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

Foreign Exchange

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.

Remittance Policies

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.

Capital Markets and Portfolio Investment

The Gabonese government encourages and supports foreign portfolio investment, but Gabon’s capital markets are poorly developed.  Gabon has been home to the Central Africa Regional Stock Exchange, which began operation in August 2008.  However, the Bank of Central African States consolidated the Libreville Stock Exchange into a single CEMAC zone stock exchange based in Douala, Cameroon in July 2019.

There are no existing policies that facilitate the free flow of financial resources into the product and factor markets.

On June 25, 1996, Gabon formally notified the IMF that they accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement. Article VIII, Sections 2 and 3 provides that members shall not impose or engage in certain measures, namely restrictions on making payments and transfers for current international transactions, discriminatory currency arrangements, or multiple currency practices, without the approval of the Fund.

Foreign investors are authorized to get credit on the local market and have access to all the variety of credits instruments offered by the local banks, without any restrictions.

Money and Banking System

The banking sector is composed of seven commercial banks and is open to foreign institutions.  It is highly concentrated, with three of the largest banks accounting for 77 percent of all loans and deposits.  The lack of diversified economy has constrained bank growth in the country, given that the financing of the oil sector is largely undertaken by foreign international banks.  Access to banking services outside major cities is limited.

The IMF December 2019 report indicated the banking system’s capital adequacy ratio increased to 15.1 percent at end-March 2019, well above the CEMAC regulatory requirement of 10.5 percent. Banks remained relatively liquid and profitable. However, the significant decline in oil revenues and the associated cash constraints, and weak PFM practices have contributed to a rapid increase in domestic arrears.  Gabon estimated the net deposit money of banks in the third quarter of 2018 at 435 billion CFA (USD 725 million).

Gabon shares a common Central Bank (Bank of Central African States) and a common currency, the Communauté Financière Africaine (CFA) Franc, with the other countries of CEMAC.  The CFA is pegged to the euro.

Foreign banks are allowed to establish operations in the country.  There is one U.S. bank (Citigroup) present in Gabon.  There are no restrictions on a foreigner’s ability to establish a bank account.

Gabon’s financial system is shallow and financial intermediation levels remain low compared to other developing countries.  The government plays an important role in the financial sector.  It controls two of the nine banks and has a stake in most of the others.  Domestic credit is limited and expensive in Gabon.  The microfinance sector is only just starting to emerge in the country with few regulated microfinance institutions (MFIs) registered, covering only a limited segment of the population.  However, a substantial number of informal, unregulated MFIs are believed to operate in the country.  Banks, even though highly liquid, are extremely prudent in providing credit.  The majority of the population lacks access to any type of financial services, as even traditional informal mechanisms, prevalent in other African economies, are scarce.  In efforts to increase access to finance, Gabon has recently supported the establishment of a development and growth fund to support small and medium enterprises, as well as the creation of a specialized agency to promote private investment.

Foreign Exchange and Remittances

Foreign Exchange Policies

The Bank of Central African States’ policy on foreign exchange requirements is in flux.  Major international companies have cited the foreign exchange regime, including currency localization requirements, as among the greatest risks to their investments.  Please contact the Embassy for additional information.

Gabon’s currency is CFA, which is convertible, subject to CEMAC restrictions, and tied to the Euro (EUR 1 equals CFA 656).  As of March 2020, 1 U.S. dollar is roughly equivalent to CFA 575 to 600.

Remittance Policies

There government recently changed investment remittance policies to tighten access to foreign exchange for investment remittances.  There is no time limitation on capital inflows or outflows.

Sovereign Wealth Funds

Gabon created a Sovereign Wealth Fund (SWF) in 2008.  Initially called the Fund for Future Generations (Fonds des Génerations Futures) and later the Sovereign Funds of the Gabonese Republic (Fonds Souverain de la République Gabonaise), the current iteration of Gabon’s SWF is referred to as Gabon’s Strategic Investment Funds (Fonds Gabonaise d’Investissements Stratégiques, or FGIS).  As of September 2013, the most recent FGIS report, the FGIS had a reported S2.4 billion in assets and was actively making investments.  The FGIS has the goals of allowing future generations to share income derived from the exploitation of Gabon’s natural resources, diversifying risk by investing surplus revenue, contributing to economic development, and encouraging investment in strategic sectors of Gabon’s economy.  Officially, 10 percent of Gabon’s annual oil revenues are dedicated to the sovereign wealth fund.  Details regarding the FGIS’ assets and investments are not publicly available.  Gabon’s sovereign wealth fund does not follow Santiago principles, nor does Gabon participate in the IMF-hosted International Working Group on SWFs.

