The Republic of Equatorial Guinea is endowed with oil and gas resources that attracted billions of dollars in direct U.S. investment instrumental to extracting those resources. Discovery of oil in the 1990s resulted in rapid economic growth by the late 2000s. According to certain businesses, however, corruption, perceptions of a biased judiciary and a burdensome, inefficient bureaucracy undermine the general investment climate in the country. Growth has slowed as several operational oil fields have matured and are now in decline. International watchdog organizations give Equatorial Guinea one of the world’s lowest rankings in various global indices, including those for corruption, transparency, and ease of doing business. Companies have reported that these ratings underscore the challenging and opaque environment in which both local and foreign businesses must operate. The government of the Republic of Equatorial Guinea is seeking investment in several sectors: agribusiness; fishing; energy and mining; petrochemicals, plastics and composites; travel and tourism; and finance. Most of these sectors are undeveloped. The Equatoguinean domestic market is small, with an estimated population of one million, although the country is a member of the Central African Monetary and Economic Union (CEMAC) sub-region, comprising more than 50 million people. The zone has a central bank and a common currency – the CFA franc, which is pegged to the euro. Equatorial Guinea graduated from “Least Developed Country” (LCD) status in 2017 and recently reactivated its efforts to accede to the World Trade Organization. Equatorial Guinea became a full member of Organization of the Petroleum Exporting Countries (OPEC) in 2017 and is a member of the Gas Exporting Countries Forum (GECF).
The Government of the Republic of Equatorial Guinea has worked with international partners, including the World Bank (WB) and the International Monetary Fund (IMF), since March 2014 to analyze ways to improve the business climate. The government implemented some recommendations, launched a one-stop shop for investors and entrepreneurs in January 2019 and instituted certain tax exemptions and other incentives to attract investment.
Equatorial Guinea has made significant advances on the country’s Horizon 2020 social development plan, specifically in construction of infrastructure, electrification, and access to water, healthcare, and education. Equatorial Guinea expresses pride in having some of the region’s best roads and other essential infrastructure, including development of its ports and pending completion of a new airport terminal. After oil prices started dropping in 2014, the government began extending timelines for completing infrastructure projects and put many on hold as the country slumped into a recession that continued through 2019. The steep drop in oil prices in early 2020 combined with the coronavirus pandemic is expected to shrink the economy by nearly 9 percent. Investors have reported that past commercial disputes have involved delayed payment, or non-payment, by the Government of the Republic of Equatorial Guinea to foreign firms for delivered goods and services; and that certain companies exited the country with millions in unpaid bills. Some claim that much work remains, especially on diversifying the economy and improving healthcare and education.
Equatorial Guinea does not require visas for U.S. citizens. Visas may be difficult to obtain for third-country nationals, although the government created new visa categories in 2019 in an effort to speed the process. Residency and work permits can be similarly difficult to obtain or renew. In March 2018, to ease the conditions of entry and residence in the country, the government reduced the cost of permits by half. Residency and work permits were not issued regularly between 2017 and 2019, requiring expatriates to leave the country every 90 days.
Despite various challenges, U.S. businesses have mainly had success in the hydrocarbons sector. Some U.S. businesses have profited in other sectors such as technology and computer services. Various international companies continued to enter the market in 2019 and 2020 in response to new licensing rounds in the hydrocarbons and mining sectors. U.S. businesses may invest in new sectors such as telecommunications, infrastructure, agriculture, mining, and transportation.
|TI Corruption Perceptions Index||2019||173 of 198||http://www.transparency.org/
|World Bank’s Doing Business Report||2020||178 of 190||https://www.doingbusiness.org/en/data/
|Global Innovation Index||2019||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2018||$908||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||$6,650||http://data.worldbank.org/
1. Openness To, and Restrictions Upon, Foreign Investment
The Government of the Republic of Equatorial Guinea is actively soliciting foreign investments. The government announced in August 2018 that 2019 would be the “Year of Energy;” with new licensing rounds for hydrocarbons fields and various events to encourage investment. This has continued in the 2020 “Year of Investment,” focusing on hydrocarbons, mining exploration, and petrochemicals. In 2017, the Government started the donor facilitation initiative with the World Bank, as part of a strategy towards membership in the World Trade Organization. The government also passed a law to establish a “one-stop shop” for investors and simplify the process to register a business, which launched in Malabo in January 2019. The government of the Republic of Equatorial Guinea equipped facilities for processing applications and has trained staff. The second office was expected to open in Bata in 2020.
Statutorily, the Minister of Economy, Finance, and Planning approves investment permits. A new state entity, Holdings Equatorial Guinea 2020, was created to help guide diversification efforts. This entity was expected to serve as a hub for foreign investors. For now, however, investors still work with the relevant government ministries to negotiate contracts.
The government, including at the highest levels, has regular meetings and conferences with business leaders and investors, though we are unaware of any formal business roundtable. For example, in November 2018 the World Bank and the Singapore Cooperation Programs led a conference in Equatorial Guinea on improving the business climate.
COVID-19 has slowed global trade, but Equatorial Guinea is not relenting its drive for investment and downstream diversification, said the country’s Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima. Equatorial Guinea’s Year of Investment 2020 campaign continues to move ahead with multiple deals signed in the first half of 2020. In response to the COVID-19 pandemic and its effects on oil prices and African economies, the Minister of Mines and Hydrocarbons signed a Ministerial Order granting oil and gas companies a two-year extension on their exploration programs. The Ministry of Mines and Hydrocarbons (MMH) will also ensure flexibility on the work programs of producing companies to ensure growth and stability in the market. The measure reflects broader efforts to drive global investment into Equatorial Guinea in line with its 2020 Year of Investment campaign, which still includes plans to host the Africa Oil & Investment Forum & Exhibition in Malabo from November 25-26, 2020. The extension of time and resources may particularly aid U.S. companies, which represent the majority of investment in Equatorial Guinea’s energy sector and are currently in the early stages of exploration and seismic interpretation of several new offshore blocks. The Year of Investment, planned to last throughout 2020 and include several in-country conferences and a global investment roadshow, is adapting to the new restrictions under COVID-19. Webinars and video conferencing are just one way technology is keeping the country connected with investors. The Africa Oil & Investment Forum aims to attract regional and international investors to Malabo, as the country continues to engage at the regional and international level. Investors work with the relevant government ministries to negotiate contracts.
