SÃO TOMÉ AND PRÍNCIPE

COUNTRY OVERVIEW

LOCATION AND SIZE.

São Tomé and Príncipe is located in the Gulf of Guinea 290 kilometers (180 miles) west of Gabon, which is located on the western edge of Africa. The 2 mountainous main islands of the republic are São Tomé and Príncipe; other rocky islets include Caroco, Pedras, and Tinhosas off Príncipe Island, and Rolas off São Tomé Island. The islands are the tips of an extinct volcanic mountain range and make up one of Africa's smallest countries. The country has an area of 1,001 square kilometers (386.5 square miles). The coast line is 209 kilometers (130 miles). Comparatively the area of São Tomé is more than 5 times of the size of Washington, D.C. The capital city of the country, São Tomé, is located on the northeastern coast of the island of São Tomé.

POPULATION.

The population of São Tomé and Príncipe was estimated at 159,883 in July 2000. In 2000, the birth rate stood at 42.98 per 1,000, which is quite high. The death rate in the same year was 7.76 per 1,000, giving an annual average population growth rate of 3.16 percent. The life expectancy at birth is 65.25 years for total population, 63.84 years for males and 66.7 years for females. The population density in 1997 was 135.5 per square kilometers Democratic Republic of São Tomé and Príncipe
República Democrática de São Tomé e
Príncipe (351 per square mile). Ninety-five percent of the country's population lives on the island of São Tomé and 46 percent of the population lived in urban areas in 1996. São Tomé and Príncipe is a country of young people with 48 percent of the population below the age of 14, and just 4 percent of the population older than 65.

The country's population is very diverse and represents mainly descendants from different parts of the African continent. Ethnic groups include mestico, ango-lares (descendants of Angolan slaves); forros (descendants of freed slaves); servicais (contract laborers from Angola, Mozambique, and Cape Verde); tongas (children of servicais born on the island); and Europeans (primarily Portuguese). Roughly 80 percent of the islanders are Christians, with representatives of the Roman Catholic, Seventh-Day Adventist, and Evangelical Protestant faiths. The official language of the republic is Portuguese; however, Lungwa São Tomé (a Portuguese creole) and Fang (a Bantu language) are widely used as well.

OVERVIEW OF ECONOMY

Presently São Tomé and Príncipe is in the process of diversifying its economy, which was dependent on cocoa production since the 19th century. After achieving independence in 1975 the nation adopted a socialist economy, imposing state control over major sectors of economy. The islands were mainly producing cocoa on the state-owned farms, and cocoa remains the main export commodity. Fishing and forestry are also important economic activities of São Toméans. The islands have no mineral resources with the exception of oil discovered in its territorial waters in 1998. The manufacturing sector is mainly limited to production of textiles, beer, soft drinks, and soap to cover the local demand. The country imports up to 90 percent of its food requirements, machinery, and petroleum products.

In the early 1980s São Tomé and Príncipe proclaimed itself a non-aligned state and started establishing trade links with non-socialist countries. In attempting to diversify its economy in the early 1990s, São Tomé requested international financial assistance. This economic development assistance was offered to the republic under conditions of economic liberalization, privatization, administrative reforms, and changes in the financial sector. During the 1990s the government increasingly relied on external sources to finance its liberalization program designed by the International Monetary Fund (IMF) and the World Bank.

According to a World Bank report, in 1999 São Toméan outstanding debt reached US$296 million, compared to US$135 million in 1989. This made about US__BODY__,851 of debt per person, including infants, in 1999. The country is one of the largest recipients of aid per capita in the world; nonetheless, corruption and mismanagement undermined the administration of aid. The country sees its economic future in the development of offshore oil reserves and the expansion of tourism, which is not yet fully established. Beginning in 1993 the nation also sought to establish free trade zones to attract foreign investors and further develop the country's shipping and manufacturing sectors.

