Economy of Equatorial Guinea
Template:Infobox economy Template:Update
The economy of Equatorial Guinea has traditionally been dependent on commodities such as cocoa and coffee, but is now heavily dependent on petroleum due to the discovery and exploitation of significant oil reserves in the 1980s.<ref name = Britannica>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> In 2017, it graduated from "Least Developed Country" status, one of six Sub-Saharan African nations that managed to do so.
However, despite the economic growth and improving infrastructure, the country has been ranked only 138th out of 188 countries on the United Nations Human Development Index in 2015 and despite its impressive GNI figure, it is still plagued by extreme poverty. After the oil price collapsed in 2014, the economy went into a free fall which put growth in a downward spiral from around 15% to −10%. Only 950,000 of 1.6 million inhabitants are citizens, giving Equatorial Guinea the largest ratio of expatriates to residents in Africa.
Economy overviewEdit
Pre-independence Equatorial Guinea counted on cocoa production for hard currency earnings. In 1959 it had the highest per capita income of Africa which it still has, after several decades as one of the poorest countries in the world.
The discovery of large oil reserves in 1996 and their subsequent exploitation have contributed to a dramatic increase in government revenue. As of 2004,<ref>Template:Cite news</ref> Equatorial Guinea was the third-largest oil producer in Sub-Saharan Africa. Its oil production had then risen to Template:Convert, up from Template:Convert only two years earlier.
Forestry, farming, and fishing are also major components of GDP. Subsistence farming predominates. Although pre-independence Equatorial Guinea counted on cocoa production for hard currency earnings, the neglect of the rural economy under successive regimes has diminished potential for agriculture-led growth. However, the government has stated its intention to reinvest some oil revenue into agriculture.Template:Cn A number of aid programs sponsored by the World Bank and the IMF have been cut off since 1993 because of corruption and mismanagement. No longer eligible for concessional financing because of large oil revenues, the government has been unsuccessfully trying to agree on a "shadow" fiscal management program with the World Bank and IMF. Businesses, for the most part, are owned by government officials and their family members. Undeveloped natural resources include titanium, iron ore, manganese, uranium, and alluvial gold (Mining in Equatorial Guinea). Growth remained strong in 2005 and 2006, led by oil.Template:Cn
In greater depthEdit
Oil and gas exports have increased substantially and will drive the economy for years to come.<ref name=":0">Template:Citation-attribution</ref> Real GDP growth reached 23% in 1999, and initial estimates suggested growth of about 15% in 2001, according to IMF 2001 forecast.<ref name=":0" /> Per capita income grew from about $1,000 in 1998 to about $2,000 in 2000.<ref name=":0" /> The energy export sector is responsible for this rapid growth.<ref name=":0" /> Oil production has increased from Template:Convert to Template:Convert between 1998 and early 2001.<ref name=":0" /> There is ongoing additional development of existing commercially viable oil and gas deposits as well as new exploration in other offshore concessions.<ref name=":0" />
Equatorial Guinea has other largely unexploited human and natural resources, including a tropical climate, fertile soils, rich expanses of water, deepwater ports, and an untapped, if unskilled, source of labor.<ref name=":0" /> Following independence in 1968, the country suffered under a repressive dictatorship for 11 years, which devastated the economy.<ref name=":0" /> The agricultural sector, which historically was known for cocoa of the highest quality, has never fully recovered.<ref name=":0" /> In 1969 Equatorial Guinea produced 36,161 tons of highly bid cocoa, but production dropped to 4,800 tons in 2000.<ref name=":0" /> Coffee production also dropped sharply during this period to bounce back to 100,000 metric tons in 2000.<ref name=":0" /> Timber is the main source of foreign exchange after oil, accounting for about 12.4% of total export earnings in 1996–99.<ref name=":0" /> Timber production increased steadily during the 1990s; wood exports reached a record 789,000 cubic meters in 1999 as demand in Asia (mainly China) gathered pace after the 1998 economic crisis.<ref name=":0" /> Most of the production (mainly Okoume) goes to exports, and only 3% is processed locally. Environmentalists fear that exploitation at this level is unsustainable and point out to the permanent damage already inflicted on the forestry reserves on Bioko.<ref name=":0" />
