Brief equatorial guinea


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Brief equatorial guinea

  1. 1. Country Brief EQUATORIAL GUINEA April 28, 2009HighlightsPositive Trends• The government has invested heavily to upgrade and modernize the infrastructure.• Growth has been very rapid in recent years, spurred by higher oil prices.• The external debt is very modest.Negative Trends• Equatorial Guinea is not a democracy. Civil and Political rights are severely limited.• Despite the recent economic boom, poverty remains pervasive.• Corruption is a major problem.GeographyEquatorial Guinea is a country with a tropical climate that is situated in central West Africa. Itconsists of a land mass on the African continent that borders Gabon, Cameroon and the Gulf ofGuinea and several islands, the largest of which is the island of Bioko that lies about 24.5 milesoff the coast of Cameroon. The total land area is slightly smaller than Maryland. Thepopulation is 633,441. The capital and the largest city is Malabo. It is located on the island ofBioko and has a population of around 100,000. The major port is at Bata, which is the secondlargest city with a population of about 70,000. It is located on the mainland.Arable land accounts for 4.6 percent of the area of the country, 38.9 percent of the populationlives in urban areas and 58.2 percent of the country is covered by forests. There are 296kilometers (184 miles) of coastline and 3.6 percent of the land area is devoted to permanentcrops. The median age is 18.9 years, the birth rate is 36.5 per 1,000 people, 41.9 percent of thepopulation is under 15 years old, 24.1 percent is between 25 and 44 and 4.1 percent are 65years and older. The population growth rate is 2.4 percent (UNDP estimate for 2005-2015).The time zone is one hour ahead of Greenwich Mean Time. Equatorial Guinea is a formerSpanish colony that received its independence on October 12, 1968. It is the only country inAfrica where Spanish is the main language. French is also an official language. In July 2007,President Teodoro Obiang Nguema announced that Portuguese would become the third officiallanguage. The decision was prompted by the government’s desire to apply for membership tothe Community of Portuguese Language Countries.Economic OverviewThe energy sector dominates the economy with oil accounting for 73.8 percent of GDP in 2007.Manufacturing related to the oil sector was responsible for 11.6 percent of GDP while 1 400 Madison Avenue 18th Floor, New York, NY, 10017
  2. 2. construction had a 7.9 percent share. Agriculture, forestry and fishing were just 2.7 percent ofGDP. About two-thirds of the work force is employed in agriculture. The recent economic boomprompted by rising oil production and prices has significantly reduced unemployment. In 2007,it was estimated at 8 percent. This is down from 30 percent in 1998. A booming economy hasattracted migrant labor from other West African nations. An October 22, 2008 article on the website noted that there were more than 300,000 people from outside the country.The article said “Malabo is filled with Senegalese jewelers and restaurant owners, Nigerian artdealers and Beninese, Lebanese and Chinese businessmen.”The crops grown are coffee, cocoa, rice, yams, cassava, bananas and palm oil. Petroleum,natural gas and timber are the major natural resources. There are also small deposits of goldand bauxite. Petroleum and natural gas exploration, liquefied natural gas, fishing and sawmilling are the principle industries.The economy rose at an annual rate of 21.9 percent between 1999 and 2008. This compares to0.8 percent for Gabon, 3.8 percent for Cameroon, 4.2 percent for the Republic of the Congo and8.0 percent for Nigeria. According to the IMF, the per capita income in 2008 was $16,262. Thiswas 1,821 percent above the level of 1999 and it placed Equatorial Guinea 45th of 178countries and territories that the IMF compiles per capita data for. Equatorial Guinea has thehighest per capita income in Africa.The high per capita income presents a false and misleading picture of the living conditions in thecountry. A 2008 African Development Bank/OECD Report noted that “The sustained economicgrowth and the increase in oil revenues have had very little effect on poverty reduction and onimproving the general standard of living of the population.”Energy SectorOil production surged from 102,000 barrels per day (bpd) in 1999 to 368,530 bpd in 2007 ofwhich 1,000 bpd was consumed domestically and the remainder was exported. In 2007,Equatorial Guinea was the seventh largest oil producer in Africa, following Nigeria, Algeria,Libya, Angola, Egypt and Sudan. For 2008, oil output was estimated by the Energy InformationAgency (a division of the US Energy Department) at 359,200 bpd. Total proven oil reserves areestimated at 1.1 billion barrels, which is 8.4 years