(introduction...)

Who has not seen or heard of well-documented analyses of the non-viability of African countries, the precariousness of their economies propped up by one or two raw materials, their tiny, split-up markets and the very poor standard of their labour forces? Sao Tomamp; Principe, a former Portuguese colony off the Gulf of Guinea, which has every one of those handicaps, is virtually a caricature of these pictures.

This little country - 964 km² in area, with a population of 120 000 - gets 90% of its revenue from just one export product, cocoa, which brought in $5.5 million last year to set off against imports of $24.5 million. So its increasingly heavy debt, relatively speaking one of the heaviest in the world, comes as no surprise. By the end of 1991, it owed $215 million, $83 million of it in arrears, which was four times its gross national product and more than 20 times the value of its exports. Without any writing-off or rescheduling, the servicing of this debt alone will account for 90% of export revenue this year. Economists, as we all know, tend to cry disaster when repayments reach 20% of exports, so what would they say to this? And Sao Tomamp; Principe has been running a structural adjustment programme since 1987!

After the main funders' mid-July Geneva meeting, the third of its kind, the country now has to negotiate the easing of its debt and new financing with each of its creditors. Even if a miracle happened and the clock was wound back to zero (and there will be no miracle, because the bulk of the money is owed to multilateral organisations which can neither reschedule nor write off), the country would not be out of the wood, for it is heavily dependent on imports of food and energy which a budget shortfall equal to half its GNP prevents it from financing.

With indicators of this sort, it would take boundless optimism indeed to dare predict economic recovery in the foreseeable future. One expert told me pointedly that the international community, which poured in something like $68 million in aid in 1990, would do better to put the money in the bank and pay every Sao Tom an annual allowance with the interest instead - a jest, no doubt (or was it?), but indicative of the state of mind which such apparently inextricable problems can produce.

Yet despite the disastrous economic record, what faces the foreign visitor to these islands is more paradise than apocalypse. There is wonderful scenery, incredible luxuriance rising to the highlands from which countless falls and mountain torrents flow down to never ending sandy beaches fringed with coconut palms and the infinite shades of blue of the crystal sea. Sao Tomnd Principe are two of the most beautiful islands in the tropics, of that there is no doubt, and relative isolation has enabled them to save most of their primitive vegetation. Some parts of Sao Tomre unexplored, even today, although the island was discovered more than five centuries ago.

It was on 21 December 1470, St Thomas' day (hence the name), that Portuguese mariners saw the island for the first time, but it was another 15 years before Captain Jose Paiva set up camp on the Ana de Chaves bay, on the site of the present capital, and opened the way for colonisation by Portuguese lords. They introduced sugar cane, to be grown by a servile labour force, and, for a few short years in the 16th century, Sao Tomven became the world's biggest sugar producer. The King of Portugal also used this distant land as a kind of penal colony and exiled prisoners to it. In 1493, he sent 2000 Jewish 2-10 year olds, only a few hundred of whom survived the tropical diseases and were still alive by the early 16th century.

But sugar output waned. In 1544, slaves escaping from Angola were shipwrecked off the Rolas Channel. Once ashore, they gathered in the hills of Sao Tomjoining up with more slaves in flight to launch murderous attacks on the plantations. Everything in their path was laid to waste including, in 1574, the capital. Terrified, most of the Portuguese colonials emigrated to Brazil, leaving the plantations in the hands of their mulatto children.

Anarchy reigned for two centuries, with internal fighting, Angolan slave attacks and visits from pillaging French and Dutch pirates, who occupied the island more than once. All this time, the colony was a crossroads for the slave trade and Principe especially became a gathering and victualling point for negro slave ships, so the capital was moved there for a century (1753-1852), only to return after the official ban on slave trading in 1836, by which time Sao Tomad become a prosperous centre for the coffee and cocoa trade.

It was the Governor of the time who brought coffee to Sao Tomn 1800, while cocoa was introduced, initially as a decorative plan, in 1822. For decades, the two crops were grown side by side, although coffee dominated until slavery was abolished in 1875. The slaves were freed and they left the plantations before the harvest, thus completing the planters' ruin. Following advice from the Portuguese bank which invested in the plantations, emphasis was now placed on cocoa and the Government authorised employers to go to Angola to recruit workers on terms very similar to those of the slaves, for they could not go home until their contracts expired. According to the May 1946 issue of the National Geographic Magazine, cocoa planters in Trinidad & Tobago were still being offered Sao Tomlantations complete with buildings and slaves at the beginning of the 20th century.

In 1889, cocoa outstripped coffee for the first time and, in 1913, Sao Tomas the world's biggest producer, with 36 500 t of high quality cocoa much sought after on the London market, the main outlet.

The country, its plantation economy on the wane, ticked over gently between the two World Wars and went slowly on until 1953, when bloody repression of a popular uprising triggered the nationalist awakening, as the Portuguese army massacred a thousand Sao Toms demonstrating against attempts to force them to work on the plantations. The Sao Tomamp; Principe Liberation Movement (MLSTP), the direct result of this, was set up in Libreville and it worked mainly through diplomatic channels. In 1973, internal discussions led its historic leader Miguel Trovoada to make way for Manuel Pinto de Costa, who became President when the country, along with other Portuguese territories, became independent two years later, in the wake of Portugal's spring revolution.

The new President went for a Marxist-Leninist rme, brought the whole of the islands under State ownership, with compensation-free nationalisation of all plantations of more than 200 ha and all businesses, and opened a series of 'people's stores'. But the decline in cocoa output combined with poor management of State firms rapidly created economic crisis, forcing the Government to switch directions. The economic liberalisation of 1985 went hand in hand with a more open political climate, leading to the adoption of a multi-party system in 1989, a decision ratified by referendum in August 1990. In January 1991, the former single party, despite a face-lift by Carlos Gra the former opposition leader-in-exile (in Gabon) and now leader, was defeated at the legislative elections by the Party of Democratic Convergence-Think Tank (PDC-GR) and Daniel Daio, its leader, became Prime Minister. This lasted until a difference of opinion over the presidential powers brought him into conflict with Miguel Trovoada (elected to the Presidency, unopposed, in March 1991) and the former was replaced by his Finance Minister, Norberto da Costa Alegre.

Land of ro

Ro the Portuguese word for 'plantation', is soon familiar to the visitor and reasonably enough too, for the whole country's history hinges on them, sugar first, coffee next and cocoa after that. Some even talk about the whole country as a plantation, because the ro occupy 90% of the arable land, almost all that can be used. During the colonial period, there were 45 medium-sised and large plantations, which the Government has since combined to make 15 State plantations. The biggest of all is the impressive Empresa Agricola Agostinho Neto, 6000 ha of northern Sao Tomnd once known as Rio do Ouro after the river which runs through it. There is lovely Agua Iz5000 ha of cocoa bushes on the west coast, and there is Monte Cafthose 1800 ha of highlands in the interior, which, despite a serious decline in output over the past 20 years (150 t down to only 15 t), can still produce some of the finest coffee in the world.

The rosystem is far more than a way of growing things. It is a whole way of life and work which has long shaped the society and the landscape of these islands. The ro, which were designed for the production and export of cocoa, provided the workers with all they needed to live, in exchange for their work. There were houses for them and their families, usually also employed somewhere on the plantation. There was (mostly imported) food such as rice and meat. There was a school for the children and there was medical treatment, for every big plantation had a decently-equipped hospital to cater for the main diseases - in some cases, a highly impressive edifice such as in Agostinho Neto, where there are wide verandas and red tile roofs. The best buildings, of course, richly furnished houses in impeccably-tended gardens, were for the bosses and some of their furniture and paintings from the 1920s, perfectly preserved, can still be seen at Agua Iz

When William Smyser wrote about life on the plantations and the delightfully welcoming hospitality of the planters in the May 1946 National Geographic, he said he felt he had been back in time to the charm and romance of the American deep south.

In America and Sao Tomlike, this way of life was closely linked to the exploitation of a labour force made up of slaves or - not much different - the contract workers whom employers 'forgot' to repatriate when their time was up. In America, it failed to survive the abolition of slavery and the war of secession and, in Sao Tomit went with the end of colonisation and the breakdown of special relations with the former metropolis.

Independence did not just trigger the mass departure of thousands of planters and their staff. It was also the end of safe outlets at guaranteed prices in Portugal. Overnight, everything became more complicated, starting with transport. The Portuguese ships which had stopped so often at Sao Tomo pick up the cocoa harvest on their way to and from Angola now rarely came. The country's output, down to 4640 t p.a. after independence from the 11 586 t of 1973, was of no interest to the big ship-owners (whose vessels could not in any case put into Sao Tomecause there was no deep-water port), when, Cd'Ivoire, say, produced an average of 600 000 t p.a. And, with high humidity, any delay in shifting production lowered both the quality of the cocoa and the income to be derived from it.

Norberto da Costa Alegre put his finger on the problem when he spoke to the third funders' conference in Geneva in mid-July. 'We thought', he said, 'that we could take over our cocoa heritage from the colonial era and that it would bring us in all the foreign exchange we needed. We were wrong on two counts. First of all, with supply increasing and demand falling off, agricultural commodities are fetching less and less on the world market. Second, the cocoa on our plantations was produced under duress. The labour relations brought in after independence, combined with a critical financial situation in the cocoa sector which precluded proper worker motivation, led to demobilisation, followed by a decline in both the productive and the social infrastructure'.