Consumer price inflation has declined from the 38.8% experienced in 1994 following the CFA franc devaluation, to 7.8% in 1998, and 1.0% in 1999, according to BEAC data.<ref name=":0" /> Consumer prices rose about 6% in 2000, according to initial estimates, and there was anecdotal evidence that price inflation was accelerating in 2001.<ref name=":0" />
Equatorial Guinea's policies, as defined by law, comprise an open investment regime.<ref name=":0" /> Qualitative restrictions on imports, non-tariff protection, and many import licensing requirements were lifted when in 1992 the government adopted a public investment program endorsed by the World Bank.<ref name=":0" /> The Government of the Republic of Equatorial Guinea has sold some state enterprises.<ref name=":0" /> It is attempting to create a more favourable investment climate, and its investment code contains numerous incentives for job creation, training, promotion of non-traditional exports, support of development projects and indigenous capital participation, freedom for repatriation of profits, exemption from certain taxes and capital, and other benefits.<ref name=":0" /> Trade regulations have been further liberalized since implementation in 1994 of the ICN turnover tax, in conformity with Central African tax and custom reform codes.<ref name=":0" /> The reform included elimination of quota restrictions and reductions in the range and amounts of tariffs.<ref name=":0" /> The CEMAC countries agreed to replace the ICN with a value added tax (VAT) in 1999.<ref name=":0" />
While business laws promote a liberalized economy, the business climate remains difficult. Application of the laws remains selective.<ref name=":0" /> Corruption among officials is widespread, and many business deals are concluded under non-transparent circumstances.<ref name=":0" />
There is little industry in the country, and the local market for industrial products is small.<ref name=":0" /> The government seeks to expand the role of free enterprise and to promote foreign investment but has had little success in creating an atmosphere conducive to investor interest.<ref name=":0" />
The Equatorial-Guinea budget has grown enormously in the past 3 years as royalties and taxes on foreign company oil and gas production have provided new resources to a once poor government.<ref name=":0" /> The 2001 budget foresaw revenues of about 154 billion CFA francs (154 GCFAF) (about U.S.$200 million), up about 50% from 2000 levels.<ref name=":0" /> Oil revenues account for about two-thirds of government revenue, and VAT and trade taxes are the other large revenue sources.<ref name=":0" />
Year 2001 government expenditures were planned to reach 158 billion CFA francs, up about 50% from 2000 levels.<ref name=":0" /> New investment projects represented about 40% of the budget, and personnel and internal and external debt payments represented about one-third of planned expenditures.<ref name=":0" />
The Equatorial-Guinea Government has undertaken a number of reforms since 1991 to reduce its predominant role in the economy and promote private sector development.<ref name=":0" /> Its role is a diminishing one, although many government interactions with the private sector are at times capricious.<ref name=":0" /> Beginning in early 1997, the government initiated efforts to attract significant private sector involvement through a Corporate Council on Africa visit and numerous ministerial efforts.<ref name=":0" /> In 1998, the government privatized distribution of petroleum products.<ref name=":0" /> There are now Total and Mobil stations in the country.<ref name=":0" /> The government has expressed interest in privatizing the outmoded electricity utility.<ref name=":0" /> A French company operates cellular telephone service in cooperation with a state enterprise.<ref name=":0" /> The government is anxious for greater U.S. investment, and President Obiang visited the U.S. three times between 1999 and 2001 to encourage greater U.S. corporate interest.<ref name=":0" /> Investment in agriculture, fishing, livestock, and tourism are among sectors the government would like targeted.<ref name=":0" />
