Financial Crime World

Sao Tome and Principe: Financial Compliance on the Rise

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Sao Tome and Principe (STP), a stable multi-party democracy with a developing economy, has made significant strides in improving its investment climate over the past decade, according to the US Department of State’s Investment Climate Statements. The country has taken efforts to combat corruption and create a more transparent business environment.

Investment Environment

Attracting Foreign Donors

STP has managed to attract foreign donors who finance around 90% of its public investment budget. In 2021, these donors included:

  • China
  • Japan
  • Portugal
  • The World Bank
  • European Union
  • Others

The government has introduced various initiatives to improve the appeal of tourism during the pandemic, including the “Seal of Clean” Program launched in 2021.

Business Environment

VAT Law and Labor Code

STP’s Value Added Tax (VAT) Law, enacted in 2019, aims to facilitate tax collection and enforcement of the tax code. A modern Labor Code came into force in 2019 to make it easier for investors to understand and abide by labor standards.

The country has also ratified the African Continental Free Trade Agreement (AfCFTA) in June 2019.

Economic Growth

Promoting Services

In 2018, a four-year program was approved to promote “robust economic growth” focused on services such as:

  • Tourism
  • Technology
  • Logistics
  • Health services associated with the digital economy

However, foreign investors continue to face challenges in 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 to electricity.

Infrastructure Development

Port Modernization

STP has taken steps to modernize its port infrastructure and capitalize on its fishing potential with the help of China. In 2020, China announced funding for airport rehabilitation and upgrades.

The country is using World Bank funding to rehabilitate the road linking the capital to the north of the island.

Leadership

Prime Minister Jorge Bom Jesus is focused on fighting corruption, improving the business environment, attracting Foreign Direct Investment (FDI), and promoting economic growth. President Carlos Vila Nova has expressed support for protecting the environment and promoting investments, welcoming U.S. cooperation.