The World Bank’s report highlights the need for Equatorial Guinea to diversify its economy away from oil dependency to address economic decline. Key recommendations include enhancing human capital, improving public governance, and strengthening the business environment to foster sustainable growth. A series of strategic actions are proposed to combat recession and promote inclusive development.
The World Bank stresses the necessity of economic diversification for Equatorial Guinea’s growth in its recent Country Economic Memorandum report. The nation is grappling with declining oil revenues, contributing to a prolonged recession that threatens social progress. Equatorial Guinea’s heavy reliance on hydrocarbon resources has led to a sharp drop in national per capita income, which is now less than half of its peak from 2008.
To foster sustainable growth, the report emphasizes the need for enhancing human capital, improving business conditions, and strengthening institutions. “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,” stated Aissatou Diallo, World Bank Resident Representative for Equatorial Guinea.
Currently, the hydrocarbon sector constitutes 39% of GDP, 76% of exports, and approximately 86% of government revenues, but it fails to generate sufficient employment opportunities. Without substantial reforms, and as hydrocarbon reserves decline, per capita income could continue to decrease for decades.
The report outlines a strategic roadmap to rejuvenate the economy, focusing on crucial areas such as enhancing fiscal stability, improving public financial management, and bolstering governance. Recommended actions include enforcing fiscal discipline, increasing non-oil revenues through tax reform, and better managing the Sovereign Wealth Fund. Additionally, strengthening the Anti-Corruption Commission is imperative for governance enhancement.
Investing in human capital is vital, as Equatorial Guinea ranks low on the Human Development Index due to inadequate social spending. Priorities should include enhancing primary education, health services, and social protection measures. Furthermore, improving the business climate is essential to engage private sector investments; efforts must target barriers hindering potential economic diversification, including legal uncertainties and gender gaps.
Accelerating digitalization, improving connectivity in global trade, and developing sectors such as eco-tourism will also benefit diversification efforts. “The recent decrease in Equatorial Guinea’s hydrocarbon production and the volatility of oil prices are a strong reminder of the need for the country to reduce its exposure to global commodity markets,” remarked Djeneba Doumbia, lead author of the report.
In summary, the World Bank’s report underlines the urgent need for Equatorial Guinea to diversify its economy away from oil dependency. By implementing policy reforms focused on human capital development, enhancing governance, and improving the business environment, the country has the potential to achieve sustainable and inclusive growth. The outlined roadmap provides a comprehensive approach to counteract the economic decline and fortify the foundations for a prosperous future.
Original Source: www.miragenews.com
