Charting a Blue Course Investment Projects for the Blue Economy Transition in São Tomé e Príncipe ©2023 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 +1 202-473-1000 www.worldbank.org This work is a product of the World Bank team with external contributions. It has been developped in partnership and co-funding with FAO in the framework of the Hand in Hand Initiative (https://www.fao. org/hand-in-hand/en) in support of the development of an investment program in São Tome and Principe in order to implement the national transition strategy toward blue economy. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Executive Board, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing in this document shall constitute or be considered a limitation or waiver of the privileges and immunities of the World Bank, all of which are specifically reserved. This report was co-financed by PROBLUE, a multi-donor trust fund administered by the World Bank, which supports the sustainable and integrated development of marine and coastal resources in healthy oceans. Any inquiries regarding rights and licenses, including subsidiary rights, should be addressed to: Publishing and Knowledge Division, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; pubrights@worldbank.org All photos are courtesy of the World Bank, the Government of Mozambique, or purchased from image banks (Shutterstock). Coordination: João Moura Lead Author: Joseph Catanzano Contributors: Adelino Santiago Castelo David Antónia Alariza Mendes Júnior Bento Luiz Bastien Loulum João Moura Jose Miguel Cerezo Lionel Kinadjian Design of the report: Gabriella Morandi Charting a Blue Course Investment Projects for the Blue Economy Transition in São Tomé e Príncipe Summary Executive summary ................................................................................................................................08 1. Introduction ...........................................................................................................................................15 2. Context ..................................................................................................................................................16 2.1 Blue Economy in STP ..............................................................................................................17 2.2 Main Economic sectors ...........................................................................................................20 2.3 Poverty levels ..........................................................................................................................20 2.4 Population and mobility ...........................................................................................................21 2.5 Agricultural dynamic ................................................................................................................23 2.6 Legal and institutional framework ............................................................................................23 2.7 Policies relevant to prioritized projects and blue economy development ................................24 3.Project 1: Development of blue cabotage in STP ...............................................................................28 3.1 National strategy and blue cabotage priorities ........................................................................28 3.2 The port sites presentation ......................................................................................................28 3.3 Phasing ....................................................................................................................................31 3.4 Investment cost .......................................................................................................................31 3.5 Social and economic analysis .................................................................................................33 3.6 SWOT analysis ........................................................................................................................36 3.7 Environmental and social impacts ...........................................................................................37 3.8 Recommendations ...................................................................................................................37 3.9 IImplementation schedule.........................................................................................................38 4. Project 2: Rehabilitation of beaches to support blue tourism development .................................41 4.1 National Strategy for Tourism ..................................................................................................41 4.2 The beaches sites presentation ...............................................................................................42 4.3 Phasing ....................................................................................................................................44 4.4 Investment costs ......................................................................................................................45 4.5 Social and economic analysis .................................................................................................46 4.6 SWOT analysis ........................................................................................................................48 4.7 Environmental and social impacts ...........................................................................................50 4.8 Recommendations ...................................................................................................................51 4.9 Implementation schedule .........................................................................................................52 5. Project 3: Blue investment project for artisanal coastal fleet modernization ................................53 5.1 Strategy for coastal artisanal fleet ...........................................................................................53 5.2 Context of artisanal fisheries sector and fleet ..........................................................................55 5.3 Phasing ....................................................................................................................................60 5.4 Investment cost .......................................................................................................................60 5.5 Social and economic analysis .................................................................................................65 5.6 SWOT analysis ........................................................................................................................68 5.7 Environmental and social impacts ...........................................................................................69 5.8 Recommendations ..................................................................................................................69 5.9 Implementation schedule .........................................................................................................70 6. Conclusion ............................................................................................................................................72 Bibliography ..............................................................................................................................................73 Annex .........................................................................................................................................................75 Annex 1: Environmental Context ................................................................................................................75 Annex 2: NPV and IRR calculation for Cabotage project ...........................................................................76 Annex 3: Type of boat in the MPCAFF .......................................................................................................82 Annex 4: Simulation of possible bonuses and reimbursement levels depending on the number of fleet exits and the number of new owners for the acquisition of a boat according to the type chosen. ..............83 List of Fig. and Tab. Tab. 1: Advantages and constraints in relation with some potentials for new niche-markets for tourism sector ......................................................................................................................................................... 26 Tab. 2: Blue Cabotage Ports identified and intermediary existing pontoons ..............................................29 Tab. 3: Equipment and activities planned in the cabotage ports project .....................................................30 Tab. 4: Consolidated priority list of potential public investments ................................................................32 Tab. 5: Comparison of estimated costs (2013, 2022, 2023) .......................................................................32 Tab. 6: Estimated costs ..............................................................................................................................32 Tab. 7: Socio economics impacts in Principe and Sao Tome of the Blue Cabotage Investment project ....34 Tab. 8: Estimate of costs and income related to investments for the ports of Principe, Ponta Mina and Santo Antonio .............................................................................................................................................34 Tab. 9: Estimate of costs and income related to investments for the ports of Sao Tomé district of Cantagalo, Caué, Lemba, Lobata ...............................................................................................................35 Tab. 10: Financial analysis of Cabotage investment projects in Principe and São Tomé islands (Cf. Annex) .....................................................................................................................................................................35 Tab. 11: SWOT analysis for Blue cabotage project ....................................................................................36 Tab. 12: Summary of potential environmental and social impacts and mitigation measures ......................37 Tab. 13: Indicative phasing and calendar for Blue Cabotage project .........................................................38 Tab. 14: Detailed composition of estimated cost for beach rehabilitation blue investment project .............46 Tab. 15: Socio economics impacts in Principe and Sao Tome of the Blue Cabotage Investment project ..46 Tab. 16: Estimate of costs and income related to investment for the beach rehabilitation blue project .....47 Tab. 17 Financial analysis of Beaches rehabilitation project in STP (Cf. Annex) .......................................48 Tab. 18 bis Financial analysis of Beaches rehabilitation project in STP considering additional impact on private .........................................................................................................................................................48 Tab. 19: SWOT analysis for beaches rehabilitation blue project ................................................................49 Tab. 20: Summary of potential environmental and social impacts and mitigation measures ......................50 Tab. 21: Indicative calendar for beach’ rehabilitation blue investment project ............................................52 Tab. 22: Variable to be considered in the Modernization Plan for the Coastal Artisanal Fishing Fleet .......59 Tab. 23: The expectations of the MPCAFF in relation to the sustainability of fisheries ..............................59 Tab. 24; Updated construction costs of coastal artisanal fishing units .......................................................61 Tab. 25: Pricing of aid and subsidies allocated under the MPCAFF according to the type of boat proposed .....................................................................................................................................................................61 Tab. 26: Projected investment costs for a shipyard in Sao Tome brought up to environmental and professional standards ...............................................................................................................................62 Tab. 27: NPV and IRR calculation for Shipyard investment project in Sao Tome .......................................62 Tab. 28: Summary of the monthly payments due according to the acquisition project (Tamanho 6,6 x 1,3 - Unit Cost 3704 Euros), (Euros/month on 60 months) .................................................................................62 Tab. 29 bis: Summary of the monthly payments due according to the acquisition project (Boat Type 7,1 x 1,8 - Unit Cost 7144 Euros), (Euros/month on 60 months) ........................................................................63 Tab. 30 ter: Summary of the monthly payments due according to the acquisition project (Boat Type 7,4 x 2,1 - Unit Cost 9525 Euros), (Euros/month on 60 months) ........................................................................63 Tab. 31: SWOT analysis for MPCAFF. .......................................................................................................68 Tab. 32: Summary of potential environmental and social impacts and mitigation measures .....................69 Tab. 33: Indicative Calendar for MPCAFF project ......................................................................................71 Fig. 1: Demography, urbanization and administrative mapping ..................................................................22 Fig. 2: Ports and beaches included in the 3 investment projects ...............................................................29 Fig. 3: Photos of ports selected for Blue Cabotage in STP ........................................................................30 Fig. 4: Maps with specific considerations on cabotage, fisheries and beaches .........................................39 Fig. 5: Projects Plans for ports ...................................................................................................................40 Fig. 6: Mapping of beaches considered in the rehabilitation investment blue project ................................43 Fig. 7: Some examples of the emblematic beaches and coastal site .........................................................44 Fig. 8: Photos of some examples of existing and modular containers system ...........................................46 Fig. 9: Map of localization site for coastal artisanal fishing boats ...............................................................54 Fig. 10: Existing fish-boat, cannot, prao, and fiberglass boat, fisheries areas and % of each category in the national context ..........................................................................................................................................55 Fig. 11: Public and private interest in committing to the MPCAFF .............................................................57 Fig. 12: Public and Private investment .......................................................................................................58 Fig 13: MPCAFF’s indicators in term of fishing capacity (+ / - boats) .........................................................64 Fig. 14: MPCAFF Provisional Budget .........................................................................................................65 List of Acronyms AU CAADP African Union “The Comprehensive African Agricultural Development Programme” BE Blue Economy CC Climate Change CECAF Fishery Committee for the Eastern Central Atlantic COSATEF Coordination Committee for Monitoring and Evaluation of Technical and Financial Assistance COTIA Technical Inter Ministerial Committee for Blue Economy COVID-19 Coronavirus Disease 2019 CO2 Carbon DA Directorate of Agriculture Del CE European Commission Delegation DGA General Directorate for the Environment DNP National Direction for Planning ENAPORT National Entreprise for Port Administration (National Acronym) ENPAB National Strategy and Action Plan for Biodiversity ENRP III National Poverty Reduction Strategy ENTEA Law adopted by the National Parliament in 2022 “Strategy for Blue Economy Transition” ESS Environmental and social safeguard EU European Union ESIA Environment and Social Impact Analysis FAO Food and Agriculture Organization of the United Nations FISH4ACP Unlocking the potential of sustainable fisheries and aquaculture for ACP countries GCF Green Climate Fund GDP Gross Domestic Product INDC Intended Nationally Determined Contribution INE National Institute for Statistics IRR Internal Return Rate MARAPA ONG Museum of the Sea and Artisanal Fishing (national acronym) M&E Monitoring and Evaluation MPCAFF Modernization Plan for Coastal Artisanal Fishing Fleet MPFBE Ministry of Planning, Finance and Blue Economy NAP National Adaptation Plan NAPA National Action Plan for Adaptation to Climate Change NGO Non-Governmental Organizations NPV Net Present Value PEMT Strategic and marketing plan for tourism Sao Tomé e Principe (Portuguese acronym) PNADD National Environment Action Plan for Sustainable Development PNIASAN National Plan for Agricultural Investments, Food and Nutrition Security PNIEA National Investment Plan for the Blue Economy PROBLUE Blue Economy Programme, World Bank PRIASA Food Security Support Infrastructure Rehabilitation Project (French acronym) PTRS Sustainable Tourism Platform SDG Sustainable Development Goal SIDS Small Island Developing State STP Democratic Republic of São Tomé e Príncipe SWOT Strengths, weaknesses, opportunities, and threats analysis TCP Technical Cooperation Programme UIEEA Intelligence Strategic Unit for Blue Economy UNCT United Nations Country Team UNDP United Nations Development Programme UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNFCCC United Nations Framework Convention on Climate Change UNIDO United Nations Industrial Development Organization WACA West Africa Coastal Areas Management Program, World Bank WB World Bank Executive Summary The Democratic Republic of São Tomé e Príncipe (STP) is the smallest independent island state in Africa, having gained independence in 1975, following the Seychelles. It has a total area of 1001 km2 and is located in the equatorial zone of the Gulf of Guinea, with an Exclusive Economic Zone (EEZ) of 160,000 km2 (160 times its land area). The country is situated approximately 300 km from the African continent, with Gabon to the east, Equatorial Guinea and Cameroon to the northeast, and Nigeria to the north. São Tomé e Príncipe consists of two main islands, São Tomé (859 km2) and Príncipe (142 km2), which are 150 km apart, as well as several islets, including Rolas (where the equator line is located), Cabras, the Seven Rocks (all three closer to the island of São Tomé), and the smaller islets of the island of Príncipe: Bom Bom, Cap Jockey, Cabo, Tinhosas Stones, and Jalé. STP has a predominantly young population, with about 52% under 20 years old and about 4% over 65 years old, resulting in an average loan age of 19 years. However, as an island micro-state, the country faces many development problems specific to islands and small countries, such as weak governance capacity, the inability to provide basic services to the population, and a lack of adequate infrastructure (ports, electricity, airports). Additionally, high production and distribution costs of goods and services, including food products, exacerbate the poverty level of 66.2% of the population. The virtually non- existent corporate structure and undiversified, highly dependent economy make the country vulnerable to exogenous shocks. To address these challenges, STP developed and adopted a Transition Strategy for the Blue Economy in December 2019. This strategy aims to establish the coherence of public policies linked to oceanic resources with the policies of other sectors, such as fisheries and aquaculture, tourism, and energy. The Blue Economy is being touted as a viable solution for the sustainable development of Small Island Developing States (SIDS), as it provides coordination mechanisms that promote growth and poverty reduction, while protecting the environment and building resilience to climate change. The Transition Strategy for the Blue Economy, which was adopted by São Tomé e Príncipe (STP), aims to align public policies related to oceanic resources with those of other sectors, such as fisheries and aquaculture, tourism, and energy. The Blue Economy remains a priority pillar for STP’s development, as outlined in its Program for the XVIII Legislature of the New Government (2023 to 2026), which was initiated at the end of 2022. The investment projects identified in this document have been earmarked as priorities for boosting economic growth and improving the living conditions of the population. This renewed commitment by national authorities has given the transition process added impetus1. STP, with support from the FAO, is leading the transition towards the blue economy to leverage its natural resources and ecosystem services, which are essential for the development of fisheries and aquaculture, transportation, trade, energy, tourism, and ecotourism. This transition will also contribute to the protection and conservation of biodiversity and endangered ecosystems and species. In 2019, a Blue Economy Transition Strategy, developed through an endogenous process that involved 1 Statement of Government Policy for the XVIII Legislature (2023-2026). 