Training funds are now widely used to finance skills development, but their results are uneven. Too often, they count people trained without showing whether graduates find work or whether employers value the skills provided. Cabo Verde offers a useful counterexample. Its Fundo de Promoção do Emprego e da Formação (FPEF), or Employment Promotion and Training Fund in English, combines sustainable financing, competitive grants, equity targets, and employment tracking in a single system.
Created in 2012, the FPEF finances pre-employment and continuing training through annual calls for proposals. Public and private accredited providers can apply, including technical schools. The calls identify priority sectors using labor market information, and proposals are assessed for relevance, quality, expected employability, inclusion, and financial sustainability. Continuing training requires 50 percent co-financing from firms, giving employers a direct stake in what is taught and whether it responds to demand.
The scale is significant for a small island economy. Since its creation, the fund has benefited 24,903 people. Women account for 55 percent of beneficiaries, and more than half come from the two lowest income quintiles. Among graduates of initial training, the reported employment rate is above 89 percent; across all training types, it is 66 percent. The FPEF does not stop at measuring enrollment or certification, it follows graduates into the labor market.
Financing that fits Cabo Verde’s economy
The fund’s financing model evolved through trial and reform. At first, the FPEF received an allocation equivalent to 10 percent of tourism tax revenues, a logical choice in an economy where tourism is a major driver of growth and employment. When that allocation ended in 2016 and was not immediately replaced, resources fell sharply. The experience exposed the risk of relying on a single revenue source, especially in an economy vulnerable to external shocks.
In 2021, the government introduced a different model. Rather than creating a new payroll levy or raising labor costs after the COVID-19 crisis, it redirected a small share, 0.5 percent, of employer contributions already paid into the mandatory social security system. The reform also diversified the fund’s revenues across social security contributions, state budget transfers, tourism-related income, and partner financing.
The result has been a much larger and more predictable resource base. Annual financing rose from CVE 88.6 million in 2021 (around 1 million USD) to CVE 795.2 million in 2025 (around 8 million USD). The 2026 forecast is CVE 768.5 million. Domestic resources also became more important: their share increased from 17 percent in 2022 to 47 percent in 2025. Partner support from Luxembourg and the World Bank helped the fund expand while domestic revenue streams were consolidated.