Since 1985, Equatorial Guinea has been a member country of the Economic and Customs Union of the Central African Countries CEMAC (Communauté économique et monetaire de l’Afrique centrale – also Chad, Gabon, Congo, Cameroon and the Central African Republic). The main goal of CEMAC is the creation of a single market with free movement of goods, people and capital (www.cemac.int). However, it rejects a number of common policies (e.g. free movement of people and goods). CEMAC is part of a wider entity – the “Economic Community of Central African States” (ECCAS; it also includes Burundi, Rwanda, Angola, DRC and the Democratic Republic of São Tomé and Príncipe).
Before the advent of the “oil era”, the economy of Equatorial Guinea relied mainly on traditional fields – i.e. agriculture (primarily cocoa, coffee production and logging). The discovery and subsequent extraction of rich oil deposits in the early 1990s contributed significantly to the rapid economic growth of this country. Equatorial Guinea was the fastest growing economy in the world at the time.
Today, the country’s economy is completely dependent on the extraction of hydrocarbons, investments in infrastructure and services for oil companies. In the medium term, Equatorial Guinea will remain an exporter of commodities (mainly oil and gas), its economy will therefore fluctuate cyclically depending on price fluctuations on world markets. Equatorial Guinea is the fourth largest oil producer in sub-Saharan Africa. It has the highest GDP/population. in sub-Saharan Africa (according to PPP up to 32,000 USD/inhabitant) and has the status of a country with an upper middle income. The GDP per capita here is higher than the Czech Republic thanks to oil extraction and a low population. But huge revenues remain in the hands of a narrow group around the president’s family, and 90% of the country’s population lives on less than $2/day, without water or electricity. Equatorial Guinea is in 144th place out of 187 countries in the global development ranking according to UNDP.
According to allcountrylist, the country’s business climate is considered one of the worst in the world. According to the latest evaluation of economic freedom carried out by the organization “Heritage Foundation”, Equatorial Guinea is classified in the group of “repressed” countries, out of 179 evaluated countries, it was ranked 173rd. The World Bank ranks Equatorial Guinea in 165th place out of a total of 189 countries assessed (see “Doing business 2015”). In addition, the country faces many serious problems (still insufficient infrastructure, high production costs, rigid labor market, complicated legal system, very slow judicial system influenced by state authorities, unenforceability of contractual obligations, excessive bureaucracy, corruption and lack of transparency). The subject of criticism is the completely non-transparent relations in the area of licensing in the oil, mining and forestry sectors.
The regime is aware of the unhealthy dependence of the economy on oil production, and has ambitious plans to get rid of this dependence. The government’s economic policy is guided by the National Economic Development Plan: Horizon 2020, which aims to diversify the economy (fishing, agriculture, mining of raw materials and petrochemicals, tourism, banking). In recent years there have been large investments in the construction of infrastructure (electricity, roads), huge sums have been invested in the construction of stadiums, a conference center, a very modern district has been built in Malabo, a new city (probably the future capital) of Oyala is being built on the continent, there are plans to build Africa’s largest petrochemical plant in Riaba, huge oil storage tanks on Bioko Island, building cable factories.
The share of industry in the creation of GDP is over almost 86%. Domestic industry is dominated by oil and gas extraction and processing. Other industry is insignificant, only woodworking is worth mentioning. Building materials, soap, some basic foods and beverages are produced locally and in small establishments.
Mineral extraction, oil and gas sector: Oil deposits in the offshore shelf of Equatorial Guinea were first discovered by the Spanish company CEPSA in 1991. The exploitation of the country’s oil potential “to the full” began in 1996. The two current largest deposits are located near the shores of Bioko Island, the third off coast of the mainland enclave of Rio Muni (Ceiba Field). Oil deposits (minable reserves reach billion barrels) are also accompanied by rich reserves of natural gas (reserves reach 127 billion m3). Average daily oil production (estimated) reached 254 thousand barrels in 2014 and is expected to continue to decline. The deposits are being mined slowly and new ones have not yet been found. The main foreign oil companies operating in Equatorial Guinea are ExxonMobil, Marathon Oil, Hess Corporation, Noble Energy and Tullow Oil. The Spanish Repsol also has an important place, Russia’s Gazprom, China’s CNPC and Nigerian companies are entering the country. In late 2014, the government offered 15 new exploration blocks, the results of which have not yet been announced. The extracted oil is partially processed in a refinery on Bioko Island, the second refinery is to be located on the mainland near Mbini. Although the government emphasizes the petrochemical industry (refineries, fertilizer production) in its Horizon 2020 strategy, most crude oil is exported unprocessed. The extracted gas (approx. billion m3/year) is liquefied (LNG and LPG) or methanol is obtained from it. The gas (LNG) is liquefied at the Punta Europa plant, with an annual production of 4 million m3 and exported to Japan, South Korea and Taiwan. The second liquefaction unit is to be built by 2016. The methanol production plant (Atlantic Methanol Production Company) began operations in 2001. It has an annual capacity of 1 million tons. LPG is then produced at the Alba plant. A feasibility study to build Africa’s largest petrochemical plant in Riaba is being handled by India’s Archean Fertilizer Pte. Ltd, the contract for the construction of huge oil storage tanks on Bioko Island was won by the Nigerian company Taleveras. The country’s supply of petroleum products and fuel is ensured by the Gettotal company, whose owners are the French consortium TotalFinaElf (80%) and the Guinean state with a 20% stake. The oil sector is a constant target of criticism by international institutions and non-governmental organizations. Equatorial Guinea does not meet the international standards of transparent extraction of natural resources EITI (Extractive Industries Transparency Initiative). The contracts concluded are not transparent, and until recently there was no control over licensing or payments. Oil revenues were (and continue to be) paid into secret offshore accounts owned by the president’s family and those closest to him. The amount of oil production, exports and revenue was first published in 2010, but statistics continue to vary widely.
