Equatorial Guinea: The Future Vision
All eyes are on Equatorial Guinea, the small West African nation rapidly becoming one of Africa's top oil and gas producers, with total energy sector investments of $40 billion. Having elevated itself out of obscurity and into global significance, the government's "Horizon 2020" Development Plan aims to enhance Equatorial Guinea's socioeconomic progress. Reinvestment in infrastructure, energy, telecommunications, transport, tourism, education, and health has been designated as a top priority, while multinational companies continue to compete for petroleum concessions and a burgeoning natural gas industry. With President Teodoro Obiang Nguema Mbasogo holding African Union chairmanship this year, Equatorial Guinea's endeavors have come even more into the public eye. Can the government convince new investors to enter its territories? Will Equatorial Guinea achieve a meaningful and transparent strategy for economic diversification and poverty reduction?
Horizon 2020: Day by Day Development
Outside of Africa, the Republic of Equatorial Guinea may not make the nightly news or be a household name on the business pages. But for one of the continent's smallest countries, all of that is about to change. Not only has the nation's economic and political status skyrocketed by substantial oil and gas discoveries in recent years—making it a big hit with petroleum multinationals—but in January this year Equatorial Guinea also assumed chairmanship of the African Union for the first time in its history.
Located next to Cameroon and Gabon in the African mid-west, Equatorial Guinea's topography is divided into the mainland region of Rio Muni and the insular regions of Annobon, Corisco, Elobey, Mbane, and Bioko, the latter being home to the country's capital, Malabo. However, another crucial division exists in Equatorial Guinea. The country may statistically be one of the wealthiest in Africa today, but poverty still remains a challenge. This has become a major focal point for the government's "Horizon 2020" Development Plan, which aims to accelerate poverty reduction and create the basis for Equatorial Guinea to become an emerging economy by 2020. The plan aligns with many benchmarks set in the UN Millennium Development Goals (MDG), and through the Malaria Control Project, the island of Bioko has already achieved MDG-outlined reduction in child mortality five years in advance.
"Equatorial Guinea was the poorest country on the continent," admitted President Teodoro Obiang Nguema Mbasogo in an October 2010 interview. When Obiang took over the reins of this former Spanish colony in 1979 by deposing Francisco Macias Nguema, Equatorial Guinea's preceding president—and notorious dictator—the country's prospects were bleak, with only agriculture and wood providing any form of national income. "But following the discovery of oil, we have overcome the issue of reconstructing the country. I think that if we continue what we are doing now, by the year 2020 we will have surpassed all the challenges of an underdeveloped country," says President Obiang.
A sustainable future is what "Horizon 2020" aims to achieve, in combination with the Social Development Fund set up to drastically improve education, health, water and sewage, gender equality, and community development. In the past year alone, President Obiang itemized over $1 billion in spending on these projects. "This is a global plan that addresses every sector, not just one. However, there are certain basic sectors such as health care and proper infrastructure that are essential to guarantee the nation's development."
Nobel Peace Laureate Archbishop Desmond Tutu commended the president's plan, writing that he was "encouraged and impressed" by Obiang's public commitments to transparency and political, legal, and economic reforms. In response, President Obiang wrote that it was "essential to have qualified and experienced people who are capable of transforming into reality the [plan's] noble objectives. We also need to be able to count on the support of individuals and prestigious international institutions that believe in our determination to develop a modern nation." The Red Cross, the U.S. State Department and the African Union have been invited to assist in protecting human rights and democratic institutions, such as a free and independent press, strong and viable political parties, and an independent judiciary.
African Union: A Summit of Values and Issues
In addition to overseeing the day-to-day developments on the ground in his own country, President Obiang has also taken on the chairmanship of the African Union. It is by no means an easy year to assume the union's presidency; the agenda is agitating with issues of civil and military conflicts, food security, developmental obstacles, and the ongoing battle against HIV/AIDS.
"The crisis of the values of the African culture is reducing the unity and solidarity amongst our people," President Obiang, as the new chairperson, said in his acceptance address to the AU Assembly. "Africa must focus on the dialogue for a peaceful negotiated solution to the conflicts that ravage our towns. Africa must assume, more than ever, a leading role, not just on the continent, but in the international arena."
In addition, Obiang will have to deal with the rapidly changing socio-political map in Northern Africa, where longstanding heads of state have been driven out or into a corner by public uprisings in demand of democratic reforms. It will no doubt be the number one topic for discussion at the 2011 African Union Summit, to be held in Equatorial Guinea in June/July.
An entirely new coastal resort, Sipopo, has been constructed for the summit, complete with a lavish Sofitel and a "smart-tech" conference center, as well as independent luxury residences to host each and every presidential delegation from Africa's 52 states attending. About 12 miles southwest of Malabo, Sipopo's secure community will also serve as the main venue for the 2012 Africa Cup of Nations, which will be jointly hosted with Gabon. Equatorial Guinea is in essence the perfect backdrop for this year's AU summit: a rapidly transforming nation extending its welcome to old friends and new faces, state heads, and delegates of a progressively evolving Africa.
Multi-Level Cooperation With the United States
2011 is a year in which President Barack Obama wants to increase U.S. engagement with Africa. Apart from his personal bond with the continent, Africa is becoming increasingly important for U.S. interests. His focus will therefore be on supporting nations with good governance and naming democracy "the change that can unlock Africa's potential, and that is a responsibility that can only be met by Africans."
Equatorial Guinea's relations with the United States have gone through phases of cooling and warming. U.S. diplomatic presence in Malabo froze in 1996, but with Equatorial Guinea's ensuing oil boom, activities by U.S. energy companies grew, and a shift in U.S. policy observed the capacity for West African oil to not only spur development but also attribute to security and stability. As a result, the U.S. Embassy in Malabo reopened in November 2006.
The United States has since become the largest cumulative bilateral foreign investor in Equatorial Guinea, which supplies 17 percent of U.S. natural gas, with investments estimated at over $12 billion. Albert M. Fernandez, current U.S. ambassador to Equatorial Guinea and recipient of the Edward R. Murrow Award for Excellence in Public Diplomacy for his work in the Middle East, said in October 2010 that "the United States Embassy in Equatorial Guinea is working in collaboration with the government to improve some aspects of its operation." In addition, the ambassador's Self-Help Fund annually finances a number of small grassroots projects in the country.
President Obiang has visited Washington on several occasions, most recently attending the National Prayer Breakfast at which President Barack Obama was a speaker. Obiang's chairmanship of the African Union lends a unique opportunity to show his nation's commitment to common values, which will be closely monitored by the U.S. State Department.
FDI: Making a World of Difference
Equatorial Guinea was not quite the same fifteen years ago as it is today. Not a decent road was to be found, means of telecommunication were rare, and the country was in essence undeveloped. But with the arrival of major energy corporations came opportunity, and soon petroleum revenues transformed the face of the whole nation.
"Investment to date in the oil and gas sector has now exceeded $35 billion," reveals Gabriel M. Obiang Lima, delegate minister of Mines, Industry, and Energy. "We anticipate this number to increase to over $45 billion in the next few years." The funds raised from these investments are being used to create thousands of miles of new urban and interur-ban roads, airports, ports, and job opportunities.
