The economy of São Tomé and Príncipe while traditionally dependent on cocoa is experiencing considerable changes due to investment in the development of its oil industry its territorial waters in the oil-rich waters of the Gulf of Guinea. In 2003, the government agreed a Joint Development Zone over the area which gives Sao Tome 40% of revenues. The Democratic Republic of São Tomé and Príncipe is a tiny two- island nation in the Gulf of Guinea, distanced 140 kilometers from one another, and situated about 250 and 225 kilometers, respectively, off the northwestern coast of Gabon. ... This article is about cocoa, the food. ... The gigantic Gulf of Guinea is the part of the Atlantic southwest of Africa. ...

Massive oil reserves

Geologists estimate unproven the Gulf of Guinea zone is estimated holds more than 10 billion barrels (1.6 km³) of oil, although no reserves have yet been proved. A joint oil project with Nigeria in 2005 is likely to contribute $50 million of revenues to the government from the exploration licence signing fees. This represents four times government revenues in 2004. São Tomé is optimistic that significant petroleum discoveries under the exploration licence are forthcoming.

Government corruption has been identified as a potential threat to the development of the economy and the prospect that the oil wealth will be distributed among a very poor community. In order to combat corruption, a revenue management law was enacted in 2004. It was drafted by a team of academics from the United States' Columbia University and establishes an oversight committee of oil revenues and mandates the priority of poverty reduction, health, education and infrastructure spending.

The Joint Development Authority administering the offshore oil zone itself was rocked by a corruption scandal in 2004. The government removed two of its appointees to the authority and insisted on replacing the Nigerian chair. Later the authority issued a statement saying that it would not tolerate bribery or attempted bribery of its officials. Nigeria's history of official corruption represents a significant challenge to the authority.

American involvement has attracted its critics, accusing US oil giants and government of corruption that exceeds the worst of local officials. Because countries like Gabon and Nigeria account for as much as 15% of US crude oil imports, US companies are believed to regard the area as highly prospective. Officials of the US Government and its largest oil transnational corporations and have funded feasibility studies for a deep-water harbor necessary for oil tankers.

After lengthy negotiations, on February 1 2005, the Nigerian and Sao Tome governments entered into an exploration and production sharing agreement over the first of six different exploration blocs with a US dominated consortium led by ChevronTexaco with 51 % of the equity, ExxonMobil with 40 % and Dangote Energy Equity Resources, a small Nigerian and Norwegian company with the remaining 9 %. The contract allows a period of eight years for exploration and up to 20 years of production. The bloc is 190 miles (306 km) north of Sao Tome in 5,700 ft (1.7 km) of water in the Gulf of Guinea.

Struggling agricultural economy

These revenues arrive at a critical time for the Sao Tome economy. Cocoa production has substantially declined because of drought and mismanagement. The resulting shortage of cocoa for export has created a persistent balance-of-payments problem. São Tomé has to import all fuels, most manufactured goods, consumer goods, and a significant amount of food. Over the years, it has been unable to service its external debt and has had to depend on concessional aid and debt rescheduling. Considerable potential exists for development of a tourist industry, and the government has taken steps to expand facilities in recent years. The government also has attempted to reduce price controls and subsidies, but economic growth has remained sluggish. A drought is an extended period where water availability falls below the statistical requirements for a region. ...

Since the 1800s, the economy of São Tomé and Príncipe has been based on plantation agriculture. At the time of independence, Portuguese-owned plantations occupied 90% of the cultivated area. After independence, control of these plantations passed to various state-owned agricultural enterprises. The dominant crop on São Tomé is cocoa, representing about 95% of exports. Other export crops include copra, palm kernels, and coffee.

Domestic food-crop production is inadequate to meet local consumption, so the country imports some of its food. Efforts have been made by the government in recent years to expand food production, and several projects have been undertaken, largely financed by foreign donors.

Other than agriculture, the main economic activities are fishing and a small industrial sector engaged in processing local agricultural products and producing a few basic consumer goods. The scenic islands have potential for tourism, and the government is attempting to improve its rudimentary tourist industry infrastructure. The government sector accounts for about 11% of employment. Farming, ploughing rice paddy, in Indonesia Agriculture is the process of producing food, feed, fiber and other desired products by cultivation of certain plants and the raising of domesticated animals ( livestock). ... Fishing from a Pier Fishing is both the recreation and sport of catching fish (for food or as a trophy), and the commercial fishing industry of catching or harvesting seafood (either fish or other aquatic life-forms, such as shellfish). ...

