2022 Investment Climate Statements: Sao Tome and Principe
São Tomé and Príncipe (STP) is a stable, multi-party democracy. It is a developing country with a Gross Domestic Product (GDP) of roughly USD $427.4 million and a population of 215,048 (World Bank, 2019 estimate). Due to STP’s very limited revenue sources, foreign donors finance roughly 90 percent or more of its public investment budget. For the 2021 budget, these donors were China, Japan, Portugal, the World Bank, European Union, the UN Food and Agriculture Organization (FAO), the African Development Bank, and the Arab Bank for Economic Development (BADEA.)
STP has taken positive steps over the last decade to improve its investment climate and to make the country a more attractive destination for foreign direct investment (FDI), including by working to combat corruption and create an open and transparent business environment. In 2021, VISA cards were introduced in the country. To improve the appeal of tourism during the pandemic, the Tourism Directorate launched its “Seal of Clean” Program in 2021. The Value Added Tax (VAT) Law (13/2019) enacted in 2019 to facilitate tax collection and enforcement of the tax code is scheduled for adoption. A modern Labor Code (6/2019) came into force in 2019 to make it easier for investors to understand and abide by the labor standards. In June 2019, STP also became the 25th African country to ratify the African Continental Free Trade Agreement (AfCFTA). In 2018, it passed its Public-Private Partnership (PPP) Law, Notary Code, and Commercial Register Code. The Regulation of Investment Code was adopted in 2017 and the Investment Code and Code of Fiscal Benefits and Incentives were previously adopted in 2016. The 2013 anti-money laundering and counter-terrorist financing law brought STP into compliance with international standards. A Millennium Challenge Corporation Country Threshold Program, completed in 2011, modernized STP’s customs administration, reformed its tax policies, and made it less burdensome to start a new business. Together, these efforts helped to develop a modern and transparent legal framework for foreign investment. Due to its reliance on outside investment, STP remains committed to improving its investment climate.
The government continues to work with the business community to develop the country economically and to improve basic social services for the country’s young and growing population. In 2018, it approved a four-year program to promote “robust economic growth” focused on the provision of services, including tourism, the financial sector, technology, logistics, and health services associated with the digital economy. Special attention is also being given to traditional sectors, mainly agriculture, livestock, and marine resources. STP’s extensive maritime domain (160,000 km2) may hold opportunities for hydrocarbon production as technology improves. In cooperation with China, STP is seeking to modernize its port infrastructure and capitalize on its fishing potential. In 2020, China also announced funding for airport rehabilitation and upgrades. STP is using Word Bank funding to rehabilitate the road linking the capital to the north of the island. However, foreign investors continue to face challenges identifying viable investment opportunities due to STP’s small and fragile domestic market, inadequate infrastructure, slow moving justice system, high cost of credit, and limited access and expensive electricity.
Prime Minister Jorge Bom Jesus is focused on fighting corruption, improving the business environment, attracting Foreign Direct Investment (FDI), and promoting economic growth. In his inaugural address in 2021, President Carlos Vila Nova expressed support for protecting the environment and investments. The President also welcomed U.S. cooperation.
1. Openness To, and Restrictions Upon, Foreign Investment
Limits on Foreign Control and Right to Private Ownership and Establishment
According to Article 4 of the Investment Code, both domestic and foreign investors are free to establish and own business enterprises, as well as engage in all forms of business activity in STP, except in the sectors defined by law as reserved for the state, specifically military and paramilitary activities and Central Bank operations. STP is gradually moving towards open competition in all sectors of the economy, and competitive equality is the official standard applied to private enterprises in competition with public enterprises regarding access to markets, credit, and other business activities. The government has eliminated former public monopolies in farming, banking, insurance, airline services, telecommunications, and trade (export and import).
