HomeReportsBureau of Economic and Business Affairs2022 Investment Climate Statements…Equatorial Guinea

# 					2022 Investment Climate Statements: Equatorial Guinea			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment                    -  Policies Towards Foreign Direct Investment 
                  -  Limits on Foreign Control and Right to Private Ownership and Establishment 
                  -  Other Investment Policy Reviews 
                  -  Business Facilitation 
                  -  Outward Investment 
                -  2. Bilateral Investment and Taxation Treaties   
                -  3. Legal Regime                    -  Transparency of the Regulatory System 
                  -  International Regulatory Considerations 
                  -  Legal System and Judicial Independence 
                  -  Laws and Regulations on Foreign Direct Investment 
                  -  Competition and Antitrust Laws 
                  -  Expropriation and Compensation 
                  -  Dispute Settlement                      -  ICSID Convention and New York Convention 
                    -  Investor-State Dispute Settlement 
                    -  International Commercial Arbitration and Foreign Courts 
                  -  Bankruptcy Regulations 
                -  4. Industrial Policies                    -  Investment Incentives 
                  -  Foreign Trade Zones/Free Ports/Trade Facilitation 
                  -  Performance and Data Localization Requirements 
                -  5. Protection of Property Rights                    -  Real Property 
                  -  Intellectual Property Rights 
                -  6. Financial Sector                    -  Capital Markets and Portfolio Investment 
                  -  Money and Banking System 
                  -  Foreign Exchange and Remittances                      -  Foreign Exchange 
                    -  Remittance Policies 
                  -  Sovereign Wealth Funds 
                -  7. State-Owned Enterprises                    -  Privatization Program 
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs   
                -  13. Foreign Direct Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Equatorial Guinea’s rise to become a country with one of the highest GDPs per capita in sub-Saharan Africa has been driven almost entirely by U.S. companies’ foreign direct investment (FDI) in the oil and gas sector. In the mid-2010s, the decline in both oil prices and the country’s hydrocarbon reserves caused an economic recession that has continued for six years and has been exacerbated by the COVID-19 pandemic. While it still ranks among the top five richest sub-Saharan countries, the country’s gross national income (GNI) per capita plummeted from $14,030 in 2013 to $5,810 in 2021.

Despite its economy’s dependence on FDI, the country presents a complex, challenging environment for foreign investors. Equatorial Guinea ranks near the bottom of the list for various global indices, including those for corruption, transparency, and ease of doing business, and the government suffers from a lack of technical expertise and capacity to implement many of the reforms it proposes. Freedom of the press is limited, and public information on laws and regulations is not readily accessible, creating an opaque operating environment that many outside investors have difficulty navigating. Furthermore, both senior leaders of the ruling Democratic Party of Equatorial Guinea (PDGE) and members of the president’s extended family own a significant number of businesses in diverse industries, dominating the private sector and creating major conflicts of interest in a country known for pervasive corruption.

On January 1, 2022, the Central African Economic and Monetary Community (CEMAC), of which Equatorial Guinea is a member, began enforcing new foreign currency regulations on companies operating in extractive industries. While there continue to be negotiations on the final implementation of these regulations, they are likely to impact foreign firms’ willingness to invest in the hydrocarbon sector in Equatorial Guinea and other CEMAC countries. Finally, as a small country with an estimated population of 1.2 million residents and an underdeveloped education system, Equatorial Guinea suffers from a shortage of both skilled and unskilled labor, which affects many businesses’ abilities to operate competitively.

In the face of the country’s growing economic and fiscal challenges, the International Monetary Fund (IMF) approved a $282.8 million, three-year Extended Fund Facility (EFF) arrangement in December 2019, which required the government to implement reforms to improve transparency, good governance, and the business environment. Between 2019 and 2021, the government passed laws, issued decrees, and established institutions to comply with these requirements. It implemented a new anti-corruption law, created an Investment Promotion Center (IPC), passed an updated labor law, announced the privatization of its main state-owned enterprises (SOEs), and launched its Single Business Window to simplify the process of registering a business. Some of these initiatives have had modest success, while most exist on paper only.

On the surface, Equatorial Guinea appears to provide opportunities for foreign investment. In addition to its hydrocarbon reserves, the country has rich soils, abundant fishing waters, vast forests, eye-catching landscapes, relatively developed road infrastructure, and a strategic location for maritime trade. Before investing in Equatorial Guinea, however, potential investors should conduct extensive research and carefully consider both the potential benefits and pitfalls of establishing operations in the country’s opaque and challenging environment.

							1. Openness To, and Restrictions Upon, Foreign Investment					

### Policies Towards Foreign Direct Investment

The government recognizes the critical role foreign direct investment (FDI) in its hydrocarbon sector plays in Equatorial Guinea’s development. However, chronic corruption, patronage, highly centralized decision-making, and a lack of local regulatory capacity create a challenging environment for foreign investors.

Article 27 of the country’s fundamental law states “the State protects, guarantees, and controls the investment of foreign capital that contributes to the development of the country.” In Article 12 of Law No. 7/1992 on the Investment Regime, the government again commits to fair and equitable treatment for all investors. Law No. 7/1992 also creates an Investment Promotion Center (IPC) to advise the government on investment policies, promote investments, and support both domestic and international investors with information and in the resolution of conflicts. These laws also create a National Investment Commission (NIC). Neither the IPC nor the NIC are operational. In 2015, the government directed the Ministry of Commerce and Business Promotion to create an agency to promote, integrate, and coordinate a national strategy to attract FDI. The ministry has yet to establish this agency. Historically, the president has had de facto final approval on large contracts with foreign investors; however, since 2020, the vice president has largely taken over this role. Foreign-owned companies pay higher registration fees than local companies and are often subject to taxes that more informal local businesses avoid.

