The investment climate in Equatorial Guinea reflects a lack of clear rules and regulations to establish and run a business, a lack of investment in critical infrastructure like power generation, and a lack of follow-through on high-level commitments to economic diversification or increased transparency. Additionally, ministers and ruling family members own important businesses and win many contracts. There have been instances in the past decades of government officials abusing their power or access to power to imprison or mistreat individuals with whom they have a business dispute. Though the government has communicated its intentions to foster private sector participation in its plan for economic diversification, no concrete steps were taken last year toward creating a sound enabling environment for Foreign Direct Investment (FDI). While a requirement to partner with a local organization was removed five years ago, uncertainty still drives foreign investors to look for a local partner or guide to work through overwhelming bureaucracy in the public administration and unclear, informal requirements for registration and operation. Plans to establish an Investment Promotion Agency were not implemented during this period, even though it was listed as priority for the new Minister of Planning and Economic Diversification. In addition, major investments decisions are still being discussed at the presidential level with direct intervention from the vice president.
During the covered period no significant steps were taken by the government to implement its plans to improve the business environment, despite adopting the National Strategy for Economic Diversification and several meetings of the Technical Committee for the Improvement of the Business Environment occurring throughout 2022. The government had identified agriculture, fishery, mining and petrochemicals, tourism, and transportation sectors as keys to overcome dependency on oil revenues. Throughout last year, the public administration had accelerated the process for online visa applications to boost influx of tourists and businesspeople, but the status remains unclear.
Historically, Equatorial Guinea’s economy has benefitted from FDI in the oil and gas sector, which is responsible for a significant portion of government revenues. Government revenues were then spent on large or mega infrastructure projects built by international construction firms. The government used these infrastructure projects to ostensibly facilitate foreign investment by providing quality roads and buildings, but lack of maintenance and underinvestment in other critical areas – including power generation – presents obstacles to investment in the government’s priority sectors. Additionally, since 2015, with the contraction of oil production and fluctuation in global oil prices, the government had to reduce public expenditure on infrastructure. While seeking to attract large-scale investments, Equatoguinean authorities had been promoting mining and gas exploration contracts with the hope to reduce unemployment.
The banking sector has been weighed down by high percentages of nonperforming loans (NPLs),
undercapitalization, and low liquidity at some banks, driven by government arrears with construction firms. Furthermore, the new Central Bank FOREX regulation on place has restricted remittance policy.
Equatorial Guinea imports most of its consumer products, and consequently was hit by the Russian war of aggression in Ukraine, which caused food shortages that worsened already steady rising inflation nationwide. In response, the vice president signed food provision contracts with the Serbian government to furnish local supermarkets.
|TI Corruption Perceptions Index||2022||171 of 180||http://www.transparency.org/research/cpi/overview|
|Global Innovation Index||N/A||N/A||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2021||$2.8 billion||https://apps.bea.gov/international/factsheet|
|World Bank GNI per capita||2021||$12,026||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|