São Tomé and Príncipe is taking steps toward sustainable economic growth. Its economic prospects depend on the government’s ability to reinforce the capacity of its small and medium-sized enterprises (SMEs) and attract sustainable foreign direct investment. Therefore, the government is eager to improve the country’s investment climate to make it a more attractive destination for foreign investors. Under Article 14 of the Investment Code, the State guarantees equal and non-discriminatory treatment to both foreign and domestic investors operating in the country. The Trade and Investment Promotion Agency (APCI, www.apcistp.com ), housed in the Ministry of Planning, Finance, and Blue Economy, promotes and facilitates investment through “single-window” service and multi-sectoral coordination. However, the agency is still struggling to fully comply with its mandate due to a lack of capacity.
There are no limits on foreign ownership or control except for activities customarily reserved for the state. The form of public participation, namely the percentage of government ownership in joint ventures, varies according to the agreement. Based on Article 8 of the Regulation of the Investment Code, all inbound investment proposals must be screened and approved by the applicable ministry for the economic sector in coordination with APCI. According to Article 14, an investment proposal can be rejected if it threatens national security, public health, or ecological equilibrium, and if the proposal has a negative effect or insufficient contribution to country’s economy. However, these mechanisms do not go beyond the law’s mandate and are not considered barriers to investment.
Other Investment Policy Reviews
STP is not a member of the Organization for Economic Cooperation and Development (OECD), nor has the government participated in in any investment policy reviews provided through the body. Neither the World Trade Organization (WTO) nor United National Conference on Trade and Development (UNCTAD) has conducted a review, either. STP currently has observer status in the World Trade Organization, and it is a member of UNCTAD.
STP has taken steps to facilitate investment and improve the business environment in recent years. The Millennium Challenge Corporation (MCC) worked with STP from 2007 to 2011 on a Threshold Country Program to improve investment opportunities, including by creating a “one-stop shop” to help encourage new investments by making it easier and cheaper to import and export goods, reducing the time required to start a new business, and improving STP’s tax and customs clearance administration. Currently a business can be registered within one to five days. In 2013, with the support of the International Trade Center, the Trade and Investment Promotion Agency (APCI) was created. APCI’s business facilitation services, including a “one-stop shop” for business registration, offer equal treatment for women and underrepresented minorities in the economy; however, there is no special assistance provided to these groups. A Single Window website (http://gue-stp.net/spip.php?article24; in Portuguese only) provides information and the application form needed to create and register companies in STP.
While STP’s government does not actively promote outward investment, it does not restrict domestic investors from investing abroad. STP also has signed Investment Protection Agreements with several countries.
2. Bilateral Investment and Taxation Treaties
STP and Portugal signed a bilateral investment treaty (BIT) and a Double Tax Agreement in 1995 and 2015 respectively. Both documents are still pending ratification.
STP is closely working with the International Monetary Fund (IMF) to implement the value-added tax (VAT) system. The VAT Law (13/2019) was approved in November 2019 but implementation is still pending. STP has not signed a BIT or a bilateral taxation treaty with the United States. There are no ongoing systemic tax disputes between the government and foreign investors or any taxation issues concerning U.S. investors.
3. Legal Regime
Transparency of the Regulatory System
The laws and regulations that affect direct investment, including environmental, health, and safety rules and regulations, apply equally to foreign and domestic firms. Before approval, investment proposals are evaluated for their environmental and social impacts. STP tax laws reward citizens who return to STP to invest, while also containing provisions for attracting foreigners to invest in STP. The STP legal code is based on Portuguese law, and laws and regulations are applied at the national level. Rule-making and regulatory authority exist at the national level and regulations are developed at the ministerial level, approved by the National Assembly, and promulgated by the President. The ministry concerned is responsible for any regulatory enforcement mechanisms. Rarely, drafted bills or regulations are made available for public comment. Copies of most regulations can be purchased online at https://www.legis-palop.org/ or directly at the Ministry of Justice, Public Administration, and Human Rights in the format of the Official Gazette. The public finances and debt obligations are relatively transparent and are periodically available on the finance ministry website: https://financas.gov.st/
International Regulatory Considerations
STP is a member of the Economic Community of Central African States (ECCAS), whose fundamental goals are to promote exchange and collaboration among the member countries and provide an institutional and legal framework to their cooperative efforts. ECCAS is the largest economic community in Central Africa, including Central African Economic and Monetary Community (CEMAC) member states (Gabon, Cameroon, the Central African Republic, Chad, Republic of Congo, and Equatorial Guinea), as well as Burundi, the Democratic Republic of Congo, Angola, Rwanda, and STP. The archipelago is a member of the Community of Portuguese Language Countries (CPLP) and its economic confederation (CE). STP is not a member of the WTO, but it does have observer status. STP is among the 44 African Nations to have signed the agreement on African Continental Free Trade Area (AfCFTA) in March 2018 in Kigali, Rwanda, and became the 25th African country to ratify the AfCFTA in June 2019.
