© 2004 Africonomie.com
COMESA: US$ 8 Million Grant in Support of Public Procurement - le 16-08-2006 par

Tunis, 14 August 2006 – The African Development Bank Group and the Common Market for East and Southern Africa on Monday in Tunis, signed an agreement for a grant of 5.66 million Units of Account (UA*), equivalent to US$ 8.40 million to finance procurement reforms and capacity building project in COMESA states.
Mr. Lobe Ndoumbe, Acting Director, Governance, Economic and Financial Management Department, signed the agreement for the Bank while Mr. Sindiso Ngwenya, Assistant Secretary-General for COMESA.
Commenting on the grant from the African Development Fund (ADF), the concessional window of the ADB Group, Mr. Lobe said that the support would enhance and consolidate procurement reforms made under the Bank’s previous support in the domain.
“This new project will support public procurement reforms in COMESA member states by helping to modernize and harmonize laws, regulations, and procurement procedures and by strengthening the countries’ capacities to manage modern procurement systems,” Mr. Lobe emphasized.
For his part, Mr. Ngwenya said the ADF grant illustrates that the Bank group remains a partner in the process of integration of the economies in the region.
“I am glad to report that we are on course to attain the customs union as a result of the many advances COMESA has made in regional inegration. Those advances include the establishment of a Free Trade Area in 2000, which has led to increased intra-COMESA trade, the adoption of common customs laws, and the introduction of many transport and facilitation measures”, he noted.The project is expected to enhance good governance through modern and harmonised public procurement systems.
The expected outputs are: full awareness of the principles and workings of the national and regional public procurement systems by the public and private sectors; publication of national procurement laws and regulations that are consistent with the COMESA procurement directive passed under the Public Procurement Reform Project (PPRP) as well as well-designed procurement training materials and case studies;
It will also result in a well trained critical mass of procurement professionals, capable of managing the modern procurement system; Enhanced capacity at COMESA Secretariat level to implement COMESA objectives, and monitoring of compliance to COMESA Directives and enhanced information technologies and human capacity for collection and dissemination of procurement information.
The governments of member States, the private sector and development partners will benefit from the project through the modernization and harmonization of their national procurement systems and by strengthening their institutional capacity to manage the modernized systems. It will also strengthen the capacity of the Secretariat to assist Member States implement their procurement systems. The project will promote better governance and harmonize public procurement systems in the Member States, which will, in turn, enhance intra-regional trade in COMESA and trade between COMESA and the rest of the world.
The total project cost is estimated at UA 6.36 million, equivalent to US$ 9.44 million. The ADF grant will finance 89 % of the cost, while COMESA will provide the remaining 11 %.
* 1 UA = USD 1.48386 as at 14/08/2006
CONTACT: Felix Njoku – Tel.: +216 71 10 26 12 – E-mail: f.njoku@afdb.org
ADF Approves US$ 3 Million Grant for Agriculture Sector Study in DRC - le 29-06-2006 par

Tunis, 28 June 2006 – The African Development Fund (ADF), the concessional window of the African Development Bank Group, on Wednesday approved a grant of 1.85 million Units of Account (US$ 2.8 million or 1.2 billion Congolese Francs) to finance an agricultural sector study in the Democratic Republic of Congo.

The study seeks to collect reliable and up-to-date data in order to identify the problems of sustainable development of the agricultural sector and better orientate and plan future operations of the Bank and other development partners in the provinces covered.

Project Brief
· Sources of financing: ADB, Government,

· Estimated start-up date and duration: November 2006, for 24 months

· Location: Bandundu, Bas-Congo, Kasaï Occidental, Kasaï Oriental, Katanga, Maniema, Equateur and Kinshasa Provinces

· Executing Agency: Ministry of Agriculture, Fisheries and Livestock, B.P. 8722, Bld du 30 juin, Av. Batela, Tel : 00243 999906017, Fax : 00243 8802381

· Consultancy Services: The recruitment of the consultant responsible for the study will be on the basis of a short list.

The study, which will be carried out in 3 phases, will also ensure an overall sustainable recovery of the agricultural sector. To this end, all livestock, food, fish and forestry production systems will be analyzed, the main constraints identified and appropriate recovery measures defined.