In addition to investment from U.S. energy companies, Africa's only Spanish-speaking nation maintains ties with former colonial powers Spain and France, and enjoys investment from a plethora of global firms. Malabo and Bata, the country's main cities, have become cosmopolitan business hubs for major companies from Brazil to Russia, all active in diverse sectors of the Equatoguinean economy. Strategic alliances have been forged in energy, infrastructure, and construction of public works, as well as in commerce, telecoms, and transport. Indeed, the overall upgrade spans even into fiber optics, with information and communication technologies firm ZTE from China currently installing the country's first high-bandwidth cable network.
"The port expansion is one of the huge infrastructure projects taking place in the country," continues Gabriel Obiang Lima, adding that it took the Moroccan firm Somagec only two years to finalize the first phase of Malabo's port. Bioko island may receive a big slice of makeover funds, but so will the remote island province of Annobon with more than $425 million worth of transport connectivity investments.
Meanwhile, on the mainland, efforts have been made to create an up-to-date healthcare system, as Obiang Lima points out. "In addition to 60 Equatoguinean nurses having been trained in Israel, we completed the first of two 100-bed hospitals, the La Paz hospital in Bata, which has all of the modern medical technology present in any of the world's trauma-one facilities. A leading public-private partnership has also been initiated to eradicate malaria with astonishing results, as the first phase ended with an 80 percent reduction in Malaria-transmitting insects." It is clear that foreign direct investment (FDI) is upgrading the country's economic status while making a world of difference for a majority of its citizens.
Big Oil on the Horizon: Equatorial Guinea's Fuel Injection
When gas condensate was first discovered by Repsol off of Bioko island in 1983, global supply and demand did not validate exploiting the relatively small Alba field. Several large U.S. companies also passed over the opportunity until Houston-based oil independent Walter International—which through acquisitions became the current owner Marathon— started drilling in 1990. One year later, Equatorial Guinea was exporting oil condensate. This is largely attributed to the perseverance of the country's president, who insisted for 12 fruitless years that enough oil could be found to turn the country around.
"We know that the task is not easy and we have a long way to go," said President Obiang in a speech to the 2010 Global Forum in Cape Town. "Because this is about developing a country that started from nowhere. It is about changing mindsets rooted in underdevelopment and banishing habits that are opposed to modern development." Sure enough, the government of Equatorial Guinea vowed to use oil revenues to tackle the causes of illiteracy, poverty, tribalism, and political opportunism.
"Until the oil boom," explains Minister of Industry, Mines, and Energy Marcelino Owono Edu, "the economy of Equatorial Guinea was based exclusively on agriculture and wood. Oil completely changed these conditions, since it now signifies 95 percent of the total income of the country." But the rapid economic development happened at a much faster pace than Equatorial Guinea could develop its human resources to service it, and Energy Minister Owono Edu calls this a "deficit of national human skills to manage the existing resources. The lack of human resources is evident in all aspects of national administration and we are therefore planning intense training programs, so that little by little our very own people can take over the responsibility and management of our national economy, particularly the sectors of oil and gas, electrical energy, and mining."
Currently, production stands at around 260,000 barrels daily of crude oil, excluding the production of condensed, propane, butane, methanol, and LNG gas. Minister Owono Edu points out that the government is also assessing opportunities in green energy "alternative power plants that include the usage of wind energy, hydro energy, and biofuels. All these projects are at the moment in an embryonic phase, but we have a plan and a vision towards the future, so that when we run out of the traditional energies, we can rely on renewable forms."
According to Delegate Minister of Energy Gabriel
Obiang Lima, energy sector investment in Equatorial Guinea has reached $40 billion from 17 different companies. "Our key target is to maintain an average not higher than 300,000 barrels per day for a long period. So whenever we have a new discovery, such as at the Aseng field, we do not put it on stream immediately. This production will compensate the decline of other fields and maintain our average." Obiang Lima adds that these past two years have been particularly good for Equatorial Guinea, and that the government's strategy seems to be paying off so far. "In a period of two years that we heavily invested in infrastructure, we saw a rapid growth of our economy. For the past ten years, Equatorial Guinea has maintained almost a zero debt status."
An expiration date is always present, with current data showing Equatorial Guinea to have proven oil reserves until 2035 and gas for another decade beyond that. That limit may well be extended with successes in new exploration areas, such as near the island of Corisco. The waters beyond Corisco Bay had become an issue of territorial dispute with Gabon. However, in an "important demonstration of statesmanship on both sides," as UN secretary-general Ban Ki-moon put it, Presidents Obiang and Ali Bongo Ondimba of Gabon vowed to jointly exploit the area's resources, securing a collective development for the region until a final decision is made by the International Court of Justice in The Hague.
"President Obiang has always insisted that the future of Equatorial Guinea is not in the oil and gas sector; it is in the services sector," says Gabriel Obiang Lima. "You must always think that whenever the oil will finish, you need to keep producing revenues for the state with the invested infrastructure."
In 2004, President Obiang initiated procedures to become a member of the Extractive Industries Transparency Initiative (EITI). With the assistance of the World Bank and the U.S. oil companies active in Equatorial Guinea-Exxon Mobil, Hess, and Marathon-the government conducted an audit to justify accounts and results from all of the oil income.
However, in April 2010, EITI chairman Peter Eigen, in an open letter to President Obiang, denied the country's request to extend its validation deadline, citing there had not been any "unforeseeable circumstances" hampering the nation's process to meet transparency requirements. EITI emphasized that it would welcome a reapplication by Equatorial Guinea with a renewed commitment to clarify and address the constraints of the original process.
Minister of Economy, Commerce, and Promotion of Entrepreneurship Dr. Francisca Tatchouop Belobe, as Equatorial Guinea's coordinator of the EITI efforts, says that it is indeed the government's intention, "to improve what prevented us from keeping the term of validation and apply again for the candidature to EITI. We think that this will help us measure our own steps in the transparent use of the oil funds. For us, transparency is an exercise to improve management of public finance, and in this process we try to learn day by day."
She adds that the EITI Reconciliation Report proved that far more than 90 percent of oil revenues are paid into treasury accounts, against all foreign expectations. This shows the determination of the government in improving public funds management, despite existing institutional weaknesses which are being targeted with continued support from the Bretton Woods Institutions. The minister believes that "concerns about opacity can be smoothed out," just as the Obiang administration did in 2010 when it published a report of its public expenditures under World Bank direction.
Sprint From the Starting Blocks
Even as oil is becoming everybody's business in Equatorial Guinea, one autonomous body has the overview to manage government stakes and public-private partnerships: GEPetrol. Established in 2001 by presidential decree, GEPetrol also acts as agent for the sale of the state's share of hydrocarbons and promotes acreage within its waters.
"Before its establishment," explains Candido Nsue Okomo, director general of GEPetrol, "it was the Ministry of Mines, Industry, and Energy, which was assigned all the technical and political works." Subsequently, the technical part was taken over by the company and GEPetrol assisted the government in evaluating other companies. "Before GEPetrol, state participation was 3 to 6 percent. Today we have a 20 to 30 percent share stake in operational fields, as well as being the technical operator in block P." That block is proving to be "a tough job," but Nsue Okomo nevertheless has high targets for GEPetrol. "We are working hard with other foreign companies and collaborating with consulting agencies so that in 3 or 5 years, GEPetrol will be transformed to an operator enterprise, the first one in Central Africa."
