In the fourth quarter of 2023, Cape Verde’s SOE sector recorded an increase in assets of 2.2%, reaching approximately 129.8 billion escudos, equivalent to 49.2% of GDP. During this period, four companies improved their risk rating: one moved from very low risk to medium risk, two from high risk to medium risk and one from very high risk to high risk.
According to the Quarterly Performance Report, the State Enterprise Audit Office (UASE) audited 35 SOEs on the basis of their economic and financial performance. The report found that SOEs made a positive contribution to national wealth. Cape Verde’s GDP grew by 6.6% in volume terms, and for the full year 2023, business volume and EBITDA are expected to grow by approximately 4.4% and 28.3% respectively.
Key indicators such as EBITDA, EBIT and net profit decreased compared to the previous year, mainly due to depreciation and losses. Nevertheless, the liquidity ratio remains above 1, confirming the companies’ ability to meet their obligations.
The net result of the SPE is expected to be positive by about CVE 686.7 million in 2023, which could be the first time the SPE reports a profit. The six largest companies are expected to grow their business volume by 2.0% and their net result by 208.7% to around CVE 1.3 billion.
ASA and ELECTRA, which will generate 41% of the sector’s trading volume in 2023, will remain key players in 2024. The risk profile of the sector’s companies has improved, with 39.4% of companies having a medium risk level. A further improvement in the risk profile of some key players is expected in 2024.
source and photo: Expresso das Ilhas
How to evaluate this information?
1. Positive growth in the SOE sector
- What it means: Cape Verde’s SOE assets grew by 2.2% to reach around 49.2% of GDP. This indicates that the sector is stable and growing, which may indicate opportunities for business and investment.
- What to consider: The growth of the sector signals a healthy economy and the opportunity to invest in areas where the state or public sector plays a key role.
2. Improving the level of risk
- What it means: Some public sector companies have improved their level of risk, indicating an improvement in their financial stability and management.
- What to consider: Lower risk levels mean a lower likelihood of financial problems for SOEs, which is positive for investors looking to partner with or invest in these companies.
3. Economic growth and performance
- What it means: Cape Verde’s GDP grew by 6.6% in volume terms in 4Q2023, a positive signal for economic growth. Business volumes and EBITDA are expected to improve.
- What to consider: GDP growth and improving economic indicators suggest a favourable business environment, which is a motivating factor for investment.
4. Performance of large SOEs
- What it means: ASA and ELECTRA are major players that will continue to generate significant revenues in 2024. Their strong position offers opportunities for investment or business collaboration.
- What to consider: Focusing on these companies can be a strategic investment move if you plan to enter a sector where these companies are dominant.
5. Future outlook
- What it means: Results are expected to improve over the course of 2024, with risk decreasing for some key players.
- What to consider: The positive outlook and expected improvements mean that investing in Cape Verde has the potential to be beneficial over the long term, especially if the economy and business environment prove to be stable and growing.