The first phase will carry out a diagnostic analysis of the agricultural sector by sub-sector, province and gender. It will also define strategic guidelines for the development of the agricultural sector and establish computerized databases on stockbreeding, fisheries/fish-farming, forestry and environment, agriculture and gender. During this phase, thematic studies relating to the areas of concentration of the intervention of the lead partners of the sector will be carried out (institutional development, improvement of production and productivity and improvement of rural infrastructure, in particular).

The second phase will be devoted to the formulation of master plans for the agricultural development of the provinces on the basis of options retained at the end of the preceding phase and the comparative advantages of each province. These master plans will constitute the framework for intervention of donors in the province in the area of agriculture.

The third phase will be devoted to the formulation of a priority programme for the development of the agricultural sector with a view to operationalizing the strategic guidelines. During this phase, feasibility studies on the priority operations identified in the provinces will be conducted, and an Environmental and Social Management Plan and a Gender Profile prepared.

The ADB Group operations in the Democratic Republic of Congo started in 1973. To date, its commitments in the country stand at US$2.2 billion in 92 operations.

* UA 1 = US$ 1.49418 = CDF 625.894 as at 01/06/2006

ADB grants a line of credit of US $ 40 million to the Guaranty Trust Bank (GTB) in Nigeria - le 24-05-2006 par
Ouagadougou, le 17 mai 2006 – Mr. Mandla Gantsho, Vice President in charge of Private Sector Operations of the African Development Bank (AfDB) and Mr. Tayo Aderinokun, CEO & Managing Director of the Guaranty Trust Bank (GTB) Plc of Nigeria, signed today a loan agreement of US $ 40 million line of credit (LOC) to support infrastructure and corporate development in Nigeria. The provision of long term lending to this successful Nigeria Bank will assist in the development of Nigeria’s capital markets, supporting the development of investment projects, by small and medium size companies. Currently, Nigeria firms are compelled to fund capital investments with short term resources, a practice which increases risk and curtails the development of long-term projects.
This proposal is consistent with the Nigerian Government’s strategy of mobilising long-term funding for capital investments, and is in line with the Bank’s private sector development strategy. The LOC, through the “wholesale” approach of financial intermediation, will finance and support local Nigerian Corporations and SMEs. GTB has presented a strong and diversified pipeline of projects with expansion plans in sectors such as infrastructures, manufacturing and agriculture.
The facility will help to create a significant number of jobs. The projects financed will promote international trade, and enhance capacity building and Nigeria’s skill base.
Under its private sector window, the Bank has approved financing for eight projects in Nigeria totalling US $ 300 million in the banking, energy, manufacturing and health sectors. In October 1992, the Bank approved a loan of UA 3.987 million to Spintex Nigeria Limited to finance the expansion of a polyester yarn plant. In September 1993, the Bank extended a loan of UA 7.973 million to Consolidated Oil Limited (Conoil), an indigenous oil and gas exploration company engaged in crude oil production. In October 1996, a loan of UA 2.392 million was granted to the Abuja International Diagnostic Centre Limited.
Additionally, Lines of Credit of UA 23.9 million to United Bank of Africa (UBA), UA 13.8 million to FSB International Bank, UA 37.7 million to Citibank and UA 47.50 million to Zenith Bank were approved by the Bank in December 2000, October 2001, September 2002 and January 2005 respectively.
The largest transaction in Nigeria under the Private Sector window was approved in December 2002, whereby the bank provided a USD 100 million loan to NLGN for the expansion of a gas liquefaction plant.
Contact : Technique: M. Hassan m.hassan@afdb.org
Agreement for the establishment of an African Development Bank Regional Office in Cameroon - le 24-05-2006 par
Ouagadougou, 17 May 2006 – An agreement was signed on 16 May 2006 in Ouagadougou between Mr. Donald Kaberuka, President of the African Development Bank Group, and Mr. Abah Abah Polycarpe, Cameroon’s Minister of Finance. The Agreement provides for the establishment of an African Development Bank Regional Office in Cameroon. The Office will be responsible for operations in Cameroon and the Central African Republic. The Office will support the Bank Group in the launching and monitoring of projects, promote relations between the Bank Group and government authorities, the private sector and civil society, and will also assist in coordinating aid. It should be recalled that the Regional Office will be part of the 25 field offices that the Bank Group has decided to open in Regional Member Countries in line with the implementation of its strategy to decentralize operations.
CONTACT: Eric chinje – Tel.: +216 71 10 21 16 – E-mail: e.chinje@afdb.org
 Internal and External Communications Division– Tel.: +216 71 10 29 16 – Fax: +216 71 10 37 52 – E-mail: comuadb@afdb.org 
Press releases are also posted on ADB Website at: www.afdb.org
Mali: Community Development Support Project - le 04-05-2006 par

