Tourism Windfall Lifts Cabo Verde, But Gender Gap Still Holds Back Full Economic Potential

Cabo Verde’s economy grew strongly in 2024, driven by tourism, agriculture recovery, and solid fiscal management, with poverty and inflation falling despite persistent structural risks. The report warns that closing gender labor gaps through better childcare, skills development, and anti-discrimination measures could boost GDP by over 12% and make growth more inclusive.

The Cabo Verde Economic Update – Spring 2025, prepared by the World Bank, the Instituto Nacional de Estatística (INE), and the Ministério das Finanças de Cabo Verde, offers a compelling combination of economic analysis and a strong case for advancing gender equality as a driver of growth. It presents the portrait of a small island nation rebounding impressively from recent crises, buoyed by tourism, improved agriculture, and sound macroeconomic management, while still grappling with structural vulnerabilities, climate risks, and the persistent underutilization of women’s labor force potential.

Strong Growth and a Tourism Surge

In 2024, Cabo Verde’s GDP expanded by 7.3 percent, led primarily by the service sector and a tourism industry that welcomed 1.18 million visitors, a 16.5 percent increase from the previous year. Apart-hotels grew in market share, pointing to diversification in the accommodation segment. Agriculture registered its first positive season in seven years, helped by good rainfall, targeted irrigation, and drought-resistant crops. Fisheries, though small in GDP terms, continued to dominate merchandise exports. Private consumption was boosted by steady remittance inflows worth 10.8 percent of GDP, a sharp drop in inflation to 1 percent, and improved household confidence.

External Strength and Fiscal Balances

External accounts strengthened significantly, with the current account swinging to a 3.7 percent surplus, supported by a 19 percent rise in tourism export earnings. International reserves reached EUR 736 million, equivalent to 5.5 months of imports, providing a healthy buffer against external shocks. On the fiscal front, revenue collection remained robust at about 25 percent of GDP. The deficit widened slightly to 1.1 percent of GDP, reflecting increased public investment, expanded social spending, and election-related expenditure. Public debt fell to 110.2 percent of GDP, continuing a gradual downward trend, although state-owned enterprises remain a fiscal risk despite ongoing reforms aimed at improving their performance.

Risks and Economic Outlook

The outlook projects growth of 5.9 percent in 2025, easing toward 5 percent in the medium term. Poverty is expected to fall from 14.4 percent in 2024 to 11.1 percent by 2027, while inflation should remain close to Euro-area levels. Fiscal consolidation is likely to resume, driven by tax reforms and more efficient investment spending. However, vulnerabilities persist: a heavy reliance on tourism, limited export diversification, climate change exposure, unresolved liabilities in SOEs, and political pressures ahead of the 2026 elections. External shocks, a global slowdown, or delays in reforms could undermine progress, making structural transformation and resilience-building essential policy priorities.

Gender Progress and Persistent Gaps

The report acknowledges Cabo Verde’s notable achievements in advancing women’s rights. The country has ratified major international conventions, reduced maternal mortality, lowered the fertility rate to 1.9, achieved near-universal literacy among young people, and made progress in reducing gender-based violence. Women’s decision-making power within households has also increased. Yet, gender disparities remain stark in the labor market. In 2023, labor force participation for women aged 24–59 stood at 68.9 percent, compared to 82.3 percent for men. In rural areas, participation among women dropped to just 50 percent, with care and household responsibilities often cited as the main barrier to employment.

Women’s work is concentrated in the service sector, particularly tourism, where a significant share of jobs are informal, low-paid, or low-skilled. They are less likely than men to hold medium-skill positions and more likely to work part-time. Despite often having higher levels of educational attainment than men, women remain underrepresented in STEM and technical fields. Regional disparities also matter: in tourism-driven Sal and Boa Vista, both men and women experience higher participation and lower unemployment than the national average. Still, wage inequality persists nationwide.

The Wage Gap and Its Economic Cost

Across all islands, sectors, and skill levels, women earn between 13.9 and 14.4 percent less than men on average, and when factoring in women who leave the workforce, the gap ranges from 26 to 56 percent. The report attributes this partly to occupational segregation, with women overrepresented in low-skill roles; differences in work experience, with men averaging two more years in their current positions; and the disproportionate burden of unpaid care work that interrupts women’s careers. Even after adjusting for education, sector, and experience, a significant wage gap remains unexplained, suggesting discrimination or structural bias. The economic stakes are high: closing gender employment gaps could raise Cabo Verde’s GDP by as much as 12.2 percent, with the largest potential gains in tourism and entrepreneurship.

Unlocking Women’s Economic Potential

The policy recommendations are clear and multi-pronged. First, strengthening the care system through expanded access to affordable, quality childcare in high-density and high-employment areas, along with improved coordination across social protection, education, and health, is essential. Encouraging shared parental responsibilities could further relieve women’s unpaid care burden. Second, targeted skills development for women should focus on sectors with high growth potential, STEM, tourism, green and blue economies, and the digital sector, supported by expanded technical and vocational training programs and incentives for female enrollment. Scholarships for girls in STEM and dedicated business support for women entrepreneurs are highlighted as game changers. Third, enforcement of anti-discrimination laws must be paired with effective grievance mechanisms, public campaigns to challenge gender stereotypes, and efforts to promote flexible work arrangements that align with care responsibilities.

The report delivers a dual message: Cabo Verde’s economy is on a promising path, with strong growth, improving external accounts, and steady poverty reduction. Yet, achieving sustainable, inclusive prosperity will require dismantling the cultural, institutional, and economic barriers that keep women from participating fully and equally in the labor market. The report frames gender equality not only as a matter of social justice but also as a strategic lever for economic expansion, resilience, and competitiveness in a nation whose fortunes are shaped by its geographic isolation, climate exposure, and dependence on a narrow set of industries. By unlocking women’s economic potential, Cabo Verde could significantly broaden its productive base, reduce vulnerabilities, and sustain its development gains well into the future.