Executive Summary

Equatorial Guinea is endowed with abundant oil and gas resources and hosts billions of dollars in direct U.S. investment. The general investment climate in the country, however, is undermined by corruption and a burdensome, inefficient bureaucracy. 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. These poor ratings underscore the challenging and opaque environment in which both local and foreign businesses must operate.

The Government of Equatorial Guinea is seeking investment in several sectors: agribusiness; fishing; energy and mining; chemicals, petrochemicals, plastics and composites; travel and tourism; and finance. Currently, many of these sectors are undeveloped. The Equatoguinean domestic market is small, with a population of approximately one million, although the country is a member of the Central African Monetary and Economic Union (CEMAC) sub-region, which is home to over 50 million people. The zone has a central bank and a common currency – the CFA franc.

Following rapid economic growth in the early 2000’s spurred by the discovery of oil a decade earlier; growth has slowed in recent years as operational oil fields have matured. With the drop in oil prices in 2015, Equatorial Guinea has extended the timelines for completing infrastructure projects to balance its budget. The country is nearing completion of the first phase of the Horizon 2020 social development plan, which emphasized infrastructure construction. Now Equatorial Guinea boasts some of the region’s best roads and other essential infrastructure including development of its ports. The government has announced plans to improve the ease of doing business by creating a one-stop-shop for investors and entrepreneurs, and creating a body to solve business disputes and a government co-investment fund of $1 billion. The fund is said to be in place, but the other measures have not yet been fully implemented.

Although certain tax exemptions have been instituted to attract investment, with the decrease in the price of oil, those exemptions are strictly scrutinized. Recent commercial disputes have involved delayed payment, or non-payment, by the Equatoguinean government to foreign firms for goods and services already delivered. The government has recently been attempting to change the terms of long standing contracts with major foreign firms and this dispute is ongoing. December 2015 saw a marked exodus of foreign businesses from the country as the government grappled with its finances and this trend continued throughout 2016.

The Equatoguinean judicial system is not independent, as the President is the Chief Magistrate. Corruption exists throughout the government, including the judiciary, making it difficult for U.S. businesses to protect their investments, and raising the risk of doing business in Equatorial Guinea. Occasionally, the passports of foreign managers are confiscated when an underlying dispute is raised. In such cases, the government has stated that movements are being restricted because the individual’s statements may be needed to resolve the dispute. This has occurred more than three times in the last 18 months, with one foreign executive having his travel restricted for nearly nine months.

U.S. citizens do not require visas to enter Equatorial Guinea, but visas can be very difficult to obtain for third-country nationals, and generally require a letter of invitation from the Equatoguinean government, which can take months to obtain. Residency permits can be similarly difficult to obtain or renew, and are expensive. Even the U.S. Embassy regularly experiences delays for residency permits of six months or more, with the host government occasionally misplacing original documents or losing them entirely. The local customs system suffers from similar delays and is plagued by corruption.

Despite the many challenges, U.S. businesses, which strictly comply with Foreign Corrupt Practices Act (FCPA) requirements, have had success in the hydrocarbons sector, and some U.S. businesses have found rewards in other sectors. U.S. businesses will likely continue to invest in the country in light opportunities in the market, however potential investors should be wary of the accompanying risks to operating in Equatorial Guinea.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 Not ranked http://www.transparency.org/
World Bank’s Doing Business Report “Ease of Doing Business” 2016 178 of 190 doingbusiness.org/rankings
Global Innovation Index 2016 Not ranked https://www.globalinnovationindex.org/
U.S. FDI in partner country ($M USD, stock positions) 2015 $4.2 billion http://www.bea.gov/
World Bank GNI per capita 2015 $ 12,820 http://data.worldbank.org/

Policies Towards Foreign Direct Investment

The government of Equatorial Guinea is actively soliciting foreign investment. In 2016, the Ministers of Economy and Finance held a roundtable discussion with the U.S. Chamber of Commerce as part of an effort to attract more foreign investment from the U.S. A new law has been passed to make it easier to invest in the country by establishing a “one-stop-shop” for investors and simplifying the process to register a business. This process, however, has not yet been fully implemented.

