Document of The World Bank FOROFFICIALUSEONLY ReportNo. 31726-STP sAo TOME AND PRINC~PE JOINT IDA-IMFSTAFFADVISORY NOTE ONTHE POVERTY REDUCTION STRATEGY PAPER March 3,2005 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - 2 - FOR OFFICIAL USEONLY INTERNATIONALDEVELOPMENT ASSOCIATION AND INTERNATIONALMONETARY FUND sAoTOMEAND PRINCIPE PovertyReductionStrategy Paper Joint WorldBank-IMF StaffAdvisory Note Preparedbythe Staffs of the Intemational Development Association (IDA) andthe Intemational Monetary Fund(IMF) Approved by GobindNankani (IDA), Saul Lizondo and MartinFetherston(IMF) March3,2005 I.OVERVIEW 1. This first full Poverty Reduction Strategy Paper (PRSP) prepared by the government of Silo Tom6 and Principe builds on the strategy laid out in the interim PRSP(I-PRSP).' The full PRSP capitalizes on the lessons from the I-PRSP and on previous efforts, mainlythe 2000-2001UNDP/ILO/W survey of living conditions andUNDP's 1991 and 1995 poverty analyses. The first Annual Progress Reportof the PRSPwill be carried out inthe first quarterof2006. 2. The PRSP sets an ambitious policy agenda-with an overall cost of about US$210 million for the first seven years of implementation. The main long-term objectives are the following: 0 reduce the percentage of Silo Tom6 and Principe's population living in poverty (54 percent) by one halfby 2010 andby more than two thirds by 2015; ' ThisJSAN is based on a review of the PRSP, which was promulgated by the President of the Republic in January 2003, and an update of the government strategy approved by the Council of Ministers and issued in January 2005.The PRSP was not submitted earlier to the Executive Boards of the IMF and World Bank because the macro-framework was insufficiently developed to put the poverty reduction strategy into full perspective.Inthis document, references to the PRSPincludethe originalPRSP andthe update. EBD/00/29, includes both the I-PRSP and the JSA, presentedto the IMF Executive Boardon April 6, 2000. IDA/SecM2000-167 includes the I-PRSP and the JSA and was presentedto the World BankBoardonApril 12, 2000. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may n o t be otherwise disclosed without W o r l d Bank authorization. - 3 - 0 provide access to basic social services for the entire populationby 2015; and 0 reduce the gap in social indicators across urban and rural populations, gender and geographical locations. 3. The full PRSP is a result of an extensive consultative process by domestic and foreign stakeholders. The process was managed by a steering committee chaired by the PrimeMinister andconsisting o frepresentatives o f government and civil society. Numerous workshops were organized for civil society, political parties and others in the six district capitals on the islando f S2o Tom6 and on the island o f Principe. A PRSP unit was set up in the Ministry o f Planning and Finance to ensure the implementation and monitoring o f the PRSP. 4. The PRSPprovidesa reliableframeworkfor reducingpovertyin Silo TomC and Principe. The main strengths o f the PRSP are in: (i) providing a poverty diagnosis and a comprehensive private-sector-led development strategy for S2o Tom6 and Principe; (ii) paying special attention to cross-cutting issues, notably governance; and (iii) identifying detailed indicators to monitor progress inpoverty reduction. 5. The staffs share concerns identifiedby domestic and foreign stakeholders in a numberof areas where further analysis would be desirable.Inparticular, the PRSP could benefit from: (i) prioritizing actions among and within sectoral strategies and making them fully consistent with the annual fiscal budget and the overall medium-term poverty alleviation strategy, (ii)launching an in-depth analysis o f the impact o fpotential oil revenues on the economy; and (iii) making an assessment o f the redistributive effect o f the proposed reforms, including taxation, land redistribution, and privatization. The staff also supports further work in securing good governance and fighting corruption, especially inthe context of rising oil revenue.Trade policy i s another area that merits attention, particularly giventhe emphasis o f the PRSP on the need for non-oil investment and the diversification o f production and export^.^ 11. POVERTY DIAGNOSIS 6. The PRSP paints a stark picture of poverty in Slo TomC and Principe. The 2000-01 UNDP/ILO/WB survey o f living conditions and the UNDP poverty reviews show that 54 percent o f the population lives in poverty: 39 percent are poor and 15 percent are extremely poor. Poverty has geographical and gender characteristics: poverty i s deeper and more widespread in the rural areas; and households headed by women have a lower consumption than those headed by men. The survey o f living conditions identifies the most vulnerable groups and confirms an accelerating urbanization (55 percent o f the total In the next PRSP annual progress report, the authorities should also review report the findings of the upcoming Diagnostic Trade Integration Study. - 4 - population in 2000 lived in the capital compared with 44 percent in 1992). It also provides insights into the non-monetary aspects o f poverty and the domestic and foreign factors that are obstacles to poverty alleviation. However, the PRSP analysis i s based on reference reports using different statistical methodologies and the 2001 survey suffered from a lack o f disaggregated consumptionexpenditure data to calculate an absolute poverty line. 7. The PRSP rightly considers that combatingsocial exclusion is also fundamental for reducingpoverty. It identifies women, the elderly, and the young (especially the street children) in need o f special support. In this context, it envisages improving the access o f women and the young to literacy programs and occupational training; creating production and marketing cooperatives; and enhancing micro-credit assistance to help them carry out income-generating activities. 8. Lookingahead, the staffs encourage further analysis of poverty and support the government's intention to conduct two surveys aimed at improving the present household and expenditure data. The analysis should focus on a review of income and coping strategies at the household level across provinces, including the allocation o f government and donor resources, access to basic infrastructure, and vulnerability to food insecurity and natural disasters. The surveys' results are to be used to monitor progress toward reaching the PRSP goals and MillenniumDevelopment Goals (MDGs). 111. PRIORITYPUBLICACTIONS 9. Priority public actions to reduce poverty, increase access to social services to support reaching the MDGs, and shrink the geographical social and gender gaps are based on the following strategic pillars: (i)maintain macro-stability while supporting accelerated and broad-based economic growth; (ii) increase population access to basic social services, particularly basic education and health; (iii) strengthen public institutions and foster good govemance; and (iv) devise mechanisms for monitoring andupdating the strategy. A. MaintainingMacro-stabilityandSupportingBroad-BasedGrowth 10. The PRSP acknowledges that attainment of its povertyreductionobjectiveswill dependcriticallyon maintainingmacroeconomic stability. Starting from thispremise, the PRSP, as updated in the annex recently submitted by the authorities to the Bretton Woods institutions, is consistent with the financial policies underpinning the government's forthcoming request to the IMF Executive Board o f a three-year arrangement under the Poverty Reduction and Growth Facility4. The PRSP medium-term macroeconomic outlook, 4The authorities' readiness to engage in PRGF program discussions with the Fund staff, as well as ongoing work at the Ministry o f Planning and Finance regarding the identification o f pro-poor budgetary spending represent credible efforts by the authorities to take ownership o f the process and implement the PRSP, while taking into account the need for substantial fiscal consolidation and the fulfillment o f the poverty alleviation objectives. - 5 - assumes an average growth rate o f 4.3 percent during2005-07, a declining inflation rate, and broadly stable NIR, supported by a strong fiscal consolidation effort based on the enactment o f revenue enhancing measures (see Tables 11 and 12 in PRSP update document) and the control over public expenditures, while safeguarding pro-poor spending; a prudentmonetary policy aided by the introduction o f indirect policy instruments; a flexible exchange rate arrangement; and the implementation o f a comprehensive structural reform agenda that includes a new investmentcode to promote private investment. 11. The authorities expectation is that a program with the Fund would catalyze needed financing from other internationalfinancial institutions and donors to further accelerate investment and economic growth in Silo TomC and Principe. Preliminary analysis conducted by the authorities indicates that the country would need to grow at an average rate higher than 8 percent per annum (i-e., almost twice the average growth rate projected by the staff for 2005-07) during the next decade to meet the PRSP's ambitious poverty reduction targets. Staff i s o f the view that while attainable, this growth rate will be contingent upon the authorities succeeding in attracting a higher level o f private investment and additional donor support. Accordingly, the government is engaged with possible development partners, including, in particular, the World Bank, UNDP, the African Development Bank, and the US-led Millennium Challenge Corporation, with a view to attract further investment, boost the economy's supply response, and reach the high-growth path that would secure achieving the PRSP's poverty reductiontargets. A donors' roundtable, tentatively planned for the second half o f 2005, could assist insecuring adequate financing o f the poverty reduction strategy while minimizing recourse to domestic inflationary financing andkeepingthe growtho fthe country's extemal debt incheck. 12. The updated PRSP includes an action plan in which guaranteeing debt sustainability is part of the poverty reduction strategy. In this regard, the government created inlate 2003 an extemal debt management unit at the central bank. However, the unit still needs to develop its analytical capacity and establish systems for the regular dissemination o f debt statistics to the public. The staffs support these endeavors, especially giventhe country's very highindebtedness. 13. A policy area that will merit attentionas the PRSPimplementationmoves ahead i s the impact of the upcoming oil era on the economy. Provided a successful exploration campaign, beginning in2010-12, SBo TomC and Principe's economy will be to a significant extent driven by developments in the emerging oil sector. The staffs consider that the Oil Revenue ManagementLaw adopted in December 2004 is highly transparent and lays the foundationfor a prudentuse of the resourceswithinthe framework ofthe country's poverty reduction strategy. On the way forward, the authorities should give attention to challenges they may face, such as, the potential for Dutch disease issues that could hamper the growth o f the nonoil economy and the importance o f maintaining donor support untilthe start o f oil production. In this respect, the staffs strongly support the government's broad- based discussions and information campaigns on the recently-approved Oil Revenue Management Law. - 6 - 14. The PRSP highlights that increasing labor productivity and diversifying income- generating activities, especially in rural areas, is critical for reducing poverty. The government's strategy emphasizes needed improvements in basic roads and marketing infrastructure for agricultural products and extension services, the development o f downstream agro-industrial activities, as well as tourism and fishing networks in the archipelago. However, most of the actions related to these policies-which are listed in Appendix Iofthe full PRSP-will need to be costed and prioritized to assess their impact on macro-stability, growth and poverty. B. SecuringBasic Services and Infrastructure 15. The need to provide basic education, health, and other basic services is extensively noted inthe PRSP. Key sectoral policies are summarized below: 16. Education. The strategy on education emphasizes three broad areas for action: mandatory six-year primary education enrollment and promotion o f adult literacy programs; access to education irrespective o f gender or income level; and occupational training to meet the country's development needs. To address these goals, the PRSP proposes to increase the share o f education in the government budget and the relative budgetary allocation for primary education. This inturn will help increase and equip classrooms inorder to phase out two and three shift teaching, reduce regional and income disparities, retain more teachers through better training and higher salaries, and decentralize the education system. The staffs are in agreement with the strategy on education, which contains interventions with specific objectives, strategies, sustainabilityplanand a preliminary costing o fthe interventions. 17. Health. The health sector strategy, a focal point in the government's development efforts, aims at universal and equitable access to health care and reduction in mortality and morbidity. To achieve these goals, the PRSP envisages an increase in the budgetary allocation for health. This will allow for a restructuring o f basic health services, refocusing care on preventive approaches and on the diseases with highest morbidity, guaranteeing access to specialized (tertiary) care, and improving national nutritional levels. The staff supports the strategy, which contains interventions with specific objectives, strategies, sustainability planand a preliminarycosting o f the interventions. 18. The PRSP gives due emphasis to malaria as the main cause o f death in S5o Tom6 and Principe. It also recognizes the danger of ignoring the low but potentially serious HIV/AIDS risks. While the document lacks an analysis o f how malaria and H N / A I D S impact poverty, gender and economic growth, the action plan (see Appendix Io f the PRSP) lists measures to reduce morbidity o f both diseases. Strategies for HN/AIDS and malaria were developed, costed, and adopted in 2003 and 2004. An anti-malarial campaign was launched inthe first half of 2003; the campaign emphasizes prevention via education, use o f mosquito nets, and spraying. 19. Utilities and Infrastructure. The PRSP comprehensively covers infrastructure issues, especially for telecommunications, water and sanitation, transport, and energy. - 7 - 0 Telecommunications-while a single company still dominates, the government intends to liberalize the market by end 2005 to foster investment, improve service, andreduce rates. 0 Water supply-the government strategy foresees more connections, improved quality, and proper maintenance. This i s to be supplemented by improvements in sanitation, envisaging additional latrines and ensuringproper disposal o f towns' solid waste andpolluted waters. 0 Transportation-the PRSP notes that poor quality rural roads, as well as limitedair and sea traffic, restrict the transport o fproducts and people, hampering private sector growth and income creation. Accordingly, the strategy sets an ambitious agenda for repair and maintenance o f roads; reform o f the air traffic protocol (through an "open sky" policy and modernization o f the airport); and the development o f airports and sea transport. 0 Energy-the PRSP envisages increasing electricity supply and service in S%oTomb and Principe through enhancedprivate sector participation inthe sector and reform o f the finances and management o fthe water and electricity company (EMAE). 20. Overall, the staffs commend the government's objectives as regards the health and education strategies and the public utilitiesand infrastructureprojects.However, the PRSP acknowledges - and the staffs concur - that low institutional and human capacitiesconstituteconstraintsto achievingthe country's developmentgoals. With this view, the staff recommends that future work inall three sectors benefit from further focus on: (i) prioritizing actions based on sound technical analysis, especially as regards to water, sanitation and transport, given the heavy investment costs; (ii) ensuring that the budgetary costs o f the sectoral strategies are consistent with the government's overall fiscal envelope; (iii) increasing institutional and human capacity through systematic training, professional development, and reinforced managerial capacity in the various sectors; and (iv) fully implementingthe recently adopted telecommunications law and strengthening the existing regulatory authority. C. PublicSector ReformandGovernance 21. The PRSP recognizes that good governance has a significantimpact on poverty reductionin Sa0 Tom6 and Principe.The strategy stresses the need to consolidate the rule o f law, including constitutional reforms to remove potential sources o f conflict among the branches o f the government. Other measures considered include basing the National Assembly on proportional representation, reforming and reinforcing the judiciary by training judges and civil servants in modern law and methods; establishing specialized courts; updating the legal framework to remove obsolete laws dating back to colonial days; and empowering law enforcement. - 8 - 22. The PRSP envisages a reorganizedpublic sector to increase its efficiency and transparency. The government would seek to eliminate overlapping finctions between agencies; decentralize and strengthen local government structures; withdraw from productive activities; and reform the civil service to enhance the provision o f public services. In addition, the PRSP emphasizes that efficient andtransparent public expenditure management i s critical for a successful implementation o f the anti-poverty agenda. Inrecognition of this, the budgetary process (formulation, execution and monitoring) is being reformed using HPC-AAP guidelines and further supported by IMF andWorld Bank technical assistanceto improve transparency and governance, andbetter target public spendingincluding pro-poor. 23. The staffs support the government's intention to promote a responsible, effective, and transparent management of public resources. The government is moving ahead with major reforms to improve procurement, inventory and accounting practices o f government assets, receipts, and expenses. Inthis regard, the government will shortly begin the implementation o f an integrated budget and treasury information system. Another key action in this area is the strengthening o f the internal and external audit o f government agencies by empowering the Auditor General's Office. The government also would benefit from adopting clear reform strategies and implementing action plans in the Ministry o f Justice and at the Secretariat o fthe State for the Reform o fthe State (including civil service). D. Targets,IndicatorsandMonitoring 24. The authorities have centered the monitoring of the PRSP implementation on indicators they consider essential and monitorable. In the staffs' view, and given the limited human and institutional capacity in Silo Tom6 and Principe, the PRSP provides a fairly comprehensive set o f indicators and targets for monitoring and evaluating the sectoral strategies, especially in education, health, and infrastructure. The set of medium- and long- term targets broadly tallies with the MDGs. Some o f the poverty targets, however, are more ambitious-particularly the 50 percent drop in poverty targeted by 2010-and will require major sustained efforts and financial support. 25. The staffs support the government's efforts to enhance the quality and availability of poverty indicators in the context of a comprehensive program of statistical capacity building. Efforts are needed to upgrade the national income accounts, balance o f payments statistics, and government finance data, with the aim o f ensuring adequate design and monitoring o f policies that impact the poor. Annual indicators (such as the budget allocations for education, health, and agriculture) should be complemented with information from household surveys and employment data. 26. The staffs also support the government's reinforcement of its PRSP unit to enhance implementation and monitoring. This would provide more transparency in planning and spending decisions and reduce intra-governmental tension over policy priorities. The staffs consider that building an effective accountability framework for the PRSP process will require the government to: (i) enhance close consultation with civil society organizations and donors and contact with the media (including through greater - 9 - public availability o f data); (ii) transparently and regularly (publicized quarterly and report annually progress reports) on PRSP implementation; and (iii) ensure the recommendations from the PRSP reports are adequately reflectedinthe subsequent year's budget. IV. CONCLUSION 27. The Bank and Fund staffs believe that SPo Tom6 and Principe's full PRSP containssubstantialimprovementsover the I-PRSPpresentedto the Boardsinterms of quality of the process and content of the document. The staffs consider SZo Tom6 and Principe's PRSP a credible but highly ambitious poverty reduction strategy. The authorities will need to address the identified shortcomings, however, to make the strategy fully operational and assure its effectiveness. Specifically they need to : 0 undertake further in-depth analysis in poverty diagnostic, providing a sustained reliable base for monitoring and evaluation; 0 undertake further analysis as to the consequences o f the petroleum economy and assess the redistributive effect o f proposed fiscal and structural reforms on poverty alleviation; 0 cost and prioritize sectoral strategies, investment and action plans in the priority sectors identified in the PRSP, including agriculture, fisheries, infrastructure, governance and justice to make them hlly consistent with the annual fiscal budget and the overall medium-term poverty alleviation strategy; 0 succeed in attracting a substantially higher level o f private investment and additional donor support to achieve the desired high GDP growth rate targets until oil production starts; 0 Enhance institutional capacity to ensure the full implementation and monitoring o f the PRSP. 28. Furthermore, implementation will in particular require prioritizing and monitoring progress in structural reforms in a context o f price stability. In the view o f the staffs, the commitment of the highest levels o f government will be crucial for a successful implementation. 29. D o the respective Executive Directors o f the Fund and the World Bank concur with the broad directions o f SZo Tom6 and Principe's PRSP and the staffs' identification o f priority areas o f action and the related recommendations for strengthening the PRSP over the coming years? L' DEMOCRATIC REPUBLIC OF sAo TOMEAND PR~NCIPE Ministry of PlanningandFinance . r FinalVersion SPo Tome, December / 2002 I1 LIST OFABBREVIATIONS ABP -Attitude, Behavior, and Practice ACBF -African Capacity BuildingFoundation AFD-French Development Agency AfDB -African Development Bank AIDS - Acquired ImmuneDeficiency Syndrome BCG-Vaccination against Tuberculosis BCSTP - Central Bank o f SBo Tome and Principe CAEC - Central Afiican Economic Community CCIAS - Cbmara de Comercio, Industria, Agricultura e Sewiqos [Chamber o f Commerce, Industry,Agriculture and Services] CFA - African FinancialCommunity CNE - Centro Nacional deEndemias [National Center for Endemic Diseases] CST - Companhia Santomense de TelecomunicaqGes [SBo Tome Telecommunications Company] DCS - Health Care Directorate DPAF-Planning, Administration, andFinance Directorate DPT-Vaccination against Diptheria, Pertussis, and Tetanus F A C -Aid and Cooperation Fund(French Cooperation) FENAPA-STP - Federaq6o Nacional dos PequenosAgricultores de SZo Tom6 and Principe [National Federation o f Small Farmers o f SHo Tome and Principe] GDP - Gross Domestic Product GIEPPA - Grupo de InteressesEconomicos das Palaizs e dos Pescadores Artesanais [Economic Interest Group for Vendors and Artisanal Fishermen] GSTP - Govemment o f Silo Tome and Principe GTIP - Inter-Project Working Group HIPC -Highly IndebtedPoor Countries HIV-HumanImmuno-deficiencyVirus IEC-Information,Education, and Communication IFAD-InternationalFundfor Agricultural Development I M C I- Integrated Management of Childhood Illnesses IMF-InternationalMonetaryFund INE-National Statistics Institute LCPiDR -Poverty Reductioflural Development Project MARAPA - NGO - Sea, Environment, andArtisanal Fishing NGO MEJC - Ministryo f Education, Youth and Culture MICS -Multiple Indicator Cluster Survey MPF-Ministryo fPlanningand Finance NGO-Non-Govemmental Organization NET-New InformationandCommunication Technologies NLTPS-National Long-Term Perspective Studies NPRS-NationalPovertyReduction Strategy OGE-General State Budget ORS - Oral Rehydration Serum IXTRODUCTION 1. The National Poverty ReductionStrategy Paper represents the result of analyses o f the country's current situation as well as a set o f proposals designed to rout the causes of poverty Sgo Tome and Principeinthe medium to long term, based on creating the conditions that make development viable and promotethe welfare of the population. Background 2. This paper i s preparedinresponse to a perception o f the problems facing the country inseveral areas and which have contributed to a situation of widespread poverty. 3. A UNDP document on the poverty line inSBo Tome and Principe, prepared in 1994, collected some data on the poverty situation in SBo Tome and Principe. Its findings indicated that 40 percent ofthe population livedbelow the poverty line and close to 30 percent inextreme poverty. This situation worsened between 1994 and 2000. 4. STP public debt climbed steadily between 1992 and 1999 from US$172 million to US$294 million, as aresult of which the government establishedpublic debt reductionas one of its chiefpriorities. 5. Inthat context, withtechnical assistancefromthe WorldBank andthe International Monetary Fund, the government prepared the Poverty Reduction Strategy Paper in November 1999.The draft was submitted to the development partners and civil society at various levels, to ensurethat there was national consensus on its content and implementation. 6. Owingto the goodperformance ofmacroeconomic stabilizationpolicies between 1998 and 2000, STP reacheddecision point o f the HIPC Initiative inDecember 2000 and, as aresult ofnegotiations with bilateral and multilateralpartners, part o f the accumulated debt was forgiven andthe financial resources allocated to external debt service were usedinpriority projects aimed at poverty reduction. 7. Betweenthem, the SBo Tom6 authorities and the Bretton Woods institutions-the World Bank and the InternationalMonetary Fund-set two conditions for the country to reach conclusion point of the HIPC Initiativein2003: consolidationo f the good macroeconomic performance and a national poverty reduction strategy, through a participatoryprocess involvingall the stakeholders inthe country. National poverty reduction strategy 8. Based on the analysis ofthe situationofpoverty and identificationof its key determinants, this paper sets forth SBo Tomi andPrincipe's strategic plan for poverty reductionbased on five pillars: Reform ofpublic institutions, capacity building, andpromotion o f a policy o f good governance; 0 Accelerated and redistributive growth; NATIONAL POVERTY REDUCTION STRATEGY 3 0 Creation of opportunities to increase and diversify income for the poor; 0 Human resource development and access to basic social services; 0 Adoption of mechanisms to monitor, assess, and update the strategy. 9. AnAction Planis attached to putthese strategic pillars inplace, which proposesto reduce poverty by a horizon o f 2015, through compliance with the following general objectives: 0 attain a GDP growth rate o f 5 percent startingin2003; 0 reduce by halfthe percentage of the population of SZo Tome living in poverty by 2010, and reduce this figure to less than 113 by 2015; 0 provide the entire population with access to basic services by 2015 and help improve their quality o f life; 0 considerably reduce the social and gender gap between districts and between these and the Autonomous Region o f Principe, as well as betweenurban and rural populations; 0 promote and build institutional capacity and a policy o f good govemance. 10. The political will to embrace these options, political stability, and properly functioning democratic institutions; with these advantages, Slo Tom6 and Principe would be able to achieve the desired results. POVERTY REDUCTION STRATEGY ,, -..-.,-..-..-..-..-..-.._.._.. ., .. .-,.-.. .. ..-..-..-..-,.-..-. ..-..-.._,-,, ..-.. ..-..-..-.._. . ..-..-..-.._.. ..-..-..-..-..-..-. . - - -NATIONAL , - - _ _ . - - _ _ - , - -.. -. . .- . ... -6 __p_ Organizational Chart and Participatory Process By Decision412001 of the PrimeMinister and Headof Govemment, it was determinedon June 29, 2001 that a National Poverty Reduction Strategy would be drafted and the basic mechanismsand procedures adopted for compliancewith that decision. The organizationalchart for drafting the nationalpovertyreductionstrategyenvisagedthe following: Steeringand SupervisoryCommittee, chairedby the Prime Minister and Head of Govemment; GovemmentiCivil SocietyiPrivateSector ConcertationCommittee, chaired by the Minister of Planningand Finance; Govemmenb'Development Partners Concertation Committee, chaired by the Minister of ForeignAffairs and Cooperation; Drafting Committee, chairedby the Minister of Planningand Finance; Permanent Secretariat for Coordination, as the support body for the Drafting Committee in all activitiesrelatedto draftingthe strategy. As a complement to this chart, all national sectors of activity were required to collaborate with the Permanent Secretariat for Coordination, making available any information needed for the smooth flow of work. The methodology used in that processconsideredit very useful to draw on past experience at various levels in the country, thus ongoing projects and programs were reviewed and the proposed components of the provisional strategy establishedbetweenthe govemment andthe Bretton Woods institutions. Also taken into account were the experiences of countries that had achieved rapid results in preparing poverty reduction strategies, drawinginspirationfrom the case of Mauritania inparticular. As part of this participatory process, thematic groups were formed, each one headed by a member o f the Drafting Committee, assisted by a consultant-facilitator hired for the task, and comprising technical staft including foreigners worlung in SPo Tome and Principe, and representatives of the private sector and civil society. The six thematic groupscreatedreviewedthe following topics: Growthpotential, macroeconomic framework, environment; Opportunitiesfor increasingand diversifying the incomeof the poor; Education, literacy,training; Health,nutrition,population; Govemance,decentralization,participation, communication, information; Analyzing andmonitoringpoverty The organs of sovereignty, public administrators, autonomous institutions, political parties, labor unions employerassociations,the variousreligious denominations,civil society ingeneral, bilateral and multilatera partners, at various levels-national, regional, district, etc.-were requested to give their opinions at eact stage of the process, making critical assessments, offering suggestions and proposals, which were successively incorporatedinto the four preliminary versionsofthe paper, as applicable. Workshops were also organized in the capital of the autonomous region Principe and in district capitals ir SI0 Tome, which contributed as well to the diversity and the consolidation of proposals for actior formulated, taking into account the degreeofparticipation in each one. After drafting and presenting the fourth version, the strategy paper was then submitted to the Council o Ministers and the President of the Republic for consideration at meetings, which served to providc clarifications and were opportunities for raising awarenessabout the importance of implementing the PRSI INext. in within the establishedtime f?ame. the context of prwaringthe National Poverty Reduction Stratem Validation Seminar. preliminar ..-..-.. . - .-.. 7 . -. .-..-.. ..-..-..-..-.. ..-.._.. -..-.._..-..-..-.. ..-.._.. . .-.. .._..-.._.. .._..-..-..-..-.._..-.. ..-.._.. _.. ..-. .-.._.. ..- - NATI0NAL POVERTY REDUCTION STRATEGY - - - - - - - - nongovemmental organizations, and civil society in general, thereby providing yet another opportunity to test whether these groups identified with the proposedactions for implementing the strategy. Finally, on December 10, 2002, in keeping with the approved timetable, the National Poverty Reduction Strategy Validation Seminar was held in SHo Tome and Principe, with the formal openingceremony chaired by the President and attended by the President of the National Assembly, Prime Minister and Head o f . Govemment, ministers, and senior public administration officials, representativesof the diplomatic corps, intemational organizations, and developmentpartnersof SHo Tome and Principe. National experts, representatives o f political parties, employer associations, labor unions, the churches and religious denominations, women's, youth, and artists' associations, nongovernmental organizations, the national police, and the armed forces were also sufficiently well-representedand involved at the National Strategy Validation Seminar. .,-..