Equatorial Guinea

EQUATORIAL GUINEA

RISK RATING
High
Default High Risk Score 7.50
Normal Average 5.20
Weighted Average 5.55
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

The small hydrocarbon-rich West African nation of Equatorial Guinea is expected to face one of its most challenging years yet. Five years into a recession, which is already expected to last a decade, the country has been hit by the coronavirus and an unprecedented drop in the global oil price. While a newly launched International Monetary Fund (IMF) programme may help the country to weather the impending storm, the entrenched political, social, and economic structures under the 40-year rule of the current president are likely to hinder a recovery. Bracing for impact, Equatorial Guinea’s government is preparing to offer support the oil sector. The Ministry of Mines and Hydrocarbons will waive fees normally charged to service companies operating in its territory in the wake. The oil sector is the largest private sector employer in the country and the ongoing crisis is expected to halt operations and stall investment across the industry.

  • Presidential succession is the key risk driving political uncertainty. President Teodoro Obiang Nguema is Africa‚Äôs longest-serving head of state. Since the last elections were held in 2016, in which he won more than 90 percent of the vote according to official results, Obiang has further consolidated his power. Attention will now shift to the transition to his successor, who is most likely to be his eldest son ‚ÄėTeodor√≠n‚Äô. Teodor√≠n is first vice-president in charge of defence and state security. However, figures within the ruling PDGE party are likely to oppose such a transition and President Obiang will have to look for outside support. In case of an uncontrolled succession, infighting between factions of the Obiang clan is likely to rise, although Teodor√≠n is the likely victor as he has the support of security services as defence minister.
  • An exponential rise of maritime piracy in the Gulf of Guinea has come to affect the country. According to the International Maritime Bureau (IMB), out of the 162 incidents reported globally last year, 64 were recorded in the Gulf of Guinea, representing almost 40 percent of the world total. While over the course of 2019, Equatorial Guinea was impacted by just one incident ‚Äď in which a vessel was fired upon in its waters ‚Äď the outlook for piracy in the region remains dire. Notably, there has been a dramatic increase in the number of maritime kidnappings and hijackings in the region as a whole, suggesting that this year could see similar attacks taking place off Equatorial Guinea‚Äôs coast.
  • Heavy dependency on hydrocarbons has continued to pull the country into recession over the last year. According to the IMF, the annual percentage change of real GDP growth has been negative year-on-year since 2015. The economy is expected to contract each year until 2024 which will amount to an almost decade-long recession in this small West African state over the long-term. In 2019, the IMF approved a three-year USD 282 million credit facility. The programme intends to strengthen public finances by reducing inefficient spending, increasing non-resource tax revenue, and improving public financial management.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
6.5
Expropriation, Nationalisation, Confiscation & Deprivation
5.0
Contract Frustration & Breach
5.0
Taxation
5.0
Bribery & Corruption
7.5
Regulatory Burden
6.0
Strikes, Riots & Civil Commotion
2.0
Security
3.0
Sovereign Default
6.0
Economic Volatiliy
6.0

Risk Rating Scale (small)

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