Economy of Equatorial Guinea

The economy of Equatorial Guinea has traditionally been dependent on commodities such as cocoa and coffee, but it is now heavily dependent on petroleum due to the discovery and exploitation of significant oil reserves in the 1980s. In 2017, it graduated from "Least Developed Country" status, one of six Sub-Saharan African nations that managed to do so. The country has seen significant economic growth and improvements in infrastructure. Equatorial Guinea has a notable Gross National Income (GNI) and has attracted a substantial foreign population, with only 950,000 of its 1.6 million inhabitants being citizens.

Top Sectors in Equatorial Guinea

Infrastructure in Equatorial Guinea

Infrastructure in Equatorial Guinea has seen notable improvements with ongoing projects to enhance transportation and electricity services. The country has over 700 kilometers of paved roads. The African Development Bank is aiding in upgrading roads from Malabo to Luba and Riaba, while the Chinese are working on a project to connect Mongomo to Bata on the mainland. The European Union is financing a road network linking Equatorial Guinea to Cameroon and Gabon. Electricity is available in larger towns through three hydropower facilities and several generators. National production has been supported by a 10 megawatt electricity plant built by the American company CMS-Nomeco, financed by the government, with plans to double capacity underway. This plant has improved service to the capital, while Bata, the largest city on the mainland, continues to work on stabilizing its electricity supply.

Energy in Equatorial Guinea

Equatorial Guinea has emerged as a major oil producer in the Gulf of Guinea, one of the most promising hydrocarbon regions in the world. The main oil fields, Zafiro and Alba, both lie offshore of Bioko island. Oil production significantly increased from its levels in the mid-1990s. The Zafiro Field, operated by ExxonMobil and Ocean Energy, produced about 100,000 barrels per day, and CMS Nomeco extracted approximately 6,700 barrels per day. By the early 2000s, production reached nearly 200,000 barrels per day. Mobil (now ExxonMobil) discovered the large Zafiro field in 1995, with estimated reserves of 400,000,000 barrels. Production began in 1996, and the company announced a three-year U.S. $1 billion rapid-development program to boost output to 130,000 barrels per day by the early 2000s. The development program was successfully carried out, enhancing the country's oil production capacity.

Equatorial Guinea - Key Economic Indicators

Exports and Imports

Equatorial Guinea's exports are predominantly petroleum and petroleum products. Imports encompass machinery, equipment, foodstuffs, and other consumer goods. While specific data on the value and composition of exports and imports can vary, the country's petroleum exports contribute significantly to its trade balance.

Infrastructure

The country's infrastructure, including roads, bridges, and ports, varies in condition. Investment in infrastructure projects is ongoing. For example, Equatorial Guinea has approximately 2,880 kilometers of roads, with about 800 kilometers paved.

Balance of trade

Equatorial Guinea typically maintains a trade surplus due to its substantial petroleum exports. In recent years, the value of exports has exceeded that of imports by several billion dollars annually.

Fiscal policy

The government of Equatorial Guinea manages fiscal policy through budgetary allocations and taxation. Government spending is directed towards various sectors. For instance, in recent years, government spending has amounted to approximately $4 billion, with revenue primarily derived from oil-related taxes.

Monetary policy

Equatorial Guinea's monetary policy is influenced by its central bank, the Bank of Central African States (BEAC). BEAC regulates the country's monetary supply and sets interest rates. For instance, the central bank may target inflation rates of around 2-3%.

Trade agreements

As a member of the Central African Economic and Monetary Community (CEMAC), Equatorial Guinea participates in regional economic integration efforts. Additionally, the country may have bilateral or multilateral trade agreements with other nations. Specific details of these agreements may vary.

Environmental regulations

Equatorial Guinea has environmental regulations aimed at protecting its natural resources and ecosystems. These regulations may include measures for environmental impact assessments, pollution control, and conservation efforts. The government may also participate in international agreements related to environmental sustainability.

Tax System in Equatorial Guinea

Capital gains tax: Equatorial Guinea does not have a specific capital gains tax on profits from investments. However, gains derived from the sale of assets may be subject to corporate income tax if generated by a business entity.
Corporate tax rate: The corporate tax rate in Equatorial Guinea is 35% for resident companies and 40% for non-resident companies. This tax is levied on the net income of businesses operating within the country.
Sales tax: Equatorial Guinea imposes a value-added tax (VAT) system known as the General Indirect Tax (IGE). The standard rate of VAT is 15%. Certain goods and services may be exempt from VAT, while others may qualify for reduced rates.
Property tax: There is no specific property tax in Equatorial Guinea. However, property owners may be subject to other taxes such as registration fees or stamp duties when transferring property ownership.
Payroll tax: Equatorial Guinea does not have a specific payroll tax. However, employers and employees contribute to social security schemes, with contributions typically ranging from 2% to 5% of wages and salaries. These contributions fund various social welfare programs.
Tax deductions and credits: Equatorial Guinea may offer certain deductions and credits to individuals and businesses to reduce their tax liability. These incentives can vary and may include deductions for investment in certain sectors, credits for specific expenditures, or incentives for job creation.
Tax compliance: Tax compliance in Equatorial Guinea is managed by the tax authorities, primarily the General Directorate of Taxes. Efforts are made to ensure the efficiency of tax collection and enforcement through audits, penalties for non-compliance, and taxpayer education programs.
Tax burden: The overall tax burden in Equatorial Guinea can vary depending on individual and business circumstances. Tax revenue is used to fund government expenditures and public services, contributing to the overall economic development of the country. The tax burden is influenced by factors such as income levels, business profitability, and government spending priorities.