Equatorial Guinea’s six-year recession has motivated the government to focus on improving economic diversification and attracting new FDI. Led by the Ministry of Finance, Economy, and Planning, the government is promoting its National Economic Diversification Strategy, developed in 2019 to comply with IMF-required reforms to receive a three-year Extended Fund Facility (EFF) arrangement. One of the primary goals of the strategy is to reduce the country’s economic and fiscal dependence on the hydrocarbon sector. The government collaborates with the World Bank, IMF, UN Development Program (UNDP), and private consultants on its economic diversification strategy, including in attracting FDI, but implementation of recommendations remains mixed.

In general, the government focuses its efforts on recruiting investments in large capital projects over small ventures, as large-scale projects are more likely to create new employment opportunities for Equatorial Guinea’s largely unskilled workforce and provide greater fiscal benefits for the government under its underdeveloped and poorly implemented taxation system. The government is increasingly seeking South-South FDI from new partners in countries like Brazil, China, Egypt, India, Turkey, and Venezuela. The government sometimes focuses on recruiting new partners in lieu of maintaining existing partnerships, neglecting improvements to its operating environment, and damaging its prospects for longer term returns from investments.

### Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors are allowed to establish and own business enterprises and engage in all forms of remunerative activity in Equatorial Guinea. As part of its economic diversification strategy, in 2018 the government eliminated the requirement to have a domestic joint venture partner for investments in the non-oil sector. Under Equatorial Guinea’s Hydrocarbons Law No. 8/2006, however, the state-owned oil company (GE Petrol) or gas company (Sonagas) must hold a stake of at least 35 percent in foreign-owned hydrocarbon companies and must account for one third of the representatives on their Boards of Directors.

Under Law 4/2009 on the Land Ownership Regime, foreigners cannot own land but can lease property from the government for up to 99 years. To secure a lease, under Decree 140/2013, a foreign national must request approval through the Office of Property Registry, who then requests authorization from the president in the form of a presidential decree. The government does, however, recognize land owned by foreign nationals before the decree entered into force in 2013, if the land was properly registered.

### Other Investment Policy Reviews

Prior to approving an EFF in 2019, the IMF conducted several rounds of staff-monitored assessments of the governments’ structural, fiscal, and monetary reforms. The results of these assessments, which include investment policy recommendations, can be found on the IMF’s website: https://www.imf.org/en/Countries/GNQ. Beyond these IMF reviews, in the past five years, Equatorial Guinea has not undergone a third-party investment policy review (IPR) through a multilateral organization such as the OECD, WTO, UNCTAD, or UN Working Group on Business and Human Rights.

Civil society organizations in Equatorial Guinea remain weak, hampered by difficulties in registering for legalization through the Ministry of Interior and Local Corporations, and thus are unable to provide oversight of investment policy-related concerns.

### Business Facilitation

In January 2019, the Ministry of Commerce launched its Single Business Window (abbreviated VUE for its Spanish name *Ventanilla**Unica**Empresarial*) at its headquarters in Malabo. The VUE reduced the time required to register a business from an average of 33 days to five. In July 2021, the ministry opened a second VUE office in the mainland city of Bata. Registration still must take place in person, however, as there is no online registration page nor a working VUE website. Individuals choosing to register their businesses without utilizing the VUE must complete the following steps through a variety of government agencies:

### Outward Investment

Although Equatoguinean citizens may legally invest outside the country, the government does not actively promote foreign investment. There are no known restrictions on foreign investment, but some individuals and companies have faced delays when transferring money overseas or converting local currency into foreign exchange, which has been exacerbated by new CEMAC rules on foreign currency reserves enacted in 2019. The National Bank of Equatorial Guinea (BANGE) – majority-owned by the government – launched two subsidiary offices in neighboring Cameroon.

							2. Bilateral Investment and Taxation Treaties					

Equatorial Guinea has signed several bilateral and multilateral investment treaties, a list of which can be found at https://investmentpolicy.unctad.org/international-investment-agreements/countries/64/equatorial-guinea?type=bits. It is also a signatory to the African Continental Free Trade Agreement (AfCFTA) and has ratified all additional protocols. It is not a member of the OECD’s Inclusive Framework Base Erosion and Profit Shifting, nor does it have a bilateral taxation treaty with the United States.

							3. Legal Regime					

### Transparency of the Regulatory System

Regulations governing the investment environment in Equatorial Guinea are implemented at the national level and can be introduced and enacted in one of three ways:

- As a law, which begins as a draft bill presented by the relevant government ministry to the Council of Ministries before being submitted to Parliament for review and a vote.
- Through a decree (at times referred to as a “decree-law”) issued directly by the president.
- Through a ministerial order issued by the relevant ministry, in this case often the Ministry of Commerce and Business Promotion; the Ministry of Labor, Employment Promotion, and Social Security; or the Ministry of Finance, Economy, and Planning.

The government does not make draft versions of bills and regulations available for public comment at any stage of the approval process. Civil society groups complain that they are not consulted in the drafting of relevant laws and regulations.

The regulatory regime suffers from both a lack of public information and shortcomings in implementation and enforcement. Online versions of laws and regulations are difficult to find and sometimes completely unavailable. To comply with the IMF’s 2019 required reforms, the Ministry of Finance created both a website (https://minhacienda-gob.com/biblioteca-juridica/) and physical office to facilitate public access to commercial regulations, but in practice limited documentation is available through either resource. In 2020, the government launched the official webpage of the state bulletin (https://boe.gob.gq/#) to improve public access to laws and regulations. The page has not been updated since January 2021, purportedly because of delays caused by the COVID-19 pandemic. Despite these efforts at digitalization, most of the information on regulations is still only accessible in hard copies for a fee through the Office of the National State Bulletin.