8 stakeholders from both islands, was supported using the TCP Facility. This Strategy proposes an innovative governance framework that promotes inter-sectorality and high-level political and technical management. The first challenge for STP2 is to ensure the sustainability of ecosystem services and to develop the various sectors concerned in the long term. This will require a paradigm shift in the conception of development and public and private investments. It will entail balancing all national strategies for the various sectors of the economy in line with the expectations of the blue economy and limiting negative externalities of one sector on another. The aim is to achieve long-term economic growth based on the enhancement of the uses and services of aquatic ecosystems and resources as a heritage. This will require coordination at the global, regional, national, and local levels, the adjustment of institutions to new governance needs, the identification of investment needs aligned with the new vision, and the development of appropriate financing mechanisms. The Blue Economy presents an opportunity for STP to contribute to the SDGs, particularly SDG14, and take advantage of new cooperation and financing opportunities. Funded by the PROBLUE Fund, the World Bank has joined the programme to strengthen capacities for developing specific parts of the National Investment Plan in preparation. This plan refers to the three project priorities proposed by the National Government during the Hand in Hand FAO Forum, organized in Rome in October 2022. The purpose of this paper is to consolidate the analysis of the three investment projects prioritized for inclusion in the National Investment Plan for the Blue Economy. While the report does not imply endorsement of these projects by the World Bank and FAO, its primary objective is to illuminate the drivers of cost and benefit associated with the priorities already identified by the Government of São Tomé e Príncipe. These projects are under preparation and are identified as P1. Blue Cabotage, P2. Rehabilitation of Beaches, and P3. Plan for Modernization of the Coastal Artisanal Fishing Fleet (PMCAFF). A detailed economic assessment, proposed modifications, and development of concept notes for the three pre-identified priority projects are expected. To achieve this, the following tasks are required: • Undertake an economic and financial assessment of the pre-identified projects, outlining economic costs and benefits, based on a quantitative methodology. • Develop reasonable assumptions, in consultation with project-specific stakeholders/promoters, where critical data is not available. • Propose modifications to the projects, based on iterative analysis of their economic impact. • Develop individual parts for each blue investment project (Chapters 2, 3, and 4), which should include, at a minimum, a description of the project, relevant expected outcomes, promoters and key stakeholders, cost estimation, impacts and risk estimation, potential financing sources, implementation period, and where possible, key performance indicators3. To prepare for these projects, an economic analysis must be conducted to determine the value of anticipated benefits relative to the costs associated with the three projects. The total Net Present Value (NPV) of the projects needs to be estimated, a discount rate defined, and the Investment Rate of Return (IRR) calculated. Hypotheses will be based on discussions with potential beneficiaries, public and private stakeholders, as well as on the results of recent studies, expertise relating to these 2 The commitment to this transition of the economy was confirmed by the Minister of Planning, Finance and Blue Economy (MPFEB) who in his letter n° 495/MPFEA-GM/2020 of February 6, 2020 wished to be able to benefit from the continued support of FAO for the formulation of an Investment Plan, the development of a multi-annual support plan and support for the innovative governance framework put in place to support the management of implement the National Blue Economy Transition Strategy. 9 3 Concept notes are expected to be prepared in a way that serves as a basis for the Government of STP to mobilize financial and technical resources for implementation. projects, and consultations with consultants involved in FAO programs (FISH4ACP, TCPSTP3804) and the European Commission’s studies (Cabotage). National literature referencing sectoral strategies and the blue economy strategy adopted by the Government of STP, including the tourism sector and marine ecosystem protection, will also be considered. Financially modeling projected impacts will help ensure that project funds are being allocated to investments and activities that will provide a return to the local population while identifying key risks and thresholds for the projects to achieve their desired impact. The methodology used accounts only for the project’s impact on direct beneficiaries rather than a broader multiplier approach that encompasses positive externalities and spill-over effects, including overall growth of the tourism and business ecosystems. Because estimating the value of such externalities is difficult, project investments could result in larger-scale private and public investments. The economic analysis is based on increased revenues for SMEs and individual beneficiaries through the project’s activities and investments, along with increased revenues within the Sao Tome e Principe Blue Economy ecosystem. The P1 project (Blue Cabotage) aligns with one of the national priorities which involves establishing a cabotage system around STP, utilizing existing quays when feasible. The Blue Cabotage plan requires an investment of 18.8 million euros, which includes the construction of six multipurpose blue cabotage ports: five in São Tomé and one in Príncipe. Ponta Mina in Principe accounts for 41% of the total investment. The project is expected to have a significant impact on the blue and green economy, particularly on fisheries, tourism, and agriculture value chains, by facilitating the transportation of goods and people and reducing the carbon footprint. The blue cabotage project can be phased in two or three stages, depending on available financial resources, and prioritizing the functional requirements of each national site. These priorities may include opening up certain areas for multi-sector maritime activities such as tourism and ecotourism, conservation of threatened or fragile coastal areas and species, contribution to the transport of goods to the port of Ana Chavez or Principe and considering the mobility of tourists along coastal circuits in relation to seaside hotels, historical sites, or exceptional natural areas to visit. The first socio-economic impacts associated with port investments include job creation (direct and indirect) linked to the operation, maintenance, monitoring, and management of infrastructure. Coordination with the Camaras District, the Regional Authority of Principe, and central national authorities involved in the management of these infrastructures (ENAPORT, IMAP, customs) is expected. It is estimated that over 20,200 people have been directly and positively impacted by the P1 project in terms of their income and professional position, which represents approximately 81,260 people indirectly and directly positively impacted in their means and living conditions. According to the calculations outlined in the document, the Net Present Value of the São Tomé e Príncipe cabotage projects for the horizon of 30 years falls within the respective ranges of 1,096,268 to 7,071,614 Euros and 2,733,076 to 10,022,937 Euros with Internal Rates of Return between 14.69% and 22.07% and between 16.66% and 24.06%, respectively. In the best-case scenario, the break-even year for Sao Tome is projected to occur in the 8th year and the 15th year for Principe. Several studies have shown that cabotage emits less CO2 than the road transport currently used in the country, as stated in the Third National Communication on Climate Change in São Tomé e Príncipe. Given these analyses and arguments, the adoption of cabotage appears entirely justified in light of the existing situation and the comparative advantages established in terms of risks, costs, and pollution associated with road transport. The P2 project, “Rehabilitation of beaches to support blue tourism development,” is part of the Program of the XVIII Constitutional Government, which covers the period 2023-2026 and highlights the 10 tourism sector as a growth sector. In recent years, considerable efforts have been made to produce new laws that can contribute to the development of the tourism sector, and the recent World Bank Systematic Country Diagnostic has identified tourism, along with agriculture and fisheries, as sectors with potential for driving growth and job creation, leveraging STP’s natural capital. In STP, beaches, bays, and lagoons are the most attractive places for tourism, according to a tourism survey. With the rising popularity of São Tomé as a tourist destination, it has become necessary to manage beaches in a sustainable manner to avoid environmental degradation and loss of customers. Uncontrolled access of vehicles, haphazard construction of kiosks, and lack of hygiene services need to be addressed and standards set (FAO, 2022). The blue investment project for rehabilitating beaches focuses on ten priority sites: Lagoa Azul, Namorados, Tamarinos, Governador, and Micondó, as well as Piscina, Cabana, Café, Granja, and Bone de Joquel. These locations were chosen due to their popularity among tourists and locals, and their potential for sustainable development. To ensure the success of this project, a technical group must be established to oversee implementation, monitoring, and evaluation. This group will include representatives from the Ministry of Environment, Infrastructure and Tourism, as well as the Ministry of Planning, Finance, and Blue Economy, and the relevant district authorities. The estimated total cost of the project is 6,040,000 euros. Beyond the direct employment opportunities generated by the rehabilitation work, the local population, who use the beaches for leisure, stand to benefit the most. It is estimated that at least 10,000 people will be impacted, both directly and indirectly, by the project, with positive effects on their livelihoods. To assess the financial and economic impact of the project, calculations were carried out taking into account the various services offered on the sites, as well as the taxes levied on private activities and rentals of restaurants and kiosks. According to the assumptions used, the net present value (NPV) ranges from 1,599,681 to 3,988,773 euros over 30 years, with break-even years of 13, 12, or 11. The internal rates of return (IRRs) range from 14.69% to 19.64%, which suggests a favorable outlook for the rehabilitation project. The proposed phasing allows for the rehabilitation of all ten beaches within a period not exceeding 16 months. This timeframe is considered feasible and will ensure minimal disruption to the local population and tourists. Some specific recommendations are proposed: • Create limited and priced parking areas on the beaches to indirectly contribute to the creation of attendance gauges. • Prioritize the use of collective and renewable energy vehicles on the sites to allow joint use of pedestrian spaces and enhance the discovery of landscapes (flora and fauna). • Mark and classify the beaches. • Recover damaged sectors of coastal sand systems through natural reconstruction of dune constructions and planting of auto clonal species. • Construct stone barriers to protect and control coastal erosion. • Safeguard vulnerable and at-risk areas by setting up appropriate emergency and management 11 plans that take into account the dynamics of coastal areas. • Promote fauna and flora observation activities with specific observation points. • Maintain the state of the beaches close to natural. • Create inspection brigades, of which the local population is a part, to act as inspection agents. • Establish beach health officers/teams managed by district authorities to keep beaches clean, controlled, and safe. • Train and raise awareness in schools for the protection of beaches and the environment. Additionally, create television and radio awareness programs aimed at the general public. • Create teams and focal points to monitor and track progress. • Involve and entrust inspection and monitoring responsibilities to the Ministry of Defense and the Port Authority to take care and preserve the coastal sites. The Plan for the Modernization of the Coastal Artisanal Fishing Fleet (PMCAFF), also known as the P3 project, is crucial due to the significant role that fisheries play in the national and local economy, food security, and poverty alleviation. The targeted modernization can contribute to reducing informal jobs, regulating fishing activities, and improving the means of work and subsistence for fishing communities, who are key contributors to the coastal economy. According to the FAO (2018), fishing contributes to 9% of GDP, with 4,155 fishermen and 2,355 women fishmongers (DP, 2019 and DP, 2014, respectively), and about 30,000 people living directly and indirectly from fishing activities (15% of the population). In addition, the modernization of the coastal fishing fleet can have a positive impact on food security, with a high consumption rate of fish (29.3 kg/year/hab.) and 99% coverage rate of fish consumption (FAO, 2019). The project can also provide employment opportunities for unskilled youth and women involved in the value chain, including processing and trading of fish products. Furthermore, it can enhance safety at sea for fishermen. Due to the significance of the fishing industry, a public support scheme is proposed to prioritize the investment file, which can promote private actors’ engagement in the formal economy by raising the level of organization of fishing communities. The project aims to engage a public-private partnership to mobilize the necessary financial resources according to a non-discretionary planning framework, with the population concerned by this sector and jobs and its contribution to food security weighing in favor of this priority across all districts of the country. The MPCAFF must align with Fishing Capacity Management Plans at STP and the general logic of improving value chains and rational management of fisheries resources to achieve the project’s objectives. The project aims to reduce the environmental impacts linked to shipyards and manufacturing processes of fishing units and adjust catches while contributing to the carbon balance by reducing traction costs and impacts on forest resources, in coherence with the Blue Economy. Currently, the government supports the sector for the acquisition of new, safer, larger, and more equipped fishing units with aid generally set at 25% of the investment value for a limited number of fishing boats. Under PMCAFF, public funds support investments in return for private commitments in good fisheries governance, and private commitment in association with investors for more efficient fishing units and better supervision. 12 The total financial requirement for the project is 1,653,500 euros over a period of 5 years, with a maximum of 300 new boats to be purchased (in exchange for approximately 120 to 150 fishing boats) and a share of subsidies (public investment) up to 1,035,000 euros, along with a share of private loans that cannot exceed 618,000 euros over the first 5 years. Additionally, PMCAFF includes investments in shipyards adapted to small-scale fleets that meet environmental and social standards (working conditions). These investments amount to up to 350,000 euros per shipyard. The profitability of the project is guaranteed by PMCAFF, with a net present value of 172,850 euros over 10 years, an internal rate of return of 22%, and a break-even year in year 6. Regarding individual boat purchases, it is difficult at this stage to provide an indicative analysis of individual profitability units, given the assumptions, bonuses, and possible involvement of fishermen’s associations (as associated investors) and the types of boats purchased and replaced. Positive indicators to be considered are the proposed aid grids, the amounts of monthly repayments applicable according to the configuration of the projects (with low levels of monthly repayment per person depending on the project), and the previous analyses on the profitability of the fishing units proposed in the case of PMCAFF (as developed in the FAO TCP “Analysis of the seafood sector in Sao Tome e Principe, FAO Rome 2019, Alioune Sy and Olivio Soares”). The PMCAFF indicators are as follows: • Launch of 300 new fishing units over the next 5 years from the launch date of PMCAFF (to be readjusted at the end of year n according to a sliding system n+5 over a period of at least 10 years). • Exit of at least 120 fishing units with a maximum of 150 units (to be readjusted at the end of year n for a sliding system n+5 over a period of at least 10 years). • All candidates for the acquisition of new boats must adhere to the conditions defined in the specifications in favor of responsible and sustainable fishing. • Distribution of the acquired units must fall within the following indicative ranges for the first year of implementation of PMCAFF (to be readjusted at the end of year n for a rolling system n+5 over a period of at least 10 years): A maximum of 50 units of type 7.4 x 2.1 Semiduplo fundo cheio de polyretano Malas na proa e popa, a maximum of 100 units of type 7.1 x 1.8 Semiduplo fundo cheio de polyretano Malas na proa e popa, and a maximum of 150 units of Tamanho type 6.6 x 1.3. • Depending on the annual budgetary commitments and the defined quotas, the planning for years n+1 to n+5 will be readjusted, and the necessary additional resources will be sought for the new year n+5 (in reality n+6 from the date of PMCAFF implementation up to n+10, year by year). The document states that the main benefits of the PMCAFF can be enjoyed by several stakeholders, including: i) shipyards that comply with certified manufacturing standards, ii) purchasers of new fishing units, iii) fishing communities, and iv) the state and its administrations. To oversee the development and modernization of the fishing sector and ensure the organization and sustainability of fishing activities in the country, the Directorate General of Fisheries must develop a Fisheries Master Plan. Improving transport, storage, and marketing conditions for products is crucial, and this will be done as part of the two other priority projects - cabotage and the development of the tourist market. 