Luxembourg has played a key role in mobilising technical and financial support for Cabo Verde's green energy transition, in line with the interests of local communities. Under the auspices of the Global Gateway strategy, it has laid the foundations for private sector investment from European Union member states.
Luxembourg and Global Gateway investments in Cabo Verde
Abstract
The Global Gateway strategy aims to support the development partners of the European Union, while facilitating private sector investment from member states that meet very high environmental, labour and financial management standards. It is challenging for a small island developing state like Cabo Verde to align these two objectives, as it does not have the resources to secure its energy supply and pursue sustainable development and climate resilience objectives: today more than 70% of its electricity generation relies on imported fossil fuels. Luxembourg's strategic role has enabled it to mobilise technical and financial support through the Global Gateway strategy, while at the same time prioritising the needs of local communities.
To reconcile the two objectives of the Global Gateway and ensure that they benefit all parties involved, Luxembourg has played a central role in coordinating multi-stakeholder investments aimed at stimulating the transition to green energy, sustainable transport and digital connectivity in Cabo Verde.
This ambitious project brings together contributions from the European Investment Bank (EIB), the European Neighbourhood, Development and International Co-operation Instrument (NDICI-INTPA) and Luxembourg Co-operation. It was signed in September 2024 by the parties involved.
The first phase of this project will focus on the development of a pumped storage infrastructure to store surplus renewable energy for redistribution at times of peak demand, ensuring optimal resource management and grid stability. In this context, Luxembourg Co-operation has already invested nearly EUR 4 million in feasibility studies, to help create favourable conditions to lay the groundwork for this infrastructure project. The aim is for the pumped storage plant to be operational in 2028.
The project could also attract private investment, given the private sector's interest in similar initiatives on the African continent. This would strengthen the public-private partnership dynamic and act as a catalyst for other sustainable development projects.
This example highlights Luxembourg's capacity to facilitate and coordinate large-scale projects, consistently with a view to ensuring efficiency and relevance to the local context. It stands out in particular for:
Mobilising additional financing: Thanks to the strong partnership with the EIB, the project succeeded in mobilising significant additional investment in Cabo Verde, expanding the scale and impact of the projects supported. The project will finance, among other things, a green energy storage facility with a EUR 29 million grant and a EUR 120 million loan to modernise national energy market.
Leveraging effect thanks to effective coordination adapted to the local context: the Global Gateway initiative and, more broadly, the Team Europe approach have demonstrated their ability to respond effectively to the critical energy needs of a developing country thanks to close coordination between the various public and private players. This shows that well-targeted interventions can contribute not only to sustainable development, but also to strengthening economic and strategic ties between international partners.
Importance of a partnership of trust and proximity with Cabo Verde: a partnership of trust spanning more than 30 years with the Cape Verdean authorities, as well as increased knowledge and involvement of Luxembourg's bilateral development cooperation agency (LuxDev) in the country's energy sector, have enabled Luxembourg to position itself as a privileged partner to effectively align the European offer, through the Global Gateway, with local priorities and help mobilise private resources in the future.
Luxembourg's strategic influence in mobilising resources: thanks to its influence with the EIB, Luxembourg has succeeded in mobilising major investments in addition to its own resources, also calling on INTPA to subsidise a non-concessional EIB loan. As a result, it has been able to broaden the scope and attractiveness of potential investment opportunities in Cabo Verde for private investment.
Benefits of a whole-of-government approach: The success of Luxembourg's whole-of-government approach in Cabo Verde highlights the value of inter-ministerial coordination. Through the Indicative Co-operation Programme "Development - Climate - Energy" (2021-2025), Luxembourg combined the expertise of the Ministries of Foreign Affairs, Economy and Environment, Climate and Biodiversity, facilitating the selection of targeted partners and instruments that reinforced the efforts of Team Europe.
European Union Delegation to Cabo Verde (2024), Global Gateway : l’Équipe Europe renforce son soutien au secteur digital, aux infrastructures portuaires et aux énergies renouvelables du Cap Vert, https://www.eeas.europa.eu/delegations/cabo-verde/global-gateway-l%E2%80%99%C3%A9quipe-europe-renforce-son-soutien-au-secteur-digital-aux-infrastructures_en?s=134.
European Commission (2023), Global Gateway: Team Europe and Cabo Verde present an investment package of €246 million to boost green energy, sustainable transport and digital connectivity transformation, https://ec.europa.eu/commission/presscorner/detail/en/ip_23_5265.
European Commission (n.d.), "Cabo Verde", https://international-partnerships.ec.europa.eu/countries/cabo-verde_en.
OECD (2025), OECD Development Co-operation Peer Reviews: Luxembourg 2025, OECD Development Co-operation Peer Reviews, OECD Publishing, Paris, (forthcoming).
OECD (2020), Development Co-operation Report 2020: Learning from Crises, Building Resilience, OECD Publishing, Paris, https://doi.org/10.1787/f6d42aa5-en.
To learn more about Luxembourg's development co-operation, see:
OECD, "Luxembourg", in Development Co-operation Profiles, OECD Publishing, Paris, https://doi.org/10.1787/87b15adf-en.
See more In Practice examples from Luxembourg here: https://www.oecd.org/development-cooperation-learning?tag-key+partner=luxembourg#search.
