São Tomé: Government urged to improve financial transparency

São Tomé: Government urged to improve financial transparency

by / Comments Off / 23 View / 25th August 2010

A report released Monday 23rd August by Human Rights Watch has addressed the nature of the country’s next transition. The paper, which is titled ‘An Uncertain Future: Oil Contracts and Stalled Reform in São Tomé e Príncipe’, explores the benefits and pitfalls of the region’s potential oil wealth.

While no significant amount of oil has been detected as of yet, experts believe that the country has offshore oil reserves valuable enough to transform the lives of its impoverished citizens.

However, the report also warns that failures to reform the country’s management of its oil resources could prove to be detrimental to future growth and development.  It subsequently encourages the country’s governmental bodies to ensure that all financial transactions related to oil licensing are made public.

With the country’s upcoming elections and the government being expected to announce those companies selected for the right to drill in its offshore exclusive economic zone, a considerable amount of possibility hangs in the balance for the country’s future.

‘The new government needs to learn from past mistakes,’ said Arvind Ganesan, business and human rights director at Human Rights Watch. ‘It has a window of opportunity and should use it to make sure São Tomé’s citizens benefit from oil revenues when and if they start to flow.’

While the country has received attention from international donors to try and improve financial transparency and accountability in anticipation of oil discoveries, little has been done by the current leaders to improve records.

Failures in improving the country’s financial management of hydrocarbon reserves recently led to the country’s expulsion from the Extractive Industries Transparency Initiative (EITI) in April this year. The Initiative subsequently aims to improve financial transparency by implementing mechanisms that verify and publicize payments and revenues endowed from natural resources.

The country now finds itself at a significant crossroads; we have often seen countries with vast amounts of natural resource potential like Sierra Leone and Equatorial Guinea fall short of their goals. It is therefore imperative for the government to be able to master the management of its most vital industries.