• Country Overview

    The Republic of Sao Tome and Principe is a lower middle income, developing small island state with a fragile economy. It is highly vulnerable to exogenous shocks. An archipelago comprising of two main islands and four islets, Sao Tome and Principe is located in the Gulf of Guinea, 350 km off the west coast of Africa. With a surface area of 1,001 sq. km, this Portuguese speaking country has a population of 197,900 people and a Gross National Income (GNI) per capita of $1,670 in 2014.

    Political Context

    Sao Tome and Principe is a multiparty, semi-presidential, democratic system since its independence. The Independent Democratic Action Party (ADI) won an absolute parliamentary majority following the 2014 elections. This presents the first opportunity in over a decade for political stability in the country since the government can have a full four-year term in office. The ruling party currently occupies 148 out of 180 seats in the National Assembly. The next presidential elections will take place in July 2016.

    Social Context

    In the 2012-13 Second Poverty Reduction Strategy (PRSP-II) implementation review report, the Government of Sao Tome and Principe acknowledged that the reduction of poverty rates since 2000 has been marginal. Currently it is estimated that 62% of the population is impoverished. Urban poverty is high compared to rural poverty due to limited employment opportunities, notably for youth. On a positive note, Sao Tome and Principe performs higher than the Sub-Saharan Africa average on the UNDP Human Development index, and has made good progress in improving other social indicators. It has a gross primary school enrollment of 110%, a life expectancy of 66 years, a mortality rate of children under five years old of 51 per 1,000 live births, access to an improved water source for 97% of the population, and access to electricity for 60% of the population.

    Sao Tome and Principe met the 2015 MDGs on universal primary education, promoting gender equality and empowering women, improving maternal health, and combating HIV/AIDS, TB, malaria and other diseases.

    Economic Overview

    Sao Tome and Principe is a small island economy with no single economic activity that serves as a driver of growth. Historically, agriculture has been a strongly performing sector, with exports of cocoa, coffee, and palm oil increasing in recent years. However, it hasn’t compensated for the growth of imports. Tourism is an important and growing activity, but it isn’t able to support growth on an economy-wide basis. Thus, the main driver of growth in the country is government expenditure. It is estimated that government expenditures amounted to 34.2% of GDP in 2015, of which capital spending accounted for 15.3% of GDP. Oil exploration has been taking place since 2012, however production isn’t expected until after 2020. 

    Since local production is limited, a large share of domestic spending “leaks” outside of the country in the form of imports. The fact that most of domestic demand is met by imports and that Sao Tome and Principe doesn’t have a large export base explains the structural and recurrent current account deficits the country experiences. Despite the challenges of dealing with a structurally uneven balance of payments, net international reserves have been kept stable at a comfortable level.

    The fact that most of the goods consumed in Sao Tome and Principe are imported links domestic price fluctuations to those of international prices, oil prices being the most notable exception since fuel prices are fixed. Risks to inflation from the monetary side were greatly reduced after the country pegged its currency to the Euro. In fact, domestic inflation has been converging to euro area levels.

    Fiscal management has historically been an area of difficulty. Low domestic revenue mobilization coupled with weak capacity in public finance management, the importance of government expenditure and the volatility of donor aid has led the country to register budget deficits and payment arrears.

    Development Challenges

    In the foreseeable future, Sao Tome and Principe will continue to face significant challenges to overcome insularity, small market size, vulnerability to natural shocks and climate change, limited human capital, and scarce tradable resources to generate sustainable and inclusive growth and reduce poverty.

    The main long-term challenge for Sao Tome and Principe is to move from ambitious plans to feasible actions that will help make the economy more dynamic. More focus could be directed to its existing comparative advantages – tourism and agriculture – rather than trying to create new ones. In the short and medium-term, the most pressing challenges are to avoid negative spill-overs from the banking sector to the economy, to unlock the bottlenecks to credit growth and support measures to improve fiscal accounts on a permanent basis. Finally, the lack of up-to-date poverty data undermines efforts aimed at reducing poverty in Sao Tome and Principe. The latest available household survey data was collected in 2010.  A new household budget survey is planned for 2017, and poverty statistics are in the process of being collected.

    Government authorities plan to implement an ambitious and comprehensive reform agenda, summarized in the planned 2016-2018 National Strategy Document that builds on the recently completed review of progress made in the implementation of PRSP-II.  Priority will continue to be given to: i) promoting good governance, public sector reform, sustainable and inclusive growth; and ii) strengthening human capital, social service delivery, social cohesion, and social protection.

