The World Bank released the 2024 Equatorial Guinea Economic Update on October 8, which examines the nation's recent economic trends and future outlook. The report emphasizes the significance of creating effective fiscal instruments to promote sustainable forestry and diversify the economy.
Equatorial Guinea's economy saw a contraction of 5.7% in 2023 after two years of recovery, primarily due to a downturn in the hydrocarbon sector. Inflation dropped to 2.4% in 2023 from 4.9% in 2022, influenced by tight monetary policies from the Bank of Central African States (BEAC), an agreement for food imports from Serbia, and reduced import tariffs.
Forests cover approximately 87% of Equatorial Guinea's territory, playing a crucial ecological role. However, deforestation and forest degradation have risen recently. Since the 1990s, forestry's contribution to GDP has decreased significantly, partly due to inadequate local wood processing capabilities. The economy, once reliant on agriculture and timber, now heavily depends on hydrocarbons. Currently, the forestry sector does not fully capitalize on its potential for job creation and value addition.
"Developing a sustainable commercial forestry sector that focuses on domestic value-added processing would help Equatorial Guinea meet both its economic diversification and forest preservation commitments," stated Aissatou Diallo, Resident Representative for Equatorial Guinea.
The national commitment to sustainable development is highlighted through plans like AGENDA 2035 and adopting a REDD+ plan to reduce carbon emissions from deforestation and degradation. This will necessitate bolstering domestic revenue collection and increasing external funding. Although international funding for sustainable forest management in the Congo Basin has grown recently, it remains inadequate.
The report suggests solutions to tackle challenges in Equatorial Guinea’s forestry sector:
- Design effective fiscal instruments by adjusting forest tax rates based on timber production methods, encouraging forest certification, and adopting long-term forest management plans.
- Improve forest governance by increasing transparency and traceability of forest products while building a robust commercial wood-processing industry.
- Increase financial and technical support from the international community to preserve forests as an important ecosystem in the Congo Basin.
"Fiscal policies that support forest preservation and the sustainable use of forest resources...could also help attract more financing," commented Djeneba Doumbia, Country Economist for Equatorial Guinea.