Equatorial Guinea: Building Foundations for Economic Diversification and Growth
The World Bank’s report on Equatorial Guinea emphasizes the need for effective institutions, fiscal reforms, educational investment, improved business climate, and enhanced digitalization and trade to promote sustainable and diversified growth.
On March 4, 2025, the World Bank released its inaugural Country Economic Memorandum report for Equatorial Guinea, titled “Building the Foundations for Renewed, More Diversified and Inclusive Growth.” This report highlights crucial findings related to the nation’s economic trajectory since the oil boom in the 1990s, emphasizing the need for substantial reforms to secure sustainable development and diversify the economy.
The report outlines that Equatorial Guinea, once a thriving economy due to oil, has faced a downturn since a decline in hydrocarbon production began in 2015. Effective institutions and fiscal policies are vital to manage economic stability. Reliance on oil has resulted in public revenues being heavily concentrated, with oil and gas accounting for approximately 80% of total revenues. To bolster growth, it is imperative that the government enhances fiscal management and diversifies its revenue sources, including establishing Sovereign Wealth Funds to support these initiatives.
Investment in education, health, and social protection is also pivotal. Though access to education has improved, funding remains low at 0.9% of GDP, significantly below regional averages. The health sector suffers from similar issues, with public expenditure at just 0.7% of GDP. Furthermore, a national social assistance program is notably absent in Equatorial Guinea, making the establishment of a comprehensive Social Protection Law necessary to ensure welfare for its citizens.
The business climate in Equatorial Guinea appears unfavorable for investment, limiting private sector expansion. Challenges such as regulatory barriers and lack of market-based competition contribute to operational risks for businesses. Improved regulations, simplified business registration, and enhanced public procurement practices are essential to cultivating a conducive environment for economic growth and competition.
Finally, the report emphasizes the importance of enhancing digitalization, trade, and ecotourism. Although Equatorial Guinea shows higher trade openness than peers, it must better integrate into the global economy. Increased digital connectivity and investment in the ecotourism sector can present new opportunities for connecting with international markets, promoting diversification away from hydrocarbons, and ultimately leading to a more robust and inclusive economy.
The World Bank’s report on Equatorial Guinea underscores the need for impactful reforms in various sectors to revitalize the economy. Key areas for improvement include fiscal management, investment in education and health, fostering a better business climate, and enhancing trade and digitalization. By addressing these critical challenges, Equatorial Guinea has the potential to achieve diverse, sustainable, and inclusive growth moving forward.
Original Source: www.worldbank.org