Capital Markets and Portfolio Investment

Guyana has its own stock market, which is supervised by the Guyana Association of Securities Companies and Intermediaries (GASCI).   Guyana’s local stock market has performed well in 2019 with a year on year increase of 20 percent market capitalization.  Guyana’s financial services sector is estimated to have grown by 4.1 percent at mid-year 2019. Credit is available on market terms. The prime lending rate as at half year was 10.5 percent.  There continues to be significant interest in Guyana’s financial sector. 

Money and Banking System

Monetary policy remains accommodative, aimed at achieving price stability and controlling liquidity within the economy.  The financial sector is regulated by the Bank of Guyana (BOG), the country’s central bank.  The BOG is empowered under the Financial Institutions Act 1995 and Bank of Guyana Act to regulate the financial sector.   Regulation highlights include high levels of liquidity, a strong deposit and asset base, and profitable financial institutions.  Liquidity in the banking system increased by 16.8 percent on account of higher excess reserves and higher balances due from banks abroad.  Net domestic credit of the banking system expanded by 12.8 percent to $1.33M from the December 2018 level of $1.2M on account of higher credit to both the public and private sectors.

Nevertheless,  private sector contacts report that access to finance remains an issue for conducting business.  The prime lending rate contracted by 2.5 percent to 10.5 percent from 13.0 percent as of the third quarter 2019.  The BOG maintains a floating exchange rate.  According to the BoG half-year report, monetary aggregates of broad money expanded by 3.3% while that of reserve money contracted by 1.6%.

Guyana has six commercial banks.  Foreign banks provide domestic services or enter the market with the applicable license from the BoG.  Foreigners may establish a bank account without restrictions.

Guyana continues to strengthen its financial system through implementation of its Anti Money Laundering/Counter Financing of Terrorism (CFT) program and the passage of the National Payments Act 2018.  

Foreign Exchange and Remittances

Foreign Exchange

The Guyana dollar (GYD) is fully convertible and transferable.  The Guyanese dollar is also generally stable and its value against the U.S. dollar. The Guyana dollar weighted mid-rate, relevant for official transactions, remained constant at GYD208.50. The un-weighted average mid-rate was GYD214.04 compared with GYD215.78 for the corresponding period in 2018. Foreign exchange transactions increased by 23.0 percent to $4,646.5 million on account of higher turnovers at banks, private trading houses known as cambios, foreign currency accounts, and hard currency transactions. Aggregate purchases were higher than sales, resulting in a net purchase of $4.9M.

No limits exist on inflows or repatriation of funds. However, regulations require that all persons entering and exiting Guyana declare all currency in excess of $10,000 to customs authorities at the port of entry. It is common practice for foreign investors to use subsidiaries outside of Guyana to handle earnings generated by exports.

Remittance Policies 

There is no limit on the acquisition of foreign currency, although the government limits the amount that several state-owned firms may keep for their own purchases.  Regulations on foreign currency denominated bank accounts in Guyana allow funds to be wired in and out of the country electronically without having to go through cumbersome exchange procedures.  Foreign companies operating in Guyana have not reported experiencing government-induced difficulties in repatriating earnings in recent years.

Sovereign Wealth Fund

The Natural Resources Fund (NRF) Act was passed in the National Assembly in January 2019, providing the framework for the establishment of a sovereign wealth fund.  Shortly after the enactment of the NRF,  Guyana became an associate member of the International Forum of Sovereign Wealth Funds (IFSWF).  The Bank of Guyana manages the NRF, which is held at the Federal Reserve Bank of New York. The opposition party has signalled its intent to repeal the NRF Act based on concerns that the bill was passed after the government was defeated by a vote of no confidence without sufficient input from the political opposition.

Capital Markets and Portfolio Investment

Portfolio investment

The government is favorable to portfolio investment. Private entities, whether foreign or national, have the right to freely establish, acquire, own, and/or dispose of interests in business enterprises and receive legal remuneration.  Privatization and liberalization programs have also helped put private enterprises on an equal footing with respect to access to markets and credit.  In principle, government policies encourage the free flow of financial resources and do not place restrictions on access by foreign investors.  Most foreign investors, however, prefer external financing due to the high interest rates and procedural complexities that prevail locally.  Credit is often difficult to obtain due to a lax legal system to enforce regulations that build trust and guarantee credit return.  There are no legal or policy restrictions on converting or transferring funds associated with investments.  Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability.  Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.