The government also took several other steps to support small and medium enterprises suffering during the pandemic, such as delaying and lowering tax payments, temporarily reducing the cost of electricity, and providing some small grants for micro-enterprises.
Limits on Foreign Control and Right to Private Ownership and Establishment
The government is generally supportive of Foreign Direct Investment. The Foreign Investment Law (Decree 72/2018 of April 2018) modified the provisions of decree 127/2004 stipulating that shareholder capital firms and companies operating in the petroleum sector must have Equatoguinean shareholders. The government requires that Equatoguinean partners hold at least 35 percent of share capital of foreign companies or companies created by foreigners in the hydrocarbons sector only. Equatoguinean partners must also account for one third of the representatives on the Board of Directors. Apart from the hydrocarbons sector, investments must not be part of public-private partnerships with a government entity. The Minister of Mines and Hydrocarbons generally approves any major deal in the hydrocarbons sector. Decisions regarding larger investment deals may rise to the presidential level. U.S. investors may reach out to the Equatoguinean Embassy in the United States for guidance regarding connection to the appropriate ministry for outreach efforts.
The Hydrocarbons Law and the National Content Regulation establish various requirements for international oil and gas companies that wish to operate in Equatorial Guinea. These include a minority partner stake for either the state oil company (GE Petrol) or the state gas company (Sonagas). In addition, there are national content requirements, many established in 2014 by the then-Ministry of Mines, Industry, and Energy, which apply to both producers and service companies, including that 70 percent of staff must be Equatoguinean, 50-100 percent of services (depending on category) must be procured from national company partners, and a percentage of the company’s revenue must be allocated to corporate social responsibility projects approved by the Ministry of Mines and Hydrocarbons. (Note: The Ministry was divided into two in 2017, including a separate Ministry of Industry and Energy. End note.) Ministerial Order 1/2020 (April 2020) established that companies can employ foreign laborers in the oil and gas sector for a maximum period of three years, though companies may apply for extensions in exceptional cases, with compliance overseen by the Ministry’s Director General of National Content. Minister of Mines Gabriel Mbaga Obiang Lima was quoted as saying, “With the release of this new order, the Ministry of Mines and Hydrocarbons intends to enhance the capacity of local service companies while guaranteeing the creation of local jobs for our trained and educated youth.” While Equatorial Guinea continues to seek foreign direct investment in several of its capital-intensive energy and petrochemicals projects through its 2020 Year of Investment campaign, the country is simultaneously prioritizing the procurement of local goods and services and the stimulation of local jobs. The legislation follows the completion of capacity building and training programs, particularly at the gas and oil industry-supported National Technological Institute for Hydrocarbons in Mongomo. Given the generally low quality of education in the country, international companies complain about the difficulty of recruiting qualified locals.
Other Investment Policy Reviews
In the past three years, the Government of the Republic of Equatorial Guinea has not conducted an investment policy review through any institutions, such as the Organization for Economic Cooperation and Development, the World Trade Organization, or the United Nations Conference on Trade and Development. In October 2019, the World Bank presented its Diagnostic Trade Integration Study (DTIS) that analyzed various sectors of the economy and prospects for increased economic development and trade.
According to the World Bank’s Doing Business Report 2020, starting a business in Equatorial Guinea requires 16 procedures and usually takes 33 days, the same as in 2019. Equatorial Guinea was ranked 183 of 190 in the World Bank’s Doing Business Report 2020 for ease of “starting a business.” In 2017, the Government of the Republic of Equatorial Guinea passed Decree No. 67/2017, published in September 2017, to establish a “one-stop shop” or “single window” to simplify the process to register a business and speed the process to seven business days. The “single window” was launched in January 2019, after the Government of the Republic of Equatorial Guinea equipped facilities for processing applications, and trained staff. There is a webpage with information, , but businesses cannot yet register online. Generally, business must register with various agencies at the national level and some local offices. The one-stop shop does not eliminate steps but it does consolidate visits to five offices into one. The below chart illustrates the steps that an entrepreneur can complete at the one-stop-shop:
|Public Notary||one-stop shop|
|Trade register||one-stop shop|
|Ministry of Economy, Finance, and Planning||one-stop shop|
|Ministry of Commerce – General Direction of Commerce||one-stop shop|
|Ministry of Commerce – Department of Business Promotion||one-stop shop|
|Ministry of Labor||Ministry of Labor|
|Social Security Administration (INSESO)||Social Security Administration (INSESO)|
|Chamber of Commerce||Chamber of Commerce|
|City Hall||City Hall|
|Sectoral Ministries according to the activity of the company||Sectoral Ministries according to the activity of the company|
The country does not have a business facilitation mechanism for equitable treatment of women and underrepresented minorities in the economy. There are laws that make it illegal to discriminate against women. There is an ongoing effort from the government to include people with disabilities in public administration, including with internship programs and contracts.
By presidential Decree No 45/2020 from April 24, the government have reduced the paid-in minimum capital requirement, for Limited Liability Companies from 1,000,000 XAF to only 100,000 XAF for business to operate within the country.