Equatorial Guinea's balance-of-payments situation has improved substantially since the mid-1990s because of new oil and gas production and favorable world energy prices.<ref name=":0" /> Exports totaled about francs CFA 915 billion in 2000 (1.25 G$US), up from CFA 437 billion (700 M$US) in 1999. Crude oil exports accounted for more than 90% of export earnings in 2000.<ref name=":0" /> Timber exports, by contrast, represented only about 5% of export revenues in 2000.<ref name=":0" /> Additional oil production coming on line in 2001, combined with methanol gas exports from the new CMS-Nomeco plant, should increase export earnings substantially.<ref name=":0" />
Imports into Equatorial Guinea also are growing very quickly.<ref name=":0" /> Imports totaled francs CFA 380 billion (530 M$US), up from franc CFA 261 million (420 M$US) in 1999.<ref name=":0" /> Imports of equipment used for the oil and gas sector accounted for about three-quarters of imports in 2000.<ref name=":0" /> Imports of capital equipment for public investment projects reached francs CFA 30 billion in 2000, up 40% from 1999 levels.<ref name=":0" />
Equatorial Guinea's foreign debt stock was approximately francs CFA 69 billion (100 M$US) in 2000, slightly less than the debt stock in 1999, according to BEAC data.<ref name=":0" /> Equatorial Guinea's debt service ratio fell from 20% of GDP in 1994 to only 1% in 2000.<ref name=":0" /> Foreign exchange reserves were increasing slightly, although they were relatively low in terms of import coverage.<ref name=":0" /> According to the terms of the franc CFA zone, some of these reserves are kept in an account with the French Ministry of Finance.<ref name=":0" />
Equatorial Guinea in the 1980s and 1990s received foreign assistance from numerous bilateral and multilateral donors, including European countries, the United States, and the World Bank.<ref name=":0" /> Many of these aid programs have ceased altogether or have diminished.<ref name=":0" /> Spain, France, and the European Union continue to provide some project assistance, as do China and Cuba.<ref name=":0" /> The government also has discussed working with World Bank assistance to develop government administrative capacity.<ref name=":0" />
Equatorial Guinea operated under an IMF-negotiated Enhanced Structural Adjustment Facility (ESAF) until 1996.<ref name=":0" /> Since then, there have been no formal agreements or arrangements.<ref name=":0" /> The International monetary Fund held Article IV consultations (periodic country evaluations) in 1996, 1997, and in August 1999.<ref name=":0" /> After the 1999 consultations, IMF directors stressed the need for Equatorial Guinea to establish greater fiscal discipline, accountability, and more transparent management of public sector resources, especially energy sector revenue.<ref name=":0" /> IMF officials also have emphasized the need for economic data.<ref name=":0" /> In 1999, the Equato-Guinean Government began attempting to meet IMF-imposed requirements, maintaining contact with IMF and the World Bank representatives.<ref name=":0" /> However, the newfound oil wealth allowed the government to avoid improving fiscal discipline, transparency and accountability.Template:Citation needed
InfrastructureEdit
Infrastructure is generally old and in poor condition.<ref name=":0" /> Template:Asof, surface transport is extremely limited, with little more than 700 kilometres of paved roads.<ref name=":0" /> The African Development Bank is helping to improve the paved roads from Malabo to Luba and Riaba; the Chinese are undertaking a project to link Mongomo to Bata on the mainland, and the European Union is financing an inter-states road network linking Equatorial Guinea to Cameroon and Gabon.<ref name=":0" /> Road maintenance is often inadequate.<ref name=":0" />
Electricity is available in Equatorial Guinea's larger towns thanks to three small overworked hydropower facilities and a number of aged generators.<ref name=":0" /> In 1999, national production was about 13 MWh. In Malabo, the American company, CMS-Nomeco, built a 10 megawatt electricity plant financed by the government, which came in line in mid-2000, and plans to double capacity are advancing.<ref name=":0" /> This plant provides improved service to the capital, although there are still occasional outages.<ref name=":0" /> On the mainland the largest city, Bata, still has regular blackouts.<ref name=":0" />
Water is only available in the major towns and is not always reliable because of poor maintenance and mismanagement.<ref name=":0" /> Some villages and rural areas are equipped with generators and water pumps, usually owned by private individuals.<ref name=":0" />
