How to Do Business In Equatorial Guinea?

Doing business in Equatorial Guinea, primarily a hydrocarbon-driven economy, involves navigating specific regulatory steps and understanding the key sectors and the current investment climate. The government is focused on economic diversification, which is opening up opportunities outside of oil and gas.

Here is a guide on how to approach business in Equatorial Guinea, incorporating real-life examples.

1. Understanding the Business Environment and Key Sectors

Equatorial Guinea’s economy is heavily dependent on oil and gas, which accounts for a significant portion of GDP, and this sector is dominated by major international companies. However, the government’s national development strategy, “Agenda 2035,” seeks to diversify the economy.

Key Sectors for Investment:

• Energy (Oil and Gas): Remains the backbone, offering opportunities in exploration, production, and related services (logistics, equipment, chemicals).
• Infrastructure and Construction: Despite significant prior investment in large projects, continuous needs exist for maintenance and new infrastructure like roads, seaports, and utilities.
• Agriculture and Fisheries: These sectors are largely underdeveloped, presenting potential in commercial farming (cocoa, coffee, palm oil) and fish processing to meet domestic demand and for export.
• Tourism and Hospitality: The country has significant natural attractions, but a severe shortage of quality tourism infrastructure like hotels and resorts creates a market gap.
• Manufacturing: There is a strong case for setting up local factories for products that are currently imported, such as building materials, packaged food and beverages, and pharmaceuticals.

Investment Climate Challenges and Reforms:

While the government has implemented some reforms to streamline processes, such as the establishment of a One-Stop Shop (VUE) for business registration and a reduction in minimum capital requirements, investors should be aware of:

• Legal and Regulatory Uncertainty: There can be a gap between official laws and practical application, with a lack of clear and consistently enforced rules.
• Corruption and Transparency: These issues pose risks, as arbitrary inspections or business disputes can arise.
• Local Content Requirements: For foreign-owned Limited Liability Companies (SARL), the requirement for 35% of shares to be held by Equatorial Guinean citizens has been eliminated for non-oil companies, but having local partners is often still necessary for navigating the operational complexities. Companies are required to have an approved long-term local content plan.
• Banking Sector Issues: The sector has faced issues with nonperforming loans and undercapitalization, partly due to government payment arrears with local firms.

2. Steps to Register a Business

The business registration process is governed by the Organization for the Harmonization of Business Law in Africa (OHADA) law, which Equatorial Guinea is a member of. The most common business structure for foreign investment is the Limited Liability Company (SARL).

1. Choose a Company Type and Name: Decide on the legal structure (e.g., SARL) and ensure the company name is unique.
2. Draft and Notarize Statutes: A public notary must legalize the company’s statutes and prepare the public deed.
3. Open a Bank Account and Deposit Capital: Open a corporate bank account and deposit the required minimum capital. For an SARL, the minimum capital is XAF 1,000,000 (Central African CFA franc). Obtain a bank certificate of solvency.
4. Obtain Solvency Proof and Apply for Authorization: Obtain a certificate of solvency from the Ministry of Finance and submit an application for the establishment of the business to the Department for Small and Medium Enterprises at the Ministry of Trade. Large-scale investments may require prior approval from the Prime Minister.
5. Commercial Registry: Submit the notarized documents to the Commercial Registry to officially register the company.
6. Tax and Social Security Registration: Apply for a Tax Identification Number (TIN/NIF) with the tax authorities (Ministry of Finance/Public Treasury) and register with the Ministry of Labor and the National Social Security Fund for employees.
7. Obtain Operating Licenses: Secure a general business license and any industry-specific permits from the relevant ministries (e.g., Ministry of Mines and Energy for oil and gas).

3. Real-Life Business Examples

Major international and regional companies are active in Equatorial Guinea, primarily concentrated in the core sectors:

Conclusion

Starting a business in Equatorial Guinea requires careful planning, a clear understanding of the centralized role of the hydrocarbon sector, and a strategy to navigate the complex regulatory environment. While the government is actively seeking to diversify, most foreign investment remains concentrated in the core industries. Success often relies on securing strong, compliant local partnerships, demonstrating a commitment to local content, and aligning your business objectives with the country’s long-term development goals.