As a member country of the Organization for the Harmonization of Business Law in Africa (OHADA), Equatorial Guinea’s accounting standards are governed by the organization’s uniform act on accounting law and financial information (AUDCIF). However, due to a lack of local expertise on OHADA’s accounting standards, the government uses the Spanish model for its general accounting system. In 2020, a World Bank-sponsored program to strengthen the investment climate in the OHADA region established an office in Equatorial Guinea to train local accountants on OHADA accounting law. Of the 10 accountants registered through the office, currently only two are Equatoguineans. Officially only these accredited accountants can audit and certify companies’ financial statements.

While the government has made improvements in its overall fiscal transparency since 2019, it does not meet the minimum requirements of fiscal transparency as established by the U.S. Department of State. While the government’s published budget provides a substantially complete picture of its planned expenditures and revenue streams, including natural resource revenues, in 2021 it failed to disclose its total debt obligations, produce audited financial statements for state-owned enterprises (SOEs), or establish a supreme audited institution, which was mandated by law in 2012. Additional information is included in the Department of State’s annual Fiscal Transparency Report: https://www.state.gov/fiscal-transparency-report/.

### International Regulatory Considerations

As a CEMAC member, Equatorial Guinea’s investment-related regulations are based on CEMAC policies. Implementation of some policies at the national level remains pending, such as the commitment to free movement of people and goods between member countries. Equatorial Guinea is not a member of the World Trade Organization (WTO) but has been an observer since 2002. In 2007, the government applied for full WTO membership, and its application remains in process. The Ministry of Commerce is implementing a strategic action plan for the country’s accession, including hiring an international consultant to prepare a required Memorandum on the Foreign Trade Regime (MFTR). The legislature has yet to approve the memorandum.

### Legal System and Judicial Independence

Equatorial Guinea’s national judicial system is not independent of the executive branch, as the president serves as the chief magistrate and has the power to appoint or remove judges at will. In 2018, the IMF highlighted numerous factors that result in a weak judiciary, including a lack of publicly accessible information on judicial decisions and limited capacity and understaffing that cause delays in rendering court decisions. Additionally, in many cases, judges are awarded percentages of the penalties they levy against defendants, which can be particularly concerning for larger U.S. companies operating in the country. While the government has committed to addressing these issues, domestic and foreign investors continue to generally distrust the judicial system.

Equatorial Guinea’s legal system is a mix of civil and customary law. The country does not have an established commercial law, and so it instead refers to the uniform acts of the OHADA for arbitrating commercial cases. OHADA legislation creates a civil legal system that aims to provide a common business and legal framework across all 17 member states, while enhancing the legal certainty and predictability of international transactions in the region. In 2010, OHADA passed its Uniform Act Organizing Securities, which created a modern security law for OHADA nations and reinforced lenders’ rights by enabling them to use new, efficient security enforcement mechanisms, such as out-of-court appropriation. Other new and revised laws for the OHADA region include:

- Uniform Act related to general commercial law act, revised in 2010
- Uniform Act related to commercial companies and economic interest groups, revised in January 2014 and effective May 2014
- Uniform Act organizing collective proceedings for clearing debts, revised in September 2015 and effective December 2015
- Uniform Act on the harmonization of accounting, adopted in January 2017 and effective January 2018.

Each member country has the responsibility to apply these acts locally through laws and regulations, and the government in Equatorial Guinea has to date failed to implement most of them.

### Laws and Regulations on Foreign Direct Investment

The primary legal instrument governing foreign investment in Equatorial Guinea is Law No. 7/1992 on the Investment Regime in Equatorial Guinea, which was last updated by in 1994 by No. 2/1994. Due to the difficulty in passing new laws, subsequent changes have mostly been implemented through more than two dozen presidential decrees, which are summarized in a document published on the Ministry of Finance’s website: https://minhacienda-gob.com/materia-de-inversion-3/. The government published Decree 45/2020 in April 2020 reducing the minimum amount of capital needed to register a limited-liability company from one million XAF (approximately $1,650) to 100,000 XAF (approximately USD 165). Specific regulations governing investments in the hydrocarbon and mining sectors are summarized on the Ministry of Mines and Hydrocarbon’s website at https://mmie.gob.gq/, although the English version of the page has not been updated since 2017.

The government has yet to create a one-stop-shop for foreign investors seeking information on relevant, rules, procedures, and reporting requirements.

### Competition and Antitrust Laws

There is no specific agency that enforces competition laws. Due to Equatorial Guinea’s membership in OHADA, OHADA competition laws should be applied to such cases. Information on all OHADA uniform acts and case law can be found at https://www.ohada.org/en/.

### Expropriation and Compensation

Law No. 7/1992 states that the government will not expropriate foreign investments except when acting in the public interest with fair, just, and proper compensation. The government does not generally nationalize or expropriate foreign investments, although there are alleged cases of local private companies cooperating with the government to expropriate property from foreign investors after falsely accusing them of breach of contract. This practice has become less common since 2018, when the government eliminated the requirement for foreign investors to identify a local business partner. The government has an extensive record, however, of expropriating locally owned property, frequently offering little or no compensation.

### Dispute Settlement

#### ICSID Convention and New York Convention

Equatorial Guinea is not a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention, also known as the Washington Convention), although Law No. 7/1992 states that international arbitration may be based on the ICSID. The government has stated that its action plan for improving the national business climate includes joining the ICSID. The country is party to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

#### Investor-State Dispute Settlement

Equatorial Guinea is member of the Multilateral Investment Guarantee Agency (MIGA). Over the past 10 years, there have been a few investment disputes involving a U.S. or other foreign investor and the government, a limited number of which were brought before international arbitration. While Equatorial Guinea is not a signatory to the ICSID, one case was brought before the tribunal in 2012 but was dismissed. In 2014, a French court ordered the government to pay 150 million euro to the French-based telecommunications company Orange Group for violating a clause in their contract. The contract required the Equatoguinean government to purchase Orange’s stake in fixed line and mobile operator Guinea Ecuatorial de Telecomunicaciones Sociedad Anonima (GETESA) if there was a new entrant in the sector. State-owned cellular company GECOMSA launched in 2012, triggering the clause, which the government did not honor. The government paid its judgement between October 2016 and October 2018.

