Sao Tome and Principe Seeks to Strengthen Financial Institutions Amidst COVID-19 Response
The government of Sao Tome and Principe has received a significant boost in its efforts to modernize and improve the country’s banking system, access to finance, and national statistics. The World Bank has approved a $7 million grant to support these initiatives, which will help scale-up activities with the Central Bank of Sao Tome and Principe and support system modernizations as part of the COVID-19 mitigation response.
Challenges in Financial Infrastructure
Despite progress in digital payment systems over recent years, coverage remains limited, and the financial infrastructure is underdeveloped and unreliable, particularly in rural areas and on the island of Principe. This hinders access to payment services, including:
- Digital payments
- Tax collection
- Utility bills
- Wages
- Pensions
- Welfare benefits
Importance of a Modern Financial System
“A modern and efficient financial system is crucial for a country’s sustained development,” said Jean-Christophe Carret, World Bank Country Director to STP. “It is vital for Sao Tome and Principe to maintain the gains of improving its financial system, particularly as it will add value to the tourism industry, which generates significant economic activity and relies heavily on digital payment systems.”
Key Benefits of a Modern Financial System
- Adds value to the tourism industry
- Promotes financial inclusion
- Enhances access to payment services
- Supports social protection programs using digital payments
Additional Financing for COVID-19 Response
The additional financing comes at a critical time as it will support the government’s response to COVID-19 by scaling up social protection programs using digital payments and promoting financial inclusion. With this allocation, the World Bank’s overall contribution to the project will reach $19 million.