Reducing the São Tomé and Príncipe Poverty Rate

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SÃO TOMÉ — Since 1990, the island nation of São Tomé and Príncipe has increased its Human Development Index (HDI) value (a composite statistic of per capita income, life expectancy and education) from 0.454 to 0.574.

The 26.4 percent increase has classified São Tomé and Príncipe as a nation with medium human development. Despite increases in life expectancy, average years of schooling, and expected years of schooling, the World Bank estimates the São Tomé and Príncipe poverty rate to exist at approximately 62 percent. The government of São Tomé and Príncipe has acknowledged that the reduction of poverty between 2000 and 2012 was marginal.

Poverty and Tourism

Still classified as a lower middle-income nation, São Tomé and Príncipe possesses a small economy greatly dependent on imports. Though the agricultural sector has historically accounted for a large portion of the economy, there has still been significant growth in the amount of imported food.

The São Toméan tourism industry also continues to grow, but high rates of urban poverty continue to persist due mostly to limited employment opportunities — particularly for young people. That is why the primary driver of growth in the country is government expenditure, including government investments meant to create future benefits. In 2015, government expenditure accounted for 34.2 percent of the São Toméan gross domestic product (GDP).

Major Growth

Despite the São Tomé and Príncipe poverty rate, the United Nations Development Programme (UNDP) 2016 Human Development Report found that, between 1990 and 2015, the country’s life expectancy increased by 4.8 years, the mean years of schooling increased by 2.4 years and expected years of schooling increased by 3.8 years. The São Toméan Gross National Income (GNI) per capita also increased by approximately 55.6 percent.

In 2015, the HDI ranked São Tomé and Príncipe as 142 out of 188 countries. With an HDI value of 0.574, the country falls below the average score of other countries in the medium human development group. However, its HDI value is higher than the Sub-Saharan African average score of 0.523.

Overcoming Obstacles

One of the main factors, though, that remains an obstacle to the reduction of the São Tomé and Príncipe poverty rate is a lack of up-to-date poverty data. The UNDP’s most recent data from the 2008-2009 survey year found that 47.5 percent of the country lives in multidimensional poverty. Multidimensional poverty refers to deprivations in the areas of education, health, and living standards.

An additional 21.5 percent of the population lives near multidimensional poverty which may still affect those who lives above the income poverty line.

When visiting São Tomé and Príncipe in 2017,  Xiangming Li, leader of the International Monetary Fund (IMF), stated that despite a rise in inflation and domestic debt, the country’s economy grew in 2016 and is expected to continue growing in 2017.

“São Tomé and Príncipe’s economy is estimated to have grown by 4.1 percent in 2016, driven by strong performance in the manufacturing (food processing) sector and tourism industry,” Li states in an end-of-mission press release. “Economic prospects are favorable, with growth expected to be around [five]percent in 2017, boosted by anticipated robust activity in the construction sector and tourism industry.”

The World Bank also asserts that in order for São Tomé and Príncipe to generate inclusive growth and reduce poverty, it must focus on growing its agriculture and tourism industries and promote public sector reform. By focusing on practical actions that will make the island’s economy more dynamic and strengthen human capital, it is believed the São Tomé and Príncipe poverty rate may be even further reduced in the coming years.

Amanda Quinn
Photo: Flickr

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