of output at the 2008 level of productionThe Ministry of Mines, Industry and Energy is the regulatory body that supervises the petroleumindustry. The national oil company, GePetrol, which was founded in 2002, manages thegovernment’s interest in production sharing agreements and joint ventures with the internationaloil companies that operate in the country. GePetrol and Sonagas, the state owned natural gascompany that was founded in 2005, are mandated to own at least a 35 percent interest in allenergy projects. Among the major oil companies with operations in the country are ExxonMobil,Amerada Hess, ChevronTexaco, Vanco (US), Atlas Petroleum Company (US), Roc Oil(Australia), Petronas (Malaysia), Sasol Petroleum (South Africa), Glencore (Switzerland),Marathon Oil, Noble Energy (US), Tullow Oil (UK), Petrobras (Brazil), Oil and Natural GasCorporation (India), the Nigerian National Petroleum Corporation and the China NationalOffshore Oil Company (CNOOC). In April 2008, Devon Energy (US) sold its operations toGePetrol for $2.2 billion. Getotal, jointly owned by Total and the government, has a monopolyon the distribution of petroleum products, all of which are imported due to a lack of refiningcapacity.Equatorial Guinea has large reserves of natural gas which are estimated at 1.3 trillion cubic feet.That is equivalent to 28.3 years of output at the 2006 level of 46 billion cubic feet. The bulk ofthe gas reserves are located offshore Bioko Island. Eon of Germany, Fenosa of Spain and GalpEnergia of Portugal have formed a consortium that will work with Sonagas to construct anetwork of pipelines and processing facilities on Bioko to export natural gas to Europe. In return, 2
  3. 3. the companies will receive long-term natural gas contracts. Eon will own 25 percent of theventure, Fenonsa and Galp Energia will each own 5 percent, Sonagas will have a 50 percentinterest and the remainder will be owned by the government.The electricity sector is owned and operated by the state-run monopoly, Sociedad deElectricidad de Guinea Ecuatorial S.A. (SEGESA). The power supply is unreliable because ofaging equipment and as a result, consumers often experience prolonged blackouts. Thegovernment has plans to upgrade and modernize the electrical grid to make it moredependable. Many businesses have diesel and gasoline powered generators as back-upsources of power supply. About 9 percent of the electricity that is generated is derived fromhydro-power and the remainder is from fossil fuels.External AccountsThe recent sharp rise in oil prices (up until the third quarter of 2008) and increasing oilproduction fueled a sharp surge in the trade surplus. Between 2004 and 2008, the IMFestimated it rose 261.4 percent to $11.179 billion as exports swelled by 217.7 percent andimports climbed 132.1 percent. The surplus was equal to a staggering 57.3 percent of GDP.Crude oil, liquefied natural gas, liquefied petroleum gas and methanol accounted for 99.3percent of total exports in 2008. Most of the rest consisted of timber. According to IMF data,public sector equipment was the largest import category with a 57.3 percent share followed byinputs and equipment for the petroleum sector and petroleum products, which togetheraccounted for 27.7 percent of the total. The US was the largest export market in 2007,accounting for 20.6 percent of the total followed by China at 18.8 percent and Spain with a 13.9percent share. The US was also the largest source of imports at 19.6 percent. In second placewas Spain with 13.9 percent and the Ivory Coast was third with 11.9 percent.The trade surplus is offset to a large extent by outflows of income remittances from energycompanies. According to the IMF, the deficit in the net investment income category surged from$2.810 billion in 2004 to $6.610 billion in 2008. The current account surplus in 2008 was $2.225billion. This was well above the $541 million surplus in 2007 and was equal to 11.4 percent ofGDP.Surging oil export revenue has substantially boosted foreign exchange reserves. The IMFestimated that gross official foreign assets at the end of 2008 were $8.472 billion, which was414.1 percent above the level of 2004. This was equal to 27 and three quarters months ofimport cover.External Debt and Budget BalanceThe total outstanding medium and long-term debt at the end of 2007 was just $136.3 million,which was equal to a mere 1.1 percent of GDP. Of the total, 41 percent was owed to theInternational Development Agency (a division of the World Bank) and 34.5 percent was owed tothe African Development Bank (AfDB). Only 15.3 percent was bilateral. Debt servicing costs in2007 (including principal payments) were $37.1 million. This was equal to 0.3 percent of GDP,0.4 percent of the exports of goods and non factor income and 0.8 percent of governmentreceipts.The budget is heavily dependent on receipts from the energy sector (including corporate taxes,and income from production sharing arrangements). For the 2008 budget, it was responsible for91.8 percent of total revenue. Non hydrocarbon personal income taxes meanwhile brought injust 0.6 percent of government receipts and the value added tax had a 1.6 percent share. Withregard to spending, the largest allocation was capital expenditures, which accounted for 83.9percent of the total. The budget had an estimated surplus of 1,433.5 million CFA francs in 2008. 3
