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. Growth has slowed as several operational oil fields have matured and are now in decline. Equatorial Guinea is among the world’s lowest ranking countries in various global indices, including those for corruption, transparency, and ease of doing business. Some companies have reported that these ratings underscore the challenging and opaque environment in which both local and foreign businesses must operate, with corruption, perceptions of a biased judiciary and a burdensome, inefficient bureaucracy undermining the general investment climate in the country.
The government of the Republic of Equatorial Guinea is seeking investment in several underdeveloped sectors: agribusiness; fishing; energy and mining; petrochemicals, plastics, and composites; travel and tourism; and finance. The Equatoguinean domestic market is small, with an estimated population of 1.2 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 the Organization of the Petroleum Exporting Countries (OPEC) in 2017 and is a member of the Gas Exporting Countries Forum (GECF).
Equatorial Guinea’s economy has suffered from the effects of the COVID–19 pandemic. The drop in global demand and oil prices occasioned by the crisis, coupled with the drop in household consumption and the slowdown in business activities due to measures to contain the spread of the disease, exacerbated the country’s already serious growth problems. Real GDP shrank 6.1% in 2020, compared with 5.6% in 2019. It was the eighth consecutive year of recession due to growth problems in both the oil (–7.2 %) and nonoil sectors (–4.7%). On the demand side, investment contracted by 35%. Although output fell, prices rose. Inflation was 3% in 2020, up from 1.2% in 2019, the result of a pandemic-related decline in the terms of trade, reduced supply of essential goods, and a worsening monetary situation. As a result, the Bank of Central African States gave up trying to reduce liquidity in the banking system and proposed a series of measures to support the economies in the Economic and Monetary Community of Central Africa (CEMAC) by cutting the policy interest rate and the marginal lending facility rate from 3.5% to 3.25%, and from 6% to 5%, respectively.
The country’s gross domestic product (GDP) shrank nearly 50% between 2014 and 2019, from USD 21.7 billion to USD 11 billion. The economy is expected to grow 2.6% in 2021, a projection based on the successful completion of a large gas project and the recovery of the world economy by the second half of the year. The country is expected to again return to recession in 2022, with a real GDP decline of -4.4%. The inflation rate is expected to settle at 2.9% over the next two years, remaining within the CEMAC limit of 3%. The budget is expected to be in a deficit of 2.4% of GDP in 2021 and 1.5% of GDP in 2022. The current account balance is expected to remain in deficit at 6% of GDP in 2021 and 5.6% the following year. The country’s main risk factor, beyond the persistence of the pandemic, remains the lack of diversification of its oil-based economy, to which is added the structural weakness of inadequate human capital. Indeed, the country has a capacity deficit, particularly in terms of public finance management and governance, that hinders effective implementation of its economic and social transformation policy.
On December 18, 2019, the Executive Board of the International Monetary Fund (IMF) approved a USD 282.8 million, three-year Extended Fund Facility (EFF) for Equatorial Guinea. The arrangement was intended to support Equatoguinean authorities’ three-year economic program, which aims at further reducing macroeconomic imbalances and addressing financial sector vulnerabilities; improving social protection and human capital development; promoting economic diversification; and fostering good governance, increasing transparency, and fighting corruption—all with the overarching aim of achieving sustainable and inclusive economic growth. Equatorial Guinea’s Fund-supported program was also intended to serve as a mechanism to spur additional external resources as well as contribute to rebuilding the CEMAC regional reserves. The new Minister of Finance, Economy and Planning, Valentin Ela Maye Mba, is tasked with improving the country’s economy and fiscal situation, including working with international financial institutions. The new three-year plan was supposed to increase revenue through greater tax compliance among individuals and greater public payment for utilities, such as water and electricity. Government leaders have publicly stated that good governance is important, and there were several bills proposed or passed in 2020 and 2021 to help, including the Fiscal Incentive Law to increase tax compliance by registering the tax obligations of individuals; and the Anti-Corruption Law, which has been under discussion for more than a year. Foreign businesses continue to express challenges and concerns about new regional banking and foreign exchange regulations implemented by the Bank of Central African States (BEAC) given the lack of liquidity in the local banking sector.
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 response to new licensing rounds in the hydrocarbons and mining sectors. U.S. businesses may find investment opportunities in other sectors such as telecommunications, infrastructure, agriculture, mining, security, and transportation.
