The archipelago nation of Cabo Verde (Cape Verde), located off the west coast of Africa, has experienced a remarkable evolution in its social security system since gaining independence from Portugal in 1975. This development reflects the country’s broader journey from a post-colonial state to a stable democracy with a growing economy. Despite limited resources and geographic challenges, Cabo Verde has established one of the more robust social protection systems in sub-Saharan Africa. This article examines the initiation, reforms, and current state of Cabo Verde’s social security system, highlighting both achievements and ongoing challenges.

Historical Context and Initiation (1975-1990s)

Post-Independence Foundations

When Cabo Verde gained independence in 1975, it inherited minimal social protection structures from the Portuguese colonial administration. The newly formed government, led by the African Party for the Independence of Guinea and Cape Verde (PAIGC), faced the daunting task of building social protection mechanisms from scratch while dealing with drought, food insecurity, and limited economic resources.

The earliest social security initiatives focused primarily on public sector employees, who constituted the formal employment sector. In 1978, the government established the Institute of Insurance and Social Security (INPS – Instituto Nacional de Previdência Social), which became the cornerstone of the country’s social security system. Initially, INPS provided basic protections against workplace accidents, illness, and retirement for civil servants.

Early Challenges

During this formative period, Cabo Verde’s social security system faced several significant challenges:

1. Limited Coverage: Only a small percentage of the population—primarily government employees—had access to social protection.
2. Funding Constraints: The country’s weak economic base and limited tax revenue restricted the government’s ability to expand social security coverage.
3. Administrative Capacity: There was insufficient institutional capacity to manage a comprehensive social security system.
4. Informal Economy: A large portion of the workforce operated in the informal sector, making it difficult to incorporate them into contributory schemes.

Despite these challenges, the foundation established during this period provided a framework for future expansion and reform.

The Reform Era (1991-2010)

Democratic Transition and Policy Shifts

The early 1990s marked a significant turning point in Cabo Verde’s history with the transition to multi-party democracy in 1991. This political transformation brought about important changes in the approach to social security. The new government, led by the Movement for Democracy (MPD), embraced market-oriented reforms while maintaining commitment to social protection.

A major milestone came in 1992 with the approval of Law 28/III/1992, which established a more comprehensive legal framework for social security. This legislation expanded coverage to include private sector employees and introduced a more systematic approach to benefits and contributions.

System Expansion and Integration

The reform period saw several important developments:

1. Extended Coverage: The system gradually expanded to include formal private sector workers, providing them with protections similar to those enjoyed by public employees.
2. Introduction of Non-Contributory Schemes: Recognizing the limitations of contributory social security in a country with high informality, the government introduced the Social Pension (Pensão Social Mínima) in 1995. This non-contributory pension targeted elderly people and persons with disabilities who lacked other means of support.
3. Administrative Reforms: The INPS underwent significant restructuring to improve efficiency and service delivery. This included investments in technology and staff training.
4. Health Insurance Integration: In 2004, the government integrated health insurance into the social security system, marking an important step toward universal health coverage.

International Support and Influence

During this period, Cabo Verde received significant technical and financial support from international partners, particularly Portugal, Spain, and international organizations like the International Labour Organization (ILO) and the World Bank. These partnerships helped strengthen institutional capacity and informed policy development.

The influence of the Portuguese social security model remained significant, but Cabo Verde adapted these approaches to fit its own context and needs. This period also saw growing South-South cooperation, with Cabo Verde learning from other developing countries’ experiences.

Modernization and Expansion (2010-2020)

Legal and Institutional Reforms

The 2010s brought further refinements to Cabo Verde’s social security system. In 2010, a comprehensive new Social Security Law (Law 131/V/2001, revised) was approved, consolidating previous legislation and introducing new features:

1. Self-Employed Coverage: The system was expanded to provide better options for self-employed workers to participate in the contributory scheme.
2. Improved Benefit Structure: Benefits were restructured to provide better protection while ensuring financial sustainability.
3. Family Benefits: The system increased emphasis on family support, including maternity and paternity benefits and family allowances.
4. Unemployment Protection: Although limited, the first steps were taken to introduce unemployment protection.

