Cape Verde is a small nation consisting of ten islands, which experience periods of drought and have a poor resource base. Lack of water, combined with other deficiencies in its infrastructure has hindered economic activity in the country, resulting in its total dependency on imports. The country relies on the sun, the ocean, the wind and its people as its most important resources.
Depending almost completely on imports to meet basic consumer needs, Cape Verde's trade balance is characterized by a constant and large trade deficit, with an average import growth rate of 14.96 percent. The total import market in 1998 is estimated at approximately US$ 220 million. With a share of 46.9 percent of the import market, Portugal is the leading supplier while the United States is third with a 5.6 percent share.
Despite slow progress in some sectors, Cape Verde's economic reform policies appear to be paying off, as new businesses are eager to explore new import markets. Furthermore, trade and investment opportunities are likely to increase as tourism, fisheries and export-oriented industries become established in the country creating new opportunities to support and enhance these sectors.
One of Cape Verde's most important assets is its location, which makes the country an invaluable crossroads for passengers moving across the Atlantic Ocean by air or sea. It holds an untapped potential as a launch site for doing business with Portuguese speaking African countries as well as countries in the West African region. The international airport at Sal could become an airline transportation hub for the region. With that in mind, the government has placed emphasis on the development of airports, ports and telecommunication facilities.
Aside from the cultural and language differences, several other factors have constituted major bottlenecks to doing business with U.S. companies. First, lack of access to commercial credit is a nearly universal complaint among Cape Verde importers who are accustomed to soft payment terms from their Portuguese suppliers. High transportation costs adversely affects profit margins and importers fear that the small size of the domestic market may not be appealing to American suppliers. However, the government encourages diversification of import markets, leading many importers to express an interest in establishing relations with U.S. suppliers.
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