World Bank Report Calls for Economic Diversification in Equatorial Guinea

The World Bank’s latest report highlights the urgent need for Equatorial Guinea to diversify its economy beyond oil dependency. A focus on human capital, governance, and private sector development is essential to combat economic decline. With recent economic contractions, substantial reforms are necessary to establish sustainable and inclusive growth.

A recent report by the World Bank emphasizes the pressing need for economic diversification in Equatorial Guinea, a country heavily reliant on oil exports. As oil revenues decline, the nation must invest in its human resources and strengthen institutional frameworks to avert further economic deterioration. Since 2015, Equatorial Guinea has faced a prolonged recession and recently experienced another downturn in 2023, leading to a reduction in per capita income to below half of the 2008 peak.

The report, titled “Equatorial Guinea Country Economic Memorandum – Building the Foundations for Renewed, More Diversified and Inclusive Growth,” asserts the country has significant potential for transformation through strategic policy implementations. Aissatou Diallo, the World Bank Resident Representative for Equatorial Guinea, stated, “Equatorial Guinea has the potential to transform its economy and improve the lives of its citizens. However, this requires bold policy actions to build the foundations for renewed, diversified, and more inclusive growth.”

Currently, the hydrocarbon sector constitutes 39% of the Gross Domestic Product (GDP), 76% of exports, and 86% of government revenues, yet offers limited employment opportunities. Projections indicate a continued decline in per capita income unless substantial reforms are instituted, particularly given the decreases in hydrocarbon reserves.

To reverse economic decline and foster inclusive growth, the report outlines a roadmap emphasizing the development of human capital, an improved environment for private sector engagement, and strengthened governance structures. Key recommended actions include:
1. Reducing fiscal instability and creating a stabilization fund for oil price volatility;
2. Enhancing public financial management and increasing non-oil revenues through tax reforms and reduced subsidies;
3. Strengthening governance by operationalizing the Anti-Corruption Commission;
4. Investing in health and education to elevate the Human Development Index;
5. Improving the business climate to promote investment and address barriers to entry;
6. Accelerating digitalization and integrating into the global economy.

Djeneba Doumbia, the report’s lead author, remarked, “The recent decrease in Equatorial Guinea’s hydrocarbon production and the volatility of oil prices are a strong reminder of the need for the country to reduce its exposure to global commodity markets.” Sustained policy actions are essential for expanding the non-oil sector and ensuring resilient and sustainable economic growth.

The World Bank’s report underscores the necessity for Equatorial Guinea to pursue economic diversification to mitigate the impacts of declining oil revenues. By focusing on human capital investment, improving governance, and enhancing the private sector’s role, the country can establish a sustainable and inclusive growth trajectory. Bold and systematic policy actions are crucial for Equatorial Guinea to transform its economic landscape and preserve social progress.

Original Source: www.zawya.com