The Non-Contributory Pillar

A particularly notable development during this period was the strengthening of non-contributory programs, including:

1. Unified Social Pension: In 2006, various non-contributory pension programs were consolidated into a single, more coherent Social Pension (Pensão Social Unificada), which was further expanded and improved in the following years.
2. Social Inclusion Income: The government introduced targeted cash transfer programs for vulnerable families, including the Social Inclusion Income (Rendimento Social de Inclusão).
3. School Social Action Programs: Expanded programs providing school meals, transportation, and other support to ensure children’s access to education.

Technology Integration

The modernization of Cabo Verde’s social security system has been significantly enhanced by technology:

1. Digital Registration Systems: Implementation of electronic registration and contribution tracking systems improved efficiency and reduced fraud.
2. Integrated Management Information Systems: Development of integrated databases allowed better coordination between different social protection programs.
3. Mobile Payment Solutions: Partnerships with financial institutions facilitated the introduction of mobile payment options for benefits, improving accessibility, especially in remote areas.

Current Situation (2020-2025)

Coverage and Inclusion

As of 2025, Cabo Verde’s social security system has achieved significant coverage compared to many similar-income countries:

1. Contributory System: Approximately 40% of the economically active population is covered by the contributory social security system, primarily formal sector workers in both public and private sectors.
2. Social Pensions: Nearly all elderly people without other pension income now receive some form of social pension, representing about 18% of the population over 60 years old.
3. Healthcare Coverage: The health insurance component of social security covers approximately 60% of the population, with efforts ongoing to reach universal coverage.

However, significant coverage gaps remain, particularly among informal workers, who constitute approximately 30% of the workforce.

COVID-19 Impact and Response

The COVID-19 pandemic tested Cabo Verde’s social security system significantly. The country experienced:

1. Economic Contraction: With tourism (a key economic sector) severely affected, unemployment increased, and contributions to the social security system declined.
2. Emergency Measures: The government implemented emergency measures including temporary income support for workers in affected sectors and expanded coverage of social assistance programs.
3. Digital Acceleration: The pandemic accelerated the digitalization of social security services, including online registration and benefit applications.

The system’s response to the pandemic demonstrated both its strengths and vulnerabilities. While emergency measures provided critical support, implementation challenges highlighted the need for further improvements in administrative systems and coverage.

Specific Programs and Coverage

Contributory System: Structure, Benefits, and Operation

The contributory social security system in Cabo Verde, managed primarily by the National Institute of Social Security (INPS), forms the cornerstone of the country’s formal social protection framework. This system has evolved significantly since its inception and now offers a comprehensive package of benefits to formal sector workers.

Coverage and Eligibility

The contributory system covers:

• Public Sector Employees: Civil servants and employees of state enterprises, historically the first group to receive coverage.
• Private Sector Employees: Workers with formal employment contracts in private businesses.
• Self-Employed Workers: Following reforms in the 2010s, self-employed individuals can voluntarily register and contribute to the system, though participation rates remain relatively low among this group.
• Household Workers: Domestic workers became eligible for coverage following legislative changes in 2009, though enforcement and compliance in this sector remain challenging.

As of 2025, approximately 40% of the economically active population participates in the contributory system. Coverage is highest in urban areas (approximately 55%) and significantly lower in rural regions (approximately 25%), reflecting patterns of formal employment distribution.

Contribution Structure

The current contribution framework operates as follows:

• Standard Employment: The total contribution rate is 16% of gross wages, with employers contributing 8.5% and employees contributing 7.5%.
• Self-Employed: Self-employed individuals contribute 19.5% of declared income, reflecting both the employer and employee portions with a slight reduction to encourage participation.
• Special Regimes: Certain sectors such as fisheries and agriculture have modified contribution rates (approximately 11% total) to account for income irregularity and encourage formalization.
• Contribution Ceiling: Contributions are capped at 80,000 Cape Verdean escudos (approximately $800) monthly, which affects benefit calculations for higher-income workers.
• Minimum Contribution Base: A minimum contribution base of 15,000 Cape Verdean escudos (approximately $150) ensures adequate benefit levels.

The system operates on a pay-as-you-go basis, with current contributions funding current benefits, supplemented by returns on reserve investments and government subsidies when necessary.