Tunis, 4 May 2006 – A new loan of the African Development Fund will support community development in 505 villages in Mali.

The loan of 15 million Units of Account* (US$ 22 million or 11.7 billion CFA) approved by the ADF Board of Directors on Wednesday 3 May, will build the capacities of all local development stakeholders, improve access to basic socio-economic infrastructure and extend financial services to remote areas.

Project Brief
· Sources of financing: ADF & Government

· Estimated start-up date and duration: July 2006, for 5 years

· Executing Agency: Ministry of Social Development, Solidarity and Senior Citizens (MDSSPA), 03 BP Bamako. Tel: (223) 222 03 87; Fax : (223) 222 03 42

· Total project cost: UA 18.72 million

Capacity building activities will finance guidance sessions on participatory diagnoses in 157 new villages for the benefit of 9,420 persons (51.7% women) and design community development plans. Information campaigns in the 157 villages will focus on various themes such as health, hygiene, education, gender mainstreaming, female genital mutilation, family planning, girl education, greater female representation in decision-making bodies, forced and early marriages, the environment, HIV/AIDS, malaria, etc. The project shall bear the literacy expenses of 7,590 villagers (more than 50% women) and provide assistance for the construction and equipment of 253 literacy centers.

The project will finance the implementation of one basic socio-economic infrastructure per village or inter-village and/or commune micro-projects (for a total of 505 micro-projects, with an average cost per micro-project of CFA.F 16.764 million and a maximum of CFA.F 30 million).

In the rural deprived project areas, a credit fund will finance agricultural sector activities, processing of agricultural produce, services, handicrafts, trade and other activities from which revenue can be generated to repay the loans.

Over the 2000-2004 period, Mali’s economic performance was sound with an average growth rate of more than 5%. However, given the enormous structural constraints to development, this performance did not translate into improved socio-economic conditions for the people. Indeed, from 2000 to 2003, close to 64% of the population was living below the poverty line.

ADB Group operations in Mali commenced in 1970. To date, its cumulative commitments in the country stand at US$ 900 million (CFA.F 492.4 billion) in 91 operations.