Parastatal Getesa, a joint venture with a minority ownership stake held by a French subsidiary of Orange, provides telephone service in the major cities.<ref name=":0" /> The regular system is overextended, but Orange has introduced a popular GSM system, which is generally reliable in Malabo and Bata.<ref name=":0" />
Equatorial Guinea has two of the deepest Atlantic seaports of the region, including the main business and commercial port city of Bata.<ref name=":0" /> The ports of both Malabo and Bata are severely overextended and require extensive rehabilitation and reconditioning.<ref name=":0" /> The British company, Incat, has an ongoing project with the government to renovate and expand Luba, the country's third-largest port which is located on Bioko Island.<ref name=":0" /> The government hopes Luba will become a major transportation hub for offshore oil and gas companies operating in the Gulf of Guinea.<ref name=":0" /> Luba is located some 50 kilometres from Malabo and had been virtually inactive except for minor fishing activities and occasional use to ease congestion in Malabo.<ref name=":0" /> A new jetty is also being built at km 5 on the way from Malabo to the airport.Template:Citation needed It is a project mainly supposed to service the oil industry, but can also relieve the congested Malabo Port due to its closeness. The Oil Jetty at km 5 was supposed to open the end of March 2003. Riaba is the other port of any scale on Bioko but is less active. The continental ports of Mbini and Cogo have deteriorated as well and are now used primarily for timber activities.Template:Citation needed
There are both air and sea connections between the two cities of Malabo and Bata.Template:Citation needed As of 2002, a few aging Soviet-built aircraft constituted the national air fleet.<ref name=":0" /> Since then, most Soviet-built aircraft have been replaced by ATR and Boeing.Template:Citation needed The runway at Malabo (3,200 m) is equipped with lights and can service aircraft similar to Boeing 777s and Ilyushin Il-76s.<ref name=":0" /> The one at Bata (2,400 m) does not operate at night but can accommodate aircraft as large as Boeing 737s. Their primary users are the national airline (EGA) and a private company (GEASA).<ref name=":0" /> Two minor airstrips (800 m) are located at Mongomo and Annobon.<ref name=":0" /> There are international connections out of Malabo to Madrid and Zürich in Europe and to Cotonou, Douala and Libreville in West Africa.<ref name=":0" />
Energy developmentsEdit
{{#invoke:Labelled list hatnote|labelledList|Main article|Main articles|Main page|Main pages}} After a slow start, Equatorial Guinea has recently (as of 2002) emerged as a major oil producer in the Gulf of Guinea, one of the most promising hydrocarbon regions in the world.<ref name=":0" /> The main oil fields, Zafiro and Alba, both lie offshore of Bioko island.<ref name=":0" /> In 1999 oil production was about five times its 1996 level; Zafiro Field, operated by ExxonMobil and Ocean Energy, produced about Template:Convert, and CMS Nomeco extracted approximately Template:Convert.<ref name=":0" /> In 2002, production was nearly 200,000 barrels per day.<ref>Template:Cite book</ref>
In 1995 Mobil (now ExxonMobil) discovered the large Zafiro field, with estimated reserves of Template:Convert.<ref name=":0" /><ref> Template:Cite journal </ref> Production began in 1996. The company announced a 3-year U.S.$1bn rapid-development program to boost output to Template:Convert by early 2001.<ref name=":0" /> Progress was delayed due to a contractual dispute with the government and by unexpectedly difficult geology.<ref name=":0" /> The difference with the government was eventually resolved.<ref name=":0" />
In 1998 a more liberal regulatory and profit-sharing arrangement for hydrocarbon exploration and production activities was introduced.<ref name=":0" /> It revised and updated the production-sharing contract, which, until then, had favoured Western operators heavily.<ref name=":0" /> As a result, domestic oil receipts rose from 13% to 20% of oil export revenue.<ref name=":0" /> However, the government's share remains relatively poor by international standards.<ref name=":0" />
In 1997 CMS Nomeco moved to expand its operation with a U.S.$300m methanol plant.<ref name=":0" /> The plant entered production in 2000 and helped boost natural gas condensate output from Alba field.<ref name=":0" />