Benefit Structure

The contributory system provides a comprehensive range of benefits:

Old-Age Pensions

The flagship benefit of the system remains the old-age pension, which features:

• Eligibility Requirements: Minimum of 15 years of contributions and reaching age 65 for men and women.
• Early Retirement Options: Available from age 60 with at least 25 years of contributions, subject to a 4% reduction per year before standard retirement age.
• Benefit Calculation: The pension amount is calculated based on the average of the best 10 years of earnings in the last 15 years of contributions. The replacement rate ranges from 40% (for minimum qualifying period) to a maximum of 80% of average earnings for those with 35+ years of contributions.
• Minimum Pension: Set at 12,000 Cape Verdean escudos (approximately $120) monthly to ensure basic adequacy.
• Maximum Pension: Capped at 80% of the contribution ceiling, approximately 64,000 Cape Verdean escudos ($640) monthly.
• Indexation: Pensions are adjusted annually based on a formula that considers both inflation and wage growth, though in practice, adjustments have sometimes been delayed or reduced due to fiscal constraints.

Disability Pensions

Protection for workers who lose earning capacity includes:

• Eligibility: Available to workers who have lost at least two-thirds of their earning capacity due to illness or injury not related to work, provided they have made contributions for at least five years.
• Temporary vs. Permanent: The system distinguishes between temporary disability (reviewed periodically) and permanent disability (subject to less frequent review).
• Benefit Level: Generally calculated similarly to old-age pensions, with adjustments for younger workers with shorter contribution histories. The minimum disability pension is set at 14,000 Cape Verdean escudos (approximately $140) monthly.
• Rehabilitation Services: The system has begun integrating vocational rehabilitation services, though these remain limited in scope and availability.

Survivors’ Benefits

Support for dependents after a contributor’s death includes:

• Eligible Survivors: Spouse (or registered partner), children under 18 (or 25 if studying), and dependent parents if no other survivors exist.
• Benefit Levels: Surviving spouse receives 50% of the deceased’s pension entitlement (or what would have been their disability or old-age pension). Each eligible child receives 25% (40% if orphaned), with total family benefits capped at 100% of the deceased’s pension entitlement.
• Duration: Spouse benefits continue for life if the survivor is over 50 (for widows) or 55 (for widowers) or has a disability. Otherwise, benefits are paid for five years or until the youngest child reaches 18.
• Remarriage: Survivor benefits cease upon remarriage, with the possibility of a one-time grant equivalent to one year of benefits.

Sickness and Maternity Benefits

Income protection during illness and childbirth includes:

• Sickness Benefit: Provides 70% of average daily wages for up to 1,095 days (three years) for the same illness, with employer responsible for the first three days. Eligibility requires six months of contributions, including 12 days in the three months before illness.
• Maternity Benefit: Provides 90% of average wages for 60 days (expanding to 90 days by 2025), covering the period before and after childbirth. Eligibility requires six months of contributions.
• Paternity Benefit: Introduced in 2016, providing five days of paid leave at 100% of wages, expanding to 10 days by 2025.
• Medical Care: Contributors and their dependents are entitled to subsidized medical care through the health insurance component of the social security system.

Work Injury Benefits

Protection for occupational injuries and illnesses includes:

• Medical Care: Full cost coverage for necessary medical treatment, rehabilitation, and appliances related to work injuries or occupational diseases.
• Temporary Disability Benefit: 70% of wages for the first 14 days, increasing to 80% thereafter until recovery or determination of permanent disability.
• Permanent Disability Pension: Ranges from 30% to 100% of the worker’s average earnings based on the degree of disability. Complete disability qualifies for 100% of average earnings.
• Employer Responsibility: Unlike other benefits, work injury protection is funded entirely by employer contributions of approximately 2% of payroll (included in the overall contribution rate).

Family Benefits

Support for workers with family responsibilities includes:

• Family Allowance: Monthly payment of 1,500 Cape Verdean escudos (approximately $15) per child under 15 (or 25 if studying), paid to contributors with at least 12 months of contributions.
• Birth Grant: One-time payment of 6,000 Cape Verdean escudos (approximately $60) for the birth of a child to a contributor or contributor’s spouse.
• Funeral Grant: One-time payment of 30,000 Cape Verdean escudos (approximately $300) to help cover funeral expenses of a contributor or dependent.