  4. 4. This was equal to 17.1 percent of GDP. Excluding oil revenue however, the budget registered adeficit of 47.4 percent of GDP.Agriculture SectorAgriculture was once a main pillar of the economy with cocoa and coffee among the largestexport earners. The agriculture sector though has been in long-term decline. Most of agricultureis subsistence in nature with productivity very low because of lack of mechanization, inadequateaccess to credit and small plot sizes. A considerable amount of the food requirement is importedfrom the Cameroon.Logging has become a major industry. The sector is dominated by Rimbunan Hijau (Malaysia).It has access to more than a dozen concessions that total over 300,000 hectares (741,000acres) and account for over half of the log production. About 60 percent of the total forest areais under concession to logging companies.InfrastructureThe government has embarked upon a major program to modernize the inadequateinfrastructure. Between 2004 and 2007, infrastructure spending surged 116.1 percent to $920.6million.There are 2,880 km (1,788 miles) of roads of which 24 percent are paved. In its March 12, 2009travel advisory, the US State Department noted that “Generally…road networks areunderdeveloped. There are few road and traffic signs, though more signs are becomingevident…During the rainy season, many roads are passable only with four-wheel-drivevehicles. However, new road construction and repair is taking place all over the country androad conditions have improved markedly over the course of the past year.” The AfricanDevelopment Bank (AfDB) has financed an upgrading of the roads from Malabo to Luba andRiaba, a Chinese company has finished a project linking Mongomo to Bata on the mainland,and the European Union has financed the construction of a road network linking EquatorialGuinea to Cameroon and Gabon.There are 5 airports all of which are paved. The main international airport is Saint IsabelAirport. It is located on Bioko Island, 9 km east of the capital. The airport has undergoneextensive upgrading and modernization in recent years. It has a runway of 3,200 meters andcan handle Boeing 747s. CEIBA Intercontinental is the national carrier. The airport is servicedby Air France, Benin Golf Air, Cameroon Airlines, Delta Airlines, Iberia, KLM, Lufthansa, RoyalAir Maroc and Swiss Air. There are flights to Abuja, Amsterdam, Atlanta, Casablanca,Contonou, Douala, Frankfurt, Lagos, Libreville, Madrid, Paris (Charles De Gaulle) and Zurich.There is no railway service.The largest port is located at Bata. It is one of the deepest ports in the region with a maximumdepth of 11.58 meters (38 feet). Since there is no natural harbor, a jetty has been constructedto facilitate offshore handling of cargo. The quay is 600m long. The port handles 240,000 tonsof cargo per year. The port at Malabo is the second largest in the country. A major expansionproject was begun by Somagec (Morocco) in 2007. When completed, it will have a 485m dock,a 6,000m operating area, 2 storage areas with 8,400 cubic meters of capacity and a passengerterminal with a 1,200m platform. At present, the port handles 200,000 tons of cargo a year. Thethird largest port is at Luba, which is on Bioko island, 50 km from Malabo. For a long time it wasinactive but it now serves as an oilfield service logistics base. The port has dockyard facilities,berthing space for ocean-going ships, warehousing, storage and workshop facilities for oillogistical equipment and repair and maintenance yards. It is also a duty free zone and has ahelicopter landing pad. 4
  5. 5. There is no oil refinery.There are 38 km of natural gas pipelines.Marathon Oil Corporation is completing a $1.4 billion LNG facility on Bioko Island.Potable water is available in the major towns but is not always reliable because of poormaintenance and aging infrastructure. As a result, there are frequent supply interruptions. Amajor project to upgrade the public water system is underway. The work in Malabo and Bata isexpected to be completed this year.Informal EconomyAn article entitled “The Political Economy of Oil in Equatorial Guinea” published in the March2006 edition of the African Studies Quarterly noted that “Criminal industries already known toflourish in Equatorial Guinea include toxic waste dumping, drug trafficking, pirate fishing, armsand aircraft