Production today is stagnant at around 4000-5000 t. Yields, at 0.32 t per ha, are very low in comparison with the 2 t per ha of modern plantations in other countries and the bushes themselves are old, 30 years on average, which bodes ill for the future.

Restore the plantations

What can a small, poor, isolated place like Sao Tomamp; Principe do when it loses its only source of income? If the answer is not 'deciding that the country is not economically viable and shutting up shop just as if you were in business', an idea rejected out of hand by the leaders, particularly Arlindo Afonso Carvalho, the Minister of Economic and Financial Affairs, then it has to be trying to save what can be saved and looking for other resources - which is exactly what the Government has been doing since 1987. In that year, it took the country into a structural adjustment programme backed by two loans from the IBRD and three-year financing from the IMF's structural adjustment facility. With help from various funders, including the World Bank, the Caisse Centrale de Cooption, the African Development

Bank and others, it is launching a plan to upgrade six of the 15 State ro, totalling 10000ha, or 40% of the land under cocoa. Management and rehabilitation contracts are being signed with foreign (Portuguese, Belgian and French) firms, but the Government does not seem satisfied with the results so far, because the plantations are still running at a loss - which it has to cover. So it is trying to renegotiate the present contracts. Under the new leases, the management companies will have to finance their investments with their own funds, maintain the value of State assets and pay a rent reflecting the production potential. Alongside this, it is hoping to sign management contracts for the State's other nine plantations and distribute the rest of the land to small producers. But, with prices dwindling on a world cocoa market oversupplied for years, will it find any takers on these new terms? Possibly not...

The other big event in the country's agricultural policy is diversification. On independence, let us not forget, Sao Tomamp; Principe inherited structures dedicated to cocoa production, in which the workers had neither the right nor therefore the means of growing anything else, and the country was and still is heavily dependent on imported food. The only exceptions are bananas, which are everywhere, quite literally, and tubers such as taro, which is common and traded on a small scale with Gabon. Market gardening began in 1985 and there is now a drive to sell cabbages, carrots, tomatoes and beans to Gabon, although Agriculture and Rural Development Minister Josuis Mendes says that this is only an experiment to get to grips with the Gabonese market. As he sees it, the only way out is regional integration. That is what will enable the islands to sell more abroad. Meanwhile, he is hoping to strike a balance between food production and food aid by encouraging the development of such crops as beans and maize.

Another attempt at diversification is the EEC-financed 600 ha Ribeira Peixe oil palm plantation and the palm oil processing plant floated with an EIB loan. This could meet local demand, thus saving on the precious foreign exchange currently spent on imported table oil. That, at least, was the intention, but the oil from Ribeira Peixe is unprocessed, whereas the locals are used to having theirs refined, so there is competition from the imported product and a problem of making extra investments in refining. The plant has already been forced to slow down its machinery because of existing stocks and, on top of that, with the main generator broken down since February 1991, it is now relying on a single back-up generator and mortgaging its future in the process. A technician who actually went out to Sao Tomamp; Principe in December 1991 could not work out what was wrong and the parts he took back with him to Europe still have not been returned.

Diversifying also means developing fisheries. There are currently 3000 artisanal fishermen, but numbers are declining because structural adjustment has pushed up fuel costs. Demand is an estimated 5000 t p.a., but the fishermen are increasingly unable to meet this. In fact, the annual catch has fallen from 3500 t to 2000 t following the fuel price increase, according to Trade, Industry, Tourism and Fisheries Minister Arsemiro Ribeira da Costa dos Prazeres. There is some semi-industrial fishing too, landing 900 t p.a. Two of the six vessels involved here are trawlers belonging to the State, which is anxious to sell them to private owners, but, for the moment, they represent its part in joint ventures with French companies. The other big scheme in this field is the Bight of Benin marine resources assessment operation, an EDF-financed regional project which should, the Minister maintains, lay scientific foundations on which to renegotiate the fisheries agreement with the EEC and improve on the previous terms.

However, the big ambition of the country's leaders on the economic diversification front is to make it a major tourist attraction. They see Seychelles, with $4000 per capita p.a. from the tourist trade, as the shining example and are forever singing the praises of their own country's potential, with its rare flora and fauna, its views and its beaches. And they feel they are right, because investors are already talking about developing the tourist trade on the islands. One French group hopes to open a holiday centre of 15 or so bungalows soon, the main target being a wealthy clientele in the oil companies in Gabon and Congo. Then there is Christian Herringer, the enigmatic businessman of German and South African origins, whose Filippino employees are putting the finishing touches to a top-flight complex for very wealthy holidaymakers on Principe. Her ringer has many interests in Sao Tomamp; Principe. Not only is there his imposing sea-front property. He was also associated with the State in Equatorial, the airline which flew between Gabon and Sao Tomamp; Principe several times a week. With Equatorial in liquidation, the country will have an acute communications problem once more, particularly as the regular line to the outside world, the weekly TAP flight to Lisbon, is nearly empty and likely to be withdrawn if the plan to privatise this Portuguese airline is carried out.

Yet the country has just built a new airport at vast expense - it came to nearly $20 million in the end, three times the original quotation - and the new terminal is one of the cornerstones of the Government's tourist strategy. Another essential is the campaign to control malaria, the country's biggest cause of death, for there is no point in developing tourist activity if the disease cannot be eradicated. With this in mind, a fact-finding mission is due to visit Seychelles in a couple of months to see how far Sao Tomamp; Principe can do what Seychelles did.

Will the cocoa country be the next place the international jet set turns to in its quest for exclusiveness? That is what the leaders seem to be counting on in hoping that the tourist trade will create enough jobs for the islands' increasing numbers of young people. In Sao Tomamp; Principe, the average woman has seven children, Health Mini Minister Dulce Gomes told me. The population is expanding at the rate of 2.9 % p.a. and, outside the country's natural beauty, as the Tourist Minister so baldly puts it, the only real employment alternative is emigration. There are already 10 000 nationals living abroad in Angola and regularisation of the situation would be a relief. But is this a matter for State policy?

One thing is certain. Everyone in Sao Tomamp; Principe, majority and opposition alike, is convinced that there is no future in cocoa. All they need is a viable alternative...

An interview with Prime Minister Norberto da Costa Alegre

'Our external debt is too big'

Sao Tomamp; Principe, a democracy in its infancy, had its fiirst political crisis in April, three months after the country's first completely free elections since independence in 1975. The cause ? A difference of opinion over his powers, which prompted President of the Republic Miguel Trovoada to remove Prime Minister Daniel Dalo, leader of the Democratic Convergence Party (PCD) and winner of the legislative elections with 64% of the votes and 32 of the 55 seats in the House. The PCD contested the decision strongly to begin with and then accepted it when legal specialists from all the political parties together with two eminent Portuguese constitutionalists investigated the presidential powers closely and clarifed the situation. President Trovoada chose a new Prime Minister from the ranks of the PCD - Norberto da Costa Alegre, the Finance Minister from the previous Government, who answers questions from The Courier in this interview.

· Sao Tomas just seen its new institutions' first political crisis, hasn't it, Prime Minister ? How is it possible to take over the job of Prime Minister from the leader of your own party and what will be your policy ?

- Countries which already have democratic traditions may find it a bit difficult to grasp, but we who are in a new phase and getting a democratic rme going do not find it so. We are trying to find pragmatic solutions without endangering the still very fragile institutions - that was the background against which a new Prime Minister was appointed. But I have to say that my Government is the natural continuation of its predecessor. Programmes are being adapted, of course, but, basically, we shall be carrying on with what was started before.

· But the previous Government also fell because of popular discontent, backed up with demonstrations, and you say you are going to carry on with that policy ?

- The popular discontent was due to the country's economic problems. And, of course, the opposition parties exploited it. But everyone has learnt a lesson from a crisis which, ultimately, was beneficial for the institutions, because democracy has now been strengthened and it is clear to everyone that crises don't help anyone.

· Your Government apparently has only a tiny majority at the moment. Do you actually have the means of governing ?

- Yes, I am convinced that we do. We may have taken things slowly so far, but that is not to say that we are not governing with the requisite stringency and determination. All that has to be done is to try and make a more thorough job of consulting and sounding out the existing political forces, and the various social forces too, so a general framework can be designed and we can move forward in a set-up everyone agrees on.

· Since independence, Sao Tomas been heavily dependent on external aid, which makes a lot of people think that the country isn't viable - although they may only say so in private. What do you have to say to them ?

- I should say that Sao Tomamp; Principe's difficulties are not so very different from the difficulties facing the other countries of Africa. We are running a balance of payments deficit and a budget deficit and we are trying to do something about that. Our investments are not financed with national savings, so we have to look abroad for financing and we have an external debt out of all proportion to the country's domestic production. But those are the problems of other African countries too. Our country is going through what is currently a very difficult period, but we are convinced that things will look up after 1994. At the round table of funders, we shall be concentrating on discussing the debt and the balance of payments and this could mean we can set up the country's development in 1994-2000 differently. So, to sum it all up, the next couple of years will be very difficult, but with the lightening of the debt, the programming of investments and the projected budget, tax and monetary regulation, things will be different after 1994.

