São Tomé and Príncipe has received the support of the World Bank to develop its financial sector and enhance its contribution to economic growth and poverty reduction.
The World Bank and the Government of São Tomé and Príncipe (GoSTP) launched the country’s Financial Sector Development Implementation Plan (FSDIP) for the period 2017-2019. The FSDIP is a coordinated, prioritized and sequenced roadmap of policy reforms and actions.
According to Footprint to Africa, the strategy will strengthen supervision of the financial sector in order to enhance soundness and stability of the system; increase financial inclusion by supporting the delivery of affordable financial services to a larger segment of the population; and upgrade critical financial infrastructure, particularly payment systems, credit reporting, and collateral registries for secured transactions, to allow for a broader range of financial services.
“The overall objective of the FSDIP is to establish a framework for the development of São Tomé and Príncipe’s financial sector and provide the Government and private sector stakeholders with a clear roadmap to sequence reforms in financial sector policy,” said Clara de Sousa, the World Bank Country Manager for Sao tome and Principe. “The ultimate goal is to increase the contribution of the financial sector to the reduction of poverty and promotion of shared prosperity in São Tomé and Príncipe.”
The FSDIP is organized around four themes, which were discussed with the GoSTP, Central Bank (BCSTP), private sector stakeholders, civil society and international development partners, including the World Bank. The first theme supports development of a modern legal and regulatory framework that establishes clear rules and boundaries for financial market participants, including a framework for the resolution of financial institutions in distress.
A modern legal and regulatory framework contributes to the second theme, which is a sound and stable financial system supervised by capable and competent authorities. This contributes to the third theme, which is a robust and efficient financial infrastructure that reduces information asymmetries by providing timely and accurate data on credit and collateral usage in order to allow for appropriate risk management and credit allocation. Together these three themes contribute to the fourth theme of broadening the quality and affordability of financial services available to individuals and firms, particularly micro, small and medium-sized enterprises (MSMEs) and low-income households.
“A stable, competitive, and inclusive financial system is necessary for long-term economic growth and job creation. A competitive market facilitates access to affordable and innovative financial services, including long-term financing and working capital for productive investment. Increasing access to financial services for underserved segments of the market is an important element to ensuring that individuals and MSMEs have the necessary resources to invest in their future,” added Julián Casal, Task Team Leader for the project.