Administration and Access

The administration of the contributory system has been modernized in recent years:

• Registration Process: Employers are legally required to register new employees within 15 days of hiring. Self-employed individuals must register themselves.
• Contribution Collection: Contributions are typically collected monthly, with employers responsible for withholding and remitting employee contributions along with their own contributions.
• Digital Transformation: Since 2015, INPS has implemented a digital platform allowing online registration, contribution payments, and benefit applications. By 2025, approximately 75% of transactions occur digitally.
• Service Centers: INPS maintains service centers in all municipal capitals, with mobile service units periodically serving remote areas.
• Compliance Enforcement: A dedicated inspection unit monitors employer compliance, with penalties for non-registration or contribution evasion ranging from fines to potential criminal charges for serious cases.

Recent Reforms and Future Directions

Recent changes to strengthen the contributory system include:

• Parametric Adjustments: Gradual increases in the contribution period required for full pension, implemented in 2018, aimed at improving financial sustainability.
• Simplified Procedures: Streamlined registration and contribution processes for micro and small enterprises introduced in 2019, aimed at increasing coverage.
• Benefit Enhancements: Increases in minimum pension levels and extension of maternity leave, reflecting commitment to benefit adequacy.
• Reserve Management: Creation of a more professional investment management framework for social security reserves, with clearer governance and reporting requirements.

Current policy discussions focus on:

• Further Coverage Extension: Developing adapted models for difficult-to-reach groups such as agricultural workers, fishermen, and informal market vendors.
• Contribution Flexibility: Considering more flexible contribution options for workers with irregular income patterns.
• Benefit Diversification: Potentially introducing unemployment insurance as a new benefit branch, though fiscal constraints have delayed implementation.
• Sustainability Measures: Debating further parametric reforms, including potential gradual increases in retirement age in line with life expectancy improvements.

The contributory social security system remains fundamental to Cabo Verde’s overall social protection architecture, complemented by non-contributory programs targeted at those unable to participate in contributory schemes.

Non-Contributory Programs

The non-contributory pillar includes:

1. Social Pension (Pensão Social): Providing monthly cash transfers to elderly people (over 60) without other means of support. The current benefit level is approximately 6,000 Cape Verdean escudos (about $60) per month.
2. Disability Support: Cash transfers and care services for persons with disabilities who cannot work.
3. Social Inclusion Income: Targeted assistance for extremely poor families, including both cash transfers and access to essential services.
4. School Support Programs: Including school meals, textbooks, and transportation subsidies for children from low-income families.

Digital Transformation: How Interact SSAS can assist with Cabo Verde’s pension system modernization

Role of Interact SSAS

While social security administrations across the archipelago look for optimal pathways to digitization, Interact SSAS can be a vital platform designed to automate and streamline pension administration while adhering to Cabo Verde’s specific policies.

Key Features of Interact SSAS

Policy-Driven Framework:

The system is built around a country and policy-based model. Administrators can define and modify social security policies easily to reflect changes in Cabo Verde’s law or practice.

Interact SSAS supports all relevant policies out-of-the-box with simple configuration of various available parameters, without any need for source-code customization:

• Employee Groups: Since Cabo Verde distinguishes between public sector employees, private sector employees, self-employed individuals, and Cabo Verdeans working abroad, this can be supported easily with the definition of different Employee Groups for each category in Interact SSAS. This enables the system to treat contributions calculations differently for each Employee Group and easily distinguish between the groups in all reporting and GL entries.
• Contributions: The varying contribution rates that apply to different categories of workers in Cabo Verde (defined as Employee Groups in Interact SSAS) can be defined within the setup of Contribution Policies.
• Reforms: Social security reform in Cabo Verde, as in other countries, means policy changes over time, typically affecting contribution rates, benefit calculations, entitlement eligibility rules, and more. Interact SSAS’s Policy Versioning keeps track of all changes and tracks start and end dates for each policy version. Transactions falling in periods when different policies were in effect can be handled under the rules applicable to that period. An additional benefit is that Interact SSAS displays the specific rules applied for any calculation, showing users which policy version was used to obtain a certain result.

