KEY RESULTS

• Supporting evidence-based analysis | The Enhanced Integrated Framework (EIF) has supported the development of the Diagnostic Trade Integration Study Update (DTISU) as a key evidence-based analysis to address trade competitiveness and mainstreaming trade.
• Capacity-building as a key to unlock trade skills and coordination | Staff skills within the Trade Directorate at the Ministry of Finance, Trade and Blue Economy have been built as a means to increase trade capacity.
• Tangible business environment improvements |The EIF's support has targeted and improved the business environment through the ease of doing business for inclusive and sustainable growth in São Tomé and Príncipe.

The Democratic Republic of São Tomé and Príncipe, located in the Central African Gulf of Guinea, is a two-island country of 225,000 people and the second-smallest African country. Pristine beaches and biodiverse rainforests provide a unique and immense potential for tourism development in the country. This sector has witnessed a steady growth and is one of the main drivers of economic development. Yet, São Tomé and Príncipe is also characterized by high levels of poverty and unemployment, particularly in rural areas.

Despite several challenges, including its largely undiversified economy, vulnerability to climate-related shocks and its small size, São Tomé and Príncipe graduated from the UN's least developed country (LDC) category in December 2024. This followed the recommendation for graduation from the LDC category by the UN Committee for Development Policy in 2018, after the country had met the relevant graduation thresholds. 

The country began receiving support from the EIF’s predecessor, the Integrated Framework (IF), in 2006, and the support has generally focused on institutional capacity-building within the Government to help strengthen competitiveness and resilience through trade. 

Evidence-based analysis to identify actions fostering trade competitiveness

São Tomé and Príncipe completed and validated its EIF-supported DTISU in 2013, which aimed to understand the country’s trade opportunities and challenges. The study built on a DTIS conducted by the World Bank in 2006, which had already identified trade constraints, analysed export potential – particularly in cocoa and emerging sectors – and examined investment and infrastructure barriers to trade integration. The DTISU highlighted persistent cross-sectoral structural and business environment bottlenecks that were holding back the country’s trade integration agenda. The creation of at least 30,000 jobs was needed to absorb new entrants to the labour market. Export‑led growth held the potential to create such jobs. According to the analysis made in the study, to promote trade growth, "the Government of São Tomé and Príncipe needed to move forward with an agenda of pro-competitive reforms to reduce trade costs, put the cocoa sector back on its feet, and to broaden the productive base to services and tourism".

Tourism, being seen as a key sector for the country, was highlighted in the DTISU as a sector with potential for growth, if certain bottlenecks were addressed. These include enhancing air and maritime connectivity, establishing a clear legal framework, and improving governance. Additionally, securing cable access to the internet's backbone and issuing a second telecom license were seen as being crucial steps to reduce communications costs. 

The DTISU therefore laid a valuable evidence base for a pro-competitive agenda in general and understanding and developing the tourism sector further in particular.

Capacity-building as a key to address bottlenecks 

According to the Coordinator of the EIF National Implementation Unit, Zeferino dos Santos Ceita, the EIF's work with São Tomé and Príncipe between 2019 and 2023 focused on "assisting the country to build solid and effective trade institutions and to integrate into regional and global trading systems aimed at creating jobs and incomes and lifting São Toméans out of poverty". 

Ceita added that "capacity-building through the operationalization of the National Trade Negotiation Committee, strengthening of customs operators and the realization of a diagnostic study of the informal sector, as well as the formulation of basic laws to guide commercial activities was paramount".

The EIF also supported strengthening staff skills within the Trade Directorate at the Ministry of Economy to increase the capacity around trade negotiation rules and their abilities to analyse and formulate trade policies. More than 180 officials were trained, 50% of whom were women. As a result of the programme, civil society became more aware of trade policy issues and their implications, especially for people living in poverty and more vulnerable groups in society. Moreover, an EIF-supported capacity‑building initiative targeting Government officials and private sector and civil society actors fostered a greater understanding of the importance of being part of the World Trade Organization and the African Continental Free Trade Area.

Among the products of significance to the economy, cocoa employs a quarter of São Tomé and Príncipe's labour force, accounting for more than half of household incomes. Re-enforcing this sector – particularly its international competitiveness in the face of global declining trade in cocoa – was crucial, given that São Tomé and Príncipe exports 40% of its cocoa to European countries, mainly Portugal. To this end, the EIF contributed to the capacity-building of existing private sector initiatives in the cocoa sector that were aimed at supporting and organizing co-operatives of small-scale cocoa producers and improving the legal environment pertaining to their land rights.   

Mainstreaming trade and country ownership

Following the gaps assessment through the DTISU, the EIF also supported the São Tomé and Príncipe Government in mainstreaming trade into economic and social policies, especially key strategic policy documents, such as the 2012-2016 Poverty Reduction Strategy Paper (PRSP) II and the PRSP III 2017-2021, both of which are grounded in the country's Vision 2030. São Tomé and Príncipe also exploited comparative advantages by developing an export competitiveness strategy for inclusive growth that focused on job creation and export-led growth. 

The final evaluation of the EIF institutional support project in São Tomé and Príncipe pointed out that  support provided was clearly aligned with the country's priorities and needs. It states that "alignment is one of the main achievements of the EIF project in São Tomé and Príncipe, which also responds to the guiding principle of the EIF programme to promote ownership by beneficiary countries".

The evaluation went on to highlight the significance of alignment and ownership fostered through EIF support: "Government's priorities and needs are reflected in national development policies. All of the EIF unit's monitoring data, the responses to the evaluation survey and the evaluation of the reports on the studies carried out have shown that the EIF project is aligned with the Government's objectives and needs."

Improving São Tomé and Príncipe's ease of doing business

Another key area of impact from the EIF's engagement in São Tomé and Príncipe was the work around improving the trade environment more broadly by targeting the country's ease of doing business. With EIF support, the country adopted several legal and regulatory texts, including the commercial law regulating commercial activities in the country; the creation of the Country Trademark; and the dissemination of the National Tourism Strategy and the National Trade Strategy.

The National Business Forum was also established with the support of the EIF to facilitate the dialogue with, and support to, businesses. Following research and training, informal private sector operators are now producing and offering quality goods and services that meet international standards. Training of trainers provided to small producers of cocoa, pepper and coffee around rules of origin created for these exports is aimed at ensuring the country’s products can access and be competitive in international markets.

The EIF support also prioritized building the capacity of the Chamber of Commerce, Industry, Agriculture and Services. A Competition Act was developed and translated into French, while the Consumer Protection Act was revised and reinstated. The Trade Directorate received new office and IT equipment to facilitate business, while a database to issue business licenses and permits was also created, leading to improved ease of doing business. A Trade and Investment Promotion Agency was also established to facilitate the of São Tomé and Príncipe branding and to share business information. When asked about the EIF engagement around this, Alfredo Bragança Da Trindade, the Executive Director of the Trade and Investment Promotion Agency, said:

A strong foundation for growth and sustainability

The EIF's support to São Tomé and Príncipe has created a strong legacy of capacity‑building and local ownership. The hiring of local experts to run seminars and workshops was important and unique, as this ensured ownership of the themes addressed. The local experts also created synergies to overcome the inertia previously encountered.

The will and competence developed across the Government, civil society and the private sector is crucial for the sustainability of activities initiated by the EIF and its partners. The EIF's support has enabled São Tomé and Príncipe to develop a holistic approach to trade and to fully understand what the country needs, especially within the Trade Directorate, to deliver on its mandate effectively.