· The people who doubt the country's viability point to its lack of exportable resources above all. They say that Sao Tomas even fewer resources than the rest of Africa.

- It does and it doesn't. It does because currently we are 90% dependent on cocoa and it doesn't because the country's potential is varied and we could produce every food product except cereal.

· Although you do in fact produce a little bit of maize...

- Yes, we do. We could diversify our farming and concentrate more on livestock to make up what is currenctly a very big food deficit. We could also look at producing exportable products which don't require a huge amount of space - cinnamon, I mean, and pepper, the spices for which we were once famous. This sort of diversification takes time, of course, but now we are suffering from not having done it before. So it's not that there is no potential. It's that there wasn't a structured enough development plan to promote this sort of agricultural diversification before. When cocoa goes up, everything is fine, but we also have to cater for the times when it goes down, which means alternative products. That is what was missing in the early years of independence.

· Are there economic activities which your country could go in for other than what you have just mentioned, Prime Minister?

- We are very well placed when it comes to developing the services sector. Certainly, there is a whole set of infrastructure there which has to be developed and improved. There is also the whole range of free zone activities. We are particularly well placed there too when it comes to developing exports to Africa and the other continents, because we are on the route to Europe and America. But as I said, this is potential which can only be realised if we develop the infrastructure and that will be one of our priorities in 1992-1994.

· Your relations with the Bretton Woods Institutions have been frozen for the time being, haven't they? Can you confirm that you will be returning to cooperation with the IMF and the World Bank ?

- I am sorry to say that you are wrong there. Relations are not frozen. We very fortunately started them up again early last year and, I have to say, the results are good.

· But payment of the second instalment of the structural adjustment monies was held up...

- No it wasn't. The second instalment will still be paid in June. The Sao Tomamp; Principe programme was put before the Board of the IBRD and the IMF on 10 June - and that was one of the conditions for the round table of funders in Geneva in mid-July. Running the structural adjustment programme with the World Bank and the Monetary Fund was one of the most important things the first Government did and that is going to continue, because Sao Tomamp; Principe's special situation demands it. As I told you, we have to have external aid to meet our internal requirements, to finance our investments and make up the deficit in our balance of payments. So the economic and financial credibility which these institutions confer is very important to us.

· One of the bones of contention with the IMF and the IBID was the administrative reform, wasn't it ? Will the army be cut down too ?

- The army hasn't come into the programmes under discussion with the IBRD and the IMF for the moment. We are talking about public administration as such, but not about very specialised sectors like the army.

· They say that some Portuguese former owners are trying to get back the property they abandoned on independence. What are your Government's intentions here ?

- We have told the Portuguese authorities on a number of occasions that Portuguese investors and promoters will be welcome in Sao Tomamp; Principe.

· That doesn't answer my question. Will they be able to get their property back ?

- That's not it. It's more a question of them applying for investments in farming or other sectors. There is no question of the State just giving property back, unless it can be proven that there were irregularities. There have been cases of irregular expropriation and there the courts decided and the people involved, Sao Toms or foreigners, got their property back. This is a problem for the courts, not the Government. But the Government has told the Portuguese authorities that investors will be welcome in Sao Tome and Principe.

· You said just now that your country had too big a debt for its meagre resources. What is your Government going to try to do about this?

- That will be one of the big questions at the Geneva meeting in mid-July. There are creditors with whom we have to discuss ways of lightening the debt burden. There are many ways of going about it. With some of them, we shall be talking about the possibility of turning these debts into direct investment in Sao Tomamp; Principe. With others, we shall be negotiating a rescheduling of what we owe. And then, of course, there is the whole system we have to find with the donors of bridging the financing gap in our balance of payments.

· By wiping debts out?

- The question is this. We are going to investigate rescheduling the debt and wiping it out and converting it into direct investment with the creditors, but there is more to it than that. There is the external deficit, after all. There is infrastructure which is completely run down. There are imports of goods and equipment to keep up with - which is why, in one and the same framework, we have to discuss the macro-economic set-up for this period with our creditors and with our funders so as to find the means of guaranteeing viability.

· Some of these debts are incomprehensible, Prime Minister, aren't they? What about the 21 million Swiss francs spent on 120 low-grade houses or the cost of the airport - $S million to begin with, but probably more than $15 million in the end ?

- I have to say that Sao Tomamp; Principe is not the only place to have this type of problem, but unfortunately it is in the poorest countries that these things stand out the most. I don't think that the rehabilitation of the airport is the same sort of thing. There were delays which caused the budget to overrun in this case. However, these prefabricated houses are a sorry affair, but, as I said, that is the sort of problem which you don't just see in Sao Tomamp; Principe. Unfortunately you see such things in other parts of Africa too.

· Your country is hosting a very rich foreign citizen, Mr Herringer, I think. What can he do for Sao Tomamp; Principe's development ?

- You have just mentioned someone you claim to be a very rich foreigner. Let me tell you that Sao Tomamp; Principe is host to other foreigners too. I can't tell you how rich they are, but we welcome all foreigners who want to take part in the development of Sao Tomamp; Principe. This gentleman has already invested in some very specific sectors - civil aviation and tourism - and the contacts he established suggested that he was willing to continue his activity. So, as far as we are concerned, he is welcome here.

· One aspect of your policy, I believe, is to boost regional cooperation, not just with the Portuguese speaking nations but with your immediate neighbours too.

- Absolutely. We are convinced that a little country like ours can only survive, in an increasingly regionalised world, if it is an integral part of the sub-region. So all the efforts we are making now to get the economy off the ground again are ultimately intended to enable our country to gain its rightful place in Africa and the world and to make the most of any comparative advantages to put its development on a firmer footing.

Interview by Amadou TRAORE

says 'We could have the same policy with fewer social costs'

Carlos Gra now Secretary-General of Sao Tomamp; Principe's Liberation Movement and Social Democratic Party (MLSTP-PSD), was long an opponent of the regime of President Pinto da Costa and was forced into exile as a result. He took refuge in Gabon, where he practised medicine for 10 years and came home when democracy was announced in 1989, joining the Government as Foreign Minister. So it was a relatively new man who led the former single party, frayed after 15 years of rule, into the elections and managed to restrict the damage by obtaining 30.6% of the votes. It is as leader of the opposition that he answers The Courier's questions in this interview.

· Your party was behind the demonstrations which juts brought down the Government of the Second Republic, I believe...

- The demonstrations were not the essential thing here, I think. They did indeed push events along a bit, but there were two very big problems to begin with. First of all, there was a conflict between the President of the Republic and the Government over a difference of opinion as to how they should interpret what the Constitution said about the scope of the President's duties. The Government, from the PCD. the Democratic Convergence Party, made a lot of authoritarian moves. It tried to put down the old single party, for example, and it tried to weaken the powers which the President of the Republic has under our system of government. Ours is a semi-presidential regime, but one which gives the President considerable powers, especially over external policy and national defence and security, and the PCD, bolstered by its absolute majority, tried to take them away from him. He was unwilling to go along with this, however, hence the institutional conflict... and the President deciding to put down the Government. The second thing was popular discontent over rising prices, which was made worse by the fact that the members of this new party had based their election campaign on the idea that all Sao Tomamp; Principe's problems were due to bad management and corruption in the single party and that things would be bound to get better if the single party was out of the way.

· But don't you think that this austerity policy which caused all the discontent is the consequence of your own policy over the past 16 years ?

- No, I don't. Let me finish what I was saying. The problem is that they made people believe that a change of party was a good thing, so they expected things to get better. There was a euphoric speech. There were implicit promises and explicit promises and the people expected things to get better. But they didn't. They got worse. Purchasing power plummeted and the people weren't prepared for it. In a way, the Government paid for its rabble-rousing, because there were popular demonstrations, the first one spontaneous and the second organised by our party and the other opposition parties.

· But what would you do today if you were in power, with the structural adjustment programme to cope with ? Wouldn't you have to bring in the same sort of measures?

- Of course we would! But we told the truth during the election campaign. We said that we couldn't improve the situation overnight and that improvements would take years of hard work and sacrifice. If we had won the elections, we would have been in a different situation. The people could have coped with one or two sacrifices, but, with all the euphoria of the speeches they had heard, they were obviously not psychologically prepared for a decline in their standard of living. We also believe that we could have brought in these measures a little more gradually, perhaps, and that all the possibilities with the World Bank and the International Monetary Fund have not been exhausted. Sao Tomamp; Principe is in a special situation; that of a micro-State with no resources, and a slightly better job could have been made of negotiating the unavoidable rationalisation measures. It was the commodity price slump which made the debt so much worse and led almost all the African countries to accept these macro-economic adjustments. It's not a party problem, you see. It's a structural problem which we commodity-exporting countries have.

· How do you see Sao Tomamp; Principe's future?

- We are still optimistic about the medium and long term, because we have possibilities which probably haven't been exploited so far.

· What are you thinking of ?

- We have already done studies on this. The party currently in power is continuing what we did. It is inaugurating a lot of things at the moment, furthermore, projects which we actually got going. We have to get out of the cocoa trade, because there's no future there, that much is clear. We have to look to tourism. Seychelles is some sort of encouragement here, because they make $4000 per capita just with their tourist trade. They have the third or fourth biggest per capita income in Africa and they are only a small country and they only have tourism.