Although Equatoguinean citizens may legally invest outside the country, the government of the Republic of Equatorial Guinea does not promote any outward investment. Equatoguineans owning businesses abroad are not praised or showcased in the news. There are no known restrictions on domestic investors who seek to invest abroad. Some individuals and companies have faced delays, however, when transferring money overseas or converting local currency into foreign exchange, which has been exacerbated by new rules enacted by the CEMAC Central Bank in 2019.
3. Legal Regime
Transparency of the Regulatory System
The Government of the Republic of Equatorial Guinea publicly publishes labor laws; however, officials do not consistently apply laws or regulations. Officials expect foreign companies to follow every detail of the labor law or face penalties. Some companies report less strict enforcement of compliance with the labor laws by national companies. U.S. businesses have complained that bureaucratic procedures are neither streamlined nor transparent and can be extremely slow for those without the proper political or familial connections. Many regulations are created within ministries, while others are the result of laws passed by the legislature. Although most regulations are created at the national level, some decisions may be taken at the municipal level (such as decisions about permits for construction).
Proposed laws and regulations are not published in draft form for public comment, but there have been reports of informal sharing with representatives of specific industries for comment. Regulations and laws are generally not published online but are available in hardcopy for a fee.
Private industry representatives report that accounting, legal, and regulatory procedures are generally neither transparent nor consistent with international norms.
According to the 2019 Fiscal Transparency Report, Equatorial Guinea does not meet the minimum requirements of fiscal transparency. More information is available at: https://www.state.gov/2019-fiscal-transparency-report/
The government recently made some progress on transparency of its public finances and debt obligations. Although not available to the public several months until after the start of the fiscal year, the 2018 budget included information on debt obligations for the first time in several years, including both public and private debt obligations. The 2019 budget also included debt obligations. The government has been working on fiscal transparency as part of its International Monetary Fund (IMF) program and another program with the African Development Bank that began in 2019. The Ministry of Economy, Finance, and Planning announced plans to move customs to an electronic system to improve transparency and prevent corruption. The Automated Customs System (Sistema Aduanero Automatizado or SIDUNEAWorld) was implemented on April 30, 2020, upon the Ministry’s announcement. By late May 2020, it had already registered 49 shipping manifests via .
In April 2020, the Ministry of Economy, Finance, and Planning issued an official communication on restructuring internal arrears. An internal arrears audit was conducted to evaluate the government’s obligations to construction companies. The African Legal Support Facility financed the process of regulating those arrears, which was carried out by McKinsey law firm. As stated in the memorandum of understanding, adopted by Decree No 136/2019, the next step includes the process of securitization to be conducted by an international financial agency.
International Regulatory Considerations
Equatorial Guinea is a member of the Central African Monetary and Economic Union (CEMAC), which includes a regional central bank (the Bank of Central African States, or BEAC) and various regulations including lower tariffs on intra-regional trade.
Equatorial Guinea is not a member of the World Trade Organization (WTO) and is listed as an observer government. The General Council of the WTO established a Working Party to examine the country’s application to join in February 2008, but the country never submitted a Memorandum on the Foreign Trade Regime (MFTR). The government is working on its application. According to the WTO’s 2019 Report, published February 20, 2020, Equatorial Guinea’s accession process is likely to become active, with the first meeting of its working party in 2020. At the request of the Government of Equatorial Guinea, the WTO Secretariat undertook a technical assistance mission to Malabo in March 2019 to assist in preparing the MFTR and to enhance the negotiating team’s understanding of the WTO Agreements, with a strong focus on the accession process. Equatorial Guinea participated in regional WTO dialogues as recently as February 2020.
Equatorial Guinea is not a signatory to the Trade Facilitation Agreement (TFA).
Legal System and Judicial Independence
Equatorial Guinea’s legal system is a mix of civil and customary law. Law No. 7/1992 states that disputes that cannot be resolved through direct negotiation by the involved parties shall be referred to Equatoguinean courts. Either party can also submit the dispute to international arbitration. Foreign investors are asked to declare their desired international arbitration venue in their initial application to invest in the country. Arbitration must take place in a neutral location and Spanish will be the official language of the arbitration.
Equatorial Guinea was ranked 105 of 190 in the World Bank’s Doing Business Report 2020 for “enforcing contracts.”
Labor law is meant to protect workers, including a requirement for written contracts and regulation of labor by minors. Labor courts exist for matters related to employment. Several companies have complained that cases are rarely decided on the merits and penalties are excessive. Appeals generally proceed to the supreme or constitutional court. The court system and staff are generally considered under-resourced and unprepared, according to companies and public statements by President Teodoro Nguema Obiang Mbasogo. Both the Labor Law and the Penal Code were set to be updated in 2020, with drafts submitted to the Legislature, which was suspended amid the COVID-19 pandemic.
The judicial system is not independent of the executive branch as the president is officially the head of the court system, with the power to appoint or remove judges at will.
Laws and Regulations on Foreign Direct Investment
Most investment is focused in the extractive industries and infrastructure development. Laws No. 7/1992 and 2/1994 and Decrees No. 54/1994 and 127/2004 regulate foreign investment. Certain industries have additional regulations. The enforcement of laws and judicial decisions has not been reliable nor consistent, according to investors. The executive branch heavily influences the judicial branch, as the president is also the chief magistrate of the Republic of Equatorial Guinea. While the government has made efforts to streamline foreign investment procedures and simplify business registration processes, these processes have not all been implemented. Decree No. 72/2018 of April 2018 revised No. 127/2014 of September 2014 and eliminated mandatory 35 percent national participation in foreign companies, except for in the hydrocarbons sector. The implementation of the “one-stop shop” for business registration in January 2019 simplified the registration process and reportedly reduced the time to complete it to seven business days, according to the government. The centralized one-stop shop clarifies the rates to be paid and the procedures to follow. The Ministries of Economy, Finance, and Planning and Commerce plan to evaluate the system in 2020 to determine its effectiveness. There is a webpage with information ( ) but businesses cannot yet register online. Investors work with the relevant government ministries to negotiate contracts.
