Country FilesCentralCountry Profile 2014: SÃO TOMÉ E PRÍNCIPE

Tue,21Nov2017

Posted on Saturday, 08 February 2014 15:35

Country Profile 2014: SÃO TOMÉ E PRÍNCIPE

The boom that never was

While developments in the oil industry breed pessimism about the country’s economic prospects, instability remains a constant in the country’s political sphere. Prime minister Patrice Trovoada’s minority government collapsed after a vote of no confidence in November 2012 and Gabriel Costa took over in December. The new government lacks time and money to make its mark before legislative and local elections planned for 2014.

 

 

TABLE OF CONTENTS:

TOP SÃO TOMÉ E PRÍNCIPE COMPANIES

TOP SÃO TOMÉ E PRÍNCIPE BANKS

 

ar-infographie-sao-tome-e-principe-2014The boom that never was

Total pulled out of Block 1 of the joint development zone in September

Parties are seeking ways to prevent another hung parliament in 2014

While developments in the oil industry breed pessimism about the country’s economic prospects, instability remains a constant in the country’s political sphere. Prime minister Patrice Trovoada’s minority government collapsed after a vote of no confidence in November 2012 and Gabriel Costa took over in December. The new government lacks time and money to make its mark before legislative and local elections planned for 2014.

Ahead of those polls, the Partido de Convergência Democrática (PCD), which won seven seats in 2010 and is part of the governing coalition, proposed a series of constitutional reforms and changesto the electoral code in October 2013. Legislative elections since 2002 have led to a series of unstable coalition governments. With the opening of the new legislative session in October, Movimento de Libertação de São Tomé e Príncipe / Partido Social Democrata (MLSTP/PSD) leader Jorge Amado said politicians need to look for a new way of doing politics and finding resources to make government more effective.

JUDICIAL DISPUTE

Developments in 2013 showed that it would not be easy.The state-run Empresa de Agua e Electricidade struggled to meet national electricity demand, with regular power cuts for several months. In September 2013, Prime Minister Costa’s judicial reforms, which are intended to bring the judiciary closer to the people and strengthen provisions against white-collar crime, faced strong opposition from the judiciary, which said the move was an attempt to bring in new judges sympathetic to the government. The government also postponed the local and regional elections scheduled for July 2013 until 2014 because there was no budget for them.

Development aid accounts for 80-90% of the national budget, and the International Monetary Fund (IMF) has encouraged the government to diversify its tax base and strengthen revenue collection to reduce the role of international donors. As the largest party in the coalition government, the MLSTP/PSD called on the government to implement policies to improve service delivery to the poorest segments of the population, engage in dialogue with striking unions and improve management of the state media.

São Tomé’s fledgling oil industry continued to sputter. In September, industry sources said French company Total had decided to abandon its exploration in Block 1 of the joint development zone (JDZ) shared between São Tomé and Nigeria. Company executives said there was not enough oil in the block to be exploitable commercially. Other companies abandoned JDZ blocks 2,3 and 4 in 2012.

STILL HOPING

Since 1997, the government has repeatedly pushed back the planned date of first oil production.Not everyone has given up hope of commercial discoveries, however. In September 2013 the government signed a contract with Hong Kong-registered Sinoangol to develop Block 2 in the country’s exclusive economic zone.

São Tomé often attracts the attention of its bigger neighbours. Promised investments from the Angolan government and state-owned companies have been slow to develop. Working against that trend, privately owned Angolan mobile telecom company Unitel is set to become the country’s second operator in 2014. With the help of the United Nations International Fund for Agricultural Development, farmers plan to add 2,500ha of cocoa, the country’s main export. Small holder farmers already have about 2,400ha planted with cocoa. The area under cultivation has not recovered since the government nationalised plantations in 1975. The Instituto Nacional de Estatística reported that cocoa exports earned $5.1m in 2012, a 4.1% rise from the previous year. Franco-Swiss company SATOCAO opened a technology centre at Morro Peixe in May 2013 and said it hopes to help the country grow 6,500tn of cocoa by 2020.

The government is also keeping a keen eye on the banking sector, as about 20% of loans are non-performing. The IMF has suggested the government may need to raise capital requirements to strengthen the industry. The government took control of a small bank, Island Bank, in April 2013 and managed it for 90 days.

TOP SÃO TOMÉ E PRÍNCIPE COMPANIES

No companies from São Tomé e Príncipefeatured in The Africa's Report's Top 500 Companies in Africa 2013.

TOP SÃO TOMÉ E PRÍNCIPE BANKS

No banks from São Tomé e Príncipefeatured in The Africa's Report's Top 200 Banks in Africa 2012.



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