The Republic of Equatorial Guinea is located on the western coast of central Africa. It has an area of 28,050 kilometres and is composed of a mainland and several islands and islets in the Atlantic. The island of Bioko, the capital, is situated about 40 km from Cameroon and Annobón Island, about 595 km ,southwest of the island of Bioko. Furthermore, belong to the country the islands of Corisco, Elobey Grande, Elobey Chico and adjacent islets. The mainland is around Río Muni, between Cameroon and Gabon. The country is administratively divided into seven provinces: Annobón [San Antonio de Palea], Bioko Norte [Malabo], Bioko Sur [Luba], Centro Sur [Evinayong], Kie-Ntem [Ebebiyin] Litoral[Bata] and Wele-Nzas [Mongomo]. The country’s estimated population is approximately 1,000,000 residents. The mostly practiced religion is the Christianity, although much influenced by traditional indigenous religions. The different ethnic groups in the population are divided Fang, Ndowe, Anobones, Bubi and Bisio. The population is divided between in a mainland part and another insular. On the continent are concentrated the 75% of citizens, especially in Bata. In the insular, in Bioko, where is located the country capital, Malabo, lives 25% of the population. The second largest city of the island, is Luba. Equatorial Guinea declared its independence from Spain in 1968. The country is a multiparty republic with a strong executive control. The official languages are Spanish, French and Portuguese, although most spoken language is Spanish.
Traditionally the wood, cocoa and coffee have been the basis of the Equatorial Guinean economy. In 2009 the primary sector, if we exclude the extraction of crude oil, accounted for only 2% of GDP. The engine of the economy of Equatorial Guinea are the hydrocarbons. Equatorial Guinea, which began in 1992, the exploitation of its oil fields, an activity that represents 85% of GDP. The discovery and the beginning of oil exploitation in the country, have contributed to the exponential growth of the Equatorial Guinean economy in the last decade and convert the extractive sector to the main engine of the economy. Since 1996, the economy has grown 40% annually on average, being like that the engine of growth in the region of Central Africa, and one of the leading investors, with a National Development Plan “Horizon 2020” adopted in 2007 as reference frame. Today, Equatorial Guinea is the third largest oil producer in sub-Saharan Africa, after Nigeria and Angola. This assumes about 85% of GDP, 98% of exports and 90% of Government revenues.
The true engine of economic activity is the public investment (about 80% of public expenditure), being largely discretionary; also the public finances have an intergenerational savings fund which wean the real growth of national expenditure. However, the Government intends to invest part of the incomes of this industry to reactivate the agriculture, diversifying the economy. Also the construction and trade are living very important developments, driven by the inflow of foreign exchange generated by the export of oil and gas. Due to the wealth of natural resources of the country, the exports in Equatorial Guinea are 4 times greater than the imports. The main trade partners of Equatorial Guinea are countries like the U.S. and China. Between 2006 and 2010, the average GDP growth was 6%, five years earlier, in the period 2001-2005, the average increased stood at 9%, while between 1996 and 2000, the average GDP was 42% due to large investments that the multinationals settled in the country held in prospecting and building oil platforms. Equatorial Guinea works to become a new nation, solvent and of reference to the other countries of the Economic and Monetary Community of Central African States (CEMAC) for what it has two important tools: the production of oil and gas.
The construction has great potential for growth in the coming years, with the development of multiple infrastructures. The service sector is slightly advanced and activities such as trade, banking, health, energy and business services constitute important attraction poles for the investment. The tourism sector has little presence in Equatorial Guinea despite its potential, as it has places of great beauty and in costs which barely know about human pressure. Equatorial Guinea has a strong tourist vocation of great quality: hunting, fishing, quality tourism seaside resort on the island of Corisco, excursions … It has a well-preserved primary forest which houses a rich biodiversity: terrestrial fauna (grassland and mountain gorillas, chimpanzees, baboons, birds and unique species), marine wildlife (whales, large sea turtles …), forest flora, and so on. Equatorial Guinea wants to be a leader in the field of tourism in the CEMAC. The financial sector is underdeveloped, considering the small number of banks and insurance number and scarcity in lending, especially about long-term loans. The financial services may be developed if we consider two main assets: the attractiveness of numerous financial groups to Equatorial Guinea because of the economic upswing, and the importance of foreign exchange reserves of the state. Moreover, the financing of the 2020 strategy and the diversification of the economy in the financial sector requires a voluntary approach to cover the needs of the diversification of the national economy.
Business opportunities in Equatorial Guinea are focused fundamentally on the construction sector, which is in full development. This activity affecting large government projects such as the creation of the city of Oyala and the construction of Malabo II. The State, in turn, would like to develop a wide network of infrastructure such as roads, ports, airports and encourages, further housing construction, both officially protected as private development. The economic and social development Plan 2020 is the framework established by the Government in order to diversify the economy and make attractive for foreign investment activities such as the electricity sector, light industry, tourism, banking, business services and the primary sector.