Following independence, the country had a centrally directed economy with most means of production owned and controlled by the state. The original constitution guaranteed a "mixed economy," with privately owned cooperatives combined with publicly owned property and means of production. In the 1980s and 1990s, the economy of São Tomé encountered major difficulties. Economic growth stagnated, and cocoa exports dropped in both value and volume, creating large balance-of-payments deficits. Efforts to redistribute plantation land resulted in decreased cocoa production. At the same time, the international price of cocoa slumped. In economics and politics, a mixed economy is an economy that combines regulated capitalism, central planning (see planned economy and statism), as well as certain socialist measures and state ownership of some sectors of the economy, such as: social security roads and other transportation environmental regulation labor regulation product safety... A cooperative (also co-operative or co-op) is an association of persons who join together to carry on an economic activity of mutual benefit, in an egalitarian fashion. ...

Economic reforms in response to IMF loan conditions

In response to its economic downturn, the government undertook a series of far-reaching economic reforms. In 1987, the government implemented an International Monetary Fund structural adjustment program, and invited greater private participation in management of the parastatals, as well as in the agricultural, commercial, banking, and tourism sectors. The focus of economic reform since the early 1990s has been widespread privatization, especially of the state-run agricultural and industrial sectors. The flag of the International Monetary Fund (IMF) The International Monetary Fund (IMF) is the international organization entrusted with overseeing the global financial system by monitoring foreign exchange rates and balance of payments, as well as offering technical and financial assistance when asked. ... Structural adjustment is a term used by the International Monetary Fund for the changes it recommends for developing countries. ...

In April 2000, the IMF approved a poverty reduction and growth facility for São Tomé aimed at reducing inflation to 3% for 2001, raising deal growth to 4%, and reducing the fiscal deficit. In December 2000, São Tomé received significant debt reduction under the IMF-World Bank's Heavily Indebted Poor Countries (HIPC) initiative. The reduction should free additional resources for poverty reduction and public investment although many argue that all Sao Tomean government debt should be waived to alleviate poverty. The International Bank for Reconstruction and Development (IBRD, in Romance languages: BIRD), better known as the World Bank, is an international organization whose original mission was to finance the reconstruction of nations devastated by WWII. Now, its mission has expanded to fight poverty by means of financing states. ... The Heavily Indebted Poor Countries (HIPC) initiative aims at assisting the worlds poorest countries by bringing their external debt to sustainable levels, conditional on their governments showing satisfactory performance levels. ...

São Tomé's success in implementing structural reforms has been rewarded by international donors, who have pledged increased assistance in 2001. The São Toméan Government has traditionally obtained foreign assistance from various donors, including the UN Development Programme, the World Bank, the European Union, Portugal, Taiwan and the African Development Bank The European Union or EU is an intergovernmental organisation of European countries, which currently has 25 member states. ... The Republic of China ( Traditional Chinese: 中華民國; Simplified Chinese: 中华民国; Wade-Giles: Chung-hua Min-kuo, Tongyong Pinyin: JhongHuá MínGuó, Hanyu Pinyin: Zhōnghuá Mínguó) is a multiparty democratic state that is composed of the island groups of Taiwan, the Pescadores, Quemoy, and the Matsu. ... The African Development Bank (AfDB) is a development bank established in 1964 with the intention of promoting economic and social development in Africa. ...

Portugal remains one of São Tomé's major trading partners, particularly as a source of imports. Food, manufactured articles, machinery, and transportation equipment are imported primarily from the EU.

Data

Gross domestic product: purchasing power parity - $214 million (2003 est.), $169 million (1999 est.) In economics, the gross domestic product (GDP) is a measure of the amount of the economic production of a particular territory in financial capital terms during a specific time period. ... In economics, purchasing power parity (PPP) is a method used to calculate an alternative exchange rate between the currencies of two countries. ...

GDP - real growth rate: 5% (2004 est.), 1.5% (1999 est.)

GDP - per capita: purchasing power parity - $1,200 (2003 est.), $1,100 (1999 est.)

GDP - composition by sector: (1997 est.)

• agriculture: 23%
• industry: 19%
• services: 58%

Population below poverty line: NA%

Household income or consumption by percentage share:

• lowest 10%: NA%
• highest 10%: NA%

Inflation rate (consumer prices): 10.5% (yearend 1999 est.)

Labor force: NA

Labor force - by occupation: population mainly engaged in subsistence agriculture and fishing
note: shortages of skilled workers

Unemployment rate: 50% in the formal business sector (1998 est.)