· But it's not an island on the equator like Sao Tome...

- Yes, but it's the same sort of exoticism - views and beaches and so on. We have assets for the tourist trade and we have assets when it comes to industrial fishing. We have very little land, but a great deal of sea, plenty of exclusive economic zone. And despite all the competition, we have also wondered about a free zone and off-shore banking and setting up industries here using the cheap labour to produce goods for the export markets in Nigeria, Cameroon and Gabon. Those are the three big sectors which should be good for the future - not forgetting agriculture. We have to make an effort to get out of the cocoa trade and promote other, more profitable crops. Pimentos are being studied and tested at the moment and we have to look for other, more profitable export products and try to develop food crops at the same time, because we import a lot of things, like beans, which we could actually grow ourselves.

· You won't be surprised if I tell you that the Prime Minister says exactly the same thing...

- There is no difference between the parties. They all have the same answers. Fukuyama called it the end of history - no more ideological debate. We have the same answers, all of us, we have the same way of looking at the problems, but our different groups struggle. There is even a problem of families here...

· Families ?

- Yes. We have a big family in power here, the Prime Minister's family. But we have no tribal problems, fortunately. I am forever saying that rivalry of that sort is irrational. Why all the hatred of the ex-single party which was completely open in the three years of transition and freed all the prisoners and let all the exiles, me included, come home? And then there was a party which said a lot about democracy but gained power and began a witch-hunt... You have to see the single party in its historical context. All these people were members of the single party. One or two of them were Ministers, even. Take Trovoada and Daio and so on. They bear some of the responsibility.

· So how do you think you can get into power if you are offering the same policy as the present Government?

- The others ran a rabble-rousing campaign and we had been in power for too long. People naturally wanted a change after 15 years. They were 54% for the new party and 30.5% for us - not a bad result given the conditions in which we went to the hustings, with a disastrous economic situation and 15 years of single-party rule behind us. The people who expected to see their standard of living improve are now saying that they were misled. But we are still telling the truth, just as we told it during the election campaign. Our adversaries are coming round to what we say, but it's too late. If there were elections now, we would be bound to win them to run the same policy with perhaps a little more experience and maturity. We could have the same policy at smaller social cost. They said themselves that they haven't been able to promote the social side of the structural adjustment plan yet. Ultimately, when they talked to the opposition parties - the little ones, that is, not us, we haven't met yet - they also admitted that they had been wrong not to have some more dialogue with the MLSTP-PSD. I maintain that it wasn't just a lack of dialogue. It was a veritable witch-hunt as far as we were concerned. We were pushed out of our headquarters, all our smaller district headquarters were taken, we lost our cars and our former Prime Minister was sent to court over a prefabricated housing affair - which was in fact a purely political issue.

· Your experience didn't stop you from coming up with white elephants then...

- It wasn't a white elephant since we didn't think we would be paying for it. When we had the offer, we telephoned Manual Dos Santos, Guinea Bissau's Minister of the Economy, to ask for details because they had the same offer there. And Manuel Dos Santos said: 'No problems. Officially, there is a price which is far more than the houses are worth, but you don't pay anything. You sign and a year later you tell the Italian Government that you can't pay'. The Italian Government, which is already in contact with the Italian firms which build these houses, is intervening. It is paying half in the form of development aid and the other half is to be paid over 10 years. The debt will be rescheduled in a year or two and then written off altogether. But, since the new party failed to stick to the agreed procedure after the elections, it may have to pay up in the end, because the case had to be monitored in Italy for the Italian Government to take over these debts. They blocked the case because they wanted to make a political case out of it and I don't know whether they will be able to set the procedure in motion again after all this time.

STomamp; Principe

Interview by Amadou TRAORE

Cooperation with the EEC

by Neil CRUMBIE

The Democratic Republic of Sao Tomnd Principe joined the Lom Convention in 1978, two years after its accession to independence. There have therefore been almost 15 years of cooperation with the Community. An Off´ce of the EEC was opened in Sao Tomn 1979, from where a Resident Adviser reports to the Delegation of the Commission in Libreville and acts as a link with the Government.

The National Indicative Programme of the LomV Convention was signed in December 1990 by the Minister of Foreign Affairs and Cooperation and the National Authorising Officer of the Democratic Republic of Sao Tomnd Principe, Mr Guilherme Posser, and by Mr Jean Delorme on behalf of the Commission of the European Economic Community. The details of this programme are explained later in this article.

Member States accredited to Sao Tomnd Principe are Belgium, Italy, France, Luxembourg, Germany, Netherlands, Spain and the United Kingdom. Portugal, of course, is represented by an Ambassador who exercises the Presidency 'itre permanent' for the Community, being the only Member State Ambassador resident in Sao TomThe others exercise their accreditation either from Luanda in Angola or Libreville in Gabon.

Sao Tomnd Principe has benefited principally from Community aid in the form of interventions under the National Indicative Programmes of Lom, II and III and now under the LomV Programme which is starting in 1992. To this must also be added transfers made under the system of Stabex as compensation for loss of receipts following the export of basic products, cacao in the case of Sao Tomnd Principe, when prices fell below those that had been forecast. The total amount of Stabex transfers was more than ECU 9 million between 1981 and 1991.

Sao Tomnd Principe has also benefited from regional programmes in the Gulf of Guinea as well as aid financed by the European Investment Bank.

Over the last few years, therefore, the EEC has been one of the principal sources of development aid for Sao Tomnd Principe together with Portugal, France, Italy, Sweden, Angola, the World Bank and the United Nations.

Development aid under Lom, II and III has been allocated in support of the development aims of Sao Tomnd Principe.

The development of agriculture and fishing

A project including the planting of a 600 hectare palm plantation to supply a palm oil factory which was financed by risk capital managed by the European Investment Bank was completed and is now in operation. The aim of this project was to provide a capacity for import substitution ensuring a regular supply to the local market while at the same time providing for savings m foreign exchange.

A refrigeration project consisting of four cold storage units was also financed to provide commercial support and a distribution facility to the fishing industry, an important element in the day-today life of the Saotomense people. In time these were supported by two ice-making units.

Finally Sao Tomill benefit from a regional project designed to develop small fishing in the Gulf of Guinea. This will be located at Neves and will involve the rehabilitation of the boatyard.

Social infrastructure

Projects to provide urban water supplies to Trinidade and Agolares have both been completed as has the structural rehabilitator of the hospital on the island of Principe, which was completed in conjunction with the Portuguese NGO AMI in late 1991.

Other current activities include the construction of a blood bank in conjunction with French and Portuguese aid, in the capital of Sao Tome.

Development of international transport links

A major project has been the rehabilitation of the Port of Sao Tomofinanced with German aid (KFW), who have provided a powertug and two of the four barges, and the United Nations Equipment Programme, which has provided cranes. The Community rehabilitated the quays, and provided for lift trucks and technical assistance.

As part of a regional programme the Community funded the provision of a 200-tonne merchant vessel now named 'Pague' which trades in the Gulf of Guinea between the islands of Sao Tomnd Principe and Cameroun, Equatorial Guinea and Gabon. This vessel cost ECU 430 000.

Import programme

This programme was in support of the balance of payments programme of Sao Tomnd Principe and included the supply of basic products such as soap, caustic soda, powdered and condensed milk and sugar.

A 1000 KVA generator and 8000 meters were also provided to support the islands" infrastructure and facilitate cost recovery.

The 1000 KVA generator, provided by ABC in Brussels, Belgium, still continues to make a very significant contribution to the supply of energy in Sao Tom

Food aid

Community food aid principally involved the supply of wheat, corn and rice which Sao Tomnd Principe needed as they were unable to produce sufficient quantities of basic foodstuffs for the national diet. The principle involved is that the sale of food and other supplies to the population builds up counterpart funds which are then managed jointly by the Government and the Commission to finance labour-intensive projects in the programme to achieve food security, improve health, education, sanitation and provide for the construction of schools. One such school will shortly be opening in Sao Joao dos Angolares.

Fishing agreement

The Fishing Agreement between the Community and Sao Tomnd Principe permits fishing licences principally for tuna to be given to Member States' fishing boats. Currently, 30 licences are in operation, for which the Government receives the sum of ECU 1.65 million over a three-year period that started on I June 1990, ECU 150 000 for scientific and technical programmes and ECU 375 000 for commitments to more general fishing and maritime activities.

Emergency aid

Of all the health threats to Sao Tomnd Principe, that of malaria remains the greatest and this is now subject to World Bank interventions. During the period of Lom11, the Community provided emergency aid in the fight against malaria amounting to ECU 465 000.

LomV

The LomV Convention entered into being in September 1991 and consists of two main sectors which are:

1. The consolidation of the palm oil project in Ribeira Peixe by the rehabilitation of the road between Ribeira Peixe and Sao Joao dos Angolares for an estimated ECU 1.3 million. The African Development Bank, as part of its programme, is financing the rehabilitation of the road between Sao Tomnd Sao Joao dos Angolares.

2. A major project to improve the water supply, drainage and sewage systems in the capital Sao Tomtself for an estimated ECU 3.9 million.

The technical studies for both these major projects have been completed and invitations to tender will be published later in 1992 with works starting in late 1992 and early 1993.