There's no denying that GEPetrol, in its close collaboration with the country's energy ministry, is privy to negotiating beneficial deals for its ambitions. Candido Nsue Okomo reveals that the next step for GEPetrol is to commercialize refined products. Last year the U.S. engineering firm KBR was selected by Equatorial Guinea's energy ministry to create the blueprint for a planned refinery at Mbini. This would eventually lead to GEPetrol opening up its own network of filling stations around the country. "We are not competing with TOTAL," assures Candido Nsue Okomo, referring to the introduction of downstream operations at GEPetrol. "There are a lot of people and many cars, and these are the challenges that GEPetrol has to face and to work out."
Miguel Edjang Angue, GEPetrol's deputy director-general, explains that "currently there are three producing fields in Equatorial Guinea's waters: ZAFIRO, licensed to ExxonMobil; CEIBA, operated by Hess; and the ALBA field for Marathon Oil. Part of the crude oil within those oil fields, as well as its sales and commercialization, are within our responsibility. One of the achievements in the past years was the promotion of new areas and the subsequent signing of contracts. The success that we had in this particular case was due to the revision of the hydrocarbons law, subsequently leading to a new law created in 2006 with more conditions of transparency in the oil sector." According to Edjang Angue, "this gave Equatorial Guinea a competitive edge over neighboring countries."
"Another achievement for us was the successful operation of purchasing DEVON's assets. The state bought them all and production increased from 38 percent to 48 percent." Miguel Edjang Angue does admit that collaborating with foreign companies, at this point, is more advantageous for GEPetrol. "We recognize our limited experience. It is better to cooperate with other enterprises than to compete with them, since this is a way of transferring know-how and technologies, as well as a way to benefit from their experience. Also, until now, explorations have been performed only in the country's offshore zone. We are now implementing a project in order to study the onshore zone as well, especially in the continental part, where we think the perspectives are encouraging."
With an ongoing campaign of intense perforation, the interest in Equatorial Guinea as an oil-producing nation has continued to peak, maintaining its status as one of the major oil producers in sub-Saharan Africa. In Miguel Edjang Angue's eyes, GEPetrol, as the leading company in Equatorial Guinea today, has "assisted a revolution of the economic and social numbers." In his own experience, the deputy director-general remembers when the nation's GDP was continuously negative. "We had a GNP of $130 per citizen and the budget investments of the state were $2 million a year. So, having that in mind, we can say that Equatorial Guinea started not from zero, but much more below that. Since the country started from negative numbers, it had to reach zero first and then it started experiencing a positive growth. That's why we have assisted in a real revolution."
"For us," continues Edjang Angue, "living in this country we have noticed that the development has vertiginous speed. We recognize that there is still a lot to do, as most of the time the growth is more rapid than the development and the development is more complex. So, we are heading straight forward and the government has made plans in order to reach its objectives for the year 2020. The "Horizon 2020" Development Program is a guideline which allows us to monitor and improve everything at all levels. We are extremely optimistic because we have been educated inside austerity; we had administered an agriculture-based country and now the country has been transformed to an industrial one, so we have to adapt to that."
A Flair for Gas
Fairly early on, Equatorial Guinea decided to find productive uses for the huge pockets of gas that were being discovered in oil drills. The government ordered the construction of an LPG plant, took a stake in the methanol production plant with Marathon and Noble, and owns a 25 percent working interest in the country's first liquefied natural gas (LNG) plant. This gas-centric expansion is headed by state-owned entity SONAGAS, which has been tasked with overseeing monetary, production, and export-related issues. "Our vision is to continue making a profit from gas and reducing all gas flaring in Equatorial Guinea," says Juan Antonio Ndong Ondo, general director of SONAGAS, from his Malabo office. The results of this creative use of gas are by no means insignificant: "In general there is gas production of around 90 million cubic feet per day. And from that gas we produce 8,000 barrels a day of butane, 14,000 daily barrels of propane, 3,000 metric tons per day of methanol, and approximately 3 million cubic feet of LNG every 24 hours."
All gas is being collected and processed at specialized plants on the island of Bioko, from where LNG and LPG cargoes are shipped abroad. New discoveries are being made by Noble Energy in its allocated blocks, and one of the government's priorities is to implement a second plant for LNG. "There are a lot of speculations that great quantities of gas exist in Equatorial Guinea," says Ndong Ondo. "These speculations have of course to be confirmed. Since there are still a lot of zones that have not been explored, we presume that there should be greater quantities of gas. The discovered quantity is more than 3 trillion cubic feet of gas. Our Japanese partner company, Mitsui, and the German Ferrostaal have already expressed interest in a new petrochemical complex being proposed."
Power for the People
With all the developments taking place in Equatorial Guinea, its people are entering an age of enlightenment. This is particularly valid with the government's objective of distributing electric power to all of its citizens. President Obiang's "Light for Everyone" program aims to connect the whole country with a constant, quality, and low-cost electricity current for all people. Juan Lupercio Nsibi Omogo, director-general of the nation's sole electricity provider SEGESA, even calls it a "great mass movement."
"This is the big government dream," urges Nsibi Omogo, "transforming it into reality through big infrastructures in order to eliminate once and for all the shortage of electricity in large cities. When our clients or the subscribers of SEGESA enjoy the electric current 24/7, without any complaints or shortages, then I think this will be a great achievement for our company."
SEGESA was established in 1990 to replace multiple generation and distribution companies. In light of the recent infrastructure development drive, electricity provision became the first major necessity, and that required a collective endeavor. "In order to support SEGESA in its economic growth, we all have to help each party to the maximum extent. This is the only way to respond to the efforts of the government and of the enterprises."
Fully owned by the state, SEGESA has been benefiting from the government's cooperation with Chinese companies and has also established cooperation with Cuba on the exchange of technical know-how, in order to ramp up its network. New sources of generation include natural gas from offshore fields as well as alternative power, such as the Hydroelectric Centers of Djibloho and Sendje, which will generate over 300 megawatts to supply electricity for the whole country. Despite the gargantuan task involved, Juan Lupercio Nsibi Omogo says these investors have been highly willing to participate in the nation's power revolution. "One of the successes of the Guinean economy is due not only to the discovery of oil but to the country's political stability. We hope that the peace and tranquility we enjoy will continue to reign on our soil."
"This has proven to be a very big experience during a very short period of time," observes Samuel Safo Tchofo, general manager of Schlumberger Oil EG. "The changes have been taking place so fast." All the more reason for a dedicated energy services company to keep track of the oil producer's technology needs. "In such a recent oil-producing country, we managed to bring state-of-the-art technology and operate it within a very difficult environment, when the infrastructure and the technical level of people were not yet in place. And we placed a lot of effort and trust in building up, in a short period of time, the local capability."
Schlumberger is proud to be the first oil services company to offer the largest range of services from exploration and development to production of hydrocarbons. "The oil companies that will come to Equatorial Guinea in the future have an advantage: they will find a structure already in place," suggests Safo Tchofo. "We established facilities that are quite large and well-structured." He nevertheless indicates that business in Equatorial Guinea is highly cyclical rather than a continuous, steady one. "Last year the business volume was quite important, but this year it has diminished. So we foresee that in 2012 it will be up again."
Samuel Safo Tchofo does however admit to being thrilled as head of Schlumberger in Equatorial Guinea. The company has been here since 2001, active in oil and gas services and giving young locals a chance to pull out all the stops. "A freshly recruited engineer will first go to the field, in order to know how things work and in order to show his practical skills. This is very important to us, because one fundamental point is that we implement the culture of the company from within, in all countries. This is the breeding ground for future managers." Anticipating future developments, Schlumberger invested an additional $1.4 million in its operations in Equatorial Guinea last year.
