Sao Tome and Principe expects Chinese investment after restoration of diplomatic relations

The restoration of diplomatic relations between China and Sao Tome and Principe, after an interruption of nearly two decades, ends a period of re-approach that has quickened since 2014 and offers the prospect of major Chinese investments in the archipelago.

On 26 December, the Foreign Minister of Sao Tome, Urbino Botelho, with his Chinese counterpart signed a statement announcing the “re-establishment of diplomatic relations between the two countries and making every effort to install diplomatic representations at an ambassadorial level in the respective capitals in the short term.”

About a week before Prime Minister Patrice Trovoada had announced a break in relations with Taiwan, which had been in place since 1997 and meant that Sao Tome and Principe as the only Portuguese-speaking country not to have relations with China and as such, was not a member of the Macau Forum.

The Africa Intelligence Monitor (AFI) newsletter reported that China was to show the São Tomé and Príncipe its willingness to finance projects and/or actions beyond the deep-water port on the island of Sao Tome, announced in 2015, in the hands of the China Harbour Engineering Company (CHEC) and budgeted at US$800 million.

Other projects include the construction, in an area of ​​20 hectares next to the capital, an administrative, commercial and residential centre, which would include a new hospital, schools and other public services.

According to AFI, the Export Import Bank of China also said it was open to finance Chinese companies interested in investing in the archipelago.

During the rapprochement phase, in 2014, there was a partial lifting of of the ban on Sao Tome and Principe taking part in the Macau Forum, in addition to opening a representative office in the Sao Tome capital.

A defining moment in the process came in June 2014, was the visit to Beijing by Manuel Pinto da Costa, which despite being unofficial, demonstrated China’s openness despite Sao Tome’s diplomatic relations with Taiwan.

The visit included the cities of Shanghai and Beijing, where Pinto da Costa met with the official authorities and State entities heavily involved in China’s cooperation with Africa, including the Exports Import Bank of China.

Other Chinese projects that have since been considered include the deployment of a large distribution warehouse of Chinese goods and the installation on the island of Sao Tome of a regional distribution centre for broadcasting the Chinese television channel signal.

In 2015, the Mckenzie consultancy drew up a recovery plan for the Sao Tome economy, in which it said investments in sectors such as tourism and agriculture, was essential. Agriculture in the archipelago is highly focused on products that used to be in high demand for their high quality, such as cocoa and coffee.

The archipelago’s financial situation is likely to have been the driving force behind Trovoada’s policy decision as the country is heavily dependent on contributions, from Taiwan and Angola in particular, which have been on the downturn.

AFI wrote that Taiwan has ignored calls for help from the Sao Tome government and has even reduced the amount of contributions to the state budget and other support.

Commenting on the decision taken by the Council of Ministers to cut relations with Taiwan, Prime Minister Trovoada noted the growing importance of China on the world stage, which brings advantages in partnerships.

“We have to take into account the specific weights of major powers, the major centres of decision, in order to position a small, isolated island, without great resources. One thing is feelings and another is the interests of the country and the state. And the state works on the basis of its interests,” said Trovoada. (macauhub)