2019 Investment Climate Statements: Equatorial Guinea
The Republic of Equatorial Guinea is endowed with oil and gas resources and hosts billions of dollars in direct U.S. investment that has been instrumental to extracting those resources. Discovery of oil in the 1990s resulted in rapid economic growth in the early 2000s. However, according to certain businesses, corruption, perceptions of a biased judiciary, and a burdensome, inefficient bureaucracy undermine the general investment climate in the country. Growth has slowed as operational oil fields have matured and are now in decline. International watchdog organizations give Equatorial Guinea one of the world’s lowest rankings in various global indices, including those for corruption, transparency, and ease of doing business. Companies have reports that these ratings underscore the challenging and opaque environment in which both local and foreign businesses must operate. The government of the Republic of Equatorial Guinea is seeking investment in several sectors: agribusiness; fishing; energy and mining; petrochemicals, plastics and composites; travel and tourism; and finance. Most of these sectors are undeveloped. The Equatoguinean domestic market is small, with an estimated population of one 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.
The government of the Republic of Equatorial Guinea has worked with international partners, including the World Bank and the International Monetary Fund (IMF) since March 2014 to analyze ways to improve the business climate. The government implemented some recommendations, launching a one-stop-shop for investors and entrepreneurs on January 14, 2019, and instituting certain tax exemptions and other incentives to attract investment.
Equatorial Guinea has made significant advances on the country’s Horizon 2020 social development plan, specifically in infrastructure construction, electrification, and access to water, healthcare, and education. Equatorial Guinea expresses pride in having some of the region’s best roads and other essential infrastructure, including development of its ports and pending completion of a new airport terminal. After oil prices started dropping in 2014, the government began extending timelines for completing infrastructure projects, and put many on hold as the country slumped into a recession that continues in 2019. 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 and that certain companies exited the country with millions in unpaid bills. Some claim that much work remains, especially on diversifying the economy, and improving healthcare and education.
Equatorial Guinea does not require U.S. citizens to obtain visas. Visas may be difficult to obtain for third-country nationals. Residency and work permits can be similarly difficult to obtain and or renew. In March 2018, to ease the conditions of entry and residence in the country, the government reduced the cost of permits by half. Residency and work permits have not been issued regularly since 2017, requiring expatriates to leave the country every 90 days.
Despite the various challenges being reported, U.S. businesses have had success in the hydrocarbons sector, and some U.S. businesses have profited in other sectors, such as technology and computer services. U.S. businesses will likely continue to invest in the country in light of opportunities in the market.
|TI Corruption Perceptions Index
|172 of 180
|World Bank’s Doing Business Report “Ease of Doing Business”
|177 of 190
|Global Innovation Index
|U.S. FDI in partner country ($M USD, stock positions)
|World Bank GNI per capita
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The government of the Republic of Equatorial Guinea is actively soliciting foreign investments. The government announced in August 2018 that 2019 would be the “Year of Energy” with new licensing rounds for hydrocarbons fields and various events to encourage investment. 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 “one-stop-shop” for investors and simplify the process to register a business, which launched in January 2019. The government of the Republic of Equatorial Guinea equipped facilities for processing applications and has started training staff.
Statutorily, the Minister of Economy, Finances 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 Programme led a conference in Equatorial Guinea on improving the business climate.
Limits on Foreign Control and Right to Private Ownership and Establishment
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.
Investors work with the relevant government ministries to negotiate contracts. 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 National Content regulation establishes various requirements for international oil and gas companies that wish to operate in Equatorial Guinea. This includes 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, several of which were established in 2014 by the Ministry of Mines, Industry, and Energy, which apply to both producers and service companies, including: 70% of staff must be Equatoguineans, the company must procure a significant portion of services (ranging from 50-100% depending on the category) from national company partners, and the company must dedicate a percentage of its revenue to corporate social responsibility projects which the government must approve. (The government restructured the cabinet and there is now a Ministry of Mines and Hydrocarbons and a separate Ministry of Industry and Energy.)
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.
According the World Bank’s Doing Business 2018 report, starting a business in Equatorial Guinea requires 16 procedures and usually takes 33 days, an improvement over 2017. Equatorial Guinea was ranked 184 of 190 in the World Bank’s Doing Business Report 2018 for ease of “starting a business.”