Further funding amounting to ECU 1.3 million will also be made available for agricultural diversification, assistance to small and medium-sized enterprises and the provision of technical assistance.

Finally, discussions are under way concerning the ECU 1.5 million available to Sao Tomnd Principe under the programme for structural adjustment and the ECU 1.5 million available as risk capital from the European Investment Bank.

N.C.

(introduction...)

Until recently, Senegal was French-speaking Africa's only democracy. This, the authorities say, has more to do with colonial heritage than national tradition and it is an historical premise which has its importance in both the practice and the development of the country's political institutions, particularly since a State organisation and operation model often reflects the ambitions of those who design it, in addition to all the socio-cultural and economic factors.

At first sight, Senegalese society has all the hallmarks of a democratic organisation. There is less State pressure on the individual than in many other African nations and the coercive attitude typical of the authorities elsewhere on the continent is virtually imperceptible here. Officially, the country's democracy is a real and positive thing, but the Senegalese themselves can be virulent in their criticism of its political workings - and for domestic far more than historical reasons.

Democracy grinds to a halt

Democratic organisation goes back a long way, but it was set aside nonetheless just after independence in June 1960, when the then Head of State, eminent grammarian Lold Sedar Senghor, was the next leader to be seduced by the one-party system, which lasted until 1978. The single party in question, the Senegalese Progressive Union (UPS), in fact looked more transparent because it included the socialist faction of former Prime Minister Mamadou Dia, although Dia was abruptly removed from power in 1962.

Senegalese politics are heavily influenced by what goes on in Paris and the events in France in May 1968 had their constitutional fall-out, leading to the reestablishment of the post of Prime Minister and a start on a multi-party system in only four years. The new system was made official in 1978, with the recognition of two new parties - the Senegalese Democratic Party (PDS) and the Independence and Labour Party (PIT). But hidebound regulation of the division between the ideological positions on which the parties were lined up meant that Senegal's democracy was stillborn, its machinery doomed first to freewheel and then grind to a halt. Paradoxical though it may seem, President Senghor thought and decided that the PDS, led by Abdoulaye Wade, the brilliant lawyer, could be nothing but a fairly right-wing free-market organisation and the PIT, Marxist or with Marxist leanings, could only be the extreme left. Only his own party, the Senegalese Progressive Union (UPS), bore the label of social democracy. So the rules of the democratic game were hard and fast and destined to lead, not to a proper pluralist system, but to governance by a dominant party which outstayed its welcome in power, radicalised the official opposition and aroused frustration in all those passed over by an economic policy totally reliant on external aid. The other consequence - one of the most perverse effects of this democracy programmed to seize up - was the development of a one-party cult in Senegal, even among the opposition, because there was no alternative to State direction.

With Africa's economic problems, national constraints and widespread one-party government, successive Senegalese authorities found it easy to develop a democratic image and to reap the dividends on the international scene.

Yet although Senegal's system has a long way to go before it becomes an average democracy, many African peoples - not leaders - would still find much to envy in the lot of the Senegalese. Despite such a firm commitment to the one-party system in its choice of leaders and its attitude to them, Senegal has, to a very large extent, the basic features of pluralist opinion, an aspect of public life which is reflected in great freedom of debate, in religious freedom in a country with a Moslem majority, in the right to be politically active without running any major risk and in the (for an African country) profusion of newspapers, whose lively tone is at variance with the conformity and 'poor standard' of the official media.

Opposition commits hare kiri

In Africa more than on other continents, the State has wanted to be a real provider and opportune or opportunistic sticking to the existing power has helped slow the move towards democracy and bolstered the one-party cult which, in Senegal, has taken hold of the opposition too. The Senegalese opposition was fairly moderate to begin with - more as a 'force of proposition' in the eyes of its principal leader, Abdoulaye Wade - and it has become more radical because of the lack of any alternative. But political combat in Africa has more to do with wielding power than achieving objectives or furthering any concept of the society that is to be built and, in 1990, the Head of the PDS yielded to temptation and joined President Diouf's Government, with neither condition nor portfolio. Just what concessions and assurances did Wade get to go into the Government and why? Newspapers and people close to the PDS leader maintain that there has never been an answer... and Senegalese housewives are still waiting for his promised slash in the price of rice.

Much the same has happened with the PIT. One or two of its leaders joined the Government at the same time as the PDS representatives, but this has done nothing to alter the policy of President Diouf and Habib Thiam, his Prime Minister.

Joining the Government spells hare kiri for the opposition and its principal leader Abdoulaye Wade, they say in Dakar - but without the honour that usually goes with this traditional Japanese form of suicide. The fact that the Government's only Minister of State is standing against President Diouf in the presidentials in February 1993 added to the confusion and made the head of the PDS's position more untenable and, in mid-October, he (like his two partisans) was forced to try and right the situation by resigning from his Government functions. But will this be enough to bring him better fortunes in the presidential elections, particularly in a country where, despite the waning authority of the holy men, particularly in the towns, Moslem brotherhoods can still greatly influence the voters' behaviour?

The other handicap, as one former PDS leader put it, is that the Senegalese opposition has failed to steer democracy or make sure it is properly rooted.

Anxious not to be outpaced

The democracy label attracted international aid for the Government and Senegal has the highest per capita rate of aid in Africa. This has its advantages, of course, but there are disadvantages too, not least the very common belief that aid is inevitable if Senegal is to survive.

The emergence of or the opening to democratic ideas in most of the other countries of Africa since Frans Mitterrand's famous speech at La Baule in 1989 has brought the Senegalese authorities the threat of competition in an area where Senegal has so far been treading a lone path on a continent where democracy was interpreted in widely different ways and was much subject to the carping of the leaders.

Anxious not to be outpaced in the democracy marathon slowly being run on the continent, the Senegalese Government has embarked upon a vast overhaul of its system, setting up a new electoral code, whose first merit is that it was adopted by all the political parties. Voter identity, the secrecy of the ballot (individual booths must be used), the count and transparency in all electoral operations in general are much more stringently controlled than before.

Votes, for example, will now be counted by about 30 committees, each one chaired by a magistrate and comprising representatives of the political parties, but none of the State - 'a real innovation', the Minister for Home Affairs emphasised, although he objected to the 'lack of a State presence' in this matter and thought the Government was at fault ' for going along with it. 'We have gone; further on this one than they have in France,' he added.

But if this is democratic progress for the people, what is the point in regretting going one better than those set up as the example?

There is a limit on the number of terms a president can serve now too - two lots of seven years - and independent candidates can stand, on far easier terms than before.

But one of the most important provisions in the new electoral code concerns the basis on which the President of the Republic is elected. The new Article 28 says that 'henceforward, no-one may be proclaimed elected on the first round unless he has obtained an absolute majority of the votes cast, representing at least one quarter of the electorate, and... if no candidate has obtained the requisite majority, there shall be a second ballot... to take place on the second Sunday following the first round'. There are a number of advantages to this: three of them are that it forces the Government to announce how many people are on the electoral roll before the election, it broadens the basis on which the president is elected (thus avoiding an ethnic, minority-based election in which list manipulation could bypass heavily populated areas hostile to a particular candidate) and it can encourage greater civic duty among the citizens.

Senegal has made a huge effort to update its democratic system in time for February 1993. It has been an expensive undertaking, very expensive indeed bearing in mind the country's income and requirements, and part of the cost has been covered by the international funders, with the European Community giving something like ECU I million.

But going beyond the heavy cost of a better system of democracy, what Senegal's political leaders, opposition included, have to do - and this is most important - is to create optimum conditions in which to safeguard the returns on democracy from which the country has derived so much benefit in years past.

Lucien PAGNI

The Senegalese economy

by Famara Ibrahima SAGNA,

Minister of Economic and Financial Affairs and Planning

Under LomSenegal has placed a lot of emphasis on agriculture and rural development in general, economic and social infrastructure and the promotion of business, trade and craft. These sectors were chosen for the simple reason that they are priority areas of our economy.

This aid fits in with the general aims of development in that it stimulates exports and helps with the balance of payments. At the same time, it constitutes support for our drive to promote economic and social development by financing key sectors of the economy.

The aid, which is normally absorbed by the Senegalese authorities, has made it possible, inter alia, to run major schemes in agriculture and rural development in general and in economic and social infrastructure and to set up machinery to stabilise our export revenue or finance particular products, emergency aid and so on.

We in Senegal use Stabex and we have had more than CFAF 76 billion for our groundnut products so far.

Commnity aid for Podor

Aid has been focused on a region like Podor above all to make up for regional differences in economic awl social infrastructure, to provide support for the opening of SMEs and to promote development at grass roots level. It is therefore in line with the trend in cooperation which began with the 6th EDF, which, true to the principle of geographical concentration, channelled CFAF 33 billion into the Podor region, as follows:

- CFAF 16.8 billion for hydro-agricultural developments;
- CFAF 1.75 billion to restore the natural environment;
- CFAF 700 million as support for the opening of SMEs;
- CFAF 8 billion for economic and social infrastructure;
- CFAF 3.15 billion as support for a variety of grassroots development schemes.

Human rights and development

The problem does not arise in Senegal's case, because our country began taking notice of human rights long before the funders thought about them as an attribute of aid. Our country made this factor, the human condition and human rights, an integral part of the untouchable principles of its economic and social management a long time ago.

