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2013 Investment Climate Statement - Equatorial Guinea


2013 Investment Climate Statement
Bureau of Economic and Business Affairs
April 2013
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Openness to, and Restrictions Upon, Foreign Investment

The Government of the Republic of Equatorial Guinea is actively soliciting foreign investment, particularly from U.S. firms. The GREG is particularly interested in investment in agriculture and other industries that will help it diversify from the hydrocarbons sector, on which the economy currently relies. Most investment contracts are negotiated individually with the relevant ministry of the government. The government has recently proposed a national content law that would require a certain percentage of the workforce to be Equatoguinean. That law is still in the draft stage. In some sectors, investments must be part of public-private partnerships with a government entity.

The judicial system is nominally independent, but in reality is heavily influenced by the executive branch. The government does not consistently or reliably enforce judicial decisions.

Equatorial Guinea does not have a single agency that serves as a hub for foreign investors. Investors must work with the relevant ministry to negotiate a contract. Larger deals may rise to the Presidential level. U.S. investors may reach out to the Equatoguinean Embassy in the United States for guidance and connection to the appropriate ministry.

Clearing imported goods and supplies can be a slow and onerous process due to bureaucratic requirements.


Economic Indices

Measure

Year

Index or Rank

Transparency International Corruption Index

2012

Rank: 163

Score: 20/100

Heritage Foundation’s Economic Freedom index

2013

Rank: 170

Score: 42.3/100

World Bank’s Doing Business Report

2013

Rank: 162


Conversion and Transfer Policies

Local currency is not widely available outside of the Central African Franc zone, but can be relatively easily obtained in country. Equatorial Guinea is an almost entirely cash economy, though credit cards are slowly growing in usage.


Expropriation and Compensation

The government does not have a record of nationalization or expropriation.


Dispute Settlement

There are no consistent mechanisms for investment dispute resolution. Generally disputes are handled in direct communication with the relevant government Ministry. The government is frequently very slow to respond. Decisions often have to be made at the Ministerial or Presidential level.

Equatorial Guinea (EG) has favorable investment laws on paper. Disputes can be taken to judicial courts for resolution, but outcomes and enforcement are inconsistent.

Recent investment disputes have centered on non-payment of investors or contractors by the government, or state-owned enterprises. There are few established mechanisms to compel the government to pay investors, and the Embassy has limited capacity to intervene.

Equatorial Guinea is not a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention - also known as the Washington Convention) or the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.


Performance Requirements and Incentives

U.S. citizens do not require visas to enter Equatorial Guinea. However, it can be very difficult to obtain a visa for citizens of most other countries. Residency permits and work permits are often good for just six months or one year, and are difficult to renew. Work permits are also difficult to obtain.


Right to Private Ownership and Establishment

Foreign investors are not allowed to be full owners of local companies, but can be minority partners with the government.


Protection of Property Rights

Foreign investors are not permitted to own land or property, but can lease it from the government or others.


Transparency of the Regulatory System

Labor laws are published and are publicly available. Regulations are not consistently applied. Foreign companies are expected to follow every detail of the labor law or face penalties. Enforcement of the labor law on national companies is far less strict.

Bureaucratic procedures are neither streamlined nor transparent, and can be extremely slow for those without the proper connections.

Proposed laws and regulations are not published in draft form for public comment, but are sometimes informally shared with representatives of specific industries for comment.


Efficient Capital Markets and Portfolio Investment

The small but growing banking sector can provide some financing to businesses. Capital markets are virtually non-existent.


Competition from State-Owned Enterprises (SOEs)

There are currently a few state-owned enterprises in the oil and telecommunications sectors. .


Corporate Social Responsibility (CSR)

Many U.S. firms operating in Equatorial Guinea have excellent corporate social responsibility (CSR) programs. The government has expressed appreciation for these efforts and recognized the positive role of U.S. firms. There are not any CSR requirements to operate in Equatorial Guinea, and most firms from other countries do not have substantial CSR programs.

There are no independent NGOs operating in the country that promote or monitor CSR.


Political Violence

There have not been recent instances of political violence.


Corruption

Equatorial Guinea has strict laws against corruption, but they are not enforced. Corruption is very common in EG.

No international nongovernmental "watchdog" organization is operating in the country.


Bilateral Investment Agreements

Equatorial Guinea has signed Bilateral Investment Agreements with France, South Africa, and Spain.


OPIC and Other Investment Insurance Programs

There are no OPIC programs in Equatorial Guinea.


Labor

Local labor is available. The local supply of skilled labor is limited.

Compared to the United States, labor laws in EG are generally very favorable toward the employee.

Local government enforcement of labor laws is mostly focused on preventing companies from employing undocumented immigrants.


Foreign Trade Zones/Free Ports

None.


Foreign Direct Investment and Foreign Portfolio Investment Statistics

The World Bank estimated the net inflow of Foreign Direct Investment into Equatorial Guinea in 2011 to be US$737.1 million.



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