-..-..-, ..-..-., .. _ _ - - .-.._.. -NAT10-..N-..AL ..-..-.. POVERTY REDUCTION STRATEGY -. . .-.._..-..-.._..-.. .. .._.._,.-. - - - .-.._.. -.,- ._.. .._. . - . .._.._ ..-.._..-..-.. 8 1. POVERTYIN sAo TOM^ AND PR~NCIPE: AN AKALYTICAL REPORT 1.1. Centralized economy period 11. After winning national independence on July 12, 1975, Sgo Tome and Principe keptthe colonial productive structure inherited from the Portuguesewith almost no alterations until 1987. The economy was based on a cocoa monoculture, which came to be runby state farms after the Roqas nationalizations of September 30, 1975.The statebecame the principal producer, with a concentration o f over 90 percent o fthe country's agricultural land. Similarly, health and all other sectors, both social and economic, were centralizedunder the government of S5o Tome. 12. From the early 1908s, the decapitalization of state farms andthe extremely low living standards of agncultural workers inall social spheres (housing with no decent amenities for cohabitation, hence overcrowding, no basic sanitation, no sanitation services to state farm outbuildings), combinedwith low wages, ledto an irreversible rural exodus. 13. Wage eamers (whole families insome cases) abandoned the state farms innumbers that would accelerate the process o f disorganized urbanizationof the secondhalfo f the 1980s and the beginning o f the 1990s. The result was a compounding of rural poverty with urban and suburban poverty. 1.2. Economic liberalization 14. The liberalization o fthe economy started in 1985.In1987, the first structural adjustment program was officially launched with financing from the World Bank in the amount ofUS$17 million. A similar agreement was reachedwiththe IMF(June 1989) for a loano f SDR 2.8 million. 15. Agriculture was one o fthe first sectors of the economy to benefit from WB credit. All inall, the results fell far short ofthe objectivestargeted. An ambitious program to privatize agricultural and non-agricultural public enterpriseswas introduced, leading to the partial or total liquidation or privatization ofthe vast majority o f public enterprises. Between 1988 and 1997, real GDP growth was positive but remainedbelow population growth, thus the process of real impoverishment continued, though the GDP growth rate finally caught up with populationgrowth in 1998. 16. Despite positivetrends in some macroeconomic indicators, the country's extemal debt situation more or less deprived it o f any external negotiating capacity. In 1992-1999, the debt increased at a fast rate, moving fiom US$172to US$294 million, of which US$168.1 millionwas multilateral debt andUS$125.9million was bilateral debt, as shown inthe table below: Table 1: Development of Slo Tom6 and Principe's ExternalDebt Period under review 1992 1993 1994 1995 1996 1997 1998 1999 Externaldebt stock 172.0 185.4 205.5 238.0 229.5 238.3 275.7 294.0 Multilateral 111.1 122.4 142.9 159.3 162.3 162.9 162.3 168.1 Bilateral 60.9 63.0 62.6 78.7 67.2 75.4 113.4 125.9 NAT10 NA L POVERTY REDUCT10N STRATEGY 9 17. In2000, the economic situation of Siio Tome and Principe continued to be very difficult. There was a huge fiscal deficit, the burden o f the external debt and its service became increasingly heavy, export revenue declined owing to a fall in prices on the internationalmarket. The primary balance ratios o fthe state budget shrank progressively from 1996to 2000 and continue to be negative, making it difficult for the govemment to take any meaningful action inthe social area and on behalf of the poor using its own resources. Interest on the debt also trended upward, thereby aggravating the government's financial situation. 18. However, the government's efforts produced encouraging results insome important indicators: i)the inflation rate dropped sharply to 9.6 percent (from 80.5 percent in 1997); ii)the exchange rate to the dollar (US$) stabilized (with a parallel market differentialof less than 5 percent). Based on the results obtained in terms o f economic and financial rehabilitation, the country was able to secure the conditions for negotiatingthe issue o f the extemal debt and debt sustainability with its bilateral and multilatera1partners and reached the decision point of the HIPC InitiativeinDecember 2000. 19. Thus, from 2001, the country has beenbenefitingfrom the financial resources released from payment o f the debt, which have beenusedto finance projects and actions inthe social sector (health and education) and ininfrastructure. It shouldbe noted that, besides the rural sector, these are the sectors hardest hitbypoverty in Siio Tome and Pnncipe. 1.3. General characteristics of poverty 20. The first attempts to measurepoverty inthe country date back to the late 1980s and the first halfo f the 1990s. Indeed, the "Report on the Poverty Line (1987-1990) funded by UNDP and publishedinJanuary 1991 and the "Poverty Line in SBo Tome and Principe" (1991-1994) published inMarch 1995providedthe first elements o fpoverty analysis. Both studies usedthe cost o fbasic needs (CBN) method. A numberof estimateswere made inthe absence o f more reliable data, which compromised the reliability and compatibility o fthe statisticswith later studies. Nevertheless, the worsening o f the situation is noticeable in the extemal manifestationso fpoverty ("street children" phenomenon, abandonment o fminors, decline inthe gross enrolment rate at the basic education level, etc.). 21. The survey o fhousehold living conditions, which was the basis for definingthe "Profile o f Poverty inSBo Tome and Pnncipe" (November 2000 to February2001) usedthe average returns (AR)method, and determinedthat the poverty line inSiio Tome and Principe was Dbs. 2,.638,618 per year (around US$294/year). This amount covers the barest minimum4ailymeals and some nonfood expenses (clothing, housing, fuel for preparing meals). 22. Thus, the income available for other basic expenditure, especially education and health ofthe household, arepracticallynonexistent. 23. Inthe case o fhousing, three important factors must be stressed (a): 4) the fact that period 1991-1994 from 6.3 percent to 2.7 percent; -ii)property ownership the share o f the poor's resourcesallocated to this basic need diminished duringthe arrangements-the poor are merely tenants, with very tenuous property , ._..-..-..-. ._..-..-.. -. .-..-..NATIONAL -..-.._.._,.-.._.. -.._.. POVERTY REDUCT10N ,-,STRATEGY.-. .-,. -..-.-..-..-.. -. - -. -.-.. , -,. . . . , . . - .-.,-..-..-.. ..-.._.. .-.. - _10 _ relationships, as the parties normally have an honor commitment with nothing in writing, muchless a contract, making itpossible for landlordsto demandthat tenants vacate the propertywithin three weeks; and, -iii) there are no recent comparison factors, as aresult of which developments inthe situation of the poor with regard to housingover the last seven years are unknown. 1.3.1. Developmentsin monetary poverty and livingconditions 24. The "Report on the Poverty Line" (1987-1990), fundedby UNDP andpublished in January 1991, reported that the situation inthe health services had worsened considerably due to the lack of resourcesneededto import medicine and materials, and to improve the existing infrastructure. Diseases such as malaria and cholera, which hadpractically disappeared, re-emerged with a vengeance and became endemic, culminatinginthe cholera epidemic of 1989. Infant mortality hadrisen. Poverty began to be visible, affecting 41 percent of the total population in 1990, up from 36 percent in 1987. 25. A second study financed by the same institution (UNDP) "The Poverty Line in SBo Tom6 and Pnncipe" (1991-1994), publishedinMarch 1995, confirmed the trend. In fact, the index rose to 48 percent in 1992. 26. This report identifiedthe socioeconomic groups most vulnerable to poverty, namely: i) agriculturalworkers; ii) low-levelcivilservants; iii) fishermenandvendors; iv) female headsofhousehold; and v) senior citizens livingalone (over 60 years old). 27. More recently, the study on the "Profile o f Poverty in SBo Tome and Principe" (November 2000-February 2001), conducted with the technical support of the ILO and fundingfrom UNDP and AfDB, published inMay 2001, confirmed the rural exodus andthe resulting acceleratedurbanization. Thus, the urbanpopulation, estimated at 44 percent o fthe total population in 1992, rose to 54.5 percent in 2001, accordingto the thirdRGPH. Close to 1/3 of SBotomean families are headed bywomen. Familieswith 4-7 members make up 57 percentof the totalpopulation while bigger families (with 8 or more members) total 26.7 percent. 28. According to the same study, 53.8 percent of the total population inthe country livesinpoverty, more so householdsheadedbywomen (55.7percent) than those headedbymen (53 percent). 15.1percent of SBo Tome's populationlives in extreme poverty. The average size o f ahouseholdis inversely proportionalto its income; thus the average household with 6.43 persons i s extremely poor, while families with 3.78 members are considered not poor. 29. Regardingthe poverty o fbasic livingconditions (access to education, health, drinkingwater, environmental sanitation, andhousing), the study concludedthat 11.8 percent o fthe populationhadneverbeento school. Itwas also foundthat illiteracy increaseswith the degree o fpoverty; 9.6 percent ofthe nonpoor NAT10NAL POVERTY REDUCTION S TRATEGY 11 population i s illiterate incomparison with 12.9percent of poor people and 15.9 percent o fthe extremely poor. Inthe area of health, the study observed that health care increases with income levels. Thus, 23.2 percent of nonpoor sick people visited a doctor inaprivate clinic, as opposed to just 8.7 percent ofpoor sick people, and only 2 percent of the extremelypoor. There situation o fpipe-bome water nationwide i s disastrous; only 19.6 percent o f the total population has access to pipe-bome water. 9.2 percent of extremely poor households have pipe-bome water incomparisonwith 13 percent o f poor households, and 25.5 percent of nonpoor households. Environmental sanitation i s also ina lamentable state. A mere 16percent o fhouseholds inSgo Tome have septic tanks connected to a public sewer system. 69 percent o fthe people relieve themselves inthe open air. 30. Combining the results o fthe last two surveys of household living conditions yields the following results: Table 2: Structureof PovertyLineExpenditurein Sgo Tom6 and Principe (inpercent) Type of Expenditure 2000/2001 ExtremelyPoor 1Poor I Non- I I Poor Food 73,O 74,6 75,O 84,l i 81,7 79,l 66,17 Education 0,8 1,9' 2,O 1,2 1,2 1,6 2,09 Health 3,l 3,9 4,3 3,l 3,2 3,5 5,33 Housing (renting a 6,3 5,7 1 5,4 2,7 -- - home) I Other expenses 16,8 13,9 13,3 8,9 13,9 15,7 26,41 TOTAL 100 100 100 100 100 100 100 NATIONAL POVERTY REDUCTION STRATEGY ..- .. 12 ,, -,, -, -.. -.. ._. . _ _ __. __ ._, ..-..-..-..-..-.._..-..-,.-..-..-..-..-.._.. ..-..-,.-., ..-.._..-..-..-..-..-.. ..-.._..-..-..-.._ . - -, , - - ._,. .. - - 1.3.3. Social and gender inequality 33. The unequal distribution of average per capita consumptionbetweentown and country i s also observed inrelation to gender. This consumptioni s 11percent lower for households headed by women. 34. Average per capita consumption i s 42 percent higher for the self-employedsocio- professionalcategory (craftspeople, businesspeople, proprietors o f small non- farming businesses, etc.) than for the poorest people (farmers-crops and livestock-and fishermen). Consumption declines increasingly as one moves further away from the capital. 35. Similarly, average per capita consumption i s inverselyproportionalto household size; it i s 2.3 times higher for single-person households than for households of 10 or more. 1.4. Determinantsof poverty 1.4.1. Economicdeterminants . 36. Internally, the economy i s facing the following problems: low productionand productivity; persistently highinflation; inability to generate employment; persistentlyunstable value o f the domestic currency; inabilityto systematically guarantee the mechanisms for financial stability; inadequate socioeconomic infrastructure; rural exodus; unequal access to national resources. 37. Externally, the regional integration policy has been unsuccessful, there is a great dependence on extemal aid, and the burden o fpreviously contracted debt i s heavy. 38. The macroeconomic indicators(*)reveal how fragile the Silo Tome economy has been duringthe last decade. Inthe 1996-1999 period, per capita GDP declined sharply and an unfortunate trendininflation rates was observed as they rose to 80.5 percent in 1997. From this date, as a consequence o f the austerity measuresto stabilize the economy, inflation droppedto 9.6 percent in2000. Previously, governments had already implemented austerity measures to ensure financial stability,thereby initiating some improvement inthe situation. Subsequently, as these measureswere abandoned, the situation began to deteriorate. 39. Inthe ruralareas, the poverty situationi s conditional upontwo key sets of factors: structural factors and cyclical factors. 40. The structuralfactors are: - reliefo f the majority o f workable agricultural land, which limitsthe crops that --- canbe grown as well as the possibilities o fmechanization; increasing difficulty and cost o fretaining farm hands; poor infrastructure; small size of the domestic market, combined with the obvious scarcity of - financial resources and skilledhumanresources; highcostsresultingfrom the isolation o fa small insular country; - inapt legal framework for the sector (inappropriate forestry and landlaws). (*ISource: Central Bank of SBo Tom6 and Mncipe ..-..-..-,,-.._..-..-..-,.-,, ..-..-.,-..-..-.. . .-.. - NAT10NAL POVERTY-.RED. UCTI0 N STRATEGY - -.._ .-.-.. - ..-..- ..-..-..-..-..-..- .-..-.. -.._..-..-. . _.. .._,. -13 41. The cyclicalfactors are: - an economic policy that discouragesagncultural productionand facilitates competition with local output; - no specific policiesthat offer protection or incentives; - inefficient management and use of financial resources; - no coherent policy on credit and incentives to the sector; - skewed productive structure, with foreign exchange eamings coming from a single export product-cocoa; 42. Nowadays, there i s heavy populationpressure on the land and, as a result, a large number o f households received less than 1.5 hectares, with somebeneficiaries beingassignedno more than 0.5 hectares, when the averagelot size stipulated for each farmer i s 2.1 hectares. This practice has become widespread, incontradiction with the criteria originally establishedinthe PPADPP and laiddown inthe law stipulating the share of landto be allocatedto small farms and medium-sized enterprises. 43. Initially, in 1993-1995, there was amoderateincrease incocoa productionwith the distribution o f farmland, owing to more efficient harvesting. Subsequently however, as a result o f the combined effect of the failure to use phytopharmaceuticals to combat mildew(phytophotorapalmivora) and other pests and diseases (only 22 percent o f farmersuse pesticides) and the forceful resurgence of cocoa thrips (rubrocinctus) starting in 1998, causedby the indiscriminate felling of trees, there was a marked decline incocoa production. 44. Cocoa, which used to be the main income eamer for households (73 percent in 1999 as opposed to 66 percent in2000) and which was selling on the international market at prices higher than US$2000/tonc.i.f., experienced a 50-percent price cut ina declining trendthat startedin 1998.Thus, the cocoapasteproducedby farmers plungedto Dbs. lOOO.OO/kg from the Dbs.2,300.00 price at whichit hadbeen sold, causing a drastic income losses. 45. Inrespect o f food crops, despite efforts madeby farmers to diversify their production to obtain new and additional income (banana, taro, millet, cassava, fresh horticultural products), they didnot receive proper compensation given the distribution andmarketing constraints. 46. Inthe area o f environmental protection, the fact that certain legislative (regulatory) measureswere not taken ina timely mannerresultedincritical problems for the sector, namely: a. In the use of foresty resources: - i)over-exploitationofshadeforestspecieswithhighcommercial value; ii) encroachment on forested areas to produce coal; iii) degradation of the systemof shading cocoa crops, causinga violent attack o f cocoa thrips in 1998; iv) escalation inthe number o floggers usingchain saws andcausingmassive waste inprocessingthe wood (65-70 percent); b. I n the environment: NATIONAL POVERTY REDUCTION STRATEGY , .-.. ..-..-..-. .. ..-.. - _ _ - . -. -..-.._.. . . . ., -. - _ _ - _ _ , -.. ,-..-,, .- -. .._.. ..-..-.. - - . .. - - .-. .-. .-..- ..- . -14... - i)deforestationofmountainslopestoplantfoodcrops,thereby increasing the incidence o f erosion; ii)improper land use without taking into account the land's production potential; iii)loss of biodiversity. 47. The rich and varied biodiversity o f flora and fauna i s under threat. The wildlife i s becoming less diverseand the dense forest i s thinningout because its use has not been properly thought out or controlled, and this has led to its impoverishment. 48. As regards livestock rearing, despite major efforts targeting the sector-the significant local genetic potential, good natural pastureland, and the introduction o f better grasses and animal feed for the different species-, the sector has not significantly improved, not only interms of farmers' yields, but also interms of daily diet. The vast majority o fhouseholds in farming communities (86 percent) eat meat less than once a week. 49. Infishing, fishermen didnot fare well. The coordination and organization of interventions inthe field under the various infrastructure programs and projects did notwork out as was expected. 50. The emergence o f an agriculturalclass with little or no capital raised doubts about how these new agrarian structures could be financed to enhance the value o f the land distributed and intensify the process. 51. From 1997 onward, access to credit through decentralized rural funds was limited to short-term financing, without taking into account the objective needs of the farms and the respective recipients. 52. The difficult living conditions inrural areas had a negative impact on women, particularly those receivingplots o f land. 1.4.2. Socially 53. 54. 55. District 1999-2000 SchoolYear 2000-2001 SchoolYear Agua Grande 39 percent 40 percent Me-Zbchi 26 Dercent 25 Dercent Cantagalo 9 percent 9 percent CauC 4 percent 4 percent Lobata 10Dercent 11Dercent ..-..-.. . .-..-. . .. . - - -..-..-.N. AT10.- N-.AL. -..POVERTY..-.RE.-.DU..-.CTI. 0N.-. -ST-..RATE..GY -. .. .-. . - .-..-..-..- .-.. - . .-. - . .. -.. --..-..-..-..-..-..-..-..-..-..-. .-..-15.., .._ 1 District IPrinci~e II1999-2000 SchoolYear 12000-2001SchoolYear 4 Dercent I 4 Dercent 1I Source: Preliminary Study o f the School Map, 2000 56. The existence o f secondary schools inall the districts of the country does not mean that they are easily accessible to the entire school-age population at that level of education. Geographic dispersal, poor accessibility, the scarcity and highcost of transportation, are factors that determine accessto education. 57. All school facilities are overcrowded, and the state has been unable to ensure that buildingsare repaired and that more are constructedto meet the growing demand. 58. Teachers at almost all levels o f education have a relatively low level o f academic qualifications overall, and have practically no teacher training. 59. Virtually nonexistent public transportation and the sometimes considerable distances that children have to travel are conditions that affect their attendance at classesand are at the root o f the highproportion o f school dropouts. 60. Inthe area of health, the main problems arise inprevention o f such diseases as malaria, acute respiratory ailments, and dysentery, which are the main causes of mortality and morbidity inthe population. 61. Malnutrition i s also one o f the primary causes o f death among children under 5 years old, estimated at around 15 percent. 62. Nutritional anemias-iron deficiency-resulting inlow hemoglobin levels have been detectedinmore than 60 percent o f the population surveyed. The index o f premature births(low birth weight) stands at 15.2 (MICSi2000). 63. Furthermore, the supply of drugs in S2o Tome and Principe i s flawed and unstable. The drug supply system i s affected by a number o f deficiencies within the health system. 64. Up until 1960,60.9 percent o fthe population o f S2o Tome was inthe 15-59 age group. This trend was reversed in 1970, with the result that 46.9 percent o f the population was inthe 0-14 age group in 1991 and 42.1 percent in2001. 65. This proportion of youth inthe populationadded to the over-65 population (4.4 percent in 1991and4.3 percent in2001) led to a highdependencyrate (51.3 percent in 1991). A young populationalso impliesgreater demand for infrastructure and social services and heavy pressure on the labor market. 66. The urbanizationprocess i s observable mostly inthe Agua Grande district, followed by Me-Z6chi. The Agua Grande population grew from 15 percent o fthe total populationin 1960 to 36.5 percent in 1991 and 37.7 percent in2001. According to the last census, the populations o f Agua Grande and Me-Zbchi combined represent 63.2 percent of the total population. 1.4.3. Politically and Institutionally 67. Throughout the last 12 years, there have been repeated institutional conflicts and longperiods of political instability. The country hadbeen throughnine different govemments by October 2002. . ..-..-..-,.-.. .. ..-..-..-..-..-..-.. -.. - - - NATIONAL POVERTY REDUCTION STRATEGY -._.._. .-. ..-..-,.-, .-.. . ..-..-..-.. .._ -.._..-..-..-..-.. ..-.._.._..-. .-.._.._ ..-.,-.,-. .. __ - __ - .. - 16 _ _ 68. As a consequenceo f successive crises and the inabilityto make decisions, the state has lost its authority and public order is not well maintained. Ill-adapted democratic institutions and weak decision-making power 69. The current number o f deputies inthe National Assembly i s not consistent with the need for a more efficient state apparatus, based on arealistic view of the country, the size of the territory, its population, and currenteconomic and financial capacity. 70. The changing governments, all with different compositions, are followed by appointments, dismissals, and reassignments of technical staff inthe ministries. Partisan political motives, cronyism, nepotism, favoritism, and family ties take precedence over criteria o f competency and seniority. 71. The courts face a lack o f qualified professionals, reduced budgetary resources, insufficient or inappropriatephysicalresources and equipment to perform their functions. Although the law on the creation o f the Audit Court has been passed,the court i s still not functional. Poor management of public assets 72. Inthe General State Budget, expenditure i s not always programmed based on specific objectives definedinaccordance with priorities. There i s no rigor inthe commitment of current expenditure. There is no guarantee o f transparency inthe procurement of goods and services and the award o f contracts for public sector agency or institution projects. Local government institutionsreceive aid from their counterparts underpartnership or twinningarrangements, over whichthere i s no control. Inadequate decentralization system 73. Now, a decade after the start o f the decentralizationprocess, local political and administrative structures have not been able to provide effective support to the population insolving its problems o f law and order, housing, and employment. 74. By law, local and regional elections take place every three years. However, after the local elections o f 1992 and the regional elections o f 1995, no other local govemment elections were held. 75. It has been realized that the way the country was divided i s not realistic for an area 1001km2, with less than 140,000 inhabitants and limited available resources. Limitedpublic administration capacity 76. Public administration is characterizedbyinefficient service, weak decision-making capacity on the part o f managers, no criteria on relationships and on accountability inthe organizationalstructure o fthe units, insufficient skilledprofessionals, low wages, nonobservance o f working hours, frequent absenteeism, lack o f ethics in service to the public. 77. Since 1997 a new civil service statute was adopted (Law 5/97). However, there are still periodic changes inthe structure o f units as their managers are transferred, and the criteria for personnel training are unclear. The statute itself i s considered to be poorly thought out andneeds to be reviewed. NAT10NAL POVERTY REDUCTION STRATEGY - 17 Little participation by civil society 78. Economic initiative groups and associations to lobby for or manage infrastructure and public services have beencreated. Although some participatory efforts in cultural, social, political and economic life are remarkably dynamic, civil society continues to be poorly organized andnot very active. 79. A telephone network covers virtually all inhabited areas butpoor people still have limited access to it. The use o f Internet services is restricted mostly to senior public administration officials, the private sector, and a very small percentage of the urban population mostly resident inthe capital, though the number of users increases annually. 80. Radio continues to be the best means of communication. About half o f all households have radios. The reviews are more mixed for the written press. As a significant portion ofthe population is illiterate, one media challenge inthe poverty reduction strategy is to tailor informationand radio and television programs to the specific target groups. 2. POVERTYREDUCTIONSTRATEGY TOWARD 2015 2.1. Strategic vision in the short, medium, and long terms 81. Taking into account the main determinants ofpoverty andbasedon an optimistic scenario derived from national long-termperspective studies, the strategy seeks to significantly reduce poverty by the horizon of 2015, through optimal use o f the country's human, natural, and physicalresourcepotential, as well as bilateral and multilateral cooperation. 2.2. Overall medium-and long-term objectives 82. By implementing the actions establishedineach o f its pillars, the strategy should achieve the following overall medium-and long-term objectives: - Reduce the percentage of the S9o Tome population (53.8 percent) living in poverty to halfby 2010 and to less than 113 by 2015; - Provide access to basic social services for the entire populationby 2015 and promote improvement inthe quality of life; - Considerably reduce the social and gender gaps between the districts in SBo Tome and between these and the autonomousregion of Principe. 5. The actions under the differentpillarsof the strategy are responsive to the targets set inpursuit o f the MillenniumDevelopment Goals (MDGs), provided that the government i s committed to the process of reaching these targets. 2.3. Basic pillars of the strategy 83. Besides recognizing that economic growthi s key to poverty reduction, giventhe effect it has o f creatingemployment and income that canbe invested insectors which directly or indirectlyhelpimprove the living conditions o f the poor, the promotion o f a policy o f good governancewas selectedas an absolute priority. 84. This strategic option seeks to respondto the needto consolidate the democratic rule of law and defend human rights, customize andbuildthe capacity of institutions and public administration agencies, strengthen mechanisms for accountability and reporting, and promote a culture ofparticipationby citizens inmakingdecisions to solve their problems. 85. This choice o fpriorities seeks to ensurethat the conditions are present for a viable commitment to the poverty reduction strategy and to making any adjustments required as the socioeconomic situationandlevels o fpoverty inthe country change. 6. Thus, apoverty reduction strategy inS9o Tome and Principe revolves aroundthe following five basic pillars: - Reforming public institutions, capacity buildingandpromotion o fa policy o f -- Accelerated andredistributive growth good governance Creating opportunities to increase and diversifyincome - - Developing humanresources andaccess to basic social services Mechanisms for monitoring, assessing, andupdatingthe strategy ..-. ..-,._., ..-..-..-..-..-..-..-..-.. -..-.. ..-..-.. -..- ..-.. ..-..-. _ _ - NAT10NAL POVERTY RED, UCTION STRATEGY - - -..-.._..-.._.-..-..-..- . ..-..-.. .. .. .. .. ..-..-..-..-.._.._..-..-..-. - - - - - 19 2.3.1. Public institution reform, capacity building, and promotion o f a policy of good governance 86. Inlight of the current situation, the pillar o f the strategy that refers to promoting good governance to reduce poverty over the medium and longterms (by 2015), revolves around the need to: -- maintain political stability; consolidate democratic institutions; - strengthen transparency and accountability inthe management o fpublic assets; - amend policies on decentralization and reorganization of regional and local governments; - promote active involvement o f the private sector and civil society in the design and execution of measuresthat benefitpoor populations; - highlightthe role o f communications and informationinthe process o fpoverty reduction. 2.3.2. Accelerated and redistributive growth 87. Agricultural development i s and should continue to be an essential component o f growth, diversifylng production, marketing, employment, and stemming the tide of rural exodus. 88. The recovery of the productive sectors i s based on the following three poles: development of the primary sector as a factor inincreasing nationalproduction, creating employment, and diversifylng the secondary sector; enhancing the development o ftourism and fishinginthe archipelago; promoting new sectors o f export-oriented growth. 2.3.3. Creating opportunities for increasingand diversifying income 89. Inthe next 15-20 years, the fundamental objective of all government action inthis regardshould be, first o f all, to establish a stable economic and institutional environment by definingpolicies that areproperly framed anddesigned to build and develop rural and urban areas, andwhich revolve around: - -- guaranteedfood security; production growth and diversification; improved socioeconomic conditions for people in rural, urban, and peripheral --- areas (small villages and localities); naturalresource conservation; promotiono fwomen and youth; development of export capacity. 2.3.4. Developing human resources and improving access to basic social services Education, Literacy, Training 90. The strategy targets the following overall objectives for education, literacy, and training: - eradicate illiteracy; ., , -.-..-.. __. .-..-. -. NAT10NAL POVERTY REDUC T I0N S TRATEGY 20 , -,.-. .-..-..-..-..-.. -..-.. -.. _..-,. _.._....-,._..-..-..-. .-..-.. . . .-.,-,, ..-..-..-.._..-..-..-.._.-..-..-.._..- .-..-..-... - __ - . - make school enrolment mandatoIy for 6 years; - provide equal opportunity for entering and completing secondary school; - train human resourcesto meet the country's development needs. 91. Some guiding principles for implementation o f the reforms to achieve these objectives, taking into account the needto reduce poverty: 0 addressthe problems inorder o f priority; 0 base decision-making on reliable data and information; 0 view capacity buildingas one o fthe stakes (training, modernizing services, improving management); 0 promote the principle of responsible solidarity. Health 92. The strategic vision of the health situation involves a qualitative improvement in the state of health o fpopulationsand their well-being. To that end, it i s based on the NationalHealth Policy (PNS), which recognizes that healthcare is a social good and therefore a factor o f development, socialjustice, and poverty reduction. 93. The national health system will have to guarantee the health o f the population of SZo Tom6 by formulating and implementing policies that seek to reduce the risk o f disease and other ailments, establishingthe conditions for universal and equal accessto interventions and services that promote, protect, restore, and maintain health, mindfulo f the determinants and prerequisites for such well-being. 2.3.5. Creation of mechanisms for monitoring, assessing, and updatingthe strategy 94. Basedon past experience with laudablebut costly initiatives which fell by the wayside, namely the National Long-Term Perspective Study, there i s a risk that ad hoc initiatives will take precedence over requirements for consistency in monitoring, assessing, and constant updating, which the nationalpoverty reduction strategy requires. This legitimate concernjustifies the inclusion of mechanisms for monitoring, evaluation, and updatingo f the strategy as another strategic option. 2.4. Risks o f the strategy 95. First, it requires political stability and the normal functioning o f institutions, which are also intrinsic components o fthe strategy itself. Itis important that, inthe short term, the causes o f the institutional conflicts that occurred inthe past be removed. 96. Secondly, to attain the objectives o f this strategy, there mustbe involvement and commitment on the part o f all the organs o fsovereignty, as well as the principal agents of development, bothpublic and private, to creatingthe momentum for implementationo fthe various stages of the strategy, ina participatory, coherent, and organized framework, without losing sight o f the needfor systematic control, NATIONAL POVERTY REDUCTION STRATEGY 21 whichis difficult to achieve insituations where confidence inand among members o f the executive branch has been eroded. 