In Senegal, we believe that the Convention is the preferred framework for cooperation. That poses no problems since, alongside this cooperation under the Convention, the other, non-Convention cooperation, with its special programmes of emergency aid and fishing programmes and Stabex and Sysmin and so on, is very fruitful and our country has had a lot of advantages from it so far.

The 6th EDF

Let us look at the nine most important aspects covered here.

Hydro-agricultural developments

The following general aims have been achieved.

- The most efficient growing techniques (animal-drawn machinery, wind breaks and R&cD) have been phased in.
- The degree of financial and technical autonomy of producers, now grouped together in economic interest groups, has been improved.
- They have been equipped with mills, huskers, threshers etc.
- The back-up structure is equipped and working properly.
- Women have been involved in production.

Training for farmers, particularly when it comes to management and keeping accounts, is still the weak spot here.

Restoring the natural environment

Despite unfavourable local eco-climatic conditions (drought, wind erosion and the over-exploitation of natural resources), quantity-wise the project targets have been met overall.

The difficulty is actually to involve the peasant farmers in the preservation and restoration of the environment in which they live.

Small and medium-sized businesses

Something like 100 projects have been run here since January 1990. The people are displaying an increasing interest in access to bank loans and joining economic interest groups and the setting up of the CNCAS in Ndioum and the BICIS in Podor should help this along.

However, the problems are:

- getting the promoters to realise that the idea of reimbursement is in fact a reality, an obligation which cannot be ducked and is beneficial for all concerned;
- generating collective solidarity between all promoters by means of the mutual guarantee fund;
- diversifying agricultural production;
- setting up small, lasting, profitable processing units.

Economic infrastructure

This involved:

- rehabilitation of the RN2, the second national road, with cofinancing from Italy;
- the making of production and communication tracks on the island of Morphil;
- urban infrastructure (water supplies, drainage, the bus station and extensions to the market) in Podor;
- regional radio, with a view to Senegalese Radio and Television (RTS) covering the northern parts of the valley.

Health

This is going well, but the health authorities' meagre contribution to the proper running of the programme could be a barrier.

Socio-cultural environment and the promotion of women

Micro-projects were run here to provide support for various development schemes at grass roots level.

Coordination and monitoring

Community support here is in the form of:

- financing of the national expert for the programme monitoring committee at the Ministry of Economic and Financial Affairs and Planning since October 1988; - financing of technical assistance for the unit responsible for maintaining the dam;
- financing of the expert missions needed to prepare, implement and evaluate the programme;
- financing of a study of the economic power of women in the Podor department.

Cooperation outside me indicative programme

- EIB loans of CFAF 2.275 billion to the SOFISEDIT, CFAF 2.45 billion to the State for its share in the extra capital of the ICSs and CFAF 4.2 billion to SONATEL.
- CFAF 37 billion-worth of Stabex transfers.
- CFAF 1 billion to resettle returnees from Mauritania.
- CFAF 4 billion-worth (100 000 t) of crude oil in 1988 as support for the balance of payments.
- A Sysmin loan of CFAF 5.3 billion to remove cadmium from Senegalese phosphate.

Regional cooperation

Senegal has benefited from some CFAF 45.5 billion here, used to set up 10 regional projects including a solar programme, a butane programme, the Dakar-Banjul road and support for ASECNA.

F.I.S.

The economy: Heavily dependent on the outside world

Trying to describe Senegal's economy in one, short article is something of a challenge. The situation has broken down to the point where structures have disintegrated and the informal sector has mushroomed. The causes are deep-rooted. 'The policy of post-l 960 Governments can be seen as a continuation of the colonial administration that went before' and, on top of that, the structural adjustment policy applied since 1980 has failed to do anything about the problems or get the economy going again on firmer foundations.

There is of course always matter for debate here. The official line is that the policies are sound and the current economic situation inauspicious. But scratch the surface and opinions as to the state of the Senegalese economy are mixed and sometimes harsh. 'No national accounting has been done since 1981. Saving is a thing of the past, although medium- and long-term bank deposits seem to be increasing at the same time,' Frans Boye, Head of the Economics Teaching and Research Unit at Senegal's Saint-Louis University, told me. Could these banking assets be a way of financing the economy?

'No', Frans Boye said. 'Paradoxically, the opposite is happening and the Prime Minister is going to the African Development Bank (ADB) to borrow something like CFAF 39 billion to finance the SMEs at the same time.'

The new industrial policy (NIP)

In theory, relatively healthy Senegalese banks should help prop up investments, especially in industry, but, in practice, they do not. Traditionally, Africa's financial establishments are chary about investing in production, for a start, and the 'complete failure of the NIP' and the 'inconsistency' of the general economic policy are holding back the development of industry, despite the Government's attempt to reshape the policy for this sector, which, as one international report made clear, has, typically, none of the major multiplying factors, fails to capitalise on local resources and has high production costs. So the major part of the manufacturing sector - with 17% of GDP in 1987, second only to Cd'Ivoire in this part of Africa - has taken a hard knock, although statistics produced by the Ministry of Economic and Financial Affairs and Planning suggest that the industrial component of GDP went up by 0.3% overall in 1991 (to 18.9%, from the 18.6% of 1990).

However, analyses do not predict any significant change in 1992 or 1993, particularly since the main products (textiles, preserved fish, oil and groundnut by-products) are selling badly because of international competition or poor competitiveness or because Africa in general and Senegal in particular have a tradition of importing the goods (other than textiles, for the most part) the consumer wants.

The phosphate sector has seen its export opportunities dwindle because of the high cadmium content of the Senegalese product, but output and income could well be looking up soon with aid of something like ECU 15 million from the European Community helping to get the 3 industry on its feet again.

Yet there will be no real take-off for any branch of the nation's industry without a thorough rationalisation of the management and economic objectives of the whole - which is the Government's aim in embarking on a strategy of rehabilitating the businesses in which the State is still a shareholder and following the World Bank's recommendations by bringing in measures to create a climate conducive to foreign investment. This means a new labour code in the very near future, the possibility of a single tax or flexible price control and many other measures to bring down management costs.

This is all very laudable, but the businessmen apparently want more than that. Their feeling is that the approved arrangements have had only a minimal effect on management cost compression so far. 'Senegal's employers wish to put the Government on its guard about the economic policy, which is worsening the financial situation of the country's businesses,' Amadou Moctar Sow, the chairman of the National Employers' Confederation, told me. The State, he maintained, should have asked the economic operators for their advice before coming up with its own measures on tax and work organisation and company competitiveness.

The futility of Senegal's ten years of structural adjustment was also to be blamed on those same errors of Government approach, he said, 'in allowing the World Bank to graft onto Senegal measures which bore no relation to local economic or political reality... and could only lead to the bad results we all know about.' This analysis of the situation comes fairly close to that of the country's main funders, who are keen to see macroeconomic factors and the structure of the market completely changed to make for a better balance of industry and services and stop the informal sector from proliferating to the increasing detriment of modern industry. But of course, with internal and external debt precluding any far-reaching tax measures (see profile), the Government is going to find any investment incentive and support policy difficult.

Agriculture - drought not the only culprit

Few countries can make a success of industrialisation without developing a strong agricultural sector first. Senegal and the other African States spent nearly three decades running policies aimed at proving this natural process of economic development wrong. They failed and now they have difficult food situations on their hands. Unsuitable measures have left domestic production in ruins and the drought which has crippled agricultural potential In Senegal and the rest of the Sahel is no longer alone in bearing most of the blame for the decline of the nation's farm sector.

The production sector has gone through nationalisation, which had more to do with introducing civil service practices, and it has undergone total and partial privatisation, but Senegalese farmers have always stuck to their traditional methods and grown what they did in the period, with just one crop or, at best, a two-crop system relying heavily on groundnuts. Attempts at diversifying into off-season vegetables (tomatoes) for export failed to make their mark because they involved a high-cost product aimed essentially at the export market and oyerlooked the psychological barriers and regulations hampering international trade. Although Senegal's agriculture accounted for 22% of GDP and provided employment for 80% of the country's workers in 1987, the national food record is largely negative. In 1990-91, an estimated 517 900 t of the available 1 289 396 t of cereal equivalent came from imports and 51 952 t were food aid - figures which, along with those for other areas, show just how export-oriented the Senegalese economy is.

Then there is the population count, expected to reach 10 million in eight years at the present rate of growth of 3.2% p.a. and implying an increase in cereal equivalent of something like 561 000 t. The Government has also adopted a new agricultural policy (the NAP), intended to bring about 80% self sufficiency in food by the year 2000 and involving being able to push the current rice output of 181000t p.a. up to 740000 t by that date. Notwithstanding an energetic drive forward, in particular with the vast European Community-supported Podor rice project in the Senegal Valley, there is little chance that the NAP target will be reached without difficulty, unless every potential resource is put to work, especially in Casamance. But, given the historico-political (and possibly economic) issue facing the people there, which loomed large for the first time in 1992 and all but upset the even tenor of Senegalese politics, Casamance's problem has to be completely solved first.