A Transport and Logistics Hub
The services sector was of course the first secondary creation effected by the energy industry in Equatorial Guinea. As cargo and products started to grow in volume and frequency, the need grew rapidly for competent logistics partners. Serapio Sima Ntutumu, an international college graduate with significant experience at GEPetrol and SONAGAS, saw a gap in the national market. While working at the Global Procurement department of ExxonMobil in Houston, Sima Ntutumu realized how both the country and its investors would be better off with a national contractor in logistics services.
"Back in 2004," recalls Sima Ntutumu, "we had the vision of creating faster logistics services in Equatorial Guinea. My thought was that we could build up the competency in order to speed up all relevant processes and gain time." Sima Ntutumu started EGBL, a logistics company, with two employees, took on ExxonMobil as his first customer, and built up the capacity of his company to become the 50-strong workforce it is today. "This is how EGBL started," says its owner and CEO. "Everyone in Equatorial Guinea shares the president's vision. If there is a single vision, then this country can become the safe gateway to Africa. This can be the home of gas processing for the central Gulf of Guinea region. Our position is very good and we are a stable country."
In only six years, EGBL's CEO has witnessed for himself the rise in efficiency and consistency in doing business in the country. "I believe we created more value of trust. Note that I do not imply value of money, but value of trust, like increasing the range of the contract terms or the range of capacity of sales." EGBL's main clients today are the "Punta Europa" entities, namely EG LNG, MEGPL, and AMPCO, a contract many newcomers would set their eyes on. "Punta Europa" constitutes one of the main transshipment facilities for the energy industry.
Europe, the United States and the Far East are all major destinations for Equatorial oil, but so are regional countries. For that reason, EGBL has expanded its already growing activities with an office for operations in Ghana. "The expansion of the oil and gas sector is creating expansion for EGBL," says Sima Ntutumu. "This will bring more expectations on business, buildings, infrastructure, and all these opportunities. So, as far as those activities increase, then logistics is absolutely a big opportunity."
Of course, in order to really expand, basic infrastructure development needs to speed up. Commercial activity zones are an ideal solution for a developing country to quickly and effectively create areas where business networks can operate from. In Equatorial Guinea, the first such zone is the Luba Freeport.
An investment to date of $70 million to $80 million has been made by Lonrho Plc, the major shareholder, in the Luba Freeport project. "Phase two of the free-port was completed in 2009, based on the template of Jebel Ali in Dubai," says Luba Freeport's current director and general manager, Howard McDowall.
Luba Freeport, which last year invoiced around $2 million per month, is making a solid economic contribution in services and logistics, as well as in the creation of jobs and the transfer of technical know-how. "We are going to leave a world class facility here which the government will become owner of in 2028, when the concession agreement will expire."
And that is exactly the philosophy behind everything the government is doing today in the energy sector. It should lead to a more advanced, industrious, and tech-savvy nation, an Equatorial Guinea on the horizon of the developed world.
Banking: A Credit Boom for the Real Economy
As the Equatoguinean government gears up to execute its visionary "Horizon 2020" Development Plan, financial institutions are bracing for a flood of investment opportunities coming their way. However, the four banks currently active in the country also have to invest in expansions of their own, as services and products are still emerging from the 20th century. ATMs, e-banking, and other transfer services require a rapid network, and with the Internet not at all widely available, banks are working together to service the real economy, as well as corporate clients.
Equatorial Guinea is a land of contrasts. Back in 1995, the IMF estimated that the country's foreign reserves were only $40,000—sufficient to cover barely one week of imports. In 2005 and 2006 on the other hand, Equatorial Guinea's foreign exchange reserves rose sharply as a result of high oil prices, an increase in hydrocarbons production, and the larger share of oil revenue taken by the state, as the investment costs of major fields had been fully repaid. By the end of 2006, foreign exchange reserves stood at $3.1 billion.
Increasingly concerned about the low yields that its foreign exchange reserves receive in the deposits held at the regional central bank, BEAC (Banque des Etats de l' Afrique Centrale), the government is persuading the regional economic grouping, CEMAC (Communaute Economique et Monetaire de l'Afrique Centrale), to change its regulations. President Obiang would very much like his country to be allowed to invest in foreign financial assets.
Only four banks operate in the country so far. In addition to CCEI Bank G.E., a subsidiary of Cameroon's CCEI Bank (Caisse Commune d' Epargne et d' Investissement) and a member of the Afriland First Bank Group, there is also BGFI Bank Guinee Equatoriale, a subsidiary of the Gabon-based BGFI group (Banque Gabonaise et Frangaise Internationale); SGBGE (Societe Generale de Banques en Guinee Equatoriale), a subsidiary of the French Societe Generale group; and a newer bank, the Banco Nacional de Guinea Ecuatorial (BANGE), which began operations in September 2006.
Mr. Melchor Esono Edjo, a renowned economist who oversaw the country's ministry of finance and budget throughout the oil boom until January this year, says that although the banking institutions in Equatorial Guinea are in a sound state of liquidity, reforms are needed to precipitate a more vibrant private banking market. "The main problems are linked to infrastructure and judicial reforms; if there is no governmental guarantee, the banks are very reluctant in financing the real economy, but they do when there is a collateral security, so the judicial reforms will facilitate the banks to intervene in financing within the real economy."
He adds that the global financial crisis did not really hit the nation's financial institutions due largely to the lack of a stock exchange in Equatorial Guinea. Therefore, no speculative trading was ever undertaken. Nevertheless, Esono Edjo would like to see banks step out of their safe zone and venture out into the country—not just in the main cities of Malabo and Bata—to start financing local business projects.
"The banks are enhancing and ameliorating their products. We are also pushing the banks to change their mentality and invest here. But as said before, they require structural reforms and a good governmental strategy to allow them to finance within the real or national economy and offer all types of modern and universal banking services to all visitors coming into the country. "
Where Credit is Due
Certainly banks have been becoming increasingly active in expanding their services to national and international clients. Credit cards such as Visa and Mastercard have yet to make an entry into Equatorial Guinea, though CCEI Bank GE says it will be introducing them this year. Joseph Celestin Tindjou, CEO of CCEI Bank GE, also insists that the bank's very existence today is because of small and medium enterprises. "If this bank has survived so far, it is not because of the large corporations, but thanks to the support of the small ones when we first started in 1994. We started with the small and medium enterprises, working very closely with them, always respecting their own culture, and I can guarantee that the future of this institution relies on the small stakeholders. We have to know that if we wish to participate in the development of a country, if we wish to reduce the social disequilibrium, we have to support SMEs and private entrepreneurship."
Tindjou, a Cameroonian executive with 17 years of experience on Equatoguinean ground, does however realize that the current shortfalls require efforts to be made by the country's bankers first. "We have to inform the population, to make presentations of our programs, to make the population trust us more, knowing that before 1994 things were really hard." Two banks went bankrupt in the years before oil was found, with the last locally owned bank closing its doors in 1985. "Our role is to implement everything in order to make people understand that it is [more] important to have bank accounts and to collaborate with bankers than to hoard money," says Tindjou. Even public servants were paid in cash up until very recently, and they reacted hesitantly when their salaries started being paid out into bank accounts.
"When the population had difficult moments, we knew how to support them, as well as support the government in its development efforts—by offering adapted products. You know that there is no success without sacrifice, no success without work, without training. We invest a lot in training and in consulting, whether it is for individuals or for companies."