97. The participation/commitment o fbilateral and multilateral partners is also of paramount importance, as they must make available the necessaryresources and other support for funding and implementation at each stage. 98. And, finally, inview o f the fact that initiatives inthe area of oil are ongoing, there i s the risk o f conflict with certain actions taken under the new guidelines for governance, which are incompatible with the strategic vision advocated for poverty reduction within the established time frame. 99. These risks may still be overcome, as long as the political will for implementation remains firm, and providedthat efforts at consensusbuilding among various social agents are revivedinorder to reach a consensus onpriority actions ineach successive stage. . ..-. _ _ _ _. _ _._ _..- -..-..-.NATIONAL ..POVERTY. ..-..-. -..-. .-. ..-.. -..-..-. .-.. -..-.. - ..- .-.._ . .- .-.._..-. .-..-..-..-. REDUCTION STRATEGY .-..-..-..-..-..-..-..-.._.22. 3. PUBLIC INSTITUTION REFORM, CAPACITY BUILDING, AND PROMOTION OFA POLICY OF GOOD GOVERNANCE 3.1. Consolidation of the democratic ruleof law 100.Prerequisites of consolidationo fthe democratic rule o flaw are: - Broad consensus on constitutional review, inorder to clarify ambiguous provisions, namely those conceming the separation of powers and functions o f each organ of sovereignty, and to remove potential sources o f conflict among institutions; - Restoration of the authority o f the government by buildingcapacity for law enforcement and maintenance o f public order ina democratic society, and through initiatives to inform the public and raise awareness about standards of civic and moral conduct; - Reorganizationof the NationalAssembly based on acceptance by consensus of the needfor it to be commensurate with the size of the country andto guaranteeeffective representationinaccordance with the most realistic political/administrative divisions.Inthat connection, serious thought needs to begivento defining thejob profile o f a deputy, inorder to guarantee more balanced representation o f the various constituencies or electoral districts. - A respectable and proportionally representative number o fwomen shouldbe encouraged and become the norm. Furthermore; this position should be strengthenedwith training initiatives to ensure that parliamentarians are qualified inthe different areas that require their interventionwithinthe framework of the National Assembly's specific missions, includingthose o f its various commissions. - Design and establishment by law o f the composition o f government, basing the demands o f central government on economic, social, and cultural realities and on the humanand financial resources available for its effective operation. With thisinmind,the keyministries that mustbepartofthe composition ofany government should be determined. - Strengthening of the judicial system and structures, with a view to promoting theireffectiveness, closer contact with vulnerable andunprotectedcitizens, and public confidence inthe independence ofthejudiciary. For this purpose, it i s imperativethat thejustice systembe treatedwith the dignityit deserves, as well as its magistrates, administrative, or technical personnel. Administration ofjustice inthe context o f strategic poverty reduction should not only give precedenceto the protection o fbasic humanrights and guarantee safety, butit should also help promote the equality o f citizens before the law, combat gender discrimination, violence against women, and corruption. 101.This brings to mindthe militaryand paramilitary forces inparticular. The problems theyposeinthe context o f a small, insular country shouldbe given special attention and should be the subject of an exchange o fviews among the diverse actors inthe country's political, social, and economic life. NATIONAL- POVERTY REDUCTION STRATEGY - 23 102.This exercise inreflection should lead to the adoption of a country-specific strategy o f national defense, which i s compatible with poverty reductionefforts and facilitates the offering by consensus of apackage of services that would effectively guarantee the sovereignrights of the nation of SZo Tome. 3.2. Promotion of responsible, effective, and transparent management of public assets 103.Public asset management i s one of the areas where results could determine whether intervention i s targeted to the poorer or more vulnerable social groups. 104.Butinefficient managementofpublic assets and deficiencies inthe functioning of the courts are usually cited among the problems facing the country. 105.Thus, for good economic govemance consistent with the goals o fpoverty reduction, a national poverty reductionstrategy must includethe following measures: - "Broadcast" through the media and other means of communication, the importance and need for responsibility, transparency, and accountability inthe management of public assets; - Strengthen the mechanisms for preparation, drafting, approval, and execution of the General State Budget, taking into consideration that budgetary choices musthave an impact on strategic poverty reduction actions; - Promote accountability and periodic reporting by government revenue collection departments; - Accelerate the establishment and operation of the Court of Audit and provide it with the human and physical resources that would enable it to function independently, particularly inthe areas of combating fraud and comption; - Proceedto inventory all public assets and allocate them to revenue collectors, who are responsiblefor regular accounting. 3.3. Adjust the decentralization process and reorganize local government 106.With a view to long-term decentralization, one mustnot lose sight o fthe size o fthe country, the number of inhabitants, or its economic potential, which should form the basis for mapping out the new political and administrative divisions, to avoid unnecessary costs associated with the proliferation o frepresentation structures at the local level. 107.Inthis area as well, problem solving seems to bemore affected bypoliticalwill than the obstacles encounteredinthe laws regulatingthe existing local govemment structures and operations. Taking the current situation into account, the strategy considers the following actions pertinent: - Review and/or update legal instruments, the Constitution, and the law on political and administrative divisions, which governthe organization, structure, and functioning ofthe local govemment authorities; \ .,-..-, -..-,._. ..-..-. POVERTY REDUCTION STRATEGY .-.. -.. -..-.. 24 ,-,, .- ._. . -NATIONAL -..-..-..-..- -. . -. ._.. . .._.. ..-..-..-. ._..-..-..-..-.. - .._.. . .-.. - - Urgent need to create a local govemment inspection unit, which is essential for the govemment to exercise supervision under the law. This unitwould have specific functions not coveredbythe existingFinancial Inspectorate; - Create mechanisms for internal coordination within government in response to the need to work together inland and environmental development; - Study and establish proceduresto execute the proposed deconcentration o fbasic social services for constituents inthe districts, and make these services more accessible to the public; - Define support mechanisms at the Chambers' request when they do not have their own resourcesto implement projects; - Plan, prepare, and organize elections at the regional and local government levels, with a view to reinstating regular democratic processes, respecting the will o f the electorate; - Support the local governments so that, inconjunction with the private sector and organized civil society, they can play a fundamental role in the socioeconomic, cultural, and environmental development o f the localities, takinginto account the aspirations o f the respective populations. 3.4. Resize and modernize public administration 108.Successive diagnostic studies o fpublic administration inthe countrypointed to a number o f institutional constraints, includingineffectivehumanresource management, unsuitable or unapplied administrative processes, poor statistical information systems, and weak coordinationo f aid. 109.An effort to reorganize and modernizepublic administration shouldreview inthe short and medium terms: - Adjustment to the govemment's new missions as it withdraws from the productive sphere; - Effective decentralizationof services, to bringthem closer to the public, taking into account capacity buildingto meet the needs o fthe population in reorganizing regional and local govemment services; - Precise guidelines on the mission and functioning o f each institutionto avoid overlapping; - Adequate staff development andtraining as needed for proper administration; - Acquisition of adequate physical resources and capital goods; - Institutionalization o fmechanisms for regular reportingat every possible level; - Wage levels that are more compatible with the qualifications demanded, as a means of instilling discipline and efficiency and overcoming vulnerability to corruption, and to restore the dignityof the civil service; ., . . . -..-. . - - NAT10NAL POVERTY REDUCTION STRATEGY 25 , _ _ __ . .._.._., .. ..-..-..-.. - - - -.._. -..-..-.. -..-.._..-..-..-.._.,-..-.._. . ..-..-. .-..- .-..-..-..-..-. -., - Mandatory organizationand periodic updating o f statistical data on developments inthe different sectors, with technical assistanceand supervision from the National Statistics Institute. 3.5. Promotionof civil society and its active involvement 110.With a view to revitalizing organized civil society and fostering its involvement in promoting good governance, inpartnership with the government and the private sector, the following mustbe taken into account: - Buildthe technical and organizationalcapacity ofthe representatives o f civil society byproviding concrete support, namely inthe areas o f social and cultural infrastructure (cultural and recreational centers, meetinghalls, libraries, etc.), credit and professionaltraining policies; - Development of a strategy for NGO intervention inresponse to poverty reduction strategy priorities; - Promote dialogue on questions requiring consensus; - Promotea public awareness and mobilization campaignthat would have the advantageo f enabling active involvement inall the issues concerning initiatives to improve the living conditions of the poor. 3.6. Development of mechanisms for access to informationand communication and promotion of a culture of participation 111.The strategy ofparticipationand communication regardingpoverty reduction in Si30 Tome andPrincipe will require close coordination with information, education, and communication(IEC) campaigns. Inthat regard, the strategy must envisage: - PromotinganinteractivecampaignofadvocacyandIECthatisbroadinscope; - Increasingtheaccessofpoorcommunitiestoinfomationsothattheycan participate inmonitoring local activities; - Improvingthe quantity and quality of informationthat reaches the public; - Diversifymgthe mediathrough the responsible contributions o fprivate agencies; - Improvingtheoperationofgovemmentagencies; - NormalizingtheoperationoftheSuperiorPressCouncil; - Incentivestopromotealoveofreadinginschoolsandcommunities; - Promotingtheuseofnewinformationandcommunicationtechnologies (NICT) inthe localities (mobile telephones, Internet, etc.). 112.More so than for rest ofthe national anti-poverty strategy, the success o fthis pillar inparticular ispredicated onthe promotionofa far-reaching andintensiveliteracy campaign, including education on healthand cultural, moral, and ethical values throughout the country (civic education). This action, combinedwith anextensive informationprocess, involvingthe media, will help improve the capacity for interventionby citizens andwill enhance overall participation. NATIONAL POVERTY REDUCT10N STRATEGY 26 4. ACCELERATEDAND REDISTRIBUTIVE GROWTH, ENVIRONMENT, AND MACROECONOMIC FRAMEWORK . 113.Divestment by the state, its liberalization o f the productive sectors, as well as its intervention as an implementer inthe infrastructure sector, creates considerable opportunities for the private sector, to the extent that the government fosters a favorable environment for private enterprise. 4.1. Stimulateprivate sector development 114.The main sections o fthe action planthat intersect withpromoting the private sector are: Deepening the reform of the legal andjudicial framework for business, namely byrevisinglabor law to adapt it to the new economy, revisingthe investment code, and implementinga set o f measures to improve the environment for the private sector, such as improving domestic transportation infrastructure; diversification and safety o f the means o f communication with the outside world; findingways to reduce factor costs; consolidatingthe banking and insurance sector; simplifying administrative procedures; or improving investment incentives; Developingtrade relations, leadingto a policy o f more open economic and financial cooperation, inparticular with the countries o f the subregion; Continued tax reformto make taxation simpler and more flexible for enterprises; Enhancing thejurisdiction o f the regulatory authorities and its applicability to telecommunications; passing acts implementing the law on competition; and establishingmarket regulation mechanisms; The government's commitment to a firm policy inthe mainpriority sectors, in particular agriculture, livestock, and tourism, with a view to augmenting growth, diversifylng production, diversifylngand increasingjob opportunities and income by means of suitable labor-intensive policies. 4.2. Savings and investment 115.All aspects o fthe economic and financial context, such as market size, limited infrastructure, low levels of saving, and an ill-adapted credit system have discouragedeconomic operators from investment projects. 116.Thus the government, inconjunctionwith civil society, will take action to create an environment conducive to private investment and domestic saving. 4.3. Sectoral strategies of the key traditional economic sectors and subsectors " 4.3.1. Agriculture 117.Given the magnitude o f the problems inrural areas, the strategy seeks to increase productivityto meet the challenge of substantially reducing the underdevelopment andpoverty of rural areas, basedonthe following: i. Diversifyagriculturalproductionandexports; Chapter 1ill(See Chapter 5: Opportunities to increase and diversify income for the poor). ..-..-.,-.. . .-. . - -..- .- .N.-.AT1 .-..-..-.._. .-..-..-..-..-. .-..-. 0NAL POVERTY RED.UCTION STRATEGY -..-. .-..-..-..-.. ..-..- .. ..-..-..-.. .. .. ..-..-. - - - - - -.. -27 .. ..-.. .. ... ii. Ensurerapid development of agricultural production on family farms; 111. Develop sectors related to agriculture (processing, transport, canning, marketing, services, and techniques, etc.); iv. Supportagricultural extension, acquisition ofinputs andfarm work animals, and their use inthe productive process; v. Establishand apply standards for the protectionofnatural resources; vi. Provide basic infrastructure; vii. Implement agricultural training. 4.3.2. Livestock 118.Development o fthe sector will be basedon small family farms andmedium-sized agricultural plants. Government intervention will have the following priorities: dissemination of techniques as a priority for farmers rearing small ruminants, poultry, and pigs; strengtheninghealthprotection; organizingthe supply of drugs; reinforcing localand general authority to take action againstrobbery and destruction o f productive areas by loose animals; adoption of an integratedposition on agricultural promotion; improvement of the conditions for preserving, marketing, andprocessinglivestock products. 4.3.3. Forests and forestry 119.The objectives inthis areaare to lay the institutional and technical foundations for overall effective forestry management; combat excessive anduncontrolledlogging; and ensure the timely renewal o f forestry resources. To achievethese objectives, the following strategic guidelines will have to be followed: review the legal framework for forestry management and strengthen the institutional capacity of the sector; promote operations involvingcommunity management of forested areas; adopt technical measures to replenish and conserve forestry resources. 4.3.4. Tourism 120.The government already has a Strategic Tourism Development Plan (PEDT), which envisages a market studywith one o f its guidingprinciplesbeing to make the sector one o f the key motors o f increasingand diversifylng the national income by 2005. 121.The objectives/strategies aim to significantly increase the sector's contributionto GDP, from 5 to 7 percent startingin2003, promoting tourism as oneo fthe sectors driving growth inthe mediumterm; develop employment directly inthe sector and maximize its spin-off effects; recognize the value of natural, architectural, and sociocultural resources; develop ecotourism and seaside tourism; createthe conditions necessary for the involvement o fprivate initiative inthe sector. 4.3.5. Industry and the production line 122.In'lighto f the situation inthe industrial sector, the primary sector-agriculture, livestock, forestry, and fishing-must remain one of the key components of growth, employment creation, and supply o f raw materials for agroindustry. This would make itpossible to boost government revenue and the opportunity for private enterprise, which would result inincreased value added and reduced unemployment andpoverty. ..-..-..-. .-.._..-.. -..- - .N .-. .. AT10N.AL. POVERTY REDUCTION STRATEGY -.-..-..-..-. .-..-..-..-..-. .-..-..-..-..-. .-..-. .-..-. -..-. .-.. ..- . -28. 123.The objectivesistrategies are as follows: to contribute to the acceleration of growth by diversifying production; to reduce the country's dependencyon export revenue from cocoa inorder to develop export flows ofnonagncultural goods and services; to reduce unemployment inurban areas by promoting activities centered on agriculture; to encourage foreign trade and investments; to provide support for income-generating sectors; to take action to incorporate STP inthe regional and subregional economic zones. 4.3.6. Fishing and fisheries resources 124.Given its potential, it i s necessary to establish a policy for the sector that seeks to increase its share of GDP as well as create employment, self-employment, and householdincome. As such, the objectives and strategies arethe following: contribute to the animal protein supply for the population; improve the living and working conditions o f fishing communities; create organizational and institutional structures adapted to the needs and realities of the sector, with a view to implementing the master plan for fisheries and to coordinating activities; create a strategic framework o f reference and buildthe sector's institutional capacity; develop the conditions for production and marketing of artisanal fishing; promote the balancedmanagement o f fisheries resources. 4.3.7. Infrastructure 125.The quantity and quality o finfrastructure for the various stages o fthe development process inRDSTP are key to the strategy of economic and social recovery. The guideline here i s enhancement o fthe capacity to manage, maintain, andpreserve infrastructure, proposing for the purpose apublic investment policythat i s fully consistent with production developmentpriorities. Telecommunications 126.The Telecommunications Master Planwas prepared in 1989and isbeingrevised, takinginto account the numerous changes intechnology andinternational regulations, as well as intemal institutional developments. Followingthe creation o f the S5o Tom6 Telecommunications Company (CST) in 1990, development o f the sector has been closely linkedto the concession contract signed with the Ministryof SocialInfrastructureandEnvironment(MESA), which grants a monopoly o fnew services to this operator for 20 years. 127. The objectives/strategies for development o fthe sector are: to enable the public and private parties involvedinthe sector to deal with the technological and economic risks o fthe telecommunications market; to improve the reliability o fthe network and the level ofnational and intemational telecommunications infrastructure; to reduce the cost o fmarket prospecting and rates as ameans ofhelpingbusinesses grow; to develop basic telephone services inrural areas; to provide incentivesto the private sector to invest inthe telecommunications sector; to improve the quality o f service o f localoperators; to reduce the cost o f international communications; to diversify the existing products on the market; to expand rural telephony and develop the regulatory capacity o f the government inthis sector. NATIONAL POVERTY REDUCTION STRATEGY 29 Energy 128.This i s one of the major problemsto be solved inorder to guarantee a sequential productive process andprovide energy to the population at an affordable cost. 129.Inrecent years, the government o f RDSTP made a great effort to increase potential thermal energy sources, having acquired generatorsthat substantially improve the energy supply for public lighting and household and industrial use. 130.The objectives and strategies are: to meet the population's basic energy needs; to help develop the productive sectors by introducingmeasures to guarantee supply and reduce the cost of the energy supplied; to produce energy with minimal foreign exchange expenditure; to strengthen the management capacity o f the water and power distribution company (EMAE), giving priority to technical maintenance services and enhancingthe independence ofthe company's management; to restore and establish the security o f the network; to optimize the economic advantages o f energy productionand distribution technologies; to review and progressively expand installed capacity. Water 131.One of Siio Tome and Principe's greatest natural resources is the abundance of water. There are probably some 12mineral water springs at various points inthe country, according to a survey conducted in 1990191. 132.The objectivesistrategies are: to increase accessby the populationto the public water supply system( U P ) by connecting households and installingstandpipes; to improve the quality ofthe water, particularly inthe EMAEnetwork; to develop infrastructure and determine environmental sanitation measures, inparticular as regards stillwater management, given the negative impact o f diseases such as malaria; to develop the existingurban drinkingwater supply system; to strengthen the capacity to protect water sources and control quality; to define a maintenance policy for AAP systems (EMAE, municipalities, settlements); to develop infrastructure for disposing o f solid waste and polluted water inthe major towns; to promote the construction o f stand-alone sanitary facilities (latrines) and hygiene measures inrural areas. Transportation and communications 133.The transportation and communications infrastructurewas builtincolonialtimes to support the productive structure o f the oldplantations. With the disappearance o f coastal shippingandrailroads on the plantations and inthe coastal areas o fthe country, the roads became the almost exclusivemode o f domestic transportation. 134.The objectives/strategies are: to repair andmaintainroads to meet the demands o f production (distribution of goods, especially) and society (access to remote areas); to strengthenthe marine network o f SZo Tome and Principe with a view to the integrated development o fboth islands; to develop international sea and air transportation inresponseto the needto diversify the economy and endthe archipelago's isolation; to define and implement a policy o f conservation o fthe primary roadnetwork (SENAE) andruralroads; to improve the operating capacity o f the S2o Tome port; to promoteprojects byprivate operators for the development o f sea transportation betweeneach o fthe islands o f the archipelago and between NATIONAL POVERTY REDUCTION STRATEGY 30 the archipelago andthe outside world; to liberalize air traffic; to enhance air safety; to develop planningcapacity inthe sector. 4.3.8. Nontraditionalsectors: free zones and oil 135.The studies and arrangements made inthe last 10years have shown that STP has two potential resources as yet unknownand unexplored: a prime location inthe Gulfo f Guineaandhydrocarbons. 136.Tapping these two potential resources, on the one hand, could provide the govemment with the revenue to establish a modem and efficient public administration and infrastructure and, onthe other hand, could createjob and income-earning opportunities conduciveto reducingpoverty. Free zones 137. Since the early 1990s, when successive governments started promoting activities related to fiee zones and recognizing their importance for the development o f the country, laws on free zones were passed. 138.However, the govemment needsto adopt effective policies to revive the process o f activating the fiee zones and, as part o f its functions, the Free Zone Authority must proceedto gradually develop activities and services that would take advantage o f the archipelago's geographic location. Hydrocarbons(oil, natural gas, etc.) 139.The existinghydrocarbonpotential and its commercial viability are not yet known for sure. InMay 1997, an agreement was reached between the govemment and the US.firmERHC, resultinginthe establishment ofa mixed capital company (49 percent ERHC; 51percent STEPETRO, representing the state). Within the framework ofthat agreement, ERHC gave the government US$5 million, which was budgetedin 1998 and 1999. Next, a contract was signed with MobilNew Exploration Ventures Group, which conducted seismic prospectinginJanuary 1999. A technical commission on oil was also establishedwith a view to studying the case anddrawing up amanagement strategy for the SHo Tome economy inthe oil age. 140.To date, negotiations have already been conducted culminating inthe demarcation ofmaritimeborders withneighboringcountries, namely Gabon and Equatorial Guinea. Inaddition, the STP govemment has already had negotiations with Nigeria concerning the problems relatedto oil exploration in areas considered to be common, andjoint exploration i s under way. 141.This leads us to conclude that, for the fbture, the economic growth o f STP will dependnotonly ontraditional resources, external aid, andforeign investment, but also on resourcesfrom the exploration o fhydrocarbons. 4.3.9. Trade, international, regional, and subregionalintegration 142.The importance o ftrade inthe SHo Tome economy is all the more significant becausethe primaryand secondary sectors o f the economy are not ina position to produce enoughto satisfy all the population's needs for primary commodities and other goods. NATIONAL POVERTY REDUCTION STRATEGY - 31 143.Inthis context, the country's economic openness i s a key to its development. For this reason, along with sectoral policy action, there must bean overall strategyto enhance RDSTP's integration inthe regional and world economy. 4.3.10. Environment 144.RDSTP has very little land space, only 1001km2. Its temtorial sea i s not extensive and the exclusive economic zone i s vast. Ineach of these zones, there are inert substances and marine life that the country requires to meet its many needs: trade, food, housing construction, medicine, etc. Some of these natural resourcesare renewable and others not, hence the need to conserve the nonrenewable resources because their total disappearance would be very damaging for the future of the country. 145.The objectivesistrategies are: to preserve the forests, which have considerably deterioratedas a result o f tree felling without replanting new species; to protect the coast, where the problem i s the removal o f sand for construction; to preserve the countryside, fauna, and architecturalassets, which are essential to the quality o f life of the population and to a policy oftourism development. 4.4. Macroeconomic framework 146.The recent economic history o f Siio Tome e Principe reflectsthe importance the authorities have placed on a stable macroeconomic framework for economic growth. Inearly 1998, a series o fmacroeconomic policy and adjustment measures were implemented, which contributed to fiscal consolidation, reducedinflation, advanced the process o f liberalization o fthe economy, and lowered the differential betweenthe exchange rates on the official and parallel markets. 147.Despite the progress made, the external vulnerability of the economy continues to be a concern. The burden o fthe public external debt i s highandper capita income i s very low, in addition to which, structural problems continue to poseproblems for economic growth andprivate investment. 148.Underthe strategy, poverty reduction will only be possible through real GDP growth, for which the participation o f all sectors o f the society, particularly those that can generate income and employment opportunities for the poor i s vital. Access to credit andproductive assets i s also extremely important. 149.The economic growth strategy i s based on expansion of the private sector and diversification o fproduction. The public sector i s still dominant and accounts for almost 70 percent o fnationalproduction. The challenge isto create conditions that would enable the private sector to be the engine o f growth and employment creation. For that purpose, a broad-based privatization programhas already been put inplace, a new investmentcode hasbeenprepared, andmore extensive and business-friendly fiscal reform is about to be concluded. 150.With a view to increasing export revenue and creating new employment opportunities for the poor inthe ruralareas, the govemment prepared sectoral strategies for the agriculture, infrastructure, andtourismsectors. 151.To facilitate accelerated economic growth, the government will make its policies within amacroeconomic equilibrium framework derived from structural reforms ..-. .-. . ._.. _ _ -..-..-.._.._ ..-..N-.AT1-.0._ ..- .-.. N..AL POVERTY REDUCTION STRATEGY -. .-,,-.. -.__..-. .-.__ 32 , .-..-. .-..-. -.._. . . _ _.. -.-..-..-..- .-..-. .-. .-. .-.. that target private sector development and economic diversification. The medium- term macroeconomic framework (2003-2005) sets the GDP growth rate at 5 percent for the period and projects a reductionin inflation from 9.2 percent in 2002 to 8 percent in2003 and 4 percent in2005. The nominal exchangerate will continue to be market-determined. By adopting these objectives, the government will create a favorable environment for the NPRS and will reach decision point under the HIPC Initiative more easily. 152.The government will give the highest priority to ensuring that the primary deficit i s inlinewiththe macroeconomic framework. This objective, which guaranteesfiscal discipline, diminishes the threat o f inflationresulting from the scarcity of financial resources inthe country and the limited capacity to absorb expenditure, and also creates an environment conducive to the development ofprivate sector activity. 153.For the period 2003-05, fiscal policy will be conducted with a view to maintaining the primary deficit, including the HIPC Initiative, at 7 percent o f GDP. To attain this goal, the government will continue its efforts to raiserevenuefrom oil-related activities and will adequately control primaryexpenditure. As regardsrevenue, the tax system i s to be simplified and tax and customs exemptions will be limited. Financial and customs inspection and audit unitswill be strengthenedto better combat fraud and corruption. Onthe expenditure side, the government will prioritize programs relatedto poverty while current expenditure, exclusive of interest, shall be set at 10percent o f GDP for the period 2003-05. Wage bill expenditure will be set at 9 percent o f GDP. 154.The reduction ininflation, which most heavilypenalizes the poor, will bebacked by the central bank, which will controlthe growth ofdomestic assetsby sterilizing a large proportion o f the resources coming from the oil sector. Credit to the private sector i s expected to increase in line with the economic growth estimated inthe Poverty Reduction Strategy and also bymeans o f openmarket operations to be started in2003. Inthis way, broad money would increase at arate consistent with the maintenance o f gross intemational reserves equivalentto four months o f imports. To that end, banking supervision will be enhanced. 155.The structural reforms prepared with the assistanceo f the IMF and WB, include a wide range o f measures to make public policy more efficient and transparent. These include, notably: privatization ofpublic enterprises; continuous adjustment of the prices o f oil derivatives, as well as water and energy, to reflect production costs while protecting the most vulnerable groups; and various reforms to strengthen the education andhealth services. 156.The S5o Tom6 and Principe economy couldbe dominatedby oil-related investments. The government estimates that the licensing round for oil exploration inthejoint exploration zonewithNigeriacouldtake placein2003; investmentsin oil explorationwill be steppedup in2003-06 and exploration will begin in2006. Duringthat period, the current account deficit (excluding officialtransfers) maybe four times greater than GDP with massive flows o f foreign direct investment. As offshore oil exploration and funds go into a special account, the inflationary pressure will be minimizedand the dobra, inreal effective terms, might even appreciate slightly. . . _ _ _ _.. -. .-.._..-..-..-..- . _. NAT10,-,,AL POVERTY REDUCT10N STRATEGY N -. .-. .-.. ..-.. - - _ _.._ .,-..-. .-,.-..-.. ._.. _..-..-.. -..-..-.. .-.. 