São Tomé e Príncipe dreams of a new business hub
At the port at Neves on the northern part of the island of São Tomé, an old tank farm sits rusting. Today, the containers hold gas. A few hundred years ago, they were bursting with whale oil. “Can you imagine how many whales were slaughtered to fill those tanks?”, asks São Tomé’s prime minister, Patrice Trovoada.
Trovoada, in office since 2014, is still keen on developing a stronger fishing industry in São Tomé e Príncipe’s waters. His vision is a marine sector that harvests the plentiful tuna offshore, takes them to a new port complex and processes them to be onsold into regional markets. It is one brick in his wider project to turn the island into a transshipment hub for the region – a Dubai-style logistics and business services platform – that depends on the construction of a new port, financed in part by Chinese companies (see page 55).
The diplomatic recognition of Beijing by Sao Tomé in December 2016 ends a two-decade partnership with Taipei. The realities of being on the Taiwan side of the argument were brought home in 2016, according to Maria do Carmo Silveira, the former prime minister and central bank governor who is now executive secretary of the Community of Portuguese Language Countries.
PART OF THE DYNAMIC
China organised a forum in Macau – a Portuguese-speaking and Chinese-administered autonomous region to the south of China – in 2016, where several countries including Angola and Mozambique received large financial packages, “but Sao Tomé wasn’t among them, as we did not recognise Beijing at that time,” recalled Silveira. “The fact that we now have diplomatic relations allows São Tomé to be part of the development dynamic China has with Lusophone countries.”
In the concentric circles of economic power and influence radiating from Beijing, the Lusophone world is certainly in a privileged sphere. China has close relations with Angola, centred around oil, and has been a steady investor in both Portugal and Brazil.
That does not necessarily spell a certain win in the quest to turn São Tomé into West Africa’s answer to Djibouti. While there is certainly a Chinese-funded infrastructure drive associated with the One Belt, One Road policy in Africa, it only touches the eastern fringe of the continent, from Kenya up through Egypt.
The government in São Tomé would like the country to be a trade hub, but a slump in commodity prices has taken the fire out of Africa’s great import surge of the past decade. Some countries, like Nigeria, have put up barriers to trade in a bid to keep precious foreign exchange at home.
To create a more comprehensive package for investors, Trovoada’s government wants to create a business services hub, too. Here, the idea is more Singapore than Dubai. “We have signed a double taxation avoidance agreement with Mauritius,” Trovoada tells The Africa Report. “And we will be using their courts, too.” In effect, investors in neighbouring African countries will be able to use the island as a place to sign contracts that will be enforceable in the Mauritian court system. For this to be successful, the country will need a new cadre of lawyers, support staff and office workers.
It was Carnaval on 27 February. On this Monday morning, the streets around the Patrice Lumumba high school in São Tomé were alive with the shrieks of children dressed in a sea of colour, especially the red, yellow and green of the national flag. “We chose ‘Schools with culture make intelligent children’ as the theme of this year’s Carnaval,” a teacher told reporters.
These young generations are the ones that will be required to fill jobs in the service industry that the government hopes to create. But with 60% of primary-school teachers not qualified for their positions, there is a mountain to climb, according to the Global Partnership for Education, a funding platform that supports education in developing countries.
To raise employment levels, the government is trying to support other sectors, including tourism. It hopes to win over travellers to the islands’ charms through the increased frequency of flights and a new airport, if investors can be lined up.
“Things are changing,” says one Portuguese resident who has been living in the country for the past decade. “On one hand, the island is losing some of its charm as more people visit and it gets dirtier. On the other hand, there’s more accessibility,” he told The Africa Report.
The country is betting on its celebrity chefs and chocolatiers to attract tourists beyond the current, largely Portuguese visitor base. One hope is that Western expats working in the Gulf of Guinea oil sector will look to São Tomé e Príncipe as a more convenient hop than a trip back home. The growth of Ghana’s oil sector – with a new field coming onstream in 2017 and oil prices slowly starting to tick back up – could help to realise those hopes, especially with the arrival of TAP Portugal’s Accra-São Tomé flights.
As for São Tomé e Príncipe’s own frustrated oil hopes, things may not turn around so neatly (see box). The initial expectations about oil wealth for São Tomé have been replaced by increasing uncertainties about the existence of oil in commercially exploitable quantities.
Between 2006 and 2012, exploration wells in four blocks of the Joint Development Zone (JDZ) shared with Nigeria failed to yield commercially viable hydrocarbons discoveries. ExxonMobil (2007), Chevron (2010), Addax and Sinopec (2012), and Total (2013) have all abandoned the JDZ.
This uncertainty may prove to be a blessing in disguise, if it pushes the government to focus more on economic diversification. And if a new round of exploration led by Kosmos is successful, those tanks at the port at Neves may yet be full of oil once more.
From the April print edition