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Who is Benefiting from Trade Liberalization in Cape Verde? A Gender Perspective

Report by Froystad, Mona, Musselli, Irene, Zarrilli, Simonetta, 2011

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The two principal aims of this report are to (a) shed light on the differentiated impacts of trade policies, especially policies geared to trade liberalization and facilitation, on men and women in Cape Verde; and (b) analyse whether there is a gender bias in the gains from trade. Specifically, the report looks at food prices, remittances and tourism as important transmission channels through which trade policies affect gender relations in Cape Verde.

A GENDER PERSPECTIVE


Who is benefiting from
trade liberalization in Cape Verde?


U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T




A GENDER PERSPECTIVE


Who is benefiting from
trade liberalization in Cape Verde?


New York and Geneva 2011


U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T




UNITED NATIONS PUBLICATION
UNCTAD/OSG/2011/2


Copyright @ United Nations 2011




iiiCONTENTS


ACKNOWLEDGEMENTS ............................................................................................................................................................. iv
EXECUTIVE SUMMARY .............................................................................................................................................................. v
INTRODUCTION ..................................................................................................................................................................... ix


I. COUNTRY PROFILE ......................................................................................................................................................... 1
1.1 OVERVIEW .............................................................................................................................. 3
1.2 ANALYSIS OF SELECTED ECONOMIC AND SOCIAL INDICATORS ..................................... 5
1.2.1 Composition of GDP .................................................................................................... 5
1.2.2 Socio-demographic indicators .................................................................................... 5
1.2.3 Regional characteristics of the islands ....................................................................... 9
1.2.4 Employment ................................................................................................................. 9


II. GENDER MAINSTREAMING IN CAPE VERDE ...................................................................................................... 13
2.1 NATIONAL AND INTERNATIONAL COMMITMENTS .............................................................. 15
2.1.1 Government policies and laws related to gender ....................................................... 15
2.1.2 International commitments to gender equality and empowerment of women ............ 16
2.2 WOMEN’S CURRENT SOCIO-POLITICAL AND ECONOMIC STATUS ................................... 17


III. TRADE ANALYSIS ............................................................................................................................................................ 19
3.1 TRADE FLOWS ....................................................................................................................... 21
3.1.1 Balance of payments ................................................................................................... 21
3.1.2 Merchandise trade ...................................................................................................... 21
3.2 TRADE AGREEMENTS/ARRANGEMENTS ............................................................................. 24
3.2.1 Bilateral ........................................................................................................................ 24
3.2.2 Regional ...................................................................................................................... 27
3.2.3 Multilateral ................................................................................................................... 27
3.3 MAJOR OBSTACLES TO TRADE ............................................................................................ 31
3.3.1 Domestic market access protection ............................................................................ 31
3.3.2 Protection faced in the major export markets ............................................................. 31


IV. TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE ............................................................... 33
4.1 CHARACTERIZATION OF INCOME DISTRIBUTION .............................................................. 35
4.2 FOOD PRICES ........................................................................................................................ 38
4.3 REMITTANCES ........................................................................................................................ 43
4.4 TOURISM, SERVICES AND LABOUR MARKET INCOME ...................................................... 49


V. POLICY RECOMMENDATIONS ................................................................................................................................... 57
5.1 DIASPORA AND REMITTANCES ............................................................................................ 59
5.2 FOOD PRICES ........................................................................................................................ 61
5.3 TOURISM ............................................................................................................................... 62
5.4 ECONOMIC PARTNERSHIP AGREEMENT ............................................................................. 63
5.5 ECONOMIC EMPOWERMENT ................................................................................................ 64
5.6 HUBS AND PLATFORMS ........................................................................................................ 64


APPENDIX 1: ANALYTICAL FRAMEWORK ......................................................................................................................... 65


REFERENCES ................................................................................................................................................................................ 67


NOTES ............................................................................................................................................................................................. 71




iv WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


ACKNOWLEDGEMENTS


This study is part of UNCTAD’s activities on trade, gender and development carried out by the organization in
accordance with its mandate. The Accra Accord resulting from the Twelfth Ministerial Conference (UNCTAD
XII, Accra, Ghana, 20–25 April 2008) requested UNCTAD to strengthen its work on the linkages between
trade and internationally agreed development goals and objectives, including gender equality (para. 96(d)),
and to make efforts to mainstream cross-cutting issues of gender equality and the empowerment of women
in all its work (para. 173). UNCTAD aims to contribute to the analysis of the linkages between trade policy
and gender equality, and to the related international debate, by looking at specific country experiences. This
study is one in a series of case studies that are being conducted by UNCTAD in six developing countries,
namely Angola, Bhutan, Cape Verde, Lesotho, Rwanda and Uruguay.


This study was prepared by an UNCTAD team including Mona Froystad, Irene Musselli and Simonetta Zarrilli,
in collaboration with Professor Guido Porto from the Department of Economics of the University of La Plata,
Argentina. The overall work was coordinated by Simonetta Zarrilli.


Invaluable support was provided by the Government of Cape Verde, in particular the Ministry of Economy,
Growth and Competitiveness and the National Statistics Institute (Instituto Nacional de Estatistica – INE),
which generously shared data, official documents and reports with UNCTAD. We are grateful to the Office of
the United Nations’ Resident Coordinator, which ensured the coordination between UNCTAD and the Gov-
ernment of Cape Verde. Special thanks go to Clara Barros, Gender Advisor at UN Women for cooperation,
support and encouragement throughout project implementation. The study benefited from insightful com-
ments and suggestions provided by Lisa Borgatti, Milasoa Cherel-Robson, Heather Gibb, Murray Gibbs,
Claudia Roethlisberger and Marta Wojtczuk.


The study was financed by the seventh tranche of the United Nations Development Account under the
overall theme, “Support to addressing key global development challenges to further the achievement of
internationally agreed development goals, through collaboration at global, regional and national levels”.




vEXECUTIVE SUMMARY


Trade policies such as trade liberalization and fa-
cilitation that are aimed at fostering market integra-
tion tend to have strong redistributive effects, both
across economic sectors and among individuals.
Some may benefit, others may suffer, and yet oth-
ers may be unaffected. The study explores some of
the impacts of trade policies on household’s welfare
in Cape Verde, with a focus on gender issues. To
the extent possible, it devises polices and instru-
ments that would bring positive results for women.
In particular, it looks at food prices, remittances and
tourism. These dimensions emerge as important
transmission channels through which trade policies
affect gender relations in Cape Verde. They were
identified in light of their critical significance to Cape
Verde and Cape Verdean women, and based on
considerations of data availability.


Cape Verde is characterized by being heavily de-
pendent on imports, especially of food products
and of several kinds of machineries. The export
sector is small and limited to primary and low tech-
nology-intensive goods. The European Union (EU)
is Cape Verde’s main trade partner. Currently Cape
Verde is eligible as beneficiary of the Everything but
Arms (EBA) scheme, which gives the country duty-
free access to the EU market. Cape Verde graduat-
ed from the Least Developed Country (LDC) status
in 2008, and, as a result, will be removed from the
list of EBA beneficiaries on 1 January 2012, after
its three-year transition period. Within the Cotonou
Agreement framework, Cape Verde is in the process
of negotiating an Economic Partnership Agreement
(EPA) with the EU. The agreement will guarantee
that Cape Verde’s exports continue enjoying duty-
free access in the EU market after the phasing out
of the EBA, but on reciprocal terms. There are con-
cerns that the elimination of customs duties on most
EU imports could lead to a significant decrease in
Government revenue, which may badly affect the
provisions of public services from which women
in particular benefit. Moreover, if not implemented
gradually and with appropriate safeguards, trade
liberalization with the EU may hamper its industri-
alization prospects, with negative repercussions
on women employed in import-competing sectors,
among others. The risk is that many Cape Verdean
producers will no longer remain profitable as their
ability to compete with EU imports is highly limited
by severe supply-side constraints.


EXECUTIVE SUMMARY


Cape Verde, to a great extent, has showed com-
mitment to gender equality and women’s empower-
ment. It is a signatory of several related covenants
and agreements at the multilateral and regional
levels; domestically, the Constitution and other key
laws guarantee equal rights for women and men.
However, Cape Verde has experienced difficulties
in ensuring de facto equality. Rather than in legisla-
tive barriers, gender inequalities seem to be rooted
in socio-cultural norms that current policies and
laws have not yet been able to overcome.


There are three main effects of trade policies on house-
holds that could be discerned: (a) the consumption
effect on the price of the good consumed by the
households; (b) the income effect on households’ in-
come, including earnings, sales of agricultural prod-
ucts and other forms of income; and (c) the revenue
effect on the generation and distribution of Govern-
ment revenues. Revenues may indirectly affect house-
holds through transfers and provision of public goods.
Simulations were made in the study in order to assess
how individuals’ and households’ welfare would be af-
fected by (a) a change in food prices; (b) an increase
in income originating from remittances; and (c) an
expansion of some tourism subsectors. Results were
aggregated by the relevant dimension (location, gen-
der, poor or non-poor), so as to better identify any sub-
group that would gain or lose from trade policy. The
main findings of the analysis are summarized below.


Food prices


In both urban and rural households, food expendi-
ture represents a large share of Cape Verdean
households’ total expenditures. Nationally, the food
budget share is approximately 45 per cent amongst
the households with the lowest income, with a
small difference between female- and male-head-
ed households. The share spent on food declines
with the level of household well-being; it follows
that higher food prices will affect more seriously the
poorer households.


At the global level, average global agriculture and
food prices are rising rapidly with the Food and Ag-
riculture Organization of the United Nations (FAO)
Food Price Index reaching a near historical high in
May 2011. Against this background, the study simu-
lates the poverty impacts of a 10 per cent increase




vi WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


in international food prices that would translate in
an equivalent increase in the cost of the food bun-
dle at the household level. At the national level, the
fraction of people below the poverty line increases
by 2.6 percentage points (the increase in head-
count ratio from 36.7 to 39.2 per cent). As stated
earlier, there are only marginal differences between
the poverty impacts on female- and male-headed
households. However, in the case of extreme pov-
erty, the impacts tend to be larger in female-headed
households than in male-headed households (2.2
and 1.5 percentage points increase, respectively).
The negative repercussions of a 10 per cent in-
crease in the cost of the food bundle are larger in
rural than urban areas: the fraction of people below
the poverty line increases by 3.1 and 2.2 percent-
age points, respectively.


The study also simulates the poverty impacts of full
tariff liberalization in agriculture, particularly in the
context of ongoing EPA negotiations. Most favoured
nation (MFN) applied tariffs average 12 per cent on
agricultural products. Without estimates of the ex-
tent of the pass‐through to domestic food prices,
it was assumed that complete tariff liberalization
would translate to a 10 per cent decline in food
prices. The purpose of this second simulation is to
isolate the impact of Cape Verde’s trade liberaliza-
tion policy on food prices from the impact on other
factors. The change in food prices brought about
by the hypothetical tariff cuts causes poverty to
decline. At the national level, the fraction of people
below the poverty line declines by 2.6 percentage
points. Again, there are only marginal differences
between the poverty impact in female- and male-
headed households, though the impacts tend to be
larger in female-headed households. The simulation
also uncovers larger impacts in rural areas, particu-
larly in the case of extreme poverty.


While the analysis shows that tariff cuts due to the
EPA may have a pro-poor impact, it tends to dis-
count considerations of food security. Because of its
geographical and climate conditions, food insecu-
rity in Cape Verde is structural, and the country will
likely remain import-dependent on food. Neverthe-
less, it has an interest in preserving some capacity
for domestic food and agriculture production. A bal-
ance should therefore be struck between the ben-
efits, especially for poor households, of trade liber-
alization and related tariff reductions and the need
to keep and enhance domestic productive capacity.


The 2007–2008 global food crisis has highlighted
some of the risks of relying on food imports, leading
to renewed interest in enhancing agricultural pro-
duction in Cape Verde.


Persistently high agriculture and food prices in the
international markets make national policies and
programmes, including safety net programmes
and proactive agricultural policies, of utmost im-
portance. In Cape Verde, the central Government
and the municipalities administer social protection
mechanisms to control negative effects of food in-
security, such as school feeding programmes and
targeted cash transfer programmes. A key consid-
eration in designing a social protection scheme is
deciding who should be targeted and how it should
be provided. Findings from this study could provide
some guidance on how to best identify the suitable
beneficiaries of the schemes, based on the popu-
lation’s characteristics such as location, gender
and income. The findings also point to the need
to preserve and boost domestic capacity in staple
food production to lessen Cape Verde’s exposure
to highly volatile international markets. Cape Verde
has already identified some key areas of policy in-
tervention, such as stimulating the artisanal fisheries
sector, improving agriculture production through ir-
rigation, and promoting sustainable management of
natural resources.


A number of Aid for Trade initiatives could catalyse
development assistance in support of Cape Verde’s
efforts to develop the infrastructure the country
needs in enhancing food production capabilities.
The key challenge is to align aid flows to the pri-
orities expressed in national agricultural/sectoral
policies. The technological upgrading of women
farmers, their enhanced access to extension ser-
vices, training on standards compliance could be
included among the trade-related areas where sup-
port from the international financing schemes could
be sought.


Remittances


Due to the Cape Verdean diaspora, remittances are
a major link between migration and development for
the country. Remittances and external rents are an
important source of income, representing 10.5 per
cent of total household income, and 14.7 per cent
of income for female-headed households. There are
also geographic disparities: in rural areas, remittanc-
es account for nearly 15 per cent of total income,




viiEXECUTIVE SUMMARY


while in urban areas they account for only 7.1 per
cent. Remittances have almost doubled between
1998 and 2008 in nominal terms (from $77 million to
$138.4 million). However, the share of remittances in
gross domestic product (GDP) actually declined in
recent years.


The study simulates the household welfare effects of
an increase of 20 per cent in income coming from
remittances. The results show that the income gains
are higher for female-headed households, and rural
areas are more affected than urban areas. In urban
areas, the gains are similar across the entire range
of income levels, and are equivalent to 2 per cent
of household income for female-headed households,
and 1 per cent for male-headed households. In con-
trast, the gains in rural areas tend to be positively as-
sociated with per capita household expenditure, es-
pecially for female- headed households. Overall, the
simulation suggests that an increase in remittances
seems to be particularly beneficial for female-head-
ed households, except for the poorest households in
rural areas, whose share of income from remittances
tends to be very small.


Given the equalizing effects of remittances on in-
come distribution and their importance for household
livelihoods, Cape Verde would benefit from exploring
ways and means to sustain and facilitate remittance
flows. This calls for policy and institutional coherence
at the national and international levels, and it requires
coordinated action among countries sending and re-
ceiving workers. There are two main policy areas that
would be of particular importance: management of
labour mobility and facilitation of remittance flows.
Labour mobility is a complex issue where Cape Verde
should carefully weigh the positive effects of migra-
tion and remittances, such as financial inflows and
the establishment of transnational networks linked to
the diaspora, against their negative repercussions,
such as “brain-drain” and dependence on remittanc-
es. Regarding facilitation of remittance flows, there
are several ways and means to lower transfer costs
and formalize remittance flows, such as encourag-
ing the establishment of foreign bank branches or
promoting partnerships between banking institutions
in sending and origin countries. A particular focus
should be to cater for those irregular migrants, many
of whom are women, who may not have access to
formal transfer mechanisms.


The provision of services abroad through the Gen-
eral Agreement on Trade in Services (GATS) mode


4 – the temporary movement of people as service
suppliers – represents the only multilateral treaty-
based regime in existence today for managing the
temporary movement of certain categories of per-
sons. The precise definition of temporary services
suppliers, however, is rather unclear, and given the
fact that the boundaries between temporary move-
ment and temporary migration tend to blur, some
countries use the same legal instruments to regulate
both movements. As highlighted above, trade and
migration instruments can be used to make working
abroad beneficial to workers and to both the send-
ing and receiving countries. As far as the temporary
movement of services suppliers under GATS mode 4
is at stake, the study identifies the enhancement of
temporary movement of lower skilled services sup-
pliers, the simplification of the granting of visas, work
permits and licensing requirements, the recognition
of professional qualifications, and the streamlining of
the economic needs tests as measures that could be
considered to facilitate women’s increased participa-
tion and benefits from working abroad.


Tourism


Through foreign exchange earnings, the creation
of direct and indirect jobs, and skills development,
tourism represents one of the most important oppor-
tunities for economic development, poverty reduc-
tion and women’s empowerment in the country.


Despite its potential benefits for overall economic
development, the expansion of the tourism sector
comes with potential costs, including the need for
large investments in infrastructure, pollution, over-
exploitation of natural resources, changes in social
relations, and potential for increase in prostitution
and sexually transmitted diseases, among others.
These are challenges that Cape Verde should get
ready to face.


The study explores, through simple simulations,
the welfare impacts, especially on women, of an
expansion of tourism. Tourism is an economic sec-
tor which includes a wide variety of activities and
impacts different sectors of the economy. It is as-
sumed that the major sectors/activities associated
with tourism – namely Hotels and Restaurants, Com-
merce and Transport – are expanding. If the head
of a household works in the Hotel and Restaurant
sectors, the per capita expenditure of the house-
hold is assumed to increase by 30 per cent. If the
head works in the Commerce or Transport sectors,




viii WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


an additional increase of 10 per cent in per capita
household expenditure is assumed.


At national level, the gains from expanding tourist
sectors do not seem to be significant for the poor-
est households. Rather large welfare gains would
be expected from an expansion of the Commerce
and Transport sectors and such gains are likely to
benefit the relatively richer households. Female-
headed households are more affected by an ex-
pansion of the Commerce sector, and to a lesser
extent by an expansion of the Hotel and Restaurant
sector. This trend can be found in both rural and
urban areas. Male-headed households mainly ben-
efit from an expansion of the Transport sector. In
rural areas, the gains are smaller for both male- and
female-headed households. This is a consequence
of the low share of these sectors in total employ-
ment in rural areas. Since islands are specialized in
different tourism sectors, the study presents simula-
tions on an island-specific basis.


In Cape Verde, the tourism labour market is an im-
portant mechanism for transferring benefits from
tourism to the rest of its economy. The country may


achieve economic growth by linking tourism with
other economic sectors. The promotion of cultural
tourism, community-based tourism, business-re-
lated tourism, wellness and health tourism could
be relevant in this respect. Community-based and
cultural tourism could in particular benefit women
in poor rural communities, where concrete policies
should aim at emphasizing the importance of cul-
tural industry and strengthening its links with the
tourism sector.


Properly trained staff and a sufficient number of
skilled personnel are preconditions for delivering
high quality touristic services. Women’s participa-
tion in tourism education and training would allow
them to have access to more qualified, stable and
better paid positions, including managerial ones.
Policies should be put in place to cater for tourism
education and training of women, especially those
already employed in tourism. A more active role for
women as tourism entrepreneurs may be facilitated
by ensuring women’s access to credit, land and
property.




ixCONTENTS


The two principal aims of this report are to (a) shed
light on the differentiated impacts of trade policies,
especially policies geared to trade liberalization
and facilitation, on men and women in Cape Verde;
and (b) analyse whether there is a gender bias in
the gains from trade. Specifically, the report looks at
food prices, remittances and tourism as important
transmission channels through which trade policies
affect gender relations in Cape Verde.


The structure of the report is as follows:


Chapters 1 and 2 provide a stocktaking and analyti-
cal background. Chapter 1 offers both an overview
of Cape Verde with a detailed description of char-
acter of its economy. Chapter 2 discusses Cape
Verde’s national policies and international com-
mitments on gender mainstreaming and women’s
equality, and provides an assessment of women’s
current socio-political and economic status. The
core of the analysis, presented in chapters 3 and 4,
seeks to shed light on the gendered impact of trade
policy, including trade liberalization. Chapter 3 spe-
cifically looks at trade flows and trade arrangements,
and analyses the major obstacles to trade faced by
Cape Verde. It briefly reviews the possible industri-
alization and revenue impact of tariff liberalization
and the related implications for women. Chapter 4
explores some of the impacts of Cape Verde’s trade
policy on household welfare, with a focus on gen-
der issues. The chapter simulates how different in-
dividuals and households would be affected by (a)
a change in food prices; (b) an increase in income
originating from remittances; and (c) an expansion
of some tourism subsectors. These areas were se-


lected in consideration of the specificities of Cape
Verde, namely the dependency of food imports, the
diaspora, and the potential of the tourism sector.
Chapter 5 concludes with some policy recommen-
dations.


Let us note that some constraints (mainly data avail-
ability) are limiting the scope of the report.


First, the core analysis focuses on specific trade
sectors/issues for which the available micro-survey
data allow to generate a meaningful quantification
of the likely gender impacts of trade liberalization/
facilitation. Due to lack of relevant data, the report
does not provide an in-depth quantitative assess-
ment of other sectors in which Cape Verde is either
currently competitive or where there is a potential to
become competitive in the future. Furthermore, the
study only partially explores some trade-related is-
sues that may have a bearing on women – including
the relationship between trade liberalization, infla-
tion/deflation and poverty, and the issue of supply-
side constraints and export competitiveness.


Second, the gender analysis in this report is limited
in that it essentially discusses employment (and
income) effects on female- versus male-headed
households, while disregarding intra-household
dynamics rooted in social patterns. For example,
decision-making processes and command over
resources within the household and intra-house-
hold transfers are not discussed. Yet, drawing on a
quantitative model, the analysis provides important
insights of the impacts of trade liberalization/facilita-
tion on household welfare, with a focus on gender
issues.


INTRODUCTION






I


Country Profile






3COUNTRY PROFILE


1. COUNTRY PROFILE


1.1. OVERVIEW


The Republic of Cape Verde is an archipelagic
country consisting of 10 small islands located in
Western Africa, 455 kilometres off the coast of
Senegal. The total area is 4,033 km2 and the cli-
mate is dry and tropical.1 The 10 islands are geo-
graphically and economically different, portraying
a mix of cultures.


The Cape Verdean islands were uninhabited when
they were discovered by the Portuguese in 1460;
two years later the first settlers arrived. Cape Verde
had been a Portuguese colony until 1951 when the
status changed from a colony to an overseas prov-
ince. During the 1960s, Cape Verdeans – jointly
with natives of Guinea-Bissau – formed a libera-
tion movement. In 1961, the inhabitants gained full
Portuguese citizenship, and in 1974 a transitional
Government composed of Cape Verdeans and
Portuguese was established. And finally in 1975,
Cape Verde gained independence from Portugal.
Cape Verde has since developed into a stable de-
mocracy, and is a unitary republic. The one-party
rule ended in 1991 when the first multiparty elec-
tions were held. The most recent legislative elec-
tions took place in February 2011, and the African
Party for the Independence of Cape Verde (PAICV)
won with an absolute majority. The new Govern-
ment was announced in March 2011. Scheduled
Presidential elections were held in August 2011
and Mr. Jorge Carlos Fonseca from the Movement
for Democracy Party was elected President.