33 . 157.The government i s determined to distribute the wealth derived from oil exploration equitably between this generation and future ones. Considering that o i l reserves are limited, the government has firmly decided to conserve this wealth for future generations as well. To that end, there will be transparent management o f the fund inwhich all incomefrom oil exploration willbe deposited and the results o fthe periodic audits will be published.Basically, the government intends to ensure the efficient, transparent, and effective management of these resources, which contribute to reducingpoverty, improving living conditions for citizens, and guaranteeing saving, within the framework of action envisaged for sustainable and lasting human development. 158.Inthe short and medium terms, S5o Tome and Principe will continue to depend on extemal assistance and concessional credit to finance its extemal account deficits, which are clearly manifested inthe wide gap between imports and exports. Overall, the export diversification strategy could improve the trade balance. There are already some promising results, for example, inthe production o fbeer, palm oil, flowers, fish, taro, coconuts, and tropical hit, inaddition to small ruminants. As longas the situation continues to be delicate, S5o Tome and Principe will needthe support o f the international community to finance the balance o fpayments deficit. The required flows o f assistance are estimated at US5.1million for 2003, US$4.8 million in2004 and US$4million in2005. These inflows o f capital will be supplemented by direct foreign investment. - NAT10 NAL POVERTY REDUCTION STRATEGY 34 5. OPPORTUNITIESTO LICREASEAND DIVERSIFYINCOME FORTHE POOR 159.The strategy to achieveprogressive development o f the poor population will have to be implementedby the sectors and subsectors o f agriculture, livestock, fishing, industry,trade, tourism, and servicesandrevolves aroundsix major objectives, namely: 1) Increased and diversified production; 2) Guaranteed food security; 3) Improved socioeconomic conditions for the population inrural, urban and peripheral areas (small villages and localities); 4) Conservation ofnatural resources; 5) Developmentof women and youth; 6) Promotionof goods and services exports. 5.1. Increased and diversified production 160.The rural world is the greatestemployer (over 50 percent) andvirtually the sole producer o f export revenue, but it also has the highest incidence o fpoverty. As a result, the government i s stepping up anumber of measures inpartnership with the local govemments and nongovernmental organizations (NGOs) ineach district with a view to: - Fosteringeconomicactivitiesthatgenerateemployment, self-employment, income, promotingthe emergence and development o fmicroenterprises in agricultural, livestock, and forestry production, industrial processing, cottage industry,trade, and services; - Helpingto improve the population's diet byincreasingproductive activity, technical-occupational training, education, and health; - Reducingthe socioeconomic disparities betweenthe two islands and the various districts, seekingto adopt aplan ofphysical landmanagement inwhich spaces in the national temtory will be used, to the extent possible, in accordancewith their environmentaladvantages, natural suitability, and socioeconomic infrastructure; - Creating four poles of socioeconomic development inaccordance with the nationalphysical development plan and the natural and humanpotential o f eachdistrict, namely inthe capital, inLemba, inPortalegre and inthe autonomous regiono fPrincipe; - Supportingpoliciesonurban and environmental development, and restructuringof rural areas; - Developingferryservices; - Acquiring the proper equipment to supply the necessary energy for each stage o f general andagroindustrial development; ..- _ _. __.-. -. -.. . . , _. .-..-..-..N-AT1 ..-.. ..-.._.. ..-.. .. - 0NAL POVERTY_.REDUCTION STRATE.GY - - -..-..-..-.. __ - __ - .-, .. ..-. .. ..-..-.. .. - -..-..-. .-..-. -.. -.35-. . - Implementingan imgationprogram that includes the constructionofreservoirs (micro-dams) for use when rainfall i s low and inperiods o fprolonged drought, taking steps to prevent the possible negative effects on publichealth, such as the proliferation o f mosquitoes, which are vectors o f malaria; - Supporting small farmers ingaining access to factors o fproduction; - Regulatingthe ownership rights of small farmers who receivedplots of land; - Providing incentives, credit, support with agricultural implements, and extension; - Furthering customs, fiscal, financial, and agrarianreform; - Laying the foundations o f a new model of infrastructuremanagement, in particular inthe water, energy, and communications sectors; - Implementingfreezones; - Rehabilitating the social and economic infrastructure (highways, rural roads, water, energy, sewage, research and survey stations); - Exploring the country's naturalresources ina balanced andrational manner; - Reviving and makingprofitable the former training centers that still exist (CATAP, Agua Ize, Uba Budo, Polytechnic Center, and others). 5.1.1. Guaranteed food security 161.Food security mustbe achieved by increasinglocal food production, better distribution o f food, adoption o fpolicies to reduce the prices o f localproducts, increasing their supply while maintaining quality so that they can be competitive with other imported goods, and education for consumption o flocalproducts first and foremost. 162.Per capita food production will grow at a rate higher thanthe population growth rate, resulting inbetter incomes for ruralpopulations and, consequently, greater access to importedcommodities. This objective will be attained through: a) Support for marketing, preserving, andprocessing offoodstuffs, improved quality and sanitary conditions; b) Improvement in storage, conservation, processing, and marketing systems for foodstuffs, exploring new regional and international markets; c) Incentives and support for horticulturalproduction, making good-quality seeds available and disseminationof appropriate technologies; d) Incentives or support for livestock production, focusing on small animals through a developmentplanthat includesimproving the stock and distribution o f animals to farmers, and dissemination ofhusbandry techniques; e) Improvement inthe varieties o f crops and cultivationtechniques used through research and extension; . .-.._..-.____-. .__. ._.._.. -.N _. .-..-. .-__-..-, .-. __ AT10NAL POVERTY REDUCTI0N STRATEGY . .. -..-..-.._ . . - - .. -.. ._.. .. ..-.. - - - - .36.. f) Research and experimentation into animal feed rations, basedon local components; g) Government financing, inthe form o fincentives, to develop, repair, and construct social welfare infrastructureinrural areas; h) Support for supplies o f inputsand other materials. 5.1.2. Improvementinthe socioeconomic conditionsof the populationinrural, urban, and peripheralareas (smallvillages and localities) 163.The social development o f the poorest peoples well as an increase intheir material well-being through education, skill, and health levels i s a good way to channel the nation's financial resources into creating basic infrastructure and eveninvestment inagriculture, forestry, andlivestock, and inother activities, suchas fishing, small processingindustries, cottage industry, and tourism. This couldbe apowerful and compelling stimulus for poverty reduction inthe country. 164.Inthat connection, there must be coordinated and intense action on the part of all public services to: - improve the conditions o fhouseholds and housing; - ensure the social development ofwomen and children; - implement small local projects, change the current diet, and educate the population on hygiene, sanitation, and public health; - establish an adequate network of child care centers andprimary healthcare units; - guarantee access to basic education for children, particularly girls; - develop literacy courses for adults; - improve the conditions o f occupationaltraining; - orient underemployed manpower toward other activities; - offer incentives for the constructionandor rehabiIitation o f water distribution systems thereby eliminating the supply o f water from rivers, and o f toilet and washroom facilities so that the population needno longer meet its physiological needs inthe open air; - motivate people tojoin the socioeconomic process; - disseminate and develop cultivation methods for traditional products and new products that would rapidly improve daily diet andhousehold income; - promote social mobility andoccupational training by all available means, namely a large-scale educationprogram covering all levels, creation of a network of accelerated occupationaltraining centers, and establishment of a coherent policy on employment and wages; - reduce regional imbalances by transferring to the districts the capacity to research and make decisions on interventions; - guaranteepublic accessto quality healthcare. NAT10NAL POVERTY REDUCTION STRATEGY 37 5.1.3. Conservation of natural resources 165.This objective seeks to maintainthe natural resourcebalance through acceptable levels o fuse of these resources,taking into account their rate of renewal. Inthe forestry sector, in addition to the objectives already stated, the following policy measures for growth must be taken: a) Ensure the renewal of forest resources; b) Meetthenationaldemandfor wood; c) Restructurethe wood cutting industry; d) Promotetree plantingon distributed plots ofland, usingspecieso feconomic interest that are already adaptedto the conditions inthe country, in combination with the plan to combat erosion. 5.1.4. Development of women and youth 166.Regarding youth, the needfor a development strategy i s recognized and the following actions must be studied and implemented: 0 a credit system for youth to carry out income generating activities, namely manufacturing craft products, creating microenterprises, livestock rearing, small processing units, small stores; e occupational andjob market training; 0 creation o f youth cooperatives for production and marketing. 167.Concerning women, in addition to the measures articulated inthe previous points, the following i s envisaged: - introduction of a national micro-credit program for rural women and those inthe informal sector; - support for the establishment ofproduction andmarketingcooperatives, and for strengthening the existing associations; - development o fliteracy and occupational training programs inthe agricultural, commercial, industrial, and services sectors; - better understandingo f the status o f women inthe informal sector; - establishment o fcommunity childcare centers in various regions of the country. 5.1.5. Promotionof goods and services exports 168.Owing to the small size o fitspopulation and their purchasingpower, the country's domestic market cannot absorb all production, therefore it i s imperativeto implement a general strategy to develop economic activities that would end the country's relative isolation. Its key features would be: i)renewed support for export growth andpromotion; ii)professionalism among economic operators; iii)extricatingthearchipelagofromitsenclaveandtradediversification. 169.However, out of concem for the weaknessof the national business sector, faced witha lack o finformationandtechnical expertise, the govemment should support NATIONAL POVERTY REDUCT10N STRATEGY 38 private sector implementation inthe industry,trade, and services sectors, in addition to the above-mentioned agriculture, livestock, fishing, forestry, and tourism sectors. 5.1.6. Industry 170.The fundamental objectives shouldbe to set up anddevelop industries that would cater to domestic and extemal consumption, inparticular through: - Producingand refiningedible oils, either by makingthe EMOLVE agroindustrial complex profitable and modemizing small oil plants, or by installing and/or modemizing copra processing plants; - Processing cocoa paste and dry cocoa adds considerable value, guaranteeing an increase inincome for small farming households. There are some efforts under way inthis area, and these should be expanded and supported as community economic activities; - Producingjuices, preserves, andjams; - Producing cassava flour and "bombom" flour by processing cassava. It should be notedthat some initiatives related to exports o f these products have been successful; - Producing sugar cane brandy (currently produced by rural households in substandard technical and sanitary conditions), improvingits manufacture both qualitatively and quantitatively; - Producing tomato paste and concentrate; - Creating a domestic base for animal feed by settingup animal rationplants usingcopra, fish, and other localproducts as inputs; - Developingthe fish salting process, to produce goods for export as well; - Supporting the handicraft sector inproducing quaIity articles made of coconut palm (mats, bags, twine, etc.); - Introducingappropriate technologies for sawing wood that allow the remnants and waste these unitscurrently produce to be used; - Industrial use o f mineral water for commercial purposes; - Increasing localproduction o fbeer and soft drinks andimproving quality standards, so that products o f this kindwould not have to be imported; - Usinganimalproductsby developing the productiono f sausagesand stuffed meat products; - Developingtheicefactory. 171.Policymeasures should also be adoptedto: - Coordinate the development o f industrywith other economic activities, particularly with regard to the creation o f economic and social infrastructure; - Develop andrevive industrial sectors, promoting their balanced growth and strengtheningtheir competitiveness; - Improve the sectoral composition o f industry; - Fuel or support the creation o f industrialpoles o f regional development, mindfulof the specific conditions ofparticular regions andthe requirements for overall development. NAT10NAL POVERTY REDUCTION STRATEGY 39 5.1.7. Trade and Services 172.This sector faces the following constraints: - Competition from the informal sector, which i s proliferating due to poverty and rural exodus; - Little or no prospectsfor industrial growth that justify investingraw materials inthe production o f consumer goods as substitutes for traditional consumer imports; - No policies onrestricting imports; - Inabilityto access alternative markets and failure to identify new export goods and services; - Outdated legislationon commercial activities and absence ofproper policies for implementing a consumer protection system; - Nomechanisms to supportthe development o f small localbusiness, nor any proper network that would guaranteeaccess to supplies for the rural population. 5.2. Political measures 173.Of the multiplicity of actions to be taken by the state and private sectors, special emphasis should be placed on the following: - Alternative market studies to guaranteebetter use o f the external market; - Negotiationsbetweenthe STP government and other governments of arrangements for the free movement o fpersons and goods between countries, with aview to regionalandinternationalintegration; - Drafting o f legislationto regulate and provide a legal framework for commercial activity and to protect the rights o f the consumer; - Tailoring apolicy mainly to supporting small business, inpartnership with the Chamber of Commerce, Industry,Agriculture and Services, and the private sector ingeneral, as key partners inthe developmentprocess. 5.3. Policies to Promote Microfinancing and Microenterprises 174.The government will form partnershipswith economic operators individually or in groups, to: - consolidate the rural savings and loan associations that already exist in ruralcommunities; - - create credit unions of merchants, farmers, craftspeople, andfishermen; set upteams o f localprofessionals trained inthe methodology and techniques o fmicrofinancing, to support andmonitorthe growth of -- microfinance funds; implement a nationalmicrocreditprogram; strengthen existing associationsandproductionandmarketing cooperatives; - promote activities that createemployment and self-employment; - develop occupational training inthe areas o f agriculture, livestock, fishing, trade, agoindustrial construction, integratedinto the general school cumcula; NAT10NAL POVERTY REDUCTION STRATEGY - 40 - conduct a study aimed at assessingbasic needs interms o f occupational training inthe sectors under reference; - draft a framework law, which defines the role and different types of partners inoccupational training activities; - draft a nationalpolicy and action plan for occupational training, covering the capital and other localities. 5.4. Safety netsfor the poorestand most vulnerable 175.The incidence o fpoverty inSTP (1inevery 2 Sotomean lives below the poverty line) and its seventy (15.1 percent of the population lives inconditions of extreme poverty) has had a more marked effect on the most vulnerable groups. 176.This fact furtherjustifies the implementationfor a relatively longperiod (up to 10 years) o f specific policies and programs to protect the most vulnerable populations. The government's strategy inthis area should have two facets: (i)the general, meaning food security, and (ii)the specific, namely combating social marginalizationinurban areas. 177.The elderly, who makeup almost 5 percent of the country's total population, are almost always systematically left out o f all processes inthe country, with the exception o f election campaigns. There i s the need to design, draft, and implement a NationalPolicy for Senior Citizens, to providethem the support needed for their proper integrationinto society and validation as social beings. NAT10NA L POVERTY REDUCTI0N STRATEGY 41 , 6. DEWLOPMENTOF H U MRESOURCESAND IMPROVEMENTIN BASIC SOCIAL SERVICES 6.1. Education, Literacy, Training 6.1.1. Education 178.Intervention inthe area o f education, as a means of improving access to basic social services, must take into account the following: - decentralization o f the education process and greater inclusiveness of all the agents involved; - prioritization of basic education and improvement ofthe effectiveness and quality o f teaching; - adoptionofpositive discrimination measuresfor children from low- ' income households; - linkage o f education, training, and employment systems, to prepare children, youth, and adults for working life. 6.1.2. Literacy 179.Interventions inthis area are: - conduct of a study on the status of literacy inthe country and survey and coordination o f literacy initiatives; - revival o f literacy initiatives related to training/preparation for working life/apprenticeship ina trade or vocation; - community involvementininitiatives to combauprevent illiteracy, resorting to IEC/social mobilizationto make communities aware o f the relevance and importance o f education; - coverage o f children who never went to school (coordination with the STP school map); - support for nonformal basic educationinitiatives and inclusion informal education o f childrenandyouth who learnedto read and write inthese programs; - creationo fpost-literacy mechanisms (community leadership, IEC, interest centers, etc.); - training of specialists and leaders to use the proper teaching techniques. 6.1.3. Training 180.The strategy inthis area is predicatedupon close coordination between education and training, to develop the capacity for self-employment, providing sound, practical, and lastingknowledge. The schools should produce individuals with an enterprising spirit, capable of creating their own employment and employment for others. NATIONAL POVERTY REDUCTION STRATEGY - 42 181.To this end, consideration needs to be given to the adoption and implementationof a structure for the education system whereby graduation from one level would create access to a brancho f training at home or abroad (practical, technicalioccupational, secondary or higher). 182.With the aim o freducing poverty, intervention inthe area of training seeks to: - Promote measures for incorporatingyouth inoccupational training and creating the conditions for establishing microenterprises ofyoung men and women; - Organize nonformaleducation for entry into the world o f work; - Adopt a training planbasedon a study o f the labor market and manpower needs; - Analyze the operating structures o f the occupational education subsystem and expand its scope (diversification, level o f training); - Promote the science and technology inschool cumcula and teacher training; - Adopt a training program for instructors givingpreference to domestic training, to avoid the risks associated with training abroad (brain drain, costs without returns); - Train specialists ina number o f areas (human resources, promotion of microenterprises). 6.2. Health, Nutrition, and Population 6.2.1. Health' National Health Policy 183. The National Health Policy (PNS) recognizes the social nature o f health services as a factor of development, socialjustice, andpoverty reduction. General Objectives 184.The general health objectives inthe area ofpoverty reductionare centered on increasing the life expectancy o f the population, equitable access for all to proper and good quality health care, thereby contributing to a decline inthe current levels o fmortality andmorbidity. Specific Objectives 185. The specific objectives are as follows: - create the conditions whereby the population can independently assume attitudes, behaviors, andpracticesthat help improve andmaintaintheir health; - restructure and organize basic health services to better respond to demand, guaranteeing equitable accessto health care; Chapter 2 Actions considered and proposed in the area of health are complementary to those stated in the Report on Health and Poverty in SZo Tom6 and Pnncipe, August 2002 (Koffi Ehmian and MohamedDidi). NAT10NAL POVERTY REDUC T I0N STRATEGY 43 - take comprehensive action to combatthe diseases that contribute most to morbidity/mortalityinthe country; - devise and implement promotional, preventive, and protective measures targeting population groups, namely, young children,teenagers, young adults, women of child-bearing age, workers, and senior citizens; - help improve the nutritional status of the population, particularly inthe target groups; - guarantee access to specialized (tertiary) care by improving the quality o f services provided bythe Dr.Ayes de Menezes Hospital; - assist the national effort to eliminate the environmental factors that contribute to the poor quality o f life of the populationand influence its development. 6.2.2. Population Policy 186.It i s imperative to define apopulationpolicy that focuses on improvingthe living conditions o f the people and encompasses all actions inthe areas o f education, health, environment, poverty relief, etc., which affect population and development. 6.3. Water 187.A large portion o f the population, mainly inrural areas, still does not have access to drinking water and usesriver water or water from existing springs without any protection or control. 188.The strategy here seeks to increasethe rate of access to water supply systems for the public and to improve the quality ofwater supplied to bothurban and rural areas. 6.4. Sewage 189.There are still serious problems with environmental sanitation that are a major threat to public health and have had the following effects, among others: - highmorbidity andmortalityratesrelatedto water-bome diseases; - - proliferation o fvectors of malaria andother diseases: threat o f epidemics related to unhealthy conditions; - environmental pollutioncausedby trash and humanwaste having a serious impact on health andthe economy. 190.Inlightof this, the following objectives have been established inaccordancewith the National Environmental Plan for SustainableDevelopment: - raise to 100 percent the rate of coverage of solid waste collection and transportation inurban and pen-urban areas; - provide sanitary facilities to 100percent o fhousesnationwide; - properly inventory all swamp areas in SI0 Tom6 and Principe so that a coherent policy on such areas can be defined; - rehabilitate old drainage systems for disposing o f rainwater in the city of SHo Tom6 and construct new systems; - promote a campaign o fhealthy habits and lifestyles. NATIONAL POVERTY REDUCTION STRATEGY 44 7. MECHANISMS FOR IMPLEMENTATION, MONITORING AND EVALUATIONOFTHE STRATEGY 7.1. Mechanisms for monitoring, evaluation, and updating 191.The NPRS i s an ambitious project, notwithstandingits relevance and the urgent need for its implementation. However, its execution touches almost all sectors o f life inthe country and poses a challenge for coordinationbetween the state, the private sector, and organized civil society, taking into account current institutional weaknesses and volume ofresourcesrequiredfor the task. A general coordination unit is neededto makethe connectionsandhave anoverview ofall the actions to be taken. 7.2. Poverty Monitoring and Evaluation System 192.The design, preparation, and definition of indicatorsneededto monitor poverty depends first o f all onthe informationrequirements stipulated, inlight o f the specific objectives o fthe policyto combat poverty inthe country. 193.It i s therefore highly advisable to createan adjustable and flexible structure, which can evolve over time to better respond to the demands of the stages ahead, and designed to take onprojects and studies on a regular and ongoing basis. It should also be able to act as the institution that monitors, coordinates, assesses, and periodicallyupdates the strategy ("RS), incooperation andpartnershipwith other national, regional, and internationalinstitutions, as it would be responsible for setting up and coordinatingthe PovertyMonitoringand Evaluation System inthe country. 194.However, gwen the country's current constraints, particularly as regards financial, and logistical difficulties and weaknesses linked to the reporting of statistical data, it mightbe advisable to use the existingcapacity inthe Economic Planning Directorate o f the Ministryo fPlanningandFinance initially, and to organize a team to install Poverty Monitoring and Evaluation Systemunitsthroughout the country. These would evolve into an autonomous structure with its own authority, responsiveto the dutiesand functions for which it was created. 7.3. Measurement of poverty and the different data needed to assess its development inthe country 195.The type o finformation neededon monetary poverty, living conditions, and potential is basedon a certain number ofindicators that reflect income and consumption levels, the food situation, education, healthand sanitation, housing, and other basic needs. 196.Thus, inorder to scrupulously meet the medium- and long-term objectives ofthe strategy (NPRS) Quantitative Objectives for ReducingPoverty inthe country were developed (see Annex 2) for measuring, monitoring, andassessingthe probleminSEo Tom6 and Principe. Naturally, this i s only one basis for the work, to which the missingdata will have to beadded and improvementsmade inareas where they are needed. NATIONAL POVERTY REDUCTION STRATEGY - - 45 7.3.1. Indicatorsfor monitoringand evaluation of the status of poverty inthe country 197.Monetary indicators, such as the poverty line, make comparisons over time possible and track developments. Specific analyses can then be made, such as measuring the new Poor (those falling below the poverty line) or the ex-Door (those rising above the poverty line), to show the origin o fpoverty and make the relationship between different forms of poverty, etc. The indicators that make it possible to monitor other forms of poverty, such as monetary poverty, are integrated ina Poverty Monitoring, Tracking, and Assessment System inthe country (see Annex 3). This system will be used to connect and incorporate inan operating system all the institutions, entities, agencies, and social partners who, by their nature o f their work, are addressingthe issue of poverty. 7.3.2. Action Plan 198.The proposed action plan to address the problems, situations, challenges, and issues concerning the different dimensions of poverty inthe country i s given inAnnex 1. NATIONAL POVERTY REDUCTION STRATEGY 46 The External Debt Reduction Initiative (HIPC Initiative) 1. Throughout 1999, the govemment worked on attaining program objectives, particularly in the macroeconomic sphere. The climate of relative political stability throughout the period made it possible to complete negotiationswith the IMF, which led to the signature of aPoverty Reduction and Economic Growth Programinthe first half of 2000. That program, scheduledover three years, should enable Sslo Tome and Principe to meet the conditions for renegotiating its extemal debt under the HIPC Initiative. 2. Based on the positive results achieved in macroeconomic management, the country reached decisionpoint under the HIPC Initiative on December21, 2000. 3. This achievement enabled the country to use the financial resources earmarked for extemal debt service in the areas of national life defined by the govemment at this stage (health, education, and infrastructure). 4. Consequently, a number of process and performance indicators must be designed, defined, and constructedto measurethe impact of allocating these financial resources to priority intervention programs and projects geared towards particular regions or target populationgroups. 5. According to the Annual Activities Report of the HIPC Funds Control Committee, during 2001, the financial resourcesdepositedinthe HIPC account, which the country received as a result of debt relief from the WB and the AtDB, amounted to Dbs23,617,936,868.97. 6. During the same period, Dbs 19,364,648,218.75 were disbursed. It should be noted that this amount also included the reincorporation ofJanuary's debt to the AfDBFAD (Dbs 2,203,986,668.00), which was not consideredan actual HIPC expenditure.There is an availablebalance(on a cashbasis) of Dbs 4,253,288,650.22. 7. These resources were effectively used in the areas defined above (educatiodtraining, health, and infrastructure). 8. According to information provided by the Secretariat of the HIPC Funds Control Committee, Dbs 20,779,506,863.50 had been used as at October 2002. These financial resources were deployed in education (Dbs 3,392,190,663.50), health (Dbs 8,630,489,693.50), infrastructure (Dbs 7,545,830,398.00), and other sectors (Dbs 1,210,996,108.50). 9. A total Dbs 31,909,943,000.00 was allocated to the HIPC Funds for 2003. These funds are expected to be allocated as follows: education (Dbs9,904,449,000.00), health (Dbs 9,111,Ol I,OOO.OO), infrastructure (Dbs 11,944,483,000.00), and other (Dbs 950,000.0). -47- 8. BUDGETARYIMPLICATIONS OFTHE NPRS 8.1. Prior Issues 199.This chapter addressesthe budgetary framework for the resourcesneeded to implement the Action Plan. Budget projections were made for the period 2003- 2010 (8 years). However, the analysis of the budgetary implications o f the NPRS was restricted to the period2003-2005. 200. The principal limitations and factors determining projections are as follows: Exogenousfactors: The degree o funcertainty ofthe macroeconomic projections to 2015, takinginto account the world economic outlook and its impact on the availability ofresources for development assistance and tourism flows; Endogenousfactors: The impact ofthe inclusionof oil resources in the economic and social matrix, as regards economic growth and redistribution ofnational income. The most optimistic scenarios point to a radical change inthe structure of macroeconomic indicators starting in2006, which makes it impossible to construct homogenous and consistent statistical series for more than two to three years ahead. This limitationhighlightsthe pressingneed for cyclical indicators and economic monitoring; The spread o f HIV and other endemicdiseases could be a factor that belies populationprojectionsand resource allocation; Changes inattitudesand behaviorsas regardsthe individual motives o f citizens andthe rulingclass interms of consumption patterns, understandings on equity, equality, opportunities, etc. One must still take account of the conceptual limitations ofthe indicators used, namely the concept ofper capita GDP, which does not reflect the changes inincomeredistribution inthe NPRS target groups. Eventakinginto account these limitations, the budgetary impact of the strategy, as measured by the weight ofthe priority sectors inthe PIP and OGE 2002, i s an adequateindicator confirming the importance the government places on the poverty reduction strategy initspolicymix. 8.2. Priority Action Areas 201. Education, health, infrastructure (roads, energy, andwater), agriculture and rural development, good governance andeconomic and financial policies were defined as strategic sectors of the NPRS and warranted more detailed budgeting for the following reasons: i. Theinitiativesandactionsofcitizensandinstitutionsrequirethatthe administration take the appropriate measures, which would necessitate a change inbehaviors. This isparticularlytrue for actioninthe areas ofgood governance, draftinglegislation, andaccessto justice. Deconcentrationand decentralizationinvolve the enhancement of local authority, which promotes greater interactionbetweenpopulations andinstitutions inthe fight against poverty through socioeconomic development. -48- .. 11. Financial and macroeconomic policies are fundamental for ensuringbetter allocation o f domestic resources, and transparency inthe preparation and implementation o f the budget andthe PIP. The efficiency of the fiscal machinery i s an important factor of the policies for redistributing the wealth generatedby productive process inwhich the poorest segments of the population contribute the most. ... 