São Tomé and Príncipe in 2024: Economic Overview
Image credit: Shutterstock / BOULENGER Xavier
An African democracy enjoying a high degree of political stability and freedom, São Tomé and Príncipe is an island country located in the Atlantic Ocean off the western coast of Central Africa.
The country is not a single island, but rather the two main islands of São Tomé and Príncipe as well as archipelagos of smaller islands. The nation’s population is just over 200,000.
The islands were largely uninhabited before their discovery in the late 15th century by the Portuguese. The Portuguese gradually settled the islands in the 16th century to use them as a trade hub.
Although the country’s colonial history is marred by the dark reality of it serving as a center of slave trading, São Tomé and Príncipe ultimately achieved independence peacefully in 1975.
The influence of Portuguese language and culture remains strong on the islands to this day, especially as São Tomé and Príncipe has strong diplomatic ties with fellow lusophone nations—especially Portugal and Angola.
Growth Industries: Agriculture
São Tomé and Príncipe enjoys a fine equatorial climate and rich volcanic soils, which make it an ideal place for agriculture, particularly the cultivation of sugar, coffee, and cocoa.
Little wonder then that agriculture is one of the pillars of the nation’s economy.
Cocoa is currently the islands’s top cash crop, as cocoa makes up 70-80% of the country’s exports by value.
“In 2021, São Tomé and Príncipe exported USD17 million in Cocoa Beans, making it the 28th largest exporter of cocoa beans in the world,” according to Observatory of Economic Complexity (OEC).
Food processing industries have also been taking root in São Tomé and Príncipe, especially in the form of fish processing.
In October 2023, the country’s president, Carlos Manuel Vila, personally paid a visit to sustainable fish processing facilities during his visit to Uganda, which may indicate that São Tomé and Príncipe is about to expand its fisheries and food processing industries in a sustainable manner.
The country’s main trade partner is unsurprisingly Portugal, which is also the largest foreign investor in São Tomé and Príncipe.
Over 50% of imports to São Tomé and Príncipe come from Portugal.
The country’s exports, meanwhile, are bound for the Netherlands, Belgium, and Portugal, respectively. Given the first two countries’ reputation as Europe’s leading chocolate producers, there is no wonder that they have long been the customers of São Tomé and Príncipe’s fine cocoa beans.
Prospects of Offshore Oil
With the discovery of oil in the Gulf of Guinea, hopes have been high about the possibility of sizeable oil and gas reserves in the country’s territorial waters.
São Tomé and Príncipe began joint exploration and production (E&P) activities with Nigeria in 2018, which was not a success story.
However, after several false starts, a joint project was finalized with the Angolan state oil company (Sonangol), TotalEnergies, Shell and Portugal’s Galp Energia in 2022.
From among the 19 oil blocks within São Tomé and Príncipe’s territorial waters, ten may soon begin generating petrodollars for the island nation’s economy.
Aside from fossil fuels, the country also has significant potential in the generation of renewables. “The government of São Tomé and Príncipe has announced partnership with the UK-based Global OTEC Resources for the deployment of the first commercial floating ocean thermal energy conversion (OTEC) platform,” reported Offshore Energy magazine in 2021.
In 2023 it was announced that the pioneering renewable energy project has moved forward with the involvement of the UN Industrial Development Organization and a Portuguese consultant firm, AQUALOGUS Engenharia e Ambiente.
All this has pushed the small island country’s economy one step forward.
In March 2023, the UN News reported that “São Tomé and Príncipe is due to graduate from its current status as one of the world’s Least Developed Countries (LDCs), a journey that is testament to its economic successes.”
The economic engine of São Tomé and Príncipe is evidently beginning to turn. Given the country’s high degree of political stability, freedom of speech, and general ease of doing business, low-risk investment opportunities will likely soon increase on the islands.
Tourism will certainly be among the sectors with a large potential for growth. The 2010s saw the the number of tourists arriving in the country rise to 35,000 from almost zero.
This is a significant number for a nation of only 200,000.
However, more growth in tourism is expected in this decade, especially in light of the islands’ natural splendour and unique equatorial landscapes, which will hopefully be protected thanks to São Tomé and Príncipe’s adherence to sustainable economic growth.