In 2017, the government of the Republic of Equatorial Guinea passed Decree No. 67/2017, published on September 12, 2017 to establish a “one-stop-shop” or a “single window” to simplify the process to register a business and speed the process to seven business days. The “single window” was launched on January 14, 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 register online. Generally, business must register with various agencies at the national level and some local offices. The one-stop-shop does not eliminate steps but it does consolidate visits to five offices into one. The below chart illustrates the steps that an entrepreneur can completed at the one-stop-shop:
|Ministry of Finance
|Ministry of Commerce – General Direction of Commerce
|Ministry of Commerce – Department of Business Promotion
|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.
Although Equatoguinean citizens may legally invest outside the country, the government of the Republic of Equatorial Guinea does not promote any outward investment that is not government led. Equatoguineans owning businesses abroad are not praised or showcased in the news. There are not any known restrictions on domestic investors who seek to invest abroad. However, some report that certain individuals and companies have faced delays when transferring money overseas or converting local currency into foreign exchange.
2. Bilateral Investment Agreements 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 AGOA 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 several bilateral taxation treaties with the following countries:
- China, signed in 2005, entered into force in 2006
- Ethiopia, signed in 2009, not currently in force
- France, signed in 1982, entered into force in 1983
- Morocco, signed in 2005, not currently in force
- Russia, signed in 2011, not currently in force
- South Africa, signed in 2004, not currently in force
- Spain, signed in 2003, entered into force in 2003
- Ukraine, signed in 2005, not currently in force
Equatorial Guinea is also party to various other economic agreements, namely the following:
- Cotonou Agreement EU, entered into force in 2003
- African Union Treaty, entered into force in 1994
- Economic Community of Central African States Treaty, entered into force in 1984
- CEMAC Convention on Liberalization, entered into force in 1972
- CEMAC Investment, entered into force in 1966
- The African Continental Free Trade Agreement signed March 21, 2018, not currently in force
China has granted Equatorial Guinea preferential trade status. The two countries are currently engaged in negotiations for a free trade agreement.
3. Legal Regime
Transparency of the Regulatory System
The Government of the Republic of Equatorial Guinea publishes Equatoguinean labor laws for public consumption; however, officials do not consistently apply laws or regulations. Officials expect foreign companies to follow every detail of the labor law or face penalties. However, some report that enforcement of compliance with the labor laws by national companies is far less strict. 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. Some regulations 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 decisions about permits for construction).
Proposed laws and regulations are not published in draft form for public comment, but are there have been reports of informal sharing with representatives of specific industries for comment. Regulations and laws are generally not published online and are available in hardcopy for a fee.
The industry informs that accounting, legal, and regulatory procedures are generally neither transparent nor consistent with international norms.
According to the 2018 Fiscal Transparency Report, Equatorial Guinea does not meet the minimum requirements of fiscal transparency and more information is available at: https://www.state.gov/2018-fiscal-transparency-report/ .
The government recently made some progress on fiscal transparency of its public finances and debt obligations. Although available to the public several months after the start of the fiscal year, the 2018 budget did include information on debt obligations for the first time in several years. The 2019 budget also included the public debt obligations. The government is working on fiscal transparency as part of the International Monetary Fund (IMF)’s staff monitored program.
Regulation are generally not reviewed on the basis of scientific or data-driven assessments.
International Regulatory Considerations
Equatorial Guinea is a member of Central African Monetary and Economic Union (CEMAC), which includes a regional central bank, the Bank of Central African States (BEAC), and various regulations.
Equatorial Guinea is not a member of the World Trade Organization (WTO) and is listed as an observer government. The General Council of the WTO established a Working Party to examine the application of Equatorial Guinea on February 5, 2008. Efforts to join have faltered, as Equatorial Guinea has not submitted a Memorandum on the Foreign Trade Regime. Equatorial Guinea is not a signatory to the Trade Facilitation Agreement (TFA).
Legal System and Judicial Independence
Equatorial Guinea’s legal system is a mixed system of civil and customary law. Law No. 7/1992 states that disputes that cannot be resolved through direct negotiation by the involved parties shall be referred to Equatoguinean courts. Either party can also submit the dispute to international arbitration. Foreign investors are asked to declare their desired international arbitration venue in their initial application to invest in the country. Arbitration must take place in a neutral location and Spanish will be the official language of the arbitration.