The government published Decree 45/2020 in April 2020, reducing the minimum capital needed to register a limited-liability company from 1 million XAF (USD 1713) to 100,000 XAF (USD 171).
Competition and Anti-Trust Laws
Equatorial Guinea does not have an agency that actively enforces any competition laws. Equatorial Guinea became a member of the Organization for the Harmonization of Business Laws in Africa (OHADA) in 1999, and any OHADA competition laws should apply in Equatorial Guinea.
Expropriation and Compensation
Law No. 7/1992 states that the government will not expropriate foreign investments except when acting in the public interest with fair, just, and proper compensation. The Government of the Republic of Equatorial Guinea does not generally nationalize or expropriate foreign investments, although a Spanish investor had his property confiscated in 2013. The Government of the Republic of Equatorial Guinea does have an extensive record of expropriating locally owned property, frequently offering little or no compensation. The government has also withdrawn blocks for hydrocarbons exploration when companies failed to invest within an allotted period, though this generally appears to follow the terms of published tenders.
ICSID Convention and New York Convention
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), although Law No. 7/1992 states that international arbitration may utilize ICSID as the basis of procedure. Equatorial Guinea is not a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Investor-State Dispute Settlement
In October 2018, Equatorial Guinea announced the resolution of litigation begun in 2014 over Orange Group’s ownership stake in the incumbent fixed line and mobile operator Guinea Ecuatorial de Telecomunicaciones Sociedad Anonima (Getesa). Agence Ecofin cited a statement from the Embassy of Equatorial Guinea in France, confirming that on September 26, 2018, the government signed an agreement with Orange Middle East & Africa under which it paid EUR 50 million (USD 57.5 million) to the French-based telecoms giant in return for relinquishing Getesa shares. The final payment followed Equatorial Guinea’s initial share payment to Orange of EUR 45 million in October 2016, thereby settling the balance of an agreed EUR 95 million-redemption price for Orange’s 40 percent stake. TeleGeography’s GlobalComms Database says that Equatorial Guinea’s government lost a Paris Court of Appeal case against a fine imposed in July 2014 by the International Court of Arbitration for reneging on a 2011 agreement to buy Orange’s Getesa stake in the event of a new entrant launching (a clause it failed to honor after the 2012 launch of majority state-owned cellular company GECOMSA). In October 2016, the government agreed to pay EUR 150 million, including interest, to Orange.
A Spanish businessperson signed a joint venture agreement with President Obiang in 2009 to build 36,000 homes in Equatorial Guinea. President Obiang allegedly pulled support for the project at the last minute, leaving the Spanish citizen bankrupted. In March 2012, the Spanish businessperson submitted a claim before the International Centre for Investment Dispute Settlements (ICSID), which ruled in favor of Equatorial Guinea in 2015. In August 2017, Madrid’s provincial court ordained a magistrate to revise the claim, acknowledging the Spanish competency to rule the case because of the bilateral investment treaty between the countries. The case was ongoing at the start of 2020, but it is unclear if it will continue as the claimant died of COVID-19 in April 2020.
In at least one case in late 2018, a company that had not been paid by a state-owned enterprise for over a year was able to make an alternate arrangement to receive payment. This required an amendment to the contract rather than a judicial solution.
International Commercial Arbitration and Foreign Courts
The Organization for the Harmonization of Corporate Law in Africa (OHADA) Uniform Act on Arbitration rules would apply where the Court has its seat in Abidjan, but it may sit in any one of the seventeen Member States of the Organization. The Court has already held hearings in several OHADA member states in recent years. As of March 2019, the Common Court of Justice and Arbitration of the OHADA included an Equatoguinean lawyer on the list of arbitrators of its Arbitration Center of the Common Court of Justice and Arbitration. This lawyer is the first Equatoguinean added to the OHADA list.
Law No. 7/1992 states that disputes that cannot be resolved through direct negotiation by the involved parties shall be referred to Equatoguinean courts. Either party can also submit the dispute to international arbitration. In their initial application to invest in the country, foreigners must declare their desired international arbitration venue. Arbitration must take place in a neutral location with Spanish as the official language.
Firms have alleged that court actions are sometimes discriminatory, not transparent, tending to favor local parties rather than foreigners or foreign companies.
In 2015, the government closed a microfinance institution founded by a member of an opposition party. He reportedly appealed to the CEMAC court, which recommended arbitration. We have no information on the outcome.
The Government of the Republic of Equatorial Guinea adopted the business laws of the Organization for the Harmonization of Business Laws of Africa (OHADA), including that pertaining to bankruptcy.
The Republic of Equatorial Guinea is tied for last place in the World Banks’s 2020 Doing Business Report’s ranking of “Resolving Insolvency.” The Republic of Equatorial Guinea received the World Bank’s “no practice mark” due to the lack of cases over the past five years involving judicial reorganization, judicial liquidation, or debt enforcement. This suggests that creditors are unlikely to recover their money through a formal legal process.
4. Industrial Policies
Law No. 2/1994 of June 6, 1994 offers investment incentives in the form of deductions from taxable income: 50 percent of the amount paid to Equatoguinean staff in wages and 200 percent of the cost of training Equatoguinean staff. It also extends/maintains previous license exemptions for imports and exports, allows conversion of sales into foreign currency, and permits transfers abroad of company profits. Decree No. 67/2017 of September 2017 created the “one-stop shop” business portal to promote investment and economic activity by significantly reducing the time needed to register a new company. According to the government, registering a company through the one-stop shop – launched in January 2019 — takes approximately seven (7) days. Decree n° 72/2018 of April 2018 revised decree 127/2014 of September 2014 to foster foreign direct investments. The revised investment law eliminated the need to have a local business partner in foreign companies, except for the hydrocarbons sector. The government sometimes jointly finances foreign direct investment projects, such as construction of social housing.