smuggling, and forced labor of children.” Illegal logging is also a major illiciteconomic activity. According to a 2002 World Bank study, illegal logging accounted for 70percent of logging.Political Environment Index Rank Score Status: Not Political Rights: 7.0/7.0 Freedom House Index 2009 Free Civil Rights: 7.0/7.0GovernmentPresident Teodor Obiang Neguema Mbasogo has been in office since August 3, 1979 when heseized power in a military coup. On June 25, 1989, he was elected in an unopposed contest.He was re-elected on February 25, 1996 and on December 15, 2002. The 2002 elections wereboycotted by the opposition because of concerns the voting would not be free and fair. The nextPresidential election is scheduled for December in 2009. President Teodor Obiang NeguemaMbasogo has indicated that he will run for a renewed mandate.There is a unicameral House of People’s Representatives (Camara de Representantes delPueblo) that has 100 seats. Members are elected by popular vote to a five year term. Suffrageis 18 years. In the May 4, 2008 elections, President Obiang’s Democratic Party of EquatorialGuinea (PGDE) and its main ally, the Democratic Opposition, captured 99 of the seats. Thelegislature has very little power as the constitution vests all executive power with the president.In its political assessment of Equatorial Guinea, Freedom House wrote that it “is not an electoraldemocracy, and the country has never held a credible election. President Teodoro ObiangNguema Mbasogo…holds broad powers and limits public participation in the policy-makingprocess….There are 13 registered political parties…6 of which are aligned with the PDGE. Theactivities of the remaining parties…are closely monitored by the government.”The 1982 constitution gives the President extensive powers, including naming and dismissingmembers of the cabinet, making laws by decree, dissolving the Chamber of Representatives,negotiating and ratifying treaties and calling legislative elections. The President is also thecommander in chief of the armed forces and appoints the heads of the seven provinces. 5
  6. 6. Civil LibertiesFreedom House has designated Equatorial Guinea as “not free” and has assigned it a rating of7 out of 7 for political and civil rights. The lower the rating the higher the degree of political andcivil liberties. Equatorial Guinea is one of only eight countries that Freedom House has assigneda rating of 7 for both political and civil rights. The others are Myanmar, Libya, North Korea,Somalia, Sudan, Turkmenistan and Uzbekistan.Equatorial Guinea is rated 155 of 167 nations in the 2008 EIU Democracy Index.Press freedom is constitutionally guaranteed, but is actually severely restricted in practice. The1992 press law authorizes the government to censor all publications. Virtually all of the printand broadcast media are state run. Libel is a criminal offense, and all journalists are required toregister with the government. The only internet provider is affiliated with the governmenttelephone monopoly. There have been unconfirmed reports that the government monitors useof the internet. Freedom House ranked Equatorial Guinea 186 of 195 in its Freedom of thePress survey for 2008 and characterized the press as “not free.”Freedom of religion is generally respected. Freedoms of association and assembly howeverare severely restricted. Official authorization is required for all gatherings that are deemed to bepolitical in nature. The constitution guarantees the right to form and join trade unions. Theserights though are not respected. There is only one legal trade union. There are many legalbarriers that prevent workers from bargaining collectively.The judiciary is not independent. Laws with respect to search, seizure and detention are ignoredby the security forces which according to Freedom House act with “impunity”. Human Rightsorganizations have accused the government of widespread civil rights abuses including torture,the detention of political opponents, and extrajudicial killings.Country Credit Ratings Credit Rating Standard & Poor’s Moody’s Fitch Ratings (as of date of publication) N/A N/A N/AEquatorial Guinea is not rated by any of the major credit rating agencies.Business Environment Index Rank Score Bertelsmann Transformation Index 2008 N/A N/A Economic Freedom of the World Index 2008 N/A N/A Fund for Peace - Failed State Index 2008 42/177 88/120 Heritage Foundation Economic Freedom Index 142/178 51.3/100.0 2009 Milken Institute Capital Access Index 2007 N/A N/A Transparency International Corruption 171/180 1.7/10.0 Perception Index 2008 UNCTAD – Inward Potential Performance Index N/A N/A 2004-2006 World Bank Ease of Doing Business 2009 167/181 N/A 6