CONTACT: Chawki Chahed – Tel.: +216 71 10 27 02 – E-mail: c.chahed@afdb.org

The African Development Fund Approves US$ 8.5 billion - le 21-04-2006 par

Tunis, 19 April 2006, afdb.org – The Board of Directors of the African Development Fund (ADF) on Wednesday, 19 April 2006, approved US$ 8.5 billion for financing debt relief of 33 low-income countries in Africa under the Fund’s Multilateral Debt Relief Initiative (MDRI). The ADF Board of Governors is expected to adopt a Resolution on the compensatory financing scheme, in May 2006, to authorize debt cancellation and financing of the debt relief. The aim of the MDRI is to assist the eligible countries make progress towards achieving the Millennium Development Goals (MDGs), while preserving the long-term financing capacity of the ADF.
“Today’s Boards decision is the culmination of an extensive and historic process of consultations with shareholders and donors about the Multilateral Debt Relief Initiative and its implementation by ADF”, the President of the African Development Bank Group, Mr. Donald Kaberuka, said. He thanked Executive Directors and ADF Deputies for their engagement and the robust and constructive discussions that have improved the MDRI package. He called for adequate donor funding to fully compensate ADF for its share of MDRI on an ongoing basis to protect its financial standing and its ability to continue to strengthen and deepen its assistance to the ADF low-income countries.
The G8 leaders had pledged, at the Gleneagles Summit in July 2005, to cancel 100 percent of the claims due to the International Development Association (IDA), the African Development Fund (ADF), and the International Monetary Fund (IMF) on countries reaching the completion point under the enhanced HIPC initiative. A consultative meeting of African Finance Ministers held in Tunis, Tunisia on 22-23 November 2005, endorsed the MDRI and welcomed the pledge to maintain the financial integrity of ADF.
The 33 potential beneficiaries of the Initiative include: 14 post-completion point HIPCs, 10 post-decision point HIPCs, 8 pre-decision point HIPCs, and one country qualifying under the ‘sunset clause’ extension. On the basis of country eligibility assessments independently conducted by the IMF, IDA and ADF, 13 of the 14 post-completion point HIPCs become the immediate beneficiaries of ADF debt relief effective 1st January 2006. They are: Benin, Burkina Faso, Ethiopia, Ghana, Madagascar, Mali, Mozambique, Niger, Rwanda, Senegal, Tanzania, Uganda, and Zambia. Mauritania will qualify for debt relief under the Initiative after satisfying criteria on public expenditure management reforms.
While the MDRI implementation date in ADF is 1st January 2006, when debt relief begins to accrue for the immediate beneficiaries, actual delivery of the benefits are to be provided retroactively by July 2006 when targets set for the effectiveness thresholds are satisfied. The deadline for receipt of donor financing commitments to satisfy the effectiveness thresholds is end-June 2006.
The indicative pledges made by donors for financing the Initiative already exceed the effectiveness thresholds. Accordingly, donors will now be taking the necessary steps, in their home countries, to obtain the legislative approvals in support of their financing commitments. In line with the compensatory financing scheme, donors have pledged to provide additional contributions to the regular ADF replenishments, over time, to ensure that additional resources are made available for poverty reduction.
Multilateral Development Banks Publish First Joint Performance Report - le 21-04-2006 par

21 April 2006, afdb.org – The five major multilateral development banks (MDBs) are making good progress in implementing a results-oriented management approach, according to a new joint report released today by the MDBs.
Published by the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank and the World Bank, the report focuses on the MDBs’ implementation of managing for development results. MfDR, as it is known, aims to improve the planning and implementation of operations to achieve the intended development results. It is the first such report produced jointly by the MDBs.
“The data show that all MDBs have made good progress in implementing MfDR. The awareness of results is increasing; frameworks, systems, and procedures are being put in place; and the independent evaluation function is being strengthened,” says Bruce Purdue, chair of the MDB working group and head of results management at the Asian Development Bank.
The report also shows, however, that the degree of application of the MfDR approach varies among MDBs. It necessarily takes time to design, approve, and implement new procedures and systems. A common challenge is to go beyond systems and procedures and to actually use results information for learning and decision making.
The report, based on an innovative Common Performance Assessment System (COMPAS) devised by the MDBs, is a new systematic framework for collecting consistent and comparable information. It aims to provide managers and shareholders of the MDBs with a common source of information on how MDBs are contributing to development results.
The report intends to contribute to transparency, accountability, and learning, satisfying increased demand from both management and shareholders of MDBs for information on the effective use of resources.
The report is used as input to the 2006 Global Monitoring Report, coordinated by World Bank and the International Monetary Fund. With annual updates, it will also serve as a tool for monitoring progress over time.
AfDB President on Official Visit to Ethiopia - le 24-02-2006 par
Tripartite Meeting with African Union and UNECA on Schedule

Tunis, 23 February 2006 - The President of the African Development Bank (AfDB) Group, Mr. Donald Kaberuka is scheduled to pay an official visit to Ethiopia from 24 to 26 February 2006.

During the visit, Mr. Kaberuka will meet with Prime Minister Meles Zenawi and other top government officials, including the Minister of Finance and Economic Development, Mr. Sufian Ahmed.

He will call on the Chairman of the Commission of the African Union, Mr. Alpha Omar Konare and the Executive Secretary of the ECA, Mr. Abddoulie Janneh, and then hold a tripartite meeting with them at the AU headquarters in the Ethiopian capital. Discussions will focus on ways of reinforcing relations between the three regional organizations and leverage the strengths of each in support of development in Africa.

