The World Bank has released a new report emphasizing the need for Equatorial Guinea to diversify its economy beyond oil dependency. The Country Economic Memorandum highlights the nation's economic challenges, noting that past failures to diversify have led to a prolonged recession and setbacks in social progress.
Equatorial Guinea's significant oil resources once placed it among Africa's upper-middle-income countries. However, since 2015, the nation has experienced six years of recession, with another downturn in 2023 after two years of growth. The national per capita income is now less than half of its peak in 2008.
To achieve sustainable growth, the report stresses the importance of human capital development and strengthening business environments and institutions. Aissatou Diallo, 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, hydrocarbons account for 39% of GDP, 76% of exports, and approximately 86% of government revenues but provide limited job opportunities. Without reforms and with declining reserves, per capita income is expected to decrease further.
The report outlines several priority actions including reducing fiscal instability through fiscal discipline and creating a stabilization fund for managing oil price volatility. It also suggests enhancing public financial management by increasing non-oil revenues and improving public spending efficiency.
Strengthening governance involves operationalizing an Anti-Corruption Commission and enhancing statistical capabilities. Investment in human capital is crucial as Equatorial Guinea ranks low on education and health outcomes compared to peers due to insufficient social spending.
Improving business conditions is necessary for attracting private investment by removing barriers such as legal uncertainties and limited access to credit. Digitalization efforts should be accelerated alongside promoting diversification through eco-tourism.
Djeneba Doumbia, lead author of the report 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."