13 Through modernization, small-scale fishing can enter into a responsible and sustainable economic cycle, contributing to food security and environmental issues outlined in the SDGs, and improving the incomes and means of subsistence of those involved. The project will be implemented in phases, with a preparatory phase for mobilizing financial resources, communication on the PMCAFF, and preparation. The second phase will involve developing funding requests within fishing communities and conducting a selection process, while the third phase will start with the construction of fishing units (year 1), followed by their delivery (phase 4), and simultaneous implementation of reimbursement procedures. Phase 5 will involve continuing the process for cycles 2, 3, 4, and year 5, with remobilization of financial resources and returning to phase 1 for a 10-year cycle. The phasing of the project and its implementation will allow year-by-year specification of the contributions to the objectives achieved. 14 1. Introduction The World Bank’s support is a result of dialogue with the FAO, which has been supporting the country’s transition to the Blue Economy since its launch in 2017. This transition has been reaffirmed by all successive governments since that time. The primary focus of the process was the development of the National Strategy Framework, which is in line with the FAO’s Blue Growth Initiative led in 2015. The adoption of the Strategic Framework for the transition to the Blue Economy was reinforced in 2022 by the National Parliament’s adoption of the Blue Economy Law (ENTEA). This has paved the way for the preparation of a National Investment Plan for the transition and the development of a Priority Support Program for the Transition, which has received support from the FAO. São Tomé e Príncipe was invited to present priority projects identified as part of the PNIEA preparation work during the first investment forum held in Rome (FAO Headquarters in October 2022) through the new Hand in Hand (FAO 2021) initiative launched by the FAO. The World Bank, through PROBLUE and in connection with the WACA project, and the FAO, on the basis of its support for the UIEEA, have joined forces to pool and project resources for the consolidation of priority projects. These projects will be presented at the Investment Forum, which will bring together all technical partners and financiers in Sao Tome in the first half of 2023. This will be done during the 2nd Edition of the Blue Economy Week to defend the projects and advocate for the mobilization of financial and technical resources for their implementation and outcome. The three projects, as well as the planned blue cabotage sites and beach rehabilitation sites, will benefit the coastal communities already identified and supported by projects from the World Bank or other partners. This collaborative approach towards investing in the Blue Economy will contribute to the improvement of the livelihoods and living conditions of these communities, particularly in the areas of fisheries, tourism, and mobility of people and goods. Through the synergies between FAO and the World Bank, the ability to attract other technical and financial partners has increased, and the expertise in handling such projects has been multiplied. The progress made hand-in-hand by these two institutions in support of the government is expected to initiate support and commitment processes from public institutions (both national and international) and private entrepreneurs for sustainable blue development. This is the essence of their common commitment. 15 2. Context The Democratic Republic of São Tomé e Príncipe (STP) is a Small Island Developing State (SIDS) and has been the smallest independent state in Africa since 1975. It is composed of two main islands, São Tomé (859 km2) and Príncipe (142 km2), located 150 km apart, along with several volcanic islets. Its total terrestrial area is 1001 km2, and it has an Economic Exclusive Zone of 160,000 km2. Situated in the equatorial zone of the Gulf of Guinea, at 0o 25’N latitude and 6o 20’E longitude, 30% of the land area of STP is designated as conservation status, with the entire island of Principe being placed under the UNESCO label. STP has a population of 215,000 inhabitants, with an average annual growth rate of 2.17% over the past decade. Approximately 40% of the population lives in the district of Água Grande, an urbanized area of the island of São Tomé, where the capital of the country is located. Despite a marginal decline from 68.4% to 66.7% between 2010 and 2017, poverty rates in STP remain persistently high (INE, 2020). Furthermore, 52.1% of the population is under 20 years old, with a literacy rate of 90.1% (INE, 2020). STP’s islands are highly vulnerable to the effects of climate change due to the fragility of their ecosystems and low level of socio-economic development4. The country is already exposed to various climate- related hazards, such as floods, coastal and river flash floods, storms, and droughts. The average rise in sea level is causing severe coastal degradation and salinization, increasing the incidence of flash floods that can damage coastal activities essential for livelihoods in coastal communities, where almost all economic infrastructure is concentrated, including social habitats (see Annex 1: Environmental context). Given this context, São Tomé e Príncipe has chosen to lead a transition towards the blue economy, with the support of the FAO, in order to make the most of its natural potentials, which are linked to ecosystem services perceived as supporting the development of fisheries and aquaculture, transport, trade, energy, tourism and ecotourism, and contributing to the objectives of protection and conservation of biodiversity and endangered ecosystems and species. The TCP Facility supported the development of a Blue Economy Transition Strategy in 2019 through an endogenous process involving stakeholders from both islands. This strategy, adopted by the government, proposes an innovative governance framework promoting inter-sectorality and high-level political and technical management. The islands of STP are highly vulnerable to the effects of climate change due to the fragility of their ecosystems and low levels of socio-economic development5. The country is already exposed to various climate-related hazards, including floods, coastal and river flash floods, storms, and droughts. The average rise in sea level is causing severe coastal degradation and salinization, leading to an increased incidence of flash floods that can damage coastal activities essential for the livelihoods of coastal communities6. These areas concentrate almost all economic infrastructures, including social habitats (see Annex 1: Environmental context). Given this context, São Tomé e Príncipe, with the support of the FAO, has chosen to lead a transition towards the blue economy to make the most of its natural potentials linked to ecosystem services, which support the development of fisheries and aquaculture, transport, trade, energy, tourism, and 4 e 5 STP is ranked 137 in the ND-Gain (Notre Dame Global Adaptation Initiative, University Notre Dame) and rated as a country with ‘’high vulnerability score and low readiness score’’ (https://gain.nd.edu/our-work/country-in- dex/rankings/). 16 6 STP, 2019, Third National Communication on Climate Change ecotourism. This transition also contributes to the objectives of protecting and conserving biodiversity and endangered ecosystems and species. The TCP Facility supported the development of a Blue Economy Transition Strategy in 2019 through an endogenous process involving stakeholders from both islands. This strategy, adopted by the government, proposes an innovative governance framework that promotes inter-sectorality, high-level political and technical management. To support its transition to the blue economy, São Tomé e Príncipe has identified the need to plan for the sustainability of ecosystem services and to think long-term about the development of the various sectors involved. This will require a shift in paradigm, with development and public and private investments evaluated from the perspective of the blue economy, rather than the maritime economy. The national strategies of all sectors of the economy will need to be balanced with reference to the expectations of the blue economy, limiting negative externalities between sectors and promoting long-term economic growth through the sustainable use and enhancement of aquatic ecosystems and resources. This will require coordination of commitments at global, regional, national, and local levels, institution-building to meet new governance needs, identification of investment needs aligned with the new vision, and the establishment of appropriate financing mechanisms to take advantage of new cooperation and financing opportunities associated with the blue economy. This transition will be a strong lever for the country to contribute to the SDGs, particularly SDG14. The primary beneficiary of the transition towards the Blue Economy is the national economy, which will experience increased opportunities for public and private business, entrepreneurship, markets, and employment based on sustainable marine resource utilization and ecosystem protection and conservation. Women and young entrepreneurs and employees will benefit from the advancements made towards decent and sustainable jobs related to new investment opportunities and diversified trades, taking into account the impact on specific sectors of the Blue Economy such as fishing (modernization, value chain, risks of the sea, depletion of resources, etc.). This will lead to more lucrative activities in the sectors of ecosystem conservation and protection, as well as the development of paid roles in the coastal and maritime tourism sectors. Other maritime, recreational, and tourism activities closely tied to marine ecosystem services will also benefit from the proposed investments. While the report does not imply endorsement of these projects by the World Bank and FAO, its primary objective is to illuminate the drivers of cost and benefit associated with the priorities already identified by the Government of São Tomé e Príncipe. 2.1 Blue Economy in São Tomé e Príncipe Maritime countries, particularly Small Island Developing States (SIDS), are facing high growth expectations in the maritime economy sectors, which are exerting direct pressure on living natural, mineral, and energy resources, as well as on coastal territories. In addition to these pressures, there are threats to ocean and coastal ecosystems due to the fragility of marine biodiversity and the direct anthropogenic effects induced by climate change. The oceans play a crucial role in climate regulation through carbon sequestration, and demographic projections indicate an increase in pressures on the coast, as already two-thirds of the world’s population live near a coast, and by 2050, a quarter of the world’s population will be African. Despite sustained economic growth rates in some African countries, nearly 45% of the population lives in a state of extreme poverty. Ninety percent of African trade transits by sea, and the potential for ocean energy is estimated to be 400% of current global demand, according to the International Energy Agency. The world maritime economy weighed 1.5 trillion euros in 2010, and the outlook is estimated to reach 2.5 trillion euros by 2020, according to the African Union Commission. The biotechnology market is expected to be worth 5 trillion euros in 2022. 17 The Democratic Republic of São Tomé e Príncipe (STP) is the smallest independent island state in Africa, having gained independence in 1975 after the Seychelles. It is located in the equatorial zone of the Gulf of Guinea and has a total area of 1001 km2. The country’s Exclusive Economic Zone (EEZ) is 160,000 km2, which is 160 times its land area. São Tomé e Príncipe is situated approximately 300 km from the African continent, with Gabon to the east, Equatorial Guinea and Cameroon to the northeast, and Nigeria to the north. The country consists of two main islands, São Tomé (859 km2) and Príncipe (142 km2), which are 150 km apart. Additionally, there are several islets, including Rolas, where the equator line is located, Cabras, the Seven Rocks (all three closer to the island of São Tomé), and the smaller islets of the island of Príncipe: Bom Bom, Cap Jockey, Cabo, Tinhosas Stones, and Jalé. São Tomé e Príncipe has a predominantly young population, with approximately 52% under 20 years old and 4% over 65 years old, resulting in an average age of 19 years. As an island micro-state, the country faces various development problems specific to islands and small countries that significantly affect the implementation of public policies. These issues include weak governance capacity, the inability to provide basic services to the population, lack of adequate infrastructure (ports, electricity, airports), high production and distribution costs of goods and services, including food products, despite favorable natural conditions for agro-livestock. Furthermore, the corporate structure is virtually non- existent, and the economy is undiversified and heavily dependent on external factors, making the country vulnerable to exogenous shocks and exacerbating the poverty level, which currently stands at 66.2% of the population. In December 2019, STP developed and adopted its Transition Strategy for the Blue Economy, marking the country’s first step towards promoting Blue Growth. The Blue Economy is considered a viable means for the sustainable development of Small Island Developing States (SIDS), as it provides coordination mechanisms that promote growth and poverty reduction while prioritizing environmental protection and climate resilience. The Transition Strategy for the Blue Economy adopted by STP aims to establish coherence between public policies related to oceanic resources and policies of other sectors such as fisheries and aquaculture, tourism, and energy. In the Program for the XVIII Legislature of the New Government (2023-2026), which came into effect at the end of 2022, the Blue Economy remains a priority pillar of the country’s development. The investment projects outlined in this document have also emerged as priorities for promoting economic growth and improving the living conditions of the population. This renewed commitment from the highest national authorities has given the transition process added momentum7. The Strategic Intelligence Unit for Blue Economy (UIEEA), which is overseen by the Minister of Planning, Finance, and Blue Economy, is now operational and has carried out all necessary activities to establish conditions for the effective implementation of the entire governance structure. The implementation of the Transition Strategy for the Blue Economy involves identifying, designing, and implementing important investment projects for Blue Growth. Currently, the country is in the process of identifying projects for the preparation of the National Investment Plan for the Blue Economy (PNIEA). In March 2022, the Blue Economy week was organized, which reiterated the government’s commitment to the Blue Economy transition. The commitment was formalized by the signature of an inter-ministerial memorandum of understanding for the promotion of Blue Employment, Blue Entrepreneurship, Blue Education8, and the decision to elevate the Blue Economy Strategy to the rank of National Law. This 7 Statement of Government Policy for the XVIII Legislature (2023-2026). 8 Platform to support the Promotion of Employment, Entrepreneurship and Education Blue (P4EA) 9 New National Law September 2022 adopted by the Parliament of STP (LEI-QUADRO DA ESTRATEGIA DE TRANSIÇÃO PARA A ECONOMIA AZUL) adopting the Blue Economy Strategy Framework in STP, with mention and definition of the roles of the institutions dedicated specifically to the transition to the Blue Economy and in particular the UIEEA (Strategic Intelligence Unit for the Blue Economy), but also the Coordination Committee, ´Seguimento e Avaliação das Ajudas Técnicas e Financeiras” (COSATEF) and the Technical Inter Ministerial Committee for Blue Economy (COTIEA) and the Coordination Committee of Technical and Financial Partners in support of the transition. • Creation in April 2022 of the Employment, Entrepreneurship and Education Platform in support of the Blue Economy (P4EA) through a memorandum of understanding signed by 4 Ministries of the Government of STP relating to the Ministry of Planning, Finance and Blue Economy, Ministry of Labour, Family Solidarity and Vocational Training, the Ministry of Youth, Sports and Entrepreneurship and the Ministry of Education and Higher Education • Partnership agreement between INE-PT, INE-CV, INE-STP, OECD, FAO for work on the development of the Blue Economy satellite account. • Development and support for geo-spatialized Territorial Planning to help determine blue investments in STP with the first elements of mapping of the Blue Economy brought within the framework of the first Forum of the Hand in 18 Hand Initiative of the FAO (October 2022, Rome). National Law9 formalizes the inter-ministerial Committee, chaired by the Prime Minister and Head of Government, and technically by UIEEA, chaired by the Minister responsible for the Blue Economy portfolio. Additionally, the law includes the creation of a coordination committee (piloted by the Prime Minister) and a commission chaired by the Ministry of Planning, Finance, and Blue Economy charged with coordinating, monitoring, and evaluating financial and technical partners supporting the transition toward the blue economy. To strengthen governance in the Blue Economy through strategic partnerships, major mechanisms are under development, such as the promotion of marine and coastal spatial planning with the adhesion request of STP to OIC-UNESCO and the development of blue economy satellite accounts through the establishment of a technical working group involving INE STP, INE Cabo Verde, INE-Portugal, and OCDE. During the Blue Economy Week, a first meeting of the partners involved in the Blue Economy was held under the presidency of the Minister of Planning, Finance, and Blue Economy and the Vice presidency of the Minister of Foreign Affairs. The partners pre-identified ongoing and forthcoming interventions, and financing mechanisms were discussed, including GCF. In October 2022, a high-level delegation from São Tomé e Príncipe, including the President of the Republic, the Minister in charge of Fisheries, and the Minister of Finance in charge of the Blue Economy, participated in an international investment forum at the FAO headquarters and presented three priority projects of its blue economy investment plans currently under development São Tomé e Príncipe (fao.org). The economic transition toward the blue economy will offer opportunities for economic diversification and the creation of new, decent employment opportunities. The project’s activities will focus on promoting new blue employment and entrepreneurship, and will directly benefit a wide range of stakeholders in the Sao Tomean society, including coastal communities, civil society organizations, private sector actors, national government stakeholders, and local authorities. The project aims to engage both high-level decision-makers and technical staff. At the community level, particular attention will be paid to the most vulnerable groups, including those in climate-risk coastal areas, women, and youth, to ensure their full participation in project training and to promote new, decent, and sustainable employment. One major constraint to the development of the blue economy in the Democratic Republic of São Tomé e Príncipe (STP)* is the financing of priority investments in this sector. As a Small Island Developing State, STP’s key economic sectors are focused on the Blue Economy, including Fisheries and Aquaculture, Tourism, new renewable energy, infrastructures, and maritime transport, as well as the environment. These sectors have been planned together in a specific National Strategy (Transition Strategy for the Blue Economy, 2019) under the leadership of the Ministry of Planning, Finance, and Blue Economy. This National Strategy was adopted as law in August 2022, further strengthening the political will to achieve the transition towards a green and blue economy in accordance with STP Vision 2030. Although key public policies for the blue economy (National Strategy for Blue Economy in STP, 2019; Fisheries Master Plan, 2006; Strategic and Marketing Plan for Tourism in São Tomé e Príncipe, 2018; STP Transport Master Plan for Maritime Transport, 2013) refer to climate change and its potential impacts on the related sectors, there is still a need to identify appropriate and costed adaptation and mitigation priorities, as well as funding opportunities for these priorities. It is important to identify investment needs, improve the planning and coordination of public and private investments in alignment with national priorities and comparative advantages of potential funding mechanisms, and address technical assistance needs. Special attention will be given to investment opportunities that create and diversify jobs in the blue economy sectors, promote entrepreneurship, and particularly benefit women and young people who are strongly affected by unemployment. The promotion of entrepreneurship and diversification of income opportunities will improve livelihoods and contribute to the resilience of young workers and women. This will indirectly help mitigate the social 19 and environmental impacts on these groups by increasing their access to decent and sustainable jobs in the blue sector. 