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.