Due to its location, Cape Verde has served as a
trade facilitator throughout history, first as a centre
for slave trade, and in the twentieth century as a
shipping port. The islands were an important coal-
ing and re-supply stop for whaling and transatlan-
tic shipping. Cape Verde is today a services-based
economy. The tourism sector has grown rapidly as
the major factor behind the country’s economic
growth. Due to high growth rates, together with a
stable democracy and a strong promotion of edu-
cation, Cape Verde graduated from LDCs status in
2007. In 2008 Cape Verde became a member of
the World Trade Organization (WTO) (WTO, 2008).


According to the 2010 Census, the population of
Cape Verde is 491,875, the proportions of females
and males are 50.5 and 49.5 per cent, respec-
tively. About 40 per cent of Cape Verdeans live in


rural areas and 26.8 per cent of them live in Praia,
the capital of the country, located in the island of
São Tiago. Men and women are evenly distrib-
uted in urban and rural areas2 (Republic of Cape
Verde, 2011a). Natural features combined with a
small domestic market, and a history of famines
has contributed to a high emigration level through-
out Cape Verde’s history. In 2010, 192,500 Cape
Verdeans were living abroad (World Bank, 2011),
corresponding to 39.1 per cent of the population
living in the country. The Cape Verde Diaspora is
mainly concentrated in Europe (Portugal, France,
the Netherlands, Italy and Spain), the United
States, and other Portuguese-speaking African
countries (Mozambique and Angola). Remittance
flows are important for Cape Verde, accounting
for about 9 per cent of GDP in 2008. Remittances,
along with official development assistance (ODA),
are contributing to the reduction of a negative bal-
ance of its current account.


The Cape Verde islands have very limited natu-
ral resources, and only about 10 per cent of the
land is farmable (Republic of Cape Verde, 2003).
Moreover, the country often bears droughts, irreg-
ular rainfalls and water shortages (Carling, 2001).
The economy is constrained by this poor natural
resource base. As a consequence, Cape Verde
is heavily dependent on food imports. This makes
the country particularly exposed and vulnerable to
price spikes on food commodity markets.


The centrality of the tourism sector, the “Diaspora”,
and dependency of food imports, are important
specificities of the Cape Verde economy.


The Constitution of Cape Verde and its laws guar-
antee equal rights for men and women; however,
social-cultural habits have lead to gender inequal-
ities across a number of areas. Inequalities have
persisted in income and employment opportuni-
ties, and access to essential services. Overall,
there has been an increasing “feminization” of
poverty: in urban areas, female-headed house-
holds tend to be poorer than male-headed house-
holds, with a widening of the poverty gap. Gender
based violence also remains a serious problem,
though some progress has been achieved through
the adoption of a National Action Plan for the pe-
riod 2007–2011 to fight violence against women,
including foreign women, and, more importantly,
through the adoption of a law against gender-
based domestic violence that entered into force
in March 2011 (Republic of Cape Verde, 2011b).




4 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


The Transparency International (TI) corruption per-
ception index ranks Cape Verde number 45 out
of a total of 178 countries. Only Botswana and
Mauritius are doing better than Cape Verde in the
sub-Saharan African region (TI, 2010). According
to the Human Development Report 2010, Cape
Verde falls in the category ‘medium human devel-
opment’ on the human development index, and
scores well over the average for the Sub-Saharan
region (0.53 compared to 0.39) (United Nations
Development Programme (UNDP), 2010). The dis-
tribution of income in Cape Verde is uneven with
a Gini index of 50.5, which scores disappointingly
as compared with other countries in the region.3


Cape Verde is ranked 55th overall (out of 183
economies) for Trading Across Borders – a
measure of the costs and procedures involved
in importing and exporting a standardized ship-
ment of goods. It compares favourably with other
countries in the region. For example, 19 days are


needed to export, as compared with 23 days in
The Gambia and 35 days in Guinea. The cost to
import (per container) is $1,000, as compared to
$1,391 in Guinea and $1,940 in Senegal. Cape
Verde requires five documents both to export and
to import. The Gambia and Senegal require six
to export and eight and nine respectively to im-
port. Overall, Senegal, The Gambia and Guinea
are ranked 67, 87 and 129 respectively for Trad-
ing Across Borders (World Bank and International
Finance Corporation (IFC), 2011).


The European Union (EU) is Cape Verde’s main
economic partner. In 2009, Spain was the destina-
tion of about 55 per cent of Cape Verde’s exports,
while about 42 per cent of Cape Verde’s import
came from Portugal (United Nations COMTRADE).
Cape Verde has a fixed exchange rate, which is
pegged to the Euro at 110.265 Cape Verde Es-
cudo. The fixed exchange rate has served as an
anchor for price and financial stability. The Euro,


Table 1. Gross domestic product (GDP), 1980-2008


GDP 1980 1990 2000 2004 2005 2006 2007 2008


Current prices (million dollars) 142 308 535 918 997 1,192 1,513 1,730


Constant prices (2,000 million dollars) 234 391 753 918 978 1,084 1,168 1,237


GDP annual growth
(percentage at constant prices) 5.2 6.8 5.1 6.5 10.8 7.8 5.9


Per capita (dollars) 548 902 1,225 1,964 2,094 2,457 3,080 3,436


Per capita (2,000 dollars) 904 1,145 1,724 1,964 2,054 2,234 2,377 2,457


Composition (percentage at current prices)


Primary 19.2 15.1 13.8 12.1 8.3 6.9 5.8


Agriculture, livestock and forestry 13.7 12.9 10.7 8.6


Fishing 4.8 1.5 2.2 1.3


Mining and quarrying 0.6 0.7 0.9 2.2


Secondary 16.3 20.6 14.4 12.8 16.2 16.8 17.7


Manufacturing 4.6 7.5 5.2 3.7


Electricity and water -0.3 1.2 1.5 1.4


Construction 12.1 11.9 7.7 7.7


Tertiary 58.2 58.9 64.9 68.1 67.8 68.3 66.6


Wholesale and retail trade 29.0 19.5 17.8 19.3


Hotel and restaurants 0.8 1.7 2.3 2.3


Transport, storage and communication 9.0 15.1 19.9 21.1


Financing, insurance and real estate 18.6 21.1 22.7 23.2


Other services 0.8 1.5 2.2 2.2


Plus: Indirect taxes less subsidies 6.3 5.4 6.9 7.0 7.7 8.0 9.9


100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0


Source: IMF (2010a) and Bank of Cape Verde (Republic of Cape Verde 1999-2009).




5COUNTRY PROFILE


the currency of Cape Verde’s main trading part-
ners, and of most of international, is also the cur-
rency widely used for remittances. Cape Verde
has pursued a prudent fiscal policy with improved
tax collection and expenditure control which,
along with good revenue performance due to eco-
nomic growth, have allowed the country to have
a contained fiscal deficit. The fiscal deficit is ac-
celerating, however, because of a large increase
in capital expenditure in 2010–2012, mainly due
to a multi-sector expansion of the infrastructure to
diversify the economy (AfDB, OECD, UNDP, UN-
ECA 2011).


1.2. ANALYSIS OF SELECTED ECONOMIC
AND SOCIAL INDICATORS


1.2.1. Composition of GDP


Cape Verde has been growing steadily, with an av-
erage annual growth rate of 5.9 per cent since 1982
(Table 1). In 2008, Cape Verde’s gross domestic
product (GDP) was $1,730 million, with per capita
income of $3,436 (Republic of Cape Verde 1999-
2009). GDP growth in 2010 was estimated to reach
5.3 per cent, compared with that of 3.6 per cent in
2009 (AfDB, OECD, UNDP, UNECA 2011).


Cape Verde has a services-based economy. In
2008, the service sector accounted for 66.6 per
cent of GDP. The share of the tertiary sector has ex-
panded by almost 10 percentage points over the


14-year period since 1980. The relevance of tour-
ism and tourism-related foreign investments in the
country’s economy is poised to growth. The islands
have a locational advantage relative to other highly
tourism-based economies, due to their location
near Europe, as well as their political and social
stability.


The increasing contribution of the service sector to
GDP has been mirrored by a decline in the primary
sector, from 19.2 to 5.8 per cent over the 1980-2008
period. The secondary sector contributed around
17.7 per cent to the GDP in 2008. In the primary and
secondary sectors, the share of industries that shrank
most notably from 1980 to 2004 were agriculture, live-
stock and forestry (by 5 percentage points), construc-
tion (by 4.5 percentage points) and fishing (by 3 per-
centage points).


1.2.2. Socio-demographic indicators


Table 2 shows poverty statistics. In 2002, the Na-
tional Statistics Institute (Instituto Nacional de Es-
tatistica - INE) created a relative poverty indicator
by defining a poverty line equal to 60 per cent of
median per capita expenditure. Based on this in-
dicator, poverty substantially declined in the past
decade. According to the 2002 Household Ex-
penditure and Income Survey (Inquérito Às Desp-
esas e Receitas Familiares) (IDRF), 28 per cent of
Cape Verdean households and 36.7 per cent of
Cape Verdean individuals were poor, while 14 per


Table 2. Poverty, 2002-2007


Characteristics


Total Rural Urban


IDRF 2002 QUIBB
2007


IDRF 2002 QUIBB
2007


IDRF 2002 QUIBB
2007


Female
headed


Male
headed Total Total


Female
headed


Male
headed Total Total


Female
headed


Male
headed Total Total


% of poor


Households 31.0 25.7 28.0 42.8 41.3 42.0 21.3 14.7 17.5


Individuals 39.6 34.6 36.7 26.6 50.8 51.3 51.1 44.3 29.9 21.6 25.0 13.2


Female 37.8 35.4 36.6 26.6 49.7 51.9 50.8 44.1 27.8 22.6 25.0 12.8


Male 42.1 33.9 36.8 26.6 52.3 50.7 51.3 43.4 33.1 20.7 24.9 13.9


% of extreme poor


Households 14.9 13.4 14.0 21.6 23.9 22.8 9.5 5.9 7.4


Individuals 20.0 19.5 19.7 26.8 32.1 29.8 14.1 9.7 11.5


Female 19.3 19.8 19.6 26.7 32.4 29.7 13.1 10.1 11.5


Male 20.9 19.3 19.9 26.9 31.9 30.1 15.6 9.3 11.5


Source: Estimation based on IDRF, 2002 (Republic of Cape Verde, 2002b) and the QUIBB 2007 (Republic of Cape Verde,
2007c).




6 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


cent of households (and 19.7 per cent of individu-
als) lived in extreme poverty (with expenditures
below 40 per cent of median per capita expendi-
ture). Moreover, the share of poor households was
significantly higher in rural areas than in urban
areas. The gap between poor female- and male-
headed household was narrow in rural areas, while
in urban areas female-headed households tended
to be poorer than male-headed households. New-
er data from the 2007 Questionnaire on the Basic
Welfare Indicators (Questionário Unificado de In-
dicadores Básicos de Bem Estar) (QUIBB) show a
reduction in the headcount ratio for the total popu-
lation of 10 percentage points (Republic of Cape
Verde 2007c). These data also show increasing
regional disparities: while more than 40 per cent
of total individuals lived in poverty in rural areas,
only around 10 per cent of the total population
lived in poverty in urban areas. In addition, gen-
der disparities widened. In 2002, the poverty rates
for female-headed and male-headed households
were 39.6 and 34.6 per cent, respectively. In 2007,
these rates were 33 per cent for female-headed


households and 21 per cent for male-headed
households (Table 2). It follows that the remark-
able poverty achievements over the 2002 – 2007
period benefited specifically male-headed and ur-
ban households. The National Poverty Reduction
Program (PNLP) - which represents a component
of the Growth and Poverty Reduction Strategy
2008-2011 - has been recommending actions tar-
geting low-income women, particularly those who
are heads of family (IMF, 2010b).


At the national level, 43.8 per cent of households
are female-headed households and 56.2 per cent
are male-headed. Male-headed households tend to
be bigger in size than female-headed households
(5.1 and 4.7 persons per household respectively),
as shown in Table 3.


As detailed in Table 4, there are important gender
and location (urban versus rural) disparities in ac-
cess to services. It is noteworthy that in both urban
and rural areas, female-headed households have
less access to electricity and water than their male-
headed counterparts.


Table 3. Demographic composition, 2002


Characteristics
Total Rural Urban


Female
headed


Male
headed Total


Female
headed


Male
headed Total


Female
headed


Male
headed Total


Households 41,729 53,528 95,257 18,709 22,245 40,954 23,020 31,283 54,303


Individuals 196,914 273,773 470,687 91,199 120,167 211,366 105,715 153,606 259,321


% of total household 43.8 56.2 100.0 45.7 54.3 100.0 42.4 57.6 100.0


% of total individuals 41.8 58.2 100.0 43.1 56.9 100.0 40.8 59.2 100.0


Household size 4.7 5.1 4.9 4.9 5.4 5.2 4.6 4.9 4.8


Households composition


Female 115,947 127,116 243,063 53,092 55,471 108,563 62,855 71,645 134,500


Male 80,967 146,657 227,624 38,107 64,696 102,803 42,860 81,961 124,821


% of female 47.7 52.3 100.0 48.9 51.1 100.0 46.7 53.3 100.0


% of male 35.6 64.4 100.0 37.1 62.9 100.0 34.3 65.7 100.0


Number of children 2.5 2.4 2.5 2.8 2.7 2.8 2.3 2.2 2.2


Age Groups total


Less or equal to 14 44.1 39.8 41.6 48.5 42.7 45.2 40.3 37.6 38.7


Between 15 and 24 22.0 19.8 20.8 20.3 17.9 19.0 23.4 21.3 22.2


Between 25 and 40 16.7 19.5 18.4 14.4 17.4 16.1 18.8 21.2 20.2


Between 41 and 64 10.8 13.9 12.6 10.5 12.7 11.8 11.1 14.8 13.3


More or equal to 65 6.4 6.9 6.7 6.3 9.3 8.0 6.5 5.0 5.6


Source: Estimation based on IDRF 2002 (Republic of Cape Verde 2002b).




7COUNTRY PROFILE


Dwelling
Characteristics


Total Rural Urban


Female
headed


Male
headed


Total Female
headed


Male
headed


Total Female
headed


Male
headed


Total


% of own dwelling 68.6 67.6 68.0 77.6 75.4 76.4 61.3 62.1 61.8


% pipe of drinking
water inside dwelling 39.4 49.6 45.2 22.1 25.5 23.9 53.5 66.8 61.2


% have electricity 52.7 63.2 58.6 23.2 35.1 29.7 76.7 83.2 80.4


Source: Estimation based on IDRF 2002 (Republic of Cape Verde 2002b).


Table 4. Housing, 2002


Table 5. Education
Literacy rate in percentage (15 years and above), 2000 and 2010


Year 2000 Year 2010


TOTAL 74.8 82.8


Men 83.5 88.5


Women 67.2 77.3


Literacy rate in percentage for age group, 2010
Age group Male Female Total


15-24 96.4 97.4 96.9


25-44 92.9 90.4 91.7


45-64 79.8 52.1 64.6


65+ 47.5 18.6 30.0


Literacy rate in percentage for urban and rural areas, 2010
Urban areas Rural areas


Male 91.7 82.9


Female 83.0 67.6


Source: Census 2010 (Republic of Cape Verde 2011a).


Recent progress in educational attainment is re-
markable and reflects the strong commitment of
the Government towards education. The overall lite-
racy rate (15 years and above population) is esti-
mated at 82.8 per cent, which is well above the sub
Saharan Africa overall average of 62 per cent, with
71 per cent for men and 53 per cent for women. In
2010, gender disparities became smaller than those
in 2000, but they were still significant. Despite an
increase of around 15 per cent in the literacy rate
for women over the period 2000-2010, it remains
around 15 per cent lower than that of men, and gen-


der disparities in the literacy rate are deeper in rural
than in urban areas (table 5). Encouragingly, how-
ever, youth education (age 15 to 24) shows a high
literacy rate for both girls (97.4 per cent) and boys
(96.4 per cent).


Data also show that women in Cape Verde pursue
education mainly in health, education, social sci-
ences, art and law, while they are significantly under-
represented in engineering, construction, agriculture
and veterinary. This situation confirms the global
trend of education segregation. Regardless of cur-
rent gender educational disparities however, it is




8 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Table 6. Regional characteristics


Island


Population


Area
(km2) Den-


sity


% of
Rural


(2002)


Tourism (2006) Maize (2002 Fish captures (2001)


Principal
ActivityTotal %


% of
ar-
riv-
als


% of
beds


Arr. x
1000
hab


Tonnes %
To. x
1000
hab


Total %


Cap.
x


1000
hab


Santo
Antão 43,915 8.9 779 56.4 67.2 3.1 3.5 200 376 7.4 8.6 776 13.74 17.7


Fishing,
agricul-


ture,
live-


stock;
little


tourism


São
Vicente 76,107 15.5 226 336.8 5.7 7.7 8.1 283 - - 1,101 19.49 14.5


Industri-
al zone,
fisheries
centre;
tourism


São
Nicolau 12,817 2.6 388 33.0 59.1 0.6 0.9 123 86 1.7 6.7 378 6.69 29.5


Fishing,
agricul-


ture,
livestock


Sal 25,657 5.2 216 118.8 7.8 59.6 59.1 6518 - - 242 4.28 9.4


Tourism
(3/4 of
total),


services


Boavis-
ta


9,162 1.9 620 14.8 50.9 7.5 13.2 2289 - - 161 2.85 17.6 Tourism, fishing


Maio 6,952 1.4 368 18.9 61.7 0.2 1.5 87 - - 526 9.31 75.7


Fishing,
agricul-


ture,
livestock


São
Tiago 273,919 55.7 991 276.4 47.0 19.8 11.0 203 2,759 54.5 10.1 1,638 29.00 6.0


Political
capital.
Fishing,
agricul-


ture,
live-


stock;
little


tourism


Fogo 37,051 7.5 476 77.8 73.9 1.4 2.1 109 1,782 35.2 48.1 448 7.93 12.1


Agri-
culture
(wine,
coffee,


fruit
trees),
live-


stock;
limited
tourism


Brava
5,995 1.2 67 89.5 72.1 0.1 0.6 26 64 1.3 10.7 379 6.71 63.2


Fishing,
agricul-


ture,
livestock


Total 491,575 100.0 4,131 119.0 44.91 100 100 571 5,067 100.0 10.3 5,649 100 11.5


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b), Food and Agriculture Organization (FAO) & World
Food Programme (WFP), 2002, Africa info market (2005; 2009), Diagnostic Trade Integration Study - DTIS (Republic of Cape
Verde, 2009b), and Census 2010 (Republic of Cape Verde, 2011a).




9COUNTRY PROFILE


Table 7. Employment, 2010 (percentage)


Age group
Unemployment rate Employment rate Labour participation rate


Sex Sex Sex


Male Female Total Male Female Total Male Female Total


15-24 18.3 25.5 21.3 46.7 35.4 41.1 38.2 26.3 32.4


25-64 7.0 8.5 7.7 85.4 68.0 76.6 79.4 62.2 70.8


65+ 1.3 0.7 1.0 23.4 11.0 15.9 23.1 10.9 15.7


Total 9.6 12.1 10.7 67.4 51.1 59.1 60.9 45.0 52.8


Source: Census 2010 (Republic of Cape Verde 2011a).


likely that women’s recent educational achievements
will overcome these disparities in the coming years.


1.2.3. Regional characteristics of the islands
Even though Cape Verde is a small country, there
are notable regional differences. The islands centre
their economic activities on tourism, agriculture and
fishing to varying degree.5 Each island has its own
characteristics as shown in table 6, which provides
a regional description of the islands. 55.7 per cent
of the population is concentrated in the island of
São Tiago, followed by São Vicente (15.5 per cent),
Santo Antão (8.9 per cent), and Fogo (7.5 per cent).


Tourism activities are mainly concentrated on Sal and
São Tiago. Sal is the most popular destination with
almost 60 per cent of total arrivals in 2006, and São
Tiago follows with close to 20 per cent of arrivals.


Agriculture is mainly a family subsistence activity,
performed in small farm units that are fragmented
often by the sharing of inheritances. A large num-
ber of farmers do not own the fields they cultivate,
and plots are typically farmed indirectly through
leasing and partnerships. As a consequence of cli-
matic conditions (droughts and irregular rainfalls)
and scarcity of arable land, production fluctuates
widely and it is largely insufficient to cover the food
needs of the country, with 54.5 per cent of maize
production taking place in São Tiago, 35 per cent in
Fogo, and the remaining among Santo Antão, São
Vicente and Brava.


Fish represent an important part of the Cape Ver-
dean diet and key contributors to protein intake.
Fishing is an income earner on all the islands. São
Tiago accounts for 29 per cent of the fish captures,
São Vicente for almost 20 per cent, and Santo
Antão for approximately 14 per cent. The rest of the
islands represent less than 10 per cent of total cap-
tures each.


1.2.4. Employment


The participation rate in labour force is higher for
males than for females, and this applies to each
age group. Gender disparities are also present in
unemployment, with higher rates for women than for
men except in the age group above 65. With an un-
employment rate of 25.5 per cent, the most affected
group is young females (table 7).


Figure 1 gives an overview over how the labour par-
ticipation rates have developed over time for men
and women, showing a fairly stable trend for men
and a steadily increasing one for women.


From a gender perspective, the fundamental piece
of information about the labour market is the sectoral
structure of employment, presented in table 8. This
information reveals the sectors in which females are
mostly employed, and thus the sectors via which in-
ternational trade might affect women. As a general
limitation of data, Cape Verdean statistics present
information at a very aggregated level of economic
activities. Female employment is by far concentrat-
ed in the tertiary sector, while male employment is
spread around the productive sectors, though 50
per cent of men work in the tertiary sector.


Confirming a trend started in the early 2000s, the
tertiary sector was the largest provider of employ-
ment in Cape Verde, absorbing 63 per cent of the
total workforce in 2010, with 82.2 per cent of women
and 50.1 per cent of men. Three years earlier, the
tertiary sector absorbed 57.4 per cent of the total
workforce, 72.5 per cent of women and 45.0 per cent
of men (QUIBB 2007). Data from 2002 (IDRF 2002)
report a total workforce in the tertiary sector of 59.4
per cent, with 71 per cent of women and 49.6 per
cent of men. These employment patterns mirror the
situation in other Small Island Developing States.




10 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


35


45


55


65


75


85


95


19
80


19
82


19
84


19
86


19
88


19
90


19
92


19
94


19
96


19
98


20
00


20
02


20
04


20
06


20
08


Pe
r c


en
t


Male participation Female participation


Source: International Labour Organization, Key Indicator of the Labour Market database (1980-2008).