Equatorial Guinea was ranked 101 of 190 in the World Bank’s Doing Business Report 2018 for “enforcing contracts.”
Labor law is meant to protect workers, including a requirement for written contracts and regulation of labor by minors. Labor courts exist for matters related to employment. Several companies have complained that cases are rarely decided on the merits 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 the President of Equatorial Guinea.
The judicial system is not independent of the executive branch. 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
Law No. 7/1992, Law No. 2/1994, Decree No. 54/1994, and Decree 127/2004 regulate foreign investment. Certain industries have additional regulations. The enforcement of laws and judicial decisions has not shown a pattern of reliably or consistency, 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 inward investment procedures and simplify business registration processes, they have not yet implemented all these processes. Decree 72/2018 of April 2018 revised decree 127/2014 of September 14, 2014, and eliminated the mandatory national participation in foreign companies, except for the hydrocarbons sector. The implementation of the “one-stop-shop” or single window, which launched in January 2019, has simplified the registration process and reduced the timelines (to seven business days according to the government). The centralized administrative procedure clarifies the rates to be paid and the procedures to follow. At least sixteen companies have registered through the single window in the initial months. The Ministry of Finance and Economy along with the Ministry of Commerce plan to evaluate the system from July-September 2019 to determine its effectiveness. There is a webpage with information (https://www.ventanillaempresarialge.com/en/welcome/) but businesses cannot register online.
Competition and Anti-Trust 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.
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 in 2013 a Spanish investor had his property confiscated. The Government of the Republic of Equatorial Guinea does have an extensive record 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 utilize ICSID as the basis of procedure. Equatorial Guinea is not a party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Investor-State Dispute Settlement
Recent investment disputes have centered on non-payment to investors or contractors by the Government of the Republic of Equatorial Guinea or state-owned enterprises. Few established local mechanisms compel the Government of the Republic of Equatorial Guinea to pay investors, and the Embassy has limited capacity to intervene. U.S. and foreign enterprises from France, Cote d’Ivoire, Lebanon, Egypt, China, Morocco, and Turkey, operating in the Republic of Equatorial Guinea, have been subject to non-payments or severely delayed payments and have had no recourse in payment disputes. This, along with the downturn in the economy, has led many foreign-led operations to pull out of the country completely or downsize substantially.
A Spanish businessperson, Francisco Hernando Contreras, signed a joint venture agreement with President Obiang in 2009 to build 36,000 social 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, Mr. Hernando Contreras submitted a claim before the International Centre for Investment Dispute Settlements (ICSID). After unsuccessful attempts with the ICSID, in August 2017 Madrid’s provincial court ordained 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 2019.
In at least one case in late 2018, a company that had payment arrears from a state-owned enterprises for over a year was able to make an alternate arrangement to receive payment and ensure timely payment for the future. This required an amendment to the contract rather than a judicial solution.
International Commercial Arbitration and Foreign Courts
The OHADA (“Organisation pour l’harmonisation en Afrique du droit des affaires”,or Organization for the Harmonization of Corporate Law in Africa) Uniform Act on Arbitration rules would apply where the Court has its seat in Abidjan, but it may sit in any other place on the territory of one of the seventeen Member States of the Organization. It has already held hearings in several member states of the OHADA in recent years. As of March 27, 2019, the Common Court of Justice and Arbitration of the OHADA has included the Equatorial Guinean lawyer, Dr. Sergio Esono Abeso Tomo, on the list of arbitrators of the Arbitration Center of the Common Court of Justice and Arbitration of the OHADA for three and half years term. 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 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.
Firms have alleged that court actions are sometimes not transparent and discriminatory, and tend to favor local parties rather than foreigners or foreign companies.
The Government of the Republic of Equatorial Guinea has adopted the business laws of the Organization for the Harmonization of Business Laws of Africa (OHADA), including the law pertaining to bankruptcy.
The Republic of Equatorial Guinea currently ranks in last place for processes related to resolving insolvency, according to the World Banks’s Doing Business Report’s ranking of “Resolving Insolvency.” The Republic of Equatorial Guinea received the World Bank’s ‘no practice mark,’ due to the lack of cases, in the past five years, involving a judicial reorganization, judicial liquidation, or debt enforcement. This is interpreted to mean that creditors are unlikely to recover their money through a formal legal process.
