Financial Sector Development Implementation Plan in São Tomé and Príncipe

Project Development Objective (PDO)

This project aims to assist the national authorities of São Tomé and Príncipe to develop and adopt a coherent vision and strategy for financial sector development with a view to introducing a prioritized and sequenced reform agenda and aligning policies and legislation to meet the changing structure of the financial sector.


The financial system in São Tomé and Príncipe faces emerging risks with regard to the majority foreign-owned, highly concentrated banking system that is characterized by low profitability, increasing nonperforming loans, and the decline of capital reserves. The country also faces constraints in access to credit for the private sector.

The proposed Financial Sector Development Implementation Plan (FSDIP) will assist authorities to undertake coordinated, prioritized, and well-sequenced activities to increase financial access. The FSDIP will do so while maintaining overall financial stability, including detailing any issues, challenges, and additional work to be done as well as any key policy decisions for the authorities to implement. 


The FSDIP will complement and build on several ongoing activities: 

1.  Take stock of and analyze completed and ongoing work on the financial sector including (a) legal
     and regulatory frameworks, (b) financial infrastructure and access to finance, and (c) bank 
     resolution and crisis management frameworks. 

2.  Draft an FSDIP and conduct an internal workshop.

3.  Develop a medium-term strategic plan for the financial sector, providing a prioritized and
     budgeted roadmap for interventions. Also, this plan will entail designing a monitoring and
     evaluation system to help transform the strategy into effective policies and regulations. 

4.  Mobilize support and financial resources to empower and involve the stakeholders in finalizing
     and implementing the FSDIP. In this regard, three to four workshops or seminars will be organized
     for consultation and dissemination of information. Those attending will be relevant regulatory
     and supervisory bodies, other relevant ministries, private sector representatives, and donors. 

Expected Outcomes

The FSDIP will provide a roadmap to enable authorities to implement key financial sector reforms and interventions to strengthen financial sector stability and resilience and to improve the financial system’s ability to finance promising sectors. A sound financial sector will promote healthy competition among strong financial institutions. This competition will provide a wide range of appropriately tailored financial products to the public and corporate sectors. A more efficient financial sector will increase private-sector credit and lower costs. A more inclusive financial sector will increase access to finance for micro, small, and medium enterprises and low-income households.