  7. 7. World Bank Gov Indicators 2008, Control of 2.4 Percentile -1.37 Corruption World Bank Gov Indicator 2008, Political Stability 38.0 Percentile -1.37 World Bank Gov Indicator 2008, Regulatory 7.8 Percentile -1.35 Quality World Bank Gov Indicators 2008, Rule of Law 10.0 Percentile -1.16 World Economic Forum – Global Competitive N/A N/A Index 2008-2009Openness to Foreign InvestmentThe government encourages foreign investment to spur economic growth and employment. Nolegal distinctions are made between foreign and domestic companies. There are no restrictionson the repatriation of profits, dividends, capital, interest and principal payments on foreign debt,lease payments, royalties and management fees. Foreigners can own land. There have beenno instances of expropriation of property in recent years. Some sectors of the economy arerestricted to nationals including the arms industry, the storing of toxic waste and the productionof alcoholic beverages, excluding beer. Foreign companies must have at least 70 percent oftheir work force comprised of nationals. An exception is made for the oil sector where the ratiois a maximum of 30 percent. Dividends paid to non-resident entities are subjected to a 25percent withholding tax. Foreigners can open foreign exchange accounts but must first obtaingovernment approval to do so. The top income tax and the corporate tax rates are 35 percent.A value-added tax (VAT) was introduced in February 2008.Despite the relatively liberal foreign investment framework, the State Department’s 2005Investment Climate Statement characterized the business environment as “extremelychallenging.” It said, “Senior government officials have extorted money from foreigncompanies…The investment code, while liberal in intent, is extremely bureaucratic in practiceand open to manipulation…The tax system is not transparent, and basic tax laws are oftenunavailable for review by foreign companies or their representatives. Enforcement of taxationand equal treatment is often arbitrary and the government has attempted to extort additionalrevenue from foreign companies through sudden changes to the tax code…Many aspects ofproperty rights are ill defined and inadequately protected. The execution of judicial decisions isslow and fraught with administrative and legal bottlenecks…The right of private ownership isrecognized in Equatorial Guinea, but is limited in practice by a dysfunctional judiciary,inadequate definitions of property rights, and widespread inconsistencies in governmentdecision-making.”Foreign InvestmentData from the UNCTAD indicate that FDI in 2007 was $1.726 billion. This was above the$1.656 billion level in 2006 and represented 44.7 percent of gross fixed capital formation. Thetotal stock of FDI (book value) at the end of 2007 was $10.745 billion, which was equal to 102.5percent of GDP.Most of the FDI is concentrated in the energy sector. French telecom has a large stake in thetelecom sector, owning 40 percent of GESTA, the phone company while its Orange subsidiaryprovides cellular service. Sofitel, which is owned by Accor (France), owns one of the majorhotels in Malabo. Incat of the UK has been involved in revitalizing the port of Luba. Pils of theNetherlands manages the port of Luba. Cepesca of Spain has constructed a fish processingplant at Mbini. China Dalian, Get and Chaabi of Morocco and Seguibat enterprises of Lebanonare involved in a program to build subsidized housing. 7
  8. 8. PrivatizationThe government has attempted to privatize SEGESA, however, foreign companies have shownlittle interest in buying it.According to World Bank Data, privatization receipts between 2000 and 2007 were just $2million.Financial SectorThe financial sector is small and underdeveloped. There are four banks; BGFI Bank GuineeEquatoriale (a subsidiary of BGFI of Gabon), Caisse commune d’ espargne et d’ investissement(a subsidiary of CCEI of Cameroon, SGBGE (a subsidiary of Societe Generale) and BancoNacional de Guinea Equatorial (BANGE)). The insurance sector consists of three insurancecompanies and one reinsurance company. In its Article IV Consultation report that wasreleased on March 25, 2009, the IMF noted that the financial system “appears generallysound…Bank real lending rates have come down in recent years, reflecting a more competitiveenvironment, but lending is mainly concentrated in public infrastructure projects. Consumercredit remains modest and the mortgage market is undeveloped. Relatively few householdshave bank accounts.” Non-performing loans as of 2007 were equal to 10.7 percent of alloutstanding loans.Equatorial Guinea uses the Central African CFA franc. There is also a West African CFA francbut it is not legal tender in the Central African CFA zone. The currency is issued by the Banquedes Etats de l’ Afrique Centrale (BEAC), which is located in Yaounde, Cameroon. It is theCentral Bank for the six countries; Cameroon, the Central African Republic, Chad, the Republicof the Congo, Equatorial Guinea and Gabon that use the Central