Other natural resources in the country include smaller (yet unused) reserves of gold, manganese, uranium, bauxite, columbite (Nb2O5), tantalite (Ta2O5) and diamonds.
Construction: It contributes 6% to the creation of GDP. In an effort to diversify the economy, the government invested approximately 3 billion Euros (approximately a third of GDP) annually in the development of infrastructure (apartments, public buildings, roads, ports, airports, power plants, electricity and water networks). Huge sums have been invested in the construction of stadiums, a conference center, a very modern district has been built in Malabo, a new city (probably the future capital) of Oyala is being built on the continent, there are plans to build factories for the production of cables, transformers and an aluminum plant in Mbini (financial costs should reach 2 billion USD), the building of hotels and the tourism industry in general should be supported. Most contracts are implemented by Chinese (but also Egyptian, Turkish, French, Brazilian and Spanish) companies. Due to the drop in oil prices and production, however, the government will not be able to finance these ambitious plans – it already has to limit capital investments. It is therefore highly likely that due to the lack of funds, a large number of projects will be delayed or not implemented, and the construction industry will rather stagnate in the coming years.
Agriculture: contributes only around 2% of GDP, although it employs a full 70% of the economically active population. The country is not self-sufficient in food production – the basis of agriculture is small farms, most of the production is for personal consumption. Agricultural reform (construction of model farms/agricultural cooperatives) is therefore one of the pillars of the president’s plan for economic recovery and diversification. In addition to timber, cocoa and coffee, the main crops in Equatorial Guinea are rice, yam, cassava, bananas and oil palms. Breeding of domestic animals, especially cattle, is widespread.
After oil, Equatorial Guinea’s second most important source of income is timber. About 80 mining companies operate in the country, licenses have been granted for an area of approximately million ha. Wood production grew uncontrollably, especially in the early 1990s, and reached its peak in 1997 – 781,000 cubic meters of harvested wood. After that, extraction began to decrease to the current approx. 280,000 m3. Activities are governed by the Forestry Act of 1997 (mining is only done in the mainland part, logs must be processed at local sawmills, harvested areas must be reforested, part of the territory is protected). However, companies do not follow it. An ongoing problem is opaque licensing (the Ministry of Forestry is always run by a member of the president’s family), non-compliance with logging quotas and nature protection regulations – 85% of harvested wood is therefore still exported in the form of unprocessed logs.
Cocoa beans are the third most important domestic natural commodity. However, after the country’s independence, this sector of agriculture declined considerably. Back in 1969, farmers produced 34,000 tons of cocoa, but production gradually fell to around 3,500 tons. The government is trying to increase cocoa production with subsidies. The production of coffee also gradually decreased significantly. The production of cocoa and coffee is accompanied by an almost complete breakdown of the infrastructure for their processing.
Sea fishing has excellent conditions. The small isolated island of Annobon, belonging to Equatorial Guinea together with the surrounding sovereign waters, lies right in the middle of the richest fishing grounds of the Atlantic Ocean. However, this sector is also neglected, fishing is carried out using traditional methods, the catch does not exceed 700 tonnes per year, therefore fish are imported frozen from abroad.