The "Horizon 2020" Development Program is widely recognized by banks as a healthy initiative for Equatorial Guinea, and is one that CCEI Bank GE fully supports. The bank has already created a department for social housing, working towards the realization of the "A home for everyone" program. "At a social level," continues CCEI Bank GE's CEO, "we have delivered a ward at the General Hospital of Malabo dedicated to the fight against AIDS. We also invest in the agricultural sector, working currently hand in hand with a company in its early stages of specializing in food production. At the educational level, we are thinking of introducing specific products towards financing Equatorial Guinea's youth. We have large projects and by 2015 we will be able to fill all the blanks."
"These initiatives," says Tindjou, "have made CCEI Bank GE the most trusted bank in Equatorial Guinea and a leader in deposits and credits, with a market share of 50 percent and 80 percent, respectively." Eager to attract more investors to the country, the bank is not resting on its laurels. "Equatorial Guinea has one of the most flexible investment codes of the sub-region. Apart from the advantages that exist in this investment code, you can always seek further input from the government on additional advantages, which may be provided after they have been analyzed. I want to point out that the essential thing is to have a serious profile, to be honest, and to respect the laws of the country. As long as these conditions are met, Equatorial Guinea is an emerging paradise."
Big BANGE Theory
The first locally owned bank to enter the market since 1985, BANGE (Banco Nacional de Guinea Ecuatorial), was set up in 2006 to support public and private infrastructure projects in the real economy. But oil flow does not guarantee cash flow, and three years down the line, the newly established bank found a partner to help reverse its turnover. The African Development Corporation, part of Germany's Altira Group, bought a 25 percent stake and took over management to bring BANGE up to a new level of competitiveness.
"This year is a very profitable one," says Cornelis Verheezen, the man tasked with guaranteeing the bank's existence and subsequent success. "This has been achieved and now we have proceeded to efficiency improvements." Verheezen is somewhat of a veteran when it comes to building up banks to viability and full potential in emerging markets. Verheezen practically co-founded the banking sector in Afghanistan in one of eight banks he has established during his career. In the case of BANGE, the bank had to prove itself in competition with one international and two regional institutions.
"Even though we are 'fishing in the same pond' with the other banks, we are a local entity and that is what differentiates us." Verheezen says that with the government owning a 35 percent stake in BANGE, the bank closely associates with "Horizon 2020" objectives. "Thus, we know where the development takes place, and that is where the business actually is." So how does Verheezen plan to win the hearts and accounts of international and local clients? The answer lies quite simply in modernization and building up Equatoguinean management skills.
"Our job is to train the people and build up the proper competence. That is in fact what I have done almost all my life in emerging markets. You enter the market, you find people with the right potential, you build up a bank, you train the people, and then you leave. This phase needs about 3 to 5 years depending on the tasks. We are now one and a half years down the road and we tripled the lending business. The deposits have also grown 20-plus percent. We have no liquidity problem, so we are in a comfortable position."
Acccording to Verheezen's team, the local banking system is not up to speed yet. "If you start developing a market, you should bring it immediately to the 21st century, bringing the latest technology and products. The moment we offer more services, more cards, more ATMs, the next step is that people and private corporations alike will bring in their business." Together with the government, Verheezen is executing tests with all the major credit card providers so that BANGE can offer the full range, including the Chinese CUP card, in early 2011. "You have to offer a total package. We are ready to venture in e-banking in spite of low Internet density in general. However, all corporate clients do have Internet and will be better serviced if they can work with their bank from behind their desks. The infrastructure has to be developed to allow us to move forward with fully fledged banking services."
Piece of the Pie Chart
As banks race to be the first to roll out new services in Equatorial Guinea, competition within the sector is heating up. This is only logical, given Equatorial Guinea's central location in the Gulf of Guinea. Once its new ports, upgraded airports, and other infrastructure projects have been completed, the country will be able to serve as a pivotal trade hub for the CEMAC region. According to Christophe Mounguengui, director-general of BGFI, two more banks are about to enter the market, Ecobank and UBA. "It is evidently a very dynamic sector," says Mounguengui, "but it presents some problems, since banking among the population remains weak." BGFI was the first to introduce ATMs in Equatorial Guinea in combination with salary accounts, providing debit cards so people can use the ATMs to extract their pay. It may seem straightforward enough, but when limited infrastructure is available, these are indeed milestone achievements.
Christophe Mounguengui believes that, in order to advance, Equatoguineans need a shift in cultural mindset, for many facets of life. "We are planning to convince the people to save money. This is not inside their mentality and culture. We also want to start with products for the children regarding savings, since children are our priority in the group. Parents should learn how to save money in order to support them, for example in their future education."
Through a partnership with WWF and the wildlife conservation society, environmental protection is another field in which BGFI is active. Gabon is particularly dependent on this change. "The protection of the environment might exist in the leaders' minds, but it is still not in the culture of each and every individual."
A sector that will be particularly observed for its development is telecommunications and the spread of information technology. Because telecoms are so vital to a society's daily progress, Equatorial Guinea has subscribed to the ACE submarine cable. Operated by Alcatel-Lucent, the cable will provide data speeds of up to 5.12 Terabits per second, a considerable speed considering the country only had basic land line cables until 15 years ago. "The 'Horizon 2020' policy adopted the use of fiber optics for its communication and information technology innovations and utilities," says Equatorial Guinea's former Minister of Transport, Technology, Posts, and Telecommunications, Vicente Ehate Tomi. Finally highspeed, high-quality broadband is making its way from France to Equatorial Guinea via South Africa. "The general law of telecommunications in the country has as sole objective to liberalize the market." And with only two telephony operators active in the country, GETESA-Orange and HITS Telecom, Equatorial Guinea is still quite open for telecom providers to enter the market.
How one oil boom, over 200 construction companies, and 756 infrastructure projects are shaping a whole new nation.
Many nations dream of striking oil on their territory. The opportunities that arise from such a find are immense, if handled sensibly. If political or civil instability was a factor, the discovery of natural resources can also blow up those tensions, especially if the ensuing wealth has not been distributed to benefit the whole population.
For Equatorial Guinea, a small yet stable country, which until recently hardly had any significant economic activity on an international level, the discovery of a generation must have seemed heaven-sent. A nation that had no roads, ports, sanitation network, electrical grid, industry, nor social housing suddenly, in 1995, found itself endowed with fossil fuels. Here was a chance for President Obiang to become a difference maker, to build up his country and establish a new economic order within the West African community; and he took it with all his power.
"During this oil boom," explains Marcelino Oyono Ntutumu, Equatorial Guinea's former minister of public works and infrastructure, "the government focused its efforts on the basic infrastructure. This will be the base for exploitation in the future. We are now in the process of building about 2,000 kilometers of motorway both in the insular and continental regions. In Malabo we are building the most important port after Morocco and South Africa. It will be a port of at least 18 meters' depth."
In Bata, the government has also ordered the port to be modernized. "It was an open sea port and had a capacity of 6 boats. Now we are building a port that will have a capacity of 40 boats and at least 16 meters of shed. We are in the process of achieving the first runway for the Airbus A380 in Bata, which will have a length of 3.5 kilometers and 70 meters' width. Apart from Senegal and South Africa in the African zone, no other country is building such airports. All these works will be achieved by next year."