POLITICS, GOVERNMENT, AND TAXATION

São Tomé and Príncipe became a colony of Portugal in 1522 and was administered by Portugal for the next several hundred years. A liberation movement emerged in the 1960s, resulting in the creation of the Movement for the Liberation of São Tomé and Príncipe (MLSTP) in 1972. Based in Gabon and led by Dr. Manuel Pinto da Costa, the MLSTP led the country to independence following a military coup in Portugal in 1974. The new Portuguese administration oversaw the peaceful transition to independence over the course of the next year.

After declaring independence on 12 July 1975, Dr. Manuel da Costa became the country's first president. The ruling MLSTP party adopted a socialist economic program, providing state ownership and direction of all the islands' industries. There were several unsuccessful coups and attempts to overthrow the regime of President da Costa, yet da Costa maintained close links with the communist bloc countries amid worsening economic conditions.

The severe drought of 1982 prompted President da Costa to change his priorities in international relations. In 1984 the president proclaimed São Tomé and Príncipe a nonaligned state. This meant that the government adopted a strategic and political position of neutrality towards the major powers aligned with the United States and the U.S.S.R. Most of the Soviet, Cuban, and Angolan advisers had to leave the country. New international links were established with neighboring African states and Portugal. The initial attempts to reduce state control over the economy halted after the minister of Planning and Commerce and the minister of Foreign Affairs and Co-Operation were dismissed.

In August 1990 a referendum indicated that 72 percent of the electorate (90.7 percent of participating voters) favored a newly drafted constitution. The new constitution declared the republic as a sovereign, independent, unitary, and democratic state. The MLSTP lost its dominating role as the new constitution allowed a multi-party system. At new National Assembly elections on 20 January 1991 the MLSTP was defeated. It obtained only 21 seats in the 55-seat unicameral National Assembly, while the opposition Party for Democratic Convergence (PCD) secured 33 seats. The remaining seat was won by the Partido Democratico de São Tomé e Príncipe—Coligacao Democratico de Oposicao (PDSTP-CODO). Miguel Trovoada of the PCD was chosen as president and retained that role in elections in 1996.

Members of the National Assembly are elected for 5-year terms in free and fair multi-party elections. The president of the republic is elected to a 5-year term by direct election. The president names the prime minister from a name submitted by the party holding a majority in the National Assembly. The prime minister then names the 14 members of the cabinet. In 2001 Miguel Trovoada was the president and Guilherma Posser da Costa was the prime minister. The next presidential election will be held in July of 2001 and the next legislative election will be held in 2003.

There are 4 types of taxes imposed by the government on imported goods: an 8 percent transaction tax; import duties ranging from 0 percent on basic foodstuff and pharmaceuticals to between 6 and 50 percent on alcoholic drinks and 10 and 66 percent on petroleum products; a 3.5 percent customs duty; and a consumption excise tax, which varies significantly on different types of goods (from 0 percent on basic foodstuff to 250 percent on tobacco) and is levied on the after-tax value on goods.

In the late 1980s, the new government requested international assistance in order to improve the economic situation. The new economic policy included economic liberalization, currency devaluation, price liberalization, and privatization. Drastic economic measures imposed by the IMF and the World Bank as part of the economic recovery programs led to a significant decline in the living standards of people. According to the EIU Country Report, inflation ballooned from 35.5 percent in 1996 to 68.5 percent in 1997. However, the annual inflation rate was reduced to 10.5 percent in 1999, and the annual GDP growth rate grew from 1.0 percent in 1997 to 3.0 percent in 2000.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

São Tomé and Príncipe have a limited network of 320 kilometers (198 miles) of roads, two-thirds (218 kilometers, or 135 miles) of which is paved. There were 4,581 light vehicles registered in 1994, 561 heavy vehicles, 299 tractors, and 815 motorcycles. There is no public transportation on the islands and no rail network.