Paradise

Almost every economic parameter is negative. What can be done about it? That is the question and few are willing to hazard even the slightest guess. Senegal's economic problem is a problem of the people and a problem of the Government, in contrast with some places where politics are a bigger burden on the economy. Frans Boye, head of the economics faculty at Saint-Louis University, said that 'no enterprise will last unless the rules of the game are made clear... and thoroughgoing political reform is undertaken.'

'Politicians do not tell the truth,' the economist went on. 'With all its deficits financed from abroad, Senegal is a land of plenty'. But how much longer will it last?

L.P.

Tourism: Need for restructuring

Tourism remains one of the sectors which Senegal can rely on to increase its income in hard currency and to reduce the balance of payments deficit. Indeed, in French-speaking Africa, Senegal is the principal tourist destination, ahead of the Ivory Coast. In the continent as a whole, it is in fourth place behind Kenya, Zimbabwe and Botswana as regards total international tourist arrivals.

But this flattering comparison may be somewhat misleading. In overall world terms it emerges that, of the 400 million tourists recorded in 1989 by the World Tourism Organisation (WTO), barely five million visited Africa (1.2% of the total) and only 265 000 of these spent their holidays in Senegal. In financial terms, these visitors represented c $123 million in income to the country,, making Senegal the top earner from tourism in West Africa and the third most important tourist destination in the continent. It is worth noting that Africa's five million tourists generated only 0.7% ($1.37 billion) of the world's total tourist earnings (5194.5 billion) in 1989.

There are also indications that all is not well with Senegal's tourist industry. The reasons for the decline in this sector are, as elsewhere, related to internal structural problems combined with unfavourable economic conditions in the tourists' own countries.

As regards the first of these, it is stated in an expert report that 'the Senegalese tourist product, the cost of which is too high in relation to the competition, has become tarnished and outdated'. This assessment is corroborated by the information coming from tourist operators. Broadly speaking, they are pessimistic about the future. An example which illustrates the problem is the 'Club Aldiana' which has now been operating in Senegal for 20 years. Usage of the 230-bed establishment, which caters mainly for European tourists, has been declining for a number of years. The occupancy rate, which averaged 67.18% in 1989, fell to 60.09% in 1990, 54.31% in 1991 and the trend has continued since then.

Senegalese tourist promoters attribute this state of affairs, at least partly, to the strength of the CFA franc, which has a fixed parity with the French currency. This means that prices in Senegal are largely comparable with those of developed countries. They also contrast unfavourably with the prices charged in neighbouring Gambia, which offers a tourist product of similar quality. Hence the latter enjoys a competitive edge.

In short, it appears that Senegalese tourism needs to be redesigned in terms of both the product and its operation, with a view to attracting visitors who are not necessarily in the habit of acquiring a loyalty to a particular holiday destination.

L.P.

Profile

Map of Senegal (A)

Map of Senegal (B)

Table 1: Balance of payments (in billions of CFA francs)

Table 2: Foreign national dept outstanding (in billions of CFA francs)

EEC-Senegal cooperation: a variety of instruments

Senegal and the European Community have been partners for a long time. For 30 years, the two countries have worked side by side to create development policies which have had an effect on all the major economic sectors.

More than 370 billion CFA francs have been made available to the Senegalese authorities, principally through the European Development Funds, but also by virtue of a range of other instruments set up by the Community over the years.

At the heart of the relationship lies technical and financial cooperation, which has covered and continues to cover a wide range of areas. Today, the main focus is on two of the principal sectors in Senegal's development namely, agriculture and road infrastructure.

As a country bordering the Atlantic Ocean which has traditionally derived an income from its maritime resources, Senegal has, not surprisingly, also benefited in no small measure since 1979 from the fishing agreements which it has concluded with the European Community.

A third source of assistance for Senegal has been through SYSMIN, the system of support for mineral exports. This support has had a continuing and significant impact on the development of the phosphates industry, which is a major provider of foreign exchange for the country. The European Investment Bank (EIB), an important partner for Senegal, has been active in providing backing to the phosphates sector, and is also involved in other major projects including the upgrading and extension of the telephone network and improvements to Dakar's water supply system.

Very recently, Senegal has made use of funds, coming partly from the 'human rights and democracy' budget heading for developing countries, for the organisation of the May 1993 general elections.

Finally, under the heading of regional cooperation, Senegal and other countries of West Africa will, with EC support, shortly begin implementation of the Regional Indicative Programme. Eighty billion CFA francs (ECU 228 million) have been made available for this purpose and the funds will be directed towards three focal sectors - the management of natural resources and the protection of the environment, transport and telecommunications, and the improvement of the natural resource base.

Financial and technical cooperation, fishing agreements, SYSMIN, help for the democratic process, regional cooperation - these are all examples of a cooperative relationship which has many aspects but just one essential goal - the development of Senegal.

An agricultural country

Primary production still predominates in Senegal, 30 years after independence. Notwithstanding the relative importance of other areas of activity, the country remains fundamentally an agricultural one. This sector still leads the field in economic terms, providing 22% of GDP in 1991 and work for almost three quarters of the population.

Cooperation between the EC and Senegal has been influenced by this situation, following broadly the orientations and priorities set by the Senegalese authorities. After independence, Senegal, with the support of the first EDF (19581963), developed and modernised its export crops, which were the only source of foreign exchange available to pay for equipment and administration. Groundnuts were specifically targeted. The aim of the cooperation was, in essence, to enable this sector to remain competitive while at the same time meeting the requirements set out in the rules adopted by the newly established European Community.

The second EDF (1964-1969) went on to provide assistance for agricultural diversification with support for cotton growing in eastern Senegal as well as a number of support measures for farmers (equipment for new farmers, soil improvement, seed distribution etc.).

Drought

The drought of the 1970s came as a major shock. National authorities and donors alike had to respond rapidly to the immediate needs of the population before embarking on the search for new, longer-term solutions to the crisis. This involved the re-establishment of both productive projects and infrastructures. The third and fourth EDFs (1970-1980) were to reflect these concerns.

The fifth EDF (1981-1985), imbued with the spirit of the 'Memorandum on Community Development Policy' drafted by the Development Commissioner, Mr Pisani, emphasised development programmes and projects per se rather than more generalised aid.

The purpose of these interventions is to bring about food security for the population, improve the environment and fight desertification. In order to achieve the objectives, a framework of measures was put in place by the authorities. These included the establishment of a Cereal Plan in 1986 and the construction of dams at Diama and Manantali which came into service in October 1992 after ten years of effort.

The Cereal Plan gives a diagnosis of the food situation in Senegal and sets out the main principles on an overhauled agricultural policy. The plan strongly emphasises the importance of national production, supported in particular by an incentive pricing policy. There are plans to reduce the country's food deficit through increased use of irrigation, primarily in the Senegal River Valley. It deals at length with the redefinition of the role of the State and of regional development enterprises, with enhanced participation by the people and the private sector.

Irrigation based on the Senegal River in this way is rendered possible by the building of dams. These dams are a major priority for the three riparian States - Mali, Mauritania and Senegal - since they offer the means of re-establishing food security for the populations affected by drought. The European Community will be heavily involved in the execution of this project, the purpose of which is to fight desertification and help the local people to meet their own needs for food as well as to generate sufficient income.

The expansion of the rice sector, which is currently the only feasible option for increasing rural incomes, involves developments aimed at the peasant populations and designed to increase profitability. Experience acquired in the field by the European Community, which has over the years developed more than 6800 hectares of irrigated land, given over mainly to rice, has provided a good basis for its participation in the discussions about the agricultural structural adjustment programme, in so far as it affects the rice sector. The rice component of the programme involves an agreed approach between the donors and the Senegalese Government, along the lines of the wider Cereal Plan, which supports the disengagement of the Government from this sector.

The 6th EDF and Podor

The framework having been established, the European Community increased its existing efforts in the Senegal River Valley under the 6th EDF (19851990). The implementation of a support programme costing 35 billion CFA francs for the development of the Podor Region has had a visible impact upon its landscape. There were a number of different objectives - to ensure food security, to restore the natural environment and to open up the region.

This programme, which was based principally on hydro-agricultural development, was also directed towards the road infrastructure. There was, furthermore, a novel component aimed at creating employment through small and medium-sized enterprises and at achieving social development through microprojects.

Different types of project

To achieve the food security objectives, different types of complementary hydro-agricultural development were put in place. They should provide peasants with the capacity to feed themselves and to release savings. Implementation of the schemes fits in with the increased responsibility being taken by peasants, who are organised in Economic Interest Groupings (EIGs). EIGs themselves have made significant progress over the period.

The first developments, the basins, are large surface areas equipped with a pumping station. Development works cost some CFAF 5 million per hectare. The areas are brought into productive operation by the peasants, who are provided with high-quality equipment and materials for the purpose. Following the previously estabilished pilot scheme at Nianga (633 hectares), and the one now set up at Diomandou (470 hectares)' two further sites, at Ndioum (700 hectares) and A Lao (1025 hectares), will be made available for the peasants.

Then there are 1050 hectares of irrigated village perimeters which have progressively been made available under the programme, following on from the 2293 hectares under previous EDFs. The individual plots, which are closer to the villages and have an average area of between 10 and 20 hectares, will henceforth include agro-forestry as well. Development work in this area is more modestly priced at about CFAF I million per hectare. Finally, almost 300 hectares of perimeter have been made available to villagers under the SME programme. This is mainly for the benefit of private individuals, and development costs are between 0.3 and 0.4 million CFA francs per hectare.