As of 2021, two U.S.-owned companies were awaiting payment from the government for services rendered since 2019. One company claims that the government owes it approximately 5 million euro for direct services and operational support it provided under contract, but the company’s owners are reluctant to take legal action out of fear of jeopardizing their other operations in the country. In the second case, in which a communications company that has repeatedly re-negotiated their contract with the Ministry of Finance in an effort to be paid, government officials responded to a U.S. Embassy inquiry stating they were working with the company to resolve the issue. Separately, a European agriculture company claims the government has neglected to fulfill its part of a contractual agreement by failing to provide its promised co-investment funding after the investor had transferred capital into a local bank.

#### International Commercial Arbitration and Foreign Courts

Law No. 7/1992 states that disputes that cannot be resolved through direct negotiation by the involved parties shall be referred to Equatoguinean courts. Either party can also submit the dispute for international arbitration. In their initial application to invest in the country, foreigners must declare their desired international arbitration venue, though arbitration must take place in a neutral location with Spanish as the official language. Under OHADA’s Uniform Arbitration Law, parties can also bring disputes before the Common Court of Justice and Arbitration (CCJA). The CCJA is based in Abidjan but can hear cases within the borders of any one of its member countries. There are no recent relevant cases in Equatorial Guinea demonstrating whether local courts recognize and enforce foreign arbitral judgments and awards.

### Bankruptcy Regulations

OHADA uniform code and case law on bankruptcy apply in Equatorial Guinea. However, despite being an OHADA member country and therefore having recourse to insolvency and debt recovery proceedings, the country has no legal practice or expertise in judicial reorganization, judicial liquidation, or debt enforcement. Creditors are therefore likely to face difficulty in recovering their money through a formal legal process in insolvency cases.

							4. Industrial Policies					

### Investment Incentives

To stimulate investment and job creation, Law No. 7/1992 on the Investment Regime establishes the following incentives, which have been in place since 1992:

- A reduction in the company’s tax base equivalent to 50 percent of the salary of an employee in a newly created position.
- A reduction in the company’s personal income tax equivalent to 200 percent of the cost of training offered to local employees.
- A credit worth 15 percent the value of non-traditional exports, which can be used in the payment of any fiscal obligations.
- Additional incentives offered to investors operating in the country’s rural areas, as described in the government’s tax law.

In addition, since the start of the pandemic the government has attempted to incentivize local business creation by reducing the minimum capital investment threshold for registering an LLC. The government does not currently offer any incentives for clean energy investments or for businesses owned by underrepresented investors, such as women.

In 2014, the government established Holding Equatorial Guinea (HOLDING G.E.) to manage a $1.6 million investment fund created to finance its joint ventures with private companies in sectors identified as key to its economic diversification strategy. Previously, the government allocated up to 20 percent of the country’s general budget to this fund every three years, but now it provides funding on a case-by-case basis when HOLDING G.E. identifies co-investment opportunities. Information on investment opportunities in strategic sectors is available on HOLDING G.E.’s website (https://www.holdingequatorialguinea.com/), as is the agency’s “Equatorial Guinea Investment Guide,” which has not been updated since 2018.

### Foreign Trade Zones/Free Ports/Trade Facilitation

Three entities have tax-free status: the Luba Free Port, the Port of Bata, and the K5 Free Port Oil Centre. Goods that are properly cleared through a fellow CEMAC member country are not taxed when entering Equatorial Guinea. In January 2021, Presidential Decree 2/2021 introduced new regulations on cross-border trade with neighboring Cameroon and Gabon, including establishing an import-export office.

### Performance and Data Localization Requirements

Under Equatorial Guinea’s Local Content Law, a significant percentage of the goods and technology used by foreign hydrocarbon companies must be produced or assembled locally or within the CEMAC region. The Ministry of Mines and Hydrocarbons has fined, suspended, and expelled companies perceived to be noncompliant with local content laws, although such cases are more often related to the failure to hire local nationals rather than the failure to use equipment and technology produced in the region.

The government requires internet service providers, whether local or foreign, to turn over source code or to allow surveillance. According to Article 15 of the Telecommunication Law 7, dated November 7, 2015, the Regulating Organ of Telecommunications (ORTEL) oversees official communication lines and networks. The government has no requirements regarding locating data storage within the country.

							5. Protection of Property Rights					

### Real Property

Despite existing laws protecting the rights of property owners, the government selectively enforces those rights and uses the judicial system to seize land “in the public interest” with little to no due process. Mortgages are offered under a “Social Housing Program” in which payments are made to the government via the commercial bank CCEI Bank. Mortgage terms vary and can be more than 20 years, and interest rates are high, ranging from 12 to 18 percent. Non-payment for six months results in foreclosure on the property.

### Intellectual Property Rights

Equatorial Guinea is a member of the African Intellectual Property Organization (AIPO) and the World Intellectual Property Organization (WIPO). After 18 years of negotiations, Equatorial Guinea launched its Intellectual Property Documentation Center (CDPI) in September 2021 with assistance from the AIPO. The CDPI’s mission is to provide scientific and technical information on intellectual property and technological innovation. Intellectual property rights (IPR) protections fall under the Council of Scientific and Technological Research of Equatorial Guinea (CITCE). CITCE sends local applications to obtain a patent for a product to the central AIPO office in Yaoundé, Cameroon, which in turn shares them with other member offices to verify the products’ originality before granting a patent.