2.2 Main Economic Sectors The economy of STP is primarily driven by agriculture, fisheries, and tourism, with the offshore oil industry becoming increasingly important. Services account for about 70% of GDP10, led by trade and transport, which represents 24% and communication, which represents 13%. While agriculture’s contribution to GDP is only 4%11, based mainly on fisheries (3% of GDP in 2019, but 9% if the entire value chain is considered) and the production and export of cocoa, which accounts for over 80% of agricultural export revenues, there has been a recent trend of inversion (55% in 2020). However, its strategic importance in socio-economic terms is quite relevant as it represents more than 70% of rural employment and contributes significantly to food and nutritional security. The fisheries sector alone, with an average national production of 11,000 tons/year exclusively from small-scale fisheries, employs 4,155 fishermen (DGPA, 2019) and 2,355 women fishmongers (DGPA, 2014). It is, however, recognized that the fisheries value chain accounts for around 30,000 people who live directly and indirectly from fishing activities (15% of the active population). With an average consumption of 30 kg/year and per capita, 53.3% of protein of animal origin (17% of total protein) comes from fish products in the population’s diet (FAO, 2019). Currently, the national fish production entirely covers the national demand, and no significant fish exports or imports are recorded. Tourism is becoming increasingly important in São Tomé e Príncipe, not only as a contributor to the country’s economy but also in terms of improving the quality of tourism products and promoting the destination. The tourism sector accounts for approximately 36% of total exports of goods and services12. In 2017, it contributed 14% to GDP with revenues of around USD 53.8 million (an increase from USD 11 million in 2011), providing employment for 1,834 workers (869 men and 965 women). The number of tourists visiting the country has grown significantly, from around 8,000 in 201013 to approximately 34,918 in 201914 (an increase of 340%). Despite this growth, the COVID-1915 pandemic has caused a halt in arrivals, and the exploitation of the natural, historical, and cultural resources of São Tomé e Príncipe for tourism is still in its early stages. 2.3 Poverty levels According to the 2017 Family Budget Survey (IOF), the incidence rate of extreme poverty in São Tomé e Príncipe was 47% (INE, 2020). Female-headed households, which make up more than a third of families, experience higher poverty rates than male-headed households, with a rate of 61.6% compared to 55.8% (INE, 2020). Due to inadequate connections between investment, territorial development, and local value chains, as well as an underdeveloped environment for promoting local entrepreneurship and business innovation, the unemployment rate in STP is 8.4% (INE, 2020), with higher rates among women (14.6%) than men (5.1%), and significantly higher among young people aged 15-24 years (21.3%). 10 https://www.ine.st/index.php/component/phocadownload/file/613-nota-pib-2020 11 2018 African Economic Outlook (African Development Bank) 12 https://bcstp.st/Banco-Central?x=wOgqPO8BlRrdHdPOd1%2BEuA==&&z=mCLJy8EbGDua1xVDQp043w 13 lano Estratégico e de Marketing para o Turismo de São Tomé e Príncipe. 2018 14 INE-Instituto Nacional de Estatística de S. Tomé e Príncipe 20 15 Despite this, and by the stop in arrivals created by COVID-19 - information available from INE-STP indicates that in 2020 the number of tourists has fallen to 10,334, a reduction of 64.8%. To address these challenges, the National Investment Plan for Blue Economy (PNIEA) is being developed with the support of the FAO technical cooperation Project TCP/STP/3804. The plan proposes to act based on a review of the situation of blue jobs undertaken by the P4EA Platform (Employment, Entrepreneurship Training Education in favor of the Blue Economy). The Readiness Programme will focus on training to meet the need for diversifying blue job opportunities and addressing the constraints faced by young people and women in search of decent and sustainable jobs. Given the effects of climate change on fisheries value chains, which pose risks to the abundance, variability, and/or spatial redistribution of fisheries resources, particularly those of species more sensitive to the effects of warming surface temperatures oceans and/or water acidification, it is essential to compensate for the risks and opportunities of the fisheries sector by increasing opportunities in other sectors of the blue economy, such as conservation, protection, and/or rehabilitation of coastal ecosystems (for example: coral reefs, mangroves, beaches, etc.). Coastal and maritime tourism development can also contribute to providing new employment opportunities for coastal maritime communities with skills in marine activities, thus increasing resilience and financial autonomy for young people seeking new jobs and revenues. It is worth noting that half of the population of STP is under twenty years old (UNSD, 2020 - https:// unstats.un.org/unsd/demographic-social/products/dyb/dyb_2020/), which highlights the importance of investing in initiatives that promote sustainable development and employment opportunities for young people. In particular, it is important to consider the effects of climate change on fisheries value chains, which pose risks to the abundance, variability, and spatial distribution of fisheries resources, especially those of species that are more sensitive to the warming of surface temperatures and water acidification16. To address this challenge, it is necessary to compensate for the potential risks and job losses in the fisheries sector by creating more opportunities in other sectors of the blue economy, such as the conservation, protection, and rehabilitation of coastal ecosystem areas (such as coral reefs, mangroves, and beaches). These efforts will not only benefit the environment but will also support the development of coastal and maritime tourism, which can provide new employment opportunities for coastal communities with skills in marine activities. By doing so, it will help to build more resilience and financial autonomy for young people by creating opportunities for new jobs and revenues. 2.4 Population and mobility The current estimated population of STP in 2022 is 217,164 (according to INE-STP), which is a significant increase from 73,600 inhabitants in 1970. This growth has resulted in a strong densification of urban areas and their outskirts, with a mobility trend observed among rural populations towards coastal areas. This shift is due to the younger generations seeking new work opportunities in fields such as tourism, tertiary, trade, and fishing, as well as the abandonment of agricultural professions, which have become increasingly difficult due to the development of phenomena such as theft of production and/or livestock17. As a result, the so-called urban population now represents approximately 75.8% of the total national population (according to INE-STP), with an average annual rate of urban concentration estimated at 2.96% for the period 2020-2025. The rate of urbanization in 2018 was 72.8% of the total population, with an urbanization rate of 3.33% per year (over the period 2015-20). The coastal area is particularly affected by these changes, as it faces new pressures that threaten both settlement conditions and the environment, especially in areas subject to climatic risks and erosion accelerated by certain human activities, such as the extraction of sand18. 16 https://www.fao.org/3/I9705EN/i9705en.pdf 17 These phenomena of theft have been denounced in most of the Districts visited either directly by the owners of agricultural land who are victims of these lootings and thefts or by the representatives of the District Camaras to whom the rural populations complain of these offences. 18 Sampling of sand from settlement beaches north of Principe and cumulative erosion with climatic effects (floods) on settlement and residential areas described in the mission report Geomorphology studies and coastal dynamics and vegetative options for coastal protection of communities Iô Grande, Praia Melão, Pantufo, Praia Lochinga-Gambôa-Cruz, Micoló and Abade, Field Visit Report - Elena (Nena) Vandebroek (Deltares) Luisa Torres Duenas (Deltares) Alessio Giardino (Deltares), Bouke Ottow (Deltares), Jenny Pronker (CDR International B.V.). 21 Fig. 1: Demography, urbanization and administrative mapping (Source FAO, 2022) These dynamics are compounded by the influence of private interests focused on the coastal areas around tourist sites, especially beaches and old port facilities (pontoons) that attract private investors interested in hotel and recreational activities or restoration. Along the west coast of Sao Tome in the Cantagalo district, privatized spaces are multiplying, limiting access to the coast from the national road and access roads to the beaches. This phenomenon, beyond the control of local authorities, is developing due to a lack of territorial planning and without consideration of environmental impacts19. As for transportation and access roads, the high urban concentration, particularly in the northern region of Sao Tome, leads to congestion on the national traffic lanes (national coastal peripheral road), where pedestrians, residents, roadside vendors, schoolchildren, motorcycle taxis, and collective taxis all jostle for space, creating a sense of insecurity. Despite the current satisfactory condition of these roads, which are often too narrow and lack suitable sidewalks for the abundant pedestrian traffic, the juxtaposition of users and means of transport means that certain times of the day carry a high risk of accidents. Access to the national coastal peripheral roads is limited to paths and tracks, which depending on the season, may not provide secure travel conditions, especially for pedestrians and motorcyclists. Furthermore, a significant portion of small goods transportation relies on these routes (e.g., fish, agricultural food products, wood, and itinerant trade products toward the urban center). Considering the coastal influence and associated risks, enhancing travel by coastal seaway is an element of national interest. It can alleviate road traffic congestion and reduce negative effects on tourist populations passing through unsanitary residential areas. Moreover, the development of small maritime transport all around and between the islands can secure permanent access for products and people to public services and markets of economic interest. This development can also contribute to substituting energy sources used for decarbonization and reducing the polluting effects caused by land vehicles such as trucks, cars, and motorcycles. The interest of developing small maritime transport has been further emphasized by the effects of climatic events such as the heavy rainy season in December 2022. 19 TObservations on the ground and denunciation made by the District Camaras and confirmed by the Department of the Environment during site visits and technical meetings held in January 2023. 22 2.5 Agricultural dynamics20 Comparative maps depicting agricultural properties and cropping choices indicate that over the span of seventy years (1953/2023, as shown in the maps below), large agricultural properties have been replaced by protected areas occupying the central part of the island of Sao Tome. These protected areas cover a large area of the southern coasts of Lemba district, bordering Caué district, with another part of the Lobata coast bordering Lemba district, and with some protected plots in the southwestern tip of the island near Porto Alegre. The remaining large agricultural properties have been fragmented into small and medium-sized agricultural properties. Simultaneously, urban areas have expanded further along the northeast coast and to the south in some attractive areas, particularly for tourist activities, such as the districts of Agua Grande and Cantagalo. In Principe, the southern half of the island has been removed from the old large agricultural properties for the benefit of protecting spaces and ecosystems. The central strip of the island, crossing from East to West, still has small agricultural enterprises in operation. These developments have resulted in a change in the distribution of cultivated agricultural land, favoring food production. The productions are then regularly transported to more densely populated urban areas. 2.6 Legal and Institutional Framework21 Since the 1990s, the Democratic Republic of São Tomé e Príncipe (DRSTP) has established an entity responsible for environmental issues within the institutional framework of its governance. This entity is tasked with coordinating the country’s environmental actions, defining and executing the State’s policy on the environment. Different governments have combined the environment sector with other sectors in various ways, which has influenced the designations and caused minor internal issues. As the environmental safeguard body, the Directorate-General for the Environment has been deepening its approach to dealing with environmental issues to achieve effective environmental management. This involves adopting medium to long-term strategies and policies, including formulating environmental policies, raising awareness through information and communication, and investing in research and new technologies. The “Base Law for the Environment” Law Nº 10/1999, developed by the General Directorate for the Environment, under the supervision of the “Ministry of Natural Resources” in collaboration with the UNDP, is the primary law regarding environmental regulation, and is the basis for other regulations. The Environmental Impact Assessment process is legally defined in the Environmental Base Law (Law No. 10/99) and regulated by Decree-Law No. 37/99 of November 20, which outlines the procedures for the Environmental Impact Assessment process. In accordance with paragraph e) of Article 1 of Decree No. 37/99, issued on August 3, 1999, which regulates the Environmental Impact Study Process, the Environmental Impact Study is a fundamental element of the evaluation process of environmental impact. It involves conducting a technical and scientific analysis of the consequences that may arise from carrying out proposed activities on the environment. This includes examining the risks and benefits in the short, medium, and long term, 20 2400 T of coffee were exported in 1889 (the regular maritime link was established in 1858). The large agricultural properties (cocoa and coffee) will grow until 1907 with private railways attached to the properties and with small ports intended to export coffee and cocoa. The total exported volume of cocoa will reach a record of 36,500 Tons in 1913. Long after the declaration of the abolition of slavery in 1876, there will still remain in 1958, 170 Roças in activity. 21 Antónia Alariza Mendes Júnior Bento Luiz, Consultora Nacional Especialista em Ambiente e Avaliação de Impactos Ambientais), FAO TCPSTP3804, Janeiro 2023, “Relatório Ambiental com contribuições e nota específica pormenorizada sobre os impactos e recomendações destinadas a serem integradas na análise e rendimentos dos investimentos prioritários do Plano Nacional de Investimentos para a Economia Azul”. 23 considering the possible options for the activity and for the intended implementation area. There are several other environmental decrees and regulations in place, including: • Law No. 11/99 - Conservation of Fauna, Flora, and Protected Areas • Decree No. 35/99 - Inert Extraction, which sets out the conditions for the exploitation of aggregates (such as sand, limestone, reefs, and pebbles) in coastal areas and rivers. • Decree No. 36/99 - Waste, which establishes criteria for the licensing of different operations related to the collection, transport, storage, disposal, or use of solid waste. • Law No. 9/01 - Fisheries and Halieutic Resources Law, which defines the general principles of the policy for the conservation, exploitation, and management of fisheries resources and the aquatic environment. • Law No. 5/01 - Forest Law • Law No. 6/06 - São Tomé Natural Park Law (Obô) • Law No. 7/06 - Príncipe Natural Park Law (Obô) • Regulation of the extraction and exploitation of aggregates in São Tomé e Príncipe, approved by Law No. 9/2020 of September 20th, which applies to the exploration, extraction, transport, and commercialization of aggregates throughout the territory of São Tomé e Príncipe. Despite the existence of a comprehensive legal framework in the environmental sector and the efforts made in recent years, there are still significant deficiencies in technical, material, and financial capacity that limit the effective implementation of legislation, as well as management, monitoring, inspection, and environmental awareness programs. 2.7 Policies relevant to prioritized projects and blue economy development • Tourism as a driver for blue economy The political recognition of the potential positive impacts of the tourism sector on the economy and employment was manifested in 2001 with the development of the first strategic plan dedicated to the development of tourism. This was followed by a Tourism Master Plan in 2008, and a plan specifically for the Autonomous Region of Príncipe in 2012 (Plan and Agenda for the Sustainable Development of the Island of Príncipe). In 2018, this plan was updated with projections for 202522. All of these policy instruments have expressed the objective of maximizing the contribution of tourism to national employment and income generation, while ensuring that the social and economic benefits of tourism are equitably distributed. In terms of legislation, Legislative Decree 28/2014 regulates hotels and similar activities, replacing No. 692, dated August 20, 1964. This law clearly defines that all tourist activities carried out in São Tomé e Príncipe must safeguard the environment and ecological values of the country, protect cultural events and the way of life of the country’s population, and preserve and maintain public and private goods related to tourism activity. Law n ° 8/2012 of September 12 allows organized civil society, including NGOs, to participate in the development process of the country. 