Budget:

• revenues: $58 million
• expenditures: $114 million, including capital expenditures of $54 million (1993 est.)

Industries: light construction, textiles, soap, beer; fish processing; timber

Industrial production growth rate: NA%

Electricity - production: 15 million kWh (1998)

Electricity - production by source:

• fossil fuel: 46.67%
• hydro: 53.33%
• nuclear: 0%
• other: 0% (1998)

Electricity - consumption: 14 GWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: cocoa, coconuts, palm kernels, copra, cinnamon, pepper, coffee, bananas, papayas, beans; poultry; fish This article is about cocoa, the food. ... Binomial name Cocos nucifera L. The Coconut Palm (Cocos nucifera), is a member of the family Arecaceae (palm family). ... Copra is the dried meat, or kernel, of the coconut. ... Binomial name Cinnamomum zeylanicum Blume Cinnamon (Cinnamomum zeylanicum, synonym ) is a small evergreen tree 10-15 m tall, belonging to the family Lauraceae, and a spice obtained from the inner bark of this species. ... Compact orange pepper plants in the genus Capsicum. ... Coffee beans and a cup of coffee Coffee as a drink, usually served hot, is prepared from the roasted seeds (beans) of the coffee plant. ... Species Hybrid origin; see text A banana is a tree-like plant (though strictly a herb) of the genus Musa in the family Musaceae, closely related to plantains. ... The papaya, also known as pawpaw, mamao, or tree melon, is the fruit of the tree Carica papaya. ... Green beans Bean is a common name for large plant seeds of several genera of Fabaceae (formerly Leguminosae) used for food or feed. ... The Poultry-dealer. ... Fish might refer to: Fish - vertebrates with gills which live in water Fish (sometimes FISH) - the British code-word for World War II German stream cipher teleprinter secure communications devices The FISH (FIbonacci SHrinking) stream cipher published in 1993 Fish - the former lead singer of progressive rock band Marillion fluorescent...

Exports: $4.9 million (f.o.b., 1999 est.)

Exports - commodities: cocoa 90%, copra, coffee, palm oil (1997) This article is about cocoa, the food. ... Copra is the dried meat, or kernel, of the coconut. ... Coffee beans and a cup of coffee Coffee as a drink, usually served hot, is prepared from the roasted seeds (beans) of the coffee plant. ...

Exports - partners: Netherlands 51%, Germany 6%, Portugal 6% (1997) The Netherlands (Dutch: Nederland) is the European part of the Kingdom of the Netherlands (Dutch: Koninkrijk der Nederlanden). ...

Imports: $19.5 million (f.o.b., 1999 est.)

Imports - commodities: machinery and electrical equipment, food products, petroleum products

Imports - partners: Portugal 26%, France 18%, Angola, Belgium, Japan (1997) The French Republic or France (French: République française or France) is a country whose metropolitan territory is located in western Europe, and which is further made up of a collection of overseas islands and territories located in other continents. ... Angola is a country in southwestern Africa bordering Namibia, Congo-Kinshasa, and Zambia, and with a west coast along the Atlantic Ocean. ... The Kingdom of Belgium (Dutch: Koninkrijk België, French: Royaume de Belgique, German: Königreich Belgien) is a country in Western Europe, bordered by the Netherlands, Germany, Luxembourg, France, and the North Sea. ... Official language Japanese Capital Tokyo Largest City Tokyo Emperor Akihito Prime Minister Junichiro Koizumi Area  - Total  - % water Ranked 60th 377,835 km² 0. ...

Debt - external: $274 million (1998)

Economic aid - recipient: $57.3 million (1995)

Currency: 1 dobra (Db) = 100 centimos

Exchange rates: dobras (Db) per US$1 - 7,200.0 (October 1999), 7,104.05 (1998), 4,552.5 (1997), 2,203.2 (1996), 1,420.3 (1995)

Fiscal year: calendar year

See also

• São Tomé and Príncipe
• Economy of Africa

The Democratic Republic of São Tomé and Príncipe is a tiny two- island nation in the Gulf of Guinea, distanced 140 kilometers from one another, and situated about 250 and 225 kilometers, respectively, off the northwestern coast of Gabon. ... The economy of Africa comprises more than 800 million people in 54 different states. ...

External links

• CIA - The World Factbook -- Sao Tome and Principe (http://www.cia.gov/cia/publications/factbook/geos/tp.html)