The government established a copyright law soon after joining the AIPO. The Ministry of Culture, Tourism, and Artisanal Promotion sporadically applies IPR regulations, for which public information is not readily available. In cases of alleged IPR violations, the injured party must file a complaint with the Ministry of Justice, which refers the complaint to CICTE. Intellectual property (IP) is also regulated in part by the Industrial Property Law. CICTE issues certificate of protection to the owners of industrial property once it verifies the IP’s originality. AIPO requires that member countries draft national laws regulating artistic and cultural property. The government has yet to comply with this requirement, but a European Union committee will be assisting CICTE in drafting the relevant legislation in 2022.

While Equatorial Guinea still faces challenges in registering and protecting intellectual property, it was not included in the Office of the U.S. Trade Representative’s 2022 Review of Notorious Markets for Counterfeiting and Piracy nor in its 2022 Special 301 Report. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

							6. Financial Sector					

### Capital Markets and Portfolio Investment

Equatorial Guinea does not have its own stock market, but CEMAC operates a common stock market for all member states known as the Central Africa Stock Exchange (BVMAC). In August 2021, the Financial Market Supervisory Commission of Central Africa provided authorization for the National Bank of Equatorial Guinea’s (BANGE) new brokerage division, the BANGE Securities Company, to operate in the BVMAC and individual stock markets accredited within the CEMAC subregion. The BANGE Securities Company offers financial advising, portfolio management, brokerage services, and bond issuance.

The government owns a 51 percent stake in BANGE, and bank shares were made available to domestic institutional investors through an initial public offering in November 2020, followed by secondary offering valued at $75 million in April 2021, which was opened to individual and foreign investors. In March 2022, BANGE advised the government to issue treasury bonds on the subregional market as one means of financing the country’s rising debt.

CEMAC’s Bank of Central African States (BEAC) regulates interest rates in member countries by setting the discount rate. However, due to the high prevalence of default on loan repayment in Equatorial Guinea, local commercial banks set high interest rates for private borrowers, ranging from 12 to 18 percent for mortgages and approximately 15 percent for personal loans. Business loans generally require significant collateral, limiting opportunities for entrepreneurs, and may have rates of 20 percent or greater. There is no evidence of foreign investors obtaining credit on the local market.

### Money and Banking System

Equatorial Guinea’s banking system remains relatively underdeveloped, and little public information is available about the assets and health of the financial sector. The government’s National Economic and Financial Committee creates a semi-annual report on the country’s banking sector, but the report is not always made public.

While banks have branches throughout the country, they are concentrated in urban centers. BANGE has the most branches (31), while CCEI/CCIW Bank de Guinea Ecuatorial, which has been wholly owned by the government since 2021, is the largest bank in the country in terms of total assets under management. BGFI Bank Guinée Equatoriale operates as a subsidiary of BGFI Holding Corporation (Gabon). Pan-African EcoBank (Togo) and Societe Générale (France) also operate in Equatorial Guinea. The construction of new bank branches is typically a result of government efforts to project an image of Equatorial Guinea as a financial center, rather than a reflection of the actual demand in the country. A small number of ATMs are located in urban centers. Banks are increasingly offering online banking services, though such services remain limited. BANGE estimates that 60 percent of the population has accessed formal financial services.

CEMAC members do not have their own central banks, but instead host national BEAC branches. Three BEAC branches are located in Equatorial Guinea in Ebibeyin, Bata, and Malabo. BEAC’s Central Africa Banking Commission (COBAC) regulates the region’s banking systems and provides authorization for commercial banks to operate in each member country. The Ministry of Finance provides information on establishing a financial institution within the CEMAC region on its website at https://minhacienda-gob.com/condiciones-para-la-solicitud-de-una-acreditacion-de-actividades-financieras-en-la-cemac/.

Equatorial Guinea’s banking sector has been weighed down by a high prevalence of nonperforming loans (NPLs), as well as undercapitalization and low liquidity. At end of 2020, NPLs accounted for approximately 53 percent of all loans, driven mainly by government nonpayment of arrears on construction projects. A significant portion of the NPLs is concentrated in BANGE. Due to the continued economic recession and widespread property damage caused by explosions at a military barracks in the mainland city of Bata in March 2021, NPL rates are expected to increase in 2022. To address the NPL crisis, the government established a Partial Guarantee Fund over a decade ago to insure non-performing loans through the National Institute for Businesses Promotion, but the fund only covers small loans and so has had a limited effect on the larger problem.

While the country’s economy is almost entirely cash-based, customers have reported that cash is not always available for withdrawal, a liquidity problem exacerbated by lengthy bureaucratic procedures and minimal digital record keeping. Foreigners must provide proof of residency to establish a bank account.

### Foreign Exchange and Remittances

#### Foreign Exchange

As a CEMAC member, Equatorial Guinea uses the Central African franc (XAF), which is backed by the French treasury and pegged to the euro at a fixed rate of 655.957 XAF/EUR. The XAF/USD exchange rate thus fluctuates with the value of the euro. Foreign currency is not widely available in the XAF zone but can be obtained in Equatorial Guinea in small quantities.

In December 2018, CEMAC approved Regulation No. 02/18/CEMAC/UMAC/CM, instituting new foreign currency exchange rules for all businesses and individuals residing within the subregion. A few of the more notable rules under the new regulations include:

- Companies and individuals residing in CEMAC countries must receive authorization from BEAC to hold offshore and onshore foreign currency accounts, thus forcing most companies to maintain their bank accounts in XAF rather than a foreign currency. If BEAC does not act on the request within 30 days, it is considered to be approved.
- Export proceeds over 5 million XAF (approximately $8,250) must be repatriated to a commercial bank within the CEMAC region within 150 days.
- Companies must declare the importation of services to the BEAC, and export proceeds over 5 million XAF (approximately $8,250) must be held in a CEMAC bank.