Limits on Foreign Control and Right to Private Ownership and Establishment

Decree 127/2004 stipulates that shareholder capital firms and companies operating in the petroleum sector must have Equatoguinean shareholders. Foreign companies or companies created by foreigners are required to have at least 35 percent of share capital held by Equatoguinean partners. Equatoguinean partners must also account for one third of the representatives on the Board of Directors. In some sectors, investments must be part of public-private partnerships with a government entity. The Chamber of Commerce of Equatorial Guinea is attempting to sensitize Equatoguinean companies to their roles and responsibilities to foreign partners.

Statutorily, investment permits are approved by the Minister of Economy, Planning and Public Investments. The new state entity, Holdings Equatorial Guinea 2020, was created to help guide diversification efforts. This entity is expected to ultimately serve as a hub for foreign investors. For now, however, investors still work with relevant government ministries to negotiate contracts. Decisions regarding larger investment deals may rise to the presidential level. U.S. investors may reach out to the Equatorial Guinean Embassy in the United States for guidance regarding appropriate ministry outreach efforts.

Other Investment Policy Reviews

In the past three years, the government 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.

Business Facilitation

According the World Bank’s Doing Business 2017 report, starting a business in Equatorial Guinea requires 17 procedures and takes 134 days. As a result, Equatorial Guinea stands at 187 in the ranking of 190 economies on the ease of starting a business. There is no website for guidance, and starting a business requires multiple trips to the appropriate government agency and lengthy waits. A new proposal has been brought to the government’s attention to make it easier to invest in the country by establishing a “one-stop-shop” for investors and simplifying the process to register a business. This process, however, has not yet moved out of the idea phase.

Outward Investment

The government’s only investment is in their production sharing contracts with foreign oil and gas companies, and there are no outward investments by the government. There is no prohibition of the citizenry to invest outside the country, but it is generally discouraged by the government.

Equatorial Guinea and the United States have not signed a Bilateral Investment Agreement, a Free Trade Agreement, nor a Bilateral Taxation Treaty. The country does however have several bilateral taxation treaties with the following countries:

  • China, signed in 2005, entered into force in 2006
  • Ethiopia, signed in 2009, not currently in force
  • France, signed in 1982, entered into force in 1983
  • Morocco, signed in 2005, not currently in force
  • Russia, signed in 2011, not currently in force
  • South Africa, signed in 2004, not currently in force
  • Spain, signed in 2003, entered into force in 2003
  • Ukraine, signed in 2005, not currently in force

Equatorial Guinea is also party to various other economic agreements, namely the following:

  • Cotonou Agreement EU, entered into force in 2003
  • African Union Treaty, entered into force in 1994
  • Economic Community of Central African States Treaty, entered into force in 1984
  • CEMAC Convention on Liberalization, entered into force in 1972
  • CEMAC Investment, entered into force in 1966

Equatorial Guinea does not have a bilateral taxation treaty with the U.S., or a tax agreement with any other country.

Transparency of the Regulatory System

Equatoguinean labor laws are published and are publicly available, however, 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 political or familial 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.

International Regulatory Considerations

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 application of Equatorial Guinea on 5 February 2008. However efforts to join have faltered, with Equatorial Guinea not yet submitting its Memorandum on the Foreign Trade Regime, and the Working Party has not yet met.

Legal System and Judicial Independence

Equatorial Guinea’s legal system is a mixed system 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. The government does not always comply with international agreements which it has signed or international legal decisions.