Since the onset of COVID-19, Equatorial Guinea has been proactive in safeguarding opportunities for foreign investors and continuing to drive capital into its hydrocarbon resources. 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. Certain companies reportedly exited the country with millions in unpaid bills.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Government of the Republic of Equatorial Guinea is still actively soliciting foreign investments. The government considered 2019 to be the “Year of Energy,” with new licensing rounds for hydrocarbons fields and various events to encourage investment. This was supposed to continue into the 2020 “Year of Investment,” focusing on hydrocarbons, mining exploration, and petrochemicals, which was disrupted by the pandemic. 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 “Single Window” for investors and simplify the process to register a business, which launched in Malabo in January 2019 but was generally moribund pending identification of priority investment areas from the April 2019 third national economic conference, the final report for which has yet to be published. The government continued to partner with the World Bank on reviewing improvements to the process. A second office was expected to open in Bata in 2020 but was put on hold due to COVID-19
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.
The country’s Minister of Mines and Hydrocarbons, Gabriel Mbaga Obiang Lima, has been leading a campaign to increase investment. In response to the COVID-19 pandemic and its effects on oil prices and African economies, the Minister of Mines and Hydrocarbons granted oil and gas companies a two-year extension on their exploration programs. The Ministry of Mines and Hydrocarbons will also encourage 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. The extensions 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 areas in existing offshore blocks. The Year of Investment, which was to include several in-country conferences and a global investment roadshow, was adapted to COVID-19 restrictions by using webinars and video conferencing to connect with investors. In February 2021, a consortium led by Noble Energy/Chevron, Marathon Oil, and EGLNG achieved the first gas flow from the successful execution of the Alen Gas Monetization project, a $475-million investment representing the first phase of Equatorial Guinea’s Gas Mega Hub plan. The Ministry of Mines and Hydrocarbons is currently promoting several capital-intensive projects – including the construction of modular oil refineries, a gold refinery, liquefied petroleum gas strategic tanks, a urea plant, and the expansion of a compressed natural gas project – which are open for investment. In December 2020, the Ministry announced a forecast of $1.1 billion in foreign direct investment in oil and gas activities in 2021.
The government also took several 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.
The Equatoguinean authorities have been willing to receive and protect all Foreign Direct Investment, including through changes in the country’s legal framework in recent years.
Currently there is no law or practice that discriminates against investors based on their origin, sex, age, race, political creed, or religion. The Law on the Investment Regime of the country establishes in Article 12 that the State commits itself to fair and equitable treatment for all investors. Decree No. 72/2018, dated April 18, 2018, and amended Article 2 of Decree No. 127/2004, dated September 14, 2004, eliminates the requirement of having an Equatoguinean partner to invest in the country’s non-oil sector.
Law 7/1992 and Law 54/1994 provide for the creation of an Investment Promotion Center, which must advise the government on investment policies, promote investments and support investors with information and in the resolution of conflicts. These Laws also provide for the creation of a National Investment Commission. Neither the Center nor the Commission is currently operational. Given the need for these types of organizations, in 2015, through Decree No. 134/2015, the Government mandated the Ministry of Commerce and Business Promotion to create and start up an agency to promote, integrate and coordinate the national policy of attraction of investors. In April 2021, this task was still in process and expected to start operating in 2023.
In November 2018, the Government organized a high-level seminar on the business climate in Equatorial Guinea with participation of the public and private sectors and development partners. For three days, they reflected on the position of Equatorial Guinea in each of the parameters of the Ease of Doing Business Ranking and the International Competitiveness Index of the World Economic Forum. As a result of the recommendations of this seminar, the government issued Decree 109/2019, creating a committee in charge of improving the national business environment, bringing together representatives of the government, private sector, and civil society to debate and propose reforms. The World Bank has subsequently partnered with the government to create and implement a plan to improve the business climate.
Even though the country does not currently have an investment promotion agency, the Ministry of Commerce has prioritized the implementation of a national agency for investment promotion within its Enhanced Integrated Framework program with World Trade Organization. The ministry has plans to establish a Foreign Trade Single Window to complement the existing one for domestic businesses.
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% of staff must be Equatoguinean, 50-100% 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 (the Ministry was divided into two in 2017, including a separate Ministry of Industry and Energy). 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 sought foreign direct investment in several of its capital-intensive energy and petrochemicals projects through its 2020 Year of Investment campaign, the country simultaneously prioritized 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.
Equatorial Guinea belongs to the Organization for the Harmonization of Business Laws in Africa (OHADA) and falls under the OHADA Uniform Act on the law of commercial companies and economic interest groups of January 30, 2014.
Law 4/2009 on the Land Ownership Regime in Equatorial Guinea establishes that foreigners cannot own land but rather purchase a lease with a maximum duration of 99 years.
The foreign investor is required to justify the origin of the funds used for the creation of a company in Equatorial Guinea.