Legal System and Judicial Independence
Disputes are generally solved through dialogue or negotiations between parties without litigation. However, there was a dispute in May 2018 between a local businessman and an Angolan investor that led to the unconstitutional dismissal of Supreme Court Judges by the parliament. Relatedly, there have been a few instances of disagreements involving foreign investors reaching international courts. The country has a written commercial law but does not have specialized courts.
Overall, the legal system is perceived as acting independently. The judicial process is fair but is subject to manipulation on occasion. All regulations or enforcement actions are appealable to the Supreme Court.
Laws and Regulations on Foreign Direct Investment
The VAT Law was approved in 2019, but it has yet to be legally implemented. A modern Labor Code (6/2019) enacted in April 2019, is designed to make labor standards easier for investors to understand and implement. In June 2019, STP ratified the African Continental Free Trade Area agreement (AfCFTA). The Public Private Partnership (PPP) Law, the new Notary Code, and the Commercial Register Code all entered into force in 2018; the Regulation of Investment Code was adopted in 2017; and the Investment Code and Code of Fiscal Benefits and Incentives were adopted in 2016. The Trade and Investment Promotion Agency (APCI) is a one-stop shop for all investment information.
Due to the establishment of APCI, the cost and waiting period to start a new business have been substantially reduced. A new business can obtain expedited registration within 24 hours for approximately STN10,190 ($456) and between three to five days for approximately STN 5,190 ($232). Despite this improvement, STP was downgraded to 150 out of 190 countries in terms of starting a new business according to the 2020 World Bank Ease of Doing Business Report. In comparison, the country ranked 35 out of 190 economies in the 2017 survey.
Although no online business registration process exists, companies can easily register their businesses at the counter. The following is a general description of how a foreign company can establish a local office:
Provide full company documentation, translated into Portuguese.
Check the uniqueness of the proposed company name and reserve a name.
Notarize the company statutes with the registration office at the Ministry of Justice.
File a company declaration with the Tax Administration Office at the Ministry of Finance, Commerce, and Blue Economy.
Register with the Social Security Office at the Ministry of Labor and Social Affairs.
Publish the incorporation notice in the official government gazette (Diário da República).
Publish the incorporation notice in a national newspaper.
Register the company with the Commercial Registry Office at the Ministry of Finance, Commerce, and Blue Economy.
Apply for a commercial operations permit (also known as an “alvara”).
Apply for a taxpayer identification number with the Office of Tax Administration at the Ministry of Finance, Commerce, and Blue Economy.
Register employees with the Social Security Office.
Other required documents include: 1) copies of the by-laws of the parent company and of the minutes of the meeting of the board of directors in which the opening of the STP branch is approved; 2) a certificate of appointment of the general manager for the STP office; 3) a copy of any agreement signed with a São Toméan company or with the STP government; 4) two copies of permits from the Court authorization to operate; and 5) two photographs and a copy of the passport of the General Manager.
Beyond the APCI’s “one-stop shop,”, there are no agencies or brokers that provide services to further simplify the procedures for establishing an office in STP. Some companies consult with a legal office for assistance.