Africa CFA franc. Thecurrency is fixed against the Euro at CFA655.957 per Euro. It dropped by 3.9 percent againstthe US dollar in 2008 and in the year top date period ending April 27th, 2009, it slipped by 6.4percent.The countries that use the Central African CFA franc are members of the West Economic andMonetary Community of Central Africa (CEMAC). It was established to promote economicintegration by promoting trade and a common market. The members share a common financial,regulatory, and legal structure, and maintain a common external tariff on imports from non-CEMAC countries. There is free movement of capital within the CEMAC. Unlike in the Westzone CFA countries, there is not a joint stock exchange.Corruption and TransparencyEquatorial Guinea has not ratified the UN Convention Against Corruption. It is ranked 171 of180 in Transparency International’s 2008 corruption perception index. In the previous year’sindex, it was ranked 168th. The law provides penalties for official corruption. However, thoselaws are not enforced. Corruption is widespread and pervasive. According Freedom House,the president and “his inner circle…have reaped huge personal profits from the growing oilindustry.” The State Department’s 2009 Human Rights Report (which reviewed developments in2008) said “officials frequently engaged in corrupt practices with impunity. Corruption continuedto be a severe problem. Officials by law must declare their assets, although the declarationswere not published publicly. There was no requirement that officials divest themselves ofbusiness interests that were in potential conflict with official responsibilities, and no lawprohibiting conflict of interest.”In an attempt to polish its international image, the government has indicated that it will join theExtractive Industries Transparency Initiative (EITI), which encourages transparency and 8
  9. 9. accountability in extractive industries in order to ensure that earnings from natural resources arenot siphoned away by corrupt practices. Equatorial Guinea obtained candidate status from theEITI Board on February 22, 2008 and has until March 2010 to be validated as a compliantcountry. This may prove to be difficult as transparency surrounding the oil industry continues tobe opaque.On December 2, 2008, several anticorruption groups filed a lawsuit in Paris against PresidentObiang and two other African heads of state, accusing them of purchasing luxury homes inFrance with embezzled public funds. Also in December, a Spanish human rights group filed acomplaint with anticorruption public prosecutors in Spain, alleging that members of PresidentObiangs family and high-ranking political officials close to him had illegally embezzled 12.7billion CFA francs from a state petrol company to buy homes in Spain, and had laundered thesepublic funds between 2000 and 2003 in American and Spanish banks.In 2004, the US Senate Permanent Subcommittee on Investigations released a report indicatingthat Riggs Bank helped top officials of the government misappropriate hundreds of millions ofdollars in oil revenue. According the report, “Between 1995 and 2004, the bank oversaw asmany as 60 accounts containing as much as $700 million, making Equatorial Guinea its largestsingle customer. Among those holding such accounts were the president and members of hisfamily…oil companies had made payments into the personal accounts of Equatorial Guineanofficials that were used for land purchases, office leases, and the education of the children ofthe countrys leaders…some Equatorial Guinea ministers and their families had come todominate certain sectors of the economy and, in some cases, had become virtual economicgatekeepers for foreign companies wishing to do business in the country."In early, 2006, the President’s son, Teodorín Obiang, bought numerous luxury cars includingtwo Bugatti Veyrons, costing over a million euros apiece. An investigation by Tracfin, theFrench anti-money laundering service, into the purchase concluded in November 2007 that themoney most likely came from “laundered proceeds of misappropriated public funds."On November 10, 2006, the British newspaper the Guardian reported that Teodorin bought a 16acres 15,000 square foot mansion with eight bathrooms, a pool, a tennis court, a designer golfcourse and “sprawling gardens speckled with fountains” in Malibu, California, for $35 milliondollars. The paper noted that his monthly salary as a minister in his father’s cabinet was about$5,800. It said, “he appears to spend as little time as possible fulfilling his duties as the ministerof agriculture and forestry…Instead he flits between South Africa, France and the US, pursuingbusiness ventures such as a failed rap label while acquiring property and a fleet of Ferraris,Lamborghinis and Bentleys.”Equatorial Guinea fares poorly in many of the World Bank’s key