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  • Closed Compact Report:  Closed Compact Report: Cabo Verde Compact
  • July 2017

Private Sector Development Project

  • $7,200,000Original Compact Project Amount
  • $1,824,566Total Disbursed

Estimated Benefits

Estimated benefits correspond to $1.8 million of project funds, where cost-benefit analysis was conducted.

Estimated Benefits for the Private Sector Development Project
Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
Not specified Not yet available 900 $2,000,000
Estimated Benefits for Activities
Activity Time Estimated Economic Rate of Return (ERR) over 20 years Estimated beneficiaries over 20 years Estimated net benefits over 20 years
Financial Sector Reform Activity At the time of signing 10.8 percent 900 $100,000
Partnership to Mobilize Investments Activity At the time of signing N/A N/A N/A

Data necessary to calculate an ERR for the Partnership to Mobilize Investment Activity was not available at compact signing, and the activity was later cancelled. No closeout ERRs were performed for the project, whose budget was less than $2 million by the end of the compact.

Project Description

Cabo Verde’s economic development strategy focused on making the transition from an economy dependent on foreign assistance and remittances to one driven by self-sustaining, private-sector led growth with priority sectors including tourism, financial services, transportation services, and fisheries. The Private Sector Development Project was designed to support the Government of Cabo Verde’s long-term economic transformation strategy through activities aimed at removing constraints to investment and stimulating these priority sectors. The project worked to reduce early-stage project development risks that dissuade both domestic and international private investors and implement financial sector reform to increase access to financial serves and improve financial flows. The Project included two activities:

  • Partnership to Mobilize Investment Activity: The Activity was divided into four phases: Phase I, completed by the International Finance Corporation (IFC), was an analysis to identify the segments of the priority sectors where Cabo Verde had a competitive advantage and propose potential interventions; Phase II, financed by the Government alongside other donors, included designing specific activities to carry out the interventions identified in Phase I and conducting an ERR for each activity; and Phase III, in which the Government, IFC and other donors would evaluate and recommend activities for MCC funding during Phase IV.Two years into the compact, the Activity was cancelled and the funds reallocated to other activities. The design of the Partnership to Mobilize Investment was based on assumptions that all participating parties (MCC, MCA, IFC, and local stakeholders) would reach similar conclusions on the sectors with potential for growth in Cabo Verde as well as the appropriate program interventions to best impact priority areas. However, the lack of an agreed vision led to agreement to halt the project activity and to the subsequent reallocation of program funds to the Infrastructure Project at the request of the Government of Cabo Verde (more details are available in the Compact Changes section of this report).
  • The Financial Sector Reform Activity. The Financial Sector Reform Activity focused on transitioning microfinance institutions (MFIs) to become regulated deposit-takers, enabling them to become more significant providers of credit, savings, and other financial services to both rural residents and the urban poor. The Activity included technical assistance to MFIs and the acquisition and upgrading of software to support their functionality.

The project’s technical assistance to microfinance institutions, under the Financial Sector Reform Activity, was completed and under this activity, eight MFIs received technical training on best practices in accounting, credit appraisal, delivery, collection, human resources management, and marketing. Additionally, four of five targeted MFIs were classified as operationally and financially sustainable. Finally, as a condition precedent to providing this technical assistance, the Government of Cabo Verde approved a micro-finance law that, among other improvements, authorized MFI collection of savings.

Evaluation Findings

Private Sector Development Project:

No evaluation will be completed for this Project.

Status of the evaluation: Cancelled

Key performance indicators and outputs at compact end date

Key performance indicators and outputs at compact end date
Activity/Outcome Key Performance Indicator Baseline End of Compact Target Quarter 1 through Quarter 20 Actuals (as of Jun 2012) Percent Compact Target Satisfied (as of Jun 2012)
Financial Sector Reform Activity MFI Gross Loan Portfolio (Thousands of USD) $2,537 $3,673 $4,384.90 162.67%
MFI Portfolio at Risk about 30 days; adjusted 16 PAR<14 10.10% Satisfied
Ration of MFI's financially self-sufficient 0/5 3/5 3/5 Satisfied
Ration of MFI's operationally self-sufficient 2/5 4/5 5/5 Satisfied
Partnership to Mobilize Investments Activity Signature of Memorandum of Understanding with CSCC (Steering Committee of Bureau Commerce) No MOU Signed by June 2008 Signed in February 2009 Satisfied
Tender documents approved and issued No documents Signed by December 2008 Signed in March 2010 Satisfied