Commercial bank loans are virtually the only type of credit instrument.  There is no stock market or other public trading of shares in Mauritanian companies.  Currently, individual proprietors, family groups, and partnerships generally hold companies, and portfolio investments.

Money and Banking System

The IMF has assisted Mauritania with the stabilization of the banking sector and as a result, access to domestic credit has become easier and cheaper.  A proliferation of banks has fostered competition that has contributed to the decline in interest rates from 30 percent in 2000 to 10 percent in 2009, not including origination costs and other fees.  Interest rates have remained stable since 2009, ranging between 10 to 17 percent as of April 2020.

Nevertheless, this banking system remains fragile due to liquidity constraints in the financial markets. The country’s five largest banks are estimated to have USD 100 million in combined reserves; however, these figures cannot be independently verified, making an evaluation of the banking system’s strength impossible.  As of April 2020, 25 banks, national and foreign, currently operate in Mauritania, despite the fact that only 15 percent of the population holds bank accounts.

The Central Bank of Mauritania is in charge of regulating the Mauritanian banking industry, and the Central Bank has made reforms to streamline the financial sector’s compliance with international standards.  The Central Bank performs yearly audits of Mauritanian banks. There are no restrictions enforced on foreigners who wish to obtain an individual or business banking account.

In 2017, the Central Bank significantly reduced direct foreign currency sales to the private sector to better enforce foreign exchange regulations as part of its drive to allow for a more flexible determination of the exchange rate.

In 2018, the Central Bank of Mauritania lost all correspondent banking relationships with banks in the United States due to de-risking policies enforced by U.S. banks.  The Central Bank subsequently was able to reestablish a correspondent banking relationship in 2019, however there are still no Mauritanian banks that have been able to do so. Local branches of international banks (such as Societe Generale or Attijari) do maintain correspondent banking relationships with U.S. banks and are able to clear transactions in USD.

Foreign Exchange and Remittances

Foreign Exchange

There are no legal or policy restrictions on converting or transferring funds associated with investments. Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability of such currencies. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.  To transfer funds, investors are required to open a foreign exchange bank account in Mauritania.  There are no maximum legal transaction limits for investors transferring money into or out of Mauritania, although regulations to withdraw money may be complicated in practice.

Businesses transfer money through the traditional Hawala system—they deposit their money in a Hawala store and designate a beneficiary for pick up.  The Hawala system has become a reliable substitute to the high interest rate, long wait period and transaction fees imposed by local banks.  However, the Central Bank closed 691 illegal money transfer points to restructure the financial sector.  Currently, only nine agencies have a provisional authorization for transfer of funds.  Individuals and companies may obtain hard currency through the informal market and commercial banks for the payment of purchases or the repatriation of dividends.  If the bank has hard currency available, there is no delay in effect for remitting investment returns.  However, if the bank does not have enough reserves, the hard currency must be obtained from the Central Bank in order to conduct the transfer.  The Central Bank is required to prioritize government transfers, which could present further delays.  Delays of one to three weeks, although relatively uncommon, can occur.

In January 2018, the government of Mauritania introduced a new currency.  The new currency drops a zero from the country’s previous currency; the value and the name of the currency remained the same, although the currency code changed from MRO to MRU.  Local banks had to adapt their software, change their checkbooks, and reconfigured their ATMs to bring them into compliance with the new currency.

Remittance Policies

There is no limit on the inflow or outflow of funds for remittances of profits, debt service, capital or capital gains.  The local currency, the ouguiya, is freely convertible within Mauritania, but its exportation is not legally authorized.  Hard currencies can be obtained from the central bank and local commercial banks or parallel financial market in the informal sector.  The Central Bank holds regular foreign exchange auctions, allowing market forces to fix the value of the ouguiya.

Sovereign Wealth Funds

The Central Bank administers the National Fund for Hydrocarbon Reserves, a sovereign wealth fund (SWF), which was established in 2006.  The SWF is funded from the revenues received from the extraction of oil, any royalties and corporate taxes from oil companies, and from the profits made through the fund’s investment activities.  The fund’s mandate is to create macroeconomic stability by setting aside oil revenues for developmental projects.  However, the fund’s management is considered to lack transparency and the projected revenue streams remain unrealized.