Sao Tome and Principe - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2022-08-11

São Tomé and Príncipe (STP) is a small island nation located in the Gulf of Guinea with a population of approximately 220,000 people, according to 2020 United Nations estimated data.

The country gained independence from Portugal in 1975. To date, the two countries maintain strong economic, political, and cultural ties.

Traditionally, STP holds free, fair, and transparent elections. However, lack of consensus on accepting the results of the Presidential first round election held on July 18, 2021, led to an impasse in a decision on the results. In September 2021, Carlos Vila Nova, supported by the Independent Democratic Action (ADI) Party, was declared the winner of the presidential election and was sworn into office one month later. In his inaugural address, President Vila Nova expressed support for protecting the environment and investments; he also welcomed cooperation with the United States. Prime Minister Jorge Bom Jesus, who took office in December 2018, has focused on fighting corruption, improving business environment, attracting foreign direct investment (FDI), and promoting economic growth.

Due to the Covid-19 pandemic, the International Monetary Fund (IMF) reported that the country’s economy contracted by a sharp 6.5 percent in 2020, in contrast to the positive 3.5 percent growth seen in 2019. In June 2022, the Central Bank of São Tomé and Príncipe (BCSTP) estimated that growth would slow to 1.4 percent during the year in comparison to the 2.4 percent increase seen in 2021. The Central Bank also forecasted an increase in inflation from 9 to 15 percent, with the main causes said to be the war in Ukraine, an increase in fuel prices, and floods that hit the country in late 2021 and early 2022. In addition, the Central Bank increased the reference rate from 9 to 10 percent to contain inflation, ensure stability in the exchange rate regime, and guarantee price stability. 

According to World Bank data, STP Gross Domestic Product (GDP) per capita in 2020 was $2,158, up from $1,988 in 2019. Overall, the economy relies on agriculture, with cocoa production accounting for 54 percent of total exports in 2021 compared to 57 percent reported by the BCSTP in 2020 and 70.9 percent reported in 2019.  The decrease in the export percentage of cocoa was due to an increase in palm oil production, which represented 32 percent of total exports in 2021. Other exports include chocolate, pepper, coconut oil, and coffee. STP approved a tourism strategy in 2018. According to the Directorate of Tourism, in 2019, 34,900 tourists visited STP, representing an increase of 4.5 percent compared to 2018. Due to the Covid pandemic in 2020, however, the number dropped to 10,718, representing a 70 percent drop from the previous year. However, with the easing in Covid-19 preventive measures, in 2021, the number increased to 15,101, representing a 41 percent increase over 2020. The trade deficit totaled $133.8 million in 2021. Exports in 2021 totaled $18.8 million, increasing from $11.8 million recorded in 2020.  Total imports increased to $152 million in 2021 from $ 116.7 million in 2020.

STP is involved in oil exploration in two different zones: the Joint Development Zone (JDZ) with Nigeria and the Exclusive Economic Zone (EEZ) in its territorial waters. The development of the JDZ follows a 2001 treaty with Nigeria. The JDZ operates independent from the government, with 60 percent of revenues allocated to Nigeria and the remainder to STP. The treaty’s term is for 45 years, with review after 30 years. The Joint Development Authority (JDA) that reports to a Joint Ministerial Council governs the JDZ, though it has been inactive in recent years. The JDA has a mandate to operate the zone, including through regulations and contractual terms with companies operating in the zone. The National Agency of Petroleum (ANP) of STP administers the EEZ. ANP operates autonomously with policy guidance from the governing bodies of the country. STP granted several licenses to firms looking to develop offshore oil blocks in past years. More recently, various companies, including Texas-based Kosmos Energy, carried out seismic surveys of offshore blocks. Currently Kosmos owns a 59 percent stake in oil block 5 located in the STP EEZ. After many false starts, in April 2022, a consortium consisting of Anglo-Dutch Shell and Portuguese GALP Energia started drilling in oil field 6 located in the EZZ. STP and Equatorial Guinea are also considering joint oil exploration of oil block L-2 at the maritime border between the two countries.

With UNDP support, in March 2022, REINA, the country’s first ever business incubator accelerator, was inaugurated to mentor and support businesses.

Housed in the Ministry of Planning, Finance and Blue Economy, the Trade and Investment Promotion Agency (APCI) promotes and facilitates investment through multi-sectoral coordination.

The currency used in STP is the Dobra (STD), which is valued at approximately 23.3 STD=1 USD. Since 2010, the Dobra has been pegged to the Euro at 24.5 STD=1 Euro, which the government has seen as a useful mechanism to control inflation that was as high as 9.6 percent at the end of 2020. At the end of 2021, inflation had decreased slightly to 9.5 percent.