After having been severely impacted by the oil price crisis, Equatorial Guinea’s economy is recovering, and so too is its plan to diversify the economy, which offers a number of exciting opportunities for investors. In this interview, Mariola Bindang Obiang, General Director of Holding 2020, discusses those opportunities and how Holding 2020 functions as the organization to oversee economic diversification and serve investors.
It is a historical moment for Equatorial Guinea (EG), as it celebrates 50 years of independence and there is great interest on the part of the government in economic diversification, social inclusion and improvement of the business climate and also in the international image of the country. What is your view of the country 50 years on since independence?
It is a special feeling but at the same time we recognize that EG is still a young country. We started from a situation where there was practically nothing. Before the departure of the Spaniards, there was a little industry but unfortunately the first 11 years of independence were destroyed and from there, when the coup of freedom took place, the country had to be recreated from scratch. At that time, in the 80s and 90s, the country survived thanks to the help of international organizations.
Several sectors benefited from such aid until the discovery of oil in the country. After the discovery of oil, the first thing the government did was to convene a national economic conference in 1997 to analyze what should be done with the resources coming from hydrocarbons. In 2007, 10 years later, the second economic conference was convened, where infrastructure investment and economy diversification were big discussion points.
In 2014, the symposium on economic diversification was organized, during which the recommendation to create Holding Equatorial Guinea (Holding EG) came about. That is: an entity that the government has created to encourage economic diversification and manage government investments in all other sectors except the hydrocarbons sector. Holding EG was established in 2015, practically as a start-up.
Holding GE works with national and foreign investors who are interested in coming to invest in GE, in sectors such as agriculture, livestock, fishing, tourism and other services in general. In the short period that we have been operating, we have conceived several agriculture and livestock projects that we currently have in our portfolio. When investors come to ask us what we have and what can materialize, we say the transformation of our raw materials and we show the already existing projects. But at the same time, we accept that if an investor comes, he can bring another project that is different from the ones we already have.
Holding receives the projects, analyses them and studies what to do what to do with the projects. We demand that the projects create a productive activity in the country. Throughout the implementation, that project should involve national training and transfer of knowledge, so that they we have partners that provide know-how and transmit that know-how. We also ensure that the projects create enough jobs for the population because we are aware that after the boom in the construction sector there are many young people who are unemployed. It is necessary to boost the creation of employment. These projects could create a lot of employment and absorb labor that is not currently being used.
Finally, Holding EG offers another possibility that it is a secure partner. People can change but the entity always remains. It does not disappear overnight and that minimizes the risk of the investment. Holding EG has been created because it is governed by private law, not by public law. So that could also inspire confidence on the part of private investors who want to come to work in Equatorial Guinea.
What guarantees, in terms of legal and financial security, stability of the country and profitability, could you give to the investor?
When it comes to large investments with a considerable amount and the partner that comes is a foreign private partner, Holding EG a guarantee to ensure your stay in the country. Holding EG requests this guarantee from the government, and subsequently it is delivered to the partner. It is already known that the government recognizes that the investment that has been made by a private investor and there would be no concern that there is going to be some strange maneuver.
Bank regulation in Equatorial Guinea does not prohibit the repatriation of profits. The country has a legal currency with that is fixed against the euro, so there is no risk of currency fluctuations. Another advantage is having good and new infrastructure. With decent road, air and sea transport, you can perfectly implement industries in Equatorial Guinea, and produce and distribute to the CEMAC area. There are good roads from Equatorial Guinea to bordering countries.
With 80% of GDP being made up by the oil industry, the economy was severely impacted by the drop in crude oil prices. That has also directly affected the creation of new companies and the diversification of the economy. But with oil prices climbing gradually, there are new positive expectations regarding the growth of the country's economy. This will in turn positively affect the creation of industry.
That is the vision we have. At the time when the economy turns around, there could be more income for the state and, as a result, several projects that Holding EG already has could be executed. When creating these new industries, foreign investors would contribute the part they wish to contribute and Holding EG would contribute the other part. If the context is favorable, the economic activity is sustainable, there is sustained internal demand, it could contribute favorably so that the projects we have can be quickly put into action. We would no longer be counting on a budget reduction as is the case now. If there was income, the actions that are scheduled could be executed without a doubt.
What would be your main priority action order for 2019 to encourage the attraction of foreign investors to the country?
The actions we have in the short term are the execution of two projects in the agriculture sector and another in the fishing sector. These are projects that we already have well advanced and the context could contribute favorably for these projects to see the light immediately, independently of those that will be scheduled for the next months.
What has been the greatest achievement since you were appointed director of the Holding EG?
Making the organization work because when I arrived in Malabo, the only thing they gave me was the decree of appointment. From there, everything that works to this day has been built progressively. Holding EG has three main objectives: Boost economic diversification; manage the co-investment fund; and manage activities in which the government has invested outside of the hydrocarbons sector.
What would be your final message about EG?
It is a country that still offers many opportunities because we still do not have many industries. And we know that being a pioneer in a sector, success is achieved better because. So is still a virgin forest that offers many opportunities. It is a matter of come, visit and see what you can contribute to then reap the best of what you have contributed.