Laws and Regulations on Foreign Direct Investment

Foreign investment is regulated by at least the following laws: Law No. 7/1992, Law No. 2/1994, Decree No. 54/1994, and Decree 127/2004. There may be other relevant regulations, particularly specific to certain industries. Enforcement of laws and judicial decisions is neither reliable nor consistent. The judicial branch is heavily influenced by the executive branch, as the President is also the Chief Magistrate of the Republic. While the government has made efforts to streamline inward investment procedures and simplify business registration processes, these efforts have not yet been implemented.

Competition and Anti-Trust Laws

Equatorial Guinea does not have an agency that actively enforces any competition laws. Because Equatorial Guinea is a member of the Organization for the Harmonization of Business Laws in Africa (OHADA), any OHADA competition laws would 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 does not generally nationalize or expropriate foreign investments, although in 2013 a Spanish investor had his property confiscated. The government does have an extensive record of expropriating locally-owned property, frequently offering little or no compensation.

Dispute Settlement

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

Recent investment disputes have centered on non-payment to investors or contractors by the government, or state-owned enterprises. There are few established local mechanisms to compel the government to pay investors, and the Embassy has limited capacity to intervene. U.S. and foreign enterprises from France, Cote d’Ivoire, Lebanon, Egypt, and Turkey, operating in Equatorial Guinea have been subject to non-payments or severely delayed payments by the government and have received no recourse in payment disputes. This, along with the downturn in the economy, has led to many foreign-led operations to either pull out of the country completely, or downsize substantially.

International Commercial Arbitration and Foreign Courts

The OHADA Uniform Act on Arbitration rules would apply where the seat of arbitration is in Equatorial Guinea.

Bankruptcy Regulations

Equatorial Guinea has adopted the business laws of the OHADA, including the law pertaining to bankruptcy. The country currently ranks in last place for processes related to Resolving Insolvency according to the World Banks’s Doing Business Report.. The reason for this is the country receives a ‘no practice mark’ since they had no cases in the past five years involving a judicial reorganization, judicial liquidation or debt enforcement. This is interpreted to mean that creditors are unlikely to recover their money through a formal legal process.

Investment Incentives

Law No. 2/1994 offers the following 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. In February 2014, the government also announced a co-financing fund intended to partner with new foreign investment projects. This continues to be nothing more than an announcement as no money has been placed in the fund nor have regulations been published as to how a foreign company may apply for co-financing.

Foreign Trade Zones/Free Ports/Trade Facilitation

Luba Freeport, the Port of Bata, and the K5 Oil Center have tax free status.

Performance and Data Localization Requirements

The government specifies a minimum percentage of employees and subcontractors which must be Equatoguinean, ranging from 70-90 percent, however these measures are not consistently enforced. The Ministry of Mines and Hydrocarbons is considering a new national content decree for the hydrocarbons sector, which would require that Equatoguineans hold certain supervisory/management positions. However, that decree is still in the draft stage and has not been made public.

Foreign investors are required to have a percentage of domestic content in goods and technology.

Internet service providers, whether local or foreign, have not been required to turn over source code or provide access to surveillance, although Equatoguinean government offices should report to the regulation office the information concerning official communications lines and network according to article 15 of the Telecommunication law (law 7, dated November 7, 2015). At present, there are no requirements pertaining to maintaining data storage within the country.

U.S. citizens do not require visas to enter the country, however, obtaining letters of invitation and visas for third country nationals can be difficult and time-consuming. Residency permits, which are required for all long-term residents, can be difficult to renew and are expensive, frequently expiring before the new permit can be issued. Even the U.S. Embassy regularly experiences delays for residency permits of six months or more, with the government of Equatorial Guinea occasionally misplacing original documents or losing them entirely.

Real Property

Property rights are enforced selectively. While there are laws on the books regarding the rights of property owners, the government can seize land in the interest of the country with very little, if any, due process via the judicial system. Mortgages do exist, but they are under a ‘Social Housing Program’ where payments are made to the government via CCEI Bank. The length of time varies and can be more than 20 years. Interest rates are high, ranging from 12 percent to 18 percent. Non-payment for six months results in the foreclosure of the property.