In 2019, the government began its second attempt to join the Extractive Industries Transparency Initiative (EITI), submitting an incomplete application and meeting with civil society and other interested organizations. By 2020, the government established two EITI commission offices in Malabo and Bata — the largest cities — and published gas and oil contracts on its EITI website.
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 Equatoguinean 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 “Single Window” 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, https://www.ventanillaempresarialge.com/en/welcome/, but businesses cannot yet register online. Generally, business must register with various agencies at the national level and some local offices. The Single Window 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 Single Window:
Single Window, Ministry of Commerce
Single Window, Ministry of Commerce
Ministry of Finance, the Economy, and Planning
Single Window, Ministry of Commerce
Ministry of Commerce – General Direction of Commerce
Single Window, Ministry of Commerce
Ministry of Commerce – Department of Business Promotion
Single Window, Ministry of Commerce
Ministry of Labor
Ministry of Labor
Social Security Administration (INSESO)
Social Security Administration (INSESO)
Chamber of Commerce
Chamber of Commerce
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, 2020, the government reduced the paid-in minimum capital requirement for Limited Liability Companies to operate in the country from 1,000,000 XAF to 100,000 XAF. In 2019, the Government established a committee to monitor the country’s performance on the main indicators of ease of doing business, as well as to propose reforms to improve the national business climate. The committee — comprised of several CEOs, the private sector, business organizations and civil society — developed a roadmap with actions to be implemented to facilitate the establishment of companies in the country. While not possible to register online, the government is exploring the option for a business to register by phone.
In February 2020, registration of trade certificates and businesses were included in the Single Window. Currently, would-be investors can access government websites for information on setting up businesses in the country. This includes websites for:
Single Window [I https://www.ventanillaempresarialge.com/en/welcome/]
Ministry of Finance, the Economy and Planning [https://minhacienda-gob.com /]
Currently, work is being done to include records from the Single Window in the Ministry of Labor and in the National Institute of Social Security. A Ministerial Order is under discussion to include data of the Ministry of Labor in the Single Window.
The National Institute for Business Promotion and Development launched an entrepreneurship training program with financing available. The program teaches entrepreneurs – with a focus on microbusinesses — how to develop business plans around their ideas, with the best project selected for investment. The United Nations Development Program (UNDP) is one of the donors, with an emphasis on supporting female entrepreneurship.
Although Equatoguinean citizens may legally invest outside the country, the government of the Republic of Equatorial Guinea does not promote foreign investment. The government and media do not praise or showcase Equatoguineans with business interests abroad. While there are no known restrictions on foreign investment, some individuals and companies have faced delays when transferring money overseas or converting local currency into foreign exchange, exacerbated by new CEMAC rules on foreign currency reserves enacted in 2019.
With technical assistance from UNDP, Equatorial Guinea is currently implementing the WTO Enhanced Integrated Framework program. This multilateral partnership is dedicated to assisting least developed countries (LDCs) use trade as an engine for growth, sustainable development, and poverty reduction. EG’s Action Plan through the Ministry of Commerce prioritizes promoting national products in the subregional and international markets. To encourage agricultural production, the Ministry plans to establish a national food certification institute within the Chamber of Commerce, pending funding from the government. The project was delayed by the pandemic.
After pausing all timber exports and firing the Minister of Agriculture, Timber, Livestock, and the Environment in the fall of 2020, the government lifted the export ban in October via Decree 93/2020. This authorized export of round wood, an industry dominated by Chinese companies. The previous decree had authorized only exports of transformed wood, with the goal of promoting the wood transformation industry in the local economy.
2. Bilateral Investment and Taxation Treaties
Equatorial Guinea and the United States have not signed a Bilateral Investment Agreement, a Free Trade Agreement, nor a Bilateral Taxation Treaty. Equatorial Guinea is not eligible for African Growth and Opportunity Act (AGOA) assistance this year.
Equatorial Guinea has a bilateral investment agreement with Spain that came into force in 2003. The government signed a cooperation framework agreement with Cape Verde on April 16, 2019, including double taxation avoidance and tax evasion, and reciprocal protection of investments in the two nations.
The country has bilateral taxation treaties with the following countries:
United Arab Emirates, signed in 2016, not currently in force
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, including:
Cotonou Agreement with the European Union, 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
African Continental Free Trade Agreement signed March 21, 2018, entered into force in 2021.
Preferential Trade Status with China, with which Equatorial Guinea is negotiating a free trade agreement.