    Sao Tome and Principe ranks 76th out of 175 countries in the 2014 Transparency International corruption perceptions index (place is shared with Montenegro). Sao Tome and Principe ranks 166rd out of 189 economies in the 2016 Doing Business report, down three spots from 2015. 

    Last Updated: Apr 08, 2016

  • World Bank Group Engagement in Sao Tome and Principe

    The Bank’s Country Partnership Strategy (CPS) for Sao Tome and Principe covers the period FY 2014 - FY 2018 and is aligned with the country’s PRSP-II. The strategy has two pillars of engagement: (i) supporting macroeconomic stability and national competitiveness; and (ii) reducing vulnerability and strengthening human capacity. A Performance and Learning Review (PLR) for Sao Tome and Principe will be prepared in the second half of FY16. The exercise will be followed by the preparation of a Systematic Country Diagnostic (SCD) and a Country Partnership Framework (CPF) in FY17 and FY18 respectively.

    The International Development Association’s (IDA) 2017 allocation for Sao Tome and Principe amounts to about $15 million. The World Bank portfolio currently stands at two projects with a total net commitment of $8.77 million, of which 57.1% is disbursed. There are also active Trust Funds that finance activities to improve power sector efficiency, the financial sector, the social protection system, the business climate, extractive industries transparency (EITI), and adaptation to climate change.

    Last Updated: Apr 08, 2016

  • Providing Quality Education for All

    The International Development Association (IDA) financed the Quality Education for All project, which supports the implementation of the government’s education and training plans. The project helps the government enhance the quality of education for all by improving the system of in-service teacher training, and by strengthening education human resource management.

    The operation was approved by the World Bank Group Executive Board on December 20, 2013, for an amount of $900,000, and an additional financing of $3.5 million was approved on June 27, 2014.  The project is co-financed by a multiple donor Trust Fund for an amount of $1.1 million. The project became effective in May 2014 and good progress is being made in the implementation of the planned activities.

    Increasing the Adaptive Capacity of Vulnerable Coastal Communities

    The Global Environment Facility (GEF) Least Developed Country Fund financed the Adaptation to Climate Change Project, which supports the implementation of the government’s National Adaptation Program of Action (NAPA) in vulnerable coastal communities. The operation was approved by the GEF on June 20, 2011, for a total amount of $4.1 million; an additional financing of $6 million has been included in the GEF pipeline for approval in late 2016/early 2017. The project is showing encouraging results: the number of fishermen lost at sea was reduced significantly after the introduction of the safety at sea program; the early warning system has been improved with SMS-based alerts, daily weather bulletins, a free weather line, and more regular communication via radio. A marine meteorological station - a first in Sao Tome and Principe - has been installed and four of the most vulnerable coastal communities (Santa Catarina, Ribeira Afonso, Malanza and Praia Burra) have benefited from flood protection works and improved drainage.

    Last Updated: Apr 08, 2016

  • Sao Tome and Principe is highly aid-dependent but given its size and insularity it has a limited donor presence. International partners such as the World Bank, the African Development Bank, the European Commission, the International Monetary Fund, and the United Nations agencies have strengthened their coordination mechanisms in order to further the Paris Declaration and the Busan agenda in the country. Dialogue among the agencies has increased with the joint organization of a donor round table to foster private investment which was held in London in October 2015.

    Last Updated: Apr 08, 2016



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

*Amounts include IBRD and IDA commitments


More Photos Arrow

In Depth

Apr 19, 2018

Africa's Pulse, No. 17, April 2018

A new analysis of African economies shows the region’s growth is projected to reach 3.1% in 2018, and average 3.6% in 2019–20.

Oct 30, 2017

Monitoring Progress in Policy

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

Oct 30, 2017

International Development Association (IDA) in Africa

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

Oct 30, 2017

World Bank Africa Multimedia

Watch, listen and click through the latest videos, podcasts and slideshows highlighting the World Bank’s work in Sub-Saharan Africa.

Doing Business in São Tomé and Príncipe

The Doing Business report provides objective measures of business regulations and their enforcement. See where your country ranks.

Additional Resources

Country Office Contacts

Main Office Contact
Av. Kenneth Kaunda, 1224
Maputo, Mozambique
For general information and inquiries
Wilson Mbanino Piassa
Communications Associate
Luanda, Angola
+244 222 393 389
For project-related issues and complaints