In the World Bank’s Doing Business Report, Equatorial Guinea ranks 160 out of 190 countries for the ease of registering property. The process takes an average of 23 days to navigate, with six distinct procedures involved.

Intellectual Property Rights

Equatorial Guinea is a member of the African Intellectual Property Organization (OAPI). Intellectual property protections fall under the Council of Scientific and Technological Research of Equatorial Guinea (CICTE). Equatorial Guinea does not report on seizures of counterfeit goods. Legal structures are weak and enforcement of intellectual property rights is rare to non-existent. Equatorial Guinea is not listed in the U.S. Trade Representative’s (USTR) Special 301 report. Equatorial Guinea joined the World Intellectual Property Organization (WIPO) in 1997. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Resources for Rights Holders

Matthew C. Lamm
Political Officer, U.S. Embassy Malabo

Capital Markets and Portfolio Investment

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

Money and Banking System

Equatorial Guinea is a member of the Economic and Monetary Community of Central African States (CEMAC) and shares a regional Central Bank (BEAC) with other CEMAC members. Members have ceded regulatory authority over their banks to CEMAC. The Equatoguinean government is also a member of the Banking Commission of Central African States (COBAC) within CEMAC. The banking sector, much like the country, is plagued with overly burdensome bureaucracy, red tape, and the absence of computerized record-keeping.

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. Due to limited financial services, it can occasionally be difficult to execute international transfers.

Local currency is not widely available outside of the Central African Franc (CFA) zone, but can be relatively easily obtained in country. Equatorial Guinea is an almost entirely cash economy, with credit cards available, but not widely used in the general population. Credit cards are used primarily by visitors or wealthy citizens at international hotels.

Remittance Policies

There have been no recent changes or plans to change investment remittance policies. Equatorial Guinea is a member of the Task Force against Money Laundering in Central Africa (GABAC), an entity in the process of becoming a Financial Action Task Force-style regional body. Equatorial Guinea does not engage in currency manipulation as the CFA franc currently has a fixed exchange rate to the euro: 100 CFA francs = 0.152449 euro; or 1 euro = 655.957 CFA francs exactly. Equatorial Guinea is listed in the Bureau of International Narcotics and Law Enforcement’s 2015 International Narcotics Control Strategy Report (INCSR) as a monitored country.

Sovereign Wealth Funds

The Fund for Future Generations is Equatorial Guinea’s sovereign wealth fund, established in 2002. There is little transparency in its management structure or the value of the fund. The U.S. Treasury and Federal Reserve ranks the fund as the least transparent fund in the world.

There are currently a five state-owned enterprises (SOEs) in the energy and mining, and information and communication sectors. The state-owned oil company, GEPetrol, has preferential right of joint ownership in the oil sector, but does not have the capacity to be the principal operator. In theory, SOEs are supposed to report to the Ministry of Mines and Hydrocarbons and hold monopolies in their respective sectors, however, in practice management of GETESA falls to Ministry of Communications and SEGESA reports to Ministry of Industry and Energy. The following SOEs are the most prominent:

  • Sonagas – The national natural gas company
  • GEPetrol – The national oil company
  • SEGESA – The national electricity company
  • GETESA – The national internet provider

Privatization Program

Equatorial Guinea has not implemented a privatization program.

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 which mandate minimum rates of CSR contributions in the sectors it manages. These rates may increase under a new draft regulation that is being considered. Many U.S. oil and gas companies tend to exceed those requirements, while other foreign firms typically 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.

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 do not fulfill a monitoring role. Equatorial Guinea had prepared a submission to participate in the Extractive Industries Transparency Initiative (EITI), but failed to meet the necessary deadlines. The country is currently preparing to submit another application to rejoin EITI after being delisted in 2010 for missing its validation deadline.

