Financial Crime World

São Tomé and Principe: Strengthening Financial System through Regulatory Bodies

The government of São Tomé and Principe has been working towards modernizing its payment system by introducing platforms for VISA and MasterCard in May 2021. This move is a significant step towards strengthening the country’s financial system.

Banking System Overview

São Tomé and Principe’s banking system comprises one Central Bank, Banco Central de São Tomé e Príncipe (BCSTP), and four commercial banks:

  • BISTP: Established in 1993 as a joint venture between the government of São Tomé and Principe and Portuguese bank Caixa Geral de Depositos
  • ECOBANK: Operates both as a commercial and investment bank since 2017
  • Afriland First Bank: Started operations in March 2012
  • BGFI: Investment bank operating in São Tomé and Principe

Regulatory Bodies

The BCSTP has declared three commercial banks insolvent, namely:

  • Banco Equator (capitalized by foreign investors from Angola)
  • Banco Privado de São Tomé (capitalized by foreign investors from Cameroon)
  • Energy Bank (capitalized by foreign investors from Nigeria)

The Central Bank’s supervision of the national financial system includes:

  • Selling hard currencies
  • Establishing indicative interest rates

Currency and Exchange Rate

São Tomé and Principe’s national currency is the dobra (STD), with one US dollar equivalent to about 23.70 STD.

  • Since January 2010, the STD has been pegged to the Euro at an exchange rate of 1 Euro to 24.50 STD
  • The government works closely with BCSTP to ensure that foreign exchange inflows translate into increased access to raw materials for businesses

Challenges and Recommendations

Despite efforts to modernize the payment system, there are no US banks operating in São Tomé and Principe, and Portuguese banks are used for transferring funds.

Experts recommend strengthening regulatory bodies responsible for financial institutions to boost confidence in the country’s financial system:

  • “The introduction of payment platforms for VISA and MasterCard is a major step towards modernizing the payment system,” said an expert
  • “However, it’s crucial that the regulatory bodies work closely with financial institutions to ensure transparency and accountability”

Improving Trade Finance Options

In related news, the government has been working on improving its trade finance options. For more information about methods of payment or other trade finance options, please read the Trade Finance Guide.