111. Human resource development i s the main contributing factor inthe identifymg specific actions to be implementedby economic agents and institutions. Education and health are vital componentsofthe behaviors and skills that foster efficiency inwork, increasedproduction of goods and services, and their distribution. Inconnection with education, basic education and literacy, in addition to technical-occupational training, are important inthe NPRS. iv. The availability o f infrastructure, inparticular roads, energy, and water i s the determining factor inimplementation. It facilitates the mobility o f factors o f production, improves the productiveprocess, expands the market, mostly access to basic health and sanitation services. Tourism, which is of crucial importance to development, was also considered vital to the NPRS owing to the highgross value added it generates and the natural environment the country offers. Iti s also assumedthat economic growth drivenbythe private sector is a prerequisite o f poverty reduction. At the same time, ifpoverty reductionpolicies are properly implemented, they contribute decisivelyto economic growth. V. Taking into account that the majority ofthe poor population lives inrural areas, inaddition to givingpriorityto the income generation component (agriculture, livestock, forestry), living conditions can only be improved by human development and the creation o f community infrastructure. 202. The selection and ranking ofpriority actions was basedon the following criteria: (i) the recognition, coming out of the consultative process undertaken with beneficiaries and civil society, that the action contributes to well-being; (ii) ability to generate sustainable economic growth and vital importance to sectoral strategies; (iii) economic, financial, and institutionalviability-the actions promote a sound social and political climate and macroeconomic stability. 8.3. Impact of the oil economy 203. Inthe short term, revenue from "leasing blocks" cannot have a direct impact on the real economy and consequently on GDP growth. Inthe initial years (2003-2006), as there will be noprospects for export production, the impact will be felt only on domestic demand andinvestmentvariables. As a result o fthe excess liquidityin the economy, the prices o f essential items could soar inthe absence of sufficient internal production capacity. This scenario may createpockets o fpoverty with a higherincidence amongrural populations, urbandwellerswith low levels o f education, senior citizens, andwomen. 204. The most optimistic scenario i s basedon the hypothesis that resources from the oil sector are injected intothe national economy primarilyfor: (i) development o f human capital (basic education, training, health); (ii) strengthening the rural economy through community infrastructure, ensuring that population distributioni s -49- balanced, and avoiding imports of goods that are produced locally at lower prices and that have a strongimpact on the formation of gross value added; (iii) acquisition and construction ofbasic equipment that promotesproductivity and an "economic base" that i s balanced and diversified-energy, support services for the oil economy (light metal mechanics, repairs, transportation), agricultural techniques, the hospitality industry;and finally (iv) development o f innovation and management capacity inbusiness and institutions. 8.4. Required resources 205. Taking into account the principlesand criteria stated above, actions under the NPRS were allocated the following resources by objectives (PILLARS): Programming by Objectives and Priority Sectors (valueinthousands ofUS%) 1-Institutional Reform. CaDacih Building. and 2.109.4 - 15 . Good Governance incl.: Justice 919.4 0.5 262.0 0 4 2 - Economic and Redistributive Growth 45.1 65.4- - 22.3 20.025.7 31 8 incl.: 29,252.0 14.4 7,488.0 120 Water and Sanitation 11,226.8 5.5 9,480.0 15 1 3 - Income-GenerationOwortunities I 106.999.4 -20.804.9 52.8 -33.1 incl.: .. Agriculture, livestock, fishing, forestry 52,921.2 26.1 12,222.1 19.4 Infrastructure 54,078.2 26.7 8,582.7 13 6 - - I 4- Access to Basic Social Services 46.280.9 22.8 19.631.1 31.2 incl.: -. Education 22,836.7 11.3 7,876.5 12.5 Health, Nutrition,and Population 19,851.2 9.8 10,491.6 16.7 Employment, Training, and Solidarity 3,593.0 1.8 1,263.0 2.0 5 -Analysis, Monitoring, and Assessment 2,035.6 e TOTAL 202,590.7 Percentageoftotal Per capita investment(US$) 206.h the short term (2003-2005), the actions that generate income, centered on basic infrastructure and primary sector activities, absorb 64.9 percent o f the resources. Activities related to access to basic social services account for 31.2 percent of the total, with education and healthhaving virtually the same weight. -50- change in the relative weight of expenditure on education and health, which Programmingby Objective (2003-2005) represented, respectively, 9 percent and 7 ProgranaCao por Objectives percent o f current expenditure in the OGE Derouc 2003 2C051 Et c and are now estimated at 13 percent and 17 percent. 208.Noticeably, only 3 1.O percent of the total E2 33 1Y cost o f the actions planned is concentrated 3E4 87. in the period 2003-2005, which i s indicative o f the difficulties with medium- E3 312% Programmingby Type of Resources (inthousands ofUS$) 1-CivilEngineering 107.006.3 - 26,987.5 52.8 42.9 incl.: ....Classrooms 12,056.2 6 0 2,131.2 3.4 Health Infrastructure 3,820.4 1 9 509.9 0 8 Road Infrastructure 49,308.7 24.3 6,124.2 9.7 Water and Sanitation 12,673.4 6.3 10,784.6 17.2 2 - Goods 36.960.6 - 10,669.0 18.2 - 17 0 ... incl:. Plant Material 13,353.0 6.6 1,415.7 2.3 Foodstuffs 1,159.7 0.6 379.5 0.6 Textbooks and Education 1,030.5 0.5 397.0 0.6 Supplies 5,469.1 2.7 1,638.7 2.6 Medicine, Equipment, and Health Supplies 3- Services 26.323.8 - 11.548.9 13.0 -18 4 incl.: a National Technical 15,3 18.0 7.6 3,244.5 5.2 Assistance 7,026.7 3.5 6,000.5 9.5 a InternationalTechnical 1,539.6 0.8 1,146.6 1.o 1.8 Assistance 705.3 0.3 599.4 m Studies 1,734.1 0.9 558.0 0.9 a Legislation Information Systems 4 - Training 7,968.8 - 2.628.1 3.9 - 4.2 . incl.: m Teacher Training 2,022.7 1.o 311.3 0.5 Occupational Training 5,703.8 2.8 2,169.4 3.5 5 - Other resources, n.i.e. 24.331.2 - 12.0 11,048.3 -17.5 -51- 8.5. Sources of Financing 209. The budget was broken down by sources of financing only in 2003. Ifthis exercise is to b e continued in subsequent years, the Medium-Term Expenditure Framework (MTEF)mustbe inplace. 210.Implementation of the activities planned for 2003 will require raising US$22,519,727 with sources of financing divided as follows: SourcesofFinancing Amount inUS$ Percent Treasury 240,671 1.07 HIPC Funds 2,678,930 11.90 Guaranteed ExternalCredits 4,712,655 20.93 Guaranteed Grants 10,013,282 44.46 Resources from Public Enterprises 151,000 0.67 Activities withoutfinancing-credits and grants to be 4,723,190 20.97 Total 22,519,728 1 100.00 -52- ANNEXES I .-S 0 . Q 0 0 hl rT) 0 rl 0 0 N .. N -.-x eE U m iD rg m \o \o 0 0 0 0 0 0 N 0N 0 0 0 E c? 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I -t e, & a .f '6 -s r T m N N" N *N -r' d *r- v, m P I - c 3 0 3 " 0 + w z -b0a x e, b .-E2 -- a 0 a 0 E . 9 OD sE) *E!28 8 .m a c 0 .LI Y mE8 8 u s:I u h I .I 0 a Iep .LI a5ua a 0 !i *i w28 T zo sm I 1 N - I 3 0 o N w 2 <3 ac 0 6 , * I 10 W - Y Q) 8 0 0 N r Y v1 Q .-r s 0 Y ae I VJ a Y 'i-- 'i" Y e8 VJ 0 &L \I" 2 3 0 0 3 0 0 \I" I 0 0 ri I E: .C - T m - N 0 1 - 0 0 N m a 0 ._ eh f u 8 O L . 0 J: E I - a" 8 c) ._ Y 3 e. * t 0) z R Ee, a"B E L I N 0 * I a R r3. -5 E 2m E 0 > I n O01 ? l -5 m e, -c E 0 d- I 0 4 I x) h m I x m k Y 3 .R a E .I Y 3 E2 I ! I I I 8 , I I I I c 0 I- * (0 a .r( 5a u I r ( a 8 r, 0 Y I I ocI C 7 I e0 c, 3 E .I k c, Q Q) f n"E E 0 .I Bs c, c, u 8 Ccl 0 7 m E 0 .I Y8 + L c, 8 .m f bl 0 n Wm e3 8 d- I ri ri 1 -117- LISTOFNPRSSTRATEGIESINCLUDEDINTHE 2003 GENERAL STATEBUDGET Financing TOURISM uter senices, Tourism -118- Financing miningfor early childhoodteachers -119- Financing HEALTH Water supply, sanitation, fight against waterborne diseases 715,100 AfDB Completiono flaundry, water pipeto sanitary facility, Angra Toldo HEALTH Cavalete 31,900.0 HIPC HEALTH Construction,Angra Toldo Praiacommunity facility 19,140.0 HIPC HEALTH Construction,MonteMario facility 20,140.0 HIPC HEALTH Intervention, Manuel Q.D.GraGaHospital 127,650.0 HIPC HEALTH Intervention, Manuel Q.D.GraFa Hospital 150,000.0 SF HEALTH Remodelingandequipment ofthe Micolocenter 43,000.0 SF -120- Financing GOVERh'ANCEIADMINISTRATIONAdministrative reform 86,000 SF MONITORING AND SUPPORT ACTIVITIES Povertyreductionproject 732,000 AfDB MONITORING AND SLTPORT ACTIVITIES Povertyreductionproject 8,510 Treasury MONITORING .4ND SUPPORT ACTIVITIES Surveyofthe informal sector 30,000 AfDB MONITORING AID SUPPORT ACTIVITIES Survey, activepopulation,employmentand unemployment 15,950 Treasury MONITORING AND SUPPORT ACTIVITIES Plantproductionsurvey 10,630 Treasury MONITORlNG AND SUPPORT ACTIVITIES Householdbudgetsurvey 42,550 Treasury MONITORING AND SUPPORT ACTMTIES Householdbudgetsurvey 150,000 SF 22,519,727 - -121- REPORT ON THE NATIONAL SEMINAR TO VALIDATE THE NATIONAL POVERTY REDUCTIONSTRATEGY OPENING REMARKS The Seminar to Validate the National Poverty ReductionStrategy (hereafter NPRS) was held on December 10,2002 at the Palace of Congresses. The purpose of the seminar was to obtain the most recent contributions from social partners prior to submissionto the Council ofMinisters for approval, ratification, and subsequentimplementation beginning in2003, inan open sessioninvolving the presentation o f the document followedby a discussion. Inhisbriefopeningremarks, DiogenesPires dos Santos, Coordinatorofthe Permanent Secretariat on NPRS preparation, thanked Fradique Bandeira Melo de Menezes, President of the Republic; Maria das Neves, Prime Minister; and Maria dos Santos Tebus Torres, Minister o fPlanningandFinance; the other members ofthe Council of Ministers, members o f the diplomatic corps; and all participants for attending the seminar. He also announcedthat the Minister and the President o f the Republic, respectively, would be speaking. The Minister opened her presentationby thanking those present for attending. She pointed out that one o f the main constraints against NPRS implementation would beto obtain financing, which Szio Tom2 and Principe's state revenue could not cover. The NPRS, however, could hopefullybecome a reality throughthe HIPC Initiative andthe resulting relief of debt, which consumes 54 percent of current revenue. Four versions of the strategy paper were produced with the active participation o f the whole society. This exercise also serves as an instrumentfor sensitizing all development partners. Such sensitization sends a messageto Szio Tome and Pnncipe's leaders that resources generated inthis connection shouldbe applied to priority sectors, ina systematic fashion so that NPRS implementation will be uninterruptedthrough 2015, inorder to achieve the desiredprogress. The Minister appealed for the allocation of greater resources to priority sectors such as education and health, while respecting gender equality, among other factors. The President o fthe Republic took the floor next, and stated how pleased he was that the plannedpoverty reductionstrategy was consistent with the mainthrusts of his project for society presented inconnection with his candidacy for president of the republic. H e then discussed the intrinsic roots o f poverty as a social phenomenon, whichhe interpretedas being the lack o f knowledge and ability inunderdeveloped societies to fight disease, hunger, andpenury. He pointed out that, throughNPRS implementation, S5o Tome and Principe would at the same time be takinggradual steps toward reaching the objectives outlined and agreeduponby the various nations at the New York summit on the Millennium Development Goals. The challenge for ,950 Tom6 and Principe i s to find a model-ways to accelerategrowth inthenational economyto makeitmore competitive vis-&vis extemalmarkets. According to the UnitedNations report, govemance i s a key factor and considereda basic requirement for reducingpoverty. Efficacy, however, shouldbe used as atool to -122- fight poverty inthe framework of governance, transparency, and inthe war against corruption. It is also vital to guarantee peace, to invest inhumanresources, to give people accessto the latest technologies; to modemize agriculture, improve infrastructures, promote regional integration to provide accessto expanded markets, and to foster domestic and foreign private sector investment. Poverty tends to perpetuate itself. The indiscriminate felling o f trees and uncontrolled use o fthe beaches degrade the environment and destroy the country's own habitat. Another extremely important factor inpoverty reduction i s the needto achieve gender equality. As the incidence ofpoverty i s greater inrural than inurbanareas, we observea one-way migratory flow fiom rural areas to the capital-another important factor to be overcome, as it correlates with increasing numbers o f street children, higher levels o f unemployment, prostitution, criminal activity, etc. President Fradique Bandeira Melo de Menezes concludedby saying that poverty reduction i s necessarily a politicalprocess as it requiresthe politicalsupport of all stakeholders, and calls for increased GDP and investment ineducation and health, among other essential measures. The President closed his speechwith words ofthanks. PRESENTATION OF TOPICS I. PROFILE OF POVERTY INsAoTOMEAND PR~CIPEAND POVERTY REDUCTIONSTRATEGY by Diogenes Pires dos Santos The speaker first identified the various types o fpoverty that the generic term could encompass-material, moral, cultural, etc.-and their implications. He explained that poverty constitutes a multidimensional problem to be approached fiom its various angles. One out o f every seven persons inSBo Tome and Principe lives onless than one-half dollar per day. The speaker indicatedthat this is an extremely serious situation that could worsen, citing many indicators for the health, education, andhousing sectors, as detailedinthe paper distributed to those inattendance. He then askedwho the poor o f SBo Tome and Principe are. The latest poverty profile studies on SBo Tome and Principe, conducted betweenmid-November 2000 and March 2001-and therefore recent-use socioprofessional classificationcriteria that define the poor as farmers, livestock rearers, and fishermen. This situation, in short, involves personsliving inrural areas, or more generally, those involved inthe primary sector. Poverty inSBo Tome and Principe has this clearly defined characteristic. Others can also be classified as poor: pensioners, unemployedpersons, wage earners in the public andprivatesector, andindependentworkers. The speakerthen askedwhat could be done to change the current situation. H e answered by explaining that while the plans of the successive post-republic govemments have consistentlyreflectedconcem withthe fight against poverty, they failed to achieve substantial results. Inlightofthe experience accumulated inthis connection, then, itcanbe concludedthat the involvement o f all ofcivil society is extremely importantinfighting poverty. Society in its entirety-the people and the poor-should be reflected inthe preparation and -123- definition o f the poverty reduction strategy. Against this backdrop, the government and its partners characterized the needto draft a poverty reductionstrategy. The speaker next presented a brief summary of the overall objectives reflectedinthe national poverty reduction strategy paper, which hadbeen provided to all those present. The strategy paper, and the following presentations, would briefly review the points of the strategy by subject heading which, inthis case, involved mainly the following: 1. Generic definition of poverty; 2. Determinants of economic poverty at the domestic and external levels, in structural and cyclical terms, and the determinants at the social, political, and institutional levels; 3. Poverty reduction strategy at the horizon 2015: strategic vision inthe short, medium, and longterms; 4. Overall objectives inthe mediumand long terms; 5. Mainthrusts underlyingthe strategy to attain the objectives as discussed; 6. Risksofthe strategy. 11.ACCELERATED, REDISTRIBUTIVEGROWTH by LeonelMario D'Alva The speaker first affirmed that economic growth is measured interms o f gross domestic product (GDP), which i s the sum of value added inthe production o f goods and services ineachbranchandsectorofeconomic activity every year. GDP growthisanecessary, butnot sufficient, condition for povertyreduction. Mechanisms of fiscaljustice and investment inservices for the poor, suchas the following, must also be included: infrastructure, water, basic social services; and specifically education, health, housing, etc. An increase inGDP without an adequate redistribution of wealth or services will not lead to reducedpoverty. Further, ifpoverty is to be reduced, growth inwealth cannot be limited to only one sector (such as the muchexpected resourcesfrom petroleum exploration). Ifpetroleum resources were the country's mainproduct, and ifthey were incorporatedinto the national economic machinery andnot redistributed to other productive sectors-and particularly to agriculture and services, where the poorest population sectors are located-poverty would not be reduced. The sectors must develop concurrently as poverty reductioni s a multifacetedprocess. The speaker then askedwhat should be done to achieve sufficiently distributive growth with a view to a gradual poverty reduction. The strategy aims to cut poverty levels in halfby 2010 and to one-third by 2015. How will these goals be achieved? The speaker citeddata from studies according to which poverty reductioninAfrica requires an average growth inGDP of 7 percent per annum. He then asked how the current growth rate of approximately 2 percent per annum could be increasedto reach the established target by 2015. According to LeonelM f i o D'Alva, the strategy reflects the first steps ina process and represents a great challenge for the country. The strategy, accordingto Mr.D'Alva, comprises a set of actions to be carried out in various sectors o f development to achieve sustained, consolidated growthand to reduce poverty. Accelerated, redistributive growth is urgentlyrequired. Iti s essential that all objectives should be coordinated, and that activities shouldbe effectively monitored -124- with information obtained onconditions inSi0 Tom6 andPrincipe, through proper use o f development mechanisms, inorder to cut poverty inhalfby 2010. The speaker provided a general summary of the activities reflected inthe NPRS paper: 1- Emergence of new sources of growth; 2- Recovery o f the productive sectors; 3- Consistent structural policies; 4- Promotiono f private sector development. To conclude, he pointed out that the following factors mustbe taken into account in order to reduce poverty: - Reduction inbureaucracy: the barriers preventing foreign investors from making more substantial investments mustbe removed; - A climate conducive to businessmustbe established along and the Court of Auditors quickly set upto settle contentious matters; - Control mustbe provided for macroeconomic management mechanisms to ensure that the inflationrate is favorable to growth and to the poor; - Monetary control i s required to avoid depreciation of the currency; - Debt sustainability: debt relief will make itpossible for more resources to be channeled to the poorest populationsectors. - Effective economic monitoring: balance ofpayments equilibrium; - Combatingunemployment, etc. 111.INCOMEOPPORTUNITIES FOR THE POOR by Carlos Pires dos Santos T h i s speakerpointed out that the incidence ofpoverty in S i 0 Tome is substantial in rural areas, and i s manifestly visible inthe agriculture and fisheries sectors. The speaker notedthat "popular landtenure," which was designed to grant landto any citizen deeming to holdrights to its enjoyment-a practice generalized as the result o f substantial social pressure on the land-was inconsistent with the criteria initially established inconnectionwith the agriculturalprivatization project. The situation has adversely affected cocoa production, which to all intentsandpurposes has stagnated, as opposed to food crop production, where substantial growth has beenregistered. Where environmental conservation i s concerned, interms ofuse o f forest and environmental resources, the situation i s critical as the relevant legislationwas not adopted ina timely manner. The country's richbiodiversity interms of flora and fauna i s threatened. Animal life is disappearing and dense forests are beginning to shrink. The livestock situation also merits special attention. Despite the efforts to implement measures for the livestock sector, there have beenno significant improvements infarmers' incomes or diet. The speaker remindedparticipants of the various programs implemented duringthe past 10years to lay the groundwork to improve income and living conditions for rural households. Inthis connection, a total o f more than 8,000 families benefited from plots ofland, corresponding to apopulation o fapproximately40,000 persons (approximately one-third ofthe rural population), involving a land area o f approximately 18,000 hectares. Inthe Districtof Pague, the establishment o f the National Federation o f Small -125- Farmers (FENAPA), which plays an important role ininterfacing with the government and other agencies on issues related to rural development, i s noteworthy. IV.EDUCATION, LITERACY, AND TRAINING by Guilhenne Octaviano dos Ramos First,the speakerindicatedthat long-term growthrequiresa greater investment in humanresources as the key factor underlying development. Inthis connection, he considers educationto be one ofthe main factors inthe poverty reduction strategy process in Sgo Tome and Principe. Duringthe period 1990-1995, extemal aid provided 12.5 percent o f education and 14.5 percent of training. Duringthe 2000-2001 school year, primary education targeted 22,270 students-1 1,577 boys and 10,689 girls. The breakdown o f the schoolpopulation by district of the country shows that the districts of Agua Grande and M e Zochi account for 39 and 40 percent, respectively, in2000-2001, as compared with 7 percent for Lemba and 4 percent for the Autonomous Region of Principe. Secondary Education, continued the speaker, i s providedby 10 facilities-9 in S I 0 Tome and one inPrincipe, where only basic secondary education, grades 5-9, are provided. Although there i s a secondary school ineach of the country's district capitals, the distribution ofthese facilities is substantially asymmetric. For example, according to the Curriculum Development and Planning Directorate, duringthe 1998-1999 school year, 37.6 percent o f all students insecondary education were concentrated inthe National High School. Geographic dispersion, lack o f awareness, and insufficient means o f transportationare factors impedingbetter operation o f the education systeminS5o Tome and Principe. Although some school transportation does exist, there are still areas where transportation i s not accessible to students. On this important topic, the presenter considers that the education sector continues to come up short inall areas. Where humanresources are concemed, according to the data from the Curriculum Development and Planning Directorate, in 1998-1999,62 percent o fthe teachershad beeneducated up to the 1lthgrade, 12.7 percent to 10th grade; 8.3 percent hada school leaving certificate, 7.6 percent a bachelor's degree, and only 1.5 held degrees related to teaching. Most o f the teachers at the pre-university level have ordinary- or advanced- level secondary school qualifications, which means that the quality o f education is not the best for the conditions inwhich they work. As a result o f the confirmed lack of high-level professionals ineducation, the National Secondary School Directoratehas tumed to otherprofessionals such as militarystaff, members ofParliament, andsenior civil servants. Of course, their professional and political duties outside o feducation have prevented their regular attendance and daily participation ineducational activities as a whole. Planning, management, and insufficient financial resources have also adversely affectedperformance inthe educational sector duringthe past 10years. Regardingthe problem o fliteracy, duringthe 1 9 8 0 special attention was devoted to ~ ~ combating illiteracy. That message received substantialsupport and involvement by the population. In 1991,among the various altematives, the authorities chose to prevent illiteracy by focusing mainly on the population enrolled inschool withinthe context of the nationalpoverty reduction strategy. Inline with this commitment, mandatorypublic or private school enrollment and attendance was declared for all children o f school age. Measures must also be takento prevent students from dropping out of school. V. HEALTH,NUTRITION, POPULATION,AND ENVIRONMENTAL SANITATION byAnasthcio de Menezes -126- This presentationfocused substantially on healthand nutrition, with reference to the relationship existing betweenthe program to fight poverty and the actions plannedby the Ministry ofHealthinvarious operating areas, inparticular services, programs, and district activities. An improvement has been regstered interms of immunization coverage, andreduced morbidity and mortality as the result of malaria. The speaker discussed the mainpillars of poverty reduction established inthe overall planto exclusively provide health care to the population. Inthis connection, the priority focus for all efforts would be to promote health protection and the fight against diseases such as malaria. Another matter would be to put the National Center for Health Education into operation, to provide quality health care, accessible to the entire population, inthe spirit o fequity. This effort would also entail reinforcement ofthe district healthsystem, and involvement of the media and nongovernmental organizations. New strategies such as the "minimum package" should be introducedto provide essential medicines and laboratory analyses. The conditions must be createdto address medical emergencies. Institution buildingi s also important through enhanced planning, humanresource training, raising the status o f the Management Training School, and improvedhealth information. Where nutritioni s concemed, food security i s important to promote direct treatment and supply o fvitaminsto pregnant women andundemourished children. VI.GOVERNANCE,DECENTRALIZATION,PARTICIPATION, COMMUNICATION, AND INFORMATION by Frederico Gustavo dos Anjos The speaker focused on the following factors: 1. Conceptualizationand definition o f "good governance" as transparent and responsible management o f human, natural, economic, and financial resources, subject to the law, inorder to prevent and to fight corruption. 2. There i s a pressing need to revise the Constitution as the result o fthe series o f institutional conflicts observed through the years. Such a revision should include the following objectives: (a) government stability; (b) institutional stability; and (c) consolidation of the state under the democratic rule o f law. 3. decisions must be made ina participative process, andnot taken apriori for the population. The population musttherefore be informed o fthe processes, status, and follow-up, and have power of control and enforcement. This approach also entails: (a) improved intervention capacity for social and nongovernmental institutions; (b) adaptation ofthe process o fdecentralizing local authorities and improvedefficacy of their administration; (c) establishment o f communication between the government authorities and those whom they govern, so that the governments understand the concems o f their constituents; (d) essential role o fthe media; -127- (e) control and enforcement; (0promotiono fcivil society'anditsparticipatory involvement; (g) development ofmechanisms for access, communication, andpromotionof a culture of participation. 4. Reform of general government, consolidated inthe: (a) redesigning and modemizing the departments; (b)making services accessibleto the population: increasedtransparency and efficacy; (c) restoring the authority o f the state; (d) enhancing public andborder security: the importantrole ofthe nationalpolice and the FARSP. -128- VII. EXECUTION, MONITORING AND EVALUATIONOF THE NPRS by Diogenes Cravid The NPRSprovides for the establishment of abase for monitoring and evaluation of the entire framework to be established.It creates a framework that will track poverty inSBo Tome and Principe over time. NPRS execution involves all sectors ofnational life and represents a challenge interms o f coordination between the state, civil society, and the business sector. There is an existing working base of quantitative indicators for measuring developments inthe various sectorsrelatedtopoverty. While factors for evaluation derived from the experiences o f other countries that have already implemented their strategies exist, there is no finished framework and the groundwork for it still remains to be done. NPRS BUDGET by Agapito Mendes Dias 1. The speaker was quite satisfied with the paperpresented and was full o fpraise for . the team that preparedthe document. 2. The problems relate primarily to the absence of statistical informationmaking for correct assessments, which substantially affects the proper prioritization o f sectors. 3. The fundamental question for poverty reduction and development inSBo Tome and Principe is not the lack o f financing, as evidencedby the country's tremendous external debt. 4. There are a number o f other factors impedingdevelopment, the greatest o f which i s a lack o f awareness o f the seriousness of the problem that poverty represents and the fact that it i s not a priority on the political and social agenda. The problems o fpoverty will continue as longas this awareness does not exist. 5. Increasing investment i s requiredineducation and training, and the widening gap between SBo Tome and Principeand more developed countries must be reduced. 6. The NPRSbudget programmedfor 2003 amounts to US$22.519 million, o f which only US$800,000 come from the generalstate budget. An effort must be made to close the financing gap o f approximately US$4 millionthat remains to be covered. 7. This budget i s the result of the financing restrictions SBo Tome and Principe faces and its GDP level, leading to low investment capacity. Accordingly, to finance the budget, the authoritiesmustresort to external resources, which are scarce and conditional. 8. SBo Tome and Principe currently does not have the institutional capacity to execute investments exceeding US$25 million invalue. 9. The programmedamount i s compatible with growth and inflationrates, which are projectedto be 5 and 8 percent, respectively, for 1983. 