Press release number: IFAD 33/01

Rome, 9 November 2001 - The International Fund for Agricultural Development (IFAD) and the Democratic Republic of Sao Tome and Principe today signed a loan agreement on very favourable terms for financing the Participatory Smallholder Agriculture and Artisanal Fisheries Programme. This IFAD-initiated programme will have a total cost of USD 13.45 million. The Agreement was signed at the Fund's headquarters in Rome by the President of IFAD, Mr. Lennart Båge, and by the Minister of Economy of the Democratic Republic of Sao Tome and Principe, His Excellency Julio Lopez Lima da Silva.

The IFAD loan is in the amount of USD 9.97 million and represents approximately 74% of the total cost of the Programme. The contribution to be made by the Government of the Democratic Republic of Sao Tome and Principe will amount to USD 1.18 million and the beneficiaries of the project will provide the equivalent of USD 840,000. The French Development Agency and the French Ministry for Foreign Affairs will cofinance the project in the amount of USD 1.45 million.

The Government of the Democratic Republic of Sao Tome e Principe, within the framework of its National Agrarian Reform Programme which was implemented in 1991, has already adopted a National Smallholders Support Programme (PNAPAF) whose financing, spread over a period of seven years beginning with 1993, has been jointly provided by IFAD, the French Development Agency and the French Ministry for Foreign Affairs. The PNAPAF has helped the new class of small farmers, made up of approximately 8,000 smallholders - former cacao plantation workers - by providing the supply of inputs, research and extension services, rural microfinancing, the establishment of individual and social infrastructures and support to associations. In May 1999, the newly-elected Government formulated a medium-term national strategy for combating poverty based upon four principal foundations: a) financial stability and the restoration of a macroeconomic equilibrium; b) promoting the private sector and diversification of production; c) more effective social policies; d) reforming public institutions and reinforcing their capabilities.

IFAD’s strategy, based upon the principle of partnership with poor rural populations, is completely in keeping with this perspective. In the short term, the primary sector, comprising agriculture, livestock breeding and fishing, will be the motor for growth and creation of employment. The main objective of the Participatory Smallholder Agriculture and Artisanal Fisheries Programme will be the diversification of agricultural production (the cacao production sector alone represents 95% of the archipelago's exports today), the development of infrastructures for improving roads and farmers' housing, family livestock breeding activities centered upon small animals, pigs and poultry and support for small-scale fishing in order to increase the domestic market's food supply.

The Programme will benefit 8,000 families that were given the status of small farmers through the land privatisation programme in 1993: thirty per cent of these are women. It will also be applied to 3,000 small-scale fishing families, including 2,200 fishers and 3,000 fish vendors (palayes). It is estimated that the Programme's target group, whose annual per capita income is between USD 162 and USD 200, will amount to 58,000 rural people, or 41% of the Sao Tome population.

To date, IFAD has provided five loans on very favourable terms to the Democratic Republic of Sao Tome and Principe, representing a total investment of 14.1 million Special Drawing Rights, or the equivalent of USD 17.68 million, as well as a grant of USD 30,000 within the framework of the Extended IFAD/NGO Cooperation Programme in the

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IFAD is a specialised agency of the United Nations with the specific mandate of combating hunger and poverty in the most disadvantaged regions of the world. Since 1978 IFAD has financed 584 projects in 114 recipient countries and in the West Bank and Gaza for a total commitment of approximately USD 7.2 billion in loans and grants. Through these projects, about 250 million rural people have had a chance to move out of poverty. IFAD makes the greater part of its resources available to low-income countries on very favourable terms, with up to 40 years for repayment and including a grace period of up to ten years and a service charge of 0.75% per year.