indicators. It is ranked 167 of181 countries in ease of doing business. This compares with a ranking of 165 in the previoussurvey. It is ranked 174th in starting a business, 178th for employing workers, 131st in gettingcredit, 69th in enforcing contracts, 69th in registering property, 142nd in protecting investors and181st in closing a business. With respect to the World Bank’s governance indicators, EquatorialGuinea performs poorly. For, control of corruption, rule of law and regulatory quality, it is rankedat or below the 10th percentile. For political stability, it is at the 38.0 percentile.The Heritage Foundation ranks Equatorial Guinea 142 of 178 and it is ranked 42 of 177 in the2008 Failed State Index (a low ranking indicates a high degree of economic and politicaldysfunction). Equatorial Guinea is not ranked in the Fraser Institute World Freedom Index, theBertelsmann Transformation Index, the World Economic Forum’s 2007-2008 CompetitivenessIndex, the UNCTAD Inward Potential Performance Index for 2004-2006, or the Milken InstituteCapital Access Index. 9
  10. 10. Standards Compliance Assessments IMF Dissemination Standard Subscription Status Special Data Dissemination Standard Not a SDDS Subscriber General Data Dissemination Standard Not a GDDS Subscriber IMF Assessment Standards Assessed Dates Compliance Level Reports on Standards and Fiscal Transparency April 27, 2005 Low Codes (ROSCs) Financial Sector Assessment N/A Programs (FSAPs)Equatorial Guinea has been assessed by the IMF in Fiscal Transparency through its ROSCProgram. The report said, “Several weaknesses in transparency need to be addressed urgently.Priority areas identified for improvement are: establishment of a clear fiscal policy framework formanagement of petroleum wealth…reconciliation of oil revenue flows; and clarification of themandate and corporate governance structure of the national oil company GEPetrol.” The IMFrecommended a number of steps to increase fiscal transparency including using the non-oilfiscal balance as the principal fiscal target, appointing an independent auditor to reviewcompany and government reports and unifying the investment and current budgets.Human Capital Index Rank Score UNDP Human Development Index 2008 115/1778 0.717/1.000Social IndicatorsEquatorial Guinea ranks 115 of 179 in the UNDP Human Development Index in 2009. Althoughit has the highest per capita income in sub-Saharan Africa, many of its major social indicatorsreflect the existence of widespread poverty. The infant mortality rate is 123 per 1,000 live births,57 percent of the population does not have access to clean drinking water, the probability of notsurviving till the age of 40 is 35.6 percent, 19 percent of children under 5 are underweight fortheir age, 49 percent of one-year olds are not fully immunized against measles, 35 percent ofbirths are not attended to by a skilled health care professional, 49 percent of the populationdoes not have access to improved sanitation facilities, the under five mortality rate is 205 per1,000 live births,13 percent of infants are born with low birth weight, the maternal mortality rateis 680 per 100,000 live births, the probability of dying between the ages of 15 and 60 is 44.9percent and the projected life expectancy for 2009 (according to the US Census Bureau) is 61.6years (62.5 years for females and 60.7 years for males).Technology AccessThere are 20 mainline telephone lines and 434 cellular subscribers per 1,000 people. Internetuse is 16 per 1,000 people, there are 10 personal computers per 1,000 people, there are 0.4broadband subscribers per 1,000 people, 26 percent of households have a television and thereare 340 radios per 1,000 people. The per capita consumption of electricity is just 52 kilowatthours (in the US, it is 14,240 kilowatt hours). 10
  11. 11. Equatorial Guinea is ranked 145 of 182 in the UN’s 2008 E-Government Readiness Index. TheIndex measures the use of information and communication technology to “provide and improvegovernment services, transactions and interactions with citizens, businesses, and other arms ofgovernment.”Health IndicatorsThere are 30 physicians per 100,000 people, 50 nurses and midwives per 100,000 people, 20laboratory health care workers per 100,000 people, 20 pharmacists per 100,000 people, therewere just 15 dentists in 2004 and there are 110 hospital beds per 100,000 people.The prevalence of HIV/AIDs among the adult population (15-49 years old) is 3.2 percent, theprevalence of tuberculosis cases is 404 per 100,000 people (in the US, there are just 3 per100,000 people) and the prevalence of obesity is 15.4 percent for females and 6.4 percent formales. In 2006, there were 193,341 cases of malaria and 1,091 deaths from malaria.The per capita health care expenditures in 2005 were $282. This compares to $6,350 in theUS.In a World Heath Organization