22 Plano Estratégico e de Marketing para o Turismo de São Tomé e Príncipe. 2018. 23 https://www.facebook.com/plataformadeturismoresponsavelesustentavel/ 24 Public-private partnerships are encouraged with the aim of promoting economic interests in a sustainable manner, without harming the environment and biodiversity. In 2014, the Responsible and Sustainable Tourism Platform (PTRS)23 was established to provide a national forum that brings together various national public and private tour operators, cooperatives, non-governmental organizations (NGOs), and local communities. This initiative is accompanied by a sustainable development charter that promotes good social, economic, and environmental practices. The main objective is to ensure a permanent and sustainable source of income for the management of protected areas, as well as to provide economic opportunities for the benefit of rural communities and small and medium-sized national enterprises. The country is home to several dense and diverse marine, terrestrial, and intermediate ecosystems, including mangroves, coral reefs, and riparian areas, which support a diverse range of flora and fauna. The coastal mangrove forests are a crucial element for biodiversity and conservation, with their value as “biological shields” (Feagin et al., 2010) and provision of important indirect benefits for coastal living resources, such as the maintenance of fish stocks, erosion control, and regulation of biogeochemical cycles. n 2015, a study conducted in São Tomé identified 26 species of fish spawning only in the Malanza site, which is the largest mangrove ecosystem in the country. Mangroves also play an increasingly important role as tourist destinations, where visitors can access services offered by local communities such as guided tours, canoe trips, and small restaurants, contributing to rural livelihoods and economic diversification. However, significant degradation of the mangrove area, resulting in the proliferation of invasive and salt-tolerant vegetation, has been observed in Ribera Alphonso, hindering the recovery of slow-growing native vegetation. Coral reefs are one of the most unique and threatened marine ecosystems in São Tomé e Príncipe and are the only reef zone in the Gulf of Guinea. The National Report of the Convention on Biological Diversity (2014) emphasized the necessity of minimizing anthropogenic pressures on coral reefs and other vulnerable marine and coastal ecosystems affected by climate change, in order to preserve their integrity and functioning. The beaches in São Tomé e Príncipe gained worldwide recognition after they were featured in a commercial for Bacardi Rum, shot on Banana Beach (Principe) in the early 1980s. Since then, São Tomé has been associated with wild sandy beaches, which are one of the most attractive ecosystems for tourism development (as per the Strategic and Marketing Plan for Tourism of São Tomé and Principe 2018). However, these coastal environments are under severe threat from sea-level rise, pollution, and sand extraction for housing construction. As the popularity of São Tomé as a tourist destination continues to rise, it has become necessary to manage the beaches sustainably to prevent environmental degradation and loss of income. 25 Tab.1: Advantages and constraints in relation with some potentials for new niche-markets for tourism sector Source: Joseph Sciortino, FAO 2022. 24 Dimmock, Kay; Cummins, Terry; Musa, Ghazali (2013). “Chapter 10: The business of Scuba diving”. In Musa, Ghazali; Dimmock, Kay (eds.). Scuba Diving Tourism. Routledge. pp. 161–173. 26 27 • Policy context related to climate change with key sectors of blue economy The National Action Plan for Adaptation to Climate Change (NAPA)25 has identified the protection of coastal areas and the impacts related to tourism as one of the priority sectors for adaptation. The plan includes several priority measures related to the sector such as beach rehabilitation and protection of tourist areas, sand dredging, rehabilitation of tide stations, construction of dikes, displacement of local communities at risk, diversification of activities and support measures for populations living on the exploitation of coastal resources, strengthening of equipment, and modernization of artisanal fishing, construction of barriers, a Climate Alert System and the State of the Sea, construction of drainage ditches, and construction of water tanks. Diversification is also a priority area of intervention in NAPA, and it is fully aligned with supporting the creation of decent blue jobs for young populations and women. This will help reduce negative impacts on fisheries value chains by driving young populations and women towards the best coastal jobs for conservation, protection, ecotourism, or maritime new blue activities diversification. The promotion of the Blue Economy, along with the protection and prevention of the degradation of coastal areas and their habitats, are identified by the iNDC as fundamental strategic elements for adaptation. These priority areas of adaptation and natural ecosystem preservation represent a source of potential new decent jobs in the fields of key blue economic sectors. Other strategic documents with direct or indirect implications for the blue economy and climate adaptation include: the National Poverty Reduction Strategy (ENRP III) 2017-2021; the National Strategy and Action Plan for Biodiversity 2015-2020 (ENPAB); the Participatory Strategy for Water and Sanitation in São Tomé e Príncipe for 2030; the Maritime Safety Strategy, approved by Decree-Law No. 2/018; the Transformation Agenda in Horizon 2030, National Strategy and Action Plan for Coastal and Marine Ecosystems (2005); the Multisectoral Investment Plan to Integrate Resilience to Climate Change and the Risk of Disasters in the Management of the São Tomé e Príncipe Coastal Zone (2017); the National Environment Action Plan for Sustainable Development (PNADD); the National Communications on Climate Change; the Updated Charter for Agricultural Policy, Rural Development and Fisheries; the Fisheries Master Plan 2006-2010; the National Plan for Agricultural Investments, Food and Nutrition Security (PNIASAN) 2016-2020, which includes a specific program on fisheries26; and the Strategic Plan for Tourism Development (2018). 25 The Republic of STP, by signing the United Nations Framework Convention on Climate Change in 1992, ratified in 1999, and the Kyoto Protocol in 1997, with ratification in 2008, demonstrated its firm commitment to combat climate change and its harmful effects on humanity , and has engaged in carrying out all the initiatives leading to mitigate the negative impact of this global phenomenon, notably: the National Action Plan for Adaptation to Climate Change (NAPA), the intended Nationally Determined Contribution (iNDC), the National Communications submitted to the United Nations Framework Convention on Climate Change (1st in 2005, 2nd in 2012 and 3rd in 2019), among other initiatives. https://faolex.fao.org/docs/pdf/sao185103.pdf 28 26 PNIASAN is linked with Malabo process and AU CAADP process. 3. Project 1: Development of Blue cabotage in STP27 3.1 National strategy and blue cabotage priorities The National Poverty Reduction Strategy II, which was implemented from 2012 to 2016, outlines the future transport policy for São Tomé e Príncipe. It emphasizes the importance of ensuring logistical coordination between transport projects and the economy, as well as introducing inter-modality and possible substitution between the various modes of transport, including air, maritime, and land transportation (FAO, Joseph Sciortino, 2022). The top priority in the maritime sector is to establish a cabotage system around STP, utilizing existing quays where possible. The Blue Cabotage plan, also known as Project 1, requires an investment of 18.83 billion euros28 (as outlined in Tables 4, 5, and 6), including the construction of six multi-purpose blue cabotage ports - five in São Tomé and one in Príncipe. Ponta Mina in Príncipe represents 41% of the total estimated investment (67.81 million euros). The project is expected to have a strong ripple effect on the blue and green economy, particularly on the fishing, tourism, and agriculture value chains, by ensuring the transport of goods and people and reducing the carbon footprint (See Figure 2). 3.2 The port sites presentation • The Port of Ponta Mina is a crucial element for the development of the autonomous region of Príncipe. Given the fact that it is poorly served with the pier at Santo António, it is the top priority of the Cabotage Master Plan. • The Port Neves Pier has multipurpose features and can be upgraded to cabotage functions for both fuel and consumer goods transportation. It can also support the development of the fishing industry and boat repair facilities, taking advantage of existing support infrastructure. • The Santa Catarina and Porto Alegre Pier can be improved to support fisheries and agriculture. Due to their location, they are also strategic for the creation of a maritime alternative (cabotage) to the highway. This can reduce the risk of isolation in case of any event that affects the existing road network. • The Água Izé wharf mainly supports agriculture but also closes the support network for cabotage and tourism. • The Ribeira de Peixe Pier can be enhanced to support tourism development and motivate private oil industry investment in a new transport system for palm oil. This will have positive impacts on land transport and infrastructures. 27This detailed presentation of the elements relating to the cabotage project includes the technical elements described in the work of the consultants of the study financed by the European Union and supplemented by the contributions of the FAO consultants (FAO TCP/STP/3804, 2022) who reworked on the proposals initially formulated and updated certain points through consultation with the national technicians of ENAPORT under the joint coordination of the UIEEA. 28 67,880 M Euros including Ana Chavez port expansion. 29 Fig. 2: Ports and beaches included in the 3 investment projects Tab. 2: Blue Cabotage Ports identified and intermediary existing pontoons 30 Fig. 3: Project 1 “Photos of ports selected for Blue Cabotage in STP” Source: FAO, TCPSTP3804, 2022. Tab. 3: Equipment and activities planned in the cabotage ports project. CABOTAGE PROJECT AND RELATED/RELATED ACTIVITIES Actividades Equipments and activities / Ports Sta. Catarina Neves Água Izé Ribeira Peixe Porto Alegre Ponta Mina Equipment fire / Security þ þ þ þ þ þ Signaling / Security (Horizontal) þ þ þ ý þ þ TURISM Relief for shipwrecked people þ þ þ þ þ þ Admin Buildings (with 2 toilets) þ þ þ þ þ þ Medical care (border control) ý þ ý ý ý þ BUSINESS Grue þ þ þ þ þ þ Forklift þ þ þ þ þ þ Fuel Station þ þ þ ý þ þ FISHERIES Ice factory þ þ þ þ þ þ Cold room þ þ þ þ þ þ Maritime access stairs to the pier þ þ þ þ þ þ Connection/access to the main road þ þ þ ý þ þ GENERAL Environmental impact * ý ý ý ý ý ý * Rehabilitation or reconstruction of the 6 quays are not included in Annex I of Decree No. 37/1999 – “Regulation on the environmental impact assessment process”, therefore the proposed actions are not subject to an environmental imp act assessment. However, the p roject considers a set of corrective measures ap p lied to p hysical, biotic and socio-economic environments. Source: Sr Manuel dos Santos Diogo Coelho do Nascimento, Merchant Marine Officer, January 2023. 31 3.3 Phasing The Blue Cabotage project can be designed in three or four phases, depending on the available financial resources. It should take into account the functional priorities of each national site, considering their contribution to opening up certain areas, encouraging the development of multi-sector maritime activities such as tourism, ecotourism, conservation of threatened or fragile coastal spaces and species, and contributing to the transport of goods to the port of Ana Chavez or Principe or from the north to the south area. Also, the project should consider tourists’ mobility according to coastal circuits related to seaside hotel residence areas, historical sites, or exceptional natural areas to visit. The following phasing is proposed based on these criteria29: • The first priority is Ponta Mina, with the possibility of rehabilitating the port of San Antonio to facilitate the construction site. The rehabilitated port can subsequently be used as a marina, complementing the main port of Ponta Mina when it becomes operational. • The second priority is the ports of Neves, Santa Catarina, Porto Alegre, and Agua Izé. They should encourage the establishment of mixed goods and passenger transport and promote local multisectoral activities such as tourism, conservation actions and programs, professional fisheries, sport fishing, recreational fishing, and yachting development. • Third priority30: The port of Ribeira Peixe and the rehabilitation of existing pontoons, which can play a role in the deployment and strengthening of ecotourism projects and marine activities such as diving, recreational and sports fishing, and visits to historic and landscape sites near coastal areas. This package includes Ribeira Peixe, Ponta Figo, Esprainha, the central pontoon of Sao Tomé, and Angolares. • Fourth priority: As part of the port infrastructures investment project, Ana Chavez expansion needs to be taken into account and studied. The detailed presentation of the port proposals will only deal with the six main ports, five ports of phases 1 and 2, and Ribeira Peixe contained in phase 3 due to the analysis made by the architects and engineers of the European and FAO missions. Specific studies will be necessary to estimate rehabilitation costs for the other pontoons mentioned in phase 3. For Santo Antonio in Principe, the proposal will relate to an estimated budget for a study of the rehabilitation needs before a more in-depth study that will consider the conversion of the port into a marina after the commissioning of the port of Ponta Mina. 3.4 Investment Costs The priorities for the Blue Cabotage project are based on the following reasons: 1. To promote balanced development between the two inhabited island territories, with a priority given to Principe. 2. To establish cabotage along the territorial dimension of Sao Tome’s coast. 3. To connect cabotage bases with areas of mixed interest, such as tourism, fishing, environment, and trade. 29 The detailed presentation of the port proposals will only deal with the 6 main ports (5 ports of phase 1 and 2 and Port of Ribeira Peixe contained in phase 3 due to the analysis made by the architects and engineers of the European missions and the FAO 2022 mission). For the other pontoons mentioned in phase 3, an estimated study budget for their rehabilitation will be proposed as an indication. 30 With the exception of the Ribeira Peixe site, the rehabilitation of the other pontoons will have to be prepared by technical and impact studies. 32 4. Expansion of Ana Chavez Port is also mentioned, but further detailed proposals will need to be studied in the future. Each port site and infrastructure of the cabotage project is addressed in a specific annex, with details including a) justification, b) proposed work description and equipment, c) environmental measures, and d) cost elements. These details can be consulted in the technical studies mentioned earlier. Tab. 4: Consolidated priority list of potential public investments (Euros, €) Tab. 5: Comparison of estimated costs (2013, 2022, 2023) (Euros, €) Tab. 6: Estimated costs (Source: FAO 2022, Joseph Sciortino) (Euros, €) 33 The following maps (Figure 4) depict the geographic proximity of sectoral establishments that can confer on the port infrastructure investment project a role in incentivizing and facilitating the development of intersectoral private initiatives between coastal communities, fishing activities and value chains, tourism and ecotourism activities, as well as transportation. It is noteworthy (yellow circles on the map, Figure 4) that the territories of positive impacts are planned systematically to straddle several districts, which requires partnerships between the District Camaras for monitoring, evaluation, and management of the infrastructures. The national institutions involved in the operation of the new port sites should work closely with the field. This aspect should be taken into account in the governance of these infrastructures and monitoring the performance and evolution of these investments through the links between the State and the central administrations, and the territorial authorities (Camara de District and Autonomous Region of Principe). 3.5 Social and economic analysis The first socio-economic impacts of port investments are related to job creation (both direct and indirect) associated with the operation, maintenance, monitoring, and management of the infrastructure. These jobs could be coordinated with the District Camaras, the Regional Authority of Principe, and the central national authorities involved in the management of these infrastructures such as ENAPORT, IMAP, and customs. As of 2022, there were approximately 746 jobs in the tourism sector in Principe (hotels, residences, accommodations, restaurants, bars, travel agencies), and 325 jobs outside of the tourism sector (source: Autonomous Government of Principe). According to INE-STP (2019), employment in Principe represents less than 7% of the total employment in the country, of which around 9.6% of the total number of people employed work in the catering and hotel industry (or any other form of tourist accommodation). Each port site and infrastructure of the cabotage project is addressed in a specific annex, with details including a) justification, b) proposed work description and equipment, c) environmental measures, and d) cost elements. These details can be consulted in the technical studies mentioned earlier. 34 Tab. 7: Socio economics impacts in Principe and Sao Tome of the Blue Cabotage Investment project Tab. 8: Estimate of costs and income related to investments for the ports of Principe, Ponta Mina and Santo Antonio. 35 Tab. 9: Estimate of costs and income related to investments for the ports of Sao Tomé (District Cantagalo, Caué, Lemba, Lobata) (Euros). The financial and economic analysis of the cabotage project has been conducted based on the following assumptions: • Discount rate of 13% • Hypothesis 1: Calculation based on an annual increase of 3% in turnover and variable expenses over the depreciation period. • Hypothesis 2: Calculation based on an annual increase of 5% in turnover and variable expenses over the depreciation period. The table below presents the results of the analysis under these two hypotheses, using the indicative data provided in the previous tables which detail the composition of income and expenses, as well as the cost of investment. Tab. 10: Financial analysis of Cabotage investment projects in Principe and São Tomé islands (Cf. Annex). 36 3.6 SWOT analysis31 This paragraph provides a summary of the reference situation analysis, highlighting the most significant aspects of the environmental and social dimensions in terms of their current conditions and the applicable policies and management instruments. The obtained diagnosis results are organized in a SWOT table for each proposed project, as shown below. Tab. 11: SWOT Analysis for Blue cabotage project 31 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro 2023. 