Equatorial Guinea has strict laws against corruption, but they are not enforced, and as a result, corruption is very common. U.S. companies operating in Equatorial Guinea adhere to the rules of the Foreign Corrupt Practices Act (FCPA). U.S. firms report that they are concerned about corruption as it pertains to government procurement, award of licenses and concessions, and dispute settlement.

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. Widespread corruption, at times involving the highest levels of the government, is a primary catalyst for money laundering and other financial crimes. 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, most likely sources of laundered funds.

Equatorial Guinea is one of the few remaining countries that is not a signatory to the United Nations Convention against Corruption. The country also is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

There are no “watch dog” organizations operating in Equatorial Guinea that monitor corruption.

President Obiang has been in power since 1979; as such, Equatorial Guinea does not have an established track record of transfer of power. In the week leading up to President Obiang’s re-election on the 24th of April, 2016, 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. Opposition members continued to report harassment, despite President Obiang’s presidency having been secured for another seven years.

In early 2017, another group of opposition party members were detained for unknown reasons in the city of Bata on the mainland, and a youth activist was detained in Malabo for three weeks after having posted pictures of members of the military on Facebook.

Equatorial Guinea has a consistent shortage in its local supply of skilled labor. While local unskilled labor is readily available, skilled labor is limited, with professional-level English uncommon, and youth unemployment widespread. A high percentage of the country’s workforce participated in the informal economy. There is a shortage of individuals trained to work in the oil and gas industry as well as in business administration. Many companies in the oil and gas sector sponsor training programs, while the government will often sponsor students for short and long-term international training and academic programs. Despite the challenges in finding skilled labor, the government requires that companies hire a specified percentage of nationals. Employers must make extensive severance payments even when employment demands fluctuate due to market conditions.

Compared to the United States, labor laws in Equatorial Guinea are generally very favorable toward the employee. Labor disputes may be heard by the parliament or in the courts, and the decisions typically favor the employee. Aside from a union of small farmers and the taxi association, the government 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.

Local government enforcement of labor laws is mostly focused on preventing companies from employing undocumented immigrants. The government has regulations to monitor health and safety standards and an inspection force, but enforcement is ineffective. Although Equatorial Guinea does not actively enforce internationally-recognized labor rights, employees generally are not subjected to abusive work conditions. However, illegal immigrants remain vulnerable to exploitation.

There currently are no Overseas Private Investment Corporation (OPIC) programs in Equatorial Guinea.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2013 $17.3b 2015 $12.2b www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2015 $4.2b BEA data available at http://bea.gov/international/direct_investment_
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2015 $3m BEA data available at http://bea.gov/international/direct_investment_
Total inbound stock of FDI as % host GDP N/A N/A 2015 34.4% N/A

* Instituto Nacional de Estadísticas de Guinea Ecuatorial (INEGE).

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward Amount 100% Total Outward Amount 100%
Netherlands $317.94 17.8% China, P.R. $1,099.40 16.7%
Spain $307.47 17.2% South Korea $996.36 15.2%
China, P.R. $279.50 15.6% Spain $593.00 9.0%
United States 168.05 9.4% Brazil $524.37 8.0%
France $90.23 5.0% Netherlands $449.71 6.8%
“0” reflects amounts rounded to +/- USD 500,000.

According to the latest available statistics, Equatorial Guinea registered $1,788.65 million in imported products in 2015, with $6,575.72 million in exports. The main imported materials were petroleum sector equipment, construction materials, and vehicles. Their exports came in the forms of petroleum products, timber, and agricultural products such as cocoa, cassava, bananas, and palm oil nuts. The vast majority of their exports were in the hydrocarbons sector with timber accounting for roughly ten percent and agricultural products tallying less than one percent.

Table 4: Sources of Portfolio Investment

No data is available regarding Portfolio Investment Assets for Equatorial Guinea.

Matthew C. Lamm
Political Officer, U.S. Embassy Malabo
Equatorial Guinea

2017 Investment Climate Statements: Equatorial Guinea
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