safety and professional training.
5.1 Specific Objectives
The 1997-2000 NDP foresees the fulfillment of the following set of specific objectives:
5.2 Land management system
Considering the degree of infrastructure development in each island and the shortcomings related to international shipping as well as the existence of suitable beaches, the following islands have been assigned priorities in respect to tourism development needs:
5.2.1 Master Plan (physical aspects considered)
The government has undertaken to assure through its competent department, the former Tourism Institute, that some land management measures be taken. Said measures were inscribed in a Master Plan whose main components are:
188.8.131.52 Special tourism development areas
Said tourism development areas are classified into:
Fourteen (14) sites have been classed as ITDA. Of that total 5 are located in Santiago, 3 in S. Vicente, 2 in Boa Vista, 2 in Maio and 2 in Sal. Each ITDA has its own Special Tourism Management Plan whose determinants are hereby specified:
5.3 Macroeconomic policies and tourism
5.3.1 Monetary and fiscal policies
The Tourism Development Plan identifies the main development shortcomings the sector is faced with. Thus, it anticipates that the bulk of the official development assistance should be directed to institutional capacity building, professional training and promotion of foreign investment.
Meanwhile, under the terms and conditions of the framework law governing the development of tourism the government is entrusted with the setting up of a system of financial incentives for investment undertakings in the sector through jointly financed loan credit agreements.
Support granted to the domestic undertakers through the Tourism Development Fund will target the development of small ancillary infrastructure projects, animation and capacity building in the area of management. The Tourism Development Fund has been instituted to enhance access to development credit. It offers cheap loans since its interest rates are lower than those charged by the financial institutions for similar operations and purposes.
5.3.2 Foreign investment in the sector
Anyone, either foreign or national citizen, is free to engage in tourism activities. However, foreign investment is solely accepted for undertakings and activities of major economic and social interest or impact, provided they have acquired the "tourism utility" status and have been granted official permit in accordance with the terms and conditions set under "Foreign Investment" law (Law numbered 89/IV/93, dated December 13).
Furthermore, under the "Hotel and Related Industries" statutes, foreign investors are entitled to run hotels and related businesses provided such establishments bear the "tourism utility" seal. Likewise, trading companies, either proprietors of and/or acting manager of hotels and related businesses whose joint-stocks (more than 40%) are detained by foreign investors are subject to the same
Although foreign travel agencies and tour operators can be represented in the country such representation is limited to the role of intermediary in respect to their clients.
Undertakings in the sector of tourism that are jointly-financed by foreign investment, are entitled to financial and fiscal incentives granted to foreign investors.
Foreign Investment is regulated by Law (law numbered 89/IV/93, dated December 13th). The law ensures safety and protection of the investor’s rights and assets and it provides the following incentives:
. dividends and
allocated to foreign investors and deriving from duly authorized foreign investment initiatives, for an initial five-year period counted as from the date the official permission was granted or whenever profits have been legally reinvested.
. amortization of loans and
. interests on supply of convertible currencies, legally furnished
by foreign investor to the joint-stock of the firms they are shareholders and
provided they are legally authorized.
If after the initial five-year period as specified for the purposes of such incentives no re-investment is made, profits and dividends are assessed at a binding rate of 10% in respect to such investment for a period of at least 15 years after the date official permission was granted to proceed with a foreign investment.
5.3.3 Foreign policy
Foreign citizens willing to enter the country as tourists might be granted a competent visa. Those visiting the country as part of a group on organized tour and bearers of a certified collective identification card and travel arrangements (according to Law numbered 93/III/90, dated October 27th) are not required to have a tourism type of visa.
The visa grants the tourist a 90-day entry permit. Such period might be extended for another 90-day maximum and should be used within the date one hundred eighty days after the date of issue.
Travel agencies managing groups of tourists are required to report to the competent immigration and customs services the identification of every single component of the group at the earliest possible date.
5.4 Promotion of tourism
The 1997-2000 Tourism Marketing Plan defines the marketing strategy and tourism promotion activities abroad to be followed for the above period.
5.5 The administration of the sector
In respect to the ITDAs, Promex is responsible for, inter alia, the acquisition, management, administration, transfer of ownership rights on the land, formulation and execution of the Tourism Management Plans, ratification and execution of the Detailed Management Plan’s projects, ratification of blue-prints and construction works projects as well as the monitoring and supervision of projects and construction works.
The laws that are applicable to the tourism industry incorporate concerns over the fragility of the ecosystem, the scarcity and dispersion of tourism-prompting natural resources as well as the needs to protect rather than subject them to the rules of the market.
The most important ones are:
A set of legislative material is being reviewed and updated in order to better adapt norms to the prevailing conditions in Cabo Verde and raise the performance of the domestic professionals in the business.