Services: The share of trade and services in the creation of GDP was 6% in 2014 and, unlike industry, they experience growth of approx. 6%. The largest part of the service sector remains logistics, transport and distribution of goods (simple wholesale and retail services), especially for oil companies. The banking sector and telecommunications are undergoing major reform (see below). Tourism, which the government sees as one of the possibilities of income diversification, is still insignificant. It will require further substantial infrastructure development and significant investment. However, the influx of tourists to Equatorial Guinea cannot be expected – it will continue to be hampered mainly by the high prices of air transport, extreme prices of hotel services, rigid control of visitors and underdeveloped infrastructure.
Infrastructure: Compared to its neighbors, the infrastructure is more developed. However, this generally only applies to the vicinity of the capital Malabo and the mainland metropolis of Bata, where the positive influence of the oil boom is evident.
Energy: According to government sources, the capacity of the installed power plants is approximately 450 MW (of which 200 MW on the island of Bioko). The country has great hydropower potential – the Chinese company Sinohydro completed the Djibloho hydroelectric power plant with a capacity of 120 MW in 2012, which should cover 90% of consumption in the mainland part of the country. Another Sendje power plant with a capacity of 200 MW should be built by the Ukrainian company Duglas Alliance by mid-2017 (the technical equipment will be supplied by the French Alstom). The Chinese company China Machinery participated in the construction of a 154 MW gas-fired power plant on the island of Bioko, which supplies the capital, another 43 MW plant supplies the liquefaction station in Punta Europa. Chinese companies are also building a distribution network. No electricity is imported, none is exported – the transmission systems are not connected to neighboring countries at all.
Telecommunications: The level of telephony in the Republic of Equatorial Guinea is already very good by African standards and is still developing. About 14,000 fixed lines and about 550,000 mobile lines are in operation. In cities, public payphones operate on a card. One terrestrial satellite station (on Intelsat over the Atlantic Ocean) is used for international telephone connections, and the first optical submarine cable for international telephone connections (from Malaba and Bata) has also been in operation since 2002. There are two mobile operators operating in the country – Getesa (Orange) and Hits (Hits Telecom). There are currently 7 internet providers operating in Equatorial Guinea (only one in 2001), the country code is “.gq”. One state television station and one state radio station are allowed in the country. The only private radio station allowed belongs to the president’s son. Satellite TV reception is allowed.
Transport network: The backbone of the transport network in Equatorial Guinea consists of about 3,000 km of roads, of which about 10% were paved (asphalt). In recent years, however, the government has invested massively in the construction and renovation of the road network, and Spanish, French and especially Chinese construction companies are involved in the construction or reconstruction. The majority of the road network (especially in the continental part) still consists of dirt roads, which are passable only by four-wheel drive cars during the rainy season. There is no railway line in operation in the country. The Republic of Equatorial Guinea currently has three major ports – Malabo, Luba and Bata. Malabo and Luba are probably the deepest ports in the entire Gulf of Guinea region, but they are congested and undergoing extensive rehabilitation. The port of Luba, which mainly serves oil companies, is undergoing reconstruction and in the future should become one of the largest shipping junctions for oil and gas mining companies operating in the coastal shelves of all surrounding countries. There are no river waterways in Equatorial Guinea. There are a total of 7 airports in Equatorial Guinea, six of which have a paved landing area. The international airport is in Malabo and Bata. Domestic and regional interstate transport is provided by the airline Ceiba, Punto Azul and Cronos.
Development aid received and provided: Despite huge revenues from oil extraction, Equatorial Guinea is still classified as a least developed country. However, it does not belong to the group of so-called highly indebted poor countries (HIPC – Highly Indebted Poor Country). The willingness of the international community to provide foreign aid to the country is not very high due to high revenues from oil and very poor governance (non-transparent management of the state, dictatorship of the president and his family, suppression of human rights and poor communication with international institutions). The World Bank and the IMF provided little technical assistance aimed at strengthening the capacity of central authorities (eg the statistical office) and transparency in the granting of mining licenses. According to the OECD, in 2015 foreign aid received reached 8 million USD. The largest bilateral donors were France and Spain, aid was provided in the field of education and healthcare. Favorable loans for the implementation of infrastructure projects (implemented by Chinese companies) are provided by China. Equatorial Guinea, on the other hand, participates financially in solving the crisis in the Central African Republic.
- Official name of the state, composition of the government
- Demographic trends: Population, average annual increase, demographic composition (including nationalities, religious groups)
- Basic macroeconomic indicators for the last 5 years (nominal GDP/cap., development of GDP volume, inflation rate, unemployment rate). Expected development in the territory with an emphasis on the economic sphere.
- Public finances, state budget – income, expenditure, balance for the last 5 years
- Balance of payments (current, capital, financial account), foreign exchange reserves (last 5 years), public debt to GDP, foreign debt, debt service
- Banking system (major banks and insurance companies)
- Tax system