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 12, 2017 created the “one-stop-shop” business portal, with the purpose of promoting investment and the development of economic activities, significantly reducing the required deadlines for the establishment of companies. According to the government, the current estimate for registering a company through the one-stop-shop is seven (7) days. The portal came into effect in 2019. Decree n° 72/2018 of April 2018 revised decree 127/2014 of September 14, 2014 through which complementary standards are given to foster and guarantee foreign investments in entrepreneurial activity. The revised investment law eliminated the mandatory national participation in foreign companies, except for the hydrocarbons sector.
The government sometimes jointly finances foreign direct investment projects, such as social housing construction.
Foreign Trade Zones/Free Ports/Trade Facilitation
There are not any known laws, policies, or practices for any areas designated as Free Trade Zones, or Duty Free Zones at the moment. Three entities have tax-free status: Luba Freeport, the Port of Bata, and the K5 Freeport Oil Centre.
Performance and Data Localization Requirements
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 the mandatory national participation in foreign companies, except for the hydrocarbons sector. The decree requires that Equatoguineans hold certain management positions in the hydrocarbons sector. 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 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 ex-patriate worker.
Equatorial Guinea does not require U.S. citizens to obtain visas. Visas may be difficult to obtain for third-country nationals, and generally require a letter of invitation that the Equatoguinean government approves, and may take months to obtain. Residency and work permits can be similarly difficult to obtain and or renew, and fees for these permits cost approximately USD 700 per year. In March 2018, as part of an overall effort to improve transparency, and ease the conditions of entry and residence in the country, prices were cut in half. Residency permits now cost about USD 343 per year. Some companies have reported to experience delays regularly in the residency permit process. Equatoguinean government officials have provided multiple explanations such as the misplacement or loss of original documents. Work permits, often a pre-requisite for a residency permit, are difficult to obtain, and the process is very time consuming. Many businesses report that they have been unable to obtain the annual permits for over 5 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.
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 (law 7, dated November 7, 2015) Equatoguinean government offices are supposed to report to the Regulating Organ of Telecommunications (ORTEL) any information concerning official communications lines and networks. The Government of the Republic of Equatorial Guinea has no requirements pertaining to maintaining data storage within the country. The Ministry of Transports, Telecommunications, and Mail reduced the cost of internet in March 2019, as part of a strategy towards openness and increased access, and both the Telecommunications Regulator (ORTEL) and the Telecommunications
Infrastructure Administrator (GITGE) are promoting implementation of the new strategy. The government announced that internet would be available in all public places, like airports, banks, and cultural centers, by 2020. It is already available in some locations, such as the new boardwalk (Paseo Maritimo) in Malabo. Although the government claims that 95% of municipalities have access to a fiber optic network, according to the International Telecommunication Union, only 26.2 percent of the population used the internet in 2017.
The Ministry of Mines and Hydrocarbons, Ministry of Labor, Employment Promotion, and
Social Security, and others make regular inspections and may apply fines. The Ministry of
Mines and Hydrocarbons has fined, suspended, and expelled companies that it perceived did not comply with regulations or laws, especially on local content.
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 seize land in the interest of the country with very little, if any, due process via the judicial system. Mortgages do exist under a ‘Social Housing Program’ where payments are made to the government via CCEI Bank, a commercial bank. The length of time 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 the World Bank’s Doing Business 2018 report, registering property in Equatorial Guinea required six procedures and usually took 23 days. Equatorial Guinea was ranked 164 of 190 in the World Bank’s Doing Business Report 2018 for “registering property.”
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 enforcement of IPR is 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/.
6. Financial Sector
Capital Markets and Portfolio Investment
The banking sector is accounted to provide limited financing to businesses. The government reports that 2 microfinance institutions operate in country and the government has started a microcredit program for 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.
Money and Banking System
There is banking coverage throughout the country and it is concentrated in urban centers. There is little information available about assets and the health of the banking system. The Equatorial Guinea National Bank (BANGE) has 29 branches throughout the country. According to a November 2017 article, BANGE had over 80,000 clients, approximately 10 percent of the population. CCEI/CCIW Bank de Guinea Ecuatorial has four branches in the largest cities and is a subsidiary of First Bank Afriland (Cameroon). BGFIBank Guinée Equatoriale operates as a subsidiary of BGFI Holding Corporation (Gabon). Pan-African EcoBank (Togo) and Societal Générale (France) also operate in Equatorial Guinea. According to the United Nations, in 2016 approximately 20 percent of the population had deposits in commercial banks. If a bank does not have a branch in the location where an individual wants to do business, they would not have access 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. 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 within CEMAC.
