Equatorial Guinea: Investing
Since the discovery of offshore oil deposits, many investors have shown great interest in Equatorial Guinea. Foreign direct investment inflows into the country had thus been consistently high for the past years. According to UNCTAD's World Investment Report 2023, FDI inflows stood at USD 459 million in 2022, in line with the level recorded one year earlier. At the end of the same period, the stock of FDI was estimated at USD 15.9 billion, representing around 96.6% of the country’s GDP. The vast majority of FDIs in Equatorial Guinea are directed towards the oil and gas sector, followed by forestry and fisheries. The United States is the main investing country, ahead of China and France.
In recent years, the government has sought to diversify the economy and attract investment in other sectors such as agriculture, fisheries, infrastructure, and tourism. In an effort to speed up economic diversification, the government has established GE Holding, an entity tasked to manage the State’s co-investment funds. It has also implemented many reforms to improve the business climate. These include creating a single desk for investments and adopting a law to settle conflicts related to contract execution. Equatorial Guinea also made starting a business less expensive by reducing registration fees. The government has decided to support the promotion of non-traditional exports, allowing the repatriation of profits and offering various tax incentives. Moreover, the government continues to sign new production partnership contracts (gas, mines) with international companies. Equatorial Guinea is currently implementing a Gas Mega Hub masterplan, with the development of several offshore gas hubs and the monetization of neighboring gas reserves (the country is in discussions with Cameroon and Nigeria to facilitate additional cross-border linkages). Law No 72/2018 amended Decree No 127/2004 to streamline domestic investments. The revised law abolished the requirement for local partners for investors outside the oil industry. However, this obligation persists for oil sector enterprises, mandating 35% local ownership. Foreign investors remain subject to sector-specific regulations concerning land acquisition and must adhere to varying local content guidelines. Presidential approval, as stipulated in Decree 140/2013, is necessary for foreign individuals or entities acquiring land titles. Furthermore, local content regulations stipulate that foreign workers cannot exceed 10% of the total workforce (30% in the extractive and agricultural sectors). Overall Governance in Equatorial Guinea is weak, and the risk of corruption is widely perceived to be extensive: the country ranks 172nd among the 180 economies on the 2023 Corruption Perception Index and 159th out of 184 countries on the latest Index of Economic Freedom.
| Equatorial Guinea | Sub-Saharan Africa | United States | Germany | |
|---|---|---|---|---|
| Index of Transaction Transparency* | 7.0 | 5.5 | 7.0 | 5.0 |
| Index of Manager’s Responsibility** | 1.0 | 3.5 | 9.0 | 5.0 |
| Index of Shareholders’ Power*** | 5.0 | 5.5 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
| Foreign Direct Investment | 2020 | 2021 | 2022 |
|---|---|---|---|
| FDI Inward Flow (million USD) | 410 | 460 | 459 |
| FDI Stock (million USD) | 14,974.0 | 15,433.9 | 15,892.4 |
| Number of Greenfield Investments* | 0.0 | 0.0 | 0.0 |
| Value of Greenfield Investments (million USD) | 0 | 0 | 0 |
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
The following items are exempt: raw agricultural, livestock, fishing and hunting products, sold directly to the end consumer by the owner; sale of products resulting from soil and subsoil extraction activities; operations transmitting real estate between individuals that do not qualify as real estate developers and that are subject to asset transfer tax; interest generated by foreign loans; interest generated by deposits of nonprofessional clients in credit or financial establishments; travelers with small imports when the value of the goods does not exceed XAF500,000; banking, insurance and reinsurance operations, which are subject to a specific tax; operations transferring real estate, and real estate rights and mutations of goodwill that are subject to the asset transfer tax or other equivalent taxes; medical services, including transportation of accident victims and sick people, and medical assistance to individuals provided by public hospitals and health centers, or similar agencies, and medical assistance provided by members of the meical and paramedic corps; staple commodities, as well as their supplies, the supplies of livestock and fishing products used by producers, as long as said products are exempt; services provided in the field of school or university teaching by public and private establishments or similar agencies; importation and sale of school or university books; sale of newspapers and periodicals, not including income received from advertising; rental of unfurnished houses; certain international traffic operations; social, educational, sports, cultural, philanthropic or religious services or operations provided to their members by nonprofit benevolent and charitable agencies, as long as said operations can be directly related to the collective defense of the moral or material interests of their members. However, these are taxable when they are in a situation of competition with the private sector; importation of equipment goods; amounts deposited by the Public Treasury into the Central Bank in its capacity of issuing bank, etc.
| Income tax | Progressives rates until 35% |
| From XAF 0 to 1,000,000 | 0% |
| From XAF 1,000,001 to 3,000,000 | 10% |
| From XAF 3,000,001 to 5,000,000 | 15% |
| From XAF 5,000,001 to 10,000,000 | 20% |
| From XAF 10,000,001 to 15,000,000 | 25% |
| From XAF 15,000,001 to 20,000,000 | 30% |
| Above XAF 20,000,000 | 35% |
| Non-resident individuals | 15% withholding tax on gross income derived from sources in Equatorial Guinea |
| Equatorial Guinea | Sub-Saharan Africa | United States | Germany | |
|---|---|---|---|---|
| Number of Payments of Taxes per Year | 46.0 | 36.6 | 10.6 | 9.0 |
| Time Taken For Administrative Formalities (Hours) | 492.0 | 284.8 | 175.0 | 218.0 |
| Total Share of Taxes (% of Profit) | 79.4 | 47.3 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
| Setting Up a Company | Equatorial Guinea | Sub-Saharan Africa |
|---|---|---|
| Procedures (number) | 16.00 | 7.51 |
| Time (days) | 33.00 | 21.30 |
Source: Doing Business.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: May 2024