On March 18, 2020, the Ministry of Finance, Economy and Planning amended Ministerial Order no. 7/2019 by limiting the certification obligation to largest taxpayers. The Minister issued Ministerial Order no. 9 on the same day, which created an office dedicated to “major taxpayers” within the General Direction of Taxes and Contributions and set out its responsibilities. The following are considered major taxpayers in Equatorial Guinea:
Companies belonging to the extractive sector, regardless of size of revenues (Oil, Gas, Mining)
Companies in any other sector whose previous year’s annual revenue reached XAF 700,000,000 (approximately USD 1,186,440)
Taxpayers with a leading position in the economic sector or whose operations are of special importance or complexity at the national level.
The government has recently audited several state-owned enterprises, including those in the hydrocarbons sector. The majority of taxes came from larger corporations, but the government has a plan to expand the effective tax base among small businesses and individuals to increase revenue. The government undertook the first business audit in the first quarter of 2021.
3. Legal Regime
Transparency of the Regulatory System
The Government of the Republic of Equatorial Guinea publicly publishes labor laws; officials, however, do not consistently apply laws or regulations. While foreign companies are expected to follow every detail of the labor law or face penalties, there is reportedly less strict enforcement of local 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 those for construction permits).
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.
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 Finance, the Economy, 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 http://siduneage.com:8080/asycuda/index.jsf and continues to work with the World Bank on implementation.
Regulations are generally not reviewed on the basis of scientific or data-driven assessments.
The government is set to implement a national agency to centralize public contracts. In 2019, the World Bank conducted a diagnostic study of public contracting in EG, the results of which were presented to the Ministry of Finance. The presentation led to an agreement with the World Bank to provide technical assistance to draft EG’s law on public procurement. The law will widen the spectrum for potential contractors through public tender offers, representing a significant step toward fiscal transparency.
In October 2020, the Ministry of Finance published a tax payment manual and launched an information office to provide taxpayers with comprehensive information on taxes and tax filling processes. To further transparency, the Ministry implemented a physical and virtual library allowing anyone to access tax-related laws and regulations in person or through the Ministry of Finance’s website.
In April 2020, the Ministry of Finance issued a communiqué on restructuring internal arrears, with an audit to evaluate the government’s obligations to construction companies. The African Legal Support Facility financed the process of regulating those arrears, carried out by McKinsey law firm.
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 signatory to the Trade Facilitation Agreement (TFA). The country is not a member of the World Trade Organization (WTO) but has been an observer since 2002. In 2007, EG submitted its application for membership to the WTO’s general council, which established a working group in February 2008 to review the application. To date, Equatorial Guinea’s accession process to the WTO is pending the Memorandum on the Foreign Trade Regime (MFTR). In 2020, the Ministry of Commerce confirmed that full membership to the WTO remains a priority for the government. The Ministry is implementing a Strategic Action Plan for EG’s accession, including hiring an international consultant to prepare a memorandum on the country’s trade regime, which was under review by the legislature in early 2021.
The Constitution establishes the separation of powers, though the same law grants the Head of State the ability to appoint and remove members of the judicial branch. According to the new National Development Strategy, the judicial system requires a profound reform. Any Supreme Court decision on commercial matters can be appealed in the Organization for the Harmonization of Business Law in Africa (OHADA) Commercial Court, based in Abidjan, Ivory Coast.
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 child labor. Labor courts adjudicate matters related to employment. Several companies have complained that cases are rarely decided on the merits, with most judgements favoring labor, 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 Obiang Nguema 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, eliminating the mandatory 35% national participation in foreign companies, except in the hydrocarbons sector. The implementation of the “Single Window” for business registration in January 2019 was intended to simplify the registration process and reduce the time necessary to complete the process to seven business days, according to the government. The centralized Single Window also clarified the rates to be paid and the procedures to follow. The Ministries of Commerce and Finance, the Economy, and Planning were planning to evaluate the system in 2020 to determine its effectiveness, though this was disrupted by the pandemic. There is a webpage with information (https://www.ventanillaempresarialge.com/en/welcome/) but businesses cannot yet register online. Investors must 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 Antitrust 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. OHADA legislation is a civil legal system that aims to provide a common business and legal framework across all 17 member states, while enhancing the legal certainty and predictability of international transactions in the region. One important law affecting international project financing, the 2010 “Uniform Act Organizing Securities,” created a uniform, modern security law for OHADA nations. It allowed the possibility of appointing a security agent, acting in its own name on behalf of lenders, and reinforced lenders’ rights by enabling them to use new, efficient security enforcement mechanisms, such as out-of-court appropriation (“pacte commissoire”).
Other new and revised laws for the OHADA region followed, including:
Uniform Act related to general commercial law act, revised in December 2010
Uniform Act related to commercial companies and economic interest groups, revised in January 2014 and effective May 2014
Uniform Act organizing collective proceedings for clearing debts, revised in September 2015 and effective December 2015
Uniform Act on the harmonization of accounting, adopted in January 2017 and effective January 2018.