There are 2 main seaports: 1 at São Tomé city and another at Santo Antonio on Príncipe island. The republic has 10 ships, but Dutch and Portuguese ships serve the links with Gabon, Portugal, and the Netherlands. The seaports are managed by the state. Although the seaports have been modernized, the maritime shipping of goods is irregular and total shipping traffic is limited due to the absence of a deep-water seaport. In 2000, there were plans to build a deep-water seaport at Agulhas Bay on Príncipe island.

There are 2 main airports, in São Tomé and Santo Antonio. Both have been recently modernized. The US$16 million modernization of the international airport in São Tomé was financed by the African Bank of Development and was completed in 1992. The airports are owned jointly by the government (35 percent), Portugal (40 percent), and France (25 percent). Domestic and regional lines are served by Portugal, Angola, and Gabon. The country's lone airline, Air São Tomé e Príncipe, owns only 1 airplane.

Electricity production in 1998 of 15 million kilowatt hours (kWh) comes from 2 main sources, imported fossil fuel (which generates up to 47 percent of total power) and hydroelectric power (up to 53 percent) generated from the nation's abundant water supply. However, only 53 percent of households have electricity and there are regular power cuts.

Local telephone service is served by the former state-owned Companhia Santomense de Telecomunicacoes (CST), over half of which has been sold to Radio Marconi of Portugal. There were 3,000 telephones lines in 1995. The international lines were improved with international financial assistance. CST tried to compete with Swedish Bahnhof Internet in providing Internet services in the country. In July 1999 Bahnhof Internet became the owner of the country's top Internet domain and it planned to introduce a satellite connection to the Internet. In 1997 the island nation had 2 television stations serving some 23,000 sets.

ECONOMIC SECTORS

The São Toméan economic sectors are influenced by its size and geographical position. The agricultural sector is mainly export-oriented and devoted to cocoa production, so that the country relies heavily on imports of food. Agricultural production is extremely sensitive to weather and prices in the international market; therefore, part of the government's policy of economic diversification is further development of fishing and tourism. Tourism is a growing sector and has been considered a priority for future development. The industrial sector is very limited. All told, agriculture contributes 23 percent of GDP in 1997, industry contributed 19 percent, and services contributed 58 percent.

AGRICULTURE

São Tomé and Príncipe is an agricultural country. According to the World Bank, in 1997 the agricultural sector contributed 23.3 percent of the GDP and provided employment for 39.6 percent of the economically active population. The agricultural sector mainly produces cocoa, which constituted 86 percent of export revenues in 1997. It also produces coffee, copra, coconuts, and palm oil. Since almost all agricultural production of the country is export-oriented, it has to import foodstuff. By the mid-1990s it imported almost 90 percent of its food requirements. The government accepted a program to develop smallholder farms since 1993 in order to diversify agricultural production. However, inadequate training, poor road quality, and limited access to markets hinder this development.

FISHING.

Fishing is another important economic activity of São Toméans. The annual total catch of fish is estimated at about 3,000 tons. About 90 percent of the total local catch is provided by 2,300 fishermen. The country's 160,000 square kilometer Exclusive Economic Zone (EEZ) has a potential to produce about 12,000 tons of fish per year. The EEZ—created by the United Nations Convention of the Law of the Sea and completed in 1982—allows coastal nations to claim a territorial sea of up to 12 nautical miles and an exclusive economic zone of up to 200 nautical miles. The government uses this potential to receive its second largest source of foreign exchange by issuing fishing licenses to foreign fishing fleets. The government has prioritized the development of this sector as part of its economic diversification policy, but awaits significant foreign investments for development to be realized.

FORESTRY.

The country had considerable forest resources, but these are in the process of being depleted. In 1995 São Toméans produced 8,500 cubic meters of trunks and 3,150 cubic meters of processed timber. Severe deforestation of the country speaks for itself: the rain forest cover dropped to 28 percent of the land area and about 30 percent of the rain forest is secondary forest. New legislation was introduced in the 1990s to protect the rain forest. The government also plans to create national parks to protect the land, which should contribute to plans to boost tourism.