Foreign Trade Zones/Free Ports/Trade Facilitation
There are currently no known laws, policies, or practices for any areas designated as Free Trade or Duty Free Zones. Three entities have tax-free status: Luba Freeport, the Port of Bata, and the K5 Freeport Oil Centre.
Performance and Data Localization Requirements
The Government of the Republic of Equatorial Guinea used to require a minimum percentage of employees and subcontractors to be Equatoguinean, ranging from 70 to 90 percent. Presidential Decree 72/2018 of April 18, 2018 revised Presidential Decree 127/2014 of September 14, 2014, eliminating this requirement, except for the hydrocarbons sector. The decree requires that Equatoguineans hold certain management positions in the hydrocarbons sector. Foreign investors in the hydrocarbons sector are required to have a significant percentage of domestic content in goods and technology. Companies are supposed to send vacancies to the Ministry of Labor, Employment Promotion, and Social Security. If the Ministry is unable to find a qualified candidate within 30 days, the company may hire an ex-patriate worker.
Equatorial Guinea does not require U.S. citizens to obtain visas, which can be difficult for third-country nationals to obtain and generally requires a government-approved letter of invitation, which can take months to obtain. Residency and work permits can be similarly difficult to obtain and renew. In March 2018, as part of an overall effort to improve transparency and ease the conditions of entry and residence in the country, the cost of a residency permits from USD 700 to USD 343 per year. In December 2019, the government agreed to lower the cost of residency permits to conform with the cost of a business visa (H1B) to the United States (USD 160). Some companies have reported delays in the residency permit process. Work permits, often a pre-requisite for a residency permit, are also difficult and time consuming to obtain. Some businesses report that they have been unable to obtain the annual permits for over five years. There are some reports that certain officials have asked for “expediting” fees that are beyond established government fees and occasionally ask for bribes directly. This is especially problematic at the airport and at customs, according to various accounts.
The Ministries of Mines and Hydrocarbons and of Labor, Employment Promotion, and Social Security, among others, make regular inspections of companies and may apply fines. The Ministry of Mines and Hydrocarbons has fined, suspended, and expelled companies that it perceived did not comply with regulations or laws, especially on local content.
The Government of the Republic of Equatorial Guinea requires internet service providers, whether local or foreign, to turn over source code or provide access to surveillance. According to article 15 of the Telecommunication law (Law 7, dated November 7, 2015), Equatoguinean government offices are supposed to report to the Regulating Organ of Telecommunications (ORTEL) any information concerning official communications lines and networks. The Government of the Republic of Equatorial Guinea has no requirements pertaining to maintaining data storage within the country. The Ministry of Transports, Telecommunications, and Mail reduced the cost of internet in 2019 and 2020 as part of a strategy towards openness and increased access, and both the Telecommunications Regulator (ORTEL) and the Telecommunications Infrastructure Administrator (GITGE) are promoting implementation of the new strategy. The government had announced that internet would be available in all public places, such as airports, banks, and cultural centers, by 2020, though this will likely be delayed by the COVID-19 pandemic. It is already available in some locations, such as the new boardwalk (Paseo Maritimo) in Malabo. Although the government claims that 95 percent of municipalities have access to a fiber optic network, according to the International Telecommunication Union, only 26.2 percent of the population used the internet in 2017.
5. Protection of Property Rights
The Government of the Republic of Equatorial Guinea selectively enforces property rights. While the government has laws on the books regarding the rights of property owners, the government can use the judicial system to seize land in the interest of the country with little to no due process. Mortgages exist under a “Social Housing Program” in which payments are made to the government via the commercial CCEI Bank. The mortgage length varies and can be more than 20 years. Interest rates are high, ranging from 12 to 18 percent. Non-payment for six months results in the foreclosure of the property. According the World Bank’s Doing Business 2020 report, registering property in Equatorial Guinea required six procedures and usually took 23 days. Equatorial Guinea was ranked 163 of 190 in the World Bank’s Doing Business Report 2020 for “registering property.”
Intellectual Property Rights
Equatorial Guinea is a member of the African Intellectual Property Organization (AIPO) and joined the World Intellectual Property Organization (WIPO) in 1997. Intellectual property rights (IPR) protections fall under the Council of Scientific and Technological Research of Equatorial Guinea. Equatorial Guinea does not report on seizures of counterfeit goods. Legal structures are weak, and IPR protection and enforcement are rare to non-existent. The government does not maintain publicly available statistics on law enforcement or judicial actions. Equatorial Guinea is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.
6. Financial Sector
Capital Markets and Portfolio Investment
The banking sector provides limited financing to businesses. The government reports that two microfinance institutions operate in country and the government has started a microcredit program for SMEs. The country does not have its own stock market. According to investors, capital markets are non-existent. Credit is available but interest rates are high, ranging from 12 to 18 percent for mortgages and about 15 percent for personal loans. Business loans generally require significant collateral, limiting opportunities for entrepreneurs, and may have rates of 20 percent or greater. It is unclear if foreigners could obtain credit on the local market.