Work to restore the natural environment, which is one of the objectives of the programme, has been carried out under the 'Prna' heading with a budget of CFAF 1.7 billion. The object is to reverse the process of degradation of natural resources. Thirty years ago, forests covered hundreds of thousands of hectares in the river area. Today, no forest remains. 'Prna', which began in 1988, follows on from two previous forestry projects, from which valuable experience was gained. The programme, which faces many difficulties, is designed to induce the local people to take charge of the management of the forest resource in a way which fits in with agriculture, livestock and water supply.

Roads - a speciality of European cooperation

For 30 years, the European Community has put considerable amounts of effort into road infrastructures - in financial terms, more than 22 billion CFA francs. In the St Louis region alone, the Rosso-Bio-Ndioum link was financed under the 6th EDF at a cost of 3.6 billion CFA francs. A logical next step was the rehabilitation of a stretch further up on the Dakar-St Louis route with a view to opening up the northern region. On a different level, tracks have been laid out in the Podor region under a CFAF 1.8 billion programme which allows the people of the island of More, phil, a zone which is cut off from the ' world during the rainy season and when the river is high, to go about their business.

Entrepreneurs

Work in the field of small and medium-sized enterprises is not confined exclusively to the agriculture sector. It also extends to a range of other activities. The aim is to increase the value of private enterprise and to meet the strong demand for credit facilities which is not met by the traditional banking sector. This introduction to the business world has as its basis the withdrawal of the State and the privatisation of agricultural activities - a very different state of affairs from the development options of the 1960s and 1970s.

The establishment of SMEs was carried out initially through two separate projects which were merged in 1991. The first, which was emergency aid finance, involved the integration of returnees from Mauritania while the second took the form of support for the creation of SMEs made available under the 6th EDF. A total of almost two billion CFA francs has been injected into the region under this project, helping in the establishment of more than 500 SMEs throughout the Senegal River Valley.

This highly positive experience has also resulted in a change of attitude, as regards SMEs, on the part of the commercial banks. There is, on the current agenda, the opening of a line of credit of more than CFAF 600 million, to be allocated in part to the banks and in part to a financial company for risk capital investments in enterprises.

A community approach

This approach in no sense excludes local community participation. The microprojects budget heading, which has CFAF 500 million (ECU 1.4 million), supports initiatives in favour of women and young people in the development of the region. Henhouses, sheep enclosures, gardens, onion storage centres, school renovation schemes and health facilities, all established with community participation, are highly appreciated, particularly in those areas where women or young people have not hitherto received much attention.

Similarly, through the health programme financed under the 6th EDF (CFAF 700 million), the focus is mainly on improving basic health care for people in the Podor region. This has been possible, in no small measure, thanks to the major efforts undertaken through previous EDFs, which resulted in the building of regional hospitals in Ndioum and Ourossogui and the renovation of that of St Louis.

The health component of the 6th EDF was developed in close liaison with the rest of the support programme for the Podor region. It is clear that while the improvement in living conditions necessarily entails hydro-agricultural development, it is unfortunately also the case that this leads to an increase in malaria and bilharzia - illnesses linked to water. It was necessary to tackle these issues, and the related one of water hygiene, without delay. This was why the highly popular and decentralised programme for malaria and the 'water-hygiene-health' programme were developed. These concentrated on education, training and awareness-raising throughout the area and involved a series of concerted actions which brought together local people and medical staff working in the region. Research has also been funded in the fight against bilharzia.

The improvement of water quality is one of the two objectives of the village water scheme, which has been allocated CFAF 2.5 billion under the Support Programme. This scheme, which is increasingly to be taken over by the local people, aims to provide the population of 36 villages in the Podor region with water in sufficient quantity and of suitable quality. The programme involves the restoration of existing boreholes and wells, the sinking of new boreholes and the development of infrastructure for storing and distributing water. In order to achieve maximum efficiency, the village water programme was linked to the regional solar programme (CFAF 1.5 billion) which allows for the provision of photovoltaic equipment for pumping but also for lighting, sanitary refrigeration and the recharging of batteries.

Table 1: Summary of Community aid to Senegal Situation at 31 December 1991

No discussion of the impact of the 6th EDF would be complete without a reference to the modernisation of the town of Podor under the budget heading of 'urban infrastructure', to the tune of CFAF 1.4 billion. At the entrance to the town there is now a large bus station used by bush taxis, while in the centre a covered market and shops have contributed to an improvement in facilities for the retail trade and for the storage of fresh products. Finally, as regards environmental improvements, water supply and sewage networks have been developed beneath new asphalted roads.

7th EDF - job creation and - food security

The finishing touches are currently being put to the 7th EDF programme, which has been allocated CFAF 38 billion (ECU 112 million). This will build on the work undertaken through previous EDFs. In the 'roads' section of the sectoral transport adjustment programme, the strategy which has been adopted involves preserving what had already been achieved through rehabilitation and maintenance. This will be carried out in future by the private sector. A substantial amount - some 25 billion CFAF - has been set aside for the implementation of the roads programme.

The other principal areas of activity will be in job creation and food security. Priority programmes in the social, political and economic spheres involving SMEs and microprojects will be extended to other regions and will be mixed with small public investment programmes of high labour intensity. Food security will be the major objective behind the implementation of low-cost hydro-agricultural developments aimed at crop-growing in an increasingly 'privatised' environment.

Trade cooperation - fish top the export league

Senegal, which has very favourable natural conditions for fisheries with its 700 kilometres of coast, has traditionally been able to exploit this position to its advantage. Fish continue to be the principal source of export revenues (some 23% of the total in 1989, representing more than 60 billion CFA francs).

The fisheries agreements between the European Community and Senegal have represented both a significant and an original initiative as regards cooperation in this area. Concluded first in 1979, and then renegotiated every two years, the agreements have established a precedent. In effect, the two-yearly operating protocols set out fishing rights for Community vessels as well as the compensatory payments to be made by the Community. To the latter must also be added the payment by vessel owners of annual fishing licence fees.

One of the most important original aspects of the agreement is the establishment of a series of specific provisions including the obligation to land tuna catches in Senegal. This ensures a source of supply for Senegalese canneries. The payment by the Community also contains an element which is used to finance scientific programmes as well as study and training grants.

The most recent operating protocol, signed on I October 1992 for a two-year period, broadly maintains the previous position. The total allowable catch is the same as in the previous protocol calculated on the basis of vessel tonnages (30 600 tonnes) with adaptations to the needs of Community fishermen as well as to categories and types of fishing (with freezing). Financial compensation has increased - up from CFAF 10.062 billion (ECU 28.75 million) to CFAF 10.608 billion (ECU 31.2 million) with CFAF 210 million (ECU 600 000) devoted to the financing of scientific programmes and CFAF 70 million (ECU 200 000) given over to bursaries and studies.

Industrial cooperation - phosphates

The phosphate industry is a third important source of foreign exchange for Senegal, contributing about 22% of export earnings.

Senegal has benefited and will continue to benefit from a range of European financial mechanisms designed to help restore the competitiveness of this sector in an international market affected by recession and by a tendency towards lower prices. This is a competitiveness which has been further affected by the fact that Senegalese phosphates have a high cadmium content, and this poses ecological risks for the purchasing country.

An initial sum of some 5 billion CFA francs (ECU 15 million) was agreed in 1990. This allows for the development of techniques aimed at reducing cadmium levels as well as for adaptation by the relevant companies to the extra costs which have resulted. This project is currently under way.

A new agreement was signed on 28 October, involving the sum of CFAF 3.7 billion (ECU 10.5 million) in order to increase the capacity of one of the factories operating in this sector. This drive for productivity will also be supported by the European Investment Bank. The EIB is presently studying a project proposal costing CFAF 5 billion (ECU 15 million) in order to assist in the exploitation of new reserves.

Overall, the support of the European Community for the maintenance of Senegal's phosphate industry will, therefore, be substantial, amounting in total to CFAF 15 billion (ECU 45 million). To this sum should be added the various other sources of financial assistance from the EIB, which have amounted to some 12 billion CFA francs (ECU 35 million) since the beginning of the 1980s.

More than CFAF 500 million for elections

A new approach introduced by the European Community, from which Senegal has been able to benefit, is that of assisting the democratic process. CFAF 525 million (ECU 1.5 million) has been provided to support the electoral process in the forthcoming poll (in 1993). Part of the funds comes from the special budget heading to support actions favouring human rights and democracy in developing countries. The remainder is in the form of resources from Senegal's own national indicative programme under the 7th EDF.

Through this measure, the European Community is making a concrete contribution to the implementation of the new, consensual electoral code which was promulgated on 7 February 1992. This code requires the mobilisation of substantial financial resources to cover a series of technical operations which must be carried out if the new system is to work successfully.

In cooperation with the Senegalese authorities and other concerned donors, the help supplied by the Community will mainly involve the printing of the election documents for the May 1993 general elections. Most of the budget is for ballot papers, election envelopes, information posters and voting cards.

In short, this illustrates the desire within Europe to offer support and assistance, through positive action, for the democratic process and ways of enhancing it.