Mr. Kaberuka is scheduled to visit the National Livestock Development Project at Kaliti, some 15 km from Addis Ababa and host a working dinner with heads of donor agencies in Ethiopia.

Ethiopia is among 23 independent Africa countries that signed the agreement establishing the ADB on August 4, 1963 in Khartoum Sudan. The Bank’s operations in Ethiopia started with the approval of a sewerage project in Addis Ababa on 1 December 1975. To date the Bank Group has financed 79 operations in Ethiopia comprising 54 projects, one line of credit, three policy-based loans and 21 studies.

The Bank Group’s commitment net of cancellations in Ethiopia amounts to UA 1,286.73 million in 79 operations. Cumulative disbursements stand at UA 1,022.45 million, representing 79 % of commitments. Fifty-four (54) operations have been completed; seven (7) were cancelled or terminated, while eighteen (18) are on-going.

The agriculture sector accounts for the largest share with 32% followed by public utilities with 20%, transport with 19%, as against 6% for the social sector and 23% for multi-sectoral projects.

[1 UA = 1.46641 USD = 12.3595 ETB for the month of February 2006]

CONTACT: Felix Njoku– Tel: +216 71 10 26 12 – E-mail: f.njoku@afdb.org

4 Internal and External Communications Division– Tel.: +216 71 10 29 16 – Fax: +216 71 10 37 52 – E-mail: comuadb@afdb.org 3

Press releases are also posted on ADB Website at: www.afdb.org

(Date: Thu, 23 Feb 2006 11:46:46 +0100)
European Union (EU) creates new fund for African crises - le 28-12-2005 par

AMSTERDAM, 27 Dec 2005 (IRIN)
- The EU approved 165.7 million euros (US $196.4 million) on
Monday for relief efforts in 10 African countries with
humanitarian crises.

"[The funds are for] foreseeable needs in ongoing crises but
there are also margins for unexpected catastrophes that may occur
during the year," Amadeu Altafaj, the EU spokesman, said on
Tuesday from Brussels.

The new fund was announced on the first anniversary of the Indian
Ocean tsunami that killed an estimated 200,000 people.

"Millions of vulnerable people in Africa are exposed to
natural disasters like droughts, floods and insect infestations
as well as armed conflicts," Louis Michel, the European
Commissioner for Development and Humanitarian Aid, said in a

The funds will be managed by the European Commission Humanitarian
Aid office which works with 180 implementing partners including
UN agencies and the Red Cross movement.

The EU has apportioned 48 million euros ($56.9 million) of the
funds for crises in Sudan and 38 million euros ($45 million) for
crises in the Democratic Republic of Congo. The other beneficiary
countries are Burundi, Chad, Comoros, Côte d’Ivoire,
Liberia, Madagascar, Tanzania and Uganda.

SAO TOME AND PRINCIPE: Waiting for the oil boom - le 20-12-2005 par
SAO TOME, 13 Dec 2005 (IRIN) - Beatriz Azevedo points to a woman carrying a plastic bowl of fish on her head as she wades chest deep through a river where it flows into the sea.

This river separates the coastal village of Sao Joao dos Angolares from a nearby beach where fishermen beach their canoes.

“Two men were drowned in recent months while trying to carry their outboard motors across this river, says Azevedo, the head of the local women’s association.

“When the oil money comes in we are going to build a bridge here.”

Everyone in Sao Tome and Principe is convinced that this small island state tucked away in the Gulf of Guinea is on the verge of an oil boom.

The US oil major Chevron has announced that it will start drilling its first offshore exploration well in block one of a Joint Development Zone (JDZ) shared with Nigeria during the first half of January.

The seismic data already gathered there is very encouraging and Total, the French oil company, has discovered a major oil and gas field just 15 km to the north inside Nigerian territorial waters.

Total’s Akpo field will produce 225,000 barrels per day of oil equivalent when it comes on stream in 2008.

There are high hopes that Chevron will find a gusher of equally impressive proportions nearby.

Billions of dollars in the pipeline

Afonso Varela, the Legal Director of Sao Tome and Principe’s National Petroleum Agency (ANP), can scarcely contain his enthusiasm.

