Cape Verde Household Debt Rises Amid Consumer Credit Surge
Consumer credit in Cape Verde surged in 2025, leading to a slight increase in overall household debt, according to the latest Financial Stability Bulletin released by the Bank of Cape Verde (BCV).
The central bank’s report highlights an acceleration in loans taken out by households for consumption and miscellaneous purposes. While the rise in debt levels over the last two years is described as “slight,” the BCV warned that the financial health of Cape Verdean families remains vulnerable to external pressures.
Inflation Risks Loom Over Households
The BCV expressed concern that the financial situation of households could deteriorate if costs for goods and services continue to climb. Although inflation cooled during the first quarter of the year, the central bank recently revised its annual inflation forecast upward, jumping from 1.7% to 2.7%.
In contrast to the rising trend in household credit, business lending has slowed. The bank debt indicator for companies has maintained a steady downward trajectory since 2021, suggesting a more cautious approach to corporate borrowing.
Banking Sector Reaches Record Solvency
Despite the risks facing consumers, Cape Verde’s banking sector appears more robust than ever. The BCV reported a “continuous improvement” in credit portfolio quality and a significant boost in solvency levels.
By December 2025, the sector’s solvency ratio reached 24.8%—the highest level since 2010. This figure is more than double the regulatory requirement of 12%, signaling that the nation’s banks are well-capitalized against potential shocks.
Concentrated Deposits Create Liquidity Risk
While the banking sector is fundamentally strong, the central bank flagged a persistent structural vulnerability: deposit concentration. The report noted that the five largest institutional depositors account for approximately 25% of all total deposits. This high level of concentration represents a significant liquidity risk should those major depositors decide to move their funds.
Overall, Cape Verde’s Financial Stability Index hit a historic high in 2025. The BCV attributes this milestone primarily to the increased resilience and robustness of the domestic banking sector, even as it keeps a watchful eye on household debt and inflationary pressures.
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