The government has created a raft of tax and training incentives that present great advantages to investors
With many dozens of countries around the globe vying for foreign investment and offering potential partners all manner of incentives, the government of Equatorial Guinea knew it needed to make sure its enticements for possible investors were world class.
Holding 2020 General Director Mariola Bindang Obiang points out that Equatorial Guinea’s political stability and its carefully thought-out incentives under the co-investment fund project have been meticulously designed for attracting domestic and foreign investment.
“When you look at Equatorial Guinea, it is quite clear that it is a very peaceful country with no history of conflict and our people like to settle their differences through dialogue, not disorder,” she says. “Apart from that, there are real benefits for investors who come here because the Equatorial Guinean currency, the CFA franc, is fully convertible and there is no problem repatriating profits.”
In addition, the currency has a fixed parity with the euro backed by agreements with the French Ministry of the Treasury and there is no hindrance by the government on the free flow of capital.
“This is a great advantage for investors,” Ms. Bindang highlights.
Liberal monetary policy is just the beginning when it comes to reasons to invest. Other incentives cover such issues as taxation, with companies creating new jobs benefitting from a 50% reduction of taxable income related to salaries for Equatorial Guinean nationals, for a period of 18 years. Plus, companies providing training to nationals enjoy a reduction of their taxable income of 200% of the amount they dedicated to training Equatoguineans.
“In addition, an incentive for the export of non-traditional products is that companies receive a credit certificate for the payment of any tax or customs duties equal to 15% of foreign currency received on account in commercial banks in Equatorial Guinea,” says Ms. Bindang.
The government’s economic planners are particularly keen on attracting investment to the country’s more remote areas. To promote that, companies involved in projects away from large urban centers can benefit from total amortization of their outlay on infrastructure. These companies will also be exempt from payment of taxes applicable to activities in remote areas, with the exception of income and sales tax, as well as customs duties and other applicable fees.
“All of these are benefits that any company which comes here to set up a business can enjoy,” the general director explains.
Other government assistance includes providing consultancy, advice and in-depth studies on sectors and markets the investor is interested in, as well as help with finding any finance needed.
“Holding 2020 will partner with other investors, both Equatorial Guinean and foreign, to co-finance projects, meaning each party will put up its share of the capital,” says Ms. Bindang.
“If there is an investment partner with the necessary knowledge and whose project is viable and profitable, we can steer them toward financing as the banks are going to play a very important part in our economic diversification.”
Equatorial Guinea is especially keen to lure investors from the United States, like those who led the way by exploring and drilling for the oil and gas that triggered the country’s new prosperity.
“If American investors are interested in entering other economic sectors to help us diversify,” Ms. Bindang says, “we would be absolutely thrilled.” She also points out that as the only Spanish-speaking African state, Equatorial Guinea is uniquely equipped to welcome investors from Spain or Latin America.
Gabriel Mbaga Obiang Lima, Minister of Energy, Mines and Industry, stresses that while Spanish-speaking investors may have a few linguistic and historical advantages, the country is keen to collaborate with a wide range of nations and will be impartial in choosing who it partners with. Belgium and Lebanon are already on board as potential investors, and India, the minister suspects, will likely be the country’s biggest investor.
“We have built so many things,” explains Mr. Obiang Lima. “But we have not broadcast our achievements to the international community,” he says. “Going forward, our responsibility is to communicate, diffuse, and inform people about what we are accomplishing in Guinea.”