Figure 1: Development of labour force participation in Cape Verde, 1980-2008


Within the tertiary sector, in 2010 women were em-
ployed mainly and in a higher proportion than men
in Wholesale and retail trade, repair of vehicles and
goods (24.2 per cent versus 10.6 per cent), Defence
and social security (12.8 and 11.8 per cent, respec-
tively), Private households with employed persons
(11.3 per cent versus 1.7 per cent) and Education
(7.4 per cent versus 3.2 per cent),


In the secondary sector – which in 2010 represented
23.6 per cent of total employment – Manufacturing
accounted for only 7.6 per cent of employment and
Construction for 15.1 per cent. The participation of
women in all activities of the secondary sector was
lower than that of men by 26 percentage points,
especially in construction. Employment in second-
ary activities increased in 2010 (23.6 per cent), as
compared with 2007 (22.2 per cent) and 2002 (18.5
per cent), for both women and men. However, this
is mainly driven by the construction sector, and thus
it does not appear to be a direct consequence of
trade.


Finally, in 2010 total employment in the primary sec-
tor was 13.4 per cent, considerably down from 20.4
per cent in 2007 and 22.1 per cent in 2002. Around
12 per cent of employment was in Agriculture and


Fishing, with 15.2 per cent of males and 7.6 per cent
of females employed in this sector.


Using data from IDRF 2002, table 9 depicts em-
ployment status in main occupations. Most of the
population work as paid employees (59.3 per cent),
and self-employment constitutes the second larg-
est group (28.6 per cent). Only 8.6 per cent work
as unpaid family workers. These statistics may in-
dicate that trade policies will affect the population
to a larger degree through formal labour markets
and wages, than through the informal labour mar-
ket. However, since unpaid family worker status is
considerably high in rural areas (18 per cent), par-
ticularly among women (21.2 per cent), the impact
of trade policies through informal channels should
not be underestimated.


Table 10 shows employment distribution according
to job and sex. Women mainly work as services pro-
viders and employees in retail trade, as public of-
fice employees and as unskilled workers. However,
more women than men are occupied as scientists or
specialists in intellectual activities. Very few women
work in factories and, as expected, a tiny percent-
age of women work in defence.




11COUNTRY PROFILE


Table 8. Main economic activities, 2010 (percentage)


Male Female Total


Primary 15.9 9.6 13.4


Agricultural and fishing 15.2 7.6 12.2


Mining and quarrying 0.7 2.0 1.2


Secondary 34 8.2 23.6


Manufacturing 9.5 4.8 7.6


Electricity, gas and water supply 1.1 0.3
0.8


Waters management, sewage 0.1 0.0 0.1


Construction 23.3 3.1 15.1


Tertiary 50.1 82.2 63


Wholesale and retail trade, repair of vehicles 10.6 24.2 16.1


Transport 7.6 1.9 5.3


Hotels and restaurants 2.8 7.3 4.6


Information and communication 1.3 1.5 1.4


Financial intermediation and insurance 0.8 1.3 1.0


Real estate 0.5 0.3 0.4


Consultancy 0.8 1.0 0.9


Public administration 4.4 5.8 5.0


Defence and social security 11.8 12.8 12.2


Education 3.2 7.4 4.9


Public health and social services 1.1 3.1 1.9


Arts, sports and other entertainment services 0.7 0.5 0.6


Other services 2.5 3.4 2.9


Private households with employed persons 1.7 11.3 5.5


International organizations and entities 0.3 0.4 0.3


Source: Census 2010 (Republic of Cape Verde 2011a).




12 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Table 9. Status in Main Occupation, 2002 (percentage)


Employment
status


Total Rural Urban


Female Male Total Female Male Total Female Male Total


Paid employee 53.1 64.5 59.3 42.3 54.6 49.1 61.1 72.4 67.1


Own-account
worker/self-
employed


32.0 25.8 28.6 35.5 28.9 31.9 29.3 23.4 26.2


Employer 0.5 1.5 1.1 0.3 0.9 0.6 0.6 2.0 1.4


Unpaid family
worker 10.0 7.5 8.6 21.2 15.5 18.0 1.7 1.2 1.4


Other 4.4 0.7 2.4 0.6 0.1 0.4 7.2 1.1 3.9


Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0


Source: Estimation based on IDRF, 2002 (Republic of Cape Verde, 2002b).


Table 10. Distribution of the employed population according to job and sex, 2010 (percentage)


Main occupation Male Female Total


Defence 98.2 1.8 100


Government and parliament representatives, directors 62.4 37.6 100


Scientists and specialists in intellectual activities 44.1 55.9 100


Mid-level professionals and technicians 62.4 37.6 100


Public offices employees 42.1 57.9 100


Service sector and retail trade employees 39.4 60.6 100


Farmers and specialized agriculture workers 72.5 27.5 100


Factory workers, craftsmen and similar workers 92.0 8.0 100


Factory chain workers 92.5 7.5 100


Unskilled workers 42.6 57.4 100


Total 55.9 44.1 100


Source: Census 2010 (Republic of Cape Verde 2011a).




II


Gender
Mainstreaming
in Cape Verde






15GENDER MAINSTREAMING IN CAPE VERDE


2. GENDER MAINSTREAMING IN
CAPE VERDE


The Republic of Cape Verde has showed commit-
ment, at the national and international levels, to pro-
mote gender equality and women’s empowerment.
Yet, there are still questions about how effectively
these commitments have been translated into prac-
tice, particularly in the socio-economic domain.


2.1. NATIONAL AND INTERNATIONAL
COMMITMENTS


2.1.1. Government policies and laws related to
gender


At the national level, the 1992 Constitution of the Re-
public of Cape Verde as well as other laws6 ensure
equal rights to men and women. The Constitution rec-
ognizes the participation in society of all citizens as
a fundamental right (Republic of Cape Verde, 1992).


2.1.1.1 The Labour Code7


The Labour Code was approved by Legislative
Decree number 5/2007. The Code strengthens the
principle of equality between men and women, stip-
ulating that equal work in identical situations should
be remunerated equally. A great achievement in
Cape Verde is that the Code recognizes domes-
tic employment as a professional category (Article
286).8 Domestic workers’ fundamental rights – such
as weekly rest, holiday, and effective remuneration
– are recognized (Article 286-294). It is worth notic-
ing that, at the international level, a Convention on
Domestic Workers was adopted only in June 2011.9


The Code has a chapter devoted to female em-
ployees’ work (Articles 270-275), which secures the
protection of maternity, a 60-day maternity leave,
the rights to breastfeed and that the dismissal of a
pregnant, postpartum or breastfeeding women can-
not be enforced without a just cause. The Labour
Code ensures to women the right to not work over
time or to be involved in night shifts during preg-
nancy and the post-partum period (Art. 270(b)). The
mother has right to full salary during the period of
maternity leave, if she is included in the Social Se-
curity System (Article 212). The possibilities for the
fathers to get involved in the care of newborns are
limited, since only two days of justified absence are
allowed (Art. 186(2)(j)). The father has the right to
paternity leave only in case the mother is sick or if
she passed away (Art. 271).


2.1.1.2 The Social Security System


The Social Security System has been under revision
since 2006 and social protection has significantly
improved. The country is gradually extending con-
tributory social insurance and combining it with the
provision of automatic basic benefits (non-contrib-
utory, tax financed). Social insurance provides a
broad coverage (old-age, disability and survivors’
pensions, health-care coverage, maternity, sick-
ness, paternity benefits and family allowance,
among others) and is extending its coverage to pre-
viously excluded groups, such as domestic work-
ers, informal workers and self-employed people. It
is reported to cover 29 per cent of the economically
active population. The non-contributory pension
reaches 90 per cent of the target population and
essential health services cover nearly the whole
population. A school meals programme is providing
additional income security, and a low-housing pro-
gramme is under way (A House for All). Cape Verde
has long used employment-intensive public works
(FAIMOs) as a means of guaranteeing an income
for the working poor. Between 15,000 and 20,000
people have access to FAIMOs each year, a third of
them are women (ILO, 2011).


2.1.1.3 National Plan for Gender Equality
and Equity (PNIEG)


The National Institute for Gender Equality and Eq-
uity (ICIEG)10 was created by the Government in
1994 (then called Instituto da Condição Feminina
(ICF)) under the Prime Minister’s Office. Two nation-
al plans have been developed by ICIEG since its
establishment: namely, the National Action Plan for
1996-2000 and the National Plan for Gender Equal-
ity and Equity (PNIEG) 2005-2009. Both plans are
based on the Convention on the Elimination of all
Forms of Discrimination against Women (CEDAW)
principles and their aims are to promote policies
that put emphasis on gender equality, and women’s
participation in all spheres of life. Government poli-
cies such as the Strategic Plan for Growth and Pov-
erty Reduction and the Programme for the 7th and
8th legislatures have been influenced by ICIEG’s
work (see below).


2.1.1.4 Strategic Plan for Growth and Poverty
Reduction II


Cape Verde’s Strategic Plan for Growth and Pov-
erty Reduction (DECRP) II 2008-2011 emphasises




16 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


the goal of sustainable development of the country,
with a particular focus on five areas: good gover-
nance through public sector reform; development
of human capital; improving competitiveness; im-
proving the infrastructure and the socio-economic
status.


Gender stands as a cross-cutting issue in the DE-
CRP II, but socio-cultural perceptions are regarded
as a hindrance to the integration of a gender per-
spective in policy formulation and implementation.
The gender perspective is seen as vital to develop-
ment, and the Government action plan for gender,
as mentioned above, is included in the DECRP II.
In addition, the DECRP stresses that mechanisms
should be created in order to stimulate women’s
presence in legislative, executive, judicial and local
spheres of power (Republic of Cape Verde, 2008).


The DECRP II does not mention how female partici-
pation in economic activities will actually be promot-
ed, and trade and other macro-economic policies
are not singled out as potential instruments through
which women’s economic empowerment can mate-
rialize.


2.1.1.5 The Government Programme 2006-2011
of the 7th legislature


The programme lays out the national objectives for
Cape Verde for the period 2006-2011 (Republic of
Cape Verde, 2006). It focuses on better governance,
continued and sustainable economic growth and in-
creasing the quality of life for Cape Verdeans. In rela-
tion to gender, the programme emphasizes the need
for a number of specific actions. These include: (a)
Make sure that the necessary conditions are in place
for implementing the signed agreements and con-
ventions related to gender; (b) Develop and imple-
ment a Platform for Action based on the National
Plan for Gender Equality and Equity, geared towards
the promotion of a global social development policy,
and towards the achievement of the MDG, in par-
ticular Goal 3; (c) Design and implement concrete
actions in order to mainstream gender in political
planning as well as in budgets; (d) Assure that the
gender perspective is integrated into all Govern-
mental programmes, projects and sector policies
(and particularly in education and training, poverty
reduction, employment and promotion of citizen-
ship); (e) Make sure that law enforcement provides
effective protection of rights; (f) Adopt mechanisms
that promote equal economic opportunities for wom-


en and men as well as a higher female participation
in economic activities; (g) Pay particular attention to
issues related to gender-based violence, as well as
the reduction of unequal access to services; (h) Es-
tablish an adequately trained special police brigade
to deal with gender-based violence; and (i) Promote
multi-stakeholder public-private partnerships that
foster families cohesion, citizenship, women’s rights,
community’s development and poverty reduction
must be reinforced.


2.1.1.6 The Government Programme 2011-2016
of the 8th legislature


The new Government programme has proposed a
vision for Cape Verde for the period 2011-2016 with
the motto: “an inclusive nation, fair and prosperous,
with opportunities for everyone”. The objective for
the programme is to develop a dynamic, competi-
tive and innovative economy, with prosperity shared
amongst everyone. Concerning gender issues, the
gradual implementation of the National Plan for
Gender Equality and Equity should permit the ef-
fective participation of women in decision making
bodies, a better access to economic entrepreneur-
ship and provide incentives for women to pursue a
scientific education, as well as creating institution
mechanisms to combat violence and exploration
of Cape Verdean women (Republic of Cape Verde,
2011b).


2.1.2. International commitments to gender
equality and empowerment of women


At the multilateral level, Cape Verde ratified the Con-
vention on the Elimination of All Forms of Discrimina-
tion against Women (CEDAW) in 1980. In addition,
Cape Verde has ratified or subscribed several cov-
enants and international agreements.11


At the regional level, Cape Verde is member of the
African Union (AU) and the Economic Community
of West African States (ECOWAS). Both AU and
ECOWAS work regionally towards achieving gender
equality and as a member Cape Verde takes part in
this endeavor.


The AU has subscribed to a number of declarations
on gender issues. These include: (a) The Protocol to
the African Charter on Human and Peoples’ Rights
(2003), including the additional Protocol on the
Rights of Women in Africa; (b) The Solemn Declara-
tion on Gender Equality in Africa (SDGEA) (2004),
through which African heads of State and Govern-




17GENDER MAINSTREAMING IN CAPE VERDE


ment committed to report annually on progress to-
wards the goal of gender equality; (c) The African
Plan of Action to Accelerate the Implementation of
the Dakar and Beijing Platforms for Action for the
Advancement of Women (1999); and (d) The Ad-
dis Ababa Declaration on Violence against Women
(1997).


In 2000 the ECOWAS Gender Policy process was
initiated, and in 2004 the Gender Policy Docu-
ment was adopted by the Council of Ministers. The
Council also adopted a Strategic Plan framework
and guidelines on the structures and mechanisms
of the Gender Management systems for ECOWAS.
The 27th Ordinary Summit of Heads of State and
Government of ECOWAS in 2003 approved the es-
tablishment of a Gender Unit in the Executive Sec-
retariat of ECOWAS, and of the ECOWAS Gender
Development Centre. The main role of the Centre is
to (a) mobilize women and empower them to be ac-
tive participants in the regional integration process;
(b) mainstream gender in ECOWAS institutions and
member States; and (c) develop networks and part-
nerships with relevant agencies for technical and
financial support for ECOWAS Gender mainstream-
ing programme.12


Gender figures prominently in other programmatic
documents and instruments. The United Nations
Development Assistance Framework (UNDAF),
which is the common strategic framework for the
operational activities of the United Nations system
at the country level, provides a collective United
Nations response to national priorities and needs
within the framework of the MDGs. Gender equality
is one of the three normative principles that inform
it. The preliminary version of Cape Verde UNDAF
2012-2016 states that gender equality will be inte-
grated as a priority thematic area of the framework
and as a cross-cutting issue. The draft UNDAF par-
ticularly addresses the feminization of poverty and
unemployment in Cape Verde.


2.2. WOMEN’S CURRENT SOCIO-POLITICAL
AND ECONOMIC STATUS


While women in Cape Verde enjoy full gender equal-
ity under the law, there are several areas in which
women are at a disadvantage compared with men.
The main message emerging from the CEDAW re-
ports13 and other evaluations14 is that Cape Verde
has seen substantial improvements in female par-
ticipation in education and political activities, as


well as improvements in literacy rate. However, the
country is facing challenges related to socio-cul-
tural habits, manifested in an uneven power struc-
ture between men and women (Republic of Cape
Verde, 2009c). Inequalities persist in terms of in-
come and opportunities for economic inclusion,
and insufficient consideration is given to gender
specificities in policy planning and in monitoring
and evaluation instruments. According to the En-
terprise Survey 2009, 33 per cent of firms had fe-
male partnership in ownership, and 17 per cent of
firms had a woman as managers (Enterprise Survey
2009). While only 21 per cent of the members of
parliament are women, there has been great im-
provement of female participation rate at the ex-
ecutive level: 8 out of 19 of Ministers are women.
Having almost the same number of male and fe-
male ministers represents a result that very few
countries in the world have been able to achieve.


Despite formal commitments, as reported in chap-
ter 1, unemployment is higher among women than
men. Higher female illiteracy rates, education seg-
regation, as well as inadequate professional training
are seen as limiting women’s employment possibili-
ties. There are also important gender disparities in
access to services (access to water and electricity).
These patterns of inequality reflect in poverty sta-
tistics: as explained earlier, in urban areas female-
headed households tend to be poorer than male-
headed households, with the poverty gap between
them widening (Chapter 1).


Another area requiring attention is gender-based
violence. According to the National Demographic
and Reproductive Health Survey, 22 per cent of
Cape Verdean women reported in 2005 that they
had been exposed to such violence (Republic of
Cape Verde, 2007a). The Government has therefore
taken several steps to mitigate this problem through
legislation aimed at preventing and condemning
gender-based violence, including the 2007-2011
National Plan to Combat Gender- based Violence,
and, more recently, the approval and entering into
force in March 2011 of the law against gender-
based domestic violence. Domestic violence is re-
garded by the new law as a public crime that can
be brought to the attention of public authorities by
anyone and that should be treated by the judiciary
as matter of urgency and priority (Republic of Cape
Verde, 2011c).






III


Trade Analysis






21TRADE ANALYSIS


Balance of Payments 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


Current account -13.7 -10.9 -10.5 -11.1 -11.2 -14.3 -4.3 -6.9 -13.7 -11.4


Goods -35.8 -34.8 -34.1 -38.0 -37.8 -40.7 -37.5 -39.2 -46.2 -41.2


Exports 4.4 7.1 6.5 6.7 6.5 6.2 9.6 8.1 5.7 6.6


Imports -40.1 -41.9 -40.6 -44.8 -44.3 -46.9 -47.1 -47.3 -51.9 -47.9


Services -2.9 1.3 2.0 2.1 1.8 3.4 6.6 11.2 13.7 14.2


Exports 16.4 19.9 22.9 25.8 24.9 25.6 29.0 32.3 34.2 34.3


Air transports 6.7 7.8 8.3 11.6 10.0 10.2 10.6 9.9 8.4 9.9


Tourism and travel 4.7 7.5 9.5 9.7 10.5 10.4 12.5 16.8 20.4 19.5


Imports -19.4 -18.6 -21.0 -23.7 -23.1 -22.2 -22.5 -21.1 -20.5 -20.1


Income -1.5 -2.6 -1.1 -2.4 -1.8 -2.0 -3.6 -3.4 -2.2 -2.7


Current transfers 26.5 25.3 22.7 27.2 26.7 25.0 30.2 24.4 21.0 18.3


Official Transfers 8.1 4.1 3.6 5.7 6.0 5.7 5.2 4.0 4.7 6.0


Remittances 13.1 15.9 13.5 14.5 12.5 10.9 14.3 11.0 9.3 8.5


Capital account 2.1 2.2 3.8 2.5 3.1 2.5 2.2 1.5 1.9 1.6


Financial account 9.9 9.4 9.2 7.0 9.9 10.8 2.0 6.2 11.7 16.4


Direct investment 10.2 7.8 2.2 6.2 4.1 7.3 8.8 11.1 13.3 12.1


Other investment 5.9 -0.5 10.3 4.6 5.6 7.5 -0.7 0.0 4.6 6.1


Reserves -6.3 2.0 -3.3 - 3.8 0.1 -4.0 -6.0 -4.9 -6.2 -1.8


Net errors and Omissions 1.7 -0.7 -2.5 1.7 -1.9 1.2 0.0 -0.7 0.1 -6.6


Current account + Capital
account -11.6 -8.7 -6.7 -8.6 -8.0 -11.8 -2.1 -5.5 -11.8 -9.8


Source: Estimation based on Bank of Cape Verde (Republic of Cape Verde 1999-2008).


Table 11. Balance of payments, 1999-2008 (percentage of GDP)


3. TRADE ANALYSIS


This chapter provides the background for the analy-
sis on who would gain from trade liberalization/fa-
cilitation in Cape Verde. The chapter first analyses
Cape Verde’s trade flows, broken down by broad
product categories and major origins and destina-
tions (section 3.1). It then presents a summary list-
ing of the major trade agreements involved, briefly
assessing their commercial significance in the light
of the country’s trade specialization and direction of
trade flows (section 3.2). It concludes with a brief
assessment of issues related to domestic market
protection and protection faced in the major export
markets (section 3.3).


3.1. TRADE FLOWS


3.1.1. Balance of payments


The export sector of Cape Verde, a small and open
country with heavy import-dependency, is small
and limited to primary and low technology-intensive
goods, causing a large negative balance of trade
($ 629 million or 41.2 per cent of GDP in 2008). Nev-


ertheless, part of this deficit is financed by remit-
tances from emigrants ($136 million or 8.5 per cent
of GDP in 2008)15 and by Tourism and travel receipts
($ 264 million or 19.5 per cent of GDP in 2008). Ex-
ports of Air transport services are also important
($137 million or 9.9 per cent of GDP in 2008).


Table 11 shows that the trade deficit grew from 34.8
per cent of the GDP in 2000 to 46.2 per cent in 2007
and 41.2 per cent in 2008, basically resulting from the
growth of imports. Although exports grew in nominal
terms, the balance of trade (exports minus imports)
has always been remarkably negative, averaging
-41 per cent of GDP during 2004-2008. Tourism and
travel experienced an important increase (from 7.5
per cent in 2000 to 19.5 per cent in 2008) as did Air
transports (although only marginally).


3.1.2. Merchandise trade


According to World Trade Indicators (World Bank
2009), out of 171 countries, Cape Verde ranks 105th
in agricultural exports and 137th in non-agricultural
exports. The country also ranks 12th in agricultural
imports, and 74th in non-agricultural imports. This




22 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Table 12. Trade composition, 1999-2007


Trade composition
(% of GDP)


Cape Verde Sub-Saharan Africa World


1999 2002 2005 2007 2007 2007


Export integration (g+s) 23.52 30.74 38.31 39.60 38.70 49.27


Goods exports 7.30 6.78 7.47 5.66 28.39 34.92


Agricultural 1.43 0.65 3.72 2.31 7.45 5.88


Food 1.19 0.49 3.72 2.31 5.72 5.00


Non-agricultural 5.87 6.13 3.75 3.35 20.94 29.04


Manufactured 5.15 6.13 3.75 3.33 8.32 16.34


Fuel 0.00 0.00 0.00 0.00 5.39 8.07


Ores and metals 0.00 0.00 0.01 0.02 5.39 2.86


Services exports 16.22 23.96 30.84 33.94 10.31 14.35


Transport 8.45 9.76 9.85 8.76 1.94 2.70


Tourism and travel 3.16 9.94 16.84 21.01 4.75 6.33


Other commercial services 2.47 2.66 2.51 2.60 2.05 4.57


Government services n.i.e 2.14 1.60 1.64 1.57 1.57 0.75


Import integration
(g+s, % of GDP) 56.76 66.32 67.94 68.00 58.30 58.73


Goods imports 41.34 44.41 47.31 47.65 40.66 45.39


Agricultural 14.93 14.78 14.06 13.98 7.43 6.12


Food 13.92 13.79 13.32 13.18 6.93 5.52


Non-agricultural 26.41 29.63 33.25 33.67 33.23 39.27


Manufactured 24.02 25.97 27.96 27.71 23.99 28.21


Fuel 2.19 3.47 4.77 5.34 7.99 8.58


Ores and metals 0.19 0.18 0.39 0.62 0.65 1.22


Services imports 15.42 21.91 20.63 20.35 17.64 13.34


Transport 7.01 9.83 9.80 9.08 5.51 4.39


Tourism and travel 4.32 8.42 6.98 7.39 2.20 2.50


Other commercial services 2.94 2.78 3.16 3.23 4.74 4.67


Government services n.i.e 1.15 0.88 0.69 0.65 4.90 1.33


Source: World Trade Indicators (World Bank 2009).


confirms that Cape Verde has the low export capac-


ity of goods, and it is among the countries that are


highly dependent on agricultural imports (as a share


of GDP). The magnitude of the goods trade deficit


makes Cape Verde rank at the very bottom of the list,


in position 167. This confirms that Cape Verde has


one of the most negative trade balances in the world.