10. The budgets presented for 2004-2010 are merely indicative. -129- 11. Greater investments are requiredto build the country's institutional capacity. It i s not possible for petroleum resources to solve the questions of development andpoverty without enhancedinstitutional capacity. DISCUSSION The discussion, moderatedby Mr.Armindo Vaz d'Almeida, was opened. Firstparticipant The first participant expressedconcerns about the fact that corruption i s such a problem inSgo Tome andPrincipe, while the financing the country receives shouldbe usedto address the existingdifficulties facing the country's population. Motivated individuals with a good work ethic are needed. Excessive tree felling i s beingpromoted by dishonest people who are marketing not only the product butthe equipment for its production. With regard to the problem o f sand extraction, the applicable rules are being violated. Despite the existence of designateddays for this activity, sand is extracted daily, which affects the development of tourism inSi30 Tomi and Principe. As for improper management ofpetroleum resources, while many o fus are aware that resources are already flowing into the country, it i s still unclear how they will be used. On the issue o f the government's current negotiations with Nigeria on the petroleum explorationagreement, the participant asked for a coherent explanation for the reduction from 65,000 barrels to 10,000 barrels. The participant supported the Prime Minister's departure from office and did not support the revision o fthe Constitution as SHo Tome and Principe is ina profoundly unstable situation owing to the power struggles and conflicts. The participant then asked where the financing ganted to the country by the developmentpartners would go as the public works contract awards inconnection with these investments are associated with harmful and questionable projects (alluding to INDES). Second participant T h i s participantwas concerned with the following question: When and how will the populationclearly see the benefits o fpoverty reduction? Thirdparticipant This participant's question related to the morality o f the state, which begins with the full functioning of the courts and the urgent establishment o f a Court o f Auditors. Ifno court of auditors has been established to date, it i s because this would not be consistent with the objectives ofthe country's leaders. The "parallel constitution" and "law o f impunity" mustbe abolished as they are impedingthe progess ofthe NPRS. The participant also disagreed with the fact that the armed forces were not consultedin the NPRSpreparationprocess, eventhough the speakers intheir presentations affirmed that the processencompasses all o f society. Further, many topics addressed duringthe seminar, such as control of fisheries resources, exploitation ofthe country's most varied resources, disaster control, etc., are related to the armed forces, as they guard the country's various borders. Poverty reductionis relatedto socialwell-being, which i s predicated on good governance and an equitable distribution o fwealth. Thus, social well-beingistantamount to security. The inequitable distribution ofresources i s leading to a different way o f life for the citizens of SZo Tome and Principe, and i s a source o f anger, constant threats, andrecourse to violence inresponse to intolerable living -130- conditions. This reality can take on greater proportions and the government shouldnot underestimate it. Accordingly, it is important not to overlook the armed forces, as their contribution may be more worthwhile than mightbe commonly believed. Fourth participant The participant first extendedcongratulations on the preparation o f the NPRS and then expresseda few considerations on the need for more than simply financial participation inthe system. The strategymust, as apriority, include good governance andhuman resource capacity building. NPRS implementation entails moving toward the common, universal objective o f achieving the millennium development goals (MDG). Fifthparticipant The participant expresseddoubts regarding the presentation. Following the validation of the paper, itwould bemade available to the government. The general state budget, however, reflects only a small share (3 percent) o f this effort. Will the rest o f the financing be providedby donors? Will the document be incorporated into hture general state budgets? If so, will this be an activity that the government will be requiredto implement? A further doubt concems the NPRS coordination unit,which is not reflected inthe budget for 2003. Sixth participant Inthis connection, withrelationto NPRSexecution, how will the NPRSbe incorporated into the general statebudget after it has been submittedto the National Assembly (for 2003)? Inother words, when will the paper infact be incorporated into the budget and how will it be executed? Seventh participant This participant's concem involved fishing activities. InS2o Tome e Principe, informal fishingis unregulated. Artisanal fishing is still practiced with boats driven by sails and paddles, and the costs of inputs (such as motors) are quite high.Fishing should be subject to research and science and technology shouldbe applied to steer the sector. The NPRS paper should addressthis issue. With relation to promotion o f the private sector, the participant agreed that legislation should be adopted to protect national business initiatives, and defended the needto place limits on foreign investments and to stimulate those that createjobs andpromote the country's development, unlike the investments that have beenmade, which might have been undertakenby local entrepreneurs had they been given the opportunity. Finally, opportunities have beenprovided for small-scale foreign investment at the expense of domestic micro-business. Eighthparticipant This participant blamedthe chaos in SZio Tome and Principe on the citizens themselves, and primarily onthe leaders and all those complicit inthe scenario. While many professionals have already been trained inthe country, and more shouldbe trained, there is no policy to take advantage o f those who have beenoverlooked infavor of foreign professionals. Wherever there is a needto contract consultants-the foreigners are usually called consultants-the cost i s much higher than for services -131- provided by nationals. Why should foreign consultants necessarily be more knowledgeable than national ones? Another relevant question i s the establishment of the Court of Auditors, which, according to the participant, would benefit the leaders. Only dishonest and incompetent persons are promoted inSBo Tome and Principe. The only way for promotion i s through corruption. Ifpeople are not prepared for the oil era, abreaking point may be near. In concluding, the participant mentionedthe fight against moral poverty, which, aside from materialpoverty, i s the country's mainproblem. Ninthparticipant The participant questioned the presentation by the Minister ofPlanningand Finance, in referenceto the need for rapid improvement, and askedwhat time frame was required for such rapid improvement. The world i s dividedinto two sectors: richand poor. Inthis connection, the paper mentions that 58 percent ofthe populationi s poor. How should the remaining 42 percentbe designated? With regard to mass transit for students, unfortunately, while students benefit from public transportation, teachers, whose wages are low, are not authorized to use such transportation, as it is alleged that they would be benefitingfrom travel subsidies. Tenth participant The participant indicatedthat the poverty paperpresentedat the seminar identifies the problems. The participant's mainconcernwas to know how these problems should be approached. A consensus i s urgent inorder to fight poverty inSHo Tome and Principe. Actions to preventpolitical instability and support NGOsworking directly with families are required for effective progress as proposed. Eleventh participant This participant criticized the performance of SBo Tom6 and Principe's leaders regarding the visit o f foreign entrepreneurs to the country. Foreign entrepreneurs coming to SBo Tome and Principe are taken to visit large enterprises and the needto visit small processing plants with which they could also cooperate is overlooked. While their poor working conditions are evident, the highquality of the finishedproducts placed on the domestic market leadmany of their customersto believethat the workplace i s one o f the best. Twelfth participant This participantexpressed some reservations about the criteria for prioritizing activities. There i s an urgentneedto distributeresources according to the priorities for executing activities and for to clearly specify the amount to be allocatedto each activity. The participant proposed that a cost benefit analysis shouldbe conducted for more coherent use o f available resources. Thirteenth participant This participantpointed out the needto update the demographic data and the growth rate as these indicators do not reflect the real current situation. Fourteenth participant The participant considers that there i s scope for improvement inthe paper presented. The fight against poverty should include an approach as a fight for the dignity ofthe citizens o f Slo Tome and Principe. This meansto reflect on and reassesswhat poverty reductionmeans to the people o f Slo Tome and Principe. A more ambitious approach, -132- i.e., a culture that promotes a work ethic, mustbe adopted.Without any effort from the people o f Sgo Tom6 and Principe, the situation cannot be corrected, even with the proceeds from oil. The indications o f malaise and frustration should receive greater attention. Examples o f sacrifices mustbe set. Leadersmustbe accountable and send the proper signals by containing expenditure. Fifteenth participant This participant considered that the question of rankingpriorities shouldbe reinforced. The budgetdoes not reflect issues such as managementof public assets and decentralization. The budget framework does not specifically reflect the effort to reduce poverty. Good governance does not mean governing well. Good governance should not be limited to the reorganizationo fthe courts and civil service. CLARIFICATIONS ON THE DISCUSSION Maria dos Santos Tebus Torres, Minister of Planning and Finance The Ministerthanked the participantsandcongratulatedmany ofthem on their courage inexpressing their questions so openly andclearly. Thepurposeof such aseminar was to receive contributions to improve the paper inquestion. The strategy paper is not a static entity and can be changed to reflect developments inthe outlook for Sgo Tom6 and Principe, interms o f the economy, intellectualand financial capacity, etc. She began by explaining how the strategy will be implemented. Ninety percent of the NPRS budget programmedfor 2003 has already beenreflectedinthe draft general statebudget for execution duringthat year. The paper is aninitiative ofthe govemment. The latter is responsible for negotiating with the economic partners, signing arrangementswiththe WorldBankandIMF, and institutionalizing procedures for preparingthe paper with the participationof consultants, many of whom are nationals of Sgo Tome and Principe. She called on national leaders to take the initiative of self improvement andto make professionalisma priority, regardless o f the level o f returns. She called for serious effort as a prerequisite for the reconstruction o f the country. Contrary to the affirmation that the government i s soliciting handouts, an effort i s being made to raise funds domestically and externally. The government is also working to identify partners and to find alternatives suchas grants and loans, as the revenue the country generates i s consumedby current expenditure. This effort involves everyone becausethe HIPC Initiative i s a responsibility for all. The efforts are being made by the government as well as the people themselves. Diogenes Pires dos Santos, Coordinator of the Permanent Secretariat Inreplyto the questionsposedonthis subject, the speaker agreedthat the fight against poverty should not be limitedto stopgap measuresto reduce poverty. The demographic datawere outdated owing to the delayed completion of the provisional results from the most recent census. The Secretariat therefore decided to delay the update untilthe final preparationphase. The CoordinationUnitis subject to financial constraints that have meant making choices, thus it could not be incorporatedinto the 2003 budget. Following approval by the Council of Ministers, the government and its partners will be negotiating financial resources for implementation o f the strategy. This processwill also entail a consensus -133- or a commitment from the donor regardingthe strategy objectives. Financing can be arranged for the unit at that stage. Frederico dos Anjos, member of the Permanent Secretariat The speaker beganby stating that the concerns were raised and that he agreedwith those mentioned. Some of these issues, however, have already beenreflected inthe strategy. The concernsyet to be reflectedinthe paper would be taken into account. The strategy, however, like any other, reflects options chosen through interactions with the people. Inother words, the strategy does not necessarily reflect all questions that may arise. He addedthat the strategy was prepared with a view to constant updating. Some issues that, for budgetary reasons or problems in finding a solution, could not be reflectedin2003 would be addressedlater-in 2004,2005, or 2006. The strategy is therefore open to constant updating to reflect changes inthe real situation inSZio Tome and Principe. Inother words, ifthe strategy is implemented according to the strategic vision adopted by the technical team, even problems relatedto oil management and the additional resourcesthat could come incanbe addressed as the poverty reduction strategy develops, rather than on an arbitrary basis. Omission o f the defense sector was deliberate. Issues of defense should not be discussed inpublic debates. They were not mentionedat length, and should be addressed inanother forum. Quite recently, in connection with a preliminary session, it was acknowledged that a seminar shouldbe organized specifically on defense and this will be the proper forum for considering the relevant questions. This seminar will also addressproblems of social the media, which mustbecome more involved inpoverty reduction. As for the question on equitable distributionof resources, the speaker indicated that some actions didnot necessarily call for strategy resources. The institutions involved could address such situations with their own resourcesat the sectoral level. The existingstrategy i s what is possible based on the resourcesavailable and forthcoming. Leone1Mario d'Alva, member of the Permanent Secretariat Further to the questions answeredby the team who preparedthe paper, the speaker took the opportunity to clarify the concernmentioned on the definition o fpriorities. Inthis connection, those who received the summary report on the national strategy were referred specifically to page 14, item 101, which reflects the criteria usedto define the strategy. There were indeedselectioncriteria but, owingto the level o f organization, they were not perfect. Ina meetingheldwithtechnical staff ofthe Ministry o f Educationand Culture to collect information, it was surprising to note that the ministry had failed to define the short and mediumterm priorities for the sector. With effective overall organization, the educationsector would first have definedits priorities, and thensubmittedthem to a central bodyfor further considerationin the selection of priorities. Organizational problems inthe group have yet to be resolved. The speaker acknowledge that, while the question onpriorities was substantially relevant, the answer entails a more effective organization inwhich each sector prepares its strategies and defines it actionsinthe short, medium, and long terms so that they can then be addressedas part ofthe overallpicture. CLOSINGREMARKS MARIADASNEWSBATISTADE SOUSA, PRIMEMINISTERAND HEAD OFGOVERNMENT Before proceeding with the closure of the seminar, the PrimeMinister and Head of Government took the opportunity to clarify two issues. First, regarding the participant -134- who posed the question on the poverty level of 58 percent as indicated inthe base document, the Prime Minister declared that the remaining42 percent of the population are not necessarily rkh. Clearly, this i s notthe real situation. The problem is the 58 percent o f the population at or below the poverty line or normal limit of poverty. The second issue involves the oil explorationprocess.Inthis connection, the Prime Minister considered that the people o f SBo Tome andPrincipe should clearly understandthe problem o f oil. She hoped that the government would promote a discussion on the problems and that all of the relevant issues couldbe addressedat that time. Inher closing remarks, the PrimeMinisterdescribedthe poverty reductionprogramas one of the fundamental pillars of her government's program. The seminar was held at a particularly important point inthe processof consolidating democracy in SBo Tome and Principe, with nationalpolicy makers demonstrating a highlevel o f maturity and statesmanship inseeking a broader consensus essentialto guarantee stability at the political, institutional, and govemment levels-key determinants o f an environment conducive to the country's development. Only the deepeningof the various forms o f peaceful coexistence would better guaranteethe success of one of the most important strategies, involving everyone, and aimed exclusively at reducingpoverty in SBo Tome and Principe. As many fellow citizens have acknowledged, SBo Tome and Principe is not poor. Ithas, however, been impoverished by the economics o fpoor resource management resources and inappropriate policy options over the years, the consequences o f whichare now beingfelt. The NF'RS presentedat the seminar representsmore than a commitment to the conditions o f the development partners for debt relief. It is, above all, the acknowledgement of the need for ajoint effort by the different sectors and subsectors involved, to overcome the constraints that determine the levels o fpoverty faced inSiio Tome and Mncipe. -135- NATIONAL SEMINAR TO VALIDATE THE NATIONAL POVERTY REDUCTION STRATEGY (Summary of Conclusionsand Recommendations) December 10,2002 A structure mustbe established to monitor, coordinate, and assess the NPRS, to guarantee its implementation; The problem ofpoverty must become a priority on the political and social agenda o f SHo Tom6 and Principe's policymakers; The country's substantial external debt proves that the problem o f poverty is not fundamentally attributable to a lack of financing. On the contrary, it involves a lack ofjudicious management o f the external resources fiom which SHo Tom6 and Principe benefits, which requires management basedon more stringent technical, economic, and social criteria; Increasinginvestments mustbe made ineducation and training to fight poverty; Oil resourcesmay not be the answer to the question of poverty and development without an improvement inthe country's institutional capacity; A serious fight against comption at all levels is required; Implementationof the national plan on sustainable development must be pursued as the mechanism to guarantee serious, stringent, and adequate management of SHo Tome and Principe's natural resources; Rapid implementation ofthe Court o f Auditors i s absolutely necessaryto abolish the "parallel constitution" and "law of impunity;" The armed forces and forces ofpublic order must play a more substantial role within the framework o f the NPRS; Conditions mustbe established for the application of scientific and technological developments to the country's fishing activities, inorder to increase catch levels; Legislation must be adopted to protect initiatives by local businesses, which are now given secondary consideration after foreign enterprises; The fight against moral and ethical poverty i s more important to the country than materialpoverty; The fight against poverty should be considered a fight for the dignity of the people of SHo Tom6 and Principe. Accordingly, a vigorous effort mustbemadeto establish awork ethic inorder to change the current situation; Inlightofthe specific issuesinvolvingthe armedforces andnational police, these issues should be discussed inthe appropriate forum (seminar on defense andnational security); Similarly, inlighto fthe specific issues related to the media, these issues shouldbe discussed inthe appropriate forum (seminar on the role ofthe media inthe NPRS; The oil issue shouldbe the subject o f a national discussion open to the public; The NPRS shouldbecome a fundamental pillar ofthe government's program; -136- 0 SBo Tome and Principe is not a poor country; ithas become poor as the result o fpoor national resource management and inadequate policy options. This situation should therefore be corrected as soon as possible; 0 The combined effort o f all sectors and subsectors i s required to overcome the constraints that determine the levels o f poverty the country now faces. -137- ADDRESS BY M S EXCELLENCY,THEPRESIDENTOFTHE REPUBLIC,AT THE FORMALOPENINGCEREMONYOFTHENATIONALSEMINARTO VALIDATE THE NATIONALPOVERTYREDUCTIONSTRATEGY MINISTERSOFTHE SECOND GOVERNMENTOFNATIONALUNITY, MEMBERSOFTHE DIPLOMATIC CORPS, REPRESENTATIVESOF INTERNATIONALAND NONGOVERNMENTAL ORGANIZATIONS, SEMINARPARTICIPANTS, LADIESAND GENTLEMEN, Let me beginby welcoming all those attending the seminar and offering a few words of friendship and appreciation to those whose determination and inputmade it possible to hold this Seminar to Validate the National Poverty Reduction Strategy. Iam convinced that this event will provide the opportunity for open andrichdebate, which will certainly make a valuable contribution to the consolidation of our poverty reduction strategy. IwishtosayhowveryhappyIamwiththeprogresswehavealreadymadeinthisfirst stage o f a process as importantas combating poverty. Iam even morepleased to see that this strategy i s gearedtoward a number o f specific actions and measures, which wouldmake the social project Ipresented duringmypresidential electioncampaign a reality. At that time, Imade a number of statementsabout the situation o fpoverty inthe country andannounced my commitment to work steadfastly with other institutions, especially with the government, to find a way to eradicatepoverty inthe short run. SEMINARPARTICIPANTS, LADIESAND GENTLEMEN, Poverty, as an economic and social phenomenon, is deeply rooted and mustbe eradicatedat the source. This phenomenonoccurs mainly because underdeveloped societies lack the knowledge and capacity to combat hunger, disease, andpenury. It i s therefore imperative to wage war on these ills on all fronts, ifwe aim to find the pathto progress and well-being for all. Indeed, the adoption of a strategy involvingall the stakeholders inthe country, includingour principal development partners, reflects a profoundanalysis o fthe situation andits impact on the politicalhstitutional, economic, and social spheresin particular. Undoubtedly, it will be a dauntingchallenge for usto ridourselves o fthis temble scourge. Iamconvincedthat,withcollectiveeffortanddetermination,withprincipled governance, and with the active participationo f our partners, we will be able to marshal the forces to tackle the difficult situation o fpoverty that the country faces. Inso doing, we will be able to gradually achieve the millennium goals, which consist o f reducing by half the indicators of the incidence ofpoverty inthe country. DISTINGUISHEDSEMINARPARTICIPANTS, L A D I E S AND GENTLEMEN, -138- Out of concern for the status ofpoverty inthe world, the UnitedNations heldthe Millennium Summit inNew York in September2000. The most burningissues of this summitfocused on the situations ofarmed conflict inAfrica andtheir impact onthe lives o fpopulations; the drama of poverty; the public debt; diseases such as HIV/AIDS, malaria, etc.. Sustainable development and environmental imperatives incountries such as ours have beenregressing significantly, endangeringthe quality of life o f nations, with adverse repercussions for the entire international community. As the situation of poverty described inthe documentsbeforeyou for discussion and enhancement, i s one o f the ills facing so many other lessadvanced countries inthe international community, it seems fair to say that the phenomenon i s rooted inthe inheritance of the previous millennium, inthe case of Si0 Tome and Principe. As a result, inour country, more than halfthe people live on less than one dollar a day and are victims of and hostages to hunger and diseases caused by problems o f access to drinkingwater, basic sanitation, modemeducation, health, anda proper environment. To calmly accept such a situation would bean act of irresponsibility and injustice. For this reason, itis imperative that profound structural changestake place, which inturn implies facing complex challenges that require the creativity andjoint efforts of the entire nation, and objectives and partnerships aimed at solvingthe problems. LADIESAND GENTLEMEN, The major challenge before us today throughout the continent i s to discover the model that will enable us to reach levels of development equivalent to other parts o f the world. Inother words, this means accelerating the growthofour economies so that they are strong enough to withstand negative endogenous and exogenous influences andbecome competitive on external markets, capable of creating employment and wealth so as to vanquish poverty. H o w can we buildschools, hospitals, produce food, energy, drinking water, and sanitationto provide a decent life for our citizens? This i s the great challenge we face and which we must already visualize overcoming. Inthe UnitedNationsreport ontransformation ofthe Africaneconomy, good governance was signaled as keyto the efforts to be undertakento reduce poverty in Africa. This means that African countries must establisha framework o f good governance within which they will implement more effective and transparent policies, combat corruption, improve fiscal controls, and seek to provide peace and security for their citizens, individual freedoms, and equal opportunities, as well as accessto subregional, regional, and international markets to enhance gains. Another important issue is investmentinhumanresources,tappingthe existing potential . andpromoting education, health, accessto new production and information technologies. It is also necessaryto invest inagriculture to modernize it, improve infrastructure, pay special attention to the question of integration and regional cooperationto make it possible to create larger markets, create the conditions for investmentand growth o fthe local and foreign private sectors. Iam pleasedto note that although this i s the first exercise inpreparing a strategy for poverty reduction, significant steps have already -139- beentaken to factor inthe problems Ihavejust cited. These will certainly be better addressed when the system ofcollecting quantitative data for compiling the national accounts i s fine tuned, as it i s a key component of the country's macroeconomic management. 8.5.1. SEMINARPARTICIPANTS, 8.5.2. LADIESAND GENTLEMEN, According to the analysis o f monetary poverty inour country's population, 68,685 or 53.8 percent o fthe population (more than half) are considered poor as they live on less than Dbs 220,000.00 a month. 19,237 or 15.1 percent are considered extremely poor as they live on less than Dbs 110,000.00 per month. The socio-professional groups hardest hit by poverty, in descending order, are: agricultural workers, fishermen, retirees, senior citizens and other unemployed persons. The analysis o fpoverty by place ofresidence shows that the NorthemRegionhas the highest incidence o f poverty (70.6 percent o f the population), followed by the Southem Region (65.1 percent), and the Autonomous Region of Principe (60 percent). At the district level, the district o f Agua Grande has the lowest incidence ofpoverty (39.4 percent o f the population). At the other extreme, w e have the district of CauC where the incidence ofpoverty i s 82.2 percent. Poverty has made it impossible for people to attain, either by workingfor others or by usingtheir income from self-employment or other sources, the resources needed to meet basic human needs, such as enough to eat to satisfy hunger and to enjoy food security. They cannot enjoy good health owing to the scarcity o f food, poor housing conditions, poor clothing, medical care, and drug supply, a polluted environment, which is unsafe and unhealthy for humans. They lack the conditions and means to leam with a view to completing at least one level o f schooling; they are not ina position to exercise their rights, nor to have their voices heard; there isno security or dignity intheir lives as they do not havejobs that give them the money to meet minimumbasic needs and so enable them to have a decent life. Livinginanharshenvironment, people affectedbypoverty, as a means o fsurvival, often destroy the environment they live inby indiscriminately felling trees, removing sand from the beaches, leaving the coastlines unprotected and stripped o ftheir beauty,, thereby underminingsustainable development. Despite the many efforts to prevent gender inequality inour society, the inequalities that still exist betweenmen and women mustalwaysbeborne inmindregardless ofthe degree ofpoverty. Spreading povertyhas caused new disturbing phenomena, such as widening asymmetries between regions, districts, and localities, as well as an increase in migratory flows from other localities to the capital seeking a means of survival. The effects o f this situation havebeenthe appearance o f street children, rising crime, and increasing numbers of unemployedinthe capital and its surrounding areas, which could compromise the country's future. LADIESAND GENTLEMEN, -140- Poverty i s a multifacetedproblem. Its highest incidence i s inthe rural and suburban areas. Its different economic manifestations, such as low wages and income, affect productivity. At the individual level, poor compensationfor work leads to poor productivity, caused, among other things, by factors related to health andor education. Access to education i s also influenced by the monetary situation o f households. The macroeconomic framework for general and sectoral development, as well as other publicpolicies, the institutional, political, and cultural environment, are also determinants to be taken into account, at a more general level. r As poverty is a multifaceted phenomenon, poverty reductionrequires that a number of actions betaken simultaneously on the overall system inwhich these phenomena arise. Itis within this framework that the presentpoverty reduction strategy paperwas drafted. The paper analyzes the situation ofpoverty in STP with regardto monetary aspects, living conditions, poor policy, and social poverty, with a view to adopting an appropriate strategy to reduce overall poverty. Poverty reduction calls for politicalwill on the part o f all agents: leaders o f government, political parties, churches, workers, employers, unions, civil society, and our external partners. The entire poverty reduction strategy i s a politicalprocess. It involves resolutejoint action to make the connectionbetween GDP growth and improvement inits distribution through good fiscal measuresand the provision o fbasic social services, such as infrastructure, environmental sanitation, education, health, to extricate the poor from the marginalized situation inwhich they findthemselves. It also involves the establishment of strategic partnerships with stakeholders interested inthe social progress o f our society, giving them the opportunity to be heard, based on democratic principles o f accountability. Inthis way, civil society can make a useful contribution to social and political transformation. Inorder to make thispossible, the government must finda way to take action to encourage dialogue with all development partners on a national scale, so that they can participate within the framework o f democratic institutions. Thus, as part ofthis strategy, the government must continue to support and tojoin with civil society insettingthe priority objectives o fpoverty reduction. To address the situation ofpoverty inour country, greater consistency i s needed in governmentpolicies influencing development. Other requirements are: debt relief from bilateralandmultilateral partners; increased trading betweenthe populations most affected bypoverty and domestic economic transactors inside the country and foreign transactorsoutside. Investment and appropriate technology are fundamental factors in poverty reduction, to the extent that they promote economic growthand strengthen social infrastructure to alleviate the living conditions of the country's poor. The majority o f our population lives inrural areas and by farming. Thus, special attention should be paidto this subsector, so that the people can earn enough income to improve their living conditions. The policy should also be consistent inits coverage o f suchsectors as the environment, populationmigrations, healthcare, security, and socioeconomic infrastructure. The government must therefore focus onmaking its policiesmore consistent with poverty reduction, usingany assistance that might be forthcoming from international agencies. -141- SEMINAR PARTICIPANTS, LADIESAND GENTLEMEN, At this stage of drafting the strategy, we are verypleasedthat we cancount onthe support of our bilateral andmultilateral partners, who have madepoverty reduction an essential priority o f cooperationwith poor countries such as ours, and whose actions are intended to strengthen the capacity o f our local operators. We mustnow make a national effort to better manage the country's scarce resources and the external aid provided to . us to combat the scourge o fpoverty and completethe various stages of the millennium goals o f reducingby halfthe percentage o f the population currently living inpoverty. Policy consistency i s another fundamental objective that will be gradually includedin our poverty reduction efforts. IwishtopointoutthatpovertyreductioninSTPrequiresnotonlyarticulatingbutalso the havingthe ability to implement creatively the strategies agreeduponbetween the government, civil society, and our developmentpartners, bothbilateralandmultilateral, so that the country can buildits capacity to manage wealth and ensure its fair distribution between capital and labor, as it opens up to the outside world. The country's probable entry into the oil cycle should present yet another opportunity to use the resources that should come from this, first and foremost, to solve the glaring problems o f poverty and to guarantee that future generations will not be so afflicted. Inclosing, Iwishto expressmyheartfeltthanks to the intemationalcommunity for the support it has been givingus inthe difficult struggle to reducepoverty and to reiterate myunreserved commitment to this important task, which is not only one ofreducing poverty as we have said, but o f completely eradicating it from this our only homeland. Here we have the place and the means for our collective and individual happiness. LONG LIVE sAo TOME AND P~NCIPEAND THE COURAGE OF S.