37 3.7 Environmental and social impacts32 Overall, the proposed interventions within the three identified projects do not suggest significant negative environmental and social impacts. However, it is important to limit the impacts induced by the physical interventions to the areas of intervention where they will occur. Environmental impact studies must be conducted in accordance with National Decree No. 37/1999, which establishes regulations on environmental impacts, to ensure proper management, planning, and implementation of these projects. The priority objective is to avoid and/or minimize negative social and environmental impacts related to infrastructure rehabilitation, construction, and associated activities. Tab. 12: Summary of potential environmental and social impacts and mitigation measures33 3.8 Recommendations34 Cabotage was widely used during colonial times for transporting goods from large agricultural properties located near the coasts, such as Água Izé, Ribeira Peixe, and Porto Alegre. However, with the disappearance of these estates and the degradation of infrastructures, road transport became more popular. In the case of transporting goods from Santa Catarina to Porto Alegre, road transport is not suitable due to the long journey. Using boats for transportation would significantly reduce logistical costs. 32 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro 2023. 33 The characterization of the impacts related to the projects will be based on the Physical, Biotic and Socioeconomic aspects. The characterization of physical impacts is associated with the components of: Geology, Geomorphology, soil, hydrology, landscape and air quality, waste production, impacts on sites of archaeological or cultural interest, biotic impacts are associated with Wildlife and the Flora and finally socio-economic, related to employment, trade and population movements in the community. 38 34 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro, 2023. Studies show that cabotage shipping emits less CO2 compared to the current road transport used in the country. According to the Third National Communication on Climate Change in São Tomé and Príncipe, the transport sector is the second highest emitter of CO2 with 37.6 Gg CO2eq., while the energy industry is the first with 56.7 Gg CO2eq. emissions. Maritime transport is not badly classified in terms of GHG emissions in São Tomé e Príncipe since only small vessels (passengers and goods) that connect the islands, as well as small fishing boats and motorized canoes, accounted for an average energy consumption of 90.9 TJ in 2012. Therefore, the adoption of cabotage is justified due to the existing situation and the potential to reduce energy consumption further with modern ships that have mixed motor (sailing and motor). 3.9 Implementation schedule35 Tab. 13: Indicative phasing and calendar for Blue Cabotage project 35 The schedule for the sites should be consolidated on the basis of the necessary preparatory expertise within the framework of consultation with the institutions involved and designated officials. The calendar presented here can only be conceived as an indication. 39 Fig. 4: Maps with specific considerations on cabotage, fisheries and beaches (Source. FAO TCPSTP3804, 2022). 40 Fig. 5: Plan projects for ports 41 4. Project 2: Rehabilitation of beaches to support blue tourism development 4.1 National Strategy for Tourism36 As part of the program of the XVIII Constitutional Government for the period of 2023-2026, the tourism sector is highlighted as a growth sector37. In recent years, considerable effort has been made to produce new laws that can contribute to the development of the tourism sector38. The “Strategic and Marketing Plan for Tourism São Tomé e Príncipe” (PEMT), prepared in 2018 with support from IFC for the period up to 2025, laid out a vision to develop a nature-based tourism offering that brings shared benefits to STP’s population39. The PEMT defined five objectives: 1. Prepare São Tomé e Príncipe for tourism in a sustainable manner, with positive impacts on local development. 2. Contribute to the preservation of natural and cultural spaces. 3. Improve the experience and increase the visibility of São Tomé e Príncipe as a tourist destination. 4. Qualify, standardize, and consolidate the quality of the offer. 5. Improve the performance of tourism. The PEMT projected a tourist inflow of more than 50,000 tourists per year by 2025, an increase in the number of rooms from the current 723 to 980, and a growth of 73.4% in the sector’s contribution to the GDP in the same period. The recent World Bank Systematic Country Diagnostic identified tourism, together with agriculture and fisheries, as sectors with potential for driving growth and job creation, leveraging STP’s natural capital40. STP, with its abundant biodiversity and pristine beaches, is well-positioned to develop nature-based tourism offerings that bring shared benefits to its population, as outlined in the 2018 Tourism Strategic and Marketing Plan developed with the support of the World Bank Group. Nature-based tourism also brings climate benefits. For example, well-preserved coral reefs and seagrass beds, while presenting further erosion rates, create white sand and nurture biodiversity, which is an important attraction for visitors to Small Island and Coastal Development States (SIDS). 36 World Bank - Terms of Reference - São Tomé e Príncipe – Mid-term evaluation and update for Tourism Strategic and Marketing Plan World Bank, 2022. 37 Sustainable development will imply, from the Government’s point of view, not only an increase in production to satisfy food security and domestic demand, but also the implementation of public policies to support the sector producing goods and services for export and strengthening levels of external booking and to encourage export policies, the Government proposes some priorities in which: The government proposes a dozen priorities among which: i) Build cabotage ports connecting Porto-Alegre/Ribeira-Peixe/Água Izé/Ana-Chaves/Ponta-Mina/Neves/Sta. Catarina and countries of the sub-region, with the purpose of supporting fishing, agriculture, tourism, transport of consumer goods, fuels and export products, ii) Reclassify the beaches that are a tourist attraction and manage them in a sustainable way, iii) Expansion of the export of tourism services through partnership agreements between São Tomé e Príncipe and the main countries that send tourists. 38 Of note are the application of the tourist tax, in the amount of STD 75,000.00, paid by the guest/tourist per day of stay, the legislation on the rental industry of motor vehicles and pleasure boats, the legislation on games of fortune or gambling, the application of hotel licensing fees, the establishment of a legal regime for travel agents and tour guides, among others. 39 Beside the strategy for the tourism sector, the government of STP has already elaborated several main strategic development documents of the country, namely: • Horizon 2030 Transformation Agenda. • National Plan for Integrated Management of Urban Solid Waste (PNGIRSU) 2018-2023. 40 As explained in the 2019 World Bank Country Economic Memorandum, the tourism sector can provide a platform to grow STP exports of high-value goods such as cocoa products, coffee, pepper and natural cosmetics, 42 which are already bought by tourists as souvenirs. Compared to other West African Small Island and Coastal Development States like Cabo Verde or The Gambia, tourism in STP is still relatively incipient. The sector employs an estimated 3,000 people, representing 179 million dobras in direct employment in 2019 (equivalent to 1.9% of nominal GDP), and is an important source of export revenue (estimated at 6.9% of GDP). Tourism had been growing strongly before the COVID-19 pandemic41, with an average annual growth rate of 15% between 2015 and 2019, when it reached almost 35,000 tourist arrivals. STP’s three main tourism markets are Portugal (55%), Angola (7%), and France (5%). The main tourism products are Sun and Beach tourism and ecotourism (land and marine). In recent years, there has also been growing interest in the country as a destination for radical sports (such as Trail) and maritime sports (such as diving and sport fishing). Recent market research in European markets (UK, Germany, and Sweden) conducted with the support of the PROBLUE Trust Fund identified low awareness of STP as a tourism destination. The sustainable development of the tourism sector in STP faces a number of cross-cutting and sector- specific challenges. These include structural obstacles, infrastructure bottlenecks, energy deficiencies, limited connectivity and mobility, a difficult business environment that curtails private investment, and weaknesses in governance and institutional capacity for policy coordination and implementation, necessitating better coordination between central and local institutions. However, the transformation towards a blue economy perspective provides an opportunity to address these challenges through the national investment plan and the promotion of blue governance (intersectionality). Furthermore, STP’s capacity to attract investments constrains the development of tourism offerings, including accommodation, food, tours, activities, and goods for tourists. In the case of small and medium enterprises, severe challenges in accessing finance also hinder progress42. While there are a few luxury hotel chains from Portugal, South Africa, and other international locations on the islands of STP, reflecting high levels of service by international standards, the number of guesthouses owned by locals is also increasing. Small-scale tourism operations include eco-lodges, diving, canoeing, and kayaking companies, and tour guide companies. Future large-scale marine tourism operations should include sport fishing and, subject to stringent management and authorization control, cruise liner visits (FAO, 2022). Based on the situational analysis and defined assumptions, the vision for tourism in São Tomé e Príncipe is as follows: “By 2025, São Tomé e Príncipe will be the most pristine island tourist destination in Equatorial Africa, featuring unique nature and biodiversity, breathtaking beaches, and the warmth of Santomean hospitality. This hospitality is rooted in the historical and cultural legacy of coffee and cocoa plantations and will be reflected in the local products and services offered by entrepreneurial initiatives. These initiatives will enhance the quality of life of families and create a high-value tourist experience.43” 4.2 The beaches sites presentation São Tomé e Príncipe boasts exceptionally beautiful landscapes, with many endemic species and a secure and tranquil atmosphere in both the cities and countryside. The beaches of São Tomé e Príncipe have been immortalized in the Bacardi Rum commercial shot on Banana Beach (Principe) in the early 1980s (FAO, 2022). Since then, São Tomé has become synonymous with wild sandy beaches44, and 41 As in other countries, the COVID-19 epidemic strongly affected the tourism sector in STP. The number of tourists decreased by 70% in 2020 and revenues generated by the sector fell by 66%. By the middle of that year, 68% of enterprises in the sector were temporarily closed. The tourism inflow started to recover in 2021 (15,700 tourists, a growth of 45% over 2020) and the recovery is picking up pace in 2022 (over 14,000 tourists in January-July). Tourism sector operators point to 2023 as the possible recovery to 2019 levels. The Tourism Authority and operators worked together to adopt Covid-19 protocols and norms, including a Covid-19 safe & clean seal, which was widely adopted. Following the pandemic, and building on its current assets, STP has the potential to position itself as a sustainable and safe tourism destination. 42 Even if on the positive side, recent developments include an expansion in the use of international credit cards and ATMs, greater organization of private sector operators into associations, and the involvement of non-govern- mental organizations in initiatives to support sustainable tourism. 43 Sao Tome and Principe Investment Promotion Strategy 2017-2019, Trade and Investment Promotion Agency (APCI), October 2016. 44 Sao Tome and Principe Investment Promotion Strategy 2017-2019, Op. Cit. 43 beaches, bays, and lagoons are the most popular tourist attractions (27% of favorite sites) according to a tourism survey. With the increasing popularity of São Tomé as a tourist destination, it has become necessary to manage its beaches in a sustainable manner to prevent environmental degradation and loss of customers. The haphazard construction of kiosks, lack of hygiene services, and uncontrolled vehicle access need to be addressed and standards set (FAO, 2022). The beaches identified as priorities for the rehabilitation blue investment project are: Lagoa Azul (Lobata), Namorados (Lobata), Tamarinos (Lobata), Governador (Lobata), Micondó (Cantagalo), Piscina (Caué), Cabana (Caué), Café (Caué), Granja (Caué), and Bone de Joquel (Principe) (see figure below). The two primary constraints hindering tourism development are the absence of hygiene facilities and poor management of municipal solid waste (MSW)45. These problems have been acknowledged by various municipalities along the coast, and as a result, a number of sub-projects have been presented for consideration under the Blue Economy initiative. Municipalities in the districts of Agua Grande, Lobata, Cantagalo, Caué, and Lemba have presented various projects ranging from public hygiene conveniences to district-wide landfills and various recycling initiatives. However, the fragmented nature of these proposals ignores the complexity of landfills, the intricacies of the individual waste streams from collection to the end processors overseas, and the cost and maintenance of each operation46. Fig.6: Mapping of beaches considered in the rehabilitation investment blue project (FAO, 2022). 45 The ambition of PNGIRSU (Plano Nacional de Gestão Integrada de Resíduos Sólidos Urbanos 2018-2023, is to increase waste valorisation by 2023, focusing on the feasibility of waste management infrastructure, such as composting stations and centres for waste recovery. The non-recyclable component, however, needs to be placed in a sanitary landfill or landfills as the case may be. The initial investment costs for a classic sanitary landfill are also high, more than €4.5 million foreseen in the case of the project developed in 2008/2009 by TRAGSA (Spain).Other factors that currently hinder the construction of a centralised sanitary landfill are: - High transport costs for a centralized landfill given the fragility of the transport network and the general difficulties of the municipalities (Câmaras Distritais). - The separation of waste and recovery by composting/recycling reduces to 30% of waste mass targeted for the landfill. - The heavy rainfall in certain months on the island of São Tomé requires special drainage measures, which are more difficult to control in a large sanitary landfill. 46 The opinion among international experts (Sharholy et al. ,2008; Zurbrugg, 2003; Jaramilo, 2002; Medina; 1999), is that there are advantages in the construction of regional/municipal controlled landfills with initial financial and technical support from international donors/institutions. Seven such municipal landfill sites have been identified, table below, and the global base value of investment in infrastructure and complementary activities (excluding the purchase of land) is around €4,400,000 (which represents around €4.5 /inhab year), with the ultimate objective of eliminating open dumps. 44 Fig.7: Some examples of the emblematic beaches and coastal sites 4.3 Phasing The activities for the rehabilitation of the beaches under this investment project must be phased in accordance with a technical group that will oversee implementation, monitoring, and evaluation. This group will include representatives from the Ministry of Environment, Infrastructure, and Tourism, as well as the Ministry of Planning, Finance, and Blue Economy. Additionally, designated representatives from the District Camaras that are concerned with the targeted beaches will participate. Each beach project must be subject to public communication, posted in the Camara de District for free consultation, targeting civil society, economic operators, and professional associations representing construction trades, public works, fishing, tourism, agriculture, transport, and trade in the districts. All projects will be compiled in a public document available at the national level. The organization of works on the sites will follow the following process: Phase 1: Preparatory phase, communication, and contracting • Establish a technical committee for implementing, monitoring, and evaluating worksites • Conduct local and national communication • Develop a project description statement and screening • Prepare bidding documents and supervision fees • Evaluate tenders. 45 Phase 2: Public works • Construct an access road to the car park (last km for car parking access) • Build a 1000 m2 parking area • Delimit the locations on the site of the planned buildings (restaurants, showers, toilets, kiosks, waste collectors, and others). Phase 3: Connections • Connect to electric current • Install water inlet connections Phase 4: Construction • Construct a beach restaurant (container system and wood terrace) • Build hygiene facilities • Construct 5 commercial kiosks • Build a beach service room • Construct a shower and changing room Phase 5: Final equipment and signage • Install bins for sorted waste • Install signage for traffic, environmental protection, good practices, prohibitions, and walking guides for landscape, history, fauna, and flora • Connect photovoltaic panels. 4.4 Investment Costs The equipment provided on each beach is provided as a guide and should be adjusted based on the specific characteristics of each site. Water and electricity connections, along with photovoltaic panel equipment, will ensure the operation of public services, small shops, and catering. The installation of septic tanks will also need to be considered for the treatment of water and liquids to minimize degradation and discharges into the sea. The estimated total investment cost is 6,040,000 euros, as detailed in the table below. 41 As in other countries, the COVID-19 epidemic strongly affected the tourism sector in STP. The number of tourists decreased by 70% in 2020 and revenues generated by the sector fell by 66%. By the middle of that year, 68% of enterprises in the sector were temporarily closed. The tourism inflow started to recover in 2021 (15,700 tourists, a growth of 45% over 2020) and the recovery is picking up pace in 2022 (over 14,000 tourists in January-July). Tourism sector operators point to 2023 as the possible recovery to 2019 levels. The Tourism Authority and operators worked together to adopt Covid-19 protocols and norms, including a Covid-19 safe & clean seal, which was widely adopted. Following the pandemic, and building on its current assets, STP has the potential to position itself as a sustainable and safe tourism destination. 42 Even if on the positive side, recent developments include an expansion in the use of international credit cards and ATMs, greater organization of private sector operators into associations, and the involvement of non-govern- mental organizations in initiatives to support sustainable tourism. 43 Sao Tome and Principe Investment Promotion Strategy 2017-2019, Trade and Investment Promotion Agency (APCI), October 2016. 