The Special Regime for Micro and Small Enterprises (REMPE) has played a crucial role in strengthening Cape Verde's business fabric since its implementation in 2014, through Law 70/VIII/2014. This regime was designed to promote competitiveness, productivity and the formalisation of micro and small businesses, contributing to the sustainable economic development of the archipelago. Recently, the Cape Verdean government has introduced significant changes to REMPE, with the aim of creating a more favourable environment for business growth and the inclusion of small investors. These measures include tax exemptions, simplification of administrative processes and specific incentives for strategic sectors such as tourism and renewable energies (Ministry of Finance).
The predominance of micro-enterprises in the country, representing around 14,940 businesses, highlights the importance of a legal regime that responds to the needs of this segment. These companies, which employ up to five workers and operate with a limited turnover, face challenges such as access to finance and bureaucracy. REMPE has emerged as a solution to encourage the formalisation and sustainability of these initiatives, promoting job creation and local development (BAI Bank Cape Verde).
In addition, initiatives such as the workshop promoted by the International Labour Organisation (ILO) in 2024, with the support of the Grand Duchy of Luxembourg, reinforce the importance of adapting REMPE to current requirements. This event discussed proposals for reforming the regime, with a focus on reducing tax and social barriers in order to create a more inclusive and favourable environment for entrepreneurship (Mindel Insite).
This report explores the impact of REMPE on the Cape Verdean business ecosystem, analysing its contributions to economic growth, the challenges faced by micro and small businesses, and the emerging opportunities for the future.
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The Legal Regime for Micro and Small Enterprises (REMPE) was created with the aim of boosting the competitiveness and productivity of micro and small enterprises in Cape Verde. This regime is regulated by Law 70/VIII/2014, approved on 26 August 2014, and has undergone significant changes to adapt to the needs of the business sector. REMPE aims to create favourable conditions so that these companies can compete more effectively in the market, contributing to the country's economic growth.
Among the main mechanisms for promoting competitiveness, the simplification of tax and administrative processes stands out, reducing bureaucratic burdens that often make it difficult for smaller companies to operate. REMPE also encourages innovation and the adoption of good business practices, promoting the modernisation of businesses. (Pro Company)
Another central objective of REMPE is the formalisation of informal businesses, a significant challenge in Cape Verde. Informality in the business sector is an obstacle to sustainable growth, as it limits access to finance, technical support and other essential resources. REMPE offers tax and administrative incentives to encourage informal businesses to register and operate within the legal framework.
Formalisation provides benefits such as access to funding programmes and technical assistance, as well as the possibility of taking part in public tenders and partnerships with government institutions. This process also strengthens companies' transparency and credibility with their clients and partners.
REMPE introduced the Special Unified Tax (TEU), a mechanism that simplifies taxation for micro and small companies. This tax is levied on companies' turnover, eliminating the need for organised accounting under the terms of the National Accounting and Financial Reporting System (SNCRF). Thus, companies covered by REMPE are not obliged to hire accountants for tax purposes, significantly reducing operating costs.
In addition, the regime stipulates that no tax assessment will be made for amounts less than 1,000 Cape Verdean escudos (approximately 9 euros), which represents tax relief for smaller companies. This system aims not only to make it easier to fulfil tax obligations, but also to increase adherence to the formal regime.
According to Article 3 of Law 70/VIII/2014, micro and small companies are defined based on the number of employees and annual turnover. Micro-enterprises are those that employ up to 5 workers and/or have an annual gross turnover of no more than 5,000,000 Cape Verdean escudos. Small businesses, on the other hand, employ between 5 and 10 workers, with a turnover of more than 5,000,000 and less than 10,000,000 Cape Verdean escudos. Companies that exceed these limits are subject to the organised accounting system.
This categorisation allows public policies to be applied more effectively, adapting incentives and tax obligations to the specific characteristics of each type of company.
Since its creation, REMPE has been the subject of several legislative changes, such as Decree-Law 12/2016, which came into force on 2 March 2016. This decree clarified crucial aspects of the regime, including the method of TEU settlement and the penalties for non-compliance with tax obligations. The changes were aimed at making the regime more accessible and effective, responding to criticisms and suggestions from the business sector.