“If we are lucky enough to find an oilfield with 1.5 billion barrels of recoverable reserves (similar in size to Akpo), even after sharing its revenue with Nigeria, we stand to receive about US $9 billion over a period of 25 to 30 years,” he said.

That is a mind-boggling sum for this twin-island state of 140,000 people.

Sao Tome presently scrapes by on $5 million a year from cocoa exports and around $25 million a year of foreign aid.

Most of the inhabitants of this former Portuguese colony are fishermen, who brave the Atlantic waters in dugout canoes, and subsistence farmers, who slash out plots in the jungle to grow plantains, cassava and a few vegetables.

But young people are drifting away from the villages to Sao Tome city where youth unemployment is estimated to be around 50 percent and expectations that oil will provide an instant solution to poverty are running high.

Dozens of new four-wheel drive cars in the sleepy capital and a crop of luxury houses mushrooming in the posh new suburb of Campo de Milho, have convinced ordinary people that money from oil-related activities is already flowing into the pockets of the ruling elite.

Corruption could soak up the money

“I don’t see how buying flash new cars can do much for the good of the people,” said Olavo Vingar, who exchanges wads of grubby Sao Tome dobras for dollars and euros in Sao Tome’s central market.

Carrying a calculator in one hand and a bag of local currency in the other, Vingar says he would prefer to get a proper job.

But with the minimum wage set at $40 a month, this 34-year-old man can’t find anything else to do that would allow him to feed his seven children.

Lucretio Goncalves, who wanders the streets with his camera, offering to take photos of people for a dollar a picture, is equally sceptical that the politicians will spend Sao Tome’s oil revenues on improving the lives of ordinary people.

“Some oil money is already coming in, but it is just benefiting half a dozen people who run the country. It doesn’t reach ordinary people, just those who govern us,” Goncalves said.

“I am absolutely certain that in this country, the oil money is not going to be well used,” said Goncalves, who walks the streets with his camera because he is unable to find work as a stone mason.

With the World Bank’s encouragement, parliament last year voted through a new law drafted by US lawyers that is supposed to ring-fence Sao Tome’s oil revenues and prevent greedy politicians from diverting the money into their own pockets.

This oil revenue law is designed to ensure that all the money is spent on priority development projects such as improving the country’s roads, schools and hospitals and its erratic electricity and water supply, while making sure some of it is set aside for the future in a Permanent Fund.

But legal experts say the new law will only work if the government and the courts are willing to enforce it. And some respected voices are already predicting that many of its provisions will be quietly ignored.

“Sao Tome is a state that simply doesn’t function,” said Pascoal Daio, an independent lawyer who is one of the pessimists. “This law is very pretty, but it is not being applied.”

Daio pointed out that Patrice Trovoada, the son of former President Miguel Trovoada who has frequently served as a cabinet minister and government adviser, has accumulated huge personal wealth without having to explain the source of his riches.

And he noted that several top government officials owned shares in ERHC, a company controlled by Nigerian millionaire Sir Emeka Offor, which has been granted generous pre-emption rights in several offshore blocks in the JDZ.

“I don’t understand how any government could give away such privileged rights to a company,” Daio said.

Signature bonuses

As the public debate smoulders on about oil-fuelled corruption, some legitimate oil money is already entering government coffers in the form of “signature bonuses.”

These front-end payments are trickling in as Sao Tome signs a series of production sharing agreements with companies keen to drill for oil in deep-sea waters that Sao Tome agreed in 2001 to share with Nigeria.

Earlier this year, Sao Tome received US $49.2 million as its share of the $123 million signature bonus paid by Chevron and its partners for the right to explore block one of the JDZ.

Nigeria receives 60 percent of all oil-related revenues from the formerly disputed JDZ, while Sao Tome receives 40 percent.

In the coming weeks, the two governments expect to sign production-sharing agreements with other oil companies covering a further five blocks in this broad swathe of ocean 200 km south of the Niger delta.

These contracts should trigger the payment of a further $55 million of signature bonus payments to Sao Tome in 2006.

However, government officials warn that even if oil is discovered in commercial quantities, there will be a 10-year gap before Sao Tome starts to receive large-scale oil production revenues.

