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Tuesday, July 5, 2022
Mario de Queiroz
LISBON, Nov 27 2006 (IPS) - The small West African island nation of Sao Tomé and Príncipe is one of the poorest countries in the world, but there are grounds for hope that conditions there may soon improve considerably.
Estimates by the International Monetary Fund (IMF), considered “conservative” by economic analysts in Portugal, estimate that the seabed of the Gulf of Guinea surrounding the archipelago could yield 30,000 barrels of crude a day by 2013.
That amount of oil would bring in revenues of 92 million dollars a year. Not bad for a country of 1,001 square kilometres and only 150,000 people, one-quarter of whom have emigrated to Portugal.
The rich undersea oil reserves struck in early 2003 may help Sao Tomé and Príncipe graduate from the list of the world’s 30 poorest countries, and turn it into a sort of “African Kuwait”.
The race to extract the oil was led by nearby Nigeria and the Anglo-Dutch oil company Shell, which has major interests in Nigeria.
Soon after, oil companies from the United States, Norway and Portugal joined the hunt for the underwater black gold. The latest to arrive on the scene is Sonangol, Angola’s state oil company.
During a late October visit to Angola, the prime minister of Sao Tomé and Príncipe, Tomé de Vera Cruz, announced that Angola would participate in exploiting oil in the economic exclusion zone, at present shared between Nigeria and his country, through partnerships between their respective state companies.
“We have signed a protocol for the oil sector and there is a memorandum between our national oil agency and Sonangol, but we want to go further so that by forming partnerships we can work together in drilling for oil,” Vera Cruz said at the time.
Everything indicates that the government of this tiny, widely dispersed country does not want to depend solely on oil companies from industrialised countries, but would rather foment cooperation with Angola and Nigeria.
Sao Tomé and Príncipe is an island paradise, made up of its two main islands and the islets of Gago Coutinho, R- las, Las Cabras, Santana, Sete Pedras, Tinhosas, Mosteiros, Bombom, Pedra da Galé and Boné do Jockey. However, life has never been easy in that country, which has been independent since July 1975 after five centuries of Portuguese colonialism.
The islands, uninhabited at the time, were discovered in 1471 by Portuguese sailors, who founded a colony and transported slaves there from the coast of Africa.
The islands were extremely prosperous in the 16th and 17th centuries, thanks to the cultivation of sugarcane, coffee and cocoa. However, from the late 17th century on, the plantation owners (“fazendeiros”) began to cross the Atlantic ocean to the largest Portuguese colony of the time, Brazil, where agriculture was booming.
With the decline of agriculture, Sao Tomé and Príncipe became basically a concentration camp for slaves, most of them on their way to Brazil or to be sold to the English, Spanish, French and Dutch for their colonies in the Americas, until slavery was abolished in the islands in 1876.
Now, however, for the first time in their long history, oil could radically improve the islanders’ very low standard of living. The riches of past centuries never contributed to the wellbeing of the African population, as everything the islands produced ended up in Brazil or Portugal, including the profits from human trafficking.
The country’s hopes are based on estimates of potential oil production in the IMF’s Country Report for São Tomé and Príncipe, released in October. The estimates in the report are considered to be quite modest, as they are calculated on the basis of projected oil flow from just one of the six blocks in the joint development zone shared with Nigeria, which is already known to be commercially viable.
The projections are also based on an oil price of 30 dollars a barrel, which most analysts consider to be overly conservative, given that international oil prices currently stand at around 60 dollars a barrel.
An article posted on the Internet by Community of Portuguese Language Countries (CPLP) residents in Portugal said that if Sao Tomé’s co-participation in the joint zone shared with Nigeria rose to 80,000 barrels a day, its oil income would be three times what the IMF report suggested.
The article from that community (made up of Angola, Brazil, Cape Verde, East Timor, Guinea-Bissau, Mozambique and Sao Tomé and Príncipe) stressed, however, that the IMF study pointed out that one of the challenges facing the island nation was the need to administer a potentially large oil income, while hampered by weak institutional and absorption capacities.
The IMF report also warned the administration of President Fradique de Menezes and Prime Minister Vera Cruz that it must balance the growing demands of the population for greater incomes with fiscal reality, in order to effect a fairer distribution of wealth by implementing social programmes.
The IMF’s view, as stated in the document, is that “in the immediate future, fiscal consolidation would require striking a balance between (i) the population’s expectation about the government’s ability to increase priority spending in the wake of the oil era and (ii) the available budgetary resources.”
Although it did not mention the word “corruption”, the IMF study said that “over the near- and medium-term, a main task would be to develop strong institutions to secure an effective, transparent, and fully accountable management of oil revenue,” because the oil sector would be “an enclave” in the country’s economy.
In its concluding paragraphs, the report recommended that the authorities of the archipelago use oil revenue to guarantee the execution of poverty reduction programmes, to “strengthen growth in the non-oil economy and support attainment of the (United Nations) Millennium Development Goals.”
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