Competition and Antitrust Laws
DRCAE (Directorate of Regulation and Control of Economic Activities) has the mandate to inspect all economic activities and impose penalties, but it lacks the resources necessary to fully perform its duties. DRCAE is housed under the Secretary of State for Commerce and Industry.
AGER (General Regulatory Authority of the Democratic Republic of São Tomé and Príncipe) was created to promote competition and prevent operator abuses in the water, electricity, and telecommunications sectors, as well as in the postal service. The AGER was established in 2005 and is housed under the Ministry of Public Works, Infrastructures, Natural Resources, and Environment.
Expropriation and Compensation
The STP Constitution and the Expropriation Code allows only the central government to expropriate private property. The law permits expropriation of private property only if it is deemed to be in the national public interest and only with adequate compensation. There is no evidence to suggest that the government would undertake expropriation in a discriminatory manner or in violation of established principles of international law and standards.
Aside from a massive land expropriation from colonial farmers in 1976 – later recognized by the government as detrimental to STP’s economy – there have not been any documented cases of expropriation of foreign-owned properties. The government has reportedly considered expropriating land to expand the runway at the international airport, but thus far has reportedly been reluctant to do so out of concern that any expropriation will deter new investment.
ICSID Convention and New York Convention
STP is a member of the International Centre for the Settlement of Investment Disputes (ICSID) Convention and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).
Investor-State Dispute Settlement
STP does not have a Bilateral Investment Treaty with the United States. In May 2018, a dispute between a local businessman and an Angolan investor over a brewery led to government intervention and the unconstitutional approval of a parliamentary resolution dismissing Supreme Court Judges, including its President. There are no reports of investor-state disputes that have involved a U.S. person in the past 10 years. STP courts recognize and enforce foreign arbitral awards issued against the government.
International Commercial Arbitration and Foreign Courts
STP does not have any conflict mediation system, but the country has a Voluntary Arbitration Law (LAV). The LAV is largely based on the Portuguese Arbitration Act of 1986 and incorporates many of the principles of the UNCITRAL Model Law. The Arbitration Center, which was housed under the Chamber of Commerce, never fully played its role and has ceased its activities.
The STP legal system recognizes international arbitration, and local courts recognize foreign arbitral awards, though enforcement may be difficult. No state-owned enterprise (SOE) is currently involved in an investment dispute.
STP has a bankruptcy law, but it is not well developed. In the World Bank’s 2020 Doing Business Report, STP ranked 168 out of 190 economies on the ease of resolving insolvency, the same rank it has in 2019. In January 2022, the STP-based commercial bank Energy Bank, founded in 2011 by a Nigeria investor, declared bankruptcy. This led to the Central Bank cancelling all of the bank’s financial operations in STP.
4. Industrial Policies
According to 2016 Investment Code, all investments, including those for clean energy, above 50,000 Euros are eligible for guarantees and benefits, including fiscal incentives stated in the Fiscal Benefits and Incentives Code of November 2016. These incentives include deductions on corporation taxes, stamp taxes, taxes on baking operations, and withholding taxes. Other incentives include reductions or exemptions of import and re-export tariffs. The government also provides incentives for human resources training, as well other exceptional and complementary benefits and incentives. Based on Article 31 of the Fiscal Benefits and Incentives Code, the incentives are granted through the Private Investment Registration Certificate (CRIP) issued by the APCI following the approval of the investment project. The conditions for access to these incentives apply equally to both men and women. However, contrary to the 2008 Investment Code, the 2016 Code does not provide access to state-owned land and facilities as incentive to investments. No significant measure was adopted in the last year to incentive investments.
Foreign Trade Zones/Free Ports/Trade Facilitation
STP currently has no free trade zones or free ports but in October 2020, the government formalized a free trade zone project to be developed in Malanza, Caué district, south of São Tomé. Article 33 of the Fiscal Benefits and Incentives Code defines the districts of Cantagalo, Lemba, Lobata, and Caué, as well as Príncipe, as Special Development or Economic Zones. Therefore, any new investment established in these areas under the Investment Code can qualify for special incentives. According to Article 14 of the Investment Code, the state assures fair, non-discriminatory, and equal treatment for all investment in the national territory. Companies that qualify may benefit from reductions or exemptions of taxes under the conditions set forth in the Code of Free and Offshore Activities.