Equatorial Guinea has a positive trade balance, as its exports, centered on hydrocarbons, multiply by 4 to its imports, which are much more diversified. Being a country belonging to the CEMAC, intraregional trade is exempt from tariffs.
Most of the 11,000 million dollars of FDI invested in Equatorial Guinea since the mid-90s, comes from U.S. companies. The discovery of oil and gas in the 90s has transformed the country into the fastest growing economy in Africa and to one of the major destinations for U.S. investment in the continent. Moreover, they are investing heavily in infrastructure sectors, such as construction and electrical sector. Equatorial Guinea is articulating its hydrocarbon extraction industry through two groups of projects. On the one hand, the extraction of crude oil from the Zafiro, Ceiba, and Alba fields. On the other, the utilization of derived gases, mainly from Alba field, to obtain three final products for export: LNG (liquefied gas), methane and LPG (butane and propane).
The principal taxes are collected in the General Tax Code Equatorial Guinea.Levies are similar to those in the region; so the company tax is 35%, the percentage of income tax varies between 10 and 35% and the standard rate of VAT is 15%. Currently there is no agreement to avoid the double taxation between Equatorial Guinea and Spain.
Costums and Trade Barriers
The country has a relatively open trade regime and does not have significant non-tariff barriers. The IMF gives 4 points in its index to the trade restrictions (an index which maximum restriction value would be 10 points). Possible problems arising from the absence of a custom administrative structure to streamline the clearance formalities. Equatorial Guinea is a member of the Economic and Monetary Community of Central Africa (CEMAC), so it applies to the third countries imports a common customs tariff and free transit is allowed to the other member countries: Cameroon, Chad, Republic of Central African Republic, Gabon and Democratic Republic of Congo. Equatorial Guinea’s Government decided in late 2006, to reform legislation affecting the investment of hydrocarbons companies to encourage investments. On the basis of assessment are applied the following taxes and fees: Tariff; depending on the category to which the product belongs, Taxes that are paid into the Public Treasury; VAT: 15% (reduced rates: 6% and 0%), Trade rate: 1% Special Law: rate up to 50% (only some products: alcohol, snuff, certain personal hygiene products).The summary of the tariff in the CEMAC countries is as follows: CAT I: Consumer staples: 5%, CAT II: Equipment and raw materials: 10%, CAT III: Intermediate goods (semi-processed): 20% CAT IV: consumer goods (final product): 30%. Besides being encumbered by these customs duties the majority of products are subject to other fees for the public treasury as: VAT: 19,25% for most products, 0%: exports or services on the part of businesses located in commercial or industrial zones. The fees designed to the CEMAC as: the Tax of Community Integration (TCI) (1%), and Community Contribution of Integration (CCI) (0.4%), both fees of community integration, in which each government of the community acts as a tax collector Free Zone. Luba Freeport is located in Luba, on the west coast of Bioko Island 40 km from Malabo. It is a port and logistical base (storage, repair, supplies, etc..) for oil, with an extension of 100 hectares. Any company operating in the free zone is exempt from income tax, VAT, IRPF, sales tax, tax on dividends. To benefit from these exemptions should request it to the Government of Equatorial Guinea.
Equatorial Guinea has two main airports located in Malabo, on Bioko Island, and in Bata on the mainland. The first is the only one having a direct connection to Spain, so for air shipments to the continental region is always necessary to make a transfer. Actually exist 4 airlines that have regular flights: Air France, Lufthansa, Iberia, Royal Air Maroc. There are also several daily internal flights between Malabo and Bata with the companies Ceiba Intercontinental, Hess and Aerocontractors. Ceiba Intercontinental also fly to other countries in the region. However, most regional airlines are blacklisted by the European Union, except a new company that has recently been established in the country, Ethiopian, with flights from Malabo to Douala (Cameroon), Tuesdays, Thursdays and Sundays. The only airlines offering cargo service are: Lufthansa, DHL and Panalpina. These last two freight a cargo plane regularly. The cargo transport of Iberia in Madrid-Malabo is almost testimonial.However, it offers special conditions to companies that use that line for their employees paths. Also special offers for merchandise path between Madrid and Malabo. Almost the entire of products and materials coming into the country do it by sea. The cost of freight from Spain exceeds approximately $ 3,000. However, with the expansion of the port of Malabo, the decongestion and reduction of waiting time of ships are favored, what will motivate a gradual decline in prices. The road network is being expanded, both on the island of Bioko and the mainland. There is a new road connecting Malabo with Malabo II ,and a new satellite city still under construction. One of the most important road is the linking Malabo with Luba, Bioko’s second city. Bata is connected by road to most the towns in the interior (Niefang Ebibeyin, Evinayong, Mongomo).