Rafael Branco, the Economic Director of the National Petroleum Agency, reckons production will only start in 2012 – although Chevron says that the fast track development of block one could produce first oil as early as 2010.

Branco also warns that even when the oil does start flowing, Sao Tome will have to wait a further three to five years before it starts to receive large-scale revenues.

That is because the oil companies involved will first have to recover the capital they have invested to bring the oilfield on steam. And that sum is likely to be $2 billion or more.

Once the big inflow of oil revenues to government coffers does start – probably sometime between 2015 and 2017 – Sao Tome may well receive several hundred million dollars per year.

That would turn it overnight into one of the richest countries in Africa, at least on the basis of gross domestic product (GDP) per capita.

Foreign aid still needed

However, until then, this tiny state– the second smallest in Africa after the Seychelles - will continue to need a large injection of foreign aid.

President Fradique de Meneses, with the backing of the World Bank, is therefore asking international donors to help Sao Tome prepare for a new era of oil wealth by financing an ambitious public investment plan.

This Poverty Reduction Strategy aims to reduce poverty by two thirds by 2015.

It also aims to modernise and reform the way in which government operates, improve the country’s decaying infrastructure, create a solid platform for private sector investment and stimulate economic growth of at least five percent a year.

A government study carried out in 2003 calculated that 54 percent of all Sao Tomeans live in poverty.

If implemented in full, the Poverty Reduction Strategy would lift over 50,000 people out of the poverty trap and reduce the social and political pressures that are currently building up as a result of high youth unemployment.

The government of Sao Tome asked donors at a round-table conference in Brussels on 6 December for US $169 million to finance the first three years of this ambitious plan and Prime Minister Maria do Carmo Silveira came away with immediate pledges of $60 million.

The economy has gone steadily downhill since independence in 1975 as the old cocoa estates have been broken up and abandoned and the country has run up a stifling external debt of $320 million.

That is equivalent to over $20,000 per capita, making Sao Tome one of the most heavily indebted countries in the world.

Living standards have fallen – a study by the United Nations Development Programme (UNDP) estimated in 1994 that only 40 percent of the population lived below the poverty line - and the country’s infrastructure has started to fall apart.

Narrow roads, once tarred and cobbled, are now full of potholes, and a third of the airport runway on the small island of Principe is unusable since the government has no money to resurface it, meaning only small planes can land there.

This year, the increasingly dilapidated state of the country’s water supply system and public latrines has led to a resurgence of cholera.

More than 700 people have fallen ill with this highly infectious disease since the latest outbreak began in October and over 20 have died.

Democracy provides hope

But with a new International Monetary Fund (IMF) agreement in place since August, Sao Tome is set to benefit from debt relief through the Highly Indebted Poor Countries (HIPC) initiative in 2006, and western donors appear well disposed to maintain and increase the current inflow of bilateral aid.

Diplomats say that a key factor in Sao Tome’s favour is that despite rampant corruption at all levels of government, the country is at least a functioning democracy.

Elections are held regularly and no one party dominates parliament, so the government depends on a series of shifting coalitions.

There have also been three changes of president through the ballot box since multiparty democracy was introduced in 1991.

There is a strong awareness amongst senior government officials that Sao Tome cannot afford to make the same mistakes with its oil as two of its close neighbours – Angola and Equatorial Guinea.

These two states have frittered away their oil revenues on self-enrichment by the ruling elite, while little has been done to use the money for the benefit of ordinary people.

“Oil is not a solution for us,” says Adelino Castelo David, the government economist charged with raising donor money for the Poverty Reduction Strategy. “It is simply a tool which can help us if we learn to use it well.”

He speaks of using it to develop agriculture, where pepper and vanilla are now being promoted as an alternative to cocoa, tourism, which is still in its infancy, and the development of Sao Tome as a regional trade centre with a deep water port serving as an entrepot for other states in the region.

Acacio Bonfim, a former finance minister who now heads Sao Tome’s largest commercial bank, Banco Internacional de Sao Tome e Principe, agrees.

“Oil revenues must be invested in priority areas in the fight against poverty,” he said.

“Oil, in my view, is not an alternative to agriculture. Neither is it an alternative to tourism or anything else,” he added.
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