June 15, 2011 | World Defense Review

São Tomé and Príncipe: An African Exception?

That the Democratic Republic of São Tomé and Príncipe might somehow escape the various “traps” – ethnic conflict, the “resource curse,” poor governance, etc. – ensnaring most of Africa in vicious cycle of underdevelopment, conflict, and oppression may come as a surprise to many.

Most people have never heard of the state consisting of several islets and two major islands, São Tomé and Príncipe, located, respectively, 250 kilometers and 225 kilometers west of Gabon – all remnants of an ancient volcanic chain – almost directly south of Nigeria in the Gulf of Guinea. Those who know of the place also know of its dire material circumstances. It is the second-smallest nation in the African Union, its two islands having a total area of just over 1,000 square kilometers (only Seychelles in the Indian Ocean is smaller). Its just-under 200,000 inhabitants eke out an existence on a gross domestic product (GDP) of about $350 per capita while suffering from endemic malaria. The Santomean economy, historically totally dependent on the export of cocoa, has been in a tailspin since the collapse of the commodity's price in the 1980s. As a result, even with Highly Indebted Poor Country (HIPC) debt relief, the country is saddled with one of the largest debt burdens in the world, the more than $300 million still outstanding representing 450 percent of GDP.

Despite these not insignificant handicaps, São Tomé and Príncipe is ranked a “free country,” scoring a 2 on both political freedom and civil liberties (the scale is 1 to 7, with 1 corresponding to the highest and 7 the lowest level of freedom) in Freedom House's scoring system, the combined score putting the Santomeans on par with South Africa and just behind Cape Verde and Ghana among African nations. Since the 1990 dismantling the socialist one-party system imposed after independence from Portugal in 1975 by the East German-educated President Manuel Pinto da Costa and his Movimento de Libertação de São Tomé e Príncipe/Partido Social Democrata (MLSTP/PSD, “Movement for the Liberation of São Tomé and Príncipe/Social Democratic Party”), Santomeans have enjoyed one of Africa's most robust parliamentary democracies, with two presidents and several governments leaving office after free elections. The U.S. State Department describes the government's respect for human rights as “exemplary,” while in a somewhat backhanded compliment São Tomé and Príncipe is the only one of the fifty-three African countries for which Human Rights Watch does not deem it necessary to maintain an internet webpage.

The current president, Fradique de Menezes, who is affiliated with the Movimento Democrático das Forças da Mudança-Partido Liberal (MDFM-PCD, “Force for Change Democratic Movement-Liberal Party”), was reelected to a five-year term in July 2006 – the fourth democratic and multiparty presidential poll in the country's history – with 60.6 percent of the vote, defeating Patrice Trovoada of the Acção Democrática Independente (ADI, “Independent Democratic Action”), who won 38.8 percent (342 people, 0.6 percent of the electorate, cast their ballots for Nilo Guimaraes, an accountant in the Santomean diaspora who ran as an independent). The old MLSTP/PSD as well as seven smaller parties backed Trovoada, while two other small parties threw their support behind the incumbent. Elections earlier March 2006 for the 55-member unicameral National Assembly gave the MDFM-PCD 23 seats, the MSDTP/PSD 19 seats, the ADI 12 seats, and one seat to a minor party.

What has kept this remarkable political enterprise stable is, as the distinguished scholar of Lusophone Africa, Professor Patrick Chabal of Kings College at the University of London, has argued, is that the “strong social bonds and pressures” in São Tomé and Príncipe. In fact, the islands were uninhabited until they were discovered by the Portuguese in the late 15th century and, with the exception of a small group of Macanese émigrés descended from Portuguese and Chinese inhabitants of Macau, all Santomeans are Creole descendants of Portuguese settlers and African slaves. There are no significant ethnic, linguistic, or religious cleavages. Consequently, when coup d'état was briefly staged in July 2003 by former Santomean exiles who had served abroad in South Africa's “Buffalo” Battalion, it was quickly diffused. In lieu of the usual violence, within a week President de Menezes and the conspirators had negotiated a return to constitution order, an amnesty, and the organization of a National Forum to air out grievances. The latter was organized with the help of a group of Columbia University professors and involved more 3,500 people – 6 percent of the adult population – in a deliberative process.