In August 1999 the government closed bidding on a new petroleum-licensing round for 53 unexplored deepwater blocks and seven shallow-water blocks.<ref name=":0" /> The response was small due to a combination of factors, including falling oil prices, restructuring within the oil industry, and uncertainty over an undemarcated maritime border with Nigeria (which was not resolved until 2000).<ref name=":0" />
In late 1999 Triton Energy, a U.S. independent, discovered La Ceiba in block G in an entirely new area offshore the mainland of the country.<ref name=":0" /> Triton expected a U.S.$200m development program to enable La Ceiba and associated fields to produce Template:Convert by late 2001, despite disappointments and technical problems at the beginning of the year.<ref name=":0" />
With an upturn in oil prices, exploration intensified in 2000.<ref name=":0" /> In April 2000 U.S.-based Vanco Energy signed a production-sharing contract for the offshore block of Corisco Deep.<ref name=":0" /> In May 2000, Chevron was granted block L, offshore Río Muni, and a further three production-sharing contracts (for blocks J, I, and H) were signed with Atlas Petroleum, a Nigerian company.<ref name=":0" />
In early 2001 the government announced plans to establish a national oil company, to allow Equatorial Guinea to take a greater stake in the sector and to facilitate the more rapid transfer of skills.<ref name=":0" /> However, critics fear that such a company may become a vehicle for opaque accounting and inertia of the sort that has hindered development in neighbouring countries including Angola, Cameroon, and Nigeria.<ref name=":0" />
Since 2001 the government has created GEPetrol, a national oil company; and Sonagas, a national natural-gas company. The company EG LNG has been created to construct and operate the Bioko Island LNG plant and terminal. The plant began to operate in May 2007 and a second plant is nowTemplate:When under development.<ref>Template:Cite press release</ref>
Equatorial Guinea became a member of OPEC in May 2017.<ref>Template:Cite press release</ref>
AgricultureEdit
{{#invoke:Labelled list hatnote|labelledList|Main article|Main articles|Main page|Main pages}}
DataEdit
The following table shows the main economic indicators in 1980–2017.<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>
| Year | GDP
(in bil. US$ PPP) |
GDP per capita
(in US$ PPP) |
GDP
(in bil. US$ nominal) |
GDP growth (real) |
Government debt (Percentage of GDP) |
|---|---|---|---|---|---|
| 1980 | 0.09 | 412 | 0.03 | 4.8 % | 146 % |
| 1985 | 0.15 | 482 | 0.07 | 12.9 % | 184 % |
| 1990 | 0.19 | 498 | 0.13 | 2.5 % | 157 % |
| 1995 | 0.45 | 1,020 | 0.17 | 26.5 % | 137 % |
| 2000 | 6.20 | 11,981 | 1.16 | 112.1 % | 37 % |
| 2005 | 21.56 | 35,721 | 8.19 | 8.2 % | 3 % |
| 2006 | 23.48 | 37,785 | 10.10 | 5.7 % | 1 % |
| 2007 | 27.79 | 43,454 | 13.09 | 15.3 % | 1 % |
| 2008 | 33.38 | 50,732 | 19.83 | 17.8 % | 0 % |
| 2009 | 34.09 | 50,363 | 15.09 | 1.3 % | 4 % |
| 2010 | 31.43 | 45,141 | 16.31 | −8.9 % | 8 % |
| 2011 | 34.17 | 47,719 | 21.36 | 6.5 % | 7 % |
| 2012 | 37.68 | 51,187 | 22.39 | 8.3 % | 7 % |
| 2013 | 36.71 | 48,499 | 21.95 | −4.1 % | 7 % |
| 2014 | 37.22 | 47,701 | 21.77 | −0.7 % | 13 % |
| 2015 | 34.09 | 42,648 | 13.19 | −9.1 % | 36 % |
| 2016 | 31.18 | 37,985 | 11.24 | −9.7 % | 48 % |
| 2017 | 30.35 | 36,017 | 12.20 | −4.4 % | 43 % |
- Investment (gross fixed)
- 46.3% (2005 est.)
- Industries
- Petroleum, fishing, sawmilling, natural gas
- Industrial production growth rate
- 30% (2002 est.)
- Electricity – production
- 29.43 GWh (2005)
- Electricity – consumption
- 27.37 GWh (2005)
- Agriculture – products
- Coffee, cocoa, rice, yams, cassava (tapioca), bananas, palm oil nuts; livestock; timber
- Exchange rates
- Communauté financière africaine francs (CFAF) per US$1 – 480.56 (2005), 528.29 (2004), 581.2 (2003), 696.99 (2002), 733.04 (2001)
See alsoEdit
- United Nations Economic Commission for Africa
- Minister of Finance (Equatorial Guinea)
- United Nations Economic Commission for Africa
ReferencesEdit
External linksEdit
- Equatorial Guinea latest trade data on ITC Trade Map
- Equatorial Oil- Government source on economics, run by the Ministry of Mines, Industry and Energy
Template:Africa in topic {{#invoke:navbox|navbox |name = OPEC |title = Organization of the Petroleum Exporting Countries (OPEC) |listclass = hlist |state = autocollapse
| list1 =
- Algeria
- Equatorial Guinea
- Gabon
- Iran
- Iraq
- Kuwait
- Libya
- Nigeria
- Republic of the Congo
- Saudi Arabia
- United Arab Emirates
- Venezuela
| list2 =
}}