Benefit Class, Policy and Entitlement Policy: Old Age Pension

In Interact SSAS, you first create Benefit Classes including any parameters that determine eligibility and entitlement calculation for a particular benefit. For Cabo Verde’s Old Age Pensions, these parameters would include:

• “Number of Contributions” (e.g., 15 years of contributions to be eligible for pension)
• “Minimum Age” (e.g., 60 years to be eligible for pension)
• “Average Insurable Earnings” (e.g., Reference Earning used for calculation of pension)
• “Contribution Blocks” (e.g., 12 months of Contributions)
• “Early Pension Reduction” (e.g., percentage reduction for early retirement)

Once these parameters are chosen for the Benefit Class, users can define the Benefit Policy and Benefit Entitlement Policy. The Benefit Entitlement Policy uses the selected parameters for eligibility and entitlement calculation, determining eligibility and calculating pension amounts based on formulas defined in the Rate Table.

Self-Service Portal:

Employees across Cabo Verde’s islands have access to a personal portal where they can view employment history, check contribution records, submit pension claims, and upload necessary documentation. This transparency reduces administrative delays and enhances user confidence.

If they notice missing or incorrect data, they can proactively alert social security administrators and upload supporting documents, giving administrators time to review and update records.

When filing for a pension, employees can verify their information and ensure the process is based on correct underlying data. The application form is streamlined, with most data pre-populated, requiring applicants only to select payment frequency and method preferences.

Automated Workflow:

Interact SSAS automates the end-to-end pension claim process:

• Submission and Review: Employees submit claims online, and designated social security administrators review and verify data.
• Approval and Audit: An integrated approval workflow ensures claims are rigorously audited before final processing.
• Financial Integration: The system generates files for electronic transfers (Electronic Bank Files), GL postings, and check payments, making the entire disbursement process efficient and accurate.

Accurate Benefit Calculation:

SSAS applies predefined parameters such as reduction factors and contribution periods to calculate benefits accurately. This minimizes errors and provides a clear audit trail for future reviews. All parameters are available out-of-the-box without requiring programmer involvement for rule configuration. Policy changes are maintained in separate tables with new version numbers, applied for the effective periods they should cover.

How SSAS Enhances Efficiency for Cabo Verde

By automating repetitive tasks and ensuring strict compliance with predefined rules, Interact SSAS reduces administrative burden for both employees and administrators across Cabo Verde’s islands. The system’s digital nature helps in:

• Error Reduction: Automated calculations and data validations ensure pension amounts are computed accurately.
• Transparency: The entire workflow is visible to stakeholders, reducing the risk of fraud and mismanagement.
• Flexibility: As Cabo Verde continues pension system reforms, SSAS can be easily updated to accommodate new policies or regulatory changes.
• Inter-Island Connectivity: The system bridges geographical gaps across Cabo Verde’s archipelago, ensuring consistent service delivery across all islands.
• Economic Development: By modernizing pension administration, Cabo Verde advances its digital transformation goals and aligns with its broader economic development strate

Conclusion

By implementing a comprehensive digital solution like Interact SSAS, Cabo Verde stands to transform these challenges into opportunities:

The adoption of Interact SSAS would represent a quantum leap in Cabo Verde’s social security modernization journey. This system would not only address current administrative inefficiencies but position Cabo Verde as a regional leader in digital social security administration. With more accurate benefit calculations, transparent processes, and improved service delivery, the system would enhance trust in the social security framework and potentially increase voluntary compliance among the self-employed and informal sectors.

Furthermore, the data analytics capabilities of Interact SSAS would provide policymakers with valuable insights for evidence-based decision-making regarding future reforms. The system’s flexibility would allow Cabo Verde to implement policy changes swiftly as demographic and economic conditions evolve.

As Cabo Verde continues to develop its digital economy and strengthen its position as a mid-income country with strong governance indicators, modernizing its social security administration through Interact SSAS aligns perfectly with the nation’s broader vision of inclusive development and efficient public service delivery across its ten islands. This investment would not only yield immediate administrative efficiencies but contribute to the long-term social and economic stability of the nation.