Professor Chabal has also noted that it is “not uncommon for members of the same family to support opposite parties,” a fact which “make it difficult for politicians to plunder the state for their own ends” – not that to date there has been much to take.

Things may be changing, however. São Tomé and Príncipe is on the cusp of significant oil wealth. By treaty, it shares with Nigeria a Joint Development Zone (the split is 60-40 in favor of the larger state) for which Chevron and ExxonMobil have already signed a first production sharing contract and paid a $123 million signing bonus. The Joint Development Zone is believed to hold up to 11 billion barrels of oil, while São Tomé and Príncipe may have further reserves in its own exclusive economic zone.

While it still may be some time before the island republic sees any significant income from its hydrocarbon potential (although anticipation and some capital investments have pushed the economic growth rate to respectable 4.4 percent), its leaders are all to aware the downside all-too-often associated with wealth: all they have to do is look at their Nigerian partners to see that the discovery of valuable natural resources, rather than being a catalyst for development, might actually reduce economic growth and, in the end, leave them poorer since the growth foregone may be greater the income from exports. Access to new and unexpected revenue streams from natural resources have a markedly negative effect on productivity in other sectors of the economy since there relatively smaller revenue value seem to be hardly worth the effort. In Nigeria, for example, the meteoric rise of the petroleum industry in the 1970s coincided with the spectacular collapse of the country's previously significant agricultural sector, which had exported peanuts, cocoa, and palm oil. Thus, ironically, the masses, which tend to be rural cultivators, end up being the first impoverished by the sudden increase in national wealth. Furthermore, this “Dutch disease” – so named for the deleterious effects of the development of North Sea gas in the 1960s and 1970s on the economy of the Netherlands – tends to drive up the prices of goods and services throughout the economy, thus undermining other potential export activities (while the market for the generic product from São Tomé and Príncipe's cacao farms has collapsed, there is burgeoning demand for the islands' boutique growths – I confess to paying in excess of $15 for each 3 oz. bar of Claudio Corallo's highly-prized 100 percent Santomean-content chocolates).

If all this were not bad enough, researchers have long noted that the negative economic impact of resource windfalls is compounded by their tendency to also worsen governance. New sources of revenue in polities which already suffer from lack of transparency only creates further incentive to limit accountability, exacerbating the cycle of corruption. And since a rational tax system is not needed by regimes suddenly enriched by resource revenues, the general public and civil society organizations are further marginalized from the levers of power since they contribute little to the public treasury. Thus the would-be wealth turns out to be a “resource curse,” with affected nations experiencing economic underdevelopment, military conflict, and political mismanagement.

Looking forward, the Santomean National Assembly unanimously passed and President de Menezes signed in late 2004 a landmark oil revenue law that was drafted with the help of a team of experts from Columbia University's Earth Institute and after fifty-five town hall meetings throughout the country. The law creates a single National Oil Account which will receive all hydrocarbon revenues due to São Tomé and Príncipe. The account will be held at the U.S. Federal Reserve and there will be but one annual transfer from it to the budget as approved by the National Assembly and requiring the signatures of four separate officials. The maximum amount of the transfer is determined according to a fixed formula indexed to stages of oil exploration and actual production, while everything else is put into a sub-account, the Permanent Fund, that cannot be expended but which would form a “national endowment.”

Management of the National Oil Account is entrusted to a committee composed of representatives of the president, the prime minister and cabinet, and the National Assembly, including the political opposition. They are legally limited in the financial decisions they can make, including provisions barring investments in São Tomé and Príncipe itself and against using petroleum resources to secure credit. The committee, in turn, is accountable to an independent public oversight board, the Petroleum Oversight Commission, which includes representatives of civil society and members of the general public. The legislation also includes provisions for enhancing transparency as well as criminal penalties for violations thereof.