Demetrio Elo Ndong Nsefumu, Equatorial Guinea's second vice prime minister and newly appointed minister of public works and infrastructure, says it was the government's firm decision to use financial resources from oil to fund projects for the people. "It should be noted that these great works arise from the difficult geographical situation of Equatorial Guinea: a presence of islands and islets with great distances between them and difficult access to the continental part, a vast maritime extension of some 300,000 square kilometers and a continental zone far from the islands, bordering Cameroon and Gabon."
In this scenario, a massive national overhaul is taking place to create ports, airports, power plants and electric transmission lines, potable water supply and sanitation, roads, bridges, government buildings, hospitals, stadiums, sports halls, and a huge amount of social houses or residential complexes, all as a central strategy for economic and social development and poverty alleviation. "Equatorial Guinea is open to any investor in any sector who will be treated according to the law and to the gracious hospitality that characterizes our peaceful people," concludes Elo Ndong Nsefumu.
Anyone who visited Equatorial Guinea 10 years ago and returns today will see that the infrastructure minister is by no means exaggerating. The tireless efforts made in creating a new nation with all the basic infrastructure necessary to spark socio-economic growth are mind-boggling. Urban and rural areas are being connected, electricity is finding its way to new communities, and clean, running water is starting to flow in villages formerly cut off from utilities.
In an interview with Equatorial Guinea News, President Obiang discussed the effects these developments were having on his country. "Frankly, everyone sees that Equatorial Guinea has been transformed. This transformation can be seen in the aspect of infrastructure, as well as in the morale of our people, because they feel satisfied." The president added that he thought there had been an important change from an economic-political standpoint. "I don't say it as flattery, it is the reality. The country has many prospects for improvement."
Projecting the future
The "Horizon 2020" Development Plan would have been inconceivable without the plethora of works being carried out in basic infrastructure. Equatorial Guinea's regeneration currently counts 756 Projects, 90 percent of which is being paid for by the government, all derived from natural resource revenues.
But the oil-buck doesn't stop there. "We are creating a platform for the exploitation of tourism," continues former infrastructure minister Marcelino Oyono Ntutumu. "That's why we are building an airport in the island of Corisco, which has a length of 3 kilometers. From that point on, we are calling businesspeople, professional experts, and private enterprises to collaborate with the government in the exploitation of those sectors where the government has established the basic infrastructure."
The development of landmark projects across Equatorial Guinea reflects a profound desire and a strategic plan to reinforce economic growth, ensuring better quality of life for the people and building a solid foundation for the future. Overseeing this construction drive is GEPROYECTOS (National Office for Project Planning and Monitoring). At its helm is Committee President Tarcisio Obama Nzeng. "There were 185 projects completed at the end of 2010," reports Obama. "We have registered about 200 national and foreign enterprises, which are working in the construction sector here in Equatorial Guinea."
Tarcisio Obama Nzeng personally oversees the execution of the country's projects, along the way assuring that a large amplitude of projects has already been completed. "We have completed three street paving phases of the streets of Bata and the addition of drinkable water and sanitation networks in the cities of Ebebiyin, Mongomo, and Evinayong." New roads between Niefang and Evinayong as well as Bata and Mbini have also brought new life to those towns. "In Bata we have finished with the restructuring of the National Institute of Secondary Education called Carlos Lwanga and that of the Polytechnic Center in Bata. We have also completed the construction of several institutions of Secondary Education in the municipality of Bidjabidjan, Bitica, Bicurga, and Evinayong."
Speaking about the water sector, Obama Nzeng notes that in villages or areas where a system of potable water and sanitation has been introduced, the health of the population has improved significantly. "As you know water can be a source of contamination and diseases. As long as the water is improved, the health of the population is also improved and various diseases like malaria can be eliminated."
Obama says there is a healthy symbiosis of governmental development agencies working together with private contractors from both Equatorial Guinea and abroad. Meanwhile, private investors are being courted to start their own projects with special incentives. "For example, if somebody wishes to invest in the hotel business, he will not have to pay for the land. The land in such cases would be provided for free. Another important incentive is the tax exemption that applies for investors."
One international firm already taking advantage of these incentives is the Moroccan civil engineering company SOMAGEC GE. It is currently developing three hotels in the country and even planning a fourth on Annobon island. "We think that the future of Equatorial Guinea is tourism," says Jean-Charles Hayoz, director-general of SOMAGEC GE. "We decided to orient the company towards tourism development by participating in the construction of three hotels; the Kogo Hotel, the Corisco Hotel, and the $70 million 5-star Media Luna Hotel, a 100 percent SOMAGEC project. The concept for Annobon is based on high-sea fishing and the idea of a modern well-being center. It will be suitable for people who want to spend, let's say, one week far away from the modern world."
The decision by one of Africa's largest maritime civil engineering groups to venture into tourism development here is a prime example of the faith displayed by a foreign company in Equatorial Guinea's non-oil potential. SOMAGEC's main strength and expertise lies in public works and the execution of vital infrastructure projects, as it has proven through Equatorial Guinea's transformation. In just under six years, SOMAGEC GE has not only initiated and completed a total overhaul and extension of the port in Malabo; it has also created the first and only port in Annobon, extended the island's airport and upgraded its terminal, developed a harbor and a 13-hectare tourist zone in Kogo, and initiated a coastal protection project against erosion in Bata, as well as the rehabilitation and construction of Bata's new harbor. With over 5,000 employees, SOMAGEC GE is the largest contractor in Equatorial Guinea, indirectly providing income for approximately 8 percent of the population.
Hayoz explains that his company's policy is to only collaborate with those countries that Morocco has good political relations with, but it was nevertheless a challenge at first to create relations of confidence with the government. "The only way to achieve that was through our work, through proving that we are able to accomplish whatever we have committed to." It only took SOMAGEC GE one year to erase any apprehension, bringing in new equipment and delivering ahead of deadlines. "The second challenge was to shape the people who were going to work with that new equipment and make them understand the whole target and the fruits of their work."
The government's decision to re-invest oil and gas funds into infrastructure projects is the right choice in Jean-Charles Hayoz's opinion, given that it promotes the people rather than the country. "For example, if you wanted to go from Ebebiyin to Bata a few years ago, you needed two days. But now with the new roads you are there in two hours. So, a farmer from Ebebiyin, who wants to sell his products in Bata, can take a car, arrive in Bata in the morning, and sell his products. Then he can buy goods and drive back. That is exactly a way to create movement, to create a society, and consequently to create an economy."
Currently working on a new trade and passenger harbor at Corisco and an industrial harbor at Akalayong, Hayoz takes pleasure in witnessing the effects SOMAGEC's first projects are having on the country. "Since December 2010, the 16-meter deep harbor in Malabo has the first berth in Sub-Saharan Africa which is able to receive the new 'Super Panamax' vessel. By the first quarter of 2012, it will be able to host two of these at the same time, each one carrying 12,000 to 14,000 containers." Although gantry-cranes capable of unloading vessels this size have yet to be invested in, all these constitute a crucial step towards Malabo and Bata on the mainland becoming trans-shipment hubs for the African continent.
The most significant metamorphosis however has been for the formerly isolated island of Annobon, which used to be approached once every month, at best, and vessels remained in high seas while islanders had to reach them in their 'cayocos' made of hollowed-out Ceiba tree trunks. The new $129 million port of Annobon, which lies 500 miles south of Bioko, will now permit trade with the region, with the docking of large-tonnage ships and passenger ferries. The Equatoguinean government has made a total investment of over $425 million in Annobon. Jean-Charles Hayoz is proud not only of his company's achievements for the people of Equatorial Guinea, but also that these "show the whole world how a typical African company is able to concept, build, and realize such large-scale projects, proving also the worth of cooperation between African countries."