Foreigners must provide proof of residency to establish a bank account.
The country is an almost entirely cash economy, with credit cards available, but not widely used in the general population. Primarily visitors or wealthy citizens use credit cards at international hotels, international airlines, and major supermarkets.
The banking sector is affected by = relatively lengthier bureaucratic procedures and a lack of computerized record-keeping. Customers have reported that currency is not always available on demand, and occasional problems making transfers or exchanging local currency into foreign exchange.
Foreign Exchange and Remittances
Foreign Exchange Policies
Decree No. 54/1994 provides the right to freely transfer convertible currency abroad at the end of each fiscal year. Many businesses have reported that limited financial services create barriers to successfully executing international transfers. 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 6-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.
Local currency is not widely available in the Central African Franc zone, but can be relatively easily obtained in the Republic of Equatorial Guinea.
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. Thus, the exchange rate of the currency fluctuates according to 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 6-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.
Sovereign Wealth Funds
The Government of the Republic of Equatorial Guinea established a sovereign wealth fund, the Fund for Future Generations, in 2002. According to investors, the fund has little transparency regarding how the fund it is managed or the value of the fund. A 2017 press report estimated the fund to have USD 413 million, or 1.6% of Equatorial Guinea’s GDP. The Sovereign Wealth Fund Institute estimates assets under management of USD 165.5 million. There is no publically 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 & Water Resources. ENPIGE is the SOE that oversees the government’s affordable housing program. CEIBA Intercontinental is the main airline, and a joint venture between the government and Ethiopian Airlines.
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. However, a requirement of the IMF’s 2018 staff monitored program is that the government hire an internationally reputable firm to audit the accounts of the state-owned oil (GEPetrol) and gas (Sonagas) companies and the government was in the process of hiring an audit firm at the start of 2019.
All oil and gas projects must include a partnership with state-owned companies GEPetrol or Sonagas.
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 approves 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 in which CSR takes place, often as partners with the companies, but they do not fulfill a monitoring role.
Equatorial Guinea is currently preparing to submit another application in 2019 to rejoin the Extractive Industries Transparency Initiative (EITI) after being delisted in 2010 for missing its validation deadline. The government has stated its goal is to submit an application by June 2019, as a condition of the IMF staff monitored program.
Resources to Report Corruption
There is no publicly designated contact at a government agency or agencies 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.
There are no “watchdog” organizations operating publicly 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. For example, on September 14, 2018, Brazilian authorities seized two suitcases with $1.4 million in cash and another suitcase containing approximately 20 watches valued at $15 million when Vice President Teodoro Obiang Nguema Mbasogo landed in Sao Paulo on an unofficial visit. The press reported on October 10, 2018 that Brazilian officials launched an investigation because they believed the undeclared cash and luxury watches, along with apartments and cars owned by the vice president in Brazil, might have been part of an effort to launder money embezzled from Equatorial Guinea’s government. Separately, one government official, Hermógenes Nzang Esono (Director General of Post and Mail – GECOTEL, an agency within the Ministry of Transport, Telecommunications, and Mail) was fired and reportedly arrested in April 2019, and is expected to be charged with corruption.
U.S. companies operating in Equatorial Guinea are required to adhere to the rules of the Foreign Corrupt Practices Act. U.S. firms report that they are concerned about corruption related to government procurement, award of licenses and concessions, customs, and dispute settlement. Major U.S. firms have internal controls, ethics, and compliance programs to detect and prevent bribery of government 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 party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
10. Political and Security Environment
There is not a history of civil unrest; some report this is caused by a severe limitation of political opposition and civil society in freedom of assembly and expression. However, there have been examples of politically motivated violence. On October 27, 2018, four individuals detained and beat civil society leader and human rights activist Alfredo Okenve Ndo of the CEIDGE. Initial reports suggest that security force members may have carried out the attack, mistaking him for his brother Celestino Okenve Ndo, a leader of an opposition party.