A new “Uniform Act on Mediation,” adopted in 2017, provides an enhanced legal framework for all aspects of mediation in OHADA’s 17 member states. This new alternative dispute resolution mechanism aims to achieve more rapid and easier enforcement of agreements in the OHADA zone. Although the sophistication and reliability of OHADA’s legal regime in certain specific business law areas offers a degree of comfort to investors in the region, other aspects of transactions remain subject to the national laws of the relevant countries. For example, the determination of tax registration fees remains the strict prerogative of individual nations. Thus, the amount of tax registration fees varies from one member state to another, even in the same cross-border transaction. This encourages forum shopping and contradicts OHADA’s goals of harmonizing business regulations.
The government can expropriate a property for public use when the general interest prevails over the individual. The process consists of notifying the owners of the future public utility, as well as the amount of the compensation. If the government does not follow due process, the property owner can sue, once they have exhausted administrative remedies, through the Supreme Court of Justice.
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 has an extensive record, however, 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 be based on ICSID. Equatorial Guinea is party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. OHADA’s Uniform Act of Collective Procedures for the Realization of Liabilities should be applied but is not enforced in practice.
In the government-approved roadmap to improve the business climate, Equatorial Guinea must accede to the ICSID.
For members of OHADA, disputes are resolved in the Court of Abidjan using the OHADA Uniform Arbitration Law. The country does not have a bilateral investment treaty nor a free trade agreement with the United States. There are no public statistics on penalties and judgments, but the judiciary is reportedly working on a website where this information will be published. For now, the judiciary does not publish sentencing statistics.
Investor-State Dispute Settlement
Equatorial Guinea is not a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
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% 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 2018, 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 ruined and bankrupted. In March 2012, the Spanish citizen submitted a claim before the ICSID, which ruled in favor of Equatorial Guinea in 2015. In August 2017, Madrid’s provincial court ordered 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 2021, the Embassy received information about a U.S. company that has done a few projects in Equatorial Guinea in the past three years. The company reported that the government made an initial payment, but the second payment was more than a year overdue. Government officials reported they were working to resolve the issue.
International Commercial Arbitration and Foreign Courts
The Organization for the Harmonization of Corporate Law in Africa (OHADA) Uniform Act on arbitration rules would apply at the Court headquarters in Abidjan, but it may be unapplicable 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. In March 2019, the Common Court of Justice and Arbitration of the OHADA included an Equatoguinean lawyer on the list of arbitrators in its Arbitration Center of the Common Court of Justice and Arbitration. He 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 for 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 ranks 168 on the World Banks’s 2020 Doing Business Report for “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 “Single Window” 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 Single Window – launched in January 2019 — takes approximately seven days. Decree no. 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.
Other laws provide financial incentives, such as for the promotion of non-traditional exports, and maintain or broaden the exemptions allowed under the previous licenses for imports and exports and for regional or local development. Companies involved with rural projects are exempt from some tax payments.
Official Equatoguinean investment incentives through Law No. 7/1992 on the Investment Regime are mostly tax-related, although Decree No. 71/2014 from May 2014 created the Holding Guinea Equatorial 2020 (State Investment Company) to invest in profitable projects chosen among proposals to national authorities.
The government subsidizes electricity, partly to encourage investment, as well as fuel by selling to enterprises at a fixed price. This may have motivated Cameroon’s Tradex to invest in EG; Tradex launched a three-year initiative in 2019 to invest approximately $25 million in Equatorial Guinea, building a network of 10 service stations over the same period. Tradex’s first service station opened in February 2021.
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 Free Port, the Port of Bata, and the K5 Free Port Oil Centre.
Equatorial Guinea belongs to the African Continental Free Trade Area (AfCFTA).
In January 2021, the government promulgated Decree 002/2021 introducing new regulations on cross-border trade with neighboring Cameroon and Gabon, including establishment of an import-export office. Goods imported from third countries will not be taxed if properly cleared through a CEMAC member country.
Performance and Data Localization Requirements
Equatorial Guinea does not require visas for U.S. citizens. Visas for third-country nationals can be difficult to obtain, requiring a letter of invitation, 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 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 and the experiences of Embassy staff. Residency and work permits were not issued regularly between 2017 and 2021, requiring expatriates to leave the country every 90 days or risk fines/deportation.
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, for which certain management positions must be held by Equatoguineans. 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 a list of 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 expatriate worker.
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 perceived to not comply with regulations or laws, especially regarding “local content” (staffing with Equatoguinean nations).
