Cape Verde Case Study

Cape Verde has made striking progress in growing its telecommunication sector and became the Least Developed Country (LDC) with the highest telephone density in 1996, a position it still holds.

Cabo Verde Telecom (CVT), the monopoly operator, has performed well and provided the country with an up-to-date telecommunication infrastructure. Nonetheless, there are the inevitable consequences of a monopoly situation, including higher prices, shortage of ancillary firms and deficiencies in innovation.

In both sectors - mobile and Internet access - Cape Verde's prices are above comparator countries and keep the country from fully benefiting from these technologies. At the end of 2001, there were around 32'000 mobile subscribers for a penetration rate of seven percent. Worldwide, the number of mobile subscribers passed fixed telephone subscribers in early 2002 and more than 100 countries had more mobile than fixed subscribers. Yet in Cape Verde, the mobile base only accounted for 33 percent of all telephone subscribers at the end of 2001, one of the lowest rates among LDCs and among African nations. Although this is partly due to the country's relatively high fixed line density, it also suggests restricted growth in the mobile sector. The Internet faces similar barriers and considering the advanced state of its infrastructure, it is surprising that Cape Verde does not have a higher level of Internet penetration, which stood at 2.7 percent at the end of 2001. Although there is a high level of Internet awareness among senior officials and many civil servants use the government intranet, the level of awareness among the population needs to be raised. There are also very few public Internet access locations.

To consolidate the gains made from infrastructure developments and to move to a higher level, Cape Verde needs to open up the market to liberalization and solve the problems linked to the legal restrictions in the ICT sector. While CVT has a legal monopoly until 2025, there are a number of arguments and an urgency for introducing competition now.

A mission to Cape Verde was carried out from 16-23 April 2002, involving Michael Minges, Vanessa Gray, and Margarida Evora-Sagna. The mission and interviews were coordinated with the Direcção Geral das Comunicações.