financing strategy

1. To draft a short national financing
strategy for an EMDE country to
access additional sources of finance
for its development

2. SÃO TOMÉ
AND PRÍNCIPE
2
Opeyemi Olakitan

3. INTRODUCTION
C o u n t r y C o n t e x t
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4. Located approximately 350 kilometers off the western equatorial coast
of Central Africa, São Tomé and Príncipe (STP) is one of the smallest
countries in Sub-Saharan Africa with a primarily Portuguese speaking
population of 197,900. STP is comprised of two main islands and four
islets, which have a total landmass of 1,000 square kilometers.
The macroeconomic framework for the period of implementation of
this five-year strategy presents two scenarios, namely: (i) a baseline
scenario, which projects the start-up of oil production and in 2015; and
(ii) an alternative scenario without oil production or exports.
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5. .
5
EMDE
COUNTRY
OF CHOICE:
SAO TOME

6. • Role: Minister of Economy
• Identifying and mobilizing the sources of
financing for the country’s development goals
over the next five years.
• Goal: To identify and mobilize resources to
finance key projects for the Country’s
development goals over the next 5 years
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7. COUNTRY HIGHLIGHTS
• São Tomé and Príncipe’s financial sector development is best understood within the
context of oil and the structure of its banking sector and the agriculture - cocoa,
representing about 95% of agricultural exports and other export crops including copra,
palm kernels, fishing, coffee, livestock, fisheries and Tourism.
• The country runs large structural external deficits because of its small production base.
Its current-account deficit (excluding official transfers) declined from 20.2% of GDP in
2016 to 18.8% in 2017.
• In the last 10 years, the country had sustainable growth, with an average real GDP
growth rate of 5.2 percent, which is slightly above the average for the countries of Sub-
Saharan Africa (4.8 percent). This growth led to a sustained increase in per capita
income for the first time since independence. Two factors can be identified as directly
responsible for this outcome: the first is the increase in inflows of foreign funding,
especially Foreign Direct Investment (FDI), with the promise of oil production. The
other factor has to do with the reallocation of resources from less productive uses
(agriculture) to more productive purposes (services), which increases the country’s
growth potential.
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8. COUNTRY HIGHLIGHTS –PT2
• The economic model will continue to grow to about $316.90 million and reach
$800.60 million by 2024
• The agricultural sector contributes about 17.2 percent of GDP and 26.2 percent of
the working population is directly dependent on the sector.
• Gross domestic product: purchasing power parity - $316.9 million (2010 est.),
$214 million (2003 est.)
• GDP - real growth rate: 6% (2010 est.), 5% (2004 est.)
• GDP - per capita: purchasing power parity - $1,800 (2010 est.), $1,200 (2003 est.)
• GDP - composition by sector: (2010 est.)
• agriculture: 14.7%
• industry: 22.9%
• services: 62%
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9. a) Private Sector Development Reform Program
b) Advances In The Investment Code And Regulatory
Framework
c)Encouraging Private Investment In Infrastructure, Business
d) Facilitation And Economic Diversification And Trade
Expansion
e) Free Entry Investment In Virtually All Sectors Of The
Economy
f) Abolished Exchange Rate Controls
g) 100% Repatriation Of Profits
h) Trade Reforms Aimed At Simplifying And Harmonizing The
Traffic Structure
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ECONOMIC PROGRESS REPORT -
SNAPSHOT

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The Challenge
 Financial governance and transparency in
public financial management
 Main economic growth has been mainly
from Agriculture to petroleum sector
 Untapped markets
 Lack of diversity in the economic sectors
 Unemployment, youth ages 15-24 total:
20.8% (2012 est.)
 Political instability
 National security and defense
 Judicial governance

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Figure 1: Unemployment rate forecast

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Population Growth
Population size, in millions
For that indicator, United Nations Population Division
provides data for Sao Tome and Principe from 1960 to
2017. The average value for Sao Tome and Principe
during that period was 0.12 million with a minimum of
0.06 million in 1960 and a maximum of 0.2 million in
2015
Figure 2: Population Size

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Figure 3: Population size (male /Female)

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Population projections
 With an estimated population of 215,056, Sao Tome
and Principe is the second-smallest African nation
behind Seychelles and the smallest Portuguese-
speaking country with Net Increase of 1 person
every 131 minutes
 Put job creation at the center development
planning
 To achieve a growth rate of at least six percent
(creating conditions for consistent diversification of
the economy)
 To reduce by ten percent the percentage of São
Tomé and Príncipe’s population living in poverty
(promoting income-producing initiatives and thus
improving the population’s productive capacity);