Table 12 depicts the trends in the composition of
trade (exports and imports shares in GDP) from
1999 to 2007. Food imports accounted for approxi-
mately 13.5 per cent of GDP throughout the period
under consideration, while food exports rose from
1.2 per cent in 1999 to 2.3 per cent of GDP in 2007.
Non agricultural goods show an opposite pattern.
On the one hand, imports increased from 26.4 per




23TRADE ANALYSIS


Table 13. Major exports and imports, 2009


Principal products
2009


Value ($) %


Exports


Fish and crustaceans, molluscs and other aquatic invertebrates 14,043,295 39.93


Preparations of meat, of fish or of crustaceans, molluscs or other
aquatic invertebrates


10,464,174 29.75


Footwear, gaiters and the like; parts of such articles 3,657,413 10.40


Articles of apparel and clothing accessories, not knitted or
crocheted 3,333,900 9.48


Articles of apparel and clothing accessories, knitted or crocheted 2,378,360 6.76


Other commodities 1,292,320 3.67


Total 35,169,462 100.00


Imports


Mineral fuels, mineral oils and products of their distillation;
bituminous substances; mineral waxes 80,392,038 15.75


Nuclear reactors, boilers, machinery and mechanical appliances;
parts thereof 68,763,744 13.47


Vehicles other than railway or tramway rolling-stock, and parts
and accessories thereof 50,015,578 9.80


Electrical machinery and equipment and parts thereof; sound re-
corders and reproducers, television image and sound recorders
and reproducers, and parts and accessories of such articles


38,706,516 7.58


Food and live animals 160,592,128 31.46


Cereals and cereal preparation 45,128,102 8.84


Vegetables and fruit 29,748,708 5.83


Dairy products and birds’ eggs 26,981,474 5.29


Meat and meat preparations 19,346,723 3.79


Sugars, sugar preparations and honey 11,394,329 2.23


Other food stuffs 27,992,792 5.48


Other commodities 111,964,391 21.94


Total 510,434,395 100.00


Source: UN COMTRADE database (2010).


cent of GDP in 1999 to 33.7 per cent in 2007. On
the other hand, exports fell from 5.9 to 3.3 per cent
of GDP during the same period. Finally, trade in ser-
vices increased: while imports increased from 15.4
per cent in 1999 to 20.3 per cent in 2007, exports
showed a remarkable increase from 16.2 per cent in
1999 to 33.9 per cent of GDP in 2007 due to travel
exports (which increased from 3.2 to 21 per cent
over the same period).


Table 13 reports on the pattern of trade in goods
of Cape Verde, with major export and import cat-
egories. It is noteworthy that the range of the coun-
try’s exported products is very limited, with only five
commodities accounting for more than 95 per cent
of total exports in 2009. Around 40 per cent of total
exports were primary products, mainly fish, and the
remaining 56 per cent comprised manufactures with
low technological intensity. For instance, nearly 30




24 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Table 14. Top 10 export markets (ranked by market share), 2009


Destination Rank Trade Value ($) Share Cumulative Share


European Union (27) 1 34,108,832 97.0 97.0


United States 2 233,879 0.7 97.6


India 3 120,671 0.3 98.0


Singapore 4 97,907 0.3 98.3


Guinea 5 12,084 0.0 98.3


Senegal 6 8,745 0.0 98.3


Angola 7 2,744 0.0 98.3


Republic of Korea 8 235 0.0 98.3


Cambodia 9 132 0.0 98.3


Brazil 10 129 0.0 98.3


Unspecified areas 584,103 1.7 100.0


Source: UNCTAD calculations based on United Nations Comtrade database (2010).


Note: Certain percentages may not sum to totals due to rounding.


per cent of exports were food preparations. Exports
of footwear and apparel were also important, ac-
counting for around another 30 per cent of exports.
The main re-exported products were canned and
frozen fish, mineral products, aircraft engines, and
containers.


In 2009, the export concentration index for Cape
Verde was 0.436, lower than the Western Africa av-
erage (0.572), but higher than that of several coun-
tries in the region.16 High export concentration is as-
sociated with volatility of export earnings and overall
growth, as well as slow productivity growth because
of limited spillovers and deteriorating terms of trade.


The top-ranking imports in 2009 were mineral fuels,
which accounted for 16 per cent of total imports.
Nuclear reactors, boilers, machinery and mechani-
cal appliances, vehicle’s electrical stuff, and electri-
cal machinery and equipment also figured impor-
tantly, accounting together for about 31 per cent of
total imports. Food imports (here including cereals,
cereals preparations, vegetables, fruits, dairy prod-
ucts, birds´ eggs, meat, meat preparations, sugars,
sugar preparations, honey and other food stuff) ac-
counted for 31 per cent of total imports.


In terms of direction of trade flows, the EU is Cape
Verde’s most important trading partner. As detailed
in table 14, the EU is the largest export market for
Cape Verde, accounting in 2009 for about 97 per
cent of its total exports. Major individual markets for
exports included Spain, Portugal and France. In the
same year, over 77 per cent of the country’s imports
originated from the EU (Table 15).


One interesting feature on the structure of trade is
the process of re-exports which consist mainly in
foreign goods, principally fuel and food stuff, ex-
ported in the same state as previously imported. Oil
re-export is reported to account for 7 per cent of the
GDP (ADB, OECD, UNDP, UNECA, 2011).


3.2. TRADE AGREEMENTS/
ARRANGEMENTS


Cape Verde has entered into trade agreements at
the bilateral, regional and multilateral levels.


3.2.1. Bilateral


At the bilateral level, Cape Verde is deepening its
long-standing trade relations with the EU, its major
trade partner, while also seeking to increase bilate-




25TRADE ANALYSIS


Table 15. Top 10 suppliers (ranked by market share), 2009


Supplier Rank Trade Value ($) Share Cumulative Share


European Union (27) 1 520,931,381 77.6 77.6


Brazil 2 32,304,748 4.8 82.4


Japan 3 21,082,555 3.1 85.6


Thailand 4 13,403,426 2.0 87.6


United States 5 12,453,262 1.9 89.4


China 6 12,254,665 1.8 91.3


Uruguay 7 10,517,363 1.6 92.8


Senegal 8 6,084,362 0.9 93.7


Viet Nam 9 3,766,059 0.6 94.3


Switzerland 10 3,623,275 0.5 94.8


Unspecified areas 7,377,382 1.1 95.9


Source: UNCTAD calculations based on United Nations Comtrade database (2010).


Note: Certain percentages may not sum to totals due to rounding. (Alignment of data by decimal point in the table).


ral cooperation with the largest emerging econo-
mies (China and Brazil, in particular). The country
also has reciprocal bilateral free trade agreements
with African Portuguese-speaking countries (Ango-
la, Guinea Bissau, Mozambique and São Tomé and
Príncipe), and a bilateral preferential agreement
with Mauritania. The country is eligible as a benefi-
ciary under the following non-reciprocal preferential
schemes.


(a) EU- Cape Verde relations


Under a transitional regime, Cape Verde continues
to be a beneficiary of the EU’s special arrangement
for LDCs, also known as the Everything but Arms
(EBA) scheme.17 The EBA gives the LDCs duty-free
access to the EU for all products, except arms and
ammunition. Following the graduation from LDC sta-
tus in January 2008,18 it was decided that Cape Verde
would be removed from the list of EBA beneficiaries
after the expiry of a three-year transitional period, i.e.
with effect from 1 January 2011 (EU, 2007).19 This
transitional period was then extended until 1 Janu-
ary 2012, since the three-year transition, coming in a
time of economic crisis, was judged to be too short
for Cape Verde to alleviate potential adverse effects


of the removal from the EBA scheme (EU, 2010).
Duty-free entry to the EU market – whether under the
EBA or under other preferential arrangements – is
of great commercial significance to Cape Verde. As
discussed in section 3.1, the EU is the largest ex-
port market for Cape Verde, accounting in 2009 for
about 97 per cent of its total exports. In light of this
trade pattern, it is critically important for Cape Verde
to continue enjoy duty-free access to EU markets af-
ter the EBA phasing out. In some instances, interim
Economic Partnership Agreements (EPAs) have
been negotiated as a temporary solution to prevent
disruption to exports to the EU, while negotiations for
a full EPA were ongoing.20


Deepening trade relations with the EU remains cen-
tral to Cape Verde’s external trade policy. Within the
Cotonou Agreement framework,21 the country is in
the process of negotiating an EPA with the EU. Un-
der the trade pillar, the Agreement will allow Cape
Verde to continue enjoy duty-free access to the
EU market after the EBA phasing out, but this time
on reciprocal terms (i.e. the country will open its
domestic market to European products). The EPA
would also contain rules on trade in services and




26 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


foreign investment. The EU-Cape Verde agreement
should have been originally reached within the re-
gional framework of ECOWAS. The country, how-
ever, opted to negotiate independently with the EU,
building on its close relationship with Portugal and
other European countries.


Among the challenges posed by the prospective
EU–Cape Verde EPA is a possible delay in indus-
trialization or a risk of de-industrialization. As men-
tioned above, Cape Verde exports a limited amount
of agricultural items and food preparations (around
70 per cent of its total exports) and other low tech-
nology-intensive products (footwear and apparel
account for the remaining 30 per cent). Converse-
ly, it imports a relatively large amount of electrical
machinery and equipment, mechanical applianc-
es and other industrial equipments, in addition to
food products. The elimination or the reduction of
tariffs on EU imports will force many domestic pro-
ducers in Cape Verde to compete directly with EU
firms. According to trade theory, greater exposure
to competition from imports lead to greater innova-
tion and efficiency gains under the condition that
local firms are able to adapt. The ability of Cape
Verdean producers to compete with EU imports is,
however, highly inhibited by the severe supply-side
constraints they face, such as lack of adequate in-
frastructure, geographical fragmentation, low lev-
els of value-addition and the small-scale nature of
production. If tariff protection was removed, many
Cape Verdean producers would no longer remain
profitable due to their much lower levels of industrial
productivity and competitiveness, compared with
the counterparts in the EU.


Such a development would bear important gen-
der implications, considering that, as shown by the
Asian experience, women particularly benefit from
the first phase of industrialization which encom-
passes the production of low-tech products, such
as food preparation, and textiles and footwear. A
slow-down in these sectors would then be particu-
larly detrimental for women in Cape Verde.


An additional challenge linked to the EPA is the
need to consider fiscal implications. Since a large
share of Cape Verde’s imports originates in the EU
and trade revenue constitutes a significant propor-
tion of total revenue, there are concerns that the
elimination of customs duties on most EU products
could lead to a significant decrease in Government
revenue. As detailed in section 3.1, over 77 per cent


of the country’s imports originated from the EU in
2009. Customs and other import duties – largely
levied on EU imports – accounted for about 20.8
per cent of tax revenue in 2009 (World Bank 2009).
Zouhon-Bi and Nielsen (2007) found that tariff liber-
alization in the EPA context would lead to a 78 per
cent decrease in total tariff revenue of the country.
This contraction would translate in a 15.8 per cent
decrease in total Government revenue, and this
would be as large as 3.6 per cent of GDP. These
shortfalls hold the threat of disproportionately affect-
ing women, as Government’s social spending forms
a large part of the budgetary outlay in the country
(UNCTAD 2010). In addition, tariffs elimination or
reduction would significantly lessen Cape Verde’s
ability to use tariff policy as a means of encouraging
industrial development and nurturing local indus-
tries, including those that may employ women.


Since 2007, the EU and Cape Verde have cooper-
ated in several areas pursuant to the Special Part-
nership between the EU and Cape Verde. Areas of
on-going cooperation include good governance,
security and stability, regional integration, knowl-
edge-based society, poverty alleviation and devel-
opment.


Bilateral trade between Cape Verde and the EU is
facilitated by the fixed exchange rate between the
two currencies.


In June 2008, Cape Verde and the EU launched
a Mobility Partnership to coordinate migration and
ensure that both the origin and receiving countries
and the migrants themselves benefit from migration.
Cape Verde and Moldova were the first two coun-
tries with which the EU has entered into such a com-
mitment.22


(b) South-South cooperation


Although the EU will continue to be the main eco-
nomic partner, Cape Verde is leveraging its strate-
gic position for cross-Atlantic trade to strengthen
South-South cooperation with non-traditional part-
ners, especially with China and Brazil (EIU, 2008
and 2011). In 2007, China designated Cape Verde
as one of its six Special Economic Areas to be
used as entrepôts for Chinese goods prior to their
distribution across Africa (EIU, 2008). At the third
Ministerial Conference of the Forum for Economic
and Trade Cooperation between China and Portu-
guese-Speaking Countries, held in November 2010,
China’s Prime Minster stated that “China and the




27TRADE ANALYSIS


Portuguese-speaking countries should work to op-
pose trade protectionism and for bilateral trade to
increase to $100 billion by 2013”.23 China’s plans to
use Cape Verde as entrepôt coincide with the lat-
ter’s national strategy to become a centre of trans-
atlantic trade. During the last decade, Brazil has
been expanding its trade and investment ties with
Africa, especially with the Lusophone countries,
and has also set up social programmes and alli-
ances aimed at knowledge sharing and skills trans-
fer. Its activities in Cape Verde have been concen-
trated in literary courses, vocational training, water
desalinization and agriculture projects. In August
2011, Cape Verde signed a number of agreements
with the Brazilian Cooperation Agency worth over
$3 million, focusing on the environment, housing
and land planning, cultural heritage, civil aviation,
and telecommunications among other. Brazil is ex-
pected to provide technical and human resources to
Cape Verde to make the identified projects viable.24


(c) African Portuguese speaking countries and
Mauritania


As mentioned earlier, Cape Verde had concluded a
free trade Agreement with a group of African Portu-
guese speaking countries - Angola, Guinea-Bissau,
Mozambique and Sao Tome and Principe. This
Agreement, signed on 30 March 1980, still needs a
protocol on rules of origin to become fully functional
(WTO, 2007a).


It is important to note that, despite a framework for
free trade being already in place, these countries
continue to be minor trading partners for Cape
Verde. In 2009, Angola, Guinea-Bissau, Mozam-
bique and Sao Tome and Principe as a whole ac-
counted for just 0.01 per cent of Cape Verde’s total
exports, while only 0.03 per cent of its total imports
originated from these countries. Overall, trade di-
versification away from the EU is proceeding at a
rather slow pace.


3.2.2. Regional


Cape Verde is a member of ECOWAS. All 15 ECO-
WAS member States had agreed to establish a Cus-
toms Union (CU) and adopt a Common External Tar-
iff (CET). Within the Customs Union, all duties and
border charges were to be eliminated, and member
States were accorded duty-free treatment in each
other’s markets. Non-tariff barriers such as quotas,
quantitative restrictions and prohibitions were also
to be removed. A common external tariff was to be


established which would be applied to imports from
outside the Customs Union. Both the CU and the
CET have not yet been fully implemented. Cape
Verde presently only provides for the free movement
of persons among the ECOWAS member States.
The country also applies an ECOWAS Community
Levy of 0.5 per cent on all imports from non-ECOW-
AS countries (WTO, 2007a).


Cape Verde’s trade integration within the ECOWAS
block is still limited, especially on the export side.
In 2009, only 0.06 per cent of Cape Verde’s total
exports were directed to ECOWAS countries. In that
year, the country sourced from ECOWAS members
about 1.65 per cent of its total imports. This may be
due to similarity of goods exported, high incidence
on non-tariff barriers (NTBs), and high transport and
trade-related costs, among others. The negotiation
of a separate EPA gives signals that Cape Verde is
further moving from the ECOWAS towards the EU.


3.2.3. Multilateral


Cape Verde became a member of the World Trade
Organization (WTO) on 23 July 2008. As a result of
the negotiations, Cape Verde has agreed to under-
take a series of liberalization commitments in both
goods and services.


3.2.3.1. Market access for goods


Following accession, all Cape Verde’s tariff lines
were bound (100 per cent binding coverage). On
average, tariffs were bound at fairly low ceiling lev-
els,25 leaving only some margins for applied tariff
increases (Table 16). The country’s average most
favoured nation (MFN) applied tariff is currently
10.4 per cent, which is lower than the average tar-
iff for sub-Saharan Africa (12.5 per cent) and also
lower than the average tariff of lower-middle-income
countries (11.4 per cent). In fact, MFN applied tar-
iffs average 12.2 per cent on agricultural products
(bound at 19.3 per cent), and 10.2 per cent on
non-agricultural products (bound at 15.2 per cent).
Cape Verde ranks 109th out of 181 countries (where
1st is least restrictive) in the World Trade Indicators
2009/10 (World Bank 2009).


The pre-membership structure of applied MFN tar-
iffs is detailed in table 17. Between 2006 and 2009,
the accession process does not appear to have in-
volved significant revenue effects through the post-
accession lowering of customs duties. Indeed, the
post-accession bound duties are higher than the
pre-accession applied rates.




28 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Table 16. Structure of MFN tariffs in Cape Verde, 2008 and 2009


Final bound MFN applied (2009) Trade weighted average (2008)


All goods 15.8 10.4 12.2


Agricultural 19.3 12.2 16.4


Non-agricultural 15.2 10.2 10.6


Source: WTO, UNCTAD and ITC (2010).


MFN applied Trade weighted average


All goods 10.4 12.3


Agricultural 11.7 17.0


Non-agricultural 10.2 10.2


Source: WTO, UNCTAD and ITC 2006.


Notes: MFN applied: Simple average of MFN applied duties (based on pre-aggregated HS six-digit averages); Trade weighted
average: HS six-digit MFN tariff averages weighted with HS six-digit import flows.


Table 17. Cape Verde’s pre-membership applied tariff structure, 2006 (ad valorem)


This comparison, however, does not provide an ac-
curate picture to the extent that it does not account
for two developments. First, some WTO tariff liber-
alization commitments involve reductions phased
in over a period of up to 2018. Some applied rates
will be significantly reduced over time. Second, the
2006 tariff structures already reflected tariff reforms
that had been implemented earlier throughout the
negotiation process.


Since 2003, the fiscal system in Cape Verde expe-
rienced sweeping reforms, leading to simplification
of the fiscal structure. As a result, the trade-weight-
ed average tariff rate had lowered significantly, from
as high as 31 per cent in 2002 to 12 per cent in
2004 (TradeCom Facility, 2008). According to data
from the Bank of Cape Verde as reported by Mark-
ing (2010), between 2003 and 2004, revenue from
taxes on international trade (tariffs and other cus-
toms duties) dropped by 42 per cent, following the
elimination of customs general fees.26 As a share
of GDP, revenue from trade taxes were reported to
decline from 7.3 per cent in 2000 to 4.9 per cent in
2007. It should be pointed out, however, that these
developments have not translated in significant rev-
enue losses for the Government.


The introduction of a value added tax (VAT) in Janu-
ary 2004 has outweighed the drop in import reve-
nues.27 Also, the lowering of import tariffs has been
partially counterbalanced by increased imports.


Tax reform, administrative improvements and the
simplifications of the tax system have improved the
ability of the Cape Verdean tax system to collect
revenues, and they have so far been instrumental
to limit and counterbalance revenue losses due to
tariff reductions mainly linked to the process of WTO
accession. It remains, however, to be seen the role
they will be able to play in the future in recovering
revenue loss due to the elimination or the reduction
of tariffs on imports from the EU due to the EPA.
Indeed, tariff reductions due to WTO accession
seem to be significantly less important than those
that will follow the conclusion of the EPA negotia-
tions. Moreover, the introduction of VAT has some
social implications: VAT is generally considered to
disproportionately affect more the poor – who spend
a larger proportion of their income on goods than
do wealthier individuals – and women, who tend to
predominate among the poor.


In agriculture, Cape Verde has neither export sub-
sidy programmes, nor WTO-inconsistent domestic
support programmes. All domestic support meas-
ures were reported to be green box (permitted) sub-
sidies. They included, among other, expenditure on
research, information dissemination through exten-
sion and advisory services, support to the develop-
ment of agriculture and livestock, and infrastructural
services serving both environmental and agricul-
tural purposes in view of the limited water resources




29TRADE ANALYSIS


in the country (WTO, 2007a). Cape Verde has not
made special safeguard (SSG) reservations in its
schedule of agricultural concession, where such
reservations would allow for the imposition of an ad-
ditional tariff where certain criteria are met.


3.2.3.2. Market access for services


Services are taking an increasingly important place
in Cape Verde’s economy. The country has made
specific commitments under the General Agreement
on Trade in Services (GATS) on 10 services sectors
and a wide range of subsectors (WTO, 2007b). To
inform the analysis under chapters 4 and 5, this
section briefly reviews liberalization commitments
scheduled by Cape Verde in tourism − a leading
and fast-growing service sector in the country and a
major source of foreign exchange earnings.


It should be borne in mind that the GATS defini-
tion of tourism is distinctly limited in scope. In the
WTO Services Sectoral Classification List,28 tourism
(Tourism and Travel Related Services) covers four
subsectors: (a) services provided by hotels and
restaurants, including catering; (b) travel agencies
and tour operator services; (c) tourist guide ser-
vices; and (d) other related services.29 Numerous
other tourism services – such as computer reserva-
tion systems; cruise ships and many other transport
services; hotel construction; car rentals; certain dis-
tribution, business, and financial services; as well
as most recreational, cultural and sporting services
– have been placed within other W/120 sectoral
categories.30


The analysis of Cape Verde’s services schedule
(WTO, 2007b) reveals that the country’s liberaliza-
tion commitments on tourism vary widely by mode
of supply and by individual subsectors (see table
18). It is worth exploring in some detail commit-
ments undertaken with regard to commercial pres-
ence. This mode covers service delivered within its
territory through the commercial presence of the
supplier. In other words, this covers the establish-
ment and treatment of legal entities.


In regard to commercial presence, Cape Verde
grants broad market access in the hotels and res-
taurants subsector. This level of commitment reflects
the desire of the country to expand foreign direct
investment (FDI) inflows in this subsector. While FDI
from European countries is still negligible due to the
low level of economic growth registered in Europe,
Chinese investments are expanding.


With respect to “Travel agencies and tour operator
services” (subsector B), market access is liberal-
ized for foreign operators that establish joint ven-
tures with local counterparts, as long as the foreign
interest is less than 50 per cent. Conversely, there
are important market access restrictions on foreign-
controlled entities. The scheduled market access
qualifications are also discriminatory in nature (i.e.
they are a limitation on national treatment). These
provisions seem to reflect the intention of Cape
Verde to favour partnerships and business linkages
between national and foreign travel agencies and
tour operators, and to further make tourism an eco-
nomic sector from which Cape Verdeans can benefit.


