How Cabo Verde uses data and financing to turn skills training into jobs

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. Data that changes incentives A financing model alone does not guarantee results. The FPEF’s most important innovation may be the way it uses data to manage performance. Working with the National Labor Market Observatory, it established graduate tracer surveys that measure employment six months after certification. The system captures whether graduates are working and whether their jobs relate to their field of training. Those findings have consequences. Training providers are paid in two installments, and the second payment depends partly on employment outcomes six months after training, alongside indicators such as dropout rates. This shifts the provider’s incentive from filling training places to supporting successful transitions into work. An operational manual defines the rules and selection criteria, while a digital platform manages applications, implementation monitoring, certification data, and labor market integration. The fund has also expanded its reach. Calls for proposals issued from 2021 through 2024 covered 13,985 beneficiaries. The number rose from 2,608 in 2021 to 5,625 in 2024. The sharp increase demonstrates the operational capacity created by more stable financing, though future analysis should continue to examine completion, employment, job quality, and earnings as participation grows. Three lessons for skills funds Cabo Verde’s experience points to three practical lessons. First, financing design should reflect the structure of the economy. A model built around existing contributions and a mix of domestic and partner resources proved more feasible than introducing a new employer levy during a difficult recovery. Second, labor market information should guide both what is funded and how success is judged. The FPEF links annual calls to evidence on priority sectors and then uses tracer data to assess outcomes. This creates a feedback loop between labor demand, training design, provider performance, and future allocation decisions. Third, accountability works best when incentives are explicit. Results-based payments make employment outcomes part of the financing contract, not simply an evaluation conducted after funds are spent. The next step is to deepen employer participation in identifying skills needs, validating standards, shaping curricula, and supervising grants, while managing conflicts of interest. The FPEF still faces challenges. Its 30 percent ceiling on indirect costs protects spending on training delivery, but standardized cost benchmarks could make reimbursement more transparent and equitable across public, private, and remote providers. Better data on actual costs would help preserve efficiency without excluding institutions that face higher operating expenses. The broader message is simple: a skills fund works when money, data, and accountability reinforce one another. Cabo Verde did not rely on a single reform. It built a financing base, used evidence to select training, tracked graduates, and tied part of provider payment to results. For countries reviewing their own skills financing systems, the priority should be not only to mobilize more resources, but to build institutions that can turn those resources into better employment outcomes. Selected references and source materials · Mundi Consulting (2026), Value for Money Study of Cabo Verde’s Professional Training Financing System. · World Bank, ILO, and UNESCO (2024), Building Better Formal TVET Systems: Principles and Practice in Low- and Middle-Income Countries. · World Bank (2022), Cabo Verde Human Capital Project: Project Appraisal Document. · UNESCO (2022), Financing Technical and Vocational Education and Training: An Overview of Modalities and Instruments.