Money and Banking System
While there are banks throughout the country, they are concentrated in urban centers. There is little information available about assets and the health of the banking system. The Equatorial Guinea National Bank (BANGE) has 29 branches throughout the country. According to a November 2017 article, BANGE had over 80,000 clients, approximately 10 percent of the population. CCEI/CCIW Bank de Guinea Ecuatorial has four branches in the largest cities and is a subsidiary of First Bank Afriland (Cameroon). BGFI Bank Guinée Equatoriale operates as a subsidiary of BGFI Holding Corporation (Gabon). Pan-African EcoBank (Togo) and Societe Générale (France) also operate in Equatorial Guinea. According to the United Nations, in 2016 approximately 20 percent of the population had deposits in commercial banks. If a bank does not have a branch in the location where an individual wants to do business, they would not have access their funds there. ATMs are in limited locations.
The Government of the Republic of Equatorial Guinea is a member of the Economic and Monetary Community of Central African States (CEMAC) and shares a regional Central Bank with other CEMAC members. Members have ceded regulatory authority over their banks to CEMAC, but also are entitled to national BEAC Branches. Evinayong, Bata and Malabo each have a branch. The government of the Republic of Equatorial Guinea is also a member of the Banking Commission of Central African States within CEMAC.
Foreigners must provide proof of residency to establish a bank account.
The country’s economy is an almost entirely cash based, with credit cards available but not widely used in the general population. Primarily visitors or wealthy citizens use credit cards at international hotels, international airlines, and major supermarkets. In April 2020, partly in response to the COVID-19 pandemic, the government encouraged banks to increase electronic payment mechanisms. The Ministry of Economy, Finance, and Planning also continued to expand electronic payments for government employees. In May 2020, the Government of the Republic of Equatorial Guinea endorsed the guiding principles of the United Nations’ “Better than Cash” Alliance, a partnership of governments, companies and international organizations to accelerate the transition from cash to digital payments as part of the United Nation’s Sustainable Development Goals. The Alliance has 75 members committed to digitizing payments to boost efficiency, transparency, and women’s economic participation and financial inclusion to make economies more digital and inclusive.
The banking sector is affected by relatively lengthy bureaucratic procedures and a lack of computerized record keeping. Customers have reported that currency is not always available on demand, and delays making transfers or exchanging local currency into foreign exchange have increased since the BEAC instituted new banking and foreign currency regulations in 2019.
Foreign Exchange and Remittances
Decree No. 54/1994 provides the right to freely transfer convertible currency abroad at the end of each fiscal year, but in practice many businesses report that limited financial services create barriers to successfully executing international transfers. On April 1, 2019, the CEMAC Central Bank published a regulation to enforce an existing requirement to maintain bank accounts in Central African francs (CFA) rather than foreign exchange, with a six-month moratorium until October 1, 2019. Account holders are theoretically able to convert funds to foreign exchange through an administrative process, but it is unclear if this applies to all accounts in the region. The moratorium was extended through 2020 for the extractives sector (hydrocarbons and mining). Many other businesses and individuals have reported lengthy delays to convert currency and make international bank transfers under the new rules.
Foreign currency is not widely available in the Central African Franc zone but can be relatively easily obtained in the Republic of Equatorial Guinea in small quantities.
Equatorial Guinea does not engage in currency manipulation as the CFA franc currently has a fixed exchange rate to the euro: 100 CFA francs = 1 former French (nouveau) franc = 0.152449 euro or 1 euro = 655.957 CFA francs exactly. Thus, the exchange rate of the currency fluctuates according to the value of the euro.
On April 1, 2019, the CEMAC Central Bank published a regulation to enforce an existing requirement to maintain bank accounts in CFA rather than foreign exchange, with a six-month moratorium until October 1, 2019. Account holders are theoretically able to convert funds to foreign exchange through an administrative process. It is unclear if this applies to all accounts in the region. Companies in the hydrocarbons sector received an exemption on implementation through 2020.
Sovereign Wealth Funds
The Government of the Republic of Equatorial Guinea established a sovereign wealth fund, the Fund for Future Generations, in 2002. According to investors, the fund has little transparency regarding its management or value. A 2017 press report estimated the fund to have USD 413 million, or 1.6 percent of Equatorial Guinea’s GDP. The Sovereign Wealth Fund Institute estimates assets under management of USD 165.5 million. There is no publicly available information on its allocations.
7. State-Owned Enterprises
The Republic of Guinea Equatorial has at least eight State-Owned Enterprises (SOEs) in the energy, housing, fishing, aerospace and defense, and information and communication sectors. Sonagas is the national natural gas company and GEPetrol is the national oil company. The energy SOEs report to the Ministry of Mines and Hydrocarbons and hold monopolies in their respective sectors. SEGESA is the national electricity company. GECOMSA and GETESA are the national telecommunication service providers. SONAPESCA focusses on the promotion of fishing and reports to the Minister of Fisheries and Water Resources. ENPIGE is the SOE that oversees the government’s affordable housing program. Ceiba Intercontinental is the main airline and a joint venture between the government and Ethiopian Airlines. The budget includes allocations to and earnings from SOEs. Large SOEs lacked publicly available audits. According to some companies, there is little evidence of oversight of SOEs. A requirement of the IMF’s 2018 staff monitored program, however, is that the government contract an internationally reputable firm to audit the accounts of the state-owned oil (GEPetrol) and gas (Sonagas) companies, which the government hired at the start of 2019. (The audits were still ongoing in early 2020.) All oil and gas projects must include a partnership with state-owned companies GEPetrol or Sonagas.
Equatorial Guinea’s oil and gas sector scored 22 of 100 points in the 2017 Resource Governance Index (RGI), ranking 85th among 89 assessments. Its overall failing performance can be attributed to the enabling environment component, which scores 17 of 100 points and ranks 79th among 89 assessments, along with an equally low score for revenue management. For more information, see https://resourcegovernance.org/.
