Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Distribution channels vary greatly by island and by sector. Major distribution centers are the capital city of Praia (Santiago) and the Port of Praia, as well as the city of Mindelo (São Vicente) and the Port of Porto Grande. There are a few importers who distribute to a network of wholesalers that then supply retailers.
Using an Agent or Distributor
There are no large-scale national distributors that reach all of the islands. It would be incumbent upon the business owner to seek out a distributor with an appropriate network depending on the product.
It is best to have an agent or partner in country to manage and monitor the enterprise on the ground. Electricity and transportation can be unreliable and/or expensive and can inhibit offsite management and distribution.
Establishing an Office
To facilitate the bureaucratic process of opening a business, potential investors should consider hiring a lawyer to assist with the process of establishing an office in Cabo Verde. U.S. Embassy Praia’s website includes a list of attorneys, and Cabo Verde TradeInvest can also provide relevant contacts for business or investment lawyers. Individual merchants may establish businesses and conduct commercial activity under their own names. Larger commercial enterprises must be established within the processes and limits defined by Cabo Verdean law. The Ministry of Industry, Trade, and Energy is the governmental entity responsible for defining and executing the guidelines of the country’s economic policy. The municipalities are the licensing agencies for retail commercial activities in their area of jurisdiction.
For more information, visit the U.S. Department of State Investment Climate Statements website.
Creation of Companies and Establishing an Office
Foreign investors are authorized to create 100 percent private companies, except in the fisheries sector, for which one or more Cabo Verdean partners must hold a minimum share of 51 percent, and inter-island maritime transport, which requires a local share of at least 25 percent.
A foreign investor may carry out business activities in an individual capacity or by establishing one of the three types of trading companies permitted by law: limited companies, single-shareholder limited companies, or joint-stock companies. The main types of trading companies are limited companies and joint-stock companies, and choosing one of these options is primarily dependent on the size of the business (i.e., capital to be invested), with the former being more suitable for generating small- and medium-scale business and the latter more suitable for large-scale investment.
The potential external investor can form a company, by any of the necessary legal forms, opting for one of two procedures. The simplest and quickest process to establish a business is “Empresa no Dia” (“company in a day”), which is done through the Casa do Cidadão and involves delivering identification and relevant business/investment documents along with a fee of approximately $100. As the name implies, the entire process can normally be completed in one day. Alternatively, an investor can form a company through the Land Registry Office. Both options have advantages and disadvantages, and the choice should be based on a careful analysis of the company’s interests and the relationship to be established between the partners or shareholders. “Por quotas” and “Anonymous” companies are the most common legal forms.
Limited companies (Ltd) must comply with the following requirements:
- · publicly established, including the share capital and number and value of shares
- · minimum share capital of 1 escudo (0.01 euros)
- · split of share capital, underwritten by every shareholder
- · at least 50 percent of the underwritten capital deposited in cash at a local bank, remaining 50 percent of underwritten capital paid in the form of assets or cash over the next three years, in accordance with the company’s statute.
Joint-stock companies must fulfill the following requirements:
- · minimum of 2 (two) shareholders
- · minimum capital of 1 escudo (0.01 euros) and the capital must be fully subscribed
- · at least 30 percent of the underwritten capital deposited in cash at a local banking institution, remaining 70 percent of underwritten capital paid up in the form of assets or cash over the next five years, in accordance with the company’s statute
- · may be a single-member company, in which case the company is a stock corporation with a single owner (Sociedade Anónima, Unipessoal, SA)
All these steps may be completed at Casa do Cidadão through the “Empresa no Dia” process.
A corporate subsidiary is not a legal entity distinct from the parent company, but it has full legal capacity to conclude contracts as part of its activities. The procedure for establishing a Cabo Verdean branch of a foreign company is similar to establishing other types of companies; it requires proof of the company’s resolution to establish representation, a complete and up-to-date text of the contract to establish the represented entity and proof of its legal existence, the decision to establish a branch in Cabo Verde that indicates the type of company and the name of the person representing the company in Cabo Verde, and an attorney’s letter with authenticated signatures conferring power of attorney to represent the company for the establishment and legalization of the company in Cabo Verde.
Other formalities include registration of the company in the commercial registration office, publication of the statutes of the parent company in the official gazette, and registration with the Instituto Nacional de Previdência Social (INPS) and the General Directorate for Contributions and Taxes.
Although many Cabo Verdeans are familiar with popular U.S. brands, franchising remains rare, as competition in the local market is more often based on price rather than name recognition or perceived quality.
Cabo Verde has a few marketing and advertising firms. Thanks to increasing internet penetration and high rates of social media use, the costs associated with reaching consumers is relatively low. Media such as print, radio, and television platforms also offer easy access to consumers. Direct marketing via mail is limited in Cabo Verde because an address database is not yet developed.
Cabo Verde has no restrictions on joint ventures between local businesses and foreign investors. Normal due diligence is recommended when partnering with local businesses in any area of investment/business. The government also encourages joint ventures.
Cabo Verde is relatively well served by representatives of FedEx, DHL, and UPS, which have offices in Praia or agencies where packages can be picked up or delivered. The delivery of packages by the Cabo Verdean post office has improved over the years, with offices across the country offering adequate express delivery services.
Companies are advised to perform due diligence on their business partners and agents in any sector of investment or business. The U.S. Embassy in Praia can assist with contacts to entities that can have reliable information on brokers and potential partners, including Cabo Verde TradeInvest and the Chambers of Commerce. While there is no American Chamber of Commerce in Cabo Verde, the Embassy can also provide contacts of established U.S. businesses that can provide helpful information.