These regulations have caused an increase in delays for transfers or exchanges of local currency into foreign denominations. In September 2020, BEAC instituted an online “e-transfer” application to ensure credit establishments comply with the new regulations. The online application automates the entire process of transfer requests and monitors the progress of each request in real time. The new regulations went into force in March 2019, but following pushback from the extractive industry, CEMAC granted an extension until December 31, 2020 for compliance by hydrocarbon and mining companies. CEMAC granted an additional extension until December 31, 2021 in response to the COVID-19 pandemic. In the months leading up to the deadline, the extractive industry negotiated with CEMAC to adapt the regulations to meet their unique foreign currency needs. Following these negotiations, CEMAC released updated instructions for mining and hydrocarbon companies in December 2021 and February 2022, under which:

- Certain transactions can be conducted using an onshore or offshore foreign currency account, including the payment of external transactions or the repayment of loans;
- Only 35 percent of proceeds must be repatriated, rather than 100 percent; and
- Contractors can be paid in foreign currency so long as the transactions are handled through onshore foreign currency accounts.

While not formally included, CEMAC verbally agreed to a 10-month grace period ending October 31, 2022 to provide addition time for extractive industry countries to fully comply with the updated regulations. In general, oil and gas companies operating in Equatorial Guinea have been able to adapt their financial processes to meet the new requirements, although they have been unable to find a local bank that can handle their account balance and transaction needs, forcing them to open accounts in Cameroon to comply with repatriation requirements, and adding additional administrative and compliance burdens. In addition, CEMAC has not yet defined how funds from abandonment and decommissioning of assets will be handled, a point of concern for foreign hydrocarbon companies.

#### Remittance Policies

Remittances and money transfers in general are regulated by CEMAC’s Exchange Regulation no02/18/CEMAC/UMAC/CM. Additionally, Ministerial Order 3221 released by the government in June 2017 regulates rapid money transfers via money transfer agencies. Transfers of remittances are limited to the equivalent of 1 million XAF (approximately $ 1,663) per person per month and to 400 million XAF (approximately $666,331) per financial institution per month. Western Union wire transfers are no longer available in the country, and informal money transfer operations have become more commonplace.

### Sovereign Wealth Funds

The government established the Fund for Future Generations as its sovereign wealth fund in 2002. The fund receives 0.5% of all oil revenues and is governed and managed by BEAC. The Sovereign Wealth Fund Institute estimates that the fund has approximately $165.5 million USD under management, although there is no publicly available information on its allocations or the regulations directing its maintenance and management.

							7. State-Owned Enterprises					

The government controls at least eight state-owned enterprises (SOEs) in the energy, housing, fishing, aerospace and defense, and information and communication sectors. These include Sonagas (natural gas), GEPetrol (oil), SEGESA (electricity), GECOMSA and GETESA (telecommunications), SONAPESCA (fishing), ENPIGE (low-income housing), and Ceiba Intercontinental (national airline). The government’s annual budget includes allocations to and earnings from SOEs, but other details – such as total assets and number of employees – are not made available. SOEs also lack publicly available audited financial statements. In 2017, the government contracted Deloitte and Ernst & Young to conduct a detailed report on its SOEs, which provided a comprehensive list of these entities. The report and other information regarding SOEs can be found on the Ministry of Finance’s website at https://minhacienda-gob.com/empresas-publicas-y-entidades-autonomas/.

Following the recommendations of the IMF’s 2018 staff-monitored program, the government began efforts to improve governance of its SOEs. It established a committee for the restructuring of public entities and appointed new governing boards for each one. The IMF also required the government to contract an internationally reputable firm to audit the accounts of the state-owned oil (GEPetrol) and gas (Sonagas) companies, which the government hired at the start of 2019. As of April 2022, however, the audits had not been completed.

### Privatization Program

To comply with the IMF’s recommendations, the government also committed to the privatization several of its SOEs. In April 2022, it announced that it would be privatizing GETESA, SEGESA, GITGE, and Ceiba Intercontinental, as well as its mail delivery service (GECOTEL) and vehicle inspection service (ITV). The government also stated that it will undertake privatization of undefined assets in the hospitality, health, and education sectors, as well as at the airports and ports. The government did not provide any details on the timeline or process for the privatization process, but it instructed the Ministry of Finance to establish the relevant procedures, including a transparent public bidding process that is open to international investors.

							8. Responsible Business Conduct					

The government does not have a clearly defined vision on responsible business conduct (RBC) for companies operating in the country. Rather, it encourages such practices through individual decrees and enforcement of laws and policies. The Ministry of Mines and Hydrocarbons, for example, mandates that international oil companies invest a percentage of their proceeds in local corporate social responsibility (CSR) projects. Under the local content rules added to the Hydrocarbon Law in 2014, a significant portion of these funds are used to support the National Technological Institute of Mines and Hydrocarbons, which trains local nationals to work in the extractive sector. Some funds are invested in environmental projects through local and U.S.-based NGOs, while others support social projects like a human trafficking awareness campaign. All CSR projects must be approved by the Ministry of Mines and Hydrocarbons, and the Ministry receives branding and credit for all CSR initiatives even it doesn’t contribute any funding. The Ministry oversees the entire CSR process through its Department of Local Content, including selecting the project, local implementing partner(s), and location(s).

While there are significant human rights concerns in Equatorial Guinea, including arbitrary detentions and restrictions on free speech and assembly, in general these are not directly related to the investment sector. There are no alleged instances of child labor in supply chains, major land tenure issues, forced evictions of indigenous peoples, or arrests of environmental defenders. There are some cases of alleged forced labor of third country nationals working for foreign companies and foreign state-owned enterprises, which are covered in more detail in the Department of State’s Trafficking in Humans Report linked below.

