Sao Tome and Principe Moves to Modernize Payment System

Introduction of VISA and MasterCard Platforms

In May 2021, the government of Sao Tome and Principe made a significant move to modernize its payment system by introducing platforms for VISA and MasterCard. This development is seen as a major boost to the country’s financial sector, which had previously relied heavily on traditional methods of payment such as irrevocable letters of credit.

Benefits of Modernization

• Increases access to financial services for businesses and individuals
• Eases transaction processes locally and internationally
• Reduces dependence on traditional methods of payment, which can be time-consuming and expensive

Banking System in Sao Tome and Principe

The country’s banking system consists of:

• One Central Bank (Banco Central de Sao Tome e Principe - BCSTP)
• Four commercial banks, including two that operate as investment banks
• The BCSTP is responsible for supervising the national financial system, selling hard currencies, and establishing indicative interest rates

Challenges Faced by the Banking Sector

In recent years, three commercial banks have been declared insolvent by the BCSTP:

• Banco Equator (Angolan capitalized)
• Banco Privado de Sao Tome (Cameroonian capitalized)
• Energy Bank (Nigerian capitalized)

The government has been working closely with the BCSTP to ensure that foreign exchange inflows are converted into access to raw materials for businesses.

Foreign Exchange Controls

• The dobra (STD) is the country’s national currency
• One U.S. dollar is 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

Repatriation of Capital and Banking Operations

• Repatriation of capital is possible with prior authorization
• There are no U.S. banks operating in Sao Tome and Principe
• Portuguese banks are used for transferring funds