&OTOMEANSTO RISEABOVE OURCURRENTCIRCUMSTANCES! THANK YOU. -142- H i s Excellency the Presidento f the Republic, M a d a m Prime Minister and Head of Government, Members of Government, Deputies andRepresentatives o f Political Parties, Representatives of the Diplomatic Corps, Donors, Guests, and Participants, Members of the Poverty Reduction Strategy DraftingCommittee and Permanent Secretariat; Ladies and Gentlemen, Before beginningmy speech on the subject that bringsus here today, on behalf o fthe Strategy DraftingCommittee, which Ichair, Iwish to thank HisExcellencythe President o fthe Republic, for coming and accepting our invitation to chair such an important event, which lays the foundations for improvingthe living conditions and futures o f the sons and daughters o f Silo Tome and Principe. Iwouldalsoliketothankallthosewhoacceptedthisinvitation,especiallyour development partners, who had to travel far to take part inthis ceremony. As you know, the purpose o fthis event is to validate our NationalPoverty Reduction Strategy in Silo Tome and Principe. This document is an initiative responding to the need to reduce the poverty affecting large segments o f the population worldwide. Our country i s not spared from this process, giventhe deterioration inthe main indicators of living conditions, both social and economic, reflectedinthe results o f the poverty profile study on Silo Tome and Principe, conducted inNovember 2000 to February 2001 with the support o f our social partners. The study under reference showed that poveicy in Silo Tome and Principe affects 53.8 percent o f the total population o f the country, with 55.7 percent ofthe households affected headedby women and 53.0 percent by men. The same study further concluded that income levels are inversely proportionalto family size, meaningthat income tends to decrease as the number ofpersons inthe family increases. Extremepoverty affects 15.1 percent ofthe Silotomeanpopulation. Regarding the poverty o f basic living conditions, namely access to education, health, drinkingwater, environmental sanitation, and housing, itwas foundthat 11.8 percento f the population hadnever beento school, and that illiteracy increaseswith the degree o f poverty, affecting 12.9 percent o f the poor and 9.6 percent of the nonpoor. Inhealth, the levelofdeterioration isalso discouraging: thepopulationlivingin extreme poverty has no accessto primary health care. Only 19.6 percent o fthepopulationhasaccess to pipe-bome water, indicatingthat the situation at the national level i s a matter for serious concem. Environmentalsanitation is also ina lamentable state. -143- Low production and productivity i s negatively influencing the income indicator, with the result that per capita GDP moved from US$365.00 in 1994 to US$295.00 in 1999. HisExcellencythe President ofthe Republic, Attendees, Ladies and Gentlemen, All the studies conducted inthe country indifferentperiods show that all the indicators measuringpoverty have worsened in Sgo Tome and Principe. Concerned by this situation and basedon the results obtained inmacroeconomic stabilization, the country was able to reach decision point under the HIPC (Highly IndebtedPoor Countries) Initiative inDecember 2000, thereby releasing domestic resources for financing some priority programs inthe area of poverty reduction. At that point, we received assurances that a larger volume ofresources would be released if Sgo Tome and Principereached completionpoint in2003 meeting the following conditions: 1. Consolidation of the macroeconomic stabilizationprocess; 2. Preparation of a National Poverty Reduction Strategy. The process of drafting the National Poverty Reduction Strategy began with the signing o f an InterimPoverty ReductionStrategy Paperbetween the government, represented by the MinistryofPlanningandFinance, and the IMFandWorld Bank inApril 2000. T h i s paper was used as amethodologicaltool to guide us through the process o f drafting our National Poverty ReductionStrategy, which we are presentingtoday to this distinguishedgathering for validation. The Poverty ReductionStrategy was institutionalized by Order 4/2001o f June 29,200 1 of the Prime Ministerand Head of Government at that time. It definedthe organizational structure for drafting the present strategy, based on a philosophy o f participation. The organizational structure for draftingthe strategy was builtaround: b A steering and supervisory committee comprising the Prime Minister, the Ministers of Planningand Finance, Education, ForeignAffairs, Health, Economy, and Infrastructure. b A governmentkivilsocietytprivate sector concertation committee, whose functions was to monitor the process o f drafting the NPRS and issue opinions on the preparatory documents drawn up duringthe exercise. That committee was chaired by the MinisterofPlanningandFinance. b A government/development partners concertation committee, chairedby the Minister ofForeignAffairs, whose mainmission was to raise the resources needed to finance implementationof the NPRS, ensuring that the interventions by development partners would be consistent with and complementary to the strategy. -144- 0 An NPRSdraftingcommittee,chairedby the Minister o fPlanningand Finance, whose missionwas to coordinate and systematically assessthe work done in opinions and quarterly reports. That committee comprised individuals designatedby the various agencies o f central government, the Office of the Prime Minister,Ministry o f Health, Ministry of Education, Ministry of Economy, and Ministry of Planning and Finance. 0 The mission of the three-member permanent secretariati s to support the drafting committee inall activities related to draftingthe NPRS. Inaccordancewiththepresetobjectives for draftingthe strategy, six thematic groups were created covering the following areas: 1. Growthpotential, macroeconomic framework, and environment. Coordinator: Dr.ManuelFilipeMoniz; Consultant: Dr.Leone1Mario d'Alva; 2. Income opportunities for the poor. Coordinator: Mr.Carlos Pires dos Santos; Consultant: Mr. Calixto Will; 3. Education, Literacy and Training. Coordinator: Dr.Femanda Pontifice; Consultant: GuilhenneOctaviano; 4. Health, Nutrition, andPopulation. Coordinator: Dr. Eduardo Carmo F. Matos; Consultant: Dr.Jose Manuel Carvalho; 5. Governance, Decentralization, Participation, Communication, and Information. Coordinator: Dr.Armindo Vaz d'Almeida; Consultant: Dr.Frederico Gustavo dos Santos: 6. PovertyAnalysis andMonitoring. Consultant: Mr.Diogenes Pires dos Santos. The key pillars ofthe strategyare: --- acceleratedandredistributive growth, new opportunities for increasing and diversifying income, humanresourcedevelopment and access to basic social services, - public institutionreform, capacity building,andpromotionofapolicy o fgood governance; - mechanism for monitoring, evaluating, and updating the strategy. HisExcellencythePresidentoftheRepublic, Participants, Ladiesand Gentlemen, Our strategy is part of a vision of lastingand sustainable growth, aimed at reducing poverty by 2015. Its overallmedium- and long-term objectives are to attain a GDP growth rate of 5 percent in2003 and higher after that date, makingit possible to reduce the poverty to halfits current levelby 2010 andto 1/3 of that levelby 2015. -145- The period to 2015 is consistent with the period envisaged inthe Millennium Development Goal as a suitable target for all the countries striving toward that end. Thus, the goals o fpovertyreduction inSgo Tome and Principe coincide with the Millennium Development Goals. The proper implementationof this strategy, guided by a philosophy of good governance, will make itpossible by 2015 for the population to have access to basic social services, better quality education andhealth, and abetter quality o f life by reducing the social disparities behveenthe districts, between these and the autonomous region o f Principe, and between urban and rural populations. Some constraints couldjeopardize the successful implementationof the actions under this strategy. One o fthe principalconstraints is the external debt burden. According to the latest available informationonthe debt sustainability analysis conducted in STP in October 2000, the stock o f debt stood at USS294 million, the ratio of the present value of the debt to exports was 851percent (150 percent), and the ratio of the present value o f the debt to current income was 1,253 percent (250 percent). Our own income is currently 22 percent of GDP. Excluding other resourcesfrom international cooperation, debt service represents approximately 54 percent of current income. This means that one o f the major constraints on implementationof the strategy i s financing. For this reason, the HIPC Initiative continues to be our best hope for solving the debt crisis, despite the slow movement o f the process toward the final goal. We needto be sure that through the HIPC Initiative we will be able to releasethe resources needed to finance the actions envisaged inthe strategy. HisExcellencythe Presidentofthe Republic, Participants, Ladies and Gentlemen, The document before you i s based on a participatory philosophy, involving, inaddition to the staff of central government agencies, organized civil society, donors, the private sector, associations andNGOs. It should therefore be viewed as a guideline indefining socioeconomic public policies, with a view to sustainable growth, the end-result being poverty reduction and improvement o f the livingconditions o f the Sgotomean population. At eachstage ofdraftingthe strategy paper, opinions were sought from the organs of sovereignty, government officials, local governments, political parties, labor unions, and civil society ingeneral, and from bilateral partners. As these organs issuedtheir respective opinions, they were incorporatedinto the paper bringingusto this validation stage. All inall, four versions ofthe paper were produced and today we arepresenting the fruit of a number of contributions, following the original methodology. As regards the details ofthe work, the technical groupwill present them and we invite all those present to ask questions that couldhelp further improve and enrich our document which, after validationhere and uponapproval by the Council o f Ministers, will become anational document. Iwishto thank all the consultants and coordinators for their work and to congratulate and thank all those who will contribute inone way or -146- another to developing this document. On a positive note, the drafting ofthis paper can be attributed to the determination of our local experts. Before giving the floor to His Excellency the President of the Republic to proceedto open the seminar, Iwould like to note that this ceremony is not only an act of validation it is also a campaign. It i s a campaign to get the word out onthe level ofpoverty afflicting our population, by focusing public actions on the systemfor poverty reduction and human development. It is a campaign to inform our development partners, so that they can support us in canceling the debt as a matter o f urgency, based on the evidence of the results of our efforts to implementmacroeconomic stabilization policies. It is a campaign to advise all those incharge o f our country's future that the available resources should be allocated primarily to the sectors which would have an immediate impact on poverty reduction. It is a campaign to mobilize domestic resources to underpinthe budgetary priorities relating to poverty reduction, strengthen human rights, democracy, and good governance, inaccordance with the millennium declaration. Itis a campaign to ensurethat implementation ofthe strategy through 2015 is not interrupted, so that it can help transform public and intellectual debate at the national and global levels; place development objectives above the priorities of individualsor groups; prioritize projects whose impact will clearly promote economic growth and so reduce poverty. Itis a campaign for better expenditure allocation inthe areas ofeducation andhealth, bearing inmindthe advantages they offer. It is a campaign that calls attention to the right to gender equality. Having alerted you to these things, Inow call onH i s Excellency the President of the Republic to proceed with the opening of the ceremony. Thankyou. . -147- ADDRESS BY HEREXCELLENCY THE PRIME MINISTER AND HEAD OF GOVERNMENT AT THE FORMAL CLOSING SESSIONOF THE NATIONAL, SEMINAR TO VALIDATE THE NATIONAL POVERTY REDUCTION STRATEGY MEMBERS OF GOVERNMENT, AMBASSADORSAND REPRESENTATIVESOF INTERNATIONAL ORGANIZATIONS ACCREDITED TO sAo TOMEAND PR~NCIPE. EXCELLENCIES, LADIES, GENTLEMEN, Itis mypleasure to chair the closing sessionofone ofthe most important events heldby the government as the year 2002 draws to a close, namely the National Seminar to Validate the National Poverty ReductionStrategy, which i s one of the fundamental pillars o f this government's program. This seminar i s being heldat aparticularly importantjuncture inthe process of consolidating our democracy. The forces inthe nationalpolitical arena have demonstratedmaturity and statesmanshipby seekinga broad consensus, without which there canbe no political/institutional stability and, consequently no stability of the government. This stability is a determiningfactor inthe creationof a favorable environment for the country's development. This i s a source of great satisfaction, as we are convincedthat only by deepening every form o f peaceful coexistencewill we be able to better guarantee compliance with one o f the most important strategies inwhichwe are all involved, with the sole intent o f doing all we can to reduce poverty in Siio Tome and Principe. Today's validation seminar affirmed this role andthe strategy should henceforthplay a permanent role o f intervention in our society. 8.5.3. Ladiesand Gentlemen, Permit me, truthbe told, to say Ishare the view o fmany o f our compatriots that SBo Tome and Principe i s not intrinsically poor, but has beenimpoverishedby the economics o fyears ofpoor resourcemanagement and inappropriatepolicy options, which, unfortunately, we are forced to live with. Despite concerted efforts over the last decade, ultimately aimed at stabilizingour economy, we have seen the livingconditions o f our citizens grow steadily worse, to the extent that more than 53 percent o f them are now actually living inpoverty. Ladiesand Gentlemen, The National Poverty Reduction Strategy presented today, representsmore than a commitment to the conditions demandedby our partners inthe context of debt relief; it i s above all a recognition of the needfor joint efforts involving the various sectors and subsectors, with a view to overcomingthe constraints that cause the levels of poverty observedinSiio Tome and Principe. This is our strategy. -148- Inaddition to the broad-basedconsultations andopinionpolls at various levels, involvingnational experts, the private sector, civil society, the development partners o f Si40 Tome and Principe, implementation also depends on the direct and indirect participation of all. Their contributionwill certainly determine the scope o f the targets set to meet the general objectives. Furthermore, the compatibility of these objectives with the broader millennium goals established by Heads o f State and Government from all over the world at the Summit in New York, organized by the UnitedNations last September, means that our poverty reductionefforts helpreduce poverty worldwide. To that end, the strategic vision adopted plannedactions inthe areas o f education and health so as to produce positive and substantial results that would contribute fundamentally to human resourcedevelopment inour country Excellencies, As there is a highincidence ofpoverty inrural areas and a growing trend towards rural exodus, the support envisagedfor development of micro and small business couldhelp keep populations settled. These measures, in addition to creating infrastructure and developing basic social services within reach of the population, will undoubtedly leadto the creation o fpoles o f development inrural areas. Inadditionto recognizingtheimportance ofthe productive sectorsinensuring increased production and the necessaryincome which, ifevenlyredistributed, will improve the living conditions of the poor, we must stress the dire need for a policy o f good govemance, which i s a prerequisite for continuity o f the strategic actions planned ifwe are to achieve the desiredresults without disruptions. To that end, it is an absolutepriority for us to implement the actions under the pillar o f the strategy relatingto public institution reform, capacity building, and promotion o f a policy of good govemance. We are convincedthat ifwe adapt our institutions to the geographic, demographic, economic, social, and cultural realities o f our country, our democratic institutions will be able to function more effectively, resultinginmore transparent and efficientresourceusefor the benefit of the poorest populations. We are proudto say that this aspect o fthe strategy hasbeenplacedat the top of our list o f priorities. Butwe mustrecognize that the institutionalization o f a structure for receiving and addressingthe concems o fnongovernmentalorganizations could facilitate the exchange of relevant informationon the aspirations and expectations ofthe communities with regard to policy measuresthat have a real impact on their lives. We take this opportunity to express our satisfaction that the strategy just validated took into consideration the current situation of the national armed forces. The demands o f guaranteeing national sovereignty, defending the integrity o f our temtory, and the urgentneedfor controland law enforcement inour waters, inlight of our vulnerability to illegal trafficking and unauthorized exploitation o fmarine resources, etc., justify takingapositionthat should be consistent withthe objectives o f efficient resourceuse. -149- We welcome the seminar that will be held shortly specifically to addressissues relating to the participation ofthe armed forces inour national poverty reduction efforts. 8.5.4. 8.5.5. Ladies and Gentlemen, We wished to underscore the timeliness o f creating mechanisms for monitoringand evaluating the strategy. Inaddition to monitoringand evaluation, the structure to be created must guide the implementationprocess, responding to the progress o f actions as well as to any corrections that will have to be made as a result of adaptationto the new realities. We regularly face many constraints inseeking solutions to ensure the welfare of our people, but it i s the economic and financial constraints inparticular that have most severely limited our ability to fully execute all plans, programs, and projects withinthe established time frames. Inthat connection, the strategy madepublic today envisages only those actions that are possible, taking into account the resources we can raise for the purpose as well as our real capacity to absorb them inthe time frames indicated. Finally, special congratulations and thanks: - to the Permanent Secretariat for Coordination, which worked competently, enthusiastically, and faithfully for more than a year on drafting the strategy we havejust validated, even under adverse conditions; - to the many sectoral experts who participatedinthe thematic groups, to the representatives of the private sector and organizedcivil society for their valuable contributions, whose opinions, comments, and suggestions enhanced the various versions o f the draft throughout the process; - and to our development partners for their material and financial support, which contributedto the successful completion o fthis extremely important document. The government, aware of the magnitude o f the poverty situation inour country, and in lightofthe commitmentsmade to our parbers, is ready andprepared to complete the long and complex but effective joumey toward poverty reductioninSBo Tome and Principe. So Itake this opportunity to launch a fervent appeal to all the stakeholders inthe nation to contributeto the implementation o f the National Poverty Reduction Strategy in Slo Tome and Principe. May this strategy become a source o f constant inspiration inour daily lives; this is my most sincere hope. IthereforedeclaretheproceedingsoftheNationalSeminartoValidatetheNational Poverty Reduction Strategy closed. Thankyou all very much. 150 DEMOCRATICREPUBLIC OF SA0 TOME AND PRhCIPE MINISTRY OFPLANNINGAND FINANCE OFFICE OFTHE MINISTER (Unity Discipline-Labor) - DRAFT DECREE' No I2002 Whereas the scourge ofpoverty afflicts a large segment o f the Sotomean population, seriously compromisingsocial stability and the equilibrium needed to implement the government's development policies; Whereas the govemment defined combating poverty as one of the fundamental pillars of its program; Whereas, to impart greater efficiency and effectiveness to the actions required to combat poverty, the govemment decided to draft a Poverty Reduction Strategy Paper, which has been publicly validated; Further, as it is necessary to formally adopt this document and make it bindingas the guideline for all the actions and institutions participating inthe poverty reduction process; Byvirtue o fthe powers vested initby Article 99(C) o fthe PoliticalConstitution, the Government of the Democratic Republic of S2o Tome and Principe hereby decrees and promulgatesthe following: Article I The Poverty Reduction Strategy Paper, which is an integral part of this Decree, is hereby approved. Article I1 The Poverty Reduction Strategy Paper is binding on all the institutions and entities involved inactions inthe struggle to reduce poverty. Article I11 This Decree shall take effect immediately. ' This d r a f t decree was submitted t o and approved by t h e c venerable Council of M i n i s t e r s a t i t s r e g u l a r meeting on Thursday, December 19, 2002, under t h e chairmanship of H i s Excellency the President o f the Republic. UPDATEDANNEXES National Strategyfor PovertyReduction INDEX 1. PREVIOUSCONSIDERATIONS ............................................................................. 2 2. CHANGES AND UPDATES..................................................................................... 3 2.1. The foreign public debt andthe effects on the resources from the HIF'C fund ..4 2.2. UrbanandRuralUnemployment......................................................................... 5 2.3. Fluctuations inthe price o fcocoa ....................................................................... 7 2.4. Tourism Growth.................................................................................................. 8 2.5. The LiberalizationofTelecommunications....................................................... 10 2.6. Oil resourcesmanagement................................................................................ 11 2.7. Educationandhealthexpenditure..................................................................... 13 2.8. Macroeconomic context.................................................................................... 14 2.9. Implementationstructure.................................................................................. 18 2.10. ExpectedConsciousness-RaisingMeetings.................................................. 20 2.11. Planof action andcurrent situation relative to its implementation .............. 21 2.12. Budget........................................................................................................... 22 3. APPENDIX............................................................................................................... 26 National Strategy for Poverty Reduction -- 1. PREVIOUS CONSIDERATIONS 1. Since Sao Tome and Principe reached the Point of Decision on the HIPC Initiative in December o f 2000, it has benefited with financial aid fi-om this Initiative. 2. The amount corresponds to a substantial portion o f what the country would have to pay back for its regular debt services, but this amount has been channeled to fundprojectsconsidered priority for poverty-reduction. 3. On the other hand, Sao Tomean authorities and Breton Wood institutions, namely the World Bank and the International Monetary Fund, established two conditions inorder for the country to reach the Point of Conclusion ofthe HIPC Initiative in 2006: i.theconsolidationofadequateeffortsatthemacroeconomiclevel; ii.theestablishment of anationalstrategyforpovertyreductionthrougha participative process with the engagement o f all active agents o f the country andthe satisfactory implementationo fthese. 4. As a matter o f fact, from the analysis o f the poverty situation and the identification o f its major indicators, the govemment projected five principal axes in the document entitled National Strategy for Poverty Reduction (NSPR), namely: 0 Reform o fpublic institutions, capacity reinforcement and the promotion o f a good governance policy; 0 Accelerated andredistributive growth; 0 Creation o f opportunities for growth and diversification o f income for the poor; 0 Humanresource development andaccessto basic social services; 0 Adoption o f mechanisms for follow-up, evaluation and strategies for updating. 5. Through the development o f actions around the strategic axes above mentioned, the government envisions achieving poverty reduction by 2015 through the accomplishment o fthe'following global objectives: 0 To reach an average growth rate of 8% of the gross domestic product (GDP) starting 2005 inorder to achieve the millenniumgoals; 0 To reduce by halfthe percentage o f the Sao Tomean population living at thepoverty levelby2010, andto less than 1/3by2015; National Strategy for Poverty Reduction 0 To reach by 2015 universal access to all basic social services, and to promote an improvement o fthe population's quality o f life; 0 To considerably reduce differences along social class and gender, among districts and within the Autonomous Region o fPnncipe, as well as among rural and urbanpopulations; 0 To promote and reinforce institutional capacities and a good govemance policy. 6. The document named National Strategy for Poverty Reduction (Estrategia Nacional de Reduqao da Pobreza, ENRP), validated in the National Symposium which took place on December 10, 2002, was approved by decree o f the advise ministries during an ordinary session on December 19 and was approved by the nation's president on January 23`d, 2003. 7. Since its finalization untilnow, however, changeshave occurred to some o f the information and data considered for the creation and elaboration, makingan update necessary for a reconsideration o fthe poverty phenomenon and, consequently, with the purpose o fmobilizing resources adjusted for the needs of the financing strategy. 8. To this end, the present document constitutes an addendum and an integral part of the National Strategy for the Poverty Reduction, inaddition to introducing some changes happening to the actions already taken or inthe process contemplating the revision o f the proposed actions andthe readjustment inregardsto some o f the reconceived goals. 2. CHANGESAND UPDATES 9. During the conceptualization o f the National Strategy for Poverty Reduction, taking into consideration the principal determinants o f poverty and basing itself on an optimist scenario inspired by national long-term studies; a significant reduction of poverty was projected during a time interval that extended until 2015. 10. In order to fulfill the requirements o f this challenge, the government recognizes the need to better take advantage o f the humanpotential and of the natural and material resources of the nation, as well as o f the availability o f bilateral and multilateral cooperation. 11.However, considering that the possibilities for mobilization of susceptive resources must be utilized for the implementation of the strategy which requires a more updated knowledge o f the poverty situation, it became necessary to proceed with the changes and updates as a consequence of more recent institutional, political, social and economic developments. National Strategy for Poverty Reduction - 12. As such, we present the following informationthat i s currently updated inrelation to: 0 Public Debt; 0 Rural and urbanunemployment; 0 Fluctuations inthe price o f cocoa; 0 Tourism growth; 0 The development oftelecommunications; 0 Oil resources management; 0 Education andhealth expenditure; 0 Macroeconomic context 0 Nationalroadmap for the implementationo fthe ENRP; 0 Plano f action; 0 Result indicators for the short andmedium term; 0 Budgetprevision. 2.1. The foreignpublicdebt andthe effects on the resourcesfromthe HIPC fund 13. Confronted with structural and socio-economic difficulties, the subsequent governments o f Sao Tome and Principe will engage in making efforts to impose the plan o f hlfilling the inherent conditions o f the HIPC initiative, or that will permit them to obtain debt relief for the country whose deficit evolved from 2001 to 2004 inthe following manner: Period under 2000 2001 2002 2003 UntilNovember of2004 (estimate) consideration Amount o f Foreign302 305.1 309.88 306.5 317.5 I Multilateral 175.4 179 181.05 Bilateral 126.6 126.1 128.83 National Strategy for Poverty Reduction 14.One o f the conditions was to fulfill the goal o f the government program, in particular the macroeconomic control. Inthe course o f negotiations with the IMF throughout 1999, accords were concluded that would lead to a signing o f a Poverty Reduction and Economic Growth program. Planned for 3 years and with visible effects starting in 1998, this program should allow Sao Tome and Principe to satisfy the conditions for renegotiation of its foreign debt in the plans o f the HIPC initiative. 15. The successful achievement of this program allowed Sao Tome and Principe to reach the point o f decision of the H P C initiative in December o f 2000 and, starting inJanuary of2001, to benefit from the upcoming aid o f this initiative. 16. However, as one can deduce, in light o f the plan presented above, the accumulated foreign debt continues to grow from year to year increasing from $302.00 million (USD) inthe year 2000 to $306.5 million (USD) in2003. 17. In the year 2004, the government, pressured by the financial need to facilitate pressing problems o f the state's functioning, celebrated two new loan contracts o f ` $10,000,000 (USD) and $1,000,000 (USD) with the countries o f Nigeria and Angloa, respectively, thus provoking an increase inthe mounting foreign debt the ended up reaching $317.5 million (USD) inNovember o f2004. 2.2. Urbanand RuralUnemployment 18. The district o f Agua Grande, considered to be the only urbanzone' inthe country and where the highest concentration o f unemployed population is registered, corresponds to 48.5% o f the total unemployed population registered in the country. 19. As far as men are concerned, 55.8% of all unemployed men in the country are concentrated in o f this large region o f the country in comparison o f 44.3% o f the total women. 20. However, the largest level o f unemployment affects women in all the districts with the exception o fthe district o fLemba. 21. Also concerning women, it i s inthe urban zone where we find one o f the largest levels o f unemployment in the country being surpassed only by the female rural populationo fthe Me-Zochi district by only 0.3 percentage points. ' Becauseof a lack o f statistical data about the urban and rural areas, this study utilized as criteria the following definition of urban area: an area where all peripheral activities and most of the secondary activities concentrate. Fromthis perspective, the district of Agua Grande abides to this defined criteria, in that the remaining partwas considered am a l zone, including the capitals ofthe other districts. - National Strategy for Poverty Reduction Q_ Agua Designation % Zochi Me- % Cantagalo Yo Caue % Lemba % Lobata YO Pagud % Total Total Valor % Grande Women 4350 48,5 2517 28,i 475 5 3 399 4,4 276 3,i 776 8,7 175 2 8968 loo Men 1815 55,8 479 14,7 202 6,2 126 3,9 176 5,4 403 12.4 50 1,6 3251 100 Women 2535 44,3 2038 35,7 273 4,8 273 4,8 99 1,7 373 6,5 124 2,2 5715 100 22. A tendency toward continual growth of the unemployment levels was verified in the urbanregionbetween 2000 and 2003 while duringthe same period a tendency o f continual decrease inthe rural zone was detected, with a few variations. 23. The variation rate2 of the unemployment in the urban zone during the period between 2000 and 2003 was 48% while the variation rate o f unemployment inthe rural region was 16.5%; this means that there was a decrease o f that same level in the order o f 16.5%. Graph 1: Evolutionof the UnemploymentLevel(2000-2003) I bolution of the Unemployment Level (2000-2003) Urbana +Rural ?L-STP I Urbano 12.7% 16.6% 18.5% 18.8% -m- Rural 16.4% 14.7% 17.2% 13.7% +STP 14.4% 15.7% 17.6% 16.4% I Source: INE, IPAED-2003 24. It is relevant to underscore the fact that the unemployment levels in the urban region registered from 2000 to 2003 evolved almost three-fold o f the average observed in the entire country (48% in comparison to 14%, respectively.) It should also be noted that the decrease inthe unemployment level observed inthe country during 2003 in regards to the same period is due to the fact that it had Level of variation = (Level of unemployment in the year 2003 - Level of Unemployment in the year 2000) / LevelofUnemploymentinthe year 2000x 100. National Strategy for Poverty Reduction decreased in the rural regions by a proportion that is 13 times greater than the unemployment growth registered in the urban region during the same period of time (- 20.3% incomparison to 1.6%, respectively.) 2.3. Fluctuationsinthe priceof cocoa 25. According to the table presented below, one part of the cocoa for export of the national economy surpassed 2,603,050 kilograms in 2001 and reached 3,274,590 kilograms and 3,356,056 kilograms in2002 and 2003, respectively. Year Total kilograms Price per kilogram in Total in Price in TotalinUSD dobras dobras kilograms in USD 2001 2,603,050 7,407.1 19,280,981,659 0.837 2,1SOj86 2002 3,274,590 12,778.8 41,845,207,707 1.4 4,603,828.2 2003 3,356,056 17,203.9 57,737,417,170 1.84 6,176,723.5 I I I I I I I Source: INE,2004 26.The increase in kilograms was 25.8% between 2001 and 2002 while between 2002 and 2003 was only 2.5%. 27. It should be noted that, notwithstanding, the increaseo fthe prices recorded inthe table above, refemng to the export o f dry cocoa in the international market, the internal price o f fresh cocoa did not surpass 2,000.00 dobras. This reveals that the differential inprices between the cocoa that the growers sell for export and that it i s sold dry for the international market was respectively 5,407.1, 10,778.8, 15,203.9 between the years 2001 and2003. 