46 44 Sao Tome and Principe Investment Promotion Strategy 2017-2019, Op. Cit. Tab.14: Detailed composition of estimated cost for beach rehabilitation blue investment project Fig. 7: Photos of some examples of existing and modular containers system 4.5 Social and economic analysis A significant proportion of the national population could potentially benefit from the beach rehabilitation project for leisure and well-being, as it is a common habit for families to visit bathing sites, especially during weekends and public holidays. Tab. 15: Socio economics impacts in Principe and Sao Tome of the Rehabilitation of Beaches 47 The project’s financial and economic analysis is based on the following assumptions: • Discount rate of 13% • Hypothesis 1: Calculation based on an annual increase of 3% in turnover and variable expenses over the depreciation period. • Hypothesis 2: Calculation based on an annual increase of 5% in turnover and variable expenses over the depreciation period. The calculations will only consider public revenues consisting of revenue from services provided on the beaches (parking, toilets, showers and cabins, rental of restaurants and kiosks) and taxes. Table 16 presents the results under these two hypotheses, based on the indicative data provided in the previous tables that detail the composition of income and expenses, as well as the cost of the investment. The financial return of the rehabilitated beaches is higher than the indicators measured here and presented in the table below if we consider that the public revenues measured must be added to the impact on the indirect revenues produced for the benefit of the private sectors. In a conservative estimate, if we consider that 20% of private revenues are due to public investments made on the beaches, we can see that the financial performance of the project is sufficient to recognize its interest. Tab. 16: Estimate of costs and income related to investment for the beach rehabilitation blue project (Euros) 48 Tab. 17: Financial analysis of Beaches rehabilitation project in STP with only public incomes (Cf. Annex). Tab. 18 bis Financial analysis of Beaches rehabilitation project in STP considering additional impact on private indirect incomes (Cf. Annex). 4.6 SWOT analysis47 This paragraph provides a summary of the diagnosis of the current situation, emphasizing the most significant aspects of the environmental and social dimensions, both in terms of current conditions and their alignment with applicable policies and management tools. The results of the diagnosis are organized in the form of a SWOT table for each of the proposed projects. 47 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro 2023. 49 Tab. 19: SWOT Analysis for beaches rehabilitation blue project 50 4.7 Environmental and social impacts48 Overall, the proposed interventions under the three identified projects are not expected to have significant negative environmental and social impacts. However, it is important to conduct environmental impact studies in accordance with National Decree No. 37/1999 to ensure proper management, planning, and implementation of these projects. The priority objective is to avoid and/or minimize any negative social and environmental impacts that may arise from infrastructure rehabilitation and construction, as well as associated activities. Tab. 20: Summary of potential environmental and social impacts and mitigation measures49 48 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro 2023. 49 The characterization of the impacts related to the projects will be based on the Physical, Biotic and Socioeconomic aspects. The characterization of physical impacts is associated with the components of: Geology, Geomorphology, soil, hydrology, landscape and air quality, waste production, impacts on sites of archaeological or cultural interest, biotic impacts are associated with Wildlife and the Flora and finally socio-economic, related to employment, trade and population movements in the community. 51 4.8 Recommendations50 To maintain the natural environment, it is recommended to preserve the existing access points and improve them with clay or stones only where there are level differences due to frequent use. It is important to constantly maintain and clean the borders to prevent overgrowth of vegetation. These access points are often part of specific ecosystems and should be preserved accordingly. Introducing major changes such as building roads or paved pavements would disrupt the natural dynamics of the flora and fauna in the area. Access to the site should be regulated, and private vehicles limited or replaced by collective electric vehicles. Providing free access for private vehicles can lead to the privatization of the land and the removal of trees for private construction or tourist complexes. It is also recommended to: • Create limited and priced parking areas on beaches to indirectly contribute to the creation of attendance gauges. • Prioritize the use of collective and renewable energy vehicles on the sites to allow joint use of pedestrian spaces, benefiting the discovery of landscapes (flora and fauna). • Mark and classify the beaches. • Restore damaged sectors of coastal sand systems through natural reconstruction of dune constructions and planting of auto-clonal species. • Construct stone barriers to protect and control coastal erosion. • Safeguard vulnerable and at-risk areas by setting up appropriate emergency and management plans that take into account the dynamics of coastal areas. • Promote fauna and flora observation activities with specific observation points. • Maintain the state of the beaches close to their natural state. • Establish inspection brigades that include local population members who will act as inspection agents. • Create beach health officers/teams managed by district authorities to keep beaches clean, controlled, and safe. • Provide training and awareness in schools for the protection of beaches and the environment; also develop television and radio awareness programs aimed at the general public. • Establish teams and focal points to monitor and track progress. • Involve and entrust inspection and monitoring responsibilities to the Ministry of Defense and the Port Authority to help care for and preserve the coastal sites. 50 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro, 2023. 52 4.9 Implementation schedule Referring to the activities and phasing described in 4.3, the indicative calendar is as follow: Phase 1: Preparatory phase, communication and contracting • Establishment of a technical committee for the implementation, monitoring and evaluation of worksites • Local (at District level) and national communication • Project Description Statement and screening • Bidding documents and supervision fees • Tenders Phase 2: Public works • Access road to the car park (Last km for car parking access) • Parking 1000 m2 • Delimitation of the locations on the site of the planned buildings (restaurants, showers, toilets, kiosks, waste collectors, others). Phase 3: Connections • Electric current connection • Water inlet connections Phase 4: Construction • Construction of: Beach restaurant (container system and wood terrace), Hygiene facilities, 5 commercial kiosks, Beach service room, Shower and changing room Phase 5: Final equipment and signage • Bins for sorted waste • Signage (traffic, environmental protection, good practices, prohibitions and walking guide landscape, history, fauna, flora) • Connection of photovoltaic panels Tab. 21:: Indicative Calendar for beach’ rehabilitation blue investment project 53 5. Project 3: Blue investment project for the coastal artisanal fleet modernization 5.1 Strategy for coastal artisanal fleet The modernization of coastal artisanal fisheries presents a significant challenge in the blue economy to improve the value chain of these fisheries. This transformation can contribute to reducing informal jobs, regulating fisheries, and improving working conditions and livelihoods for fishing communities, who are significant contributors to the coastal economy (9% of GDP, FAO, 2018; 4,155 Fishermen - DP, 2019; 2,355 women fishmongers - DP, 2014). It is estimated that around 30,000 people directly and indirectly depend on fishing activities, which accounts for 15% of the population51. Moreover, positive impacts are also expected in terms of food security (no export, consumption of 29.3 kg/year/person, 53.3% of animal protein - 17% of total protein, and a fish consumption coverage rate of 99% - FAO, 2019), employment opportunities for young people without qualifications, and women involved in the value chain (product processing and trade). Additionally, the modernization could enhance the safety at sea for fishermen. Given the significant impact of this sector on the population and food security, the investment proposal is given priority. A public support scheme is proposed to encourage private actors to revitalize the fisheries sector and raise the level of organization of these communities. This will bring them into the scope of a formal economy, which can be administered and monitored, capable of mobilizing the necessary financial resources to achieve modernization objectives through a planned double dynamic (public/private). This priority is common to all regions of the country. 51 National production: 45 landing sites / coastal villages (28 in ST and 17 in RAP) with very little basic social infrastructures, new fish markets in some towns and Central fish market at ST. built (AfdB project), but problem of cold chain. 54 Fig. 9: Map of localization site for coastal artisanal fishing boats The investment project aimed at achieving the aforementioned objectives must take the form of a Modernization Plan for the Coastal Artisanal Fishing Fleet (MPCAFF). This plan should be in agreement with the actions of the General Directorate of Fisheries and financial resources should be coordinated based on the national resources available and the resources that can be mobilized through international support52. To ensure the adequacy of the plan’s execution, it will be supervised by the General Directorate of Fisheries in close partnership with the Ministry of Planning, Finance, and the Blue Economy (UIEEA). This will include communication and selection of files, monitoring, and evaluation of the plan’s proper application. Additionally, the plan must be consistent with national objectives for the management of fishery resources and the administration of the profession. Furthermore, the plan must take into account the necessary reinforcements of the capacities of the existing shipyards in the country. 52 Tuna Fishing EU agreement: 8.000 tm/year (840,000 €/year as Public revenue paid by EU for the access payment). 55 5.2 Context of artisanal fisheries sector and fleet In São Tomé e Príncipe, there are currently 2023 canoes made from a single tree trunk, 20% of which are motorized, 129 outrigger canoes called “praos,” made of fiberglass or laminated wood panels, and 85 fiberglass boats built in São Tomé with a standard design of 10m long and 1.5m wide, capable of supporting larger and more powerful engines (Porriños et al., 2021). The majority of the fleet, more than 90%, is made up of canoes, which are less durable and less safe than the other two types of vessels. According to the World Bank (2019), many fishermen are seeking to switch to safer prao-canoes (Serkovic & Million, 2019). Most of the artisanal fishing activities are concentrated on a narrow coastal strip in the shallower waters of STP’s island platforms. This is mainly due to the lack of resources for fishermen to venture further out to sea. However, due to the scarcity of fish resources, they tend to move away from the coast to fish (KII, 2021; Belhabib, 2015; Omali Vida Nón, 2019; Santos et al., 2017). Fig.10: Existing fish-boat, cannot, prao, and fiberglass boat, fisheries areas and % of each category in the national context. Shipyards and boat building If we consider the three main types of boats used by artisanal fishermen in São Tomé e Príncipe (STP) - canoes, outrigger canoes, and fiberglass boats - and knowing that more than 90% are canoes, with 6% being outrigger canoes and the rest being fiberglass boats, the data related to the construction techniques and capabilities of these fishing units on site in STP are as follows: • Canoes are made locally, mainly from acacia and “oca” trunks. They are priced between 7,000 STN and 20,000 STN (i.e., between 300 and 850 USD). From the felling of the tree to the end of the canoe, it takes several weeks, a job that is normally carried out by a single specialist based in 56 the fishing community. • Outrigger canoes or PRAOS are built with imported materials that can be found on the island, such as sheets of plywood, wooden planks, and various chemicals like glue, thinner, bitumen, or paint. They are sold for approximately 25,000 STN each (i.e., 1,055 USD), and the operation takes about 1-3 work weeks for two people. The PRAO canoe is characterized by lower fuel consumption levels and increased safety thanks to better boat stability. • Fiberglass boats are built with materials that are usually imported from Portugal, such as fiberglass rollers, resins, and so on. Depending on the size of the boat, they are sold for between STN 55,000 and 210,000 (i.e., between USD 2,500 and 9,000). The modernization plan for the coastal artisanal fishing fleet (MPCAFF) Currently, the government provides support to a local workshop for the construction of proa canoes and fiberglass boats. The government subsidizes up to 25% of the total cost and offers favorable conditions for fishermen to reimburse the remaining cost. As of 2021, six fiberglass vessels and ten praos have been constructed under these conditions (Ref. KII Former Fishery Officer, 2022). However, manufacturers of praos and fiberglass boats have raised concerns regarding the availability of materials in the market to build these boats. They are also facing payment issues due to reduced catches, which have led to lower revenues, and reduced orders caused by the COVID-19 pandemic (KII Boat Manufacturing, 2021). To grow their business, boat manufacturers typically provide repair services for boats. They see opportunities to improve their technical know-how and increase production by having better shipyards and locally sourced materials. The Plan for the Modernization of the small-scale coastal fishing fleet also includes the modernization and upgrading of shipyards in accordance with environmental and social protection standards for workers and the direct environment. These shipyards will serve as a support base for the implementation of the PMCAFF and as a maintenance, repair, and service base for other future fleets of São Tomé e Príncipe, including those for tourism, ecotourism, transport, and service units for the protection and conservation of marine ecosystems. Similar to fishing investments for new units built, the state will use public funds to support the modernization and upgrading of these shipyards within the framework of the PMCAFF. Territorial balance will be a priority, with consideration given to candidates for the standardization of existing construction sites for equal services on the islands. 57 Fig.11: Public and private interest in committing to the MPCAFF Public interest Private Interest • Professionalize artisanal fisheries • Reduce the informal sector • Improve fishing performance • Regulate fishing capacity • Securing your activity at sea • Improve animal protein supply • Increase and diversify its capture and income opportunities • Facilitate the monitoring / • Benefit from public support administration of fisheries (catch and trade) • Contribute to the development of the value chain • Strengthen the level of equipment for fisheries and coastal communities • Benefit from innovation / training • Develop jobs in service professions • Benefit from a professional environment improved by fisheries services • Reduce environmental risks • Leaving an informal activity • Contribute positively to the carbon • Increase community capacity and footprint employment opportunities • Develop technical skills useful to other nautical sectors The reference situation highlights the constraints that the renewal plan needs to consider, such as: • Enhancing the technical performance of new units by expanding prospecting areas and reducing travel time on the fishing site or diversifying catches depending on the season, along with better securing of boats. • Increasing the number of days at sea through the development of coastal resources and rationalization of fisheries, including control of catches, gear, sizes, non-professional and/or prohibited activities. • Improving the value of products landed by fishermen by enhancing the quality and conservation of products. • Promoting products in new niches linked to tourism or processing and reducing manufacturing costs through economies of scale. Considering these constraints and the stakes for the Blue Economy associated with the modernization of the coastal fishing fleet, the MPCAFF must align with the logic of the Management Plans for fishing capacities in STP and the broader objective of improving value chains and rationalizing fishery resources. Along with these objectives, the MPCAFF should also aim to reduce the environmental 58 impacts of shipyards and manufacturing processes of fishing units, as well as adjusting catches and contributing to the carbon balance by reducing traction costs and impacts on forest resources. Fig.12: Public and Private investment The underlying principles of the MPCAFF justify its inclusion within the National Investment Plan for the Blue Economy, given its potential for sustainability across the three dimensions of the environment, society, and the economy. The variables that we will aim to balance under the MPCAFF are outlined in the following tables. 59 Tab.22: Variable to be considered in the Modernization Plan for the Coastal Artisanal Fishing Fleet Tab. 23: The expectations of the Modernization Plan for the Coastal Artisanal Fishing Fleet in relation to the sustainability of fisheries 60 5.3 Phasing The investment project linked to the MPCAFF is expected to be phased as follows: • Gradually replace non-motorized individual fishing dugout canoe units (approximately 1600 units) with a ban on new construction in this category. Incentives will be provided to group fishermen together by offering a rate bonus or direct public aid. Additionally, fishermen will be encouraged to acquire a new proa motorized unit or larger boat from the controlled second-hand market. • Encourage owners of motorized monoxyle units to upgrade to a new proa unit (about 400 units) by offering bonuses for the exit of old monoxyle units. Fishermen will also be incentivized to bring together several boats (with an incentive scale of aid or increased rate) and comply with administrative specifications such as obtaining construction authorization, fishing permit, and canoe registration. • Encourage other coastal artisanal fishing units to modernize by offering a bonus for the exit of old units that can be resold in the second-hand market. Fishermen will also be incentivized to bring together several boats (with an incentive scale of aid or increased rate) and comply with administrative specifications such as obtaining construction authorization, fishing permit, and canoe registration. 5.4 Investment Costs Based on the expectations of the MPCAFF, we can formulate the following hypotheses for our calculations: 1. The support provided for the capacity building of shipyards in STP, combined with the MPCAFF’s commitment to order from certified shipyards, is expected to reduce manufacturing costs of new artisanal fishing units by 15 to 20% compared to previous costs. Profits from the sites could help cover investments made for site adaptation and standardization. 2. When considering the accumulation of direct aid for exiting a fishing unit (whether destroyed or resold), community or collective investment bonuses, and assistance with specification applications for fisheries monitoring and management, combined public aid could be between 32% and 48% of the acquisition cost of the fishing units. This excludes reimbursement interest subsidies, which are assumed to be at 0 in the optimal hypothesis presented in the table below. 3. By substituting an old fishing unit with a more efficient and multi-active unit, it is estimated that the increase in yield could lead to a benefit of between 15% and 30% at the end of the annual fishing activity, compared to the old unit. This increase is due to increased catch volume from increased fishing time, more sea trips, and greater conservation capacity, as well as better valuation of catches through improved quality, better mobility in relation to markets, and better service facilities for unloading and transporting products to consumers. These factors can also improve demand for processing high-quality products, further enhancing the increase in yield.” 