The Ministry of Economy, Finance, and Planning discussed plans to involve the private sector in the management of state-owned assets, including through privatization. The initiative was a recommendation from the Third National Economic Conference (April-May 2019), which included discussion of options to improve management of state assets. The government envisages three paths: (i) restructuring autonomous agencies and state-owned enterprises; (ii) concession of assets to the private sector; and (iii) sale of public assets to private operators (privatization). The authorities also plan to open to competition sectors where public enterprises operate, with the aim of limiting monopolistic practices and passing on efficiency gains to the rest of the economy. The Ministry will present a substantive list of state assets to be privatized, as well as a list of entities that will be restructured or placed under a concession regime with the private sector for the approval of the Council of Ministers (structural benchmark, end of June 2020). Once the Council of Ministers approves this plan, the authorities will present an action program for privatization (planned for the second half of 2020). To generate revenue, they plan to prioritize privatization, with the proceeds going to pay down validated domestic arrears and rebuild EG’s foreign currency reserves at the BEAC. Sales and concessions will be carried out through open, international tenders. The sale of the listed assets may be delayed so that their prices are not negatively affected by the current global slowdown. Information is likely to be announced on the Ministry’s website:
8. Responsible Business Conduct
Many U.S. firms operating in Equatorial Guinea have well-developed corporate social responsibility (CSR) programs. The Ministry of Mines and Hydrocarbons has established industry-specific regulations that mandate minimum rates of CSR contributions. The Government of the Republic of Equatorial Guinea is considering a regulation that would increase those rates. U.S. and UK oil and gas companies tend to exceed those rates. Most firms from other countries have limited CSR programs. The government has expressed their appreciation for the U.S. companies’ efforts and recognized the positive role of U.S. firms. CSR projects have included support for various initiatives, including conservation, education, health, and awareness campaigns on sensitive subjects like trafficking in persons. The government approves all CSR programs, offering explicit support, and occasionally also provides additional in kind or financial support. There are several non-governmental organizations operating in the country that work in fields in which CSR takes place, often as partners with the companies, but they do not fulfill a monitoring role.
Equatorial Guinea submitted an application in 2019 to join the Extractive Industries Transparency Initiative (EITI), after being delisted in 2010 for missing its validation deadline during its first attempt to join. This was a condition of the IMF staff monitored program. A decision was still pending from the EITI Board in June 2020.
There is no publicly designated contact at a government agency responsible for combating corruption. Various ministries, including the office of the Prime Minister, nominally have responsibility for combatting corruption either within their own ministry or in the government at large. A commission to combat corruption was formed in 2019 but there has not been a public announcement of its results or projects. There are no “watchdog” organizations operating in country.
The Government of the Republic of Equatorial Guinea has laws and regulations against corruption, but many businesses have complained that they are not often enforced, and as a result, corruption is very common. There are no specific laws about conflict of interest or nepotism. Numerous foreign investigations continued into high-level official corruption. For example, on September 14, 2018, Brazilian authorities seized two suitcases with USD 1.4 million in cash and another suitcase containing approximately 20 watches valued at USD 15 million from Vice President Teodoro Obiang Nguema Mbasogo upon landing in Sao Paulo on an unofficial visit. The press reported on October 10, 2018, that Brazilian officials launched an investigation because they believed the undeclared cash and luxury watches, along with apartments and cars owned by the vice president in Brazil, might have been part of an effort to launder money embezzled from Equatorial Guinea’s government. Separately, one government official within the Ministry of Transport, Telecommunications, and Mail was fired and reportedly arrested in April 2019, and was expected to be charged with corruption. A military court sentenced a former Army Chief of Staff to 18 years in prison in October 2019 for embezzlement of public funds. He was also ordered to reimburse the 38 million CFA francs (USD 65,000).
U.S. companies operating in Equatorial Guinea are required to adhere to the rules of the Foreign Corrupt Practices Act. Some U.S. firms report that they are concerned about corruption related to government procurement, award of licenses and concessions, customs, and dispute settlement. Major U.S. firms have internal controls, ethics, and compliance programs to detect and prevent bribery of government officials. It is unclear what controls exist at smaller companies and other foreign and domestic firms.
The country’s greatest concerns in terms of money laundering and terrorism financing are cross-border currency transactions and the illegal international transfer of money by companies or corrupt individuals. Some report that widespread corruption, at times involving members of the government, is a primary catalyst for money laundering and other financial crimes. Certain businesses have noted that diversion of public funds and corruption are widespread in both commerce and government, particularly as regards the use of proceeds from the extractive industries, including oil, gas, and timber, and infrastructure projects.
Equatorial Guinea became a signatory to the United Nations Convention against Corruption on May 30, 2018. Equatorial Guinea is a member of the Task Force against Money Laundering in Central Africa, an entity in the process of becoming a Financial Action Task Force-style regional body. The country is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Resources to Report Corruption
10. Political and Security Environment
There is not a history of civil unrest in Equatorial Guinea. Some report this is due to a severe limitation of political opposition and civil society, including freedom of assembly and expression. There have been, however, examples of politically-motivated violence. On October 27, 2018, four individuals detained and beat civil society leader and human rights activist of the CEIDGE. Initial reports suggested that security force members might have carried out the attack, mistaking the activist for his brother, a leader of an opposition party.
President Teodoro Obiang Nguema Mbasogo has been in power since 1979. Equatorial Guinea does not have an established record of democratic transfer of power. In the week leading up to President Obiang’s re-election on April 24, 2016, there were reports that government security forces forcibly entered the headquarters of political opposition party Citizens for Innovation (CI) and seriously injured several opposition party members. Political activists who were arrested prior to the election have been subsequently released, although some remained in jail for over a year. Opposition members continue to report arrest, torture, and harassment, despite President Obiang securing another seven years in office.
