PROJECT BRIEF INVESTMENT CLIMATE | WORLD BANK GROUP 90714 A Fast-Improving Environment for Tourism in São Tomé and Príncipe PROJECT AT A GLANCE RESULTS AND IMPACTS COUNTRY/REGION SÃO TOMÉ AND PRÍNCIPE/SUB-SAHARAN • In 2011, the number of business AFRICA registrations more than quadrupled PRODUCT INDUSTRY-SPECIFIC INVESTMENT CLIMATE/ from the previous year to 241. In TOURISM 2012, this number increased by another 61 percent to 388. Since early 2011, the World Bank Group has been working with the government of São Tomé and Príncipe to abolish the alvarás • Reforms that eliminated fees and system, a century-old business licensing regime introduced by other costly procedures resulted in the colonial Portuguese. The removal of alvarás was particularly over $1 million in direct private sector relevant for the tourism sector, as the government looked to cost savings alone. ensure easier market entry for small and medium-sized enterprises • Businesses were able to register in 5 such as travel agencies and car rental companies. days on average in 2013, down from 144 days in 2010. CONTEXT São Tomé and Príncipe is a small West African island nation, among the last to gain independence in 1975 and in 1990, the first in the region to launch democratic reforms. However, political turmoil undermined economic development. Prospects of deep-sea oil exploration and signs of political stability resulted in some, albeit limited, donor presence and nascent entrepreneurial activity. IN PARTNERSHIP WITH IRELAND, PORTUGAL World Bank Group Even as late as 2010, the colonial heritage and post- quadrupled from the previous year to 241. In 2012, this colonial reforms continued to heavily burden the business number increased to 388, resulting in over $1 million in environment and diminish the country’s attractiveness private sector savings in direct costs alone. to investors. Business incorporation used to take 144 State controls within the administration have relaxed with days and involved a myriad of agencies and fees. The one reform leading to another in a short period of time. operational license, also known as alvarás, was particularly The administration eliminated not only the alvarás but also difficult to obtain. It required an expensive bank other regulatory requirements, procedures, and fees. These guarantee, notarization of documents, a statutory capital radical regulatory reforms propelled São Tomé and Príncipe deposit in the bank, and successful navigation of the to the top of the Sub-Saharan African ranking in the World bureaucratic maze, a process that needed to be repeated Bank Group’s Doing Business 2012 report as the region’s each year. In addition, the associated costs were strongly top reformer and fourth most successful reformer globally. disproportionate to the nation’s per capita income. OUR ROLE For many years, Walter Martinho offered his guide services and car rentals to tourists exploring São Tomé and Príncipe, but he faced a critical impediment to formalizing his business. Car rentals, travel agencies, and tourism services were all subject to the complex alvarás. Starting in early 2011, the São Tomé and Príncipe government worked with the World Bank Group to abolish the archaic alvarás system. In 2012, Walter was able to register his business, Tortuga Ltd., in only 48 hours at the new one-stop shop for business registration. Since the abolition of the alvarás system, many more entrepreneurs In 2013, the World Bank Group and the government have started to formalize their existing or new businesses. jointly launched a much larger investment climate In 2011, the number of registered businesses more than program. Building on earlier successes, São Tomé and Príncipe aims to establish a paperless bureaucracy for all external trade. This will further reduce costs and facilitate simplification of other regulations, including those that “The entire approach of the Directorate of Tourism impact the tourism sector. The creation of an online has changed … We now provide greater security visa system has already simplified visa regulations and and safety to our clients. All our cars are in processes and gained São Tomé and Príncipe recognition perfect shape, and my guides offer top services. from the World Tourism Organization (UNWTO) as Now it does make sense to pay taxes and other one of the top ranking countries in visa reform in contributions for my employees — I am finally 2012. The reform is part of a medium-term tourism development strategy to build capacity within the tourism getting value from our public administration.” administration. As reforms continue, the country is WALTER MARTINHO expected to attract more entrepreneurs and tourists. Now Owner of Tortuga Ltd. it will be much better positioned to respond to growing demand and interest. CONTACT Boris Divjak | Operations Officer | Investment Climate EMAIL: BDivjak@ifc.org | TEL: +221-33-859-8502 | www.wbginvestmentclimate.org