China’s decision last week to reengage economically with São Tomé and Principe promises to revolutionize the possibility of prosperity for the remote and unusual island nation.
São Tomé and Principe is a tiny African country composed of two volcanic islands located in the Gulf of Guinea off the Atlantic Ocean coast of Gabon and due south of Nigeria. Oil and gas have been found elsewhere in and around the Gulf of Guinea, especially in Nigeria and Equatorial Guinea. There is every geological reason to assume that the territorial waters of both São Tomé and Principe also hold exploitable reserves of oil and gas. Now that a dispute over whether all of the relevant waters are Nigerian or belong to São Tomé and Principe has been settled by sharing whatever is discovered, several concerns have begun drilling. Chinese oil entities may soon join them.
Cocoa was once the mainstay of this former Portuguese colony of 185,000 people. But severe drought and mismanagement has reduced income from cocoa exports. Today the GDP per capita of São Tomé and Principe (approximately $2300 in 2012) is growing at nearly 5 per cent per year thanks to new tourist investments from South Africa and explorative preparations by petroleum companies.
Despite São Tomé and Principe’s ties since independence in 1975 to Taiwan, China’s decision in early November to open a trade mission in the distant and isolated country represents a major economic breakthrough. Sixteen years ago China shut its embassy in São Tomé.
China intends to build a massive deep-water port in São Tomé, which will make exporting oil easier and generally facilitate sea-borne commerce. São Tomé and Principe has, for several years, been seeking outside assistance for such construction; there were abortive negotiations with other countries, including Russia.
China also promises to build roads throughout the two islands and construct markets, shopping centers, and other commercial facilities. São Tomé also needs new sewers and sewage disposal plants, and China agreed to provide them. It will also upgrade the country’s main airport so that the islands can truly become an international destination.
Another major project, possibly to be offered to China, is the damming and production of hydroelectric power from the River Yo, which runs through São Tomé island. China is building at least a dozen major dams elsewhere in Africa, so such a project may prove natural after the signing of the trade agreement and the resumption of diplomatic relations.
Osvaldo Abreu, São Tomé and Principe’s Minister of Public Works and Infrastructure, said at the signing of the trade agreement that São Tomé and Principe welcomed the business focused manner of the Chinese delegation. São Tomé wanted, he said, to benefit from the wave of Chinese investment in Africa. “We don’t want to be kept on the margin” of this productive movement, he also assured the visitors.
At 372 square miles, São Tomé and Principe includes Africa’s least amount of land in a single country. But it is also one of the best governed and most democratic of the countries of Africa, ranking eleventh (after Senegal but before Zambia) in overall governance according to the Index of African Governance rankings for 2013.
Welcoming Chinese investors will be a major game-changer for the people of the rocky offshore islands.
This post appeared under the same title in the blog China-US Focus, http://www.chinausfocus.com, Nov. 20, 2013