In 2017, Equatoguinean authorities detained a large group of over one hundred CI opposition party members in the cities of Bata, Akonibe, and Malabo during the campaign period for municipal and legislative elections; thirty-one of them were sentenced to 41 years in prison in February 2018. They were subsequently released by a Presidential pardon in October 2018. A well-known Equatoguinean cartoonist and political activist was also detained in Malabo for six months until he was released from prison on March 8, 2018, after being acquitted of counterfeiting and money laundering due to false testimony by a police officer. An alleged foiled coup plot led to a campaign of massive arrests from December 2017 to March 2018 in the country and a trial of 117 individuals in the mainland city Bata between March and May 2019. The ruling Democratic Party of Equatorial Guinea (PDGE) announced on November 3, 2018, that it had expelled 42 members for alleged involvement in the coup. Security forces often used excessive force when implementing government restrictions designed to combat COVID-19 in 2020.
Government officials and members of the private sector have noted an increase in crime, including drug use and violent robberies, as the country’s recession continues. Piracy in the Gulf of Guinea also increased from 2018-2020, including within Equatorial Guinea’s territorial waters.
11. Labor Policies and Practices
Equatorial Guinea has a consistent shortage of skilled labor. Unskilled labor is readily available. Youth unemployment is considered widespread but statistics are scarce. According to the government’s 2015 census, which was released in 2018, about 40 percent of the population were not formally working and about 16 percent were unemployed. Officials estimate that close to 50 percent of the country’s workforce participates in the informal economy. Foreign laborers make up an important segment of all sectors of the economy, but generally dominate skilled labor positions, including engineers, pilots, and doctors. Labor laws apply to both foreign and domestic laborers, though in practice rulings tend to favor locals over foreigners when resolving disputes.
The oil and gas industry claims to have a shortage of trained individuals. Companies in the oil and gas sector sponsor training programs, and the government sponsors a limited number of students for short- and long-term international training and academic programs. The industry and the government also run a National Technological Institute of Hydrocarbons, which has 50 students per cohort in a three-year program. The government and companies inaugurated a new building in Mongomo in 2019, after various years in Malabo and Bata.
The agriculture and fishing sectors have shrunk in past decades as the rural population declined 42 percent from 2001 to 2015, according to the government census, and some businesses claim to have a shortage of laborers. Cattle ranchers have brought in migrant workers from the Sahel region of Africa to work with imported cattle.
Despite challenges in finding skilled labor, various laws require hiring nationals. The National Content Law of Equatorial Guinea requires that oil companies hire seventy percent of nationals. Officials of the Ministry of Labor explained that according to the Labor Law (last updated in 2012 and under review for an update), the final target of the government is that 90 percent of workers should be nationals. They also underlined that for companies to fill a position there is a process through the Ministry. If no suitable domestic applicant is found in 30 days, then the company is free to hire a foreigner. Employers must make extensive severance payments even when employment demands fluctuate due to market conditions. Currently there is neither unemployment insurance nor other social safety net programs for workers laid off for economic reasons, though this has been a goal of the government for several years.
Compared to the United States, labor laws in the Republic of Equatorial Guinea are generally favorable toward the employee. Labor disputes may be heard by the congress or in the courts, and the decisions typically favor the employee. Aside from a union of small farmers and the taxi association, the Government of the Republic of Equatorial Guinea does not recognize any labor unions. Small collectives and associations are allowed to register with the government but do not carry out labor advocacy efforts. Collective bargaining is not common. There have not been any strikes during the last year that posed an investment risk and the government typically restricts the occurrence of strikes or protests.
Labor laws include provisions such as regulating industries in which minors may work, as well as requiring written contracts. Short-term contracts are limited to 24 months. Local government enforcement of labor laws is mostly focused on preventing companies from employing and exploiting unauthorized migrants. The Government of the Republic of Equatorial Guinea has regulations to monitor health and safety standards and an inspection force, but some have criticized the effectiveness of their enforcement.
Labor laws differentiate between layoffs and firing (with severance). Unemployment insurance or other social safety net programs do not exist for workers laid off for economic reasons.
There are gaps in compliance in both law and practice with international labor standards. Although the Republic of Equatorial Guinea does not actively enforce internationally recognized labor rights, employees are generally not subjected to abusive work conditions. The government has been ranked Tier 3 in the annual Trafficking in Persons (TIP) Report from 2011-2019, however, and has struggled to identify and combat forced and child labor. The government increased efforts to combat TIP in 2018 and 2019, including the creation of a national action plan and an online portal and hotline for people to anonymously report abuses. Despite this, businesses have noted that the government does not have an adequate labor inspectorate system to identify and remediate labor violations and hold violators accountable, investigate and prosecute unfair labor practices, such as harassment and/or dismissal of union members; nor to investigate and prosecute instances of forced and/or child labor. Reports indicate that violators are rarely held accountable, with both corruption and political patronage used to prevent enforcement of laws and regulations. The law prohibits certain kinds of discrimination, but many gaps are still recorded. The International Labor Organization (ILO) noted in 2018 “with deep concern that, for the last 12 years, the reports due on ratified Conventions have not been received” from the Government of the Republic of Equatorial Guinea. The ILO also offered technical assistance to complete the reports and respond to comments.
In 2020, a new labor law was being drafted, but there was no public information as of May 2020.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
There currently are no Overseas Private Investment Corporation (OPIC) or Development Finance Corporation (DFC) programs in Equatorial Guinea. There is an OPIC agreement between Equatorial Guinea and the United States. OPIC financed a hundred million dollars for a liquefied natural gas (LNG) plant in 2000. There could be potential for DFC programs to support investments in infrastructure (including water and power), petrochemicals, and other industries.
There is significant investment financing or insurance for firms from China, and possibly Egypt and Morocco.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available.