World Bank Report Highlights Path for Economic Diversification in Equatorial Guinea

The World Bank’s 2025 report on Equatorial Guinea emphasizes the necessity for institutional strength, investment in education and health, improvement of the business climate, and enhanced digitalization and trade practices to promote economic diversification and sustainable growth amid declining oil revenues.

On March 4, 2025, the World Bank released its inaugural Country Economic Memorandum for Equatorial Guinea, titled Building the Foundations for Renewed, More Diversified and Inclusive Growth. This report underscores the critical challenges and opportunities facing the nation as it seeks to enhance its economic landscape in the wake of declining hydrocarbon revenues since 2015.

The report highlights that effective institutions are essential for economic management and sustainable growth. Although Equatorial Guinea became the third-largest oil producer in Sub-Saharan Africa in the 1990s, its economy has faced prolonged recession due to reliance on oil revenues, which constitute approximately 80% of total public revenues. Structural reforms are needed to improve fiscal management, promote long-term stability, and diversify revenue sources through well-managed institutional frameworks and Sovereign Wealth Funds.

Investment in education, health care, and social protection remains a significant concern. Despite improvements in educational access, government spending on education is only 0.9% of GDP, which is below the averages of regional peers. Additionally, poor maternal and child health outcomes hinder human capital development, while social assistance spending is exceptionally low. A proposed Social Protection Law for universal coverage remains unapproved, revealing the urgent need for significant reform in social services.

To create a conducive environment for business growth, the regulatory landscape in Equatorial Guinea must be improved. Although some efforts have been made to reform regulations, challenges such as land titling uncertainties, credit access, and digitalization of services persist, affecting investment and private sector development. Enhancing the business climate is paramount to reversing declining income per capita and fostering sustainable economic expansion linked to the National Sustainable Development Strategy (AGENDA 2035).

Moreover, increasing digitalization and engaging in trade and ecotourism are essential for integrating Equatorial Guinea into the global economy. Despite higher trade openness compared to peers, the economy suffers from high trade costs, driven by inadequate logistics performance. The government must prioritize improvements in the technology sector and promote ecotourism by utilizing existing infrastructure and investing in marketing and training to capture global opportunities. In sum, fostering these sectors will help facilitate economic diversification and connect Equatorial Guinea with international markets.

The World Bank’s report on Equatorial Guinea emphasizes the need for foundational structural reforms to ensure sustained and inclusive growth. Key areas of focus include strengthening institutions, enhancing education and healthcare access, improving the business environment, and embracing digitalization and trade integration. Addressing these issues will position Equatorial Guinea to successfully diversify its economy and mitigate the adverse effects of declining hydrocarbon revenues.

Original Source: www.worldbank.org