The World Bank emphasizes the vital need for economic diversification in Equatorial Guinea to combat recession and stimulate growth. The report outlines key actions such as enhancing human capital, strengthening governance, and improving the business environment to facilitate sustained economic development. The call for strategic reforms reflects the challenges posed by declining oil revenues and the need for a broader economic base beyond hydrocarbons.
The World Bank’s latest report on Equatorial Guinea emphasizes the necessity of economic diversification for fostering new growth avenues. The ongoing decline in oil revenues, coupled with previous attempts at diversifying the economy, has contributed to a long-lasting recession, eroding economic gains and social progress in the country. Despite its initial status as an upper-middle income nation, Equatorial Guinea has faced six years of recession since 2015 and reverted to recession in 2023 after only two years of slight growth. National per capita income now stands at less than half of its value in 2008.
To achieve sustainable and inclusive growth, the report advocates for prioritizing human capital development and improving the business landscape and institutional frameworks. Aissatou Diallo, the World Bank Resident Representative for Equatorial Guinea, remarked, “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, the hydrocarbon sector makes up 39% of the country’s GDP, 76% of exports, and approximately 86% of government revenues, yet offers limited employment opportunities. Without decisive reforms and as hydrocarbon reserves dwindle, the country’s per capita income is anticipated to continue its decline for many years ahead.
The report outlines a strategic framework aimed at countering economic downturns and facilitating a sustainable growth path based on enhanced human capital, favorable conditions for the private sector, and fortified governance. Key recommendations include establishing fiscal discipline, exploring stabilization funds, improving public financial management by increasing non-oil revenues, and enhancing the efficacy of public expenditures.
Additional focal areas involve strengthening governance through the operationalization of the Anti-Corruption Commission, investing in human capital to improve health and education outcomes, and refining the business environment to draw private sector investments. Moreover, enhancing digitalization and fostering integration into the global economy through trade facilitation and eco-tourism diversification are also highlighted as vital components of the growth strategy.
Djeneba Doumbia, the lead author of the report, underscored the importance of these initiatives, stating, “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.”
In conclusion, the World Bank’s report underscores the urgent need for Equatorial Guinea to diversify its economy to secure sustainable and inclusive growth. As the country grapples with declining oil revenues and economic stagnation, strategic investments in human capital, the establishment of robust governance, and the enhancement of the business environment are critical. The pathway forward involves embracing diversification and implementing effective policy reforms that could uplift the nation economically and socially.
Original Source: www.zawya.com