Performance and Data Localization Requirements
The government encourages but does not mandate local employment. STP has no specific performance requirements as a condition for establishing, maintaining, or expanding investment. However, under the Code of Fiscal Benefits and Incentives, the government offers better incentives for those companies that choose to reinvest or expand their investment. The government encourages but has not defined requirements for investors to buy local products, to export a certain percentage of output, to invest in a specific geographical area, or use a domestic technology. There is no blanket requirement that STP nationals own shares in foreign investments in STP. The visa application process is straightforward and transparent, and visas or work permits are usually easy to obtain if companies meet all the requirements. Nevertheless, few São Toméan embassies worldwide process visa applications. Under the Legal Regime of Foreign Citizens in STP, the country lifted visa requirements for citizens of the United States, EU, Canada, UK, South Africa, Rwanda and the Community of Portuguese Language Countries. In addition, any foreign citizen holding a valid passport with a valid Schengen or U.S. visa can enter and stay in the country up to 15 days. STP recently began accepting online visa applications. Information on submitting an online visa application is available in Portuguese and English at https://evisa.st, though it reportedly suffers from outages, requiring visa applications to be done in person or via email.
In March 2022, the government approved a decree stating that effective June 1, 2022, visa-exempt visitors must pay an entry fee of STN 500,00 (roughly USD 23). Currently, to fly into STP, travelers must have a negative COVID-19 PCR test result valid for 72 hours if the traveler does not possess a digital vaccine certificate. If the traveler has a certificate, he/she can submit the results of a COVID-19 rapid antigen test valid for 24 hours. When flying out of the country, COVID test requirements depend on the country of destination. Check https://travel.state.gov/content/travel.html for country-specific information when planning travel for the latest updates.
The National Agency for Personal Data Protection (ANPDP) oversees all the rules and requirements for data storage and transfer: https://www.anpdp.st/#13.
5. Protection of Property Rights
Based on Article 46 of the Constitution, private property rights are guaranteed by the State. According to Article 13 of the Expropriation Code, authorities must provide fair, adequate, and effective payment at market value in advance before expropriating any private property. The government owns the vast majority of land in the country, most of which is agricultural land granted by the Ministry of Agriculture, Fishing, and Rural Development through concessions of land titles under the Land Reform Law. Less than 10 percent of land is held by private owners. Foreigners cannot purchase land, although they can purchase structures. The 2020 World Bank’s Doing Business Report ranked STP 172 out 190 economies in terms of registering properties. The 2018 Notary Law provides the country with a modern and practical legal framework that allows for fast and efficient notarial acts, while ensuring judicial security. U.S. companies have not raised property rights concerns with the Embassy.
Intellectual Property Rights
U.S. companies have not raised intellectual property (IP) rights concerns with the Embassy. During the past year, no new IP related laws and regulation were enacted, nor are any reform bills pending. All copyright and industrial property rights proceedings are covered by the Directorate of Industry in collaboration with the National Directorate of Culture, under the Secretariat of State for Commerce and Industry and the Ministry of Tourism and Culture, respectively.
STP is listed in the USTR’s Special 301 report but not listed in the notorious market report. STP is a member of the World Intellectual Property Organization (WIPO). The Regulation on Industrial Property regulates the enforcement of IP, including geographical indications, patents, and trademarks. STP does not report on seizures of counterfeit goods. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
6. Financial Sector
Capital Markets and Portfolio Investment
Portfolio investment is undeveloped and unclear. The Central Bank of STP (BCSTP) issued Treasury bills (T-bills) for the first time on June 29, 2015 for STN 75 million (approximately $3.7 million) at the fixed interest rate of 6.2 percent, with a maturity of six months. The demand was 20 percent higher than the offer, due to the participation of three domestic banks. The most recent issuance occurred on March 15, 2018. STP does not have a stock market. Articles 13 and 14 of the Foreign Exchange Regulations facilitate the free flow of financial resources under the supervision of the Central Bank. Foreign investors are able to get credit on the local market; however, access to credit is difficult due to the limited variety of credit instruments, high interest rates, and the number of guarantees requested by the commercial banks. As a result, on the World Bank Ease of Doing Business Report 2020, STP ranked 165 out 190 economies regarding access to credit, a 4-point drop compared to the previous year. There are currently no significant U.S. investors active in STP.