In both subsectors, Cape Verde places no restric-
tion on national treatment. The “no limitations” en-
try in the NT column (expressed as “none”) would
mean that incentives to sustain/expand the subsec-
tors (hotels and restaurants and travel agencies and
tour operator services) cannot discriminate on the
basis of the supplier’s country of origin. This liberali-
zation commitment deserves some attention, since
it may possibly have some gender ramifications. It
should be borne in mind, in fact, that limitation on
national treatment cover cases of both de facto and
de jure discrimination. Incentives schemes targeted
at female business ventures (tax incentives, facili-
ties for the transfer of funds and banking, etc) can
in some cases result in less favourable treatment of
foreign (male) suppliers, in contrast with the disci-
plines of Article XVII (National Treatment).


Cape Verde remains free to maintain market access
restrictions on foreign tour guide agencies. This
mode of supply does not cover own-account tourist
guides, falling under mode 4.


Under the EPA, the EU is likely to request for ad-
ditional services liberalization. While further liberali-
zation could provide benefits to Cape Verde, if it is
focused on sectors or subsectors where the country
lacks capacity or is unlikely to develop it in the short
run, it would be wise for the country to retain the
ability to use safeguards and to regulate market ac-
cess for foreign firms in order to allow the strength-
ening of domestic capacities.


3.3. MAJOR OBSTACLES TO TRADE


3.3.1. Domestic market access protection


As discussed in section 3.2, Cape Verde has a rela-
tively liberal trade regime in terms of domestic tariff
protection.




30 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Table 18. Sector-specific commitments in tourism and travel-related services


Subsector Limitations on market access Limitations on nationaltreatment


A. Hotels and restaurant service
(CPC 641, 642, 643)


1) Unbound 1) Unbound


2) None 2) None


3)


None, except (a) operation of hotels may optionally seek
to take advantage of the investment incentives under
Tourism Utility Law, and (b) restaurants that want to take
advantage of investment incentives under the Tourism
Utility Law, are subject to an economic needs test (ENT).
However, restaurants that do not want to take advantage
of investment incentives under that law are not subject
to an ENT.


3) None


4) Unbound, except as indicated under Horizontal Commit-ments 4)
Unbound, except as
indicated under Horizontal
Commitments


B. Travel agencies and tour
operators services
(CPC 7471)


1) Unbound 1) None


2) None 2) None


3)


None with respect to travel agencies and tour opera-
tor services provided in joint venture with Cape Verde
nationals, as long as foreign interest is less than 50 per
cent.


Travel agencies and tour operator services with foreign
investment of 50 per cent or more are subject to the fol-
lowing limitations:


- the number of such travel agencies cannot exceed
more than one-third of all national service providers
(including joint ventures with a foreign interest of less
than 50 per cent) operating in the territory of Cape Verde;


- the number of such tour operators cannot exceed more
than one-third of all national service providers (including
joint ventures with a foreign interest of less than 50 per
cent) operating in the territory of Cape Verde;


- a travel agency with less than 50 per cent Cape Verde
ownership is limited to one establishment on each of
three islands; and


- a tour operator with less than 50 per cent Cape Verde
ownership cannot operate on more than 3 islands.


3) None


4) Unbound, except as indicated under Horizontal Commit-ments 4)
Unbound, except as
indicated under Horizontal
Commitments


C. Tour guides (CPC 7472)


1) Unbound 1) None


2) Unbound 2) None


3) Unbound, except for tour guides with language capabili-ties not otherwise available in Cape Verde 3)
None


4) Unbound, except as indicated under Horizontal Commit-ments 4)
Unbound, except as
indicated under Horizontal
Commitments


Source: WTO Services Database Output.


Note: “None” indicates full liberalization commitment (no limit on Market Access) or National Treatment) in a given subsector
and for a given mode of supply); “Unbound” means no commitment (the member remains free to introduce or maintain
measures inconsistent with Market Access or National Treatment, except as indicated in the schedule).




31TRADE ANALYSIS


3.3.2. Protection faced in the major export
markets


Table 19 details the share of the country’s duty free
exports to major trading partners. As also discussed
in section 3.2, Cape Verde enjoys preferential (duty-
free) access to the EU and other export markets.
Taking into account these trade patterns, in terms
of both export specialization and destination, the
country does not currently face major tariff barriers
in its largest export markets.31 More prominent trade
policy issues are seemingly related to non-tariff bar-
riers and trade facilitation.


Just as in the case of many other developing coun-
tries, Cape Verde’s ability to expand and diversify
its export trade is largely contingent on overcom-
ing supply-side obstacles and fulfilling increasingly
stringent entry requirements in export markets. Im-
portant market access/entry obstacles are in the
form of non-tariff barriers (NTBs). These include
Governmental measures (licensing procedures, as
well as technical barriers to trade (TBT) and sani-
tary and phytosanitary measures (SPS)), as well as
private sector standards. A number of entry barriers
also stem from the structural characteristics of sup-
ply chains and markets. These impediments include
important structural (sunk costs, economies of scale,
etc.) and behavioural barriers (e.g. abuse of market
power by incumbent firms) that impact developing
countries’ ability to enter new export markets.


From 2000 to 2003, Cape Verde faced a ban on
imports of fish and seafood in the EU due to non-
compliance with sanitary and hygienic require-
ments. Limited capacities to check the safety of
food products have not only hampered exports, but
also diminished the ability to guarantee the quality
of nationally produced and imported products, as
well as to protect the health of consumers, including
tourists. The ban had obvious detrimental implica-
tion for the economy of the country, considering that
fish are among the top exports of Cape Verde and
that EU is by far its largest market of destination.
Cape Verde has a fishing fleet composed by arti-
sanal boats (around 1,200) and industrial vessels
(less than 100). Fish undergoes port-side process-
ing, mainly done by women. Canning facilities and
other facilities for the production of fish meet exist
in the country, mainly in Mindelo, Praia, and Sal.
However, cold-storage and freezing infrastructures
are insufficient and many artisanal fishermen and
women processors do not have access to ice (US-
AID and West Africa Trade Hub, 2008). Lack of ad-
equate technology for deep water fishing and lack
of modernization of fishing fleets seem to hamper
the development of the industry.


The following chapter explores some of the impacts
of trade liberalization on household welfare, with a
focus on gender.


Table 19. Exports to major trading partners, 2008 - Share of duty-free trade


Major export markets
Bilateral imports Duty-free imports


in $ million Percentage of tariff lines Percentage of imports


Agricultural products


1 European Union 2 91.4 91.0


2 Switzerland 0 91.7 77.9


3 United States 0 100.0 100.0


4 Brazil 0 0.0 0.0


5 Niger 0 0.0 0.0


Non-agricultural products


1 European Union 35 100.0 100.0


2 Cote d’Ivoire 8 0.0 0.0


3 Singapore 1 100.0 100.0


4 Morocco 1 4.8 81.0


5 Hong Kong, China 0 100.0 100.0


Source: WTO, UNCTAD and ITC 2010.


Notes: “Percentage of tariff lines” means the duty-free tariff lines in per cent of all traded tariff lines. “Percentage of imports”
indicates the share of duty-free trade in per cent of all bilateral trade flows, including duty-free preferential treatment






IV


Trade
Liberalization,


Female
Employment
and Welfare






35TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


4. TRADE LIBERALIZATION, FEMALE
EMPLOYMENT AND WELFARE


Policies geared to trade liberalization and facilita-
tion have diverse impacts on individuals: some will
benefit, others may suffer, yet others may not be af-
fected. The impacts that trade liberalization/facilita-
tion policies have on individuals depend mainly on
two factors. First, they depend on the influence that
trade policies have on domestic prices of goods
and factors of production (such as wages, earnings,
returns to capital and land) where individuals oper-
ate. Owing to regulatory frameworks, some domes-
tic markets and/or economic sectors may be shel-
tered from the effect of trade policies, while others
may be fully dependent on international markets,
and thus on trade policies. Second, the impact of
trade policies depends on the degree of exposure
that individuals have to the various goods and fac-
tors of production. Individuals employed in export
sectors, for example fishery, may not be affected
in the same manner as those in import-competing
sectors, such as cereals. The degree of exposure
also depends on the extent of self-subsistence ac-
tivities that the individual is engaged in. In small
developing countries, such as Cape Verde, many
households engage in self-sufficient activities, that
is, production for own use. Those activities, largely
independent of price shocks, are therefore isolated
from trade policies.


The quantitative analysis in this study on the effect
of trade policies on individuals was conducted in
three steps (see Appendix 1 for technical details):


(1) It sought to measure the extent to which trade
policies affect domestic prices of goods and
factors of production. This included making
estimations or assumptions about the degree
of which international prices pass through to
domestic prices of goods and factors of pro-
duction. Estimations and assumptions were
also made to determine to what extent trade
policy impact Government revenues;


(2) It then identified and quantified the sources
of income and the consumption basket for
each household. This provided a measure of
the dependence between the real income of
the households and the change in price of a
particular good of factor of production due to
trade policy;


(3) It mapped the changes in the prices of goods
and factors of production due to trade policies
into each household’s budget and income
shares. This allows for the calculation of the
positive or negative effects of trade policy on
a household’s real income. Results are then
aggregated by the relevant dimension (loca-
tion, gender, poor or non-poor), so as to better
identify any subgroup that would gain or lose
from the trade policy.32


In some detail, this chapter looks at transmission
mechanisms through food prices, remittances and
tourism. These areas are worth being considered in
detail in consideration of the specificities of Cape
Verde, namely the dependency of food imports, the
diaspora, and the potential of the tourism sector.


4.1. CHARACTERIZATION OF INCOME
DISTRIBUTION


The section explores some of the impacts of trade
policy on household welfare, with a focus on gender
issues. The aim is to shed some light on how differ-
ent individuals and households would be affected
by (a) a change in food prices; (b) an increase in
income originating from remittances; and (c) an
expansion of some tourism subsectors. The aim is
to shed some light on questions such as whether
Cape Verde will benefit from further trade liberali-
zation and, if so, whether there is a gender bias in
the gains from trade. The analysis builds on both
the data described in chapters 1 and 3 and on the
analytical framework discussed above. After a brief
characterization of the distribution of income in the
country, both at the national level and across gen-
ders, the analysis focuses on food imports (section
4.2), remittances (section 4.3), and tourism and ser-
vices (section 4.4).


This section quantifies the distribution of income,
and uses per capita expenditure to measure house-
hold welfare.33 Appendix 1 provides more infor-
mation about the methodology used. Figure 2 de-
scribes the income distribution at the national level,
and for both rural and urban samples. The graph
illustrating the income distribution corresponding
to rural areas is biased to the left (meaning lower
expenditure) relative to the one corresponding to
urban areas. This means that rural population have
a lower mean per capita expenditure than urban
households and that they tend to be poorer than
urban households.




36 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


0
.2


.4
.6


D
en


si
ty


8 10 12 14 16
log per capita expenditure


National Urban
Rural


Figure 2: One graph whith three densities: national, urban, rural, 2002


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


0
.2


.4
.6


8 10 12 14 16 8 10 12 14 16


Urban Rural


Female headed Male headed


D
en


si
ty


log per capita expenditure


Graphs by area


Figure 3: Distribution of income by sex of households head and area, 2002


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Figure 3 compares the income distribution
among rural and urban, female- and male- head-
ed households. The density of the female-head-
ed households overlaps with the density of the
male-headed, with a slight poverty bias against
female-headed households. A left-bias of the fe-
male-headed income distribution relative to the


male-headed income distribution, both in urban
and rural areas, means that they have a lower
mean per capita expenditure and that they tend
to be poorer than male-headed households.


Figures 4 and 5 show the densities for urban and
rural areas, and female- and male-headed total
households by island. S. Antão and Sal have similar




37TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


g y y


0
.5


1
0


.5
1


0
.5


1


8 10 12 14 16 8 10 12 14 16 8 10 12 14 16


S. Antão S. Vicente S. Nicolau


Sal B. Vista Maio


S.Tiago Fogo Brava


Urban Rural


D
en


si
ty


log per capita expenditure


Graphs by ILHA


Figure 4: Distribution of income by area of households and by island, 2002


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


0
.2


.4
.6


0
.2


.4
.6


0
.2


.4
.6


0
.2


.4
.6


0
.2


.4
.6


.8


0
.2


.4
.6


0
.5


0
.2


.4
.6


0
.5


1


8 10 12 14 8 10 12 14 16 9 10 11 12 13


8 10 12 14 16 10 11 12 13 14 8 10 12 14


8 10 12 14 16 10 12 14 10 11 12 13 14


S. Antão S. Vicente S. Nicolau


Sal B. Vista Maio


S.Tiago Fogo Brava


Female headed Male headed


D
en


si
ty


log per capita expenditure


Graphs by ILHA


Figure 5: Distribution of income by sex of households head and by island, 2002


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


distributions for urban and rural per capita expend-


iture, but the urban distributions appear to be on


the right of the rural one for four of the nine islands,


namely Fogo, B. Vista, São Vicente and São Tiago.


The dispersion of the expenditure is higher for urban


areas in all the islands but in São Nicolau (figure 4).


The graphs show that there are lesser disparities in the
distributions of income for male- and female-headed
households in Sal and São Tiago. São Vicente, São
Nicolau show a higher mode for men. On the contra-
ry, the mode seems higher for women in São Vicente.
Boa Vista, Brava and Fogo show a greater dispersion
for women than that of men (figure 5).




38 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Island


Total Rural Urban


Female
headed


Male
headed Total


Female
headed


Male
headed Total


Female
headed


Male
headed Total


Santo Antão 658 886 814 655 756 726 663 1,214 1,014


São Vicente 1,686 1,625 1,651 613 738 705 1,722 1,688 1,702


São Nicolau 712 1,065 911 664 937 820 776 1,253 1,037


Sal 1,387 2,535 2,187 949 1,877 1,581 1,435 2,601 2,249


Boavista 1,100 1,298 1,241 929 923 925 1,257 1,639 1,529


Maio 985 1,090 1,035 902 716 808 1,085 1,682 1,345


São Tiago 1,036 1,276 1,159 530 616 570 1,529 1,719 1,634


Fogo 649 857 771 544 696 633 985 1,341 1,199


Brava 793 1,113 980 686 829 774 1,004 1,966 1,496


Total 1,074 1,300 1,201 571 706 645 1,483 1,722 1,621


Source: Estimation based on IDRF 2002 (Republic of Cape Verde 2002b).


Table 20. Average per capita expenditures, 2002 ($)


Disparities between islands, areas and sex of house-
holds’ heads are presented in table 20, where the
mean of annual per capita household consumption
(in United States dollars) in 2002 is calculated. The
poorest islands are Fogo, S. Antão, São Nicolau
and Braga. The wealthiest island on average is Sal,
where the consumption gap between female- and
male-headed households is however large.


4.2. FOOD PRICES


The IDRF does not contain data that allow identi-
fying net-producers and net-consumers of food.
However, considering that Cape Verde imports 80
per cent of the food it consumes (World Food Pro-
gramme, 2009), it seems reasonable to assume that
most households consume imported food.


At the global level, very rapid rises in average glob-
al agriculture and food prices are taking place, with
the FAO food price index in May 2011 reaching a
near historical high (FAO and WFP, 2011). The glob-
al phenomenon of high food and agriculture prices
experienced in recent years is the result of several
long and short-term factors: growing population
and income in developing countries, the demand
for food and feed crops for the production of bio-
fuels, high oil prices, depleted agriculture stocks,


unfavourable climate conditions in major produc-
ing countries/regions, political unrest especially in
North Africa and the Near East, under-investment
in agriculture, speculation, and the depreciation of
the United States dollar. Import and export restric-
tions, as well as domestic support schemes that
distort production incentives, discourage supply in
response to market demand and constrain interna-
tional trade of food and agriculture products.


Higher prices for commodities are being passed
through the food chain, leading to rising consumer
price inflation in most countries. Given Cape Verde’s
high dependence on commodities imports, con-
sumer prices are rising, allegedly due to increases
in the cost of flour, water, fuel and electricity. The
retail price for rice in April 2011 was 4 per cent
higher than a year earlier and 11 per cent higher
than two years earlier (FAO and WFP, 2011). The
Government is prioritizing interventions to restrain
price rises that are targeted at the most vulnerable
groups, while planning to withdraw general subsi-
dies on food prices (EIU, 2011).


In both urban and rural households, food expendi-
ture represents a large share of Cape Verdean
household total expenditures. This can be explored
with the help of non-parametric regressions of the




39TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


share of food on the log of household per capita ex-
penditure. These regressions estimate the average
food share at different levels of living (measured by
per capita expenditures). In figure 6, the food budg-
et share at the left tail of the income distribution is
approximately 45 per cent (in both urban and rural
areas). In rural areas, there are some differences be-


tween female-headed and male-headed in the share
spent on food (more than 55 per cent for the former
versus less than 50 per cent for the latter). As expect-
ed, the share spent on food declines with the level
of household well-being. It follows that lower food
prices will have a pro-poor bias, while higher food
prices will have an anti-poor bias for non-producers.


0
.2


.4
.6


S
ha


re
o


f f
oo


d


8 10 12 14 16
log per capita expenditure


Female headed Male headed




Figure 6: Share of food and log of per capita expenditure


National


.3
5


.4
.4


5
.5


.5
5


.6
Sh


ar
e


of
fo


od


9 10 11 12 13 14
log per capita expenditure


Female headed Male headed




Rural




40 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


0
.2


.4
.6


S
ha


re
o


f f
oo


d


8 10 12 14 16
log per capita expenditure


Female headed Male headed




Urban


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Looking at the difference between female- and male-
headed households does not necessarily capture all
the impacts on women. So far, the analysis has fo-
cused on female-headed households. But obviously
women living in male-headed households can also
benefit from lower food prices. This is explored by ex-
amining the relationship between the food share on
the one hand and the total number of females in the
household or alternatively the share of females in the


household on the other. As before, non-parametric
regressions are estimated and reported in figure 7.
In principle, households with more women tend to
allocate a slightly higher share of their expenditure
to purchase food, especially in rural areas, and thus
these households will enjoy higher gains from lower
food prices. Note, however, that there are little differ-
ences in food shares for different gender structures
(share of females) in Cape Verdean households.


.3
.3


5
.4


.4
5


.5
.5


5
S


ha
re


o
f f


oo
d


0 2 4 6 8 10
Number of females


National Rural
Urban


.2
.3


.4
.5


.6
S


ha
re


o
f f


oo
d


0 .2 .4 .6 .8 1
Share of females


National Rural
Urban




Figure 7: Share of food and women


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).




41TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


Characteristics


Total Rural Urban


Female
headed


Male
headed


Total Female
headed


Male
headed


Total Female
headed


Male
headed


Total


% of poor


Households 2.4 2.4 2.4 3.3 3.0 3.1 1.7 2.0 1.9


Individuals 2.5 2.7 2.6 3.1 3.1 3.1 2.0 2.4 2.2


Female 2.5 3.1 2.8 3.1 3.6 3.4 1.9 2.8 2.4


Male 2.5 2.4 2.4 3.0 2.7 2.8 2.2 2.1 2.1


% of extreme poor


Households 1.8 1.3 1.5 2.4 1.9 2.1 1.3 0.8 1.0


Individuals 2.2 1.5 1.8 2.4 2.1 2.3 2.1 1.0 1.4


Female 2.3 1.6 1.9 2.4 2.3 2.4 2.2 1.0 1.5


Male 2.2 1.4 1.7 2.4 2.0 2.1 1.9 1.0 1.3


Source: Estimation based on IDRF 2002 (Republic of Cape Verde 2002b).


Table 21. Poverty impacts of increased food prices (10 per cent increase)


Figure 8 shows the regional distribution of the share
of food expenditure in total expenditures by island,
both for total households and for female-headed
households. The average share of total expenditures
spent on food is higher than 50 per cent in Santo
Antão, Brava, Fogo, and some rural areas of São
Tiago (São Miguel) both for all households and for
female-headed households. Note that these islands


are also poorer (table 20). In all areas, the food shares
are slightly higher for female- headed households.


Table 21 presents simulations of the poverty impacts
of an increase in international food prices of 10 per
cent. Without estimates of the extent of the pass-
through to domestic food prices, the simulations are
run by assuming that the cost of the food bundle of a
given household increases by 10 per cent.


Figure 8: Share of food expenditure in total expenditure by municipalities, 2002


52.1 - 63.2
47.9 - 52.1
42.1 - 47.9
33.6 - 42.1


51.9 - 64.2
46.4 - 51.9
43.1 - 46.4
37.7 - 43.1



Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Total households Female-headed households




42 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Simulations are made of changes in the head count
ratio, and the proportionale of the population below
the poverty line. The increase in food prices causes
the poverty line to rise, with the implication of an in-
crease in poverty. After a price increase of 10 per
cent, the proportional change in the poverty line is
the product of the proportional change in prices and
the share in the poverty line. Following the approach
in Porto (2010), these shares are estimated using
the average share spent on food by households
with expenditures in a neighbourhood of the poverty
line. This corresponds to the average share of food
expenditures from households with between 50 and
70 per cent of median per capita expenditure.34


With the simulated poverty line, a calculation is
made of headcounts ratios for all, female-headed
and male-headed households, in rural and urban
areas. Table 21 reports changes in the headcount
ratio from the baseline scenario to the simulated
food price increase. At the national level, the frac-
tion of people below the poverty line increases by
2.6 percentage points (the headcount ratio increase
from 36.7 to 39.2 per cent). In the case of extreme
poverty, the fraction of people living under the ex-
treme poverty line increases by 1.8 percentage
points. The table also shows that there are only mar-
ginal differences between the poverty impacts on
female- and male-headed households, though the
impacts tend to be larger in female-headed house-
holds, especially in the case of extreme poverty. A
10 per cent increase in food prices would have more
severe negative repercussions in rural than urban
areas, especially in the case of extreme poverty.
Female-headed households would be particularly
penalized in rural areas. The extreme poverty count
would increase by 2.3 percentage points in rural ar-
eas and by 1.4 percentage points in urban areas,
and more specifically by 2.4 percentage points for
female-headed household in urban area and by 2.1
percentage points for female-headed household in
rural areas.


While agriculture and food prices are expected to
keep their rising trend at the global and local levels,
the conclusion of the EPA negotiations will lead to
the reduction or elimination of tariffs on imports from
the EU, including agriculture and food imports. As
showed in table 16, the MFN applied rate for agri-
cultural products is 12.2 per cent. A simulation is
then conducted to assess the poverty impact that a
10 per cent tariff cut on agriculture products could


have. Without estimates of the extent of the pass‐
through to domestic food prices, the simulation as-
sume that the cost of the food bundle of a given
household declines by 10 per cent. Given the tariff
rate and considering that food imports account for
around 80 per cent of total food consumption, this
assumption seems plausible. The purpose of this
exercise is to isolate the impact deriving from Cape
Verde’s trade liberalization from the impact of other
factors that affect world agriculture and food prices.