These changes have had a positive impact on the business environment in Cape Verde, encouraging the formalisation of companies and increasing tax collection. In addition, the regime has contributed to job creation and the diversification of the economy, essential factors for the country's sustainable development. (Official Bulletin of Cape Verde)
The Special Regime for Micro and Small Enterprises (REMPE) has played a crucial role in encouraging young entrepreneurship in Cape Verde. This regime offers significant benefits, such as tax exemptions and reduced administrative costs, which make it easier for young people to enter the business market. In addition, REMPE promotes the creation of subsidised credit lines, allowing entrepreneurs to access financing with more favourable conditions. This financial support is particularly relevant for young people who face difficulties in obtaining start-up capital through traditional banking institutions. (CaboWork)
In addition, REMPE is complemented by programmes such as "StartUp Jovem", which offers training, mentoring and access to networks, strengthening the skills of young entrepreneurs. This set of initiatives has contributed to the diversification of the Cape Verdean economy by encouraging the creation of innovative businesses in sectors such as technology, tourism and services.
Another significant impact of REMPE is the prioritisation of micro and small companies in public procurement and subcontracting. This positive discrimination mechanism allows companies registered in the scheme to access business opportunities that would previously have been out of their reach. Preference in public works contracts and the supply of services creates a more inclusive environment, encouraging the formalisation and growth of local businesses. (Pro Company)
This benefit not only increases the competitiveness of companies, but also contributes to their financial sustainability by guaranteeing a constant flow of revenue from government contracts. This impact is particularly relevant in more remote regions, where business opportunities are often limited.
Although the formalisation of companies has been addressed in previous reports, this section focuses on REMPE's direct impact on reducing informality. Through tax incentives and the simplification of administrative processes, the regime has encouraged informal companies to legalise their activities. This process not only improves transparency in the market, but also increases tax collection, allowing the government to reinvest in programmes to support entrepreneurship. )
In addition, formalisation allows companies to access benefits such as social insurance for their workers and technical training programmes, increasing the quality of the services provided and customer satisfaction.
REMPE introduced tax measures aimed at easing the tax burden on micro and small businesses, promoting their long-term sustainability. These measures include tax exemptions for companies with incomes below a certain threshold and the creation of the Special Unified Tax (TEU), which simplifies the fulfilment of tax obligations.
These initiatives reduce companies' operating costs, allowing them to reinvest in strategic areas such as innovation, marketing and expansion. This impact is particularly evident in sectors such as commerce and services, where low profit margins can be an obstacle to growth.
REMPE has also contributed to promoting equal opportunities in the Cape Verdean business market. By offering uniform benefits to all micro and small businesses, regardless of their location or sector of activity, the scheme helps to level the playing field. This is especially important in peripheral regions, where access to resources and opportunities is often limited.
In addition, the scheme encourages the participation of women and other under-represented groups in the business sector through specific support and training programmes. This social impact is a reflection of the government's commitment to promoting inclusive and sustainable economic development. (CaboWork)
Incubators and accelerators play a crucial role in supporting start-ups and micro-enterprises in Cape Verde. These initiatives offer technical support, mentoring and access to networks of strategic contacts, helping entrepreneurs turn ideas into sustainable businesses. The Business Incubation Centre (BIC), for example, has been a benchmark in supporting young entrepreneurs, promoting innovation and competitiveness in the market. In addition, programmes such as the Startup Challenge, in partnership with JovEmprego Cabo Verde, have contributed to training entrepreneurs through workshops and mentoring sessions. (consultancy.cv)
Continuous training is essential for strengthening entrepreneurship in Cape Verde. Programmes such as "StartUp Jovem" offer specialised training in areas such as business management, digital marketing and technological innovation. These initiatives aim to prepare entrepreneurs for the challenges of the globalised market, promoting the modernisation of their businesses. In addition, the government has invested in partnerships with academic institutions to develop technical courses and certification programmes tailored to the needs of the local market. (expressodasilhas.cv)