INDUSTRY

São Toméan industry is very small. It includes manufacturing, power generation, and light construction. In 1997 this sector contributed 18.7 percent of the GDP and employed 15.8 percent of economically active population. There are no mineral resources on the island except the discovery of oil in the territorial waters (in the Gulf of Guinea) in 1998, the development of which will depend on agreements with Gabon, Nigeria, and Equatorial Guinea.

Small manufacturing plants that produce only items for local consumption such as beer, textiles, soap, and bread represent the manufacturing sector. Most of the enterprises were under state control in the 1970s and 1980s. While the state would like to privatize these and all other industries, it is awaiting significant investments of capital and management expertise before it can relinquish control.

SERVICES

The services sector contributed about 58 percent of the GDP and employed 33.6 percent of economically active population in 1997. The banking system in the republic is underdeveloped and notorious for its corruption scandals. In 1999 there were several arrests in Belgium when some individuals tried to cash in false bonds. After the arrests the government was forced to dismiss the governor of the Banco Central de São Tomé e Príncipe, the bank's administrator, and its administrative board.

TOURISM.

A big potential for the country lies within the fast-growing tourism sector. Fantastic mountain scenery, breathtaking beaches, and unique species of flora and fauna are big attractions for tourists. However, high airfares, the extreme isolation of the islands, and underdeveloped infrastructure discourage potential tourists, although there were considerable improvements in telecommunications and hotel accommodations in recent years. This sector attracts the largest portion of foreign investments. While in the early 1980s there was only 1 hotel, in 1996 there were already 9 hotels and 9 guest-houses with a total of 520 beds. In 1996, 2,000 tourists visited the country bringing US$2 million in revenue; in 1998 there were about 6,000 foreign visitors who brought US$4 million.

INTERNATIONAL TRADE

São Toméan international trade relies mostly on the export of cocoa that gives up to 86 percent of the earnings. According to The CIA World Factbook, it also exports copra, coffee, and palm oil to the Netherlands (51 percent), Portugal (6 percent), and Germany (6 percent). Exports totaled US$4.9 million in 1999.

The country depends heavily on food imports, mainly from Portugal. It also imports machinery, electrical equipment, and petroleum products. The main import partners are Portugal (26 percent), France (18 percent), Angola, Belgium, and Japan. Angola is the main source of petroleum products. Imports in 1999 totaled US$19.5 million.

MONEY

The value of the São Toméan dobra has decreased steadily against the U.S. dollar with the implementation of the economic adjustment program and the devaluation of currency. Throughout the late 1990s the dobra collapsed 5-fold within 4 years. In 1995 US__BODY__ was equal to 1,420.3 dobras; by 1999 that figure rose to 7,200 dobras. Though the diminishing value of the dobra was meant to spur exports, it also caused high inflation in the country, which translated in a higher cost of goods for São Toméans. Before the start of economic reforms in the 1990 the inflation rate was about 44.8 percent (1989); it went down to 27.4 percent in 1992 and up again to 68.2 percent in 1997.

POVERTY AND WEALTH

São Tomé and Príncipe is an agricultural country with the majority of its population living in rural areas and plantations with poor quality roads, no electricity, and little access to medical help and education. The deeply indebted government of São Tomé and Príncipe cannot afford to spend more on health and education for its people. Spending on health declined over the years and constitutes slightly more than 10 percent of total expenditures. In 1992 all São Toméan hospitals and medical centers had 556 beds and 66 practicing doctors. Although the life

expectancy is relatively high for an African country, there are about 40,000 cases of malaria infection per year as well as numerous cases of respiratory and diarrheal diseases. There were also 32 registered AIDS cases, although it is estimated that the actual figure is higher.

The education sector receives about 10-15 percent of total budget expenditures. There were 69 primary and 10 secondary schools in 1997. Although the average adult literacy rate was 73 percent in 1991, one-third of the population between the ages of 6 and 20 never went to school. The network of secondary and tertiary institutions is inadequate; there are also shortages of school equipment, textbooks, and properly trained teachers. Although there is some foreign financial assistance directed into education, it cannot cover all of the problems.