The simulation assesses changes in the head count
ratio and the proportion of the population below the
poverty line. The change in food prices brought
about by the hypothetical tariff cuts causes the pov-
erty line to decline, and, in consequence, would
cause a decline in poverty.


Following the same approach as above, headcounts
ratios for all, female‐headed and male‐headed
households, is calculated breaking it up by area. Ta-
ble 22 reports changes in the headcount ratio from
the baseline scenario to the simulated tariff cuts.
At the national level, the fraction of people below
the poverty line declines by 2.6 percentage points
(the headcount ratio decrease from 36.7 to 34.1 per
cent). This is equivalent to more than 12,000 indi-
viduals. In the case of extreme poverty (the frac-
tion of the population below the food poverty line),
2 per cent of all Cape Verdean change their status
to “poor.” This represents almost 10,000 individu-
als. Table 22 also shows that there are only marginal
differences between the poverty impacts in female‐
and male‐headed households, though the impacts
tend to be larger in female‐headed households.
Also, the simulation uncovers larger impacts in rural
areas, particularly in the case of extreme poverty.


While the analysis shows that the tariff cuts due to
the EPA would have a pro-poor impact, it tends to
discount considerations of food security. Because
of its geographical and climate conditions, Cape
Verde will remain a net-food importer. Nevertheless,
it has an interest in preserving some capacity for do-
mestic food and agriculture production. A balance
should therefore be struck between the benefits, es-
pecially for poor households, of trade liberalization
and related tariff reduction and the need to keep
and enhance domestic productive capacity. The
2007-2008 global food crisis has highlighted some
of the risks of relying on food imports, leading to re-
newed interest in enhancing agricultural production
in Cape Verde.




43TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


4.3. REMITTANCES


Cape Verde’s Diaspora creates a major link via remit-
tances between migration and development. In the
1900s Cape Verdeans mainly migrated to the United
States. After immigration quotas were introduced in
the United States in 1920, migration shifted to Portu-
gal and West Africa, and it converged to countries of
Western Europe after the 1960s. At present, top desti-
nation countries for Cape Verdean migrants are Portu-
gal, France, the United States, Mozambique, Angola,
the Netherlands, Senegal, Italy, Spain and Nigeria
(World Bank, 2011).


The character of the emigrants from Cape Verde has
changed over time. Between 1960 and 1970, labour
migrants were mainly men who wanted to accumu-
late savings abroad, who left their wives behind in the
country, and who mainly worked as sailors (Carling,
2004). Later on, women also started to migrate and
from 1995 to 2000, men and women migrated at simi-
lar rates: 46.7 per cent of the emigrants were women
and 53.3 per cent men. However, female migration
was higher than male migration for women aged up 24
years, while it was lower for women between 25 and
44 years old (Republic of Cape Verde, 2002a). Women
migrated both to join family members already estab-
lished abroad (family-related migration) and indepen-
dently, especially to work as domestic employees in
Southern Europe. These single women are reported to


remit regularly to their children and to other close rela-
tives.35 There is a strong link between women working
abroad and women left behind in Cape Verde, mainly
grandmothers, who take care of the grandchildren in
the absence of the mothers. This also implies that the
decision of women to work abroad is often a family
decision (Carling, 2002). In 2000, nurses migrating
abroad were more than 40 per cent of nurses born in
the country (World Bank 2011).


The provision of services abroad through GATS mode
4 – the temporary movement of people as service sup-
pliers – represents the only multilateral treaty-based
regime in existence today for managing the temporary
movement of certain categories of persons. Mode 4
offers a great potential for women’s participation in the
economy. The boundaries of GATS mode 4, however,
are not well-defined. GATS recognizes that services
delivery may require the presence of foreign natural
persons, but it does not detail specific ways in which
this can be achieved. Lack of clarity on the issue has
led to a diversity of views among countries on the
types of movements of natural persons that fall under
GATS. Nevertheless, consensus exists that job seek-
ers, permanent establishment and citizenship do not
fall within the purview of GATS, while contract-based
services provision by individuals or firms and invest-
ment-related movement of persons are covered. Mode
4 issues in most countries are dealt with in the same
manner as migration issues, blurring the boundaries


Characteristics


Total Rural Urban


Female
headed


Male
headed Total


Female
headed


Male
headed Total


Female
headed


Male
headed Total


% of poor


Households 2.3 2.1 2.2 2.5 2.7 2.6 2.2 1.6 1.9


Individuals 2.9 2.5 2.6 2.9 2.8 2.9 2.9 2.2 2.5


Female 2.6 2.4 2.5 2.9 2.9 2.9 2.4 2.0 2.2


Male 3.3 2.5 2.8 2.9 2.8 2.9 3.6 2.3 2.7


% of extreme poor


Households 1.8 1.2 1.5 2.7 1.8 2.2 1.1 0.8 0.9


Individuals 2.5 1.7 2.0 3.1 2.0 2.5 1.9 1.5 1.7


Female 2.4 1.6 2.0 2.8 1.7 2.3 2.1 1.6 1.8


Male 2.6 1.7 2.0 3.5 2.2 2.7 1.7 1.4 1.5


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Table 22. Poverty impacts of decreased food prices (10 per cent decrease)




44 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Quintile Income
Total Rural Urban


Female
headed


Male
headed Total


Female
headed


Male
headed Total


Female
headed


Male
headed Total


All


Labour income participation 50.6 65.5 58.9 47.0 58.8 53.4 53.5 70.2 63.1


Capital income participation 3.7 3.7 3.7 3.0 2.8 2.9 4.3 4.4 4.3


External pensions and remittances 14.7 7.3 10.5 18.6 12.0 15.0 11.5 3.9 7.1


National pensions 3.4 4.4 4.0 3.8 5.1 4.5 3.0 4.0 3.6


Other welfare benefits 1.0 0.9 0.9 0.6 0.6 0.6 1.4 1.1 1.2


Other sources of income 7.2 2.2 4.4 6.5 3.2 4.7 7.7 1.6 4.2


Imputed rent 19.4 16.0 17.5 20.5 17.5 18.9 18.5 14.9 16.5


1


Labour income participation 51.0 58.3 54.4 47.2 55.9 51.3 54.6 63.3 58.0


Capital income participation 3.0 1.8 2.4 2.6 1.3 2.0 2.5 2.3 2.4


External pensions and remittances 8.2 5.6 6.9 8.8 4.7 6.9 7.3 3.1 5.6


National pensions 3.8 4.7 4.2 5.0 3.7 4.4 2.7 5.5 3.8


Other welfare benefits 0.9 2.1 1.5 0.7 2.0 1.3 2.0 2.1 2.0


Other sources of income 7.9 3.7 5.9 8.7 4.0 6.5 9.6 1.8 6.5


Imputed rent 25.2 23.8 24.6 27.0 28.5 27.7 21.3 22.1 21.6


3


Labour income participation 49.8 65.0 57.7 46.2 58.4 52.9 50.3 70.7 61.7


Capital income participation 3.0 2.9 2.9 1.2 2.5 1.9 4.4 3.4 3.8


External pensions and remittances 16.4 8.3 12.2 18.3 10.9 14.2 15.2 5.0 9.5


National pensions 3.2 3.9 3.6 5.1 7.5 6.4 2.5 3.6 3.1


Other welfare benefits 1.1 0.3 0.7 0.8 0.3 0.6 1.1 0.5 0.8


Other sources of income 7.2 2.5 4.7 7.9 2.8 5.1 7.0 1.7 4.0


Imputed rent 19.3 17.2 18.2 20.6 17.5 18.9 19.5 15.2 17.1


5


Labour income participation 52.1 70.7 64.4 43.4 59.5 52.8 55.9 73.4 67.7


Capital income participation 6.5 5.5 5.8 4.1 4.8 4.5 7.0 6.1 6.4


External pensions and remittances 15.2 5.9 9.0 29.4 17.6 22.5 11.9 3.0 5.9


National pensions 3.7 3.8 3.7 2.8 3.4 3.2 4.5 4.2 4.3


Other welfare benefits 1.0 1.0 1.0 0.5 0.3 0.4 1.1 1.1 1.1


Other sources of income 5.7 1.5 2.9 4.8 1.9 3.1 4.6 1.2 2.3


Imputed rent 15.8 11.7 13.1 15.2 12.3 13.5 15.0 10.9 12.2


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Table 23. Sources of income, 2002, percentage




45TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


Table 24. Trends of remittances, 1998-2009


1998 2002 2006 2007 2008 2009


Millions of dollars 77.7 68.3 123.1 126.0 138.4 128.4


% of GDP 156 108 104 95 89.0 86


Country of Origin


USA 27.4 19.4 16.5 14.1 15.1


The Netherlands 11.0 8.9 10.2 11.6 9.1


France 22.4 22.9 22.2 21.8 21.9


Portugal 25.3 28.6 30.5 30.1 30.3


Others 14.0 20.2 20.7 22.3 23.7


Total 100.0 100.0 100.0 100.0 100.0


Source: Estimation based on Bank of Cape Verde (Republic of Cape Verde 1999-2009).


between temporary and permanent movement. Con-
versely, treating mode 4 as a trade issue – instead of
a migration issue – would facilitate the movement of
services suppliers and could pre-empt some of the
problems currently generated by permanent migra-
tion and irregular labour flows (UNCTAD, 2009).


It has been argued that mode 4 is not usable if the
countries of origin cannot guarantee the return of
their services providers working abroad, and hence
ensure that their work abroad is in fact temporary. The
policy recommendations will discuss how to over-
come these constraints.


The analysis of the role of remittances is carried out
by exploring the sources of household income based
on data from the IDRF (2002), for female- and male-
headed households, and for rural and urban areas.
Results are presented in table 23. Labour income
is the main source of income, ranging from as low
as 47 per cent for female-headed households in ru-
ral areas to as high as 70.2 per cent to male-head-
ed households in urban areas. Remittances and
external rents are an important source of income.


They represent 10.5 per cent of total household in-
come, reaching 18.6 per cent for female-headed
households in rural areas. Not only are there gen-
der disparities but also geographic disparities: in
rural areas remittances account for nearly 15 per
cent of total income, while in urban areas they ac-
count for only 7.1 per cent. Remittances are a much
larger source of income for female-headed house-
holds in rural areas (18.6 per cent) than for male-
headed households in urban areas (3.9 per cent).


Another interesting feature related to remittances is
their evolution in the country of origin (table 24). It
is noteworthy that remittances almost doubled be-
tween 1998 and 2008 in nominal terms (from $77.7
million in 1998 to $138.4 million in 2008). However,
the share of remittances in GDP actually declined in
recent years.


To assess the welfare implications of remittances
in Cape Verde, non-parametric regressions are
estimated of the share of income accounted for
by remittances on the log of per capita household
expenditures. These are estimates of the average
importance of remittances as a source of income at




46 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


different levels of living. The first panel in Figure 9
shows the non-parametric regressions at the nation-
al level. The share of remittances is always higher for
female-headed than for male-headed households.
For females, the share increases sharply with the
level of living at the left tail of the distribution; in the
wide middle range of the income distribution, the
share of remittances is higher than 15 per cent and,
at the top (for the richest households), they plummet
abruptly to less than 5 per cent. The non-parametric
averages for males follow a similar pattern, but the
shares are always lower.


The lower panels of figure 9 report results for urban
and rural areas. In urban areas, the share of remit-
tances is higher for female headed households at
the left tail of the distribution (the poorest people)
and at the middle, but the shares converge at the
richest tail. In rural areas, in contrast, the share of
remittances on total income is low for the poorest
households but they sharply increase as the level
of living increases. This analysis reveals that remit-
tances are an importance source of income, and
more so for female-headed households than for
male-headed households, as well as for rural areas
than urban areas.


0
.0


5
.1


.1
5


.2
sh


ar
e


of
re


m
itt


an
ce


s


8 10 12 14 16
log per capita expenditure


Female headed Male headed




Figure 9 : Share of remittances and log of per capita expenditure


National


Rural


0
.1


.2
.3


.4
sh


ar
e


of
re


m
itt


an
ce


s


8 10 12 14
log per capita expenditure


Female headed Male headed




47TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


Figure 10 shows the relationship between the share
of remittances in total income and the number of fe-
males and the share of females in households. On
the left panel, remittances are equally important (as
an income source) for households without females
than for households with up to six or seven females.
Households with more than seven females tend to
report lower remittances shares, but the difference


Urban


0
.0


5
.1


.1
5


sh
ar


e
of


re
m


itt
an


ce
s


8 10 12 14 16
log per capita expenditure


Female headed Male headed


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


0
.0


5
.1


.1
5


sh
ar


e
of


re
m


itt
an


ce
s


0 2 4 6 8 10
Number of females


National Rural
Urban


.0
5


.1
.1


5
.2


sh
ar


e
of


re
m


itt
an


ce
s


0 .2 .4 .6 .8 1
Share of females


National Rural
Urban


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Figure 10: Share of remittances and women


is not significant. On the right panel, the share of


remittances increases with the share of females in


the household and this increase can be abrupt.


In rural areas, for instance, households with no fe-


males earn more than 10 per cent of their income


from remittances while only-female households can


earn up to 20 per cent.




48 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Figure 11: Share of remittances in total income by municipalities, 2002


17.3 - 22.96
8.62 - 17.3
6.21 - 8.62
3.41 - 6.21



Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Total households Female-headed households


20.4 - 28.3
14.2 - 20.4
9.7 - 14.2
3.8 - 9.7




0
.0


2
.0


4
.0


6


8 10 12 14 8 10 12 14


Urban Rural


Female- headed Male- headed


G
ai


n


log per capita household expenditure




Figure 12: Gain by head and area


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).




49TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


The share of remittances in total income, by is-
lands, both for total households and female-headed
households, is presented in figure 11. There are
some discrepancies in the distribution between
these cases. For total households, São Tiago and
Fogo show a high share of remittances; for female-
headed households, this occurs in Fogo and São
Nicolau. In all cases, with the exception of São
Miguel in the island of São Tiago, female-headed
households show a significantly higher share of
remittances than male-headed households. This is
especially the case in São Nicolau (26.6 per cent in
female-headed and 15.8 per cent in male-headed
households) and Fogo (21.1 and 13.7 per cent, re-
spectively).


To assess the effect of a possible increase of remit-
tances on households, a simulation of the welfare
impacts of an increase of 20 per cent in income
coming from remittances is carried out. Figure 12
shows the percentage gain in per capita house-
hold income for each Cape Verdean household,
using the non-parametric analysis to link the size
of the gain with the initial level of household well-
being (measured with the log of per capita house-
hold expenditure). As expected, the gains are
higher for female-headed households and rural
areas are more affected than urban areas. In fact,
in urban areas the gain is similar across the entire
income distribution and is equivalent to 2 per cent
of household income for female-headed house-
holds, and 1 per cent for male-headed house-
holds. In contrast, the gains in rural areas tend to
be positively associated with per capita household
expenditure, especially for female- headed house-
holds. Overall, this exercise suggests that an in-
crease in remittances seems to be important for
female-headed households, except for the poorest
households in rural areas, whose share of income
from remittances tends to be very small.


4.4. TOURISM, SERVICES AND LABOUR
MARKET INCOME


Tourism has become the primary source of growth
and foreign exchange in Cape Verde and repre-
sents one of the most important opportunities for
economic development, poverty reduction and
women’s empowerment in the country, through
foreign exchange earnings, the creation of direct
(e.g. hotel and restaurant employees) and indirect
(e.g. taxi drivers, gift shops, artisanal crafts, street


vendors, food manufacturers) jobs, and skills de-
velopment. More accurate tourism statistics, how-
ever, are needed for assessing the real impact
of tourism on the national economy as well as on
poverty and on the environment (Republic of Cape
Verde, 2009b).


At the global level, the tourism sector provides direct
and indirect opportunities for women to get earn-
ings and jobs in both the formal and informal sector.
Women make up between 60 and 70 per cent of the
labour force, among others, because most tourism
jobs are flexible and can rather easily accommodate
women’s need to devote time to family responsibili-
ties. Contrary to other sectors, tourism can provide
employment to women, including young ones, with
little or no formal training (ILO, 2010).


On the other hand, there is a divergence between
qualifications and employment opportunities for
women. Unskilled or semi-skilled women tend to
work in the most vulnerable jobs, where they are
more likely to experience poor working condi-
tions, inequality of opportunity and treatment, vio-
lence, exploitation, stress and sexual harassment.
They are on average paid 25 per cent less in the
sector than male workers for comparable skills (ILO,
2010). Employment segregation implies that women
tend to perform functions such as cooking, clean-
ing and hospitality, while men are in charge of more
skilful and better paid tasks. Moreover, jobs in the
tourism sector and in particular in lower level occu-
pations, are often seasonal and fluctuate according
to the volatile nature of the industry (United Nations
World Tourism Organisation and United Nations
Women, 2011). Women also suffer segregation in
terms of access to education and training.


Despite its potential benefits for overall economic
development, the expansion of the tourism sector
comes with potential costs, including, among oth-
ers, the need for large investments in infrastructure,
pollution, over-exploitation of natural resources,
such as fresh water, changes in social relations, po-
tential for increase in prostitution and sexually trans-
mitted diseases.


In Cape Verde, tourism is mainly concentrated on
Sal and São Tiago. Sal is the most popular destina-
tion with almost 60 per cent of total arrivals in 2006,
and São Tiago follows with 20 per cent. Tourism and
travel exports represent 62 per cent of total exports




50 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


Residents Non residents Total


Number % Number % Number %


Santo Antão 2,390 6.2 6,409 2.7 8,799 3.1


São Vicente 5,252 13.5 16,322 6.8 21,574 7.7


São Nicolau 775 2.0 798 0.3 1,573 0.6


Sal 12,606 32.5 154,616 64.0 167,222 59.6


Boa Vista 1,842 4.7 19,126 7.9 20,968 7.5


Maio 203 0.5 399 0.2 602 0.2


São Tiago 14,792 38.1 40,856 16.9 55,648 19.8


Fogo 913 2.4 3,125 1.3 4,038 1.4


Brava 67 0.2 91 0.0 158 0.1


Total 38,840 100.0 241,742 100.0 280,582 100.0


Source: Africa infomarket (2009).


Table 25. The geography of tourism, 2009


of services. A challenge in order to make tourism
beneficial for the population as a whole, and in par-
ticular for vulnerable groups, is that people tend not
to live where tourism is taking place (see table 25
for an overview on the geography of tourism). Im-
proving the transport infrastructure between the is-
lands would both make it easier for Cape Verdeans
to take part in the tourist sector and improve tour-
ists access to different islands. Two high-speed fer-
ries have recently begun operation for cargo and
passengers in order to foster the development of
tourism, as well as the socio-economic integration
among the islands.


An important dimension of the touristic activity is the
supply side. There has been a substantial increase
in the number of hotels and in different types of ac-
commodations. Hotels are still the main establish-
ments for tourism, basically in Sal; pensions and
residences are common in Santo Antão and São Vi-
cente. The regional distribution of accommodations
is shown in table 26, as well as the type of tourism
the establishments are catering for.


The tourism labour market is an important mecha-
nism for transferring benefits from tourism to the
Cape Verdean economy: Table 27 shows the num-
ber and types of enterprises in the tourism sector
(microenterprise, small and medium enterprise). It
also reveals that microenterprises are common on
most islands. The medium sized enterprises can
mainly be found on the most touristic islands.


The study explores, through simple simulations,
the welfare impacts, especially for women, of an
expansion of tourism. Tourism is an economic sec-
tor which includes a wide variety of activities and
impacts different sectors of the economy. Hotels
and restaurants are affected by tourism, and so are
commerce and transport. Agriculture and construc-
tion can also be affected by tourism, but to a lesser
extent. There is little quantitative data on how a giv-
en sector is affected by tourism. In the simulations,
this hurdle is sidestepped by assuming growth in
the major sectors/activities associated with tour-
ism, namely Hotels and Restaurants, Commerce,
and Transport.36 If the head of a household works in




51TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


Island
Microenterprise Small enterprise Medium enterprise Total


Employees
Number % Number % Number % Number %


Santo Antão 15 15.2 5 11.9 0 0.0 20 12.7 240


São Vicente 14 14.1 7 16.7 3 17.6 24 15.2 684


São Nicolau 6 6.1 0 0.0 0 0.0 6 3.8 36


Sal 17 17.2 8 19.0 9 52.9 34 21.5 1,512


Boa Vista 10 10.1 6 14.3 3 17.6 19 12.0 630


Maio 3 3.0 1 2.4 0 0.0 4 2.5 48


São Tiago 20 20.2 14 33.3 2 11.8 36 22.8 800


Fogo 9 9.1 1 2.4 0 0.0 10 6.3 84


Brava 5 5.1 0 0.0 0 0.0 5 3.2 30


Total 99 100.0 42 100.0 17 100.0 158 100.0 4,064


Source: Estimation based on Africa infomarket (2009).


Table 27. Tourism enterprises, 2008


Island
Establishments Beds


Type of tourism Infrastructure
Number % Number %


Santo Antão 19 13.4 310 3.5 Rural


São Vicente 20 14.1 711 8.1 Active, cultural International Airport


São Nicolau 6 4.2 79 0.9 Active Airport


Sal 34 23.9 5,219 59.1 Sun and beach, active , cultural International Airport


Boavista 14 9.9 1,168 13.2 Sun and beach, active , cultural International Airport


Maio 3 2.1 133 1.5 - Airport


São Tiago 31 21.8 973 11.0 Active tourism, business International Airport


Fogo 10 7.0 188 2.1 Active tourism, rural Airport


Brava 5 3.5 47 0.6 -


Total 142 100 8,828 100


Source: Africa infomarket (2009).


Table 26. Regional distribution of accommodations, 2009)




52 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


0
.0


2
.0


4
.0


6


8 10 12 14 8 10 12 14


Male headed Female headed


H&R H&R and Commerce


H&R, C and Transport


G
ai


n


log per capita expenditure




Figure 14: Gains by gender


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


0
.0


1
.0


2
.0


3
.0


4


8 10 12 14 8 10 12 14 8 10 12 14


National Rural Urban


H&R H&R and Commerce


H&R, C and Transport


G
ai


n


log per capita expenditure


Figure 13: Gains from tourism


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Hotels and Restaurants, the per capita expenditure


of the household is assumed to increase by 30 per


cent. In addition, if the head works in Commerce or


Transport, a further increase of 10 per cent in per


capita household expenditure is assumed. In the


analysis, the gains are assessed cumulatively so as


to illustrate the contribution of each sector.


The simulations allow calculating the percentage
gain in per capita household expenditure for each
Cape Verdean household. These gains are de-
scribed by using the non-parametric analysis to link
the size of the gain with the initial level of house-
hold well-being. Figure 13 shows the results at the
national level, and for rural and urban areas. Each
panel reports three non-parametric regressions.




53TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


0
.0


05
.0


1
.0


15
.0


2


8 10 12 14 8 10 12 14


Male headed Female headed


H&R H&R and Commerce


H&R, C and Transport


G
ai


n


log per capita expenditure




Figure 15.a: Gain by gender in rural areas


Source: Own estimation based on IDRF (2002).


The regression labelled H&R assumes an expan-
sion of the Hotels and Restaurant sector only. The
regression labelled H&R and Commerce adds the
gains from the expansion of Commerce. The regres-
sion labelled H&R, C, and Transports further adds
the gains from an expansion of Transport.


At the national level, the gains do not seem to be
significant for the poorest households, especially
gains originating in Hotels and Restaurants. Larger
gains are expected from an expansion of Commerce
and Transport and these gains are concentrated at


the middle and, especially, at the top of the distribu-
tion (i.e. richer households are more likely to ben-
efit). Conversely, Commerce gains seem to be more
centred at the bottom-to-middle part of the income
distribution. In rural areas, the gains are very small
because few household heads work in the affected
sectors. On the other hand, the simulated effects
are important in urban areas, which in fact drive the
results reported at the national level.


Figure 14 shows the gains by gender at national
level, while figures 15.a and 15.b present results


0
.0


2
.0


4
.0


6


8 10 12 14 8 10 12 14


Male headed Female headed


H&R H&R and Commerce


H&R, C and Transport


G
ai


n


log per capita expenditure


Figure 15.b: Gain by gender in urban areas


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).




54 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


for rural areas and urban areas. Female-headed
households are undoubtedly more affected by an
expansion of Commerce, and, to a lesser extent by
an expansion of Hotels and Restaurants. However,
as expected, only few women are employed in the
Transport sector (1.35 per cent of female heads)
and this sector practically does not have an impact
on the well-being of female-headed households.
Conversely, male-headed households are mainly
benefited by an expansion of the Transport sector
and the gains tend to be more concentrated in the
upper tail of the expenditure distribution. In rural ar-
eas the gain is smaller for both male- and female-
headed households – a consequence of the low
share of these sectors in total employment in rural
areas. The gains from an expansion of Commerce
for female-headed households in urban and rural
areas are important and are observed along all the
per capita household expenditure distribution.


The regional analysis is also relevant because each
island is specialized in different sectors. The aver-


age gains are reported in table 28. Some islands,
including Santo Antão, São Nicolau, Maio, Fogo and
Brava, enjoy little tourism and the gains are conse-
quently small. In contrast, the islands of São Vicente,
Sal and São Tiago benefit from tourism activities. It
is interesting to observe that different islands benefit
from expansions of different sectors. In São Vicente,
the highest gains are observed in male-headed
households at the middle of the income distribu-
tion. In female-headed households, the gains origi-
nate in the Commerce sector and are similar across
all levels of living (except perhaps for the poorest
households). In Sal, which receives 60 per cent of
all tourists, the gains of male-headed households
come from the Transport sector; in female-headed
households, the gains from an expansion of Hotels
and Restaurants sector and of Commerce are im-
portant and affect all social strata. Finally, in São Tia-
go, the gains from tourism are relatively anti-poor. In
female-headed households, the predominant gains
originate in the Commerce sector.




55TRADE LIBERALIZATION, FEMALE EMPLOYMENT AND WELFARE


Region \\
island Household head


Hotel and restaurants H & R + Commerce H & R + C + Transport


All Poor Non poor All Poor Non poor All Poor Non poor


National


All 0.3 0.1 0.4 1.4 0.9 1.7 1.8 1.1 2.2


Female headed 0.4 0.3 0.5 2.0 1.4 2.4 2.1 1.5 2.5


Male headed 0.2 0.0 0.3 0.9 0.4 1.1 1.6 0.8 2.0


Region


Rural


All 0.1 0.1 0.1 0.7 0.5 0.9 0.9 0.6 1.2


Female headed 0.2 0.2 0.2 1.2 0.9 1.6 1.3 1.0 1.6


Male headed 0.1 0.0 0.1 0.3 0.1 0.4 0.6 0.4 0.8


Urban


All 0.4 0.2 0.5 1.9 1.6 2.0 2.6 1.9 2.8


Female headed 0.6 0.4 0.7 2.7 2.1 3.0 2.8 2.3 3.1


Male headed 0.3 0.0 0.4 1.4 1.0 1.5 2.4 1.5 2.6


Island


Santo Antão


All 0.2 0.0 0.4 0.6 0.3 1.0 0.7 0.3 1.2


Female headed 0.0 0.0 0.0 0.4 0.5 0.3 0.4 0.5 0.3


Male headed 0.3 0.0 0.6 0.7 0.1 1.4 0.9 0.3 1.7


São Vicente


All 0.4 0.3 0.4 1.9 1.6 2.0 2.7 2.0 2.9


Female headed 0.6 0.6 0.6 2.5 2.4 2.6 2.7 2.6 2.8


Male headed 0.2 0.0 0.2 1.5 0.7 1.6 2.7 1.4 3.0


São Nicolau


All 0.0 0.0 0.0 0.7 0.3 0.9 1.4 1.7 1.2


Female headed 0.0 0.0 0.0 0.8 0.0 1.6 1.7 1.8 1.6


Male headed 0.0 0.0 0.0 0.6 0.6 0.6 1.2 1.6 1.1


Sal


All 2.0 1.4 2.1 3.2 2.9 3.3 4.3 3.4 4.4


Female headed 2.3 4.3 1.9 4.5 4.3 4.6 4.7 4.3 4.8


Male headed 1.9 0.0 2.2 2.7 2.3 2.7 4.1 2.9 4.2


Boavista


All 1.0 0.0 1.2 2.5 0.5 2.8 3.0 2.0 3.2


Female headed 1.9 0.0 2.1 3.0 2.2 3.1 3.0 2.2 3.1


Male headed 0.6 0.0 0.8 2.2 0.0 2.7 3.1 1.9 3.3


Maio


All 0.0 0.0 0.0 1.1 0.3 1.6 1.3 0.3 2.0


Female headed 0.0 0.0 0.0 2.0 0.7 2.5 2.3 0.7 2.9


Male headed 0.0 0.0 0.0 0.2 0.0 0.4 0.4 0.0 0.8


São Tiago


All 0.2 0.1 0.3 1.4 1.0 1.7 1.8 1.1 2.1


Female headed 0.4 0.1 0.5 2.2 1.4 2.8 2.3 1.5 2.8


Male headed 0.1 0.1 0.1 0.7 0.5 0.8 1.3 0.8 1.6


Fogo


All 0.2 0.2 0.2 0.6 0.5 0.8 0.9 0.5 1.2


Female headed 0.4 0.6 0.3 0.8 0.9 0.8 0.8 0.9 0.8


Male headed 0.1 0.0 0.2 0.5 0.2 0.7 1.0 0.3 1.4


Brava


All 0.6 1.4 0.0 1.4 1.9 1.0 1.6 1.9 1.3


Female headed 1.3 2.6 0.0 1.9 3.0 0.9 1.9 3.0 0.9


Male headed 0.0 0.0 0.0 1.0 0.7 1.2 1.3 0.7 1.6


Source: Estimation based on IDRF 2002 (Republic of Cape Verde, 2002b).


Table 28. Welfare impacts of an expansion in tourism and services






V


Policy
Recommendations






59POLICY RECOMMENDATIONS


5. POLICY RECOMMENDATIONS


Informed by the previous analysis, this chapter pre-
sents some policy recommendations. The aim is
to point to some key issues that have an important
bearing on women and to suggest some policies
that may facilitate the process of women’s economic
empowerment.


5.1. DIASPORA AND REMITTANCES


As discussed in chapter 4, remittance flows are im-
portant for Cape Verde, accounting for about 8.5
per cent of GDP in 2008. To better inform policy de-
cisions, this study explicitly addressed the link be-
tween migrants’ remittances, poverty and gender.
It was found that remittances are essentially poor-
friendly and retain an equalizing effect on overall
income distribution in the country, although their
direct effects on the poorest may be limited. The
analysis also provides some evidential support that
households that receive remittances rapidly attain
standards of living greater than those who do not
have family members working abroad. In terms of
distributional effects across gender and locations,
the findings from the study show that remittances
are more important for female-headed households
than for male-headed households and that they are
a more important source of income in rural areas
than in urban locations.


These poverty- and gender-specific findings have
important implications for policy purposes. Cape
Verde may consider ways and means to sustain
and facilitate remittance flows. This calls for policy
and institutional coherence at the national and inter-
national levels – bilateral, regional and multilateral.
In particular, it requires concerted and coordinated
action among sending, transit and receiving coun-
tries.


There are two main policy areas in this regard: (a)
new comprehensive policies and regulatory and
institutional frameworks to manage labour mobility;
and (b) a concerted approach to facilitate remit-
tance flows.


(a) Labour mobility


Further progress can be made at the national and
international levels, i.e. in the relation between Cape
Verde and destination countries, for managing la-
bour mobility. This is a complex issue where Cape
Verde may wish to carefully weigh the positive ef-
fects of migration and remittances (financial inflows,


investments, transnational networks linked to the
diaspora, the return of highly qualified individuals)
against their negative repercussions (“brain-drain”;
dependence on remittances without the ability
to leverage them to generate additional income;
Dutch-disease type impact at the macroeconomic
level, etc.).


Both trade and migration instruments can be used
to make migration beneficial to both the send-
ing and receiving country. As far as the temporary
movement of services suppliers under GATS mode
4 is at stake, the following measures could be con-
sidered to facilitate women’s increased participa-
tion and benefits from it: (a) simplifying the granting
of visas, work permits and licensing requirements;
(b) enhancing temporary movement of lower-skilled
workers; (c) eliminating economic needs tests or
reducing their coverage, and making them more
transparent and predictable; (d) facilitating recogni-
tion of professional qualifications (UNCTAD, 2009).


Cooperation agreements between origin and desti-
nation countries on “temporary” and “circular migra-
tion” have become a way to address a wide range
of issues including migrant rights, labour and social
protection, and facilitation of remittance flows (UNC-
TAD, 2004). Within the framework of these agree-
ments, there are several policy areas that Cape
Verde may wish to consider, including:


t4FUUJOHVQJO$BQF7FSEFDFOUSFTUPQSPDFTT
visas and distribute information concerning
migrations and employment opportunities in
the receiving countries (this already exists in
the case of migration to EU countries);


t*NQSPWJOHUIFMFHBMTJUVBUJPOPGNJHSBOUT QBS-
ticularly undocumented women workers, in the
receiving country;


t5BSHFUFEOFHPUJBUJPOTUPGBDJMJUBUFUIFSFDPHOJ-
tion of professional qualifications relevant to
the Cape Verdean diaspora, based on a better
understanding of their number, composition,
skill levels and aspirations. Special attention
needs to be paid to health workers, including
nurses, both to ensure proper recognition of
their professional qualifications abroad, and
to limit the phenomenon of brain drain that,
among other, could negatively affect the health
and retirement tourism;




60 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN BHUTAN? A GENDER PERSPECTIVE


tCo-financing return programmes for highly-
skilled migrants, or scholarships with return
conditions, so as to facilitate “circular” migra-
tion and/or return;


t *NQMFNFOUJOH JOUFHSBUJPO QPMJDJFT JO UIF IPTU
country not exclusively focused on assimila-
tion into the receiving country, but on training,
so as to empower migrants, and on reintegra-
tion issues (return);


t'BDJMJUBUJOHSFNJUUBODFGMPXTTFFCFMPX


As mentioned in Chapter 3, the “mobility partner-
ship” between the EU and Cape Verde provides a
framework for facilitating temporary and circular mi-
gration from Cape Verde to the EU, and for combat-
ing irregular immigration and regulating re-admis-
sion. It, among others, set up in Praia a joint centre
to process short-stay visas and to distribute infor-
mation concerning employment opportunities in
the EU members participating in the project. It also
envisaged capacity–building in Cape Verde to man-
age migration, notably by developing a centre de-
signed to implement measures for the information,
integration and protection of migrants and return-
ees. There were also plans to improve the efficiency
of workers’ migration procedures and to develop job
opportunities both in Cape Verde and abroad. The
partnership also provides for initiatives to facilitate
remittance transfers (European Union, 2008a and
2008b). More specifically, the Centre for Migrant
Support in the Origin Country (CAMPO) project aims
at facilitating the correspondence between skills
and available job vacancies and at providing infor-
mation on migration channels, so as to promote the
use of legal migration channels. It also aims at fa-
cilitating the reintegration the labour market at home
for Cape Verdeans returning from EU countries, and
at supporting them in making the best possible use
of the skills and resources acquired through the mi-
gration experience, for their own benefit and their
country’s development (African Union Commission
and the European Commission, 2009). Within this
framework, special attention should be devoted to
women migrants, in consideration of the special dif-
ficulties they usually face as migrants, and in order
to make the country benefit as much as possible
from the expertise they may have acquired abroad.


(b) Facilitate remittance flows


There are several ways and means to lower transfer
costs and formalize remittance flows. Various prac-
tices to that end have been reviewed in the context


of UNCTAD’s Expert Meeting on Maximizing the De-
velopment Impact of Remittances (Geneva, 14–15
February 2011).


Some innovative schemes have been implemented
through multi-stakeholder partnerships involving
destination and recipient countries, post offices,
banks and credit unions. Mexico, for example, has
adopted two approaches to making financial ser-
vices available to the 19.3 per cent of unbanked
and 24 per cent of underbanked Hispanic house-
holds in the United States (UNCTAD, 2011). One
was the issuance of consular cards to Mexican mi-
grants through Mexican consulates in the United
States, so as to facilitate the opening of bank ac-
counts. Agreements to accept such cards as official
ID for Mexican migrants had been signed between
banks/credit unions and Mexican consulates. An-
other approach was to provide financial education
to migrants in the United States and to recipients of
remittances in Mexico.


Other successful pilot projects to promote the use
of formal channels in remittance transfers are aimed
at increasing the diversity of agencies involved,
namely credit unions, financial cooperatives and
microfinance institutions and post offices, alongside
traditional institutions such as banks and money
transfer organizations. The postal system could play
a useful role in improving remittance flows, on ac-
count of its wide physical network and in light of the
fact that post offices are usually cheaper than banks
or money transfer organizations. Various schemes
have successfully established links between remit-
tances and postal account-based service (listed in
UNCTAD, 2011).


Receiving countries could also consider exempting
remittances from taxation, which would contribute to
lowering transaction costs and increasing the level
of formal remittance flows. Another powerful means
to facilitate easy and speedy flow of remittances from
source countries is to encourage the establishment
of foreign bank branches, or encouraging partner-
ships between local banking institutions and banks
in origin countries. In the United States, for exam-
ple, Citizens Bank has established an arrangement
with banks in Cape Verde to offer migrants from the
country a remittance facility that is cheaper than that
granted by money transfer organizations.


All these customized remittance policies/schemes
are typically implemented through multi-stake-
holders initiatives involving destination and recipi-




61POLICY RECOMMENDATIONS


ent countries, as well as public and private actors.
Cape Verde may wish to carefully revise the poten-
tial of these schemes to reach out to its migrants,
and particularly to cater for those temporary/undoc-
umented migrants, often unbanked/underbanked
women, who may not have the possibility to access
formal transfer mechanisms.


5.2. FOOD PRICES


The analysis on the welfare implications of food
prices in chapter 4 found that food price develop-
ments would have discrete effects across gender,
class and spatial location.


First, it was observed that, in both urban and rural
locations, and for both male- and female-headed
households, the share of household expenditure
devoted to food declines sharply with the level of
well-being. Consequently, lower food prices would
have a remarkable pro-poor bias, in that the poorer
would benefit significantly more from declining food
prices than the better-off. Conversely, soaring food
prices would disproportionately hit the poorer. It was
estimated that, at the national level, a 10 per cent
increase in the cost of the food bundle at the house-
hold expenditure level would lead to an increase of
2.6 percentage points in the poverty headcount ra-
tio, the fraction of people living under the extreme
poverty line would increase by 1.8 percentage
points.


Although there would be only marginal differences
between the poverty impacts on female- and male-
headed households, the impacts would tend to be
larger for females and for rural as opposed to urban
households. This reflects the fact that households
with more women tend to allocate a higher share
of their expenditure to purchase food, especially in
rural areas, and they would accordingly be more se-
verely hit by soaring food prices.


Conversely, a 10 per cent reduction in the cost of
the food bundle at the household expenditure level
due to tariff cuts linked to the EPA would lead to a
decline by 2.6 percentage points in the fraction of
people below poverty line. In the case of extreme
poverty, 2 per cent of Cape Verde people would
change their status from “extremely poor” to “poor”.
There would be only marginal differences between
the poverty impacts in female- and male-headed
households, though the impacts tend to be larger
in female-headed households. Also, the simulation
uncovers larger impacts in rural areas, particularly
in the case of extreme poverty.


The analysis revealed that, for all households and
for female-headed households in particular, the
share of food in total expenditures was, on average,
higher than 50 per cent in Santo Antão, Brava, Fogo,
and some rural areas of São Tiago. Since these ar-
eas are relatively poorer than others, it follows that
food price developments would disproportionately
affect the most disadvantaged locations.


These findings are critically important, as they un-
veil the discrete effects of soaring food prices within
society, and help to better define and target policy
interventions for socially inclusive development.


As discussed, food insecurity in Cape Verde is
structural in nature due to agro-ecological con-
straints. With only 10 per cent arable land, the Cape
Verde islands are heavily dependent on food im-
ports and greatly exposed to external food price
shocks. Hence the importance of national policies
and programmes that mitigate the domestic im-
pacts of spikes in international food prices. These
include safety net programmes (cash, food, vouch-
ers, or subsidies) as well as pro-active agricultural
policies aimed to secure basic livelihoods.


(a) Safety net programs


In Cape Verde, the central Government and the
municipalities administer several social protection
mechanisms to control the negative incidence of
food insecurity. These include school feeding pro-
grammes and targeted cash transfer programmes.
Overall, Cape Verde has a National Strategy for
Food Security (ENSA), which was developed in
2002 to run through 2015, together with a Five-Year
Program for Food Security (PSA 2002-2007) and a
National Program of Food Security for 2007-2011
(Republic of Cape Verde, 2007d).


A key consideration in designing social protection
schemes is deciding who should be targeted and
how. Findings from this study could provide some
guidelines when targeting schemes by charac-
teristics such as location, gender and income. In-
deed, domestic food subsidies and other universal
programmes are expensive, and they may benefit
groups who do not need them. In terms of reach-
ing the neediest, targeted programmes, such as
focused cash transfers, tend to perform better than
untargeted schemes. The Government seems to be
heading in this direction.


(B) Proactive agricultural/sectoral policies


The findings also point to the need to preserve and
boost some domestic capacity in staple food pro-




62 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


duction to lessen Cape Verde’s exposure to highly
volatile international markets. In 2009, 6.6 per cent of
the budget of the Government went to modernisation
programmes aimed to improve the quantity and the
quality of agriculture production, especially through
improved irrigation systems. On the other hand, the
fisheries sector got less than 1 per cent of the 2009
budget (0.9 per cent) and remains a subsistence
activity (AfDB, OECD, UNDP, UNECA 2011).


Cape Verde may wish to consider several policy
actions to increase production of staple, non-trad-
ed, traditional and indigenous crops and fisheries/
livestock for local markets. The Government has al-
ready identified some key areas of policy interven-
tion, which include:


t5PJNQMFNFOUSVSBMNBOBHFNFOUQPMJDZGPSUIF
sustainable management of natural resources
in order to take full advantage of the potential
for agricultural, forestry and livestock produc-
tion;


t5PTUJNVMBUFUIFBSUJTBOBMGJTIFSJFTTFDUPS


t 5P TUSFOHUIFO JOUFSJTMBOET NBSJUJNF DPOOFD-
tions to improve market supply and exporta-
tion of local production;


t5PSFJOGPSDF UIF JOUFHSBUJPOPGEJGGJDVMUBDDFTT
zones in order to facilitate the access to goods
and services; to assure the operation of the
Food Security Information System at central
(national) and local (municipalities) levels to
improve planning, evaluation and maximize
the impact of interventions in this area;


t5PBTTVSF UIFPQFSBUJPOPG UIF'PPE4FDVSJUZ
Network to improve the integration of food se-
curity concerns into sectoral policies;


t5P JODSFBTFQSPEVDUJWJUZBOE UPEJWFSTJGZQSP-
duction through technological upgrading;


t5PBTTVSFUIFBWBJMBCJMJUZBOETUBCJMJUZPG GPPE
supply in the markets by optimizing its man-
agement and assigning the supply to private
sector;


t5PJNQSPWFGPPEDSJTJTQSFWFOUJPOBOENBOBHF-
ment system;


t 5P CVJME MPDBM TUBLFIPMEFST JOTUJUVUJPOBM BOE
technical capacities and to promote the good
management of food security;


t5PQSPNPUFTBOJUBSZTFDVSJUZBOEUIFRVBMJUZPG
foodstuffs and water through nutritional and


environmental education (Republic of Cape
Verde, 2007d).


Special attention should be paid in these plans to
the role that women can play in alleviating food in-
security and to ways and means to facilitate their
active involvement. For example, it would be crucial
to ensure that the Food Security Information System
reaches women.


Concerted national and international policy actions
are needed to finance productive investment in ag-
riculture and fisheries. This calls for internal and ex-
ternal resource mobilization. In domestic resource
mobilization, a key issue is sustained growth in dy-
namic sectors of the economy (tourism, etc.) and
transfer of resources within the economy, across
sectors – ultimately, a matter of revenue manage-
ment. Turning to the pooling and alignment of ex-
ternal funds, a number of Aid for Trade initiatives
can catalyse development assistance in support of
Cape Verde’s efforts to develop the infrastructure to
enhance production capabilities. The key challenge
is to align aid flows to the priorities identified in na-
tional agricultural/sectoral policies. The technologi-
cal upgrading of women farmers, their enhanced
access to extension services, and training on
standards compliance represent examples of trade-
related areas where support from the international
financing schemes could be sought.


(c) South-South cooperation


Enhancing the trade links with countries in the re-
gion and deepening South-South cooperation could
prove beneficial for Cape Verde, especially consid-
ering its large food deficit. While at present only 1.7
per cent of Cape Verde’s imports come from other
ECOWAS countries, the provisions for the duty-free
and quota-free circulation of goods in the ECOW-
AS region could be used to facilitate trade in some
agricultural products, such as vegetable oils, fruits
and vegetables, and nuts. The elimination of non-
tariff measures, such as sanitary and phytosanitary
measures, and the reduction of transport and other
related trade costs could also be discussed in the
framework of enhanced regional cooperation.