While the prospects for São Tomé and Príncipe are bright, it will still be several years before the country begins to receive any significant revenues. In the meantime, it faces not only the challenges of existing needs, but new ones posed by its potential wealth and those who might seek to move in on it.

As I have noted previously in this column, there are significant vulnerabilities in the Gulf of Guinea. It is a stretch, to put it diplomatically, to even imagine that São Tomé and Príncipe can maintain even a minimal level of maritime domain awareness, much less to secure, its exclusive economic zone of 142,563 square kilometers, especially when its entire coast guard consists of fifty volunteers and two inflatable Zodiac boats. The United States occasionally does its bit to help. In July 2005, the U.S. Coast Guard Cutter Bear, under the command of Commander (now Captain) Robert Wagner, visited the island state and helped to train the local coast guard. Last month, the Military Sealift Command-contracted cargo ship CEC Endeavor delivered construction equipment to São Tomé which will be used over the next few months by Navy Seabees deployed to the region, members of Naval Mobile Construction Battalion 133 and Underwater Construction Team One, to renovate the boat ramp for the Santomean coast guard base (currently the only boat ramp is unable to launch patrol boats due to erosion and shallow slope into the water) as well as to build a guard house for the base. And since 2006, São Tomé and Príncipe has been eligible for Millennium Challenge Corporation assistance as a “threshold country.”

Remarkably, other than the Voice of America relay transmitter station that broadcasts to most of Africa, the United States does not maintain a permanent official presence in São Tomé and Príncipe: the ambassador in Gabon is concurrently accredited to the island state and makes occasional visits. Fortunately for U.S. interests, unlike other geostrategically important and resource-rich countries, this absence of an American presence has not resulted in the People's Republic of China (PRC) filling in the vacuum. As it happens, São Tomé and Príncipe is one of only five African countries (the others are Burkina Faso, The Gambia, Malawi, and Swaziland) to have maintained diplomatic relations with the Republic of China on Taiwan, perhaps not so coincidentally another island nation that has escaped the plagues of the mainland nearby. In addition to implicitly helping U.S. strategic interests by keeping at bay the PRC – whose political and economic as well as military penetration of Africa I have previously discussed, including its pursuit of access to natural resources in places as unlikely as Somalia – Taiwan is also meeting some of the basic needs of Santomeans, which helps to also reduce the potential for social unrest.

Following a 2002 visit to São Tomé and Príncipe, to cite just one example, President Chen Shui-bian recognized endemic malaria as an obstacle for the country's development. During a follow-up visit to Taipei by then-Santomean Prime Minister Maria das Neves Ceita Baptista de Souza, an accord was reached to undertake an ambitious six-and-a-half-year malaria elimination program beginning in July 2003. The first stage of the program, which aimed at reducing the number of mosquitoes through indoor residual spraying, reduced the infection rate among children under 9 years of age, the most easily infected age group, from upwards of 35 percent to between 1 and 5 percent. According to the World Health Organization (WHO), malaria as a cause of child mortality in São Tomé and Príncipe is now less than 1 percent, compared with the regional average of 17 percent. The next stage of the program is the total eradication of the disease from the country by 2009.

Against the odds, São Tomé and Príncipe may prove to be an African exception: a stable democratic state, aligned with the United States and its allies, managing its wealth transparently and responsibly for the benefit of its citizens. However, the next few years will be critical ones for Santomeans. They'll need all help they can get to build the institutions for their brighter tomorrow.

J. Peter Pham is Director of the Nelson Institute for International and Public Affairs and a Research Fellow of the Institute for Infrastructure and Information Assurance at James Madison University in Harrisonburg, Virginia. He is also an adjunct fellow at the Foundation for the Defense of Democracies in Washington, D.C.

Read in World Defense Review