28. This situation does not stimulate cocoa producers to sell fresh cocoa which i s more anachronistic when we know that the growers who produce cocoa and sell for export because o f the lack o f knowledge and access to the international market, are confronted with an increase inthe price of insumosfor the treatment ofcocoa. 29. The studies that were canied out reveal that in one area o f a hectare with 1111 cocoa plants,the grower needs the following inorder to fight against illnesses and plagues duringone year: I Sulfate...................................................................... I I 1I Limestone 224.000,OO ................................................................. 120.000,OO Tenax......................................................................... I1140.000.00 1I National Strategy for Poverty Reduction iTotal............................................................................. 1480.000,OO 1 30. Such costs imply that the grower would have to produce 240 kilograms o f cocoa to support the cost o f the fertilizers. Since we need to add to these costs the expense o f manlabor for cleaning, grass-cutting, rat poison and work tools, cocoa sold at less than 2,000.00 does not pose a benefit for the growers. 31. Because o f this and other reasons, we witness the abandonment o f lands that were given by the State through a process o f privatization. Activities are then transposed to other types o f products that are more advantageous such as the extraction o fpalm wine, the production o f sugar cane for spirits, among others. 2.4. Tourism Growth 32. According to the data in Table 3, the influx of tourism grew by an annual average rate o f 36.5% between the years 1999 and 2003. The year 2003, for diverse reasons, yielded the highest entry o ftourists to the country reaching a variation o f 46.3% inrelation to the same period. Table 4 - Entry of passengers into national territory according to country of origin Amenca Source: Tourism and Hotel Directory/Migration and Frontier Service *Istsemester o f 2004 33. From 1998 to 2003, based on the data fiom Table 4, we can observe that there was no investment in hotel infrastructure (hotels, motels, inns) which is a basic condition for attracting tourists. Table 5 -Major indicators of Tourism Designation 1998 1999 2000 2001 2002 2003 Hotels National Strategy for Poverty Reduction - __J P Designation 1998 1999 2000 2001 2002 2003 I I I I I I Establishments 16 17 17 17 17 17 Room 184 198 198 198 214 228 Capacity for lodging 325 353 353 353 397 425 Motels Establishments 6 7 7 7 7 7 Rooms 38 42 42 42 42 42 Capacity for lodging 69 73 73 73 73 73 Residences Establishments 4 4 4 4 4 4 Rooms 37 37 37 37 37 37 Capacity for lodging 69 69 69 69 69 69 I 1 I I I I I I Source: Tourism and HotelDirectoryMgrationandFrontier Service 34. As one of the envisioned goals in the Strategy for the Promotion o f Tourism and the increase of tourist influx to 7.5% per year, it is necessary that the competent entities do more in the area o f tourism, namely creating incentives and competition. 35. The government already possesses a Strategic Plan for the Development o f Tourism (Plan0 Estrategico de Desenvolvimento do Tourismo, PEDT) that contemplates the study o f the market as one of the guiding factors to make the sector become a major engine o f increase and diversification o f the national income from now untilthe year 2008/2010. 36. These objectives/strategies envision the following: increase in a significant way the contribution o f the sector for the PIB (excluding the oil sector) fkom 5% to 7%, starting 2005, toward the promotion of tourism as one o f the principal engines o f increase for the medium term; develop direct employment in the sector and maximize its revolving effect; value the natural, architectural and socio- cultural patrimonies; develop ecotourism and resort tourism; ensure for private enterprisesthe necessary conditions for development inits sector. - National Strategy for Poverty Reduction 2.5. The Liberalization of Telecommunications 37. The Directive Plan o f Telecommunications was elaborated in 1989 and has since been readapted to take into consideration the numerous changes in the realm o f technology, of international regulations and o f internal institutional evolutions. 38. The process o f creation in 1990 o f the Companhia Santomense de Telecomunicaqoes (CST) (Sa0 Tomean Company o f Telecommunications), an entity o f mixed economy, the development o f the sector is narrowly linked to the concession contract signed December lst,between the government and the 1989 Campanhia Portuguesa Radio Marconi where an agreement of exclusivity was reached for 20 years. 39. However, although the society created is allowed to reach relatively satisfactory results in terms o f the development o f networks and o f the quality o f borrowed services, takinginto consideration the global evolution o f telecommunications and the opportunities afforded by the opening o f the market to new operators, and in the process of more recent negotiations established that this status o f exclusivity would prevail only until December 3lSt o f 2005. 40. Inthe meantime, Law 3/04 was approved which defines the applicable rules for the establishment, the management and the exploration o f national telecommunication networks and o f telecommunication services and established that the regulation o f the telecommunications sector would be realized by a Regulation Authority with the purpose o f favoring the emergence of an open market that favors competition with new partners. Box I L a w that defines the applicable rules for the establishment, the management and the exploration of national telecommunication networks and telecommunication services Law 3/04, published in Diirio da Republica no. 6 o f July 2, 2004, recognizes that telecommunications constitute a key sector for the economic development of the country because o f its geographic isolation as well as because it is indispensablefor the implementation of industry and services. This law also recognizes that telecommunications also constitute a monopoly o f the State and that it is necessary to take measuresto promote new services and to rationally manage the tariffs. As a consequence, this law seeks to constitute the base o fa regulationadequate to the modernization o fnets and of telecommunication services and to the progressive opening o f the telecommunications market to the competition. B y the same token, this law seeks to clarify the responsibilities o f the State and o f the net operators and o f the telecommunications service providers, limiting them to new guidelines (licenses for public networks, authorizations for independent networks or simple declarations for the establishment o f services utilized as independentnetworks or simple declarations for the establishment o f services utilizing complete or partialthird- parry networks.) hordertoassuretheregulationofthetelecommunicationssector,withthepurposeoffavoringtheemergence o f an open market, this law establishes the creation o f a Regulation Authority incharge also o f providing advice to the government in matters o f telecommunications whose orientations and priorities seek to guarantee the extension o fthe coverage area for telephone services, namely favoring the implantation o fpublic posts. National Strategy for Poverty Reduction 2.6. Oil resourcesmanagement 41. The mindfulmanagement o f oil resources is at the center of the citizens' concerns considering the possibilities that could emerge for the improvement o f their life conditions. 42. It is not known with certainty the potential o fthe existing hydro carbonates and o f their commercial viability, but negotiations culminating in the delimitation o f marine borders with neighboring countries, namely Gabon and Equatorial Guinea, will becarried out at the righttime. 43. In the meantime, there are plans to register a progress for both conducive procedures toward oil prospects and for future production and exploration from the perspective o f rules that should define the forms of use as well as the utilization of oil revenues. 44. In July o f 2004 Sao Tome and Principe and Nigeria signed the Declaration o f Abuja, outlining the transparency and good governance in the Zone o f Joint Development that will need to be upheldin all the shared contracts o f oil business production between the two countries. 45. InOctober o f 2003, the first bidding o f blocs in the Zone o f Joint Development was organized in S. Tome, and, as a consequence, it was projected that inJanuary o f 2005 the signing o f the first joint contract of production related to one o f the blocs (bloc I) take place. will 46. The process for the second bidding to take place in Abuja, during the last trimester of 2004 (December of 2004), expects to see the signing of new joint contracts o f production encompassing five blocs which will enable the collection o frevenues that could contribute to the maintenance of economic development. 4 7 . h the meantime, the Law o f Oil Revenues (see Box 1) was approved in December of 2004, after its elaboration and approval by the National Assembly on November 26, 2004, having previously had a broad discussion around this matter such as the involvement of civil society. National Strategy for Poverty Reduction Box 2 Law on Oil Revenues On December 29, 2004 the president of the Republic ratified the oil revenues law approved by the National Assembly plenary that regulates payment and utilization of oil revenues related with operations of oil explorationboth in the joint development zone (JDZ) o f Sao Tome and Principe with Nigeria in the Exclusive Economic Zone of Sao Tome and Principe. The law utilizes the principal lessons learned from international experiences whereby the Sao Tomean people become major beneficiariesof this mineral richness. To that effect, the law created an account - The National Oil Account - where all oil revenues should be directly deposited and there were also defined mechanismsto assure that the revenues be utilized to the benefit of national development. Thus, it foresees mechanisms to prevent the revenues from being channeled to other accounts. The revenues can only be deposited in a State National Treasury Account or in opened accounts created for that purpose, with an authorizationof the national Assembly on behalfofthe State. Quantitativeand qualitative limitswill be introduced to oil revenues that could be channeled to annual budget expenditures. The first will define with certain amplitude the maximum amount of annual financial expenditures related to oil. The second set of limits will establish the basic principles that define the calculation of those expenditures within the maximum fixed limits. Despitethese limits, the guiding principle applied to oil revenue utilization shouldbe a prudent fiscal policy. The No. 5 o f article 8., foresees that an annual figure should always be in conformity with inflation goals. This amount will be determinedby the minister o f Planning and Finance, in consultation with the Central Bank, and taking in consideration the capacity of economy for absorption. The law alsoprohibitsthe santomean State from malung loans utilizing current or future oil revenues as the guaranty for the same. Thetransparency of the annual figure inthe National Oil Account for the NationalTreasury should be approved by the National Assembly within the parameters o f the State General Budget approval, and will be utilized mainly to finance objectivesandprograms defined in the National Strategy for Poverty Reduction. The finite nature of oil resources was also considered as well as the need to introduce mechanisms that allow ofthis, a sub-account ofreserve was created- the permanentFund of Sao Tome and Principe-where part of the Sao Tome and Principe to face the era after the oil boom with a minimumof economic repercussions.Because oil revenues should be deposited and whose utilization is strongly limited only to revenues generated by its applications. When the oil resources are depleted, the intention is that the Sao Tomean people can still continue benefitingfrom the revenuesgeneratedby applications o f this sub-account. The managementand investment of oil revenues are assignedto a committee for management and investments, which is an institution with competence and accredited by law for said purpose. It should act as a prudent investor, based onprinciplesestablishedinthe same law andinthe policy of management and investment. Another aspect that the law centralize on is transparency. The law also defined the mechanisms of auditing, advertising and fiscalization of oil resourcesmanagement. Two annual audits are planned for the oil accounts where the revenues will be deposited. One audit will be conductedby the National Accounting Court (Tribunal de Contas) and the other will be carried out by an audit firm with internationalreputation. Clear rules about transparency and advertising are established in connection to all acts and documentsrelated to exercises of oil activity. On the other hand, this law introduces mechanisms that limit the confidentiality of contracts that have oil resources or revenues as their goals, and includes registry and mandatory advertising of all documentsandinformation relatedto the sector. Conversely, everyone has ample access to the information. A commission for Oil Fiscalizationis also created with characteristics of independenceand with adminisfntive andfinancial autonomy, which permits an efficient exercise ofpower to audit, investigate and sanction. Lastly, the law establishes a set of incompatibilities to the exercise o f responsibilitiesinthe organisms created by the law and aggravates by at least one third, the sanctions normally stipulated in the law to punish conduct that violates dispositionsof the present law. National Strategy for Poverty Reduction 2.7. Education and health expenditure 48. According to Table 6, the study carried out for the National Strategy for Poverty Reduction (ENRP) in Sao Tome and Principe allocated a mounting total o f $26,517 millions (USD) for the sectors o f health and education for the period between 2005 and 2007. 49. Of the amount allocated for the above-mentioned period, the distribution o f monies for the health and education sectors will be $14,050 million (USD) and $12,458 million (USD) corresponding to the 53% and47% levels, respectively. Table 6: ENRP Programming for the 2005-2007 period Health 4,686,170 4,686,170 4,686,170 14,0583 10 1Total (USD) I8,439,050 I 8,862,415 9,215,935 126,517,400 Source: ENRP, PIP-2005 50. According to that data in the table above, there i s a somewhat similar distribution between these two sectors which shows the importance that these two areas have for the nation's development strategy. The expenditures allocated for the education sector represent a trend o f growth within three years whereas the projection for those three'years in the health sector demonstrates an equal distribution. This i s due to the fact that the PIP o f 2005 was utilized as a reference base assuming that the revenues duringthe next two years (2006 and 2007) would revolve around more or less around what was budgetedfor this sector in the PIP of 2005, depending on the circumstances and on the country's needs. 51.According to Table 7, in comparative terms to the level o f accomplishment in both sectors, it is stated that the education sector achieved a positive level of growth in the amount o f 80.2% while the growth for the health sector was negative (-65.95%) duringthe same period o f analysis. 52. Of the total accomplishments, it is indicated here that both the education and the health sectors reveal a level o f growth in the amount o f 5.14% during the years 2003 and 2004 (lst semester.) National Strategy for Poverty Reduction - Table 7: PIP for the Health and Education Sectorsfrom 2003 to 2004 Sectors 2003 2004 (lst Semester) Education 3,795,599 6,839,845 Health 4,006,939 1,364,299 I Total (USD) 7,802,538 8,204,144 2.8. Macroeconomic context 53. Between 2000 and 2003, significant progress was achieved inraising investment and growth while containing inflation. Growth in real GDP accelerated during that period, reaching 4.5 percent by 2003, while inflation was remained stable at around 9 percent. Investment averaged 36 percent o f GDP. 54. The strong growth performance was achieved against the backdrop o f continued diversification o f the economy and expansion o f private sector activity. In a reflection o f the success o f the new sectoral strategies for tourism and agriculture the economy has become primarily service-oriented, with tourism now the principal foreign exchange earner, from an economy that until the end o f the 1990s was predominantly reliant on cocoa. The agricultural sector itself has also witnessed significant diversification, with the cultivation o f pepper and vanilla having taken o f f and plans are currently underway for the commercialization and export o f these activities. To support the diversification process and create the necessary conditions that.would be conducive to further expansion o f the private sector, a broad-based privatization program has been prepared and a new investment code will shortly be presented to the National Assembly for approval. 55. Success in implementing structural reforms has also played a key role in supporting growth. With assistance from the World Bank and the IMF, Sao Tome and Principe has implemented a series of structural reforms including privatization o f public enterprises, adoption o f a semi-automatic pricing National Strategy for PovertyReduction mechanism for petroleum products, that better reflect production cost while protecting the most vulnerable groups. Moreover, in 2001 a civil service reform was implemented, which involved downsizing o f the civil service by 320 public and 158 utility employees, and the establishment o f a single computerized system o f civil service andpayroll management. 56. To minimize the degree o f extemal vulnerability, maximum efforts have been made to meet the conditions that would enable Sao Tome and Principe to reach the completion point under the HIPC Initiative. Most o f the HIPC completion point triggers have been satisfied, including: (i) the preparation and approval by the National Assembly of transparent legislation for management of petroleum resources; (ii) the establishment of a technical petroleum unit dealing with the sectoral issues such as re-negotiations o f old contracts since 2002; the establishment o f a National Committee on Petroleum (NCP); and (iii) the creation o f the National Petroleum Agency (NPA) (in charge o f designing the necessary legal framework and institutions to supervise and regulate the sector). Other completion point triggers including in the social areas and the creation o f the Fiscal Tribunal (Tribunal de Contas) that has been functional since mid-June 2003, have also been met. 57. Important reform in the area o f fiscal administration has also been implemented during 2000-03. The governments' accounting and budgeting systems have been updated to bring them more in line with international standards; the tax code is being modernized, customs rates have been simplified; the information system has been modernized, including adoption of the SYDONIA information system; humancapacity has been reinforced; and the services o fthe Ministry o fPlanning and Finance has been decentralized from a single Directorate o f Finance to individual directorates (Treasury; Budget; Tax, Planningetc). Moreover, a revised tax code and package o f tax reform that includes the recommendations o f the 2001 FIAS report will shortly be submitted to the National Assembly for approval. National Strategy for Poverty Reduction ___p 58. Despite the significant progress in boosting growth and implementing structural reform, policy implementation suffered a setback in 2001 because of fiscal and structural reform slippages. The fiscal situation worsened in 2003 as the govemment, reestablished after the July 2003 military coup, increased expenditure as it sought to address social and political pressuresbrought about by extreme poverty. The fiscal imbalances widened further in 2004 as a result o f expenditure pressures in anticipation o f very large oil signature bonuses that had been expected for this year. Lnthe event, the bonuses did not arrive, resulting in a larger than expected fiscal deficit. Provisional data show a primary fiscal deficit o f 22 percent o f GDP, from 12 percent o f GDP in 2003, mainly reflecting rapid growth in govemment expenditure, including increases in the government wage bill, spending on goods and services, and transfers. Meanwhile, extemal debt arrears had continued to accumulate. As a result, the economy remains fragile and important internal and extemal remain. 59.Recognizing that the large imbalances caused by the high expenditure are unsustainable and could undermine the prospects for growth and poverty reduction the SBo Tomean govemment has decided to implement a package o f measures over the period 2005-2007 that would aim at correcting the widening macroeconomic imbalances. The program, for which the authorities are seeking the support o f the Bretton Woods institutions, will aim at fiscal consolidation, monetary stabilization, implementation structural reform and improvement the sustainability o fthe country's extemal debt. 60. While GDP growth is expected to slow down in 2005 in response to tight financial policies, the program aims at realizing real GDP growth o f 5.5 percent by 2007, inanticipation o f increased in activity inthe services sector. Inflationis projected to return to single digits by end-2007. The program also envisages maintaininggross international reserves at around 3 % months o f imports, while the current account deficit will be contained in response to the expected improvement inthe fiscal sector. National Strategy for Poverty Reduction 61. Structural reform will remain an important element o f the medium-term strategy to achieve macroeconomic stability. These will include reform o f public enterprises to improve the financial position o f these enterprises, notably the utility enterprise, EMAEfor which a strategy will shortly be implemented. Inthe communication sector, following the renegotiation o f the exclusivity agreement the telecom parastatal CST, will now only continue until January 2006, after which the market will be open for competition. A commission to address land tenure reformwill shortly be established. 62. Satisfactory performance under the program would also allow S5o Tome and Principe to reachthe completion point underthe HIPC initiative inthe second half o f 2006. SZio Tom6 and Principe's will nevertheless, continue to be donor- dependent over the medium term. The main features o f macro-economic scenario are summarized in the attached tables. The government i s o f the view that the macro-economic objectives would be achievable underthe following conditions: Peace andpolitical stability Prudent macroeconomic and financial management Transparency inoil sector activity Strong investment insocial spending andtoward poverty-reduction Further diversification ofthe economy Expansiono ftrade through regional integrationandrenegotiation of new trade agreements Improved communication andtransportation Reform o fpublic enterprise to improve efficiency andmakethese enterprises more commercially oriented Implementationof further structural reforms National Strategy for Poverty Reduction 2.9. Implementation structure 63. The National Strategy for Poverty Reduction (ENRP) defined the creation o f an implementation, follow-up procedure and evaluation mechanism as one of two fimdamental axes of this strategy. This mechanism would not be subject to institutional changes but would, instead, correspond to the needs o f the performance evaluation. 64. As a consequence o f the considerations made and taking into account the institutional reality o f the country, the government projects the creation o f an implementation structure, part o f the National Strategy for Poverty Reduction, with the following characteristics: 0 A Ministerial Council; A Consulting Council; A Poverty Reduction Observatory; Focal Points (Antennas) 65. The Ministerial Council will cany out the orientation and supervision o f the activities related to the achievement o fthe E m ' s Plano fAction. 66. The Ministerial Council will convene at least twice a year under the chairmanship o f the Prime Minister and the chief of government. In his or her absence or inabilityto attend, the minister o fplanningshould chair. 67. The members o f the Ministerial Council will be the ministers responsible far the areas o f planning, cooperation, education, youth, health, labor, solidarity, social communication, agriculture andrural development. 68. Other members o f govemment who have programs or projects enrolled the ENRP's Plan o f Action can also be invited to participate in the Ministerial Council. 69. After listening to non-governmental organizations, such as civil society organizations and representatives o f the private sector, the Consulting Council will need to emit recommendations about the periodic reports associated with the achievement of the National Strategy o f Poverty Reduction, before being submitted to the Ministerial Council. National Strategy for Poverty Reduction - 63. The Consulting Council will meet at least twice a year with the request o f the presiding ministerresponsible for planning. 64. Public individuals or representatives o f collective entities - namely the local officials, the Federation o f NGOs, the Sao Tome Women's F o m , youth organizations, labor unions, the private sector, professional associations, churches and civil society ingeneral-will participate in the Consulting C ~ u n c i l . ~ 65. The Observatory of Poverty Reduction (Observatorio da Redu@o da Pobreza, ORP) will be createdindirect consultation with the minister incharge ofplanning andwill have the following capabilities: a. to ensure the implementation the E m ' s Plan o f ActiQnand the accomplishment ofthe defined goals; b. to update and adjust the ENRP; c. the make compatible the goals o f strategic poverty reduction with the goals of the development o f the millennium; d. to analyze all the debt reduction initiatives inthe country and promote the coordination o fthese; e. to promote surveys and inquiries that will allow the collection o f data and information about the evolution o f poverty; f. to establish a reliable database envisioning a periodic update o f the country's poverty profile and to develop studies about its different dimensions; g. to elaborate periodic reports about the process o f implementation, follow-up procedure and evaluation o f the government; h. to carry out any other functions determined by a superior power. 66. The organization and functioning o ftheObservatory o fPoverty Reductionwill be subject to self-regulation to be approved by the consulting minister who will contemplate the following: As proofof consultation between the state o f Sao Tome and its donors, it will be permissible to create a supplementing council that will meet by request and under the chairmanship of the Minister o f Foreign Affairs, Cooperatives and Communities, with the presence o f the Minister o f Planning and Financing, the Executive Secretary o f the Observatory o f Poverty Reduction, as well as the Focal Points (Antenna) o f the Ministry o f o f ForeignAffairs, Cooperativesand Communities. National Strategy for Poverty Reduction 1_p - The Multi-Sector Technical Commission; The Coordinator. 67. The Multi-Sector Technical Commission will generally meet with the presiding consulting minister to analyze matters that relate to the functioning o f the Observatory o f Poverty Reduction and the accomplishment o f the respective plan o f activities. 68. Besides, the specialists or technicians o f the Observatory will integrate to the Technical Commission the focal points of the ministries and the remaining institutions responsible for the sectorial actions o f the E m , as well as the representatives o f the National Institute o f Statistics and o f the institutions responsible for planningtogether with the Ministry o f Planning andFinance. 69. The Coordinator will be named by the consulting minister and will represent the Observatory of Poverty Reduction before public or private entities and will coordinate all its activities. 70. It will be the Coordinator's responsibility to present the plans and reports o f activities and to organize the different meetings o f the Ministerial and Consulting Councils as well as those o fthe Multi-Sector Technical Commission. 71. The technical staff o f the Observatory o f Poverty Reduction will be subject o f the approval by the consulting minister taking into consideration the availability o f the Economic PlanningDirective. 72. With the purpose o f coordination and follow-up procedures, the ministries and remaining institutions responsible for the actions integrated into the ENRP's Plan of Action will need to indicate the respective Focal Points (Antennas) of the Observatory o fPoverty Reduction. 73. The activities o f the Observatory of Poverty Reduction will be carried out as often as necessary inclose collaboration with the assigned institution for economic and social planningtogether with the ministry responsible for planning and with the National Institute o f Statistics, all o fwhom will be obligated to cooperate. I 74. It will be the responsibility o f those institutions to organize themselves in a way that will allow them to effectively respond to the requests made by that institutionalcollaboration. 2.10. ExpectedConsciousness-RaisingMeetings 75. During the period that will follow the approval of the E", the country will experience episodes of significant social tension and changes in officials or representatives o f institutions responsible for the implementation of the programmed actions. National Strategy for Poverty Reduction 76. This fact will make the renewal o f contact with the officers necessary for its implementation. On the other hand, once the mechanism i s created, the consequential and sustainable success o f the process will not be guaranteedwhile there i s still a risk o f quantitatively superior resources being used outside o f the definedstrategy. 77. On the other hand, the creation o f Focal Points (Antennas) inministries and other institutions that are directly compromised or involved in strategic projects o f poverty reduction will determine the urgency o f a preparation envisioning the exchange o f information about the progress o f the respective projects to be able to offer a systematic appreciation and evaluation o f the accomplishments made. 78. Inwhat follows, the subsequent consciousness-raising meetingsare anticipated: A symposium on the role that the military and paramilitaryforces will play inpoverty reduction; A symposium about the contribution social communication organisms to inform, raise consciousness and mobilize the public on the issue o f poverty reduction; Meetings among leaders and/or representatives o f institutions directly involvedinthe creation o f information about the need for Focal Points (Antennas); A seminar for the preparation o f Focal Points (Antennas) about the importance o f their participation in the methodology o f the procedure manual to be elaborated. 2.11. Planof action and current situationrelativeto itsimplementation 79.Changes and updates made will be necessary inorder to proceedwith the revision o f the Plan of Action taking into fundamental account the new periods considered for the implementation priority actions. That process also allowed the recording o f an actual situation associated with some of the programs and projects whose completion was projected for 2003 and 2004. 80. For the purpose o f evaluation o f the progress reached, during the process o f the ENRP implementation there was the inclusion of indicators associated with priorities or measures susceptible ofbeing periodically verified. 81. The Plan o f Action thus reviewed, includes synthesized information o f the current situation, as well as a list of indicators, contained inappendix. National Strategy for Poverty Reduction 2.12 Budget 82. Considering that education, health, infrastructure, agriculture and rural development, good governance and economic and financial policies were defined as priorities, the projected budget deserves to be discussed in greater detail. Table 8: ProgrammingOrganizedby GoalsandPriorities (values are indicatedinthousandsof U.S. dollars) 1 919.4 I 0.4 1 525.4 I o.6 I 2-Economic and Redistributive Growth 45165.4 21.5 10368.1 12.4 Energy 29252 13.9 3865 4.6 Water and sanitation I 1226.8 5.3 4676.2 5.6 3-Oportunities for Revenue 106999.4 50.9 45259 54.0 Agriculture,livestock, fishing,forestry 52921.2 25.2 21349.5 25.5 Infrastructures 54078.2 25.7 22699.5 27.1 4-Access to Basic Social Services 54068.8 25.7 26523.2 31.7 Education 22836.7 10.9 12458.9 14.9 Health,Nutrition and Population 27639.1 13.1 14058.5 16.8 Employment,Training and Solidarity 3593 1.7 1086.8 1.3 5-Analysls, Follow-Up Procedures and Evaluation 2035.6 1.o 456.5 0.5 Total 210378.6 100.0 83767.6 100.0 National Strategy for Poverty Reduction Graph2: Percentage of the Expenditureof Strategic Axes Poarammina bv Goals and Sectors 12005-2007) I"M..,n.l R a m 16% R.audb.Rk. 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