Money and Banking System
STP has four private commercial banks. Portuguese, Angolan, Cameroonian, Gabonese, Togolese, and as well as Säo Toméan interests are represented in the ownership and management of the commercial banks. The International Bank of STP (BISTP) is believed to be the largest bank in terms of assets; however, banks’ asset estimations are not publicly available. In January 2022, STP-based commercial bank Energy Bank, founded in 2011 by a Nigeria investor, declared bankruptcy leading the Central Bank to cancel all its financial operations in STP. In early 2018, the BCSTP declared the commercial bank “Private Bank” insolvent and opened a public tender to liquidate its assets and liabilities. The Gabonese investment bank BGFI opened its São Toméan operation in March 2012. Banking services, especially from BISTP, are available in the capital with a few smaller branches in cities in the north, south, and center of the country, as well as in Príncipe. In 2021, VISA card was introduced into the country’s financial system
In addition to retail banking, commercial banks offer most corporate banking services, or can procure them from overseas. Local credit to the private sector is limited and expensive, but available to both foreign and local investors on equal terms. The country’s main economic actors finance themselves outside STP. Foreigners must establish residency to open a bank account.
Foreign Exchange and Remittances
The BCSTP supervises the national financial system and defines monetary and exchange rate policies in STP. Among other responsibilities, it sells hard currency and establishes the reference rate. In case of a shortage, access to foreign currency is limited; however, there is no official norm restricting access. Article 18 of the Investment Code dictates that foreign investors are allowed to transfer or repatriate funds associated with an investment.
Dobra (STN) is the national currency. In July 2009, STP and Portugal signed an economic cooperation agreement to peg the Dobra to the Euro rather than a weighted basket of currencies. Based on the 2017 Monetary Law, the BCSTP introduced a new currency to modernize and strengthen the country’s financial system. With the introduction of the New Dobra on January 1, 2018, the exchange rate is currently 24.5 Dobra to the Euro. This peg offers credible parity, minimizes monetary instability costs, and provides better credibility for exchange rate and monetary policy. The exchange rate to the U.S. Dollar fluctuates.
Repatriation of capital is possible with prior authorization. According to both the Foreign Exchange Law and the Investment Code, transfer of profits outside the country is also allowed after the deductions for legal and statutory reserves and the payment of existing taxes owed. The government encourages reinvestments with associated reductions in income taxes.
Sovereign Wealth Funds
STP does not have a traditional sovereign wealth fund (SWF) in existence. It does have a small National Oil Account (NOA). The NOA was previously funded by signing bonuses paid by energy and oil companies to gain rights to conduct exploration and production activities. According to officials from the budget department, the Law of Petroleum allows the government to withdraw up to 20 percent of the balance of the NOA every year as calculated on June 30 of the previous year. Details are available on the state budget and under NOA online: www.grip.st/?cntnr_informac=informac&ficherselt=DT-166- Envio de Extracto da Conta Nacional de Petroleo junto BCSTP.pdf
7. State-Owned Enterprises (SOEs)
When STP’s cocoa plantations were shut down in the late 1980s, most State-Owned Enterprises closed. Still, EMAE (Water and Power Supply Company), ENAPORT (Port Authority Company), ENASA (National Company for Airports and Air Safety), and Empresa dos Correios (Post Office) are 100 percent state-owned, though they have some financial autonomy. Under a joint venture, the government holds a 49 percent share of CST (Santomean Telecommunication Company), while the Portuguese Conglomerate Visabeira Global owns 51 percent, acquired from the Brazilian “Oi” in 2022. The government has a 48 percent stake in BISTP, while the Portuguese Caixa Geral de Depositos holds 27 percent and the African Investment Bank holds 25 percent. All four fully owned state enterprises are unprofitable and are annually audited by the Ministry of Planning, Finance, and Blue Economy and biennially by the Court of Audit. They have financial autonomy, but largely depend on funds from the state budget. EMAE, ENAPORT, and ENASA have no competitors. Regarding telecommunication and banking, traditionally government is the largest client of CST and BISTP.
