World Bank lends US $11.5 million to develop private sector

The World Bank on Wednesday approved a US $11.5 million loan for Cape Verde to develop the private sector of the economy in the arid island state and make it more competitive. The bank said the project would sustain Cape Verde's poverty alleviation efforts by generating employment. It would support tax reform help to establish a pensions system, reduce government red tape and provide support, such as training, to privatised companies. "The last two years have been a time of change and experimentation with institutional arrangements and policies, while redressing a difficult macroeconomic situation," a Bank statement said. "Cape Verde has achieved substantial progress in the area of macroeconomic reforms, cutting the fiscal deficit. It has a well-developed poverty strategy." Cape Verde is a volcanic archipelago of 10 islands on the Atlantic ocean, 600 kilometers west of Senegal. The former Portuguese colony has limited natural resources. However, it has a recent history of democracy and economic stability and a well-educated labor force, according to the Bank. In 2002 this arid country of 435,000 people suffered a total crop failure, prompting the government to appeal for international aid. Cape Verde normally only produces 10 to 20 percent of its cereal needs and imports the rest. The World Food Programme said many Cape Verdeans ate their seed reserves after last year's drought and had nothing left to plant.