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Investment climate
Foreign Direct Investment, percent of GDP
 For that indicator, The World Bank provides
data for Sao Tome and Principe from 2001
to 2017. The average value for Sao Tome
and Principe during that period was 12.7
percent with a minimum of 3.35 percent in
2004 and a maximum of 42.09 percent in
2008.
 Diversification and resilient plan to
diversify into Oil, coal, and electricity
Energy use per capita

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For that indicator, International Monetary Fund provides
data for Sao Tome and Principe from 1980 to 2024. The
average value for Sao Tome and Principe during that
period was 2.55 percent with a minimum of -10.31
percent in 1981 and a maximum of 9.3 percent in 1985.
Figure 4: Foreign Direct Investment (GDP)

17. .
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Figure 5: Economic growth forecast

18. • Expand the Energy sector mix - Fossil fuels electricity capacity, Wind
electricity generation , Solar electricity generation , Hydroelectricity
generation ,Nuclear power generation & Geothermal electricity generation
to promote investments (local & international) and job creation ETC
• Diversified Agricultural Development & linking production sector -
Forestry Employment in agriculture , Crop production Cereal
crop, Food production , Rural population, Fishing production &
Livestock production
• Innovation measures Information technology exports
• Tourism
• Tourism Partners – Invested $200,000 per institution per year
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Strategy
Focus 4 areas :

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UK – Tourism Partners
I. Freeman Events
II. Gatwick Airport
III.GLH Hotels
IV.Global Blue
V. Golden Keys Concierge Service
VI.Greater London Authority
VII.GREAT Campaign
VIII.Grub Club
IX.Harrods
X. Harvey Goldsmith Productions
XI.Heart of London Business
Alliance
XII.Heathrow Airport
XIII.Heritage Lottery Fund
XIV.Hilton
XV.Historic Royal Palaces
Hotels Investments
 Hilton Hotels ($10
Million)
 Hamilton Hotels – Spain
($25 Million)
 London Hotel
Development – ($20
Million)
 Corporations & Local
Partners

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How to Accomplish these
Goals
 Create more formal sector jobs
 Given the importance of the agricultural sector, particularly
farming, livestock, and fish production
 Commercialization and links to business supply chains
 Creating and ensuring the conditions essential to growth and
job creation
 Ensuring macroeconomic stability, facilitating access and
lending credibility to justice
 Increasing the growth of the productive sector of the
economy
 Promotion of sustainable and integrated economic growth
 Promoting tourism and related telecommunications activities
 Integrating the economy in the subregion and in the
multilateral trade system
 Developing the oil industry
 National program to support microfinance
 Micro-credit for SMEs

21. • Estimates - $1.25 billion plus
• Agriculture sector mix - $250 Million (5 Years)
• Education needs - $200 Million (5 Years)
• Energy sector mix - $500 Million (5 Years)
• Tourism developments - $300 Million (5 Years)
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Example Job Creation Goals
Capture the demographic dividend of an expanding
workforce
Estimated funding needs

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Sources of finance from both
public and private sources –
5years
Agriculture Partners $20 Million (5 Years) =
$100Million
FDI: $40 Million (5 Years) = $200 Million
Local Government: $ 50 Million (5 Years) = $250
Million
Multilateral Partnerships: $100 Million (5 Years) =
$500 Million
Tax revenues: - $20 Million (5 Years) = $100 M
Tourism: $20 Million (5 Years) = $100Million
Total - $1.25 billion

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Removing constraints to
unlock funding opportunities
Multilateral development
banks
 International Bank for Reconstruction and Development
(IBRD-World Bank)
 International Development Association
 The United Nations Educational, Scientific and Cultural
Organization
World Bank Systematic Country Diagnostic – Sao Tome
 Employment trends
 Key impediments to economic development and growth
 Pathways out of poverty for Sao Tome youth

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Conclusion / Blended approach
•Broaden range of stakeholders to include the
European Union, UK & Spain
•Grow energy sectors
•Promote sustained, inclusive economic growth and
productive
•Provide employments and decent work for all the Sao
Tome citizens.
•Unlock investment opportunities in Real Estate,
Bonds & other less volatile investments, Gold &
Private investments in Sao Tome

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26. Add a Footer
SAO
TOME
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27. THANK YOU
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