The World Bank advocates for economic diversification in Equatorial Guinea, emphasizing investment in human capital and strengthening institutions to mitigate economic decline. The latest report reveals the impact of falling oil revenues and prolonged recession on social progress, necessitating strategic actions for sustainable growth. Key recommendations include enhancing governance, improving public financial management, and fostering a conducive business environment.
The World Bank emphasizes that economic diversification, investment in human resources, and the strengthening of institutions are essential for reversing the economic decline in Equatorial Guinea. The recent Country Economic Memorandum highlights the challenges posed by diminishing oil revenues alongside insufficient diversification, leading to a prolonged recession and reversing previous economic advances. Equatorial Guinea, once an upper-middle-income nation, has experienced continuous economic contraction since 2015, exacerbating its challenges and reducing per capita income significantly since its peak in 2008.
To achieve sustainable growth, the report outlines the necessity of bolstering human capital and improving the overall business environment. The report, titled “Equatorial Guinea Country Economic Memorandum – Building the Foundations for Renewed, More Diversified and Inclusive Growth,” stresses the urgent need for strategic actions to lay the groundwork for a more resilient and varied economy.
“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,” states Aissatou Diallo, World Bank Resident Representative for Equatorial Guinea.
The hydrocarbon sector, constituting 39% of GDP and 76% of total exports, remains a critical but limited source of employment. Without significant reforms, Equatorial Guinea’s reliance on hydrocarbons will continue to diminish, projecting a decline in per capita income for decades ahead. Consequently, the report proposes a comprehensive growth roadmap to foster an inclusive economy through various priority actions.
Key recommendations include enhancing fiscal stability through discipline and the establishment of a stabilization fund, improving public financial management by increasing non-oil revenues, and ensuring transparency in the Sovereign Wealth Fund. Governance strengthening through implementing the Anti-Corruption Commission and enhancing statistical monitoring is also advised.
Further, it urges investing in human capital, noting Equatorial Guinea’s low ranking on the Human Development Index, which is attributed to insufficient social investment and poor public service delivery. Major focus areas will be primary education, health services, and social protection schemes to support diversification initiatives.
The report stresses the need to improve the business environment to attract private investments, highlighting the removal of entry barriers, gender gaps, and the necessity for enhanced digital services. Accelerating digitalization and engaging in global markets with an emphasis on trade, particularly eco-tourism, are also pivotal for fostering diversification.
“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,” remarks Djeneba Doumbia, lead author of the report.
To summarize, the World Bank’s report urges Equatorial Guinea to transition towards a diversified economy, highlighting the importance of human capital development, better governance, and an improved business climate. It stresses the urgency of policy reforms to alleviate economic dependence on hydrocarbons while addressing social welfare. Achieving these objectives will require coordinated efforts to build a resilient and inclusive economic framework.
Original Source: www.miragenews.com
