This paper discusses the following selected issues related to the São Tomé and Príncipe's economy: tourism competitiveness in São Tomé and Príncipe-challenges and strategy, macro-financial linkages, private sector development, and challenges of small financial systems. São Tomé and Príncipe has experienced significantly faster growth in tourism than most tourism-dependent small states (TDSS). An application of a tourism gravity model shows that São Tomé and Príncipe is competitive in compared to TDSS. However, tourism development in this country faces broad challenges both on the micro and micro level. São Tomé and Príncipe can do well with venture capital-type financing for micro, small-, and medium-sized enterprises.