President Teodoro Obiang Nguema Mbasogo has been in power since 1979. 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, some reports that government security forces forcibly entered the headquarters of political opposition party Citizens for Innovation (CI) and seriously injured several opposition party members. Political activists who were arrested prior to the election have been subsequently released, 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 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. The well-known Equatoguinean cartoonist and political activist Ramon Esono was also detained in Malabo for six months until he was released from prison on March 8, 2018 after being acquitted for counterfeiting and money laundering, due to false testimony by a police officer. An alleged foiled coup plot led to a campaign of massive arrests from December 2017 to March 2018 in the country, and a trial of 117 individuals began in the city Bata in March 2019. The ruling Democratic Party of Equatorial Guinea (PDGE) announced on November 3, 2018 that it had expelled 42 members for alleged involvement in the coup.
Around New Year’s Day 2019 there was an increase in violent crime, including multiple murders. Government officials and 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 in 2018, though it is unclear if any of these incidents occurred within EG waters.
11. Labor Policies and Practices
Equatorial Guinea has a consistent shortage of skilled labor. Unskilled labor is readily available. Youth unemployment is considered widespread. The definition of the concepts “unemployed-youth” still poses problem between institutions, and statistics are scarce. According to the government’s 2015 census, which was 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 authorities tend to favor locals over foreigners when resolving disputes.
The oil and gas industry claims to have 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 Technology and Hydrocarbon Institute, which has 50 students per cohort in a three-year program. The government and companies will inaugurate a new building in Mongomo in 2019, after various years in 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 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 oil companies hire seventy percent of nationals. Officials of the Ministry of Labor explained that according to the Labor Law (last updated in 2012 and under review for an update), the final target of the government is that 90% of workers should be nationals. They also underlined that for companies to fill a positon there is a process through the Ministry. If no suitable domestic applicants are found in 30 days then the company is free to hire a non-national. Employers must make extensive severance payments even when employment demands fluctuate due to market conditions. Currently there are neither unemployment insurance nor other social safety net programs for workers laid off for economic reasons, though this has been a goal of the government 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 congress 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 does not recognize any labor unions. Small collectives and associations are allowed to register with the government but do not carry out labor advocacy efforts. Collective bargaining is not common. There have not any strikes during the last year that posed an investment risk and the government typically restricts the occurrence of 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). 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. However, the government has been ranked Tier 3 in the annual Trafficking in Persons (TIP) Report since 2011 and struggles to identify and combat forced and child labor have been reported. The government increased efforts in 2018 and 2019, including the creation of a national action plan to combat TIP and an online portal for employees to anonymously report abuses. However, businesses have noted that the government does not have an adequate labor inspectorate system to identify and remediate labor violations and hold violators accountable, investigate and prosecute unfair labor practices, such as harassment and/or dismissal of union members; nor to investigate and prosecute instances of forced and/or child labor. Reports indicate that violators are rarely held accountable, with both corruption and political patronage used to prevent enforcement of laws and regulations. The law prohibits certain kinds of discrimination, but many gaps are still recorded. The International Labor Organization (ILO) noted in 2018 “with deep concern that, for the last 12 years, the reports due on ratified Conventions have not been received” from government of the Republic of Equatorial Guinea. The ILO also offered technical assistance to complete the reports and respond to comments.
Equatorial Guinea does not have a trade agreement with the United States.
12. OPIC and Other Investment Insurance Programs
There currently are no Overseas Private Investment Corporation (OPIC) programs in Equatorial Guinea. There is an OPIC agreement between Equatorial Guinea and the United States. OPIC financed a hundred million dollars for an LNG plant in 2000.
There is significant investment financing or insurance for firms from China, and possibly 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)
|Foreign Direct Investment
|Host Country Statistical Source*
|USG or International Statistical Source
|USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
|U.S. FDI in partner country ($M USD, stock positions)
|BEA data available at http://bea.gov/international/direct_investment_multinational_companies_comprehensive_data.htm
|Host country’s FDI in the United States ($M USD, stock positions)
|BEA data available at http://bea.gov/international/direct_investment_multinational_companies_comprehensive_data.htm
|Total inbound stock of FDI as % host GDP
|UNCTAD data available at
*Equatorial Guinea does not regularly produce figures for public consumption in regards to their finances.
Table 3: Sources and Destination of FDI
Data not available.
Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
U.S. Embassy Malabo
+240-333-095-741 or 1-301-985-8750