Presentation Developing the sao tome island

							        DEVELOPING THE
     SÃO TOMÉ AND PRINCIPE
            ISLANDS
           A liberal & environment friendly model




Pablo Fernández        June 11th 2008
Stéphane Harter
        Topics

          General remarks & economic
           background

          Our model

          Future global scenario

          Summary and critic


Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
      Welcome to São Tomé and Principe!
                     Democratic Republic of São Tomé and Príncipe




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
 Economic key values

    • Capital (largest city): São Tomé

    • Official language: Portuguese

    • Government: Democratic semi-presidential Republic

    • Former Portuguese colony (independence in 1975)

    • Area: 1,001km2

    • Population: 206 000 (~Iceland)

    • Density: 205/km2



Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
 Economic key values
  Currency: Dobra

  GDP (2007 est.): $142 million.

  Annual real GDP growth rate (2007 est.): 6.5%.
  Consumer price inflation (2007 est.): 17%.

  Agriculture (14.8% of GDP, 2007)
  Industry (14.2% of GDP, 2007)

  Trade: Exports (2007 est.)--$4 million
         Imports (2007 est.)--$73 million

  Total external debt: $318 million.

  Exchange rate (2007): 13700 dobras=U.S. $1.


Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
    What we are going to do…



           Try to build a probable
            development model,
       based on the current situation.




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Major trends of development :

               • Infrastructures

               • Resources (except oil)

               • Access to the world market

               • Possible oil revenues

               • Macroeconomics and laws




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Infrastructures :

               • Military base

               • Port container hub

               • Airport hub

               • Hydro-electric infrastructure

               • Satellite launch platform

               • Use of bicycle




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Military base :
                                                    US military
                                                       base


                     Rent                      Protection


                                                                            Gulf of
                                                                            Guinea


                                  Oil



Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Port container hub :
    Create a tax free port (Maersk )

          • Benefit from the company granted access

          • Improve the logistic chain of the island




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Airport Hub :
  Create a free tax airport

  • Airlines companies: platform to the Atlantic Africa (lower oil
  consumption) South America, subsaharian Africa.

  • For the island: increase the economic activity
                   reduce the cost of the tourist industry
                   commercial advantage.




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Hydro-electric infrastructure :

                Advantages for the                            Compensations/restri
                melting company                               ctions
                Owns the infrastructure                       50 years reducing n%
                                                              every year
                Low tax (5-10%)
                                                              (Almost) no polluting
                                                              technology
                Reduce its power bill
                Secure its power supply
                (precipitations: 5000
                mm/year) =>100MW



Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        (US) Satellite launch platform :

                                                              Lower
                  Equator
                                                              energy


                                                              Safe place
                        Island                                in case of
                                                              accidents


                             sell the geostationary orbit (!)

Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Use of bicycle :

                                                                       Develop transport:
     Small island
                                                                       •Fluidity
     Environmental concerns
                                                                       •Speed


   (to raffle off groups of bicycle on party days!).




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Resources :

               • Agriculture

               • Fish

               • Timber

               • Solar energy




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Agriculture:


                        Foreign                                                  Improve the
                     experimented                        Rice                        food
                        families                                                  production




                       Brasil,                      Sugar
                       Cuba                         (high
                                                    price)

                                                   Biofuel




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
    Solar energy:
    • High solar potential
    • Almost no heating needed !




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Fish:
  Tune, sardines,… Fish processing industry ?




        Timber:
   forest = 56% of the terrain

   • tourist industry, sustainable development, water regulation, and
   forest products.
   • furniture industry, production of traditional ships.
   • biofuel, to energy and heat, support to the electric system



Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
     Access to the world market :

            • Constraints

            • Tourism

            • Free export industrial park

            • Low wages industries

            • Resources related industries

            • Finances, assurance and investor centre.

            • Software, IT, Internet based activities, consulting.



Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Constraints:

  • group of islands: tiny markets, bad logistic chains, big transport
  cost, time delays in the transport system.

  • little space, a tiny amount of natural resources

  • shortage of skilled workers

  • developing country with little industrial base.




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Tourism
                       = major opportunity to future development


   •more presence in the internet ? (not very expensive!)



   •islet: luxury hotel?



   •No major problem with languages (Portuguese, English, French)




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Free export industrial park:
     Low taxes(example 5-10%)


    Idea: to reduce costs by an inovative use of the internet

    •national web page for exporting industries
    •export line in eBay in Europe, USA, Brazil,…
    •web page with the logistic chain.




  Future : further development of the infrastructures
                          (!)

Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Low wage industries:

   Why ?
   • competitive advantages
   • compensation of the high transport costs


     Ex: textile and shoe industry




   Main targets:
   South Africa, Europe and USA

   (eBay !)




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
   Finances, assurance and investor centre :

   •Advantages in our model :
   sensitive to taxes, but not on the lack of place and distance to the
   market

   •Problem: shortage of skilled workers…


    •Solution :




     base of a future sustainable development…
     Island as an investment centre to the countries of the Guinea
     Gulf?
Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Possible use of oil revenues…

               •   Education
               •   Health-care
               •   Debt and Funds
               •   Infrastructure




                                                   Corruption!

Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Macroeconomics and laws…
        PRIORITIES:

               •   Education
               •   Health-care
               •   Opportunities and social inversions
               •   Debt and Funds
               •   Infrastructure
               •   State leading inversions
               •   Corruption




Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Expectancies (Future):

                                                        Money




                                                       Education                 Infrastructures


  Advantages:
  • More environment
  friendly
  • Fewer starting
  investments                                               ECONOMY OF SERVICES



Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
        Summary
                 Low taxes + targeted investments
                           = Attractivity

   Identify strong points to improve attractivity and
                orientate your economy

          Nevertheless…
   Robustness of the model ?

   Reliability of the model ?
   (Social demands ?)
    Questionable assumptions… (ex: finance like to be in great decision
    centres)
     Remarkable point: oil!
Pablo Fernandez, Stéphane Harter, "Developing the São Tomé island", June 2008.
Thank you for your attention!