AfDB deepens São Tomé partnership with $18m boost for energy and climate

The first agreement provides $7.5 million for the third phase of the Fiscal Sustainability and Resilience Programme – Supplementary Financing (FSERP-SF).

The African Development Bank Group (AfDB) has strengthened its development partnership with the Government of São Tomé and Príncipe through the signing of three new grant financing agreements worth a combined $18 million, aimed at supporting energy reform, climate-resilient agriculture and integrated water, energy and food security.

The agreements were signed on Thursday at the São Tomé and Príncipe Investment Forum in Brussels and underscore the Bank’s commitment to supporting the island nation’s long-term development priorities under its National Development Plan.

The first agreement provides $7.5 million for the third phase of the Fiscal Sustainability and Resilience Programme – Supplementary Financing (FSERP-SF). Launched in December 2023 as a budget support operation, the programme has now reached a cumulative value of $20 million, with funds disbursed directly into the national budget.

The FSERP-SF focuses on two key reform pillars: fiscal sustainability and energy sector transition. Under the fiscal sustainability pillar, the Government of São Tomé and Príncipe has committed to strengthening public financial management through reforms to the public procurement system, customs administration and debt management frameworks. These measures are intended to improve transparency, enhance revenue mobilisation and ensure long-term macroeconomic stability.

Energy transition forms the second pillar of the programme and is a central priority in the country’s National Development Plan. The programme supports improved governance and financial sustainability of the national electricity utility, tariff adjustments aimed at cost recovery, and an accelerated shift towards renewable energy sources. These policy reforms are designed to complement ongoing investments in electricity generation and distribution infrastructure, reducing reliance on imported fossil fuels and improving energy security. The third phase of the programme is financed through the Nigeria Trust Fund (NTF), which is administered by the African Development Bank.

The second financing agreement mobilises resources from the Global Environment Facility (GEF) for the Co-Management of Climate Extremes for Agriculture and Fisheries Resilience Project (PRIASA III). The project seeks to strengthen agricultural and fisheries value chains while protecting livelihoods from the growing impacts of climate change, including droughts, floods and water scarcity.

With a total investment of $18.9 million, the project includes $10 million in AfDB financing and $8.9 million from the GEF. It will be implemented through three main components: enhancing value chains and socio-economic benefits for farming and fishing communities; reducing vulnerability through the adoption of climate-smart technologies and capacity building; and ensuring effective project management to support integrated climate adaptation in the agriculture and fisheries sectors.

The third agreement provides $1.4 million through a Project Preparation Facility (PPF) for the Water-Energy-Food Security Nexus under the Bank’s NEW-ERA initiative. Over a two-year period, the facility will finance critical studies and master plans to guide future investments in integrated water resources management.

These preparatory activities will include feasibility studies for a multipurpose dam, a water treatment plant, climate-resilience measures and a city-wide sanitation plan. The PPF is expected to lay the foundation for large-scale investments aimed at achieving universal access to safe drinking water, exploring hydropower generation potential and improving food production by 2030. It will also strengthen institutional capacity, governance frameworks and stakeholder coordination across the water, energy and agriculture sectors.

African Development Bank Country Manager for Angola and São Tomé and Príncipe, Pietro Toigo, said the agreements send a strong signal to international investors and development partners.

“As São Tomé and Príncipe presents to the global community its National Development Plan and approaches investors to power its private sector, these three financing agreements are a clear sign that the African Development Bank stands with the country as a provider of patient capital and risk mitigation,” he said.

As of 30 November 2025, the African Development Bank Group’s active portfolio in São Tomé and Príncipe amounts to approximately $89.4 million across 12 financing instruments. The portfolio has an average age of 4.2 years and a disbursement ratio of 49.5 percent.

Agriculture accounts for the largest share of the portfolio at 43 percent, followed by multisector operations at 23 percent, finance at 17 percent, energy at 15 percent and water at two percent. The Bank said its investment profile reflects a strong focus on building resilience, strengthening food security, supporting energy transition and advancing macroeconomic reforms, alongside growing engagement in the green and blue economy and financial infrastructure development.