Survey on the leading causes of death for 2002, HIV/AIDS wasresponsible for the largest number, with a 17 percent share, followed by malaria at 11 percent.Diarrhea diseases and lower respiratory inflections were each tied in third place at 6 percentshare.In its March 12, 2009 travel advisory, the State Department said, “Medical facilities areextremely limited. Pharmacies in Malabo and Bata stock basic medicines including antibiotics,but cannot be counted on to supply advanced medications. Outside of these cities, manymedicines are unavailable… The sanitation levels in even the best hospitals are very low thoughthe new Israeli-built and staffed La Paz Hospital in Bata approaches European standards ofsanitation and is reported by Red Cross officials to be the best in the region. Doctors andhospitals often require immediate payment for health services, and patients are often expectedto supply their own bandages, linen and toiletries. The Malabo hospital is undergoing acomplete update, with expected completion in late 2009…Malaria is a serious problem andthere are periodic outbreaks of cholera.”In the World Health Organization’s ranking of the World’s Health Care Systems, EquatorialGuinea is in 171st place of the 190 countries surveyed.EducationEducation is compulsory for ages 7 to 11 but is not stringently enforced. The costs of tuition,books, uniforms and other fees make education unattainable for the poor. Many schools areinadequately equipped. Untrained school teachers are common. There are an insufficientnumber of schools. Primary school begins at age 7 and continues for 5 years. Of the studentswho enroll in Grade 1, 93 percent graduate. The pupil/teacher ratio in primary school is 32:1.Secondary education begins at age 12 and is completed in 7 years.The adult literacy rate is 87 percent for those 15 years and older. The average for sub-SaharanAfrica is 62.1 percent. The net enrollment rate in primary school is 84 percent for girls and 99percent for boys. This compares to the sub-Saharan average of 67 percent for girls and 73percent for boys. The ratio of primary school age children who are not in primary school is 11percent. The school life expectancy is 9.6, which is higher than the regional average of 8.2years. 11
  12. 12. Economic Data and Outlook IMF Country Data Overview 2008 (Est.) GDP GDP: GDP per CPI: Current Budget FDI Growth capita: Account as deficit as (UNCTAD % of GDP % of GDP 2007) 7.4% $20.163 $16,262 5.9% 11.4% 17.1% $1.726 bln bln IMF Article IV Consultation In its Article IV Consultation Report of March 25, 2009, the IMF noted that the economy in 2008 was underpinned by high oil prices and increased government capital spending. It warned that the 2009 budget was too expansionary and therefore could fuel inflationary pressures. In addition, it urged the government to improve public financial management procedures, expand access to credit for small and medium sized businesses and indicated that “the weak statistical base hinders macroeconomic assessments.”Economic OutlookIn light of Equatorial Guinea’s great dependence on the energy sector to generate export andgovernment revenue, the recent sharp decline in oil prices suggests that 2009 will be a difficultand challenging year. After rising by 21.4 percent in 2007 and 11.3 percent in 2008, the IMF ispredicting a 5.4 percent retreat in the economy this year and a further descent of 2.8 percent in2010. The current account meanwhile is expected to register its first deficit since 2005 and thebudget will probably also be in deficit following last year’s surplus of 17.1 percent of GDP asgovernment revenues are severely curtailed by the plunge in oil prices. The high level of foreignexchange reserves however provides the government with the resources to finance the budgetdeficit as well as to continue its aggressive capital spending program which is designed tomodernize and upgrade the infrastructure.Over the medium-term, the government must devise a strategy to diversify the economy awayfrom its great dependence on the energy sector. This is especially important as in the absenceof new discoveries, oil production has probably peaked. The government has plans to turn thecountry into the Dubai of West Africa. However, a shortage of skilled labor, pervasive corruptionand the lack of incentives to develop non-energy industries will make this a difficult goal toachieve.Membership in international organizations Financial Action Task Force (FATF) Not a member International Center for Settlements of Not a member Investment Disputes (ICSID) International Federation of Accountants (IFAC) Not a member Multinational Investment Guarantee Agency Yes, a member (MIGA) United Nations Convention Against Corruption Not a signatory World Intellectual Property Organization (WIPO) Yes, a member World Trade Organization (WTO) Observer status 12