The Morabeza Fund, financed by the African Development Bank (ADB) to the tune of 24 million euros, is a structuring initiative aimed at fostering digital and technological entrepreneurship in Cape Verde. This fund offers financing to start-ups and micro-enterprises, with a focus on strategic sectors such as fintechs and e-commerce. In addition, crowdfunding platforms have been gaining prominence as alternative financing mechanisms, allowing entrepreneurs to access capital in a more accessible and diversified way. (diarioeconomico.co.mz)
In addition to the Morabeza Fund, the Cape Verdean government has been promoting subsidised credit lines for micro and small businesses. These credit lines offer advantageous conditions, such as reduced interest rates and extended payment periods, facilitating access to the capital needed for business growth. This financial support is particularly relevant for entrepreneurs who face difficulties in obtaining financing through traditional banking institutions. (consultancy.cv)
Public-private partnerships have been fundamental to the development of entrepreneurship in Cape Verde. These collaborations make it possible to mobilise resources and implement projects that benefit both the public and private sectors. One example is the partnership between the government and international companies such as Starlink and Airtel, which aim to improve the country's digital infrastructure. These initiatives not only strengthen the entrepreneurial ecosystem, but also attract foreign investment, consolidating Cape Verde as an innovation hub in the region. (expressodasilhas.cv)
Organisations such as the African Development Bank and the European Union have played a significant role in funding entrepreneurship projects in Cape Verde. This support includes subsidies for the development of digital technologies, training programmes and sustainability initiatives. This international involvement strengthens the country's ability to implement large-scale projects and increase the competitiveness of its companies on the global market. (diarioeconomico.co.mz)
The development of adequate infrastructure is essential for the success of entrepreneurship in Cape Verde. Coworking spaces, such as those promoted by Cabo Verde Digital, offer collaborative environments where entrepreneurs can share resources and ideas. In addition, the recently opened Mindelo Technology Park represents a milestone in supporting the digital economy, providing access to advanced technologies and networking opportunities.
Incubation and acceleration programmes are another essential component of the support infrastructure. These programmes offer technical support, training and access to funding, allowing startups to validate and scale their business models. The Blue Economy, sustainable tourism and renewable energies are some of the strategic sectors supported by these initiatives, which aim to promote the country's sustainable economic development. (consultancy.cv)
The National Strategy for the Digital Economy is a central pillar in strengthening entrepreneurship in Cape Verde. This strategy includes the implementation of the Single Digital Services Portal and the development of a fintech innovation centre, which aim to facilitate access to digital services and promote technological innovation. The aim is to increase the digital economy's share of GDP to 25% by 2025, creating quality jobs and stimulating young entrepreneurship. (expressodasilhas.cv)
The Cape Verdean government has prioritised support for tech startups, offering tax incentives and access to funding programmes. These measures are complemented by initiatives such as the Morabeza Innovation Project, which aims to accelerate digital transformation and attract talent, including digital nomads. This focus on technology positions Cape Verde as an attractive destination for international entrepreneurs and investors. (diarioeconomico.co.mz)
The Legal Regime for Micro and Small Enterprises (REMPE) has proved to be a strategic tool for strengthening entrepreneurship and the development of micro and small enterprises in Cape Verde. Through measures such as tax simplification, the introduction of the Special Unified Tax (TEU) and the reduction of administrative burdens, the regime has promoted competitiveness and business sustainability. In addition, REMPE has played a crucial role in formalising informal companies, enabling them to access funding, technical assistance and opportunities in public contracts, contributing to greater transparency and tax collection in the country. These initiatives have fostered business modernisation and economic diversification, with a positive impact on job creation and sustainable growth.
Another important aspect is the encouragement of young and technological entrepreneurship, with programmes such as "StartUp Jovem" and the Morabeza Fund offering funding, training and technical support. These initiatives, combined with the development of infrastructures such as the Mindelo Technology Park and coworking spaces, have consolidated Cape Verde as an innovation hub in the region. The National Strategy for the Digital Economy, which aims to increase the digital economy's share of GDP to 25% by 2025, further reinforces this commitment. However, to maximise the impact of REMPE, it will be essential to continue investing in public-private partnerships, business training and inclusive policies that promote equal opportunities throughout the territory.
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