STP does not have an active privatization program. However, thorough its periodical reports, the IMF has been recommending the privatization of the SOEs, especially EMAE. On occasion, there are concession opportunities. They are normally advertised under a non-discriminatory public bidding process.
There are no rules or legislation pertaining to responsible business conduct (RBC) in STP. Companies generally act in accordance with laws pertaining to investment, labor, environment, flora and fauna protection, consumer protection, and taxation. There is limited awareness of expectations of or standards for responsible business conduct. STP participates in the Extractive Industries Transparency Initiative (EITI). Companies usually respect human and labor rights. On occasion, civil society and NGOs speak up against businesses’ inappropriate conduct, especially as regards environmental destruction. In 2018, a group of civil society organizations and a political party contested the government’s decision to lease a large piece of land in the north of São Tomé to a Chinese business group for the establishment of a quarry. The land was part of a natural park with many preserved species of plants, animals and birds.
Although STP has taken steps to combat corruption through government reforms the country ranked 66 out 180 countries in Transparency International’s 2021 Corruption Perception Index, dropping one position compared to the previous year. The government passed an anti-corruption law in 2012 that required all payments to government entities over USD $5 be made directly at the BCSTP and all salary payments to civil servants be paid directly to the employee’s bank account. The government has also taken steps to review and update existing contracts with some foreign companies to support liberalization and free market competition. The government has denounced corruption and pledged to take necessary steps to prevent and combat it.
Although the government has been taken these steps, in March 2022, President Vila Nova cited a study showing seven out of 10 Santomeans still believed corruption was increasing.
Although corruption in customs was historically an issue for foreign investors, the MCC Threshold Program did help establish a modern customs code and related decrees by introducing modern customs tracking software and eliminating manual procedures, with customs agents handling payments for the importer. As a result, customs revenues have increased significantly. while incidents of corruption have reportedly declined.
In 2013, the parliament adopted an amended anti-money laundering/counter-terrorist financing (AML/CFT) law that complies with international standards. It designates the Financial Information Unit (Unidade de InformaçãoFinanceira) as the central agency in STP with responsibility for investigating suspect transactions. STP is a member of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), a FATF-style regional body.
According to the 2016 Investment Code, all investment proposals must be submitted to the APCI, which is responsible for carrying out all legal inter-institutional coordination with different sectors involved in the analysis and approval of the investment project. The law limits contacts between investment proponents and officials involved in the investment approval process.
STP signed and ratified the UN Anticorruption Convention. It is not party to the Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
STP does not have a designated agency responsible for combatting corruption but in March 2022, the President promised to create an “Anti-Corruption Committee” comprised of reputable citizens, and uncommitted to any political agenda.
Resources to Report Corruption
Deodato Capela President
Centro de Integridade Pública de São Tomé e Príncipe (STP Public Integrity Center) – Anticorruption, Transparency and Integrity – NGO
P.C: 330, Almeirim-São Tomé; São Tomé e Príncipe
+ 239 991 1116 firstname.lastname@example.org http://cipstp.st/
10. Political and Security Environment
STP is relatively stable, has no ethnic tensions, and has a relaxed lifestyle, which locals refer to as leve-leve (“take it easy”). Since its democratic reforms in 1990, the archipelago has been a good example of democracy in the sub-region with a history of peaceful transfers of power and consensus in decision-making. In July 2021, following the results of the first round of the presidential elections, the third ranked candidate contested the election’s results, alleging massive fraud. After back-and-forth decisions from the Constitutional Court there was a delay in the holding of the second round of the presidential election. Ultimately, the second round took place and observers announced that they found it to be free, fair, and transparent. The President took office in 2021 without incident. There were some protests in 2018 over the creation of the Constitutional Court, and a lower court decision to recount the votes of the October 7 legislative, local, and regional elections. Despite the post-election protests, the legislative elections led to the peaceful formation of a new coalition Government. STP generally has a good human rights record and demonstrates a respect for citizens’ and workers’ rights. Strikes are not seen as the primary means to settle labor disputes and labor strikes have been sporadic in recent times.