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 7, dated November 7, 2015, Equatoguinean government offices are supposed to report any information concerning official communication lines and networks to the Regulating Organ of Telecommunications (ORTEL). The Government of the Republic of Equatorial Guinea has no requirements regarding locating 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) promoted implementation of the new strategy. While the government had announced that internet would be available in all public places, such as airports, banks, and cultural centers, by 2020, this was delayed by the COVID-19 pandemic. Internet is already available in some locations, such as the Paseo Maritimo in Malabo. Although the government claims that 95% of municipalities have access to a fiber optic network, only 26.2 percent of the population used the internet in 2017 according to the International Telecommunication Union.
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 to the World Bank’s Doing Business Report for 2020, registering property in Equatorial Guinea required six procedures and usually took 23 days, ranking the country 163 of 190.
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.
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/. Equatorial Guinea is a party to the Bangui Agreement on Intellectual Property. There is a national office that is the link between CICTE and the African Intellectual Property Organization (AIPO). The application to register a product is sent to the central office in Yaoundé, Cameroon, which in turn shares it with other offices to verify the product’s originality. If confirmed, AIPO grants the patent. (AIPO’s office in Equatorial Guinea can also handle case rather than processing through Yaoundé.) An internal copyright law was promulgated after the signing of the Bangui Agreement. The Ministry of Cultural, Tourism and Artisanal Promotion sporadically applies IPR regulations, for which clear information is unavailable. In cases of alleged IPR violations, the injured party must file a complaint with the Ministry of Justice, which refers the complaint to CICTE.
6. Financial Sector
Capital Markets and Portfolio Investment
The banking sector provides limited financing to businesses. The government claims two microfinance institutions operating in country, with a government-backed microcredit program for small- and medium-sized enterprises (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. The Single Window office assumes investors have already secured all financing.
Equatorial Guinea is a member of CEMAC, which has a stock market common to all member states. The Central Africa Banking Commission (COBAC) regulates the region’s banking system. The BEAC and the COBAC regulate transfer limits. Commercial banks follow BEAC requirements. To attract investment and promote economic diversification, the government offers facilities for granting loans, including through the National Institute of Promotion and Development (INPYDE), which has an investment fund for entrepreneurs.
The National Bank of EG (BANGE), in which the government has a 51% stake, plans to launch the country’s first brokerage business to facilitate foreign investment, negotiating equity and even debt for major companies operating in Equatorial Guinea. BANGE falls under the Central African Financial Market Surveilling Committee and includes such customers as supermarket chains Martinez Hermanos and EGTC. Additionally, BANGE inaugurated the BANGE Business School in 2020 to train students to work in the banking sector and facilitate underwriting, syndication, and funding. In November 2020, BANGE announced it first capital increase through an initial public officering directly through its offices. In April 2021, the institution announced the second capital increase of $75 million, which was open to individual investor (nationals and foreigners).
Money and Banking System
BANGE has the most branches of any bank in EG and estimated that 60% of the population used formal financial services. BANGE estimates that its clients are 26% of the population.
Banking revenues have been deteriorating over the last five years as the government gradually reduced or stopped infrastructure projects due to the economic recession. The government established the Partial Guarantee Fund to insure non-performing loans through the National Institute for Businesses Promotion (INPYDE). Demand for loans was supported by specific budget allocations each fiscal year, mostly from BANGE. In 2020, INPYDE negotiated an agreement to include other banks and to enlarge the Guarantee Fund.
While banks have branches throughout the country, they are concentrated in urban centers. There is little information available about the assets and health of the banking system. BANGE leads with 29 branches throughout the country. CCEI/CCIW Bank de Guinea Ecuatorial, a subsidiary of First Bank Afriland (Cameroon), has four branches in the largest cities. 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. If a bank does not have a branch in the location where an individual wants to do business, they would not have access to 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. Ebibeyin, 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 (COBAC) 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 by the general population, confined to foreigner or wealthy citizens using at international hotels, international airlines, and major supermarkets. In April 2020, partly in response to the COVID-19 pandemic’s social distancing measures, the government encouraged banks to increase electronic payment mechanisms. The Ministry of Finance, the Economy, 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 member countries committed to digitizing payments to boost efficiency, transparency, and women’s economic participation and financial inclusion.
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 for transfers or exchanges of local currency into foreign denominations have increased since the BEAC instituted new banking and foreign currency regulations in 2019.
