Economic diversification: Equatorial Guinea’s bet

With a sharp drop in the oil barrel price and 90% of its revenue derived from oil and gas exports, Equatorial Guinea is projected to be one of the hardest-hit African economies by COVID-19.

No project in the country has been officially postponed. Meanwhile, companies in Ghana, Senegal, Mozambique, Uganda and Cameroon experience some problems linked to the fall in exploration activity, such as project delays, canceled contracts and postponement of final investment decisions.

To discuss this situation, Equatorial Guinea’s leading energy players united last Thursday (16) to address the impact of COVID-19 on the country’s oil and gas sector. They try to delineate mitigation measures to sustain its pace of engagement with global investors.

“A lot of businesses are living on the brink due to the twin issues of COVID-19 and the oil price war. Before it gets better, it will get worse. More employers will terminate people, and more international service companies will reduce staff or move out of a country because of lack of activity”, affirms NJ Ayuk, Chairman of the African Energy Chamber.

The government has been supporting small and medium-sized enterprises to stimulate local job growth. However, leaders from the African Energy Chamber call for bolder and more decisive government action.

They ask, for example, deferring some legal obligations for 2020. “If the government wants the industry to survive, it has to do something to keep jobs in the country. If the government does not show that, then it will have companies continue to fail on their own”, said Ayuk.

COVID-19 Effects

On March 22, Equatorial Guinea implemented global health and safety initiatives to curb the spread of the coronavirus, such as the closure of borders and social distancing practices.

The government is partnering with the International Monetary Fund, World Bank, World Economic Forum and other development partners to strengthen diversification initiatives and resolve trade and fiscal imbalances.

“The pandemic is giving us the opportunity to rethink what we are doing when we dream about diversifying the economy. Everything we do does not make sense if the people are not at the center of it”, affirms Cesar A. Mba Abogo, Minister of Finance, Economy and Planning.