As a result of Equatorial Guinea’s underdeveloped and under-resourced judicial system, laws designed to protect human rights, workers, the environment, and consumers are not always effectively enforced. The absence of labor unions and weak civil society organizations result in little third-party oversight of or advocacy for improved government actions related to RBC. A high-profile case in early 2022 resulted in the arrest of six individuals accused of putting consumers at risk by falsifying the expiration dates on products at a prominent supermarket. In 2021, national police arrested multiple individuals for falsifying official signatures and documents to engage in illegal logging.

Equatorial Guinea applied to join the Extractive Industries Transparency Initiative (EITI) in 2010, but its application was delisted after the government missed the validation deadline. To comply with IMF recommendations, it reapplied in 2019, but it once again had to withdraw its application in 2020 for failure to meet all requirements. The government has been unable to identify a civil society organization to serve as part of an effective multi-stakeholder oversight mechanism, a key component of admission into the EITI. In late 2021, the Minister of Mines and Hydrocarbons stated that the government would be resubmitting its application in early 2022, but as of April, no progress toward reapplying had been made public.

Equatorial Guinea is not a signatory of the Montreux Document on Private Military and Security Companies, nor does it participate directly in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA), although several companies in the country are members.

#### Additional Resources

**Department of State**

- Country Reports on Human Rights Practices ;
- Trafficking in Persons Report ;
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities ;
- U.S. National Contact Point for the OECD Guidelines for Multinational Enterprises ; and;
- Xinjiang Supply Chain Business Advisory 

**Department of the Treasury**

- OFAC Recent Actions

**Department of Labor**

- Findings on the Worst Forms of Child Labor Report ;
- List of Goods Produced by Child Labor or Forced Labor ;
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World  and;
- Comply Chain .

#### Climate Issues

Equatorial Guinea’s national climate change policy is established in the following documents:

- National Food Security Program (NFSP), adopted in 2012;
- National Climate Change Action Plan (NCCAP), prepared in 2013;
- Nationally Determined Contributions (NDCs) plan, adopted in October 2015;
- National action plan to mitigate CO2 emissions in international aviation, adopted in 2016;
- Reducing Emissions from Deforestation and Forest Degradation National Strategy (NS-REDD+), adopted in 2018;
- 2018-2025 National Renewable Energy Action Plan (NREAP), adopted in 2018; and
- REDD+ national investment plan (NIP-REDD+), adopted in 2020.

Through its existing NDC, the government sets a target of a 20 percent reduction of CO2 emissions by 2030 and a 50 percent reduction 2050 compared to 2010 levels. The NDC plan includes a variety of initiatives designed to help meet this goal and improve Equatorial Guinea’s overall climate adaptation, including: installation of early alert systems for climate risks and natural disasters; periodic resiliency reviews of critical infrastructure; increased use of renewable energy with a focus on hydropower; greater public transportation options; and greater use of new technology, including more fuel-efficient machinery, vehicles, and airplanes. In late 2021, a representative of the Ministry of Agriculture, Livestock, Forests, and Environment (MAGBMA) stated that the government would be releasing its updated NDCs in April 2022, which would include more aggressive targets. Both Ministry officials and third-party observers admit that the government does not currently have the capacity or resources to meet its existing targets, and little tangible progress has been made.

Equatorial Guinea’s Hydrocarbon Law No. 8/2006 requires all hydrocarbon operations to be undertaken in a manner that protects and preserves the environment and allows the Ministry of Mines and Hydrocarbons to suspend the operations of any company that damages the country’s natural resources. Law No. 7/2003 on the Environment further requires all companies to present environment protection plans, including environmental impact studies and rehabilitation plans, to the Ministry. There are no known regulatory incentives to achieve policy outcomes that preserve biodiversity, clean air, or other desirable ecological benefits, and it is unknown if the government’s public procurement policies include environmental considerations.

							9. Corruption					

Corruption at all levels of government remains a serious issue, although the government has taken some steps to combat it. The government ratified the UN Convention against Corruption in May 2018 and the African Union Convention on Preventing and Combating Corruption in October 2019. In July 2020, the President issued Decree-Law No. 1/2020 on the Prevention and Fight against Corruption to bring its existing anti-corruption laws up to international standards in compliance with requirements from the IMF. The decree requires public officials to disclose all assets and sources of income, sets new rules to prevent conflicts of interests, prohibits officials from receiving most types of gifts, establishes a National Commission on the Prevention and Fight Against Corruption, and establishes punishments for corruption offenses, as well as protections for whistleblowers.

As with the investment regulatory regime, however, anti-corruption enforcement remains weak. Some anti-corruption agencies, such as a Court of Accounts and a Commission on Ethics, have been created by law but have yet to be operationalized. Other offices, such as those of the anti-corruption prosecutor and the ombudsman, have been launched but remain weak and under-resourced. While some high-profile corruption cases against low- and mid-level officials were prosecuted in 2021, a culture of impunity remains among higher level leaders. Despite public disclosure of assets being included in both the anti-corruption law and the amended 2012 constitution, many public officials have yet to comply. Many high-level officials continue to have ownership of private sector businesses with no oversight of conflict of interest, contract negotiations, or anti-nepotism mechanisms.

Law No. 2/2014 on Civil Servants of the State sets forth responsibilities and prohibited actions of public workers, and some autonomous entities and SOEs have established their own codes of conduct. In 2019, the government called for the establishment of a Commission on Ethics to facilitate reporting by public officials of acts of corruption, but it is not yet operational.

Through harassment and intimidation, the government prevents civil society organizations from advocating on any issues that it considers to be political, and it does not offer protection for entities investigating corruption. NGOs of all kinds, but especially those engaging on issues of human rights and good governance, have difficulty obtaining legal registration through the Ministry of Interior and Local Corporations, some waiting for years without an official answer despite multiple attempts.

