Legislative and presidential elections in January and February 2011 should not have a major influence on Cape Verde’s development path. Opinion polling shows that the governing Partido Africano da Independência de Cabo Verde (PAICV) is likely to maintain its control of the presidency and the powerful post of prime minister. President Pedro Pires is stepping down, but the PAICV does not want jostling for the presidential seat to complicate matters for the legislative polls.
José Maria Pereira Neves, the prime minister since 2001, will lead the PAICV in the 2011 legislative polls. He will face former prime minister Carlos Veiga (1991-2000) of the opposition Movimento para a Democracia (MPD). Both parties are campaigning on their legacies of economic development, the PAICV’s in the 2000s and the MPD’s in the 1990s.
The MPD’s Veiga says that his leadership in the 1990s brought low levels of unemployment and high incomes. The PAICV’s Neves hopes to increase the number of votes for his party by highlighting the construction of new ports, airports and roads that should facilitate the economic takeoff on the archipelago’s smaller islands. Both parties have left-leaning tendencies and there are few ideological differences between the two.
Before the elections, Cape Verdeans said that they were most concerned about employment and poverty. Economic policy will be a big election issue in 2011, but Cape Verde is one of the strongest performing economies in Africa. It is set to be the African country that meets the most Millennium Development Goals by 2015.
The IMF predicts that economic growth will rise above 5% in 2010, reaching 6% in 2011. Inflation will remain low, at 1.8% in 2010 and 2% in 2011. Cape Verde’s donors, especially those in Europe, are encouraging the government to tackle problems with an international dimension, especially immigration, drug trafficking and offshore banking.
International financial institutions praised the Praia government’s counter-cyclical spending on social services and infrastructure, which they credit with protecting the archipelago from the full impact of the global slowdown. The policies boosted the economy and gave the governing party electoral fodder, having hired more health workers, police officers and teachers. Government spending also focused on infrastructure projects like social housing, power generation and transportation. The country’s port authority, ENAPOR, says that four-fifths of the country’s ports will have modern infrastructure by the end of 2011.
However, the government runs the risk of increasing the medium-term debt by increasing spending by almost 20% in nominal terms in 2010. Tourism is the most important sector of the economy and accounts for more than 20% of GDP. The industry remained buoyant in the face of lagging growth in Europe as hotels slashed prices to attract customers.
In the first quarter of 2010, tourism receipts had risen by 7.75% over the same period in 2009. The negative external environment has slowed down construction, foreign investment and remittances, which are an important source of revenue due to the fact that there are more Cape Verdeans abroad than at home. The government is trying to cut the losses made by parastatal electricity and transportation companies and to reduce their subsidies.
Electricity company Electra is now switching from fuel-based electricity generation to wind power. Praia is also in talks with the governments of Austria and Portugal to sell its carbon credits in order to finance green projects. The government is looking to privatise TACV Cabo Verde Airlines and has sacked employees to make operations more efficient.