The World Bank’s latest report emphasizes the urgent need for Equatorial Guinea to diversify its economy away from oil dependency, invest in human capital, and bolster institutional frameworks to combat economic downturns. With a declining oil sector and rising socioeconomic challenges, the report outlines strategic reforms in governance, fiscal management, and educational investment to achieve sustainable and inclusive growth.
According to the World Bank’s recent Country Economic Memorandum, Equatorial Guinea must diversify its economy beyond oil, invest in its citizens, and enhance institutional capacities to counter the ongoing economic decline. The drop in oil revenues, alongside failures in economic diversification, has led to a prolonged recession and stagnation of social advancements, returning the nation to a state akin to its pre-growth period of 2015 with decreasing per capita income.
The document emphasizes the potential for Equatorial Guinea to revitalize its economy through strategic policy initiatives grounding sustainable development in human capital and institutional strength. “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,” stated Aissatou Diallo, the World Bank Resident Representative for Equatorial Guinea.
Currently, the hydrocarbon sector constitutes 39% of the GDP, 76% of exports, and 86% of government revenues, but provides limited employment opportunities. Without significant reforms and with depleting oil reserves, per capita income is expected to decline further in the coming decades. The World Bank report outlines a path to recovery, emphasizing education, a robust private sector environment, and sound governance.
Key recommended actions include: reducing fiscal instability and maintaining fiscal discipline, creating a stabilization fund for oil revenue management, and enhancing the accountability of the Sovereign Wealth Fund. Furthermore, improving public financial management by increasing non-oil revenue through a streamlined tax system and reducing subsidies is essential.
Strengthening governance is necessary by operationalizing the Anti-Corruption Commission and enhancing statistical capabilities, alongside investment in human capital as Equatorial Guinea ranks low on the Human Development Index. Prioritizing education and public health, alongside social protection measures, is critical for promoting social equity.
To foster economic diversification, the business climate must be improved to attract private investment. This includes addressing legal uncertainties, land rights issues, gender disparities, and facilitating access to credit and digitalization. Accelerating efforts in digital integration within the global market and promoting sectors like eco-tourism are vital elements for future growth.
“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. Sustained policy actions and efforts to develop the non-oil sector, boost human capital development, enable the private sector, and strengthen legal, fiscal, and economic institutions can help promote resilient, sustained, and inclusive growth,” remarked Djeneba Doumbia, the report’s lead author.
The World Bank’s memorandum underscores the necessity for Equatorial Guinea to diversify its economy, enhance human capital, and strengthen institutional governance to escape the ongoing economic decline. Through targeted policy reforms aimed at stabilizing revenue and improving public services, alongside a significant boost to the private sector, the nation can work towards a more sustainable and inclusive growth trajectory. The commitment to these changes is essential for future prosperity.
Original Source: www.miragenews.com