Corruption is reportedly present in many stages of the business cycle, including during procurement and awarding of licenses, as well as in regulatory enforcement and dispute settlement

#### Resources to Report Corruption

Contact at the government agency or agencies that are responsible for combating corruption:

The government has not provided contact information for the newly created office of the anti-corruption prosecutor. The National Committee on the Prevention and Fight Against Corruption (CNPCC) created under Law No. 1/2020 is designed, among other things, to receive reports of suspected corruption cases, but it has yet to be fully established.

Contact at a “watchdog” organization:

The European Union-funded project APROFORT reports on issues of corruption and transparency in the country. Its legal clinic is primarily designed to provide services to human rights activities, civil society organizations, women and girls in vulnerable situations, and LGTBQI+ communities, but it also takes on whistleblower cases. The clinic can be contacted at:

Legal Aid ServiceAPROFORTCalle del Botuku Luba, s/nMalabo, Bioko Norte, Equatorial Guinea(+240) 333 099 118secretariado@transparencia.pt

							10. Political and Security Environment					

Politically motivated arbitrary detentions do occur. Equatorial Guinea does not have a recent history of political violence or civil disturbance, due in part to significant government controls on political opposition and civil society. Over 50 percent of the population has official membership in the ruling Democratic Party of Equatorial Guinea (PDGE), which has maintained control of the legislative, executive, and, by extension, judicial branches since its founding in 1987. The Convergence for Social Democracy is the only legal, non-aligned opposition party, while 16 minor parties make up the “aligned opposition” and are closely affiliated with the PDGE. Legislative elections are expected to take place in 2022, with presidential elections anticipated in 2023. During its November 2021 national convention, the PDGE surprised many observers by not announcing whether President Teodoro Obiang Nguema Mbasogo, who has led the country since taking power in 1979, would run for his final constitutionally authorized term. If a new PDGE candidate is named for the 2023 presidential elections or following President Obiang’s final term, some observers predict in-fighting within the party and/or the ruling family that could lead to temporary political instability. In almost all official meetings and speeches, Equatorial Guinea’s top leaders warn of the many internal and external threats faced by the country. Some of these warnings results from thwarted coup attempts in 2004, 2009, and 2017, as well as increasing instability in West and Central Africa, but they may also be designed to solidify popular support for the PDGE and the Obiang family.

Maritime piracy remains a critical threat in the Gulf of Guinea (GoG). While reported attacks dropped from 81 in 2020 to 34 in 2021, all 57 of the global piracy-related kidnappings in 2021 occurred in the GoG. The year-to-year decrease in incidents was in part the result of several foreign governments sending vessels to patrol the waters of the GoG, including the Russian, Brazilian, and Danish navies. Following the 2019 hijacking of a supply vessel in transit to Exxon-Mobil’s offshore facility and the October 2020 on-land attack on an oil compound, the government required all ships operating in Equatorial Guinea’s water to have an armed security officer, provided by Equatorial Guinea’s military, on board. Some international oil companies are instead attempting to procure their own armed security vessels, although the government has yet to provide final approval. Despite these efforts, five high-profile attacks in and around Equatorial Guinea’s waters occurred in November and December 2021.

							11. Labor Policies and Practices					

In December 2021, the Parliament passed General Labor Law No. 4/2021, updating the regulations governing Equatorial Guinea’s labor law. This new law was designed to strengthen workers’ rights and create streamlined procedures for arbitrating labor disputes. It also raised the retirement age from 60 to 65. While the government has not published the law’s text online, in March 2022 it organized a public session to provide information on the new regulations to private companies.

Labor disputes may be heard by the legislature or in the courts, and decisions often favor the employee. This can be especially true for foreign firms. Labor disputes involving companies are frequently resolved through legislative hearings, after which the company may be obligated to pay a substantial compensation to the local employee. Employers are required to make significant severance payments to separated employees, even when employment demands fluctuate due to market conditions. Currently, the government does not provide any unemployment insurance or other social safety net programs to assist laid-off workers.

Due to its small labor pool and underdeveloped education system, Equatorial Guinea has a consistent shortage of both skilled and unskilled local labor. Foreign laborers make up an important segment of all sectors of the economy, and dominate in highly skilled professions, including engineers, pilots, and doctors. Despite local skilled labor shortages, the National Content Law of Equatorial Guinea requires that 70 percent of foreign oil company’s staff consist of local nationals. Furthermore, before hiring an expatriate worker, these companies must demonstrate to the Ministry of Mines and Hydrocarbons that they have been unable to find a suitable local employee during a period of 30 days.

While official statistics are scarce, anecdotal evidence suggests that youth unemployment is widespread and that women remain under-represented in the formal economy. A study conducted by the Ministry of Finance in 2017 estimated that the informal sector is responsible for 32 percent of Equatorial Guinea’s GDP. This informal sector, which includes the provision of both goods and services, grew quickly following the start of an economic recession in 2015, which was further exacerbated by the COVID-19 pandemic.

Aside from a union of small farmers and the taxi association, the government has not recognized any labor unions, so collective bargaining is not common. The government allows small collectives and associations to register but does not permit them to engage in labor advocacy. There have not been any strikes during the last year that posed an investment risk, as the government typically restricts strikes or protests. There is no evidence of the government waiving labor laws to attractive foreign investments. Equatorial Guinea joined the International Labor Organization (ILO) in 1981 and has ratified the ILO’s Worst Forms of Child Labor Convention, the Abolition of Forced Labor Convention, and the Discrimination (Employment and Occupation) Convention.

							12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs					

In June 1998, the U.S. Government and the Government of the Republic of Equatorial Guinea signed an investment incentive agreement through the U.S. Overseas Private Investment Corporation (OPIC), the precursor to the U.S. International Development Finance Corporation (DFC). The DFC does not have any active projects in Equatorial Guinea, but there is potential for DFC programs to support investments in infrastructure (including water and power), telecommunications, agriculture, petrochemicals, and other industries.

							13. Foreign Direct Investment Statistics