The World Bank’s report stresses the importance of economic diversification in Equatorial Guinea due to declining oil revenues and subsequent recession. It outlines measures, including enhancing human capital and governance, to restore sustainable growth. The report advocates for stronger fiscal discipline, governance reforms, and improving the business climate to promote non-oil sector development.
The World Bank’s latest report emphasizes the urgent need for economic diversification in Equatorial Guinea to foster growth beyond oil dependency. It identifies that declining oil revenues, paired with a lack of economic diversification, have led to a prolonged recession and jeopardized social progress within the nation. Since 2015, Equatorial Guinea has experienced six years of recession, and its national per capita income has halved since its peak in 2008.
The report, titled “Equatorial Guinea Country Economic Memorandum – Building the Foundations for Renewed, More Diversified and Inclusive Growth,” underscores the necessity of enhancing human capital and strengthening institutions. According to Aissatou Diallo, World Bank Resident Representative for Equatorial Guinea, “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 constitutes 39% of the GDP, representing 76% of exports and 86% of government revenue, though it offers limited job opportunities. Without significant reforms, the projected decline in per capita income threatens the nation’s economic stability for decades. The report outlines vital measures to reverse economic decline, focusing on enhancing human capital and creating a robust business environment.
Priority recommendations include: reducing fiscal instability and creating a stabilization fund to mitigate oil price volatility; improving public financial management; enhancing governance by operationalizing the Anti-Corruption Commission; and investing in human capital to boost education and health outcomes.
Moreover, the report advocates for improving the business climate to attract private investment and promote diversification while addressing barriers such as legal uncertainties and limited access to credit. It also encourages advancing digitalization and integrating with the global economy to facilitate trade and diversify into sectors like eco-tourism. Djeneba Doumbia, the report’s lead author, warns that the decreased hydrocarbon production underscores the urgency for Equatorial Guinea to lessen its reliance on global commodity markets for sustained economic growth.
In summary, the World Bank’s report advocates for comprehensive reforms aimed at diversifying Equatorial Guinea’s economy away from oil dependence. By investing in human capital, enhancing governance, and improving the business environment, the country could initiate a new trajectory of sustainable and inclusive growth. The recommendations underscore the crucial need for policy actions that prioritize economic resilience amidst global commodity market volatility.
Original Source: www.zawya.com