61 Tab. 24: Updated construction costs of coastal artisanal fishing units (Euros). Tab. 25: Pricing of aid and subsidies allocated under the MPCAFF according to the type of boat proposed (In USD on the September 2022 database – Source: Sao Tomé shipyard owner) MPCAFF Assumptions The MPCAFF is focused on capacity building and upgrading (both environmentally and socially) of a boatyard, at least for the program launch, as part of a modernization program that must be implemented over two 5-year periods, with additional 5-year cycles likely to follow. Other shipyards will be able to contribute to the modernization program under this initiative, with the opportunity to benefit from capacity building based on the same investment model. The aim is to distribute technical capacities for construction, repair, and maintenance of the small-scale fleet, and eventually, to expand to tourism and maritime services fleets throughout Sao Tomé and the island of Principe. To bring this first project up to standard, specific investments are required as detailed below. The project site will be established on land already owned by the investor and located near the coast, although not necessarily on the waterfront, and will include a launching ramp. 62 Tab. 26: Projected investment costs for a shipyard in Sao Tome brought up to environmental and professional standards (social and protection) (Euros). Tab. 27: NPV and IRR calculation for Shipyard investment project in Sao Tome For individual boat purchases, given all the assumptions, bonuses, and potential involvement of fishermen’s associations as associated investors, it is currently difficult to provide an indicative analysis of individual profitability units. However, some positive indicators to consider include the proposed aid grids, the monthly repayment amounts applicable based on project configuration (which can be relatively low per person for certain projects), and previous analyses conducted on the profitability of fishing units proposed in the PMCAFF. These analyses were developed in the FAO TCP report “Analysis of the Seafood Sector in São Tomé e Príncipe” (FAO Rome 2019) by Alioune Sy and Olivio Soares. Tab. 28: Summary of the monthly payments due according to the acquisition project with reference to the previous table (Euros/month on 60 months). 63 Tab. 29: Summary of the monthly payments due according to the acquisition project with reference to the previous table (Euros/month on 60 months). Tab.30: ter: Monthly payments due according to the acquisition project (Types 7,7 x 2,1) with reference to the previous tables (Euros/month on 60 months). The shipyard on the island of Sao Tome, which is participating in the MPCAFF and has planned additional investments, is expected to produce a total of 60 boats per year according to appropriate standards and the hull configurations specified in the previous table. Other shipyards may also contribute to the nautical technical park in other regions of the country, including the island of Principe or another location on the southern part of the island of Sao Tome to ensure site availability for repairs. To meet the production rate of fishing units in line with the MPCAFF, 14 employees will be required 64 instead of the current workforce, which is limited to 8 employees. Assuming only one site is authorized to support the MPCAFF, the project will aim to construct 300 coastal artisanal fishing units over the next 5 years, targeting fishermen who register their approach to responsible investments, with specifications for good management of fishery resources. The objective is also to reduce the number of single members monoxyle units and encourage units that group at least two fishermen. In this context, the project aims to retire a minimum of 120 single-person fishing units. The following are the indicators for the MPCAFF: • Within the next 5 years from the launch of the MPCAFF, 300 new fishing units should become operational (with adjustments made at the end of year n using a sliding system n+5 over a period of at least 10 years). • At least 120 fishing units should exit from activity, with a maximum of 150 units (with adjustments made at the end of year n using a sliding system n+5 over a period of at least 10 years). • 100% of potential buyers for new boats must adhere to the conditions specified for responsible and sustainable fishing. • The distribution of the units acquired must be within the indicative ranges specified for the first year of implementation of the MPCAFF (with adjustments made at the end of year n using a rolling system n+5 over a period of at least 10 years): Maximum of 50 units of type 7.4 x 2.1 Semiduplo fundo cheio de polyretano Malas na proa e popa. Maximum of 100 units of type 7.1 x 1.8 Semiduplo fundo cheio de polyretano Malas na proa e popa. Maximum of 150 units of Tamanho type 6.6 x 1.3. • Depending on the annual budgetary commitments and the defined quotas, the planning for years n+1 to n+5 will be adjusted, and additional resources will be sought for year n+5 (in reality n+6 from the implementation of the MPCAFF and up to n+10 year by year). Based on the proposed premium scales in the above table, the MPCAFF must have a budget provision estimated in the following table. Fig.13: MPCAFF’s indicators in term of fishing capacity (+ / - boats) Max. 300 new Min. 120 boats / 5 years Max. 150 • 50 (7,1x1,8) • 100 (7,4x2,1) • 150 (6,6x1,3) boats / 5 years 65 Fig. 14: MPCAFF Provisional Budget 1,653.500 MPCAFF provisional budget Euros/5 years 618,000 € Total subsidies and grants 105,000 € MPCAFF provisional budget For contribution to the Fisheries 1,035.000 € 310,000 € Resources Management Plan Loans 105,000 € MPCAFF provisional budget 167,000 € For Community investment project label The economic benefits of renewing coastal artisanal fishing units can be analyzed at various levels. There are several benefits that can be expected, directly linked to the MPCAFF, that concern the different stakeholders involved in the plan as economic actors in the value chain and/or investors. These benefits include: • General State Subsidy: automatically allocated for each new boat under the MPCAFF. • Contribution to the Fisheries Resources Management Plan: Participation of new boat owners in the specifications defined in relation to the fisheries resources management plan which will be developed by the General Directorate of Fisheries and Aquaculture (for Principe and for Sao Tomé). • Fleet boat exit: One for one, one for two, or one for three, at a maximum for large units purchased. • Community investment project label: for new owners who are members of an association of fishermen and actively engage in community-based activities that support the Blue Economy (environmental protection, sustainability of fisheries, contribution to the development of ecotourism). • The total amount of subsidies is optimal (618,000 Euros). • Advances on loans granted and repayable are estimated and likely to vary depending on the achievement of quotas by category of vessels built. 5.5 Social and economic analysis The economic aspects of renovating coastal artisanal fishing units can be evaluated at various levels. There are several benefits that can be directly linked to the Marine and Coastal Protected Area Financing Facility (MPCAFF) and that affect the different stakeholders involved in the project as either economic actors in the value chain or investors. Here are the main benefits that can be taken into account when 66 making economic calculations, depending on the perspective of the user: At the level of the shipyard brought into compliance with the standards of manufacture of certified serial copies in connection with the Fleet Modernization Plan, several advantages are to be expected: • Access to an investment budget adapted to its involvement in the plan to modernize the coastal artisanal fishing fleet. • Acquisition of innovative and more economical manufacturing processes in terms of raw materials. • Economy of scale on imported inputs (adjustment of taxes on incoming products in the national modernization plan). • Economies of scale on mass production. • Orders secured as part of a five-year plan (possibly renewed). • Ease of recruitment due to the guaranteed order book. At the level of the purchaser of the new fishing unit, the following incentives can be noted: • Lower acquisition costs through positive impacts on shipyard cost. • Accumulation of advantages of aid for the acquisition of a new unit (interest subsidy, exit bonus from an old unit, direct public aid in the event of collective investment, etc. other conditions defined in the modernization plan of the small-scale coastal fleet). • Expectation of increased performance of the new unit due to the expansion of its prospecting radius, its greater security at sea and therefore increase in the number of potential outing days, reduction of travel time to reach fishing site, lengthening of effective fishing times, capacity to embark several types of gear on board (diversification by trip made possible), better conservation of catches and therefore better valuation of landed products. • Mutualization of investment costs between several fishermen possibly. • Ease of maintenance of the fishing unit due to the long-term presence of shipyards. • Better inclusion in the professional framework and improved dialogue with the fisheries administration to guide the public investments needed to support fisheries. • Increase in opportunities for the diversification of activities and markets by improving the safety conditions of vessels at sea and the quality of products landed. • Planned phasing of government guaranteed acquisition loans. At the level of the fishing community, we can note: • Development of landing sites and parking of boats. • Improved relations with the fisheries administration and markets. • Education in the pooling of investments and risks. • Reduction of material and human losses (maritime accidents). 67 • Employment and training opportunities. • Strengthening of links with banking services and central regulatory institutions. • Enhancement and securing of product processing sectors through better direct supply within the communities participating in the fishing capacity modernization plan. At the level of the State and its administrations, we will mainly note: • Ease of monitoring aid. • Ease of catch regulation through the specifications imposed on the beneficiary of public aid. • Reduction of costs related to accidents at sea and loss of equipment. • Better managed monitoring of fishing capacities. • Sustainability of public investments and better targeting of priority sites according to the level of community involvement in the modernization plan. • Ease in the mobilization of financial resources in connection with the five-year planning of the MPCAFF. • Implementation of international conventions facilitated. • Adjustment of professional training to new equipment. • Increased employment and contribution of fisheries to GDP. 68 5.6 SWOT analysis53 Tab. 31: SWOT Analysis for MPCAFF 53 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro 2023. 69 5.7 Environmental and social impacts54 Tab. 28: Summary of potential environmental and social impacts and mitigation measures55 5.8 Recommendations56 From an environmental and social perspective, the sustainability of marine ecosystems, fishery resources, seafarer safety, and the health of products intended for human consumption are crucial factors that determine the best fishing and operating methods. Achieving these improvements requires investment in the transformation of fishing boats at the first stage of the value chain. In the context of open fisheries, which still characterizes small-scale fisheries with low levels of investment, and due to the increasing migration of rural populations towards the coastal zone that offers more opportunities for young people with improved equipment, it is essential to raise the capacity level of first-time entrants. This will allow them to be managed within the framework of regulated and monitored fisheries. This requires more secure equipment for ships that can be registered and easily traced in their activities along the coasts and in the value chain to ensure traceability. It also involves reducing the individual nature of activities to put an end to illicit, unmanaged, and unregulated practices. 54 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro 2023. 55 The characterization of the impacts related to the projects will be based on the Physical, Biotic and Socioeconomic aspects. The characterization of physical impacts is associated with the components of: Geology, Geomorphology, soil, hydrology, landscape and air quality, waste production, impacts on sites of archaeological or cultural interest, biotic impacts are associated with Wildlife and the Flora and finally socio-economic, related to employment, trade and population movements in the community. 70 56 Antónia Alariza Mendes Júnior Bento Luiz, Op. Cit. Janeiro, 2023. The modernization of the fleet must be done while regulating fishing capacities (fishing effort directed towards the most coastal species). Therefore, given the vulnerability of our islands and the fragility of our coastal areas, the most environmentally viable proposal would be to always combine artisanal fishing with semi-industrial fishing, without completely replacing the techniques used in artisanal fishing, as many of them are sustainable and use resources rationally. For the sustainability of the value chain, existing resources, the economy of the actors involved (palaces, families), and the environment must be taken into account. It is recommended to prioritize fleet modernization in order to increase operational capability. This involves improving equipment to allow for greater autonomy and mobility at farther distances from the coast. In the case of Sao Tome, this could enable more efficient fishing for pelagic resources (small and large) that are currently less vulnerable to overexploitation, while still benefiting coastal demersal resources. The project will focus on the following objectives: • Rationalizing marketing and distribution channels (including traceability, improved quality and quantity, and grouping of fishing actors at better-equipped sites) • Providing financial and technical resources to promote co-management at national, local, public, and private levels • Establishing embarkation points and fisheries monitoring and management offices at the district level • Developing new boat models for standardized manufacturing to reduce costs and improve safety for fishermen and the environment • Encouraging professional cooperation among local ports (in connection with cabotage ports) • Improving access to ship repair equipment and workshops To accomplish these goals, the General Directorate of Fisheries must create a Fisheries Master Plan to oversee the development and modernization of the sector and make fishing activities in the country viable. Improving transportation, storage, and marketing conditions is also crucial for the success of the other two priority projects (cabotage and tourism market development). The modernization component must enable small-scale fishing to enter into a responsible and sustainable economic cycle, addressing issues related to food security and the environment as included in the SDGs, by improving incomes and livelihoods. 5.9 Implementation schedule Referring to the MPCAFF as planned, the indicative calendar is as follow: Phase 1: Preparatory phase, mobilization of financial resources, communication and definition of priority • Establishment of a technical committee for the definition, implementation, monitoring and assessment of MPCAFF. 71 • National and local communication with DG Fisheries and Aquaculture, the Districts and fisheries associations. • Planning of annual quotas for new boat and priorities Phase 2: Development of funding applications within the fishing communities and conduct of the analysis process • Support for the preparation of application files with support from the District Chambers • Definition of the application selection process Phase 3: Construction of fishing units (quota year 1) Phase 4: Delivery of units built and implementation of reimbursement procedures Phase 5: Continuation of the process year 2 and cycle 3, 4 and year 5 with remobilization of financial resources and return to Phase 1 for a 10-year cycle • Assessment of process implemented year 1 • Planning of new quota for year 6 (5+1) • Back to implementation of cycle (Phase 1 to 5) Tab. 29: Indicative calendar for MPCAFF project 72 6. Conclusion The three priority projects presented by the government of STP for the Blue Economy sectors - tourism, fishing, port infrastructure, and transport - are seen as potential areas of investment that could lead to significant economic growth at both local and national levels. They are also considered to be avenues for establishing new forms of partnerships between public and private entities that prioritize positive environmental and social contributions, such as the fight against poverty, resilience to climate change, and food security. The three projects are envisioned to be interconnected, with a focus on value chain transformation, productive system changes, and public regulation adaptations to facilitate their development. Contextual analysis, environmental impact assessments, and social impact analysis of these projects demonstrate the benefits of each, contributing to their adoption and implementation. These projects have already attracted the attention of international partners. The upcoming investment forum during the 2nd Edition of the Blue Economy Week in STP will be a priority venue for the presentation and analysis of these projects, which should facilitate the mobilization of resources necessary for their implementation in the preliminary draft of the Blue Economy National Investment Plan. According to the regulatory framework of the transition set forth in the ENTEA Law, the three projects discussed in this note should capture the attention of financial and technical partners, thereby marking major stages in the expected blue transformations, including the system of production, regulation, and recovery. These projects have already garnered the interest of international partners such as FAO, EU, World Bank, and African Development Bank, in connection with actions and support programs already developed in the country, aligned with these three themes such as ACPFISH4, WACA, PRIASA, and FAO GCF Readiness. The presentation and analysis of these projects are prioritized for the upcoming investment forum planned during the 2nd Edition of the Blue Economy Week in STP, which is expected to mobilize the necessary resources for their implementation as part of the preliminary draft of the Blue Economy National Investment Plan that will be presented during the same forum. 73 Bibliography • AFDB., Sao Tome & Principe - Projet de réhabilitation des infrastructures d’appui à la sécurité alimen- taire (PRIASA)., https://projectsportal.afdb.org/dataportal/VProject/show/P-ST-AA0-004#:~:text=- The%20Infrastructure%20Rehabilitation%20for%20Food%20Security%20Support%20Project,by%20 targeting%20specifically%20food%20security%20through%20infrastructure%20development • AfDB. 2018 African Economic Outlook 2018, (African Development Bank)., https://www.afdb.org/en/ documents/document/african-economic-outlook-aoe-2018-99877 • Banco Central STP., https://bcstp.st • Delegation of European Union in Gabon to Sao Tome-and-Principe and ECCAS., https://www.eeas. europa.eu/gabon/european-union-and-sao-tome-and-principe_en?s=99 • Delegação da Comissão Europeia no Gabão “Elaboração de um Plano de Cabotagem para São Tomé e Príncipe” • Dimmock, Kay; Cummins, Terry; Musa, Ghazali (2013). “Chapter 10: The business of Scuba diving”. 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Annexes 77 78 79 80 81 82 83 84 85 86