WORKING CONDITIONS

The crawling growth of wages for workers could not keep up with the growing inflation, and the real value of wages has plummeted significantly since 1987. Constant demonstrations of angry people prompted the government to increase the wages in spite of criticism from the IMF. The public-sector wages were increased by 200-300 percent in 1997 and the teachers' wages were up by 100 percent in 1998. A threat of a strike came from the civil servants' union (Sindicato da Funcao Publica), who demanded an increase in minimum monthly wages from 40,000 dobras ($6) to 350,000 dobras ($52.50). Just finding a job in the country is difficult, however, for estimates of unemployment run as high as 50 percent.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

c. 1471. Portuguese explorers discover uninhabited islands of São Tomé and Príncipe.

1522. The islands become a Portuguese colony, and are eventually populated with slave labor from the African continent.

1800s. Two cash crops —cocoa and coffee—are introduced to the islands.

1876. Slavery is officially abolished.

1951. São Tomé and Príncipe become an overseas province of Portugal.

1975. São Tomé and Príncipe achieve independence from Portugal and select Manuel Pinto da Costa as president.

1984. São Tomé is proclaimed a nonaligned state, ending its special relationship with other socialist states.

1987. The constitution is amended to allow universal adult voting.

1990. A new constitution is approved by referendum and allows multi-party politics.

1991. First multi-party elections.

1994. Príncipe is granted political and administrative autonomy.

FUTURE TRENDS

São Tomé has a history of coups, demonstrations, and strikes by people whose expectations for economic improvement are crushed by economic stagnation, high inflation, low salaries, and constant disagreements between the legislature and the president. The government's attempts to attract international financial aid in the 1990s resulted in accepting a "shock therapy" approach to economic reorganization, which led to the further deterioration of the quality of life in the country. However, IMF projections on poverty reduction efforts suggest that inflation may be reduced to 3 percent annually and that GDP may grow by 4 percent as early as 2001. Should these projections prove true, and should the government succeed in its 2 great economic projects—offshore oil extraction and the expansion of tourism—it is possible that São Tomé and Príncipe may correct its longstanding economic woes. The single biggest question is whether the cash-poor country can attract enough foreign investment to allow it to realize its dreams.

DEPENDENCIES

São Tomé and Príncipe has no territories or colonies.

BIBLIOGRAPHY

Assembleia Nacional São Tomé and Príncipe. <http://www.parlamento.st>. Accessed August 2001.

Economist Intelligence Unit. Country Profile: São Tomé and Príncipe. London: Economist Intelligence Unit, 2000.

Hodges, T., and M. Newitt. São Tomé and Príncipe: From Plantation Colony to Microstate. Boulder: Westview Press, 1998.

International Financial Statistics Yearbook, 1999. Washington, D.C.: International Monetary Fund, 2000.

Siebert, Gerhard. Comrades, Clients and Cousins: Colonialism, Socialism and Democratization in São Tomé and Príncipe. Leiden, the Netherlands: Leiden University, 1999.

U.S. Department of State. Background Notes: São Tomé and Príncipe, March 1997.
<http://www.state.gov/www/background_notes/sao_tome_0397_bgn.html>. Accessed August 2001.

—Alfia Abazova

CAPITAL:

São Tomé.

MONETARY UNIT:

Dobra (Db). One dobra equals 100 centimos. There are coins of 50 centimos and 1, 2, 5, 10, and 20 dobras, and notes of 50, 100, 500, and 1,000 dobras.

CHIEF EXPORTS:

Cocoa, copra, coffee, palm oil.

CHIEF IMPORTS:

Machinery and electrical equipment, food and live animals, petroleum products.

GROSS DOMESTIC PRODUCT:

US$169 million (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$4.9 million (f.o.b., 1999 est.). Imports: US$19.5 million (f.o.b., 1999 est.).