The National Economic and Financial Committee publishes a semi-annual report on the evolution of banks in the country. The CEMAC establishes the requirements for any bank that wants to operate in a member country, which COBAC can grant. COBAC also publishes information on the banking system of each member country. There are no restrictions, but there are requirements that applicants must meet to open an account, whether or not they are a resident. The country is currently starting the use of mobile banking; financial services are mainly limited to banking and microfinance.
The government’s failure to repay loans has increased interest rates and reduced access to credit for the private sector, especially households. Banks in EG have the lowest ratio of loans to savings within the subregion. During the economic expansion (2009-2014), the government developed a line of credit with CCEI Bank to finance infrastructure development projects with construction companies. Loan defaults rose rapidly as the government failed to meet its legal obligations with CCEI Bank, prompting the government to nationalize the bank in January 2021 by acquiring Afriland First Group’s shares.
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 Bank of Central African States (BEAC) published a regulation to enforce an existing requirement to maintain bank accounts in Central African francs (CFA) rather than foreign currency, with a six-month grace period 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. Following pushback from the extractive industry, which accounts for over 80% of EG government revenues, CEMAC exempted gas and oil companies from the regulation through December 31, 2021. Many other businesses and individuals have reported lengthy delays to convert currency and make international bank transfers under the new rules. The BEAC announced that regulations were intended to usher in reforms that redefine BEAC’s role, and the role of the Bank’s control bodies, to ensure compliance with IMF guidance and currency stabilization, including a 30-day waiting period to withdraw foreign currency. Other reforms included: reinforcement of the regulatory framework for manual exchanges; assuring the flexibility of certain operational arrangements as instructed by the BEAC governor; adapting foreign exchange regulations to new methods of payment and transfer institutions; and simplifying procedures to increase compliance. In September 2020, the BEAC instituted an online “e-transfer” application to ensure credit establishments comply with the new regulation. The online application automates the entire process of transfer requests and monitors in real time the progress of each request through an e-tracking site. Foreign currency is not widely available in the Central African Franc zone but can be 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. The exchange rate fluctuates with 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 and mining sectors received an exemption on implementation through 2021.
Sovereign Wealth Funds
The Government of the Republic of Equatorial Guinea established a sovereign wealth fund, the Fund for Future Generations, in 2002. The fund receives 0.5% of all oil revenues and is governed and managed by the Bank of Central African States (BEAC). The Sovereign Wealth Fund Institute (SWFI) estimates assets under management of USD 165.5 million (https://www.swfinstitute.org/profile/598cdaa50124e9fd2d05b002). 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 is currently near bankruptcy, facing internal structural crisis, after the termination of a joint venture with Ethiopian Airlines in 2020. 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 mid-2020, with no report of completion.) 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 Finance, the Economy, 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: https://minhacienda-gob.com/.
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 has final approval of 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 supported by CSR projects, often as partners with the companies, but they do not fulfill a monitoring role.
In November 2019, the Ministry of Mines and Hydrocarbons published the first informative booklet on CSR in the oil sector. The pamphlet compiles key achievements in corporate social responsibility — like the Bioko Island Malaria Control Project (BIMCP) and Bioko Biodiversity Protection Program (BBPP) — and was distributed during GECF 5TH as summit 2019 in Malabo.
Equatorial Guinea applied in 2019 to join the Extractive Industries Transparency Initiative (EITI), after being delisted during its first attempt to join in 2010 for missing its validation deadline. The application was withdrawn in fall 2020 for being incomplete. Application to join EITI was a condition of the IMF staff monitored program.
In 2020, EG was upgraded from Tier 3 to Tier 2 Watchlist on the State Department’s annual report on trafficking in persons in recognition of increased efforts to identify and assist victims. Concerns remain regarding forced labor, sex trafficking, and ineffective enforcement of laws to prevent trafficking.
EG is not a signatory of the Montreux Document on Private Military and Security Companies. EG is not a participant in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA), although several companies in the country are members.
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 and worked with the legislature to pass a new law on corruption in April 2021. 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.
In December 2020, the International Court of Justice ruled that a Paris mansion at the center of a dispute between France and Equatorial Guinea could not be unilaterally designated a diplomatic outpost. French authorities seized the building on Paris’ Avenue Foch in 2012 as they investigated Teodoro Nguema Obiang Mangue, the Vice President of Equatorial Guinea, for misuse of public funds and money laundering. In 2017 Vice President Mangue was tried in absentia in a French court for allegedly embezzling public funds. He was given a three-year suspended sentence and fined $32 million. The International Court of Justice found that France did not violate the Vienna Convention on Diplomatic Relations when it raided the building because the Parisian mansion was not a diplomatic residence for Equatorial Guinea and thus France had a right to seize it.
