São Tomé and Príncipe are one of Africa's smallest
states, with little productive agriculture as the most
important industrial base. In the 2000s, exploration for oil
began, and the oil discoveries made are expected to lead to
dramatic changes in the island community.
COUNTRYAAH, São Tomé and Príncipe independently had a classic
plantation economy with a small number of cocoa plantations,
controlled by a few Portuguese owners. The economic decline
after independence was due to the fact that most Portuguese
left the country, and that in 1976 the government
nationalized the plantations, which led to further skills
and capital flight. Nationalization contributed to a sharp
reduction in cocoa production, which has traditionally
accounted for over 90% of export value. Significant price
reductions in cocoa and the elimination of schemes with
restricted access to the Portuguese market also contributed
to the decline. Agriculture, including fisheries and
forestry, employs just under 40% of the population and
accounts for just under a quarter of GNI; the service sector
is the largest, the industry is small. Low credit rating led
to São Tomé and Príncipe following the demands of the World
Bank and the IMF on economic liberalization in the 1980s. In
1997 Parliament approved the establishment of the first free
trade zone in the Gulf of Guinea, with a new deep-water port
and a center for duty-free trade and offshore financial
services on Príncipe.
Tourism is under development and is expected to play a
prominent economic role.
São Tomé and Príncipe are traditionally an agricultural
land based on plantation. Agriculture is dominated by cocoa,
the country's only export item of importance. After the
nationalization of the plantations in 1976, a privatization
program was implemented from 1985, to increase productivity.
Cocoa exports are the country's most important source of
income, and since independence have accounted for over 90%
of total export value, but production has been variable.
Other export products are copra, coffee and palm oil and
kernels, but also for these products production decreased
drastically after independence. In the 1990s, a significant
production of flowers was developed for export. Alongside
the export-oriented sector of agriculture, food is produced
for the local market. However, São Tomé is dependent on
importing about half of its food consumption.
Fisheries bring - before oil exports - the largest export
revenues after cocoa, but these are mostly from licenses
from foreign trawlers. The waters around the islands are
fishy, and the sector employs approx. 10% of the
population. São Tomé's own catch is mainly for domestic
consumption. It is estimated that the tuna in particular can
be expanded, with a view to export. In 1978, an economic
zone of 200 nautical miles was established.
The country's forests are also underutilized
commercially; close to 30% of the land is covered with
primeval forest, especially wooded obó.
Mining, energy and industry
São Tomé and Príncipe have no mineral resources or
significant minerals. Surveying and sample drilling on the
continental shelf in the early 2000s indicated very large
deposits of hydrocarbons, and thus considerable revenues for
the country. Estimates from 2006 suggest oil reserves
equivalent to 11 billion barrels. A marine area between São
Tomé and Príncipe and Nigeria, the Joint Development Zone (JDZ),
is managed by the two countries jointly, and revenues from
oil extraction are to be divided by 60% to Nigeria and 40%
to São Tomé and Príncipe. Statoil was among the oil
companies participating in a bidding round about licenses,
while a small Norwegian company, Energy Equity Resources,
entered into partnership with other players. This was
together with Chevron joined the first trial drilling 2006.
The industry is little developed. With the exception of
textile production, which is partly exported, industrial
production of consumer goods is aimed at the local market.
In 2005, the industry accounted for approx. 15% of
employment and GNI.
Since the 1980s, São Tomé and Príncipe have had a trade
balance deficit, both as a result of increasing imports and
falling exports - especially of cocoa. The country is
heavily dependent on cocoa exports and the prices of this
one item. It is expected of São Tomé and Príncipe will
receive large revenues from oil exports, which will generate
large trade surpluses. The country has for many years been
one of the most aid-dependent states, and Portugal and the
EU have been important aid providers. Main trading partners
are Portugal, the Netherlands, France and Japan.
Transport and Communications
There are well over 200 km of paved roads in the country.
The main port and airport is at São Tomé.