5.3. TOURISM


Chapter 4 looked into how an increase in tourism-
related activities affects households’ income. Three
sectoral groups were studied: Restaurants and ho-
tels, Transport, and Commerce. The analysis shows
that female-headed households’ income is positive-
ly affected by an expansion of the Commerce sec-




63POLICY RECOMMENDATIONS


tor, and to a lesser degree by an expansion of the
Hotels and Restaurant sector. The effect is stronger
in urban areas than in rural areas. It is interesting to
note that female-headed households appear to be
stronger affected by the simulated income increas-
es than male-headed households (with all three sec-
tors included). Further, different islands benefit from
expansions in different sectors. Hence the analysis
shows that tourism is a potential sector for improv-
ing the economic condition of women, and that re-
gional differences should be taken into account.


As already mentioned, people tend not to live where
tourism is taking place. Hence, policies to improve
the transport infrastructure between the islands
would be instrumental to make it easier for Cape
Verdeans to take part in the tourist sector, and would
improve tourists’ access to different islands. The
recent start of operation of two speed ferries for
cargo and passengers points to the right direction.
The country’s ambitious plan for the expansion of
its infrastructure, including modernization of ports,
upgrading of roads and improvement of energy pro-
duction capacity, will enhance its attractiveness as
tourist destination.


Economic growth for Cape Verde may be achieved
by linking tourism with other economic sectors. The
promotion of cultural tourism, community-based
tourism, business-related tourism, wellness and
health tourism could be relevant in this respect.
Community-based and cultural tourism could of par-
ticular benefit women in poor rural communities. How-
ever, there is still little data available on this sector,
and adequate copyright law or legislation on the pro-
tection of national cultural heritage are yet not avail-
able. Concrete policies are needed for emphasizing
the importance of cultural industry and at strengthen-
ing its links with the tourism sector. Overall, more ac-
curate tourism statistics are needed to assess the real
impact of tourism on national economy (particularly
on poverty) as well as on the environment (Republic
of Cape Verde, 2009b).


Properly trained staff and a sufficient number of
skilled personnel are preconditions for delivering
high quality tourist services. Women’s participation
in tourism education and training would allow them
to have access to more qualified, stable and better
paid positions, including managerial ones. Policies
should be put in place to cater for such education
and training for women, especially those already em-
ployed in the sector. Brazil provides education and
vocational training to Cape Verde in several areas


and grants scholarship to Cape Verdean students.
Tourism could be included among the areas of co-
operation, and a number of scholarships on tourism
studies could be reserved to female candidates.
Flexible hours, arrangements for childcare and op-
portunities for working from home would make it pos-
sible for more women to enter the tourism sector. A
more active role for women as tourism entrepreneurs
may be facilitated by ensuring women’s access to
credit, land and property.


5.4. ECONOMIC PARTNERSHIP AGREEMENT


Trade liberalization is likely to affect the prospect of
industrialization in Cape Verde, since local produc-
ers increasingly face direct competition from EU
producers. Many Cape Verdean producers may not
remain profitable given their ability to compete with
EU imports being highly limited by severe supply-
side constraints. The food-processing, footwear and
clothing sectors may be particularly affected. These
sectors traditionally rely on large female workforce.


Given these concerns, it is crucial that Cape Verde
use all the flexibilities available within the EPA in de-
fining the product coverage, sequencing and tran-
sitional period for liberalization. The country should
include certain safeguards to protect its sensitive
products, both agricultural and non-agricultural, also
considering women’s participation in production.


Loss of Government revenue is a common concern
with trade. As detailed in chapter 3, customs and oth-
er import duties accounted for about 20.8 per cent
of tax revenue in 2009. According to some analysis,
tariff liberalization in the EPA context would lead to a
78 per cent decrease in total tariff revenue. This con-
traction would translate to a 15.8 per cent decrease
in total Government revenue. These shortfalls may
disproportionately affect women due to the negative
repercussions they may have on public services from
which they in particular benefit. Recovering Govern-
ment revenue loss in order to keep the level of public
services provided at present remains one of Cape
Verde’s key challenges for the future.


In order to mitigate the possible negative effect of
loss of revenue a country may wish to develop al-
ternative sources of income, including by broaden-
ing its tax base. Cape Verde’s introduction of a value
added tax (VAT) in January 2004 has outweighed the
drop in import revenues due to the reduction of trade
taxes. The poverty and redistribution effects of taxa-
tion, however, should be kept in mind when imposing
new taxes. Improving the education of tax officials,




64 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


enhancing the technological capacity of tax authori-
ties and supporting corporate management efficien-
cy, starting for example from adequate bookkeeping,
would be ways of increasing public revenues and at
least partially counterbalancing revenue decline due
to trade liberalization. Lower import tariffs, in combi-
nation with simplified tax and tariff systems, may also
be enhancing trade, and hence offset loss of revenue.


5.5. ECONOMIC EMPOWERMENT


Women who are economically empowered may find
it easier to gain respect within the society and in the
household. Cape Verde has experienced difficulties
in ensuring de facto gender equality despite of very
advanced and comprehensive legal commitments
at the national, regional and multilateral levels. The
challenge is to facilitate the transition from theory to
practice.


Increasing women’s participation in the labour mar-
ket would not only have positive repercussions on
their social and economic status, but would positive-
ly impact the economy and contribute to higher tax
income for the Government. Full use should be made
of the high levels of education attained by Cape Ver-
dean women and of the huge investments made by
the Government to this end.


Multilateral development assistance frameworks,
such as Aid for Trade (AfT), provide entry points to
use international trade as an instrument for women’s
economic empowerment. Projects and programmes
are eligible for AfT if they match the trade-related de-
velopment priorities of the recipient country’s national
development strategies. Thus interventions aimed at
facilitating women’s participation in international trade
would be eligible for AfT financing if such actions
were identified in Cape Verde’s trade related priori-
ties, national action plans, export strategies and pov-
erty reduction policies. Tradable sectors which have
a clear export potential, such as tourism and fishery,
could be considered, and AfT financing could in-
clude, among other, skills upgrading for women work-
ing in the tourism sector, awareness building on SPS
requirements in the markets of destination for women
working in the fishery sector, or improvement of the
cooling and freezing facilities for fishery, especially
those which have a large female workforce.


In consideration of women’s significant presence in
the decision-making process (8 out of 19 ministers
are women), including targeted measures for women
involved in trade among Cape Verde’s trade priori-
ties, seems to be an achievable objective.


Family policies would be particularly important to
enhance women’s participation in the labour market.
For example, measures (incentives or requirements)
to increase fathers’ participation in parental leave
would enable women to go back to work sooner, as
child care would be more equally shared between
the parents. Provisions of public child care would en-
able both parents to work. While such services are
expensive, increased female labour supply and tax
revenues could offset the costs.


In order to increase women’s participation at the
executive level, imposing a female quota for board
directors in publicly listed companies may be con-
sidered. Norway has implemented such quotas, and
France, Spain and the Netherlands are phasing in
similar measures.


5.6. HUBS AND PLATFORMS


Being located at the crossroads between Africa,
Europe and America, Cape Verde enjoys an ideal
geographical position for international transport of
passengers and cargo. However, exploiting such
a strategic position, thereby becoming an interna-
tional air and maritime transport hub, requires the
development of infrastructure to international stand-
ards. Expansion and modernization works are ongo-
ing in several ports and some of them, such as Min-
delo Port, could become important trans-shipment
ports. In the air sector, the construction of the Praia
Airport has had a positive impact in improving traf-
fic and the development of tourism and subregional
integration (African Development Bank, 2009). Such
development would allow the country to strengthen
trade links with non-traditional partners, such as
China and Brazil. However, Cape Verde should not
overlook competition from other existing or poten-
tial regional hubs and should realistically assess
the competitiveness of its services. The Diagnostic
Trade Integration Study and the Transport Strategic
Plan 2008-2011 have identified some key areas of
policy intervention to this end. They include, in ad-
dition to the necessary infrastructure upgrading, im-
plementing a modern maritime code, and increased
coordination among maritime, air and road transpor-
tation systems to facilitate inter-island connections.
The participation of international partners is critical
to the development of this sector and for securing
the necessary funding; therefore, the Government
plans to induce private sector investment through
subventions and concession contracts.




65COUNTRY PROFILE


APPENDIX 1: ANALYTICAL FRAMEWORK
This section lays out the analytical framework used to assess the impacts of trade liberalization on welfare in
general and on women, in particular. This framework builds on standard agricultural household models, as
in Singh, Squire and Strauss (1986), and follows Porto (2007) and Brambilla and Porto (2010).


The unit of analysis is the household, denoted by h. To measure welfare changes, the analysis adopts the
approach in Dixit and Normal (1980) and works with the budget constraint of the household.37 In equilibrium,
household expenditures (including savings) have to be financed with household income (including trans-
fers). That is


(1)


The expenditure function e (∙) of household h, on the left hand side, is defined as the minimum expenditure
needed to achieve a given level of household utility u h. It depends on a vector of prices of consumption goods,
p, on the level of utility u h, and on other household characteristics, x h (such as household composition).
Income comprises the sum of the wages of all working members j (w j ) and the sum of the profits ʌ i made
in different economic activities i. Profits include, for instance, the net income from agricultural production
(potatoes, oranges, apples, rice) or farm enterprises. They depend on prices, technical change and key
household characteristics, such as gender (summarized by Ø ). Notice that profits are defined as sales net
of purchases of inputs so that some of the effects caused by protection on inputs or intermediate goods can
be captured by ʌ i . In equation (1), ȉ h measures transfers (public or private), saving and other unmeasured
factor returns. Finally, exogenous income x h is added for technical reasons.
It is evident from equation (1) that household welfare depends on equilibrium variables, such as prices and
wages (that affect household choices) and also on household endowments. For instance, household con-
sumption depends on the prices of consumer goods, and household income depends on the labour endow-
ment (skilled, unskilled), the wage rate, and the prices of key outputs. It follows that changes in commodity
prices affect welfare directly via consumption and production decisions, and that these impacts are hetero-
geneous insofar as they depend on household choices and endowments. In addition, there are short-run
impacts, when households do not adjust, medium-run impacts, when households make partial adjustments,
and long-run impacts, when growth, investments, and long-run choices have taken place.


A crucial assumption that consent to work with equation (1) for welfare analysis is that the principle of “sepa-
rability’’ holds.38 Under this assumption, production decisions are independent of consumption decisions
(utility maximization). This means that the income level of the household can be considered as exogenous
(once optimal production decisions have been made) when utility maximization takes place. The separabil-
ity assumption is not innocuous: it requires perfect and complete markets (for goods, credit, insurance and
so on). Further, just to simplify the algebra, separability is also assumed between consumption and leisure
in utility.


First-order impacts


The analysis will now consider the impacts of changes in the price of commodity i. The short-run impacts
on the household can be derived by differentiating equation (1) (while keeping utility constant and adjusting
ȉ h ). It follows that
(2)


where cv =֙ is a measure of the compensating variation (as a share of initial expenditures) associated
with a change in the ith price. The compensating variation is defined as in Hicks (1939). It is the revenue
of a planner that needs to compensate households for the price change. If a household loses from a price
increase, the compensating transfer of income from the planner is and the compensating variation cv
is negative (i.e., a deficit for the planner). Instead, if the household benefits from a price increase, the com-


e h ( p, u h, x h ) = Ȉ w j + Ȉ ʌ h (p, Ø ) + ȉ h + x h
j i


o i


o


cv h = ( b h – s h ) dlnp h + ȈύjজZj dlnp h iiiii
j


dxo
e


dxo
e




66 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


pensating variation is positive because it actually represents a transfer from the household to the planner
(so that is negative).


In equation (2), s i is the budget share spent in good i, b i is the share of household income from the pro-
duction of good i , ύj is the share of the wage income of member j in total household income, and জZj
is the elasticity of the wage earned by household member j with respect to the price p i.
Equation (2) summarizes the first-order impacts of a price change. Notice that dlnp h has been purposely
indexed by h in order to introduce heterogeneity of price changes at the household level. The right-hand
side of equation (2) reveals impacts on both household consumption and income. On the consumption side,
consumers are worse off if prices go up, and they are better off if prices go down. In a first order approxi-
mation, these impacts can be measured with budget shares, s i. On the income side, there is also a direct
impact on profits, if the household produces goods i, which depends on the share of income attributed to
these goods, b i. In rural economies, this source of income can account for a large fraction of total income.
In more urbanized economies with more developed labour markets, the role of the direct production of (ag-
ricultural) goods will be much less important.


Overall, the first term on the right hand side of equation (2) establishes a key result in the literature: after a
price increase, net consumers (as defined by the difference between budget shares and income shares) are
worse off and net producers are better off. The opposite is true for price declines: net consumers become bet-
ter off and net producers worse off. Further, this shows that the welfare impacts will be heterogeneous across
countries. An exporter of agricultural goods will be, on average, benefited by price increases associated with
the international liberalization of agriculture; but an importer will probably be hurt by those changes.


The result was introduced by Deaton (1989a), who launched a whole literature (by advocating the use
non-parametric density estimation and non-parametric regressions in economic development) to study the
distributional effects of price changes. Deaton (1989a) used data from the Thailand Socioeconomic Survey
of 1981–82 to explore the distributional consequences of the export tax on rice across all Thai households.
The ideas introduced in Deaton’s work have been, and still are, extensively utilized in the literature. Early
examples include (a) Deaton (1989b), who reviews applications for Cote d’Ivoire, Indonesia, and Morocco;
(b) Budd (1993), who investigates food prices and rural welfare in Cote d’Ivoire; (c) Benjamin and Deaton
(1993), who study cocoa and coffee in Cote d’Ivoire, too; (d) Barret and Dorosh (1996), who look at rice
prices in Madagascar; and (e) Sahn and Sarris (1991), who examine structural adjustments in several Sub-
Saharan African countries. Deaton (1997) provides an account of the early use of these techniques in distri-
butional analysis of pricing policies.


Price changes also affect wages. This channel is described by the second term on the right hand side of (2).
The mechanisms are in principle simple. When there is a price change, labour demand for different types of
labour (and also labour supply) can change, thus affecting equilibrium wages. In (2), these responses are
captured by the elasticities জZj , which will vary from one household member to another provided different
members are endowed with different skills (unskilled, semi-skilled or skilled labour) or if they work in different
sectors (industry premia). These impacts on labour income depend on the share of income contributed by
the wages of different members, ύ j . Clearly, if countries differ in technologies, endowments, or labour regu-
lations, the responses of equilibrium wages to prices can be heterogeneous across different economies.


As shown in equation (2), the response of wages can generate first-order effects on household welfare. To
account for these responses, the standard net-consumer/net-producer proposition needs to be modified.
To see this, consider the extreme case where a farm-household consumes a product but does not produce
it at all. Instead, the farm earns income from selling labour in neighbouring farms. Omitting wages, this
household is a net consumer and could thus be hurt by a price increase. But if wages respond positively to
prices, the final welfare effect may not necessarily entail a loss. For details, see Ravallion (1990), Boyce and
Ravallion (1991), Porto (2005), and Porto (2006).


xo
e


i


i


i




67COUNTRY PROFILE


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71COUNTRY PROFILE


NOTES


1 The information on the history and geography of Cape Verde included in this section is available on the
official site of the Government of Cape Verde: http://www.governo.cv/.


2 In urban areas, 49.8 per cent of the population is men and 50.2 per cent women. In rural areas, 49 per
cent of the population is men and 51 per cent women. (Republic of Cape Verde, 2011a).


3 The Gini index lies between 0 and 100. A value of 0 represents absolute equality and 100 absolute in-
equality of income. Countries in the region display more even income distribution patterns than Cape
Verde. For example, the Gini Index for Benin is 38.6, for Cameroon 44.6, for Côte d’Ivoire 48.4, for The
Gambia 47.3, for Ghana 42.8, for Mauritania 39 and for Senegal 39.2 http://hdrstats.undp.org/en/indica-
tors/161.html.


4 2005-2008 period. (UNESCO, 2011).


5 The Government seeks to raise the contribution to GDP of fishing and agriculture. Statistically, the current
contribution of fishing and agriculture is underestimated since only artisanal fishing and traditional crops
are captured in statistics, leaving out industrial fishing, the impact of the Public investment Programme
(PIP) on dams, and microcredits for irrigation to raise agricultural productivity (AfDB, OECD, UNDP, UN-
ECA, 2011).


6 The penal code, the electoral law, the labour code and the civil code give equal rights to men and women.


7 This section is based on Republic of Cape Verde (2007b).


8 Domestic work is defined as work conducted in the residence of the employer. For more details see :
http://www.ine.cv/Legisla%C3%A7ao/Outras/C%C3%B3digo%20laboral%20cabo-verdiano.pdf.


9 The Convention was approved on 16 June 2011 during the annual conference of the ILO. It sets out a set
of standards, including reasonable hours of work, weekly rest of at least 24 consecutive hours, a limit on
in-kind payment, clear information on terms and conditions of employment, as well as respect for funda-
mental principles and rights at work including freedom of association and the right to collective bargain-
ing.


10 For more information: http://www.icieg.cv/.


11 The International Covenant on Civil and Political Rights, 1993; the International Covenant on Economic,
Social and Cultural Rights, 1993; the Principles and Plan of Action of the Cairo International Conference,
1994; the Beijing Declaration and Platform for Action, 1995); and the MDGs, 2000.


12 Information on ECOWAS can be found at: http://www.ccdg.ecowas.int/; and http://www.comm.ecowas.
int/dept/stand.php?id=e_e2_brief&lang=en.


13 CEDAW requires signatory countries to report about progress in implementing the Conventions’ obliga-
tions every four years. Cape Verde presented its first report in 2005 and this was considered a cumulative
report, including rounds 1 to 6 of the CEDAW reports. In September 2010 the Government approved a
CEDAW report combining rounds 7 and 8 (Republic of Cape Verde, 2010).


14 The PNIEG was evaluated in 2008, and a progress report towards achieving the MDGs was published
in 2009.


15 Remittances contribute to partially balancing the negative trade deficit; however, they are mainly used to
increase consumption-related activities, rather than to finance productive activities.


16 For example, Benin (0.354), Cote d’Ivoire (0.363) and The Gambia (0.262) have an export concentration
index far lower than Cape Verde’s. The concentration index shows how exports of individual countries
are concentrated on several products. The values rank from 0 to 1 (maximum concentration). Source:
UNCTAD Handbook of Statistics 2010.




72 WHO IS BENEFITING FROM TRADE LIBERALIZATION IN CAPE VERDE? A GENDER PERSPECTIVE


17 Cape Verde also qualifies as a beneficiary under two other preferential schemes: the United States’ Afri-
can Growth and Opportunity Act (AGOA) and the Canadian General Preferential Tariff (GPT) treatment.
The commercial significance of these schemes has been limited for the country: virtually no exports oc-
curred in 2008 and 2009 under the provisions of AGOA, and Cape Verde’s exports to Canada are not
significant.


18 The graduation entered into effect from 1 January 2008 (United Nations General Assembly Resolution A/
Res/59/210 of 20 December 2004).


19 Article 11(8) of Regulation (EC) No 732/2008 provides for the withdrawal of a country from the EBA, when
that country is excluded by the UN from the list of the LDCs. This Article also provides for the establish-
ment of a transitional period of at least three years before the removal takes effect (European Union,
2008a).


20 Côte d’Ivoire and Ghana, for example, both agreed to interim EPAs with the EU in December 2007. As a
result, the main exports of Côte d’Ivoire and Ghana continued to enjoy preferential access to EU markets.


21 The “Partnership Agreement between the members of the African, Caribbean and Pacific Group of States
of the one part and the European Community and its Member States of the other part” (“ACP-EC Part-
nership Agreement” or “Cotonou Agreement”) was signed on 23 June 2000 in Cotonou, Benin. It was
concluded for a 20-year period from March 2000 to February 2020, and entered into force in April 2003.
While under the Lomé conventions the EU granted non-reciprocal trade preferences to the ACP Group
of States, the Cotonou Agreement envisages a system of regional economic partnership agreements
(EPAs), under which the ACP States open their domestic markets to the EU as a reciprocal concession
for duty-free access to the EU market. Source: Europa, Summaries of EU legislation, http://europa.eu/
legislation_summaries/development/african_caribbean_pacific_states/r12101_en.htm.


22 The Mobility Partnerships are not legally binding international treaties. They do not cover all EU member
States – member States instead take part in the partnerships on a voluntary, opt-in basis, according to
the interest they have in managing migration flows, including irregular ones, coming from a specific third
county. France, Luxembourg, The Netherlands, Portugal and Spain have signed the Partnership with
Cape Verde. Because of their “soft” legal nature, their different geographical coverage and the fact they
are perceived to serve the national interests and the political agendas of the participating EU members
countries rather than the interests of third country workers, such agreements have been the object of
criticism. Source: Carrera S. and R. Hernandez i Sagrera (2009).


23 http://www.macaunews.com.mo/index.php?option=com_content&task=view&id=1099&Itemid=4.


24 Macauhub, 27 June 2008 and 2 August 2011.


25 Relative to other developing countries, particularly in Africa.


26 The customs general fees were levied on imports as a fixed percentage of the import value.


27 With the introduction of the VAT, the structure of indirect taxes was considerably simplified. It substituted
10 different taxes such as the Consumption Tax, the Tax on Oil Products, the Special Tax on Consumption
of Alcohol and Tobacco and the Tourism Tax. The normal VAT rate is of 15 per cent.


28 Document MTN.GNS/W/120, dated 10 July 1991. “Tourism and Travel Related Services” fall under, cat-
egory 9 of the Services Sectoral Classification List.


29 The first three subsectors have associated listing under the United Nations’ “Provisional Central Product
Classification” (CPC), as follows: CPC 641-643 for “Hotels and restaurants (including catering)”; CPC
7471 for “Travel agencies and tour operators services”; CPC 7472 for “Tourist guides services”.


30 See, for example, Communication from the Dominican Republic, El Salvador, and Honduras – The Cluster
of Tourism Industries (WTO document S/CSS/W/19, 5 December 2000).




73COUNTRY PROFILE


31 Tariffs may however become an issue, if Cape Verde manages to diversify towards more added value
exports. Also, tariffs may become an issue should there be a hiatus between the expiration of the EBA
transitional period and the conclusion of EPA negotiations.


32 This description of the impact of trade policy on individuals is based on the framework developed by
Nicita (2009).


33 The densities of the (log) of per capita expenditure is used. A kernel density estimation is a non-paramet-
ric way of estimating the probability density function of a random variable. This function describes the
relative likelihood for a variable to occur.


34 Official poverty line is 60 per cent of the medium annual household income of IDRF 2002.


35 A case study carried out in Naples, Italy, in the 1980s (Monteiro, 1997) reported that Cape Verdean
women were sending more money home than men, about 18 per cent of their income, as opposed to 7
to 13 per cent sent by men.


36 The sectors/activities reported are following the classification from the IDRF 2002 survey.


37 An alternative method is to start with the indirect utility function, see Deaton (1997).


38 See Barnum and Squire (1979) and Singh, Squire, and Strauss (1986) for a theoretical discussion of the
principle of separability.




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