Having committed all available funds in order to ensure the execution of necessary modern infrastructure and development projects all across the country, the government of Equatorial Guinea is today monitoring the allocated public funds, making sure the construction sector is delivering the desired level of quality and value. The foregoing has prompted the Ministry of Finance to begin implementing a structure of pricing per unit, to be adopted for public works, in a well-directed effort by President Obiang to keep costs under control.
The sheer number of projects being executed nationwide is awe-inspiring, but also highly challenging. "The coordination of the infrastructure is something quite difficult, and shall take time for sure," observes Bechara El Kassis, director of operations at renowned construction and engineering company Setraco EG, "especially when it comes to bringing in people to start the construction of a project, to provide plans and provisions, or to apply them." But El Kassis praises the close cooperation with all relevant public authorities passionate about a collective success. "Everybody needs everybody," he adds, also indicating the collaboration with other construction companies present in Equatorial Guinea. "It is a cooperative attitude, not a competitive one, aimed at bringing about the best results for the country. We are combining all our strengths with the government's efforts in a disciplined and organized manner, so as to ensure a high level of quality and professionalism in the execution of both public and private works."
Nevertheless, the company has also proven its worth in executing intricate projects on its own. "The first essential project that we were assigned in February 2009 was that of Paraiso," continues El Kassis. "Development of the Paraiso neighborhood is considered one of the most challenging projects, since it is situated in a very populated area with many obstructions." In addition, it is a complete infrastructure project entirely taken on by Setraco EG. "Now we stand at 70 percent of the project, which includes sanitary, drainage, potable water, and distribution networks. When we took over this project we brought in people who had worked with us in the past, well experienced in the field of infrastructure. As a result, we have managed to increase the production by 3 or 4 times per month over the last 4 months."
Bechara El Kassis indicates that there are also natural factors to consider when developing a project in Equatorial Guinea. "Our target is to have finished with the main roads of Paraiso by June 2011. Then the curbs and pedestrian walkways remain. We have set our targets, but unfortunately there are many factors causing delay, such as rainfall. This is something that cannot be predicted, and one day of rainfall actually means two days of productivity loss. Given that the soil layers are composed of clay, whenever there is water, it takes time to dissipate and evaporate."
Bringing 41 years of experience from Lebanon, the Nigeria-based company said its main challenge on arrival in 2003 was the language barrier, for which it brought in Spanish-speaking professionals from Europe. The second issue was isolation. Conducting construction projects on an island requires everything to be shipped in. "We have a fleet here of over 150 machines," says El Kassis, "with about 26 extra-heavy pieces of equipment coming in order to speed up operations before the rain season begins. In line with Setraco's faith in the country's promising future and potential, the company has committed among the largest capital investment made by private companies here in Equatorial Guinea. We have already invested approximately $7 million." El Kassis says that even with a 10 percent government down payment on projects in hand, Setraco's total investment will run up to $25 million once it has established its main offices in Equatorial Guinea.
Bringing vital arteries to life
Not all foreign construction firms present in Equatorial Guinea came after the oil boom. Sogea Satom GE, part of Vinci Construction, has been present in the country for more than 15 years, becoming one of the first foreign entities to commit to the nation. Bringing in 70 years of know-how and the experience of conducting projects from Morocco and across Africa, it has been at the forefront of bringing vital transport arteries to life, connecting the country with roads and bridges.
Frank Casteleyn, the company's agency director in Equatorial Guinea, describes how its work has impacted Equatoguinean life. "In a town like Mbini, for example, which is very far from easy connections, there were no open roads. The few open roads we built changed the nature of the town completely. From there you start organizing business activity and the government can start planning schools, hospitals, and everything else. I have been working for 16 years now in the construction sector across Africa and this is the first time I have seen such frenzy," comments Casteleyn.
The payoff for home-bred construction companies participating in their country's buildup lies in the exchange of acquisition and transfer of know-how. "Partnerships are quite necessary, since the implementation of some works within a project may require more than one enterprise to make it," says Alejandro Envoro Ovono Angue, president and director-general of Equatoguinean construction firm AMACEEA, colloquially known as Andoga. "For example, we are constructing a road extension of many kilometers. In order to do it appropriately, we are collaborating with other big enterprises for the construction of the bridges and the project designs. One major advantage is that we train our own local people, since most of them are quite competent."
AMACEEA's main projects, assigned by the government, are ones that can be slightly challenging on a private level, as Envoro Ovono Angue explains. "We have big and important projects ranging from $20 million to $126 million. We have the government trust and support for the execution of these projects, especially the residential houses that we build."
Safe new social housing is a vital necessity for most communities in Equatorial Guinea. Even in some quarters of Malabo, homes are not connected to running water networks. This in combination with dangerous materials in use has caused quite a few outbreaks of fire. "We also contribute to the social sector," says AMACEEA's president and director-general. "For example, during our construction activities, we may help by building a house for a poor family to live in decently. Also, we build meeting places so that people in villages may gather and socialize."
For Envoro Ovono Angue, the "Horizon 2020" Development Plan is encouraging not only the progress of Equatorial Guinea's people but also its businesses. "Our company started as a small enterprise, and during years of work it has increased tremendously and has taken a very important place in the country.
This is due to the opportunities that our president and the "Horizon 2020" plan gave us, as all efforts are directed towards an integrated development of Equatorial Guinea."
The number of contractors active in Equatorial Guinea is creating an entirely new ecosystem, leading companies to home in on specific areas of expertise or even expand to offer turn-key services from start to finish. "Competition forces the construction industry to evolve," observes Roger Pereira, director of PAC International GE. "That's why we have chosen to position ourselves as a high-standard construction company." Pereira notes that throughout the 10 years of the company's activities here, "PAC International GE has grown to offer specialist site teams of 450 personnel to perform high-quality construction, renovation, interior design, furniture work and decoration, consultancy, refurbishment, and planned maintenance services. We use only the finest craftsmen to ensure that these important bespoke elements are finished to the highest standards."
PAC currently takes on 30 projects a year, setting itself apart from other constructors and elevating the standards of engineering, architecture, and aesthetics by adding bespoke elements and details in all of its works. Among its various projects, PAC has undertaken significant assignments at Sipopo, the General Hospital in Malabo, VIP terminals at the airports of Malabo and Bata, the Cultural Center of Malabo, the Public Library of Bata, the Ministry of Agriculture in Malabo, the Nigerian Embassy at Malabo, the Malabo Student Hostel Residence, and the Seminary of Banapa.
Pereira says that by contributing to the country's architectural landscape, PAC has become part of the national development. "While PAC International executes mainly government works, our projects have helped grow local economies and improve the quality of life for communities and people across Equatorial Guinea."
In spite of all the challenges facing the country, considering how far it has come and the state it was in just a few years ago, it is not hard to understand how Equatoguineans view the progress in a positive light. "The infrastructure sector contributes greatly to the socioeconomic development of our country," Infrastructure Minister Demetrio Elo Ndong Nsefumu says with pride. "It has been emerging as a major vector of development, being the link that facilitates the interaction between productive and social sectors."
Building a luxury tourism upgrade
From its inception almost 100 years ago, Hilton Hotels & Resorts has become the most recognized global brand associated with luxury hospitality. The winning philosophy of founder Conrad Hilton has now also reached Equatorial Guinea's shores, as his spirit once again beckons visitors to "Be My Guest."
