Country Office Contacts
Main Office Contact
+258-21-482-300

Rafael Saute
Sr. Communications Officer
+258-21-482-944

Av. Kenneth Kaunda, 1224
Maputo, Mozambique
rsaute@worldbank.org

In Washington:
Thomas Buckley
Country Program Coordinator
+1-202-473-0075

1818 H Street, NW
Washington, DC 20433
tbuckley@worldbank.org

This page in:

Sao Tome and Principe Overview

Overview

The Democratic Republic of São Tomé and Príncipe (STP) is a small and fragile island state. A lower middle-income country and an archipelago of just over 1,000 square kilometers in the Gulf of Guinea, STP is one of the smallest economies in Africa with over 180,000  inhabitants and a per capita Gross National Income (GNI) of about US$2,080 (2011, PPP, current international $). It is highly dependent on external support, with over 85% of its budget financed by Development Partners. The country’s economic outlook remains positive though the near term outlook is challenging. The economy remains vulnerable to external and domestic shocks and growth has been revised downward from 5.5 to 4% in 2012, given the global uncertainties and the related slowdown in FDI. The annual average rate of inflation has trended down from 26% in 2008 to 14% in 2010, to a single digit percentage of 9.6 in 2012 and 7-to-9% in 2013.

The country has also registered significant improvements in human development front recently.  It ranks 144th out of 186 countries in UNDP’s Human Development Index (HDI), higher than the average in Sub-Saharan Africa and with consistently improving indicators. Great strides have been made in education and health outcomes. Recent achievements include a sharp decline in maternal and child mortality rates due in large part to an increase in the proportion of births attended by skilled birth attendants. Important progress has been achieved in the fight against malaria, with a record low incidence as well as HIV/AIDS prevalence at less than 1.5% . São Tomé and Príncipe has also registered excellent progress in education, especially in primary education. The Gross Enrollment Rate is estimated at 106% in 2011, and STP is close to achieving primary education completion rate at 97%. Secondary education has not yet universal coverage with supply limited to main urban areas.

Despite those remarkable achievements, the country is rated Fragile State as assessed using the Multilateral Development Bank’s based mainly by economic vulnerability and insularity, and it remains highly vulnerable to unpredictable shocks, such as food shortages, climate change, and the impact of the recent global financial crisis. With limited progress in poverty reduction, unemployment continues to be high, especially among women and youth population, and gaps in terms of chronic malnutrition, infant mortality and secondary education are also high.

Political Context

São Tomé and Príncipe has been largely free of conflict and political violence since holding its first multiparty elections in 1991. However, internal political wrangling has caused repeated changes in governments and two failed coups in 1995 and 2003. Following a political confrontation in December 2012, a vote of no-confidence led to the replacement of the minority government led by Prime Minister Patrice Trovoada by an all opposition government headed by Prime Minister Gabriel da Costa immediately after December of the same year. Although this new Government holds a narrow majority with 29 out of 55 seats in parliament, the cohesiveness of the coalition is untested. Though national (legislative) elections are not expected until August 2014, the political situation remains fragile.

Last updated September 2013

Development challenges

While Sao Tome and Principe (STP) faces complex set of challenges, it also has a number of opportunities it can capitalize on.  Its challenges mainly stem from its isolated setting, its limited internal market, an undiversified economy, environmental degradation and climate change, frequent turn-over in government, as well as management of revenues from incipient – though uncertain – oil sector.  Nonetheless, STP has significant opportunities to diversify its economy through tourism, fisheries, hydropower as well as oil production. Access to education and health have markedly improved (though quality remains an issue), positioning STP well to make strides in economic growth and poverty reduction. 

The Government of Sao Tome and Principe (GoSTP) has prepared its second poverty reduction strategy paper (PRSPII) , which identifies and sets forth the country’s priority areas of intervention for a  five-year period (2012-2016). The PRSP II focuses on four pillars:

  1. promoting good governance and public-sector reform;
  2. supporting sustainable and inclusive economic growth;
  3. enhancing human capital and extending basic social services; and
  4. reinforcing social cohesion and social protection, particularly for vulnerable population groups. 

