| Country Profile: SÃO TOMÉ E PRÍNCIPE | ||
| Central Africa |
| Monday, 23 November 2009 00:00 |
This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.Country ProfileTop São Tomé e Príncipe CompaniesTop São Tomé e Príncipe Banks
Delays and disappointment over successive failures to find oil in commercial quantities have started to hurt confidence in São Tomé e Príncipe, and it is already a couple of years since it lost its place in media and market speculations as the ‘next big thing’ in African oil. It has clearly slipped far behind Ghana in the regional stakes and now also the surprise new entrant, Sierra Leone, where US independent Anadarko announced a potentially huge oil find in September 2009. But at last towards the end of 2009, after years of waiting and watching governments tumble in rapid succession, São Tomé saw the first genuine indications that it might yet emerge as a genuine oil province.
Prospects for the transformation of São Tomé’s lethargic economy have long hinged on the discovery of oil. The IMF has praised a 2009 agreement with former colonial power Portugal to peg the currency, the dobra, to the euro as an important ingredient to help promote stability and growth. However, donors have noted that already limited investment has declined in the current international climate and is unlikely to take off without the discovery of commercial oil deposits.
São Toméan officials nevertheless remain upbeat and plan the next licensing round for the first quarter of 2010, according to prime minister Rafael Branco. The round has been delayed on several occasions since 2007, amid some legal uncertainty as to discretionary rights awarded to ERHC and another exotic company, Equator Exploration, in São Tomé’s Exclusive Economic Zone.
The IMF forecasts growth of 4% in 2009 and 4.5% in 2010. This is largely on account of the recent ongoing growth in tourism, accompanied by improvements in infrastructure, as well as the promise of substantial foreign investment in a proposed new deep-water port. But without its own tax revenues, the govern ment is likely to remain heavily dependent on foreign aid and has little leverage over incoming foreign investors. Donors have been critical of the authorities’ poor performance in collecting taxes or in enforcing existing tax laws.
Prime minister Rafael Branco, who completed a nearly unprecedented 12 months in office in 2009, heads a precarious coalition of parties, which tends to be the normal situation on the islands, but in 2010 he will increasingly look to use his position as a platform for a potential bid for the presidency in 2011. He points to the success of the euro-dobra agreement with Portugal as a demonstration of his deal-making ability, and he has also been cultivating relations with Angola, which has in any case traditionally supported his party, the Movimento de Libertação de São Tomé e Príncipe/Partido Social Democrata.
Despite the appearance of stability, there remain equally clear reminders of the risks facing a government with limited resources in changing a culture of endemic poverty. In October, 18 opposition supporters and former members of apartheid South Africa’s Buffalo battalion went on trial in connection with an alleged coup attempt in February 2009 – the second attempt by the group in five years.
São Tomé e Príncipe's Top Companies
No companies from São Tomé e Príncipe featured in The Africa's Report's Top 500 Companies in Africa 2009.
São Tomé e Príncipe's Top Banks
No banks from São Tomé e Príncipe featured in The Africa's Report's Top 200 Banks in Africa 2009.
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In October, exploration wells drilled in Blocks 2 and 4 of the Nigeria-São Tomé Joint Development Zone (JDZ) showed evidence of gas and hydrocarbons, according to ERHC, a US company with interests in several blocks and a controversial pedigree in the country. Further evaluation will show whether discoveries are likely to prove commercial; results from a discovery by Chevron in 2006 were so disappointing that partners Exxon bailed out of the JDZ, with no further drilling in Block 1.
