Payment Systems Strengthening and Financial Inclusion in São Tomé and Príncipe

Project Development Objective (PDO)

The aim of this project is to improve financial inclusion and the overall efficiency of the economy by assisting the Authorities in the development of their national payments system, improve its oversight and enhance the legal framework to include all electronic payments and services, and support for MFIs.


São Tomé and Príncipe’s payments infrastructure is underdeveloped, lacking the capacity to process safely and efficiently interbank payments, or retail payments, and to process international retail transactions. As a result, interbank payments, as well as retail payments are difficult and costly and the use of cash is widespread. 

The current payment systems infrastructure is comprised of the following: (i) A manual cheque clearing system (SICOI) operated by São Tomé and Príncipe’s Central Bank (BCSTP), which requires the physical exchange of cheque and involves many manual processes, making the system inefficient and overall subject to mistakes; and (ii) a card switch operated by SPAUT, a joint venture of BCSTP, the commercial banks and telecommunications firms. However, local banks only offer domestic debit cards and cannot offer credit cards, which encourages the use of cash and limits commercial transactions. To service tourists and foreign visitors many international hotels have developed a relationship with an overseas bank to accept international credit cards. This keeps domestic banks out of a potentially important fee-income source (i.e., merchant fees), limits their ability to offer revolving credit via credit cards and limits the tourism business. Due to persistent problems with the card network, BSCTP has requested multilateral support to upgrade their payments system. Further given the importance and significance of the banking system, the need for ensuring safer, more efficient and inclusive payments is critical. 

The project will provide the necessary technical assistance to enhance the capability of the authorities to manage a modern payments infrastructure and develop a specific national financial inclusion strategy in line with the FIRST-funded 2016 National Financial Sector Development Implementation Plan (FSDIP). Further it is a necessary precursor to African Development Bank’s project to provide an upgrade in payment system hardware and software.

Activities / Output

The technical assistance project will include the following activities: 

1.  Drafting the retail payments strategy (including mobile) and implementation plan

2.  Drafting the amendments to payment systems law and regulations & regulations / guidelines on
     agent banking and mobile money

3.  Capacity Building, training and development of manuals on payment systems oversight 

4.  Providing technical support for the specification of payment system to be acquired

5.  Drafting Microfinance law and regulations, market conduct guidelines and regulations; and results
     framework for financial inclusion.

Expected Outcomes

The main expected outcomes of the project include the following:

1.  Mobilizing the resources and commitments to develop payment systems

2.  Establishing a conducive and strengthened legal and regulatory environment for payment system
     development (e.g., mobile money, agent banking)

3.  Strengthening oversight capacity to oversee payment systems

4.  Establishing new/upgraded payment systems

5.  Establishing a clear legal framework for the MFI sector to ensure entities in this sector
     appropriately and adequately supervised

6.  Clear financial inclusion goals and targets