( AfDB) - The Board of Directors of the African Development Fund approved on Wednesday in Abidjan, a grant of US $ 10.7 million to São Tomé and Príncipe for the implementation of the first phase of the Zuntámon Initiative, within the framework of the Lusophone Compact.

The project aims to improve the business environment by removing specific bottlenecks that hinder private sector-led growth. The project will also strengthen capacity and access to markets and credit for small and medium-sized enterprises (SMEs) through technical and business development training. This will ultimately increase their contribution to the economy and job creation and build a more resilient economy.

In addition to SMEs, the project will benefit investor and business support institutions such as the Trade and Investment Promotion Agency, business associations and business support organisations, financial institutions and the Central Bank of São Tomé and Príncipe. Implementation of the project will lead to reduction in the number of days to resolve commercial disputes from 1,185 to 600 days by strengthening the capacity of the arbitration centre and the commercial court system, and through strengthening the business environment to increase the number of registered businesses.

“This project will build the capacity of critical institutions of the Government of Sao Tome while improving the business environment for private sector development. It will promote and incentivise the formalization of the informal economy to create more and better jobs, especially for women and youth who dominate the informal sector.” says Ms. Martha Phiri, Director, Human Capital, Youth and Skills Development (AHHD).

The country has high potential in agriculture, services, including tourism and the blue economy, sectors that represent more than 70% of economic activity.

The Zuntámon Initiative will focus its interventions on commodities to which women and youth are actively contributing, as well as export products with high growth potential such as cocoa, coconut and horticultural products. The focus on these products and services is in line with the Government of São Tomé and Príncipe's post-Covid-19 economic recovery strategy, which prioritises support to pandemic-affected businesses and recovery in key industries such as agriculture, fisheries, tourism and hospitality.

“After supporting the COVID response with a historical budget support operation in 2020, the Bank is now at the forefront of the post-pandemic recovery in São Tomé and Príncipe with an innovative approach that responds to the specific challenges faced by the private sector in small insular economies," said Mr. Toigo, the Bank's Country Manager in São Tomé and Príncipe.

The project aligns with the Bank's Jobs for Youth Strategy for Africa and responds to the objectives of the Lusophone Compact by promoting inclusive and sustainable private sector development, while contributing to the country's Private Sector Development Strategy 2015-2024.