World Bank: Economic Diversification Essential for Equatorial Guinea’s Growth

The World Bank’s recent report advocates for Equatorial Guinea to diversify its economy away from oil dependency, focusing on human capital investment and institutional enhancement. The nation has faced significant economic decline, with ongoing recession prompting the need for strategic reforms. Key recommendations include improving public financial management, enhancing governance, and promoting a favorable business environment, empowering the country to achieve sustainable growth.

The World Bank emphasizes the necessity of diversifying the economy of Equatorial Guinea, investing in human capital, and strengthening institutions to mitigate ongoing economic decline, as stated in the latest Country Economic Memorandum report. The report highlights that the nation has been significantly impacted by decreasing oil revenues, leading to a prolonged recession and a roll-back of social advancements. Although Equatorial Guinea once ranked among African upper-middle-income countries, it has faced six years of recession since 2015, with a return to recession in 2023 after brief growth.

To achieve sustainable and inclusive growth, the report calls for concentrated efforts to enhance human capital, improve the business environment, and fortify institutions. Aissatou Diallo, World Bank Resident Representative, remarked on the country’s ability to transform its economy by implementing strong policy initiatives. Currently, the hydrocarbon sector constitutes 39% of GDP, dominates exports and government revenues but offers limited employment opportunities. Without essential reforms, there is a bleak future for income levels in Equatorial Guinea.

The report prescribes a strategic framework aimed at reversing economic decline and facilitating a new, sustainable growth model. Recommended priority actions include reducing fiscal instability, improving public financial management, enhancing governance, and investing in human capital. Specific measures involve creating a stabilization fund, increasing non-oil revenues, operationalizing the Anti-Corruption Commission, and focusing on education and health improvements as well as social protection initiatives.

In addition, steps to enhance the business climate are urged to attract private investment and spur diversification efforts. These steps should address barriers such as legal uncertainties and limited access to credit. Promoting eco-tourism, accelerating digitalization, and fostering trade integration are essential components for economic diversification moving forward. Djeneba Doumbia, the lead author of the report, stressed the urgency of diversifying the economy in light of diminishing hydrocarbon production and fluctuating oil prices.

In summary, the World Bank underscores that economic diversification, human capital investment, and institutional strengthening are critical for Equatorial Guinea’s recovery and growth. The proposed strategies aim to create a sustainable and inclusive economy that is less reliant on hydrocarbon resources, ensuring better living standards for its citizens. Implementing these recommendations is essential for a resilient economic future.

Original Source: www.miragenews.com