Since independence in 1975, there have been no incidents of politically motivated attacks on projects or installations. There is no anti-American sentiment and instances of civil disorder are rare. Recently maritime piracy has affected STP’s territorial waters in the Gulf of Guinea, though the threat of terrorism remains limited. STP has sought to be an active partner in regional maritime security efforts, although its capacity and resources are minimal. Despite two violent murders in early 2020, violent crime rates are at a historical low.
11. Labor Policies and Practices
A significant portion of STP’s workforce is young, relatively well-educated, and multilingual (Portuguese and French). Further training of the workforce is needed, however, for the economy to continue developing. The percentage of foreign/migrant workers is low but covered by the new Labor Code (Law 6/2019). The government does not officially require but encourages companies to hire nationals. In March 2022, after negotiations with the labor unions, the government announced that the monthly minimum wage for civil servant will increase from USD $50 to USD $112 as of May, with an expected increase to USD $157 in 2023 and USD $202 in 2024. The unions also announced a leave allowance payment of 40 percent as of May and 100 percent by 2023, retroactive from January. For the first time in 2016, the government set the national minimum wage for private and public sectors. The basic salary varies by the size of the enterprise. For micro enterprises or family businesses, the minimum wage is around STN 800 ($38.80) per month, small business STN 1,000 ($48.50), medium enterprise STN 1,300 ($63.10) and large enterprise STN 1,600 ($77.70). The basic salary for the public sector is approximately STN 1,100 ($50). Women are entitled to state-funded maternity leave for a period of 14 weeks, including 8 weeks after childbirth. The law recognizes the right of workers to form and join independent unions, conduct legal strikes (though this is strictly regulated), and bargain collectively. The law does not prohibit anti-union discrimination or retaliation against strikers. Workers’ collective bargaining agreements remain relatively weak due to the government’s role as the principal employer and key interlocutor in labor matters, including wages. Special tax incentives are provided under the Fiscal Benefit Code to companies that provide training to its human resources. Labor disputes are usually solved through dialogue between parties, under mediation of the General Labor Inspection Department (IGT), or through litigation if a consensus cannot be reached. The Labor Law was drafted in collaboration with the ILO. The IGT is housed under the Labor Ministry.
STP’s private sector is underdeveloped, undiversified and dominated by a large number of informal operators who work mainly in civil construction, agriculture, commerce and fisheries, with a low level of education, lack of organizational and managerial skills, absence of structured accounting systems, as well as minimal business planning procedures in the medium/long term. However, the informal sector makes a substantial contribution to the economy through its dynamism, entrepreneurial culture, innovation and flexibility to adjust to changes in the environment. Thus, it still has the potential to eventually develop into a part of the more mainstream private sector in the coming years.
The World Bank 2020 Doing Business Report ranked STP 185 among 190 economies in terms of contract enforcement. Although some reforms are ongoing, the county’s justice system is still seen as slow moving, costly, and biased at times. Therefore, it is still very important to know the given local partner or individual who you are doing business with. Further, it is always advisable to confirm the true ownership of any asset before its acquisition, especially when involving land.
According to a government official, there are a total of 11,000 civil servants, more than half the country’s labor force. The World Bank estimated STP’s 2020 total labor force to be about 68,000; among the total number, roughly 35,000 are female between the ages of 15-64 years old.