Sao Tome and Principe is a small island nation located in the Gulf of Guinea off the west coast of Africa. The country has a population of around 200,000 and a total area of only 1,001 km2. It is one of the smallest countries in Africa and the second smallest Portuguese-speaking country in the world. Despite its small size, Sao Tome and Principe has an economy that is relatively diverse, with agriculture, fishing and tourism being some of its main economic activities.
According to cheeroutdoor, agriculture is one of the main economic activities in Sao Tome and Principe; it accounts for around 15% to GDP and employs around 40% of the workforce. The country’s main agricultural products include cocoa, coffee, bananas, palm oil, copra and timber. Fishing also plays an important role in the economy; it accounts for around 7% to GDP and employs around 10% of the workforce. The main fish species caught are tuna, octopus and lobster.
Tourism is another important part of Sao Tome and Principe’s economy; it accounts for around 5% to GDP and employs around 20% of the workforce. The country has become increasingly popular among tourists due to its pristine beaches as well as its rich cultural heritage which includes African traditions such as voodoo rituals as well as Portuguese colonial architecture such as churches from the 16th century.
The government has implemented several reforms to stimulate economic growth including tax incentives for businesses as well as improved infrastructure such as roads, ports and airports which have made it easier for tourists to visit Sao Tome & Principe from abroad. In addition to this, Sao Tome & Principe also enjoys low inflation rates due to its strong fiscal policies and stable currency exchange rates with other countries like Portugal or Brazil which helps attract foreign investment into the country.
Despite its small size Sao Tome & Principe has managed to create a relatively diverse economy thanks to various reforms implemented by its government over recent years which have made it easier for businesses both domestic or foreign investors to operate in this small African nation.
Abbreviated as STP by abbreviationfinder.org, 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.
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.
- COUNTRYAAH: Find major trading partners of Sao Tome and Principe, including major exports and major imports with latest trade value and market share as well as growth rate.
Transport and Communications
There are well over 200 km of paved roads in the country. The main port and airport is at São Tomé.
Note: the capital city of São Tomé and Príncipe is São Tomé on the island of São Tomé with a population of 80,100 (UN estimate 2018). Other major cities include Trindade, Neves, Santana, Bombom.