Equatorial Guinea: Strategic Initiatives for Sustainable Forestry and Economic Diversification

The 2024 Equatorial Guinea Economic Update by the World Bank reveals a 5.7% economic contraction in 2023, emphasizing the decline in the hydrocarbon sector and highlighting the pressing need for effective fiscal tools for sustainable forestry and economic diversification. With forests covering approximately 87% of the country, the report calls for improved governance and international cooperation to address escalating deforestation rates and revitalizing the forestry sector to meet economic and environmental goals.

On October 8, 2024, the World Bank released the 2024 Equatorial Guinea Economic Update, which offers an in-depth analysis of the nation’s recent economic trends and future prospects. It emphasizes the significance of creating effective fiscal mechanisms for both sustainable forestry practices and economic diversification initiatives. The economic performance of Equatorial Guinea saw a downturn of 5.7% in 2023, primarily due to a slump in the hydrocarbon sector following a two-year recovery phase. Inflation figures also showed a decrease, aligning at 2.4% in 2023 as opposed to 4.9% in the previous year, a change attributed to the stringent monetary policies implemented by the Bank of Central African States (BEAC), along with a food import pact with Serbia and the curtailment of specific import tariffs. The report addresses the urgent need for Equatorial Guinea to implement efficient fiscal tools aimed at the forestry sector, which currently makes up a diminishing portion of the national GDP. Since the 1990s, the contribution of forestry to the economy has declined significantly due to insufficient local wood processing capabilities, leading to an increased dependency on the hydrocarbon industry. Equatorial Guinea’s forest, which encompasses approximately 87% of the nation’s landmass, has witnessed rising rates of deforestation and degradation in recent years. Aissatou Diallo, the Resident Representative for Equatorial Guinea, stated, “Developing a sustainable commercial forestry sector that focuses on domestic value-added processing would help Equatorial Guinea meet both its economic diversification and forest preservation commitments.” Furthermore, Equatorial Guinea’s dedication to sustainable development, as illustrated by its national sustainable development strategy (AGENDA 2035) and the adoption of the REDD+ framework, necessitates enhancements in domestic revenue generation alongside an increase in external financial resources. Although recent years have seen a boost in international funding aimed at promoting sustainable forest management within the Congo Basin, these international commitments do not sufficiently meet current demands. In response to the challenges besetting the forestry sector in Equatorial Guinea, the report suggests several solutions focusing on fiscal reforms and enduring forest management practices: 1. Design effective fiscal instruments by modifying forest tax rates linked to timber production techniques, encouraging forest certification, and instituting comprehensive forest management strategies. 2. Enhance forest governance by enhancing transparency and traceability of forest products and establishing a robust wood-processing industry that aids sustainable forestry management, bolstering forest revenues, job creation, and broad economic engagement. 3. Augment financial and technical support from the international community in efforts to safeguard forests and advocate their role as a crucial ecosystem within the Congo Basin and a valuable global public resource. Djeneba Doumbia, the Country Economist for Equatorial Guinea, remarked, “Fiscal policies that support forest preservation and the sustainable use of forest resources, combined with improved forest governance and investment climate, will not only help to improve domestic revenue mobilization, but could also help attract more financing, including international and private amid a shrinking fiscal space in Equatorial Guinea.” For further insights, the full Economic Update is available for download in English.

Equatorial Guinea’s forestry sector faces significant challenges, particularly the decline in its contribution to the GDP and increasing deforestation rates. Historically, the economy relied heavily on agriculture and timber, but there has been a notable shift toward dependence on hydrocarbons. The World Bank’s report highlights the need for sustainable practices and economic diversification, underscoring the crucial role that effective fiscal policies can play in revitalizing the forestry sector while ensuring ecological integrity.

In summary, the 2024 Equatorial Guinea Economic Update provides a critical examination of the country’s economic hurdles, particularly emphasizing the forestry sector’s untapped potential. By implementing strategic fiscal reforms and enhancing governance within the forestry realm, Equatorial Guinea can aim for sustainable economic growth while preserving its vital forest ecosystems. The insights shared by key representatives from the World Bank underscore the importance of both local and international participation in fostering a sustainable economic future for Equatorial Guinea.

Original Source: www.miragenews.com