In order to achieve the above vision, the following general strategic objectives have been defined: i) maintaining an annual GDP growth rate of at least 6% in order to facilitate consistent diversification of the economy; ii) reducing the percentage of the population living in poverty by ten percentage points (through promotion of income generating initiatives so as to improve the economy’s productive capacity); and iii) improving access to basic social services to the entire population.

The World Bank Group is currently updating its Country Partnership Strategy (CPS) in alignment with the government’s development vision mentioned above. The strategy under preparation will include a special focus on two broad themes: Enhancing economic governance and competitiveness to promote shared prosperity; and Strengthening service delivery and human capacity to reduce poverty.  In addition, it will seek to incorporate gender, partnership, and capacity building as cross-cutting elements throughout its proposed interventions. The CPS pays close attention to the constraints that STP faces and proposes targeted support that the Bank can offer to unblock these constraints.

The World Bank has funded about 20 projects for STP to date. Its early support focused on agriculture, health, and education sectors, and included structural adjustment operations. These projects, contributed to the country’s efforts to reduce poverty and promote economic development. The total World Bank investments into STP ascend US$100 million so far, most of which from the International Development Association (IDA), the World Bank’s fund for the poorest countries.

The current country portfolio consists of IDA-funded projects as follows: Adaptation to Climate Change Project (US$4.15 million); Second-Governance and Competitiveness Development Policy Operation (US$5.5 million); and the Regional Central African Backbone Project, which is providing broadband connectivity to STP and promoting competition in the telecommunication market (US$14.9million).

Last updated September 2013

Support to Education--- The Social Sector Support project and its Additional Financing Operation, financed in part by the Education for All-Fast Track Initiative (EFA/FTI) Catalytic Fund Grant (now Global Partnership for Education Fund), have exceeded the targets these project had set out to achieve for STP. Examples of those gains include the current Gross Enrollment Rate (GER), estimated at 121%, and the completion rate in primary education at 64%. The ‘survival’ rate from first to sixth grade rose to 66.7% in 2009, from 47% in 2003, and the transition rate from fourth to fifth grade increased to 84.2% from 60% in the same period. The percentage of schools working on a triple shift regimen has dropped to eight from 27 in 2003, and the ratio of one textbook per student has been achieved.

Support to the Health Sector --- The health sector is also demonstrating encouraging results, particularly in the areas of maternal health and child health care. Most of the original project indicators have also been reached or surpassed. The proportion of births attended by skilled professionals increased to 86% in 2009 from 70% in 2003 (surpassing the project target of 85%) as a result of improvements in service delivery, particularly in rural areas. At the same time, the proportion of pregnant women receiving antenatal care increased from 65% to 82.3% during the same period. Progress was also registered in child health care. The immunization rate for measles in 2009 is at 93.1%, and São Tomé and Príncipe has been a success story on the malaria front: the incidence of the disease in children under five years old has decreased to 34 per 1,000 in 2009 from 1,273 per 1,000 in 2004, primarily as a result of the use of bed nets, and the treatment of malaria cases with a combination of amodiaquine and artesunate. Mortality from malaria has dropped to close to zero in 2009. The HIV prevalence among pregnant women has dropped from 5.4% at the beginning of the project to an estimated 1.5% in 2009, although some concerns still remain. Civil society organizations have also played an important role in project implementation.

Improving Transparency --- Significant progress in improving transparency, fostering competition and improving the business environment has been made by the government of STP with the support of the WBG, namely IFC’s advisory and technical assistance. In 2012 STP was the third-strongest reformer in the world in the Open Budget Index (OBI) thanks to substantial reforms in the area of budget transparency and accountability: STP improved its OBI score from 0 to 29, out of 100, jumping 25 places to rank 62nd in the world. Furthermore, improvements in the investment climate earned STP a spot among the top-ten worldwide reformers in the 2012 Doing Business report, and a spot in the top 50 worldwide reformers from 2005-2013 in the 2013 DB report; STP became the world’s top reformer in terms of business freedom in the 2012 Heritage Foundation's Index of Economic Freedom and jumped 28 positions, from 100th place to 72nd in the world on Transparency International’s Corruption Perception Index, well above the average for the Sub-Saharan Africa region. 