Obiang Mangue has publicly committed to eradicate corruption and promote fiscal transparency. In September 2020, the government established an anti-corruption audit commission, for which the port administrations of Bata and Malabo became the primary focus. The commission seized significant amounts of money allegedly siphoned off through those ports. As a result, the Director General for Customs was dismissed after more than twenty years on the job, though he was not charged. During 2020 and 2021, executives of state-owned enterprises have faced prosecution on embezzlement charges following surprise government audits as part of the anticorruption strategy. Those under investigation included the deputy director of the national power company (SEGESA) and the regional director of the National Institute of Social Security (INSESO).
U.S. companies operating in Equatorial Guinea are required to adhere to the U.S. Foreign Corrupt Practices Act. Some U.S. firms report concern about corruption in government procurement, the award of licenses and concessions, the customs process, and dispute settlement. Major U.S. firms have internal controls, ethics, and compliance programs to detect and prevent bribery of foreign 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.
On July 13, 2020, President Obiang Nguema Mbasogo approved Decree-Law No. 1/2020 on the prevention and fight against corruption in Equatorial Guinea as an interim measure pending approval of anti-corruption legislation in Parliament. The legislation passed in April 2021.
Resources to Report Corruption
Decree-Law No. 1/2020 stablished the National Commission for Prevention and Fight against Corruption as the primary source to report corruption. However, this Legal Entity of Public Law is not yet operational.
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. An opposition party member and civil society activist was arrested at his home in February 2019 following his advocacy of labor rights at the national university. He was then charged of plotting to kill the president and tried for defamation and threats against the President on November 21, 2019. His sentence was never announced, and he was released on February 14, 2020, after almost a year in prison – longer than the maximum penalty for the charge against him.
President Teodoro Obiang Nguema Mbasogo has been in office since taking power in a 1979 coup. 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. Opposition activists arrested before the election were 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 after being falsely accused by the police of counterfeiting and money laundering. He was released from prison on March 8, 2018, after being acquitted. A foiled coup plot led to massive arrests throughout the country from December 2017 to March 2018. The ruling Democratic Party of Equatorial Guinea (PDGE) announced on November 3, 2018, that it had expelled 42 of its members for alleged involvement in the coup. A total of 132 individuals were tried in the mainland city of Bata between March and May 2019, of which 112 were convicted.
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 to 2021, including within Equatorial Guinea’s territorial waters. Security forces often used excessive force when implementing government restrictions designed to combat COVID-19 in 2020.
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, released in 2018, about 40% of the population were not formally working and about 16% were unemployed. Officials estimate that close to 50% 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 gas and oil industry reports 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 alternating study in previous years between Malabo and Bata.
The agriculture and fishing sectors have shrunk in past decades as the rural population declined 42% 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 70% of oil company employees are Equatoguinean. Companies must go through the Ministry of Mines and Hydrocarbons to fill a position, demonstrating an effort to find a suitable domestic applicant within 30 days before hiring a foreigner. Employers must make extensive severance payments to separated employees, even when employment demands fluctuate due to market conditions. Currently there is neither unemployment insurance nor other social safety net programs to assist laid-off workers, though the EG government has stated that this has been its goal 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 Legislature 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 has not recognized 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; the government typically restricts 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). In Equatorial Guinea, it is imperative for the company to understand all the legal obligations a decision to dismiss entails before deciding to do so. The law favors employees. Dismissals can take a broad range of forms from justified dismissals, dismissals for economic reasons and null dismissals. Dismissal is considered void when the legal process for dismissal has not been followed. Cases hereof would be when the employee has not received proper notice in the form of a dismissal letter or has been dismissed in specific circumstances that the law prohibits, for example, when a woman is on maternity leave. 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 2 watchlist in the 2020 Trafficking in Persons (TIP) Report. The government made key achievements during 2021 TIP reporting period. These achievements included investigating and—for the first time since 2010–prosecuting a possible trafficking case; developing and implementing formal screening procedures to identify victims within vulnerable populations; proactively identifying a potential trafficking victim; funding and partnering with an international organization to deliver training for more than 700 officials and civil society actors; expanding its awareness campaign to reach all seven of the country’s districts; and providing funding for its 2019-2021 national action plan. Despite these achievements, the government has never convicted a trafficker under its 2004 anti-trafficking law. Additionally, the government’s victim services remained inadequate. Official awareness of trafficking remained low and the government’s anti-trafficking law did not criminalize all forms of trafficking.
In 2020, a new labor law was drafted but it remained under review by the legislature in 2021.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance or Development Finance 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 and/or insurance for firms from China, and possibly Turkey, Egypt, and Morocco.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
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
Host Country Gross Domestic Product (GDP) ($M USD)