Supporting the Telecommunication Sector ---São Tomé and Príncipe along with other two Fragile States, Liberia and Sierra Leone are some of the countries with the highest costs of communications in the world, which is believed to significantly hamper opportunities for growth and development in West and Central Africa. These countries were the first beneficiaries of the IDA support to the Africa Coast to Europe cable thru the IDA West Africa Regional Communications Infrastructure Program Project; the development objective of which is to increase the geographical reach of broadband networks and dramatically reduce costs of communications services in West Africa. The Gambia, Guinea, Benin, and Gabon followed. The Bank support to seven countries under the Africa Coast to Europe (ACE) cable, a private sector led consortium, has resulted in the construction of approximately 17,000 km submarine cable system that connects South Africa to Europe, potentially connecting up to 23 countries along the route. The ACE is an over US$700 million investment, with each country contributing approximately US$25 million to secure a landing station in its territory.

Following the requests from the governments, IDA was able to mobilize resources to enable these countries to make initial payments to join the ACE project on time. Overall, IDA’s approved US$52.6 million for the countries to participate in ACE, and also additional financing for complementary activities. IDA’s funds helped leverage additional private sector resources to benefit from this unique opportunity to provide citizens of these countries with affordable broadband. Within the few months of its operation, the submarine is already contributing to lower prices for enterprises and the private sector in general, providing them digital communications tools to become effective players in the Africa region as well as in the global economy. Along with infrastructure, IDA is helping the countries modernize policy and regulatory frameworks and develop public-private participation frameworks to continue leveraging private investment into the telecommunications sector. In São Tomé and Príncipe the project has provided technical assistance to government for introduction of competition and a second telecommunications license has just been awarded.

Support to Climate Change Mitigation--- The Climate Change Mitigation Operation has been providing coastal early warning systems and safety at sea so artisanal fishermen can adapt to the adverse impacts of climate variability.  This is done through disseminating timely forecasts prior to extreme events, distributing safety equipment and training on safety at sea, and reinforcing coastal community emergency preparedness. The Operation also addresses coastal erosion and inundation by piloting participatory coastal adaptation measures in vulnerable fishing communities, and develops public awareness and improved coastal resilient policies.

Petroleum Governance --- Considerable support has been provided to STP through a series of Bank projects, including Development Policy Operations and Technical Assistance to develop the institutional and legislative reforms that are critical to govern STP’s offshore petroleum deposits, located in both the Joint Development Zone (JDZ) shared with Nigeria and STPs own Exclusive Economic Zone (EEZ). 

STP has been recently accepted by the Board of the Extractive Industries Transparency Initiative (EITI) as an EITI Candidate Country, and it has been making considerable strides to improve transparency in the oil sector.  Technical assistance helped build the capacity of the National Petroleum Agency, the Public Registration, and the Transparency Information Office. Legislation governing the EEZ is in line with international standards.

Transparency in Public and Natural Resources Sectors--- São Tomé and Príncipe is focusing on building institutional and legal capacity to improve economic management and to strengthen accountability of public and natural resources.  Support from Bank projects has helped STP to strengthen the governance in the fisheries sector, improve the dissemination and quality of budget documents, promote fiscal stability, and strengthen public sector management. As a result of these efforts, the recent Open Budget Index of 2012, for example, highlights STP as the third top reformer in the world during the 2010-2012 periods.  Additionally, for the first time after almost two decades, STP prepared and submitted the 2010 Public Accounts of the State. A new operation is under preparation to continue Bank assistance in these areas and further strengthen economic governance in natural and public resources.

Last updated September 2013

LENDING

Sao Tome and Principe: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

Around The Bank Group

Find out what the Bank Group's branches are doing in Sao Tome and Principe.