The 189-room Hilton Malabo will be the country's new benchmark of luxury. Only five minutes from the airport and seven minutes from downtown Malabo and its new business district, Hilton Malabo is also set to become the beating heart of Equatorial Guinea's tourism, conference, and business travel sectors.
The approximately $70 million establishment, completed from scratch in just five years by American Business Investment (ABI) Construction Ltd., includes a state-of-the-art conference wing, a grand ballroom for up to 450 guests, and a fully equipped business center.
Youssef Ahmad, general director of ABI Construction, says the Hilton is practically finalized, opening its doors on May 30, 2011. On the occasion of the 2011 African Union Summit in the country, Hilton Malabo will be welcoming Equatoguineans and foreigners alike. "Profiting from our presence here for this successful project, we have been able to initiate other construction projects with the government," explains Ahmad, mentioning the new building that will house the Ministry of Economy and the Ministry of Finance and Budget, as well as one for the Municipality of Bata.
There's no doubt that Hilton Malabo will place Equatorial Guinea on the "go-to" executive and tourist maps, in itself a whole new frontier for the country.
Assuring a collaborative reform process, President Obiang has vowed commitment to the rational use of resources, social sector development, legal reform, relations with human rights organizations, and environmental conservation. With USAID technical assistance for the country's Social Development Fund, the economic transformation will promote small and medium enterprises, benefit a better redistribution of the national wealth, and allow a drastic reduction of poverty.
International oil companies have also started to take up an active role in Equatoguinean life. During the nation's annual Independence Day parades, it is not unusual to see delegations from Marathon Oil, Hess, or ExxonMobil participating in the festivities alongside parading national troops and local schoolchildren. As David Kennedy, vice president of Hess EG, explains, big oil companies want to be part of the country's development. "We endeavor to leave a lasting and positive legacy in the country." In the past 10 years, Hess committed over $30 million to social responsibility projects in Equatorial Guinea, including 50 percent co-sponsorship of the Prodege primary education improvement project with the government.
Marathon Oil equally believes that the right to operate in and work together with the government of Equatorial Guinea is "a privilege." In return, Marathon has not only pumped funds and efforts in Bioko's Malaria Control Program, but has also committed to advanced education initiatives for Equatoguineans, such as undergraduate training programs at the Universities of South Carolina and Texas A&M.
The grandest challenge, however, lies in the development of education and health care. In order to avoid the proliferation of problems affecting the country's school system, Minister of Education and Sciences Joaquin Mbana Nchama has been visiting national academic institutions to take note of ideas for improvement. Students raised their concerns, which ranged from a paucity of didactic material, libraries, and Internet access to demands for an increase in qualified professors. The minister promised to devise solutions, in return encouraging students to maintain "good manners" and discipline to uphold peace and order in the country.
West African students now also have access to the new International University of Equatorial Guinea in Malabo. Designed by Unicon Development, the complex aims to impart future leaders with the knowledge to compete in a global landscape, while still maintaining and enriching their own cultural identity.
In addition, the School of Medical Sciences in Bata, part of the National University of Equatorial guinea (UNGE), has recently been endowed with upgraded equipment, one of the steps taken to assure future growth and increase medical expertise in Equatorial Guinea, and an aspiration for government-paid universal health care.
An enterprising perspective
Before it can take its first unaided step, a baby needs to find its equilibrium, standing on its own two feet. "Balance of growth," is how Minister of Economy, Commerce, and Promotion of Entrepreneurship Dr. Francisca Tatchouop Belobe describes her strategy of diversification for Equatorial Guinea. "The mono-production orientation in the oil sector has established an economy that remains very fragile," clarifies Tatchouop Belobe. Thus, the government passed a fiscal expansion policy that aims to obtain resources in order to make investments in other sectors. However, growth is embedded in a well-functioning and organized private sector. "This leads us to the small and medium enterprises, which are not involved in the oil sector and need a lot of support in order to finance their activities."
Logically, economic diversification has to be based on expanding the country's existing industries, with a special focus on increasing the export potential of fisheries, agriculture, and forestry. Modern service sectors like telecoms, financial markets, tourism, and transport are slightly more challenging to develop, as they require both qualified human resources and infrastructure upgrades; the latter are being undertaken by the government and the former is being addressed by developing human resources from primary to higher education levels through the Prodege project, the National University of Equatorial Guinea, and other initiatives.
"The population is quite active, commercially speaking. But enterprises lack the human resources or funds to implement better activities." Economy Minister Tatchouop Belobe is therefore creating a fund of partial guarantee of credits and a training center.
"By far the biggest challenge is, however, understanding that economic and social development means building a win-win contract between all actors, institutional and private. The challenges we are facing are of a more philosophical than technical nature. If there is a lack in the conceptualization of a vision of society, it is difficult to implement technical development."
One of the companies driving non-oil growth in Equatorial Guinea since 1997 is CFAO MOTORS, a French-based automotive, high-technology, and pharmaceutical representation group active in Africa since 1886 and with presence today across 36 countries. Samuel Lefebvre, general director of CFAO MOTORS EG, also agrees that shifting gears in education is a prime factor for accelerating business here. "Its shortage is actually the brake on development," Lefebvre asserts.
As the official representative of Toyota in Equatorial Guinea and a major sales force in Suzuki, Peugeot, and Renault trucks, CFAO's success depends largely on the technical know-how of its after-sales service engineers. Lefebvre therefore places great importance on the training of the country's 71 employees. "There is also a Toyota training center in Douala where we actually send those employees who have the appropriate potential to evolve."
With Equatorial Guinea's expanding road network and economic activity, CFAO is projecting an increase in demand, vehicle imports, and car sales, automatically requiring a larger pool of competent technicians. "This is why we are proceeding towards the construction of a concession—European Toyota's standard—for the automotive sector, to enforce our position in after-sales services and support." But there is one other issue, which according to Lefebvre is arresting development of enterprise in Equatorial Guinea: the approximately 50 percent share of the informal market that skirts all legal and tax directives. When trust and balance has been mastered, and such challenges are resolved, the infant economy that is Equatorial Guinea will soon be running at full speed.
Imagine observing gorillas at the Monte Alen National Park, discovering the James Bond-esque volcanic crater lake Lago A Pot on Annobon Island, or ascending Mount Pico Basile to breathtaking views. It can all be possible as tourism development opens up Equatorial Guinea in the coming years. Secretary of State for Tourism Jose Mba Obama describes his country as "an oasis of peace, where a person feels more human," with a high potential for quality leisure and ecotourism, "more rewarding than mass tourism." Mba Obama wants his people to understand the importance tourism can have in improving their living standards. "We Guineans have to identify ourselves with tourism as a way to emphasize the values of our own identity."
All that is required now is a travel visa, an approved itinerary from the ministry of information and tourism, and—in case you want photographic keepsakes of your Equatoguinean memories—an official letter of permission to take pictures.
New hotels are sprouting and transportation facilities are increasing throughout Equatorial Guinea. By basing yourself at the Sofitel Malabo, with its Spanish Colonial architecture and French art de vivre, you're well in reach of all that's fascinating in this land, its graceful and hospitable people, their unique customs and culture, and immensely diverse flora and fauna. You might even catch an impromptu performance by the Malabo Strit Band.
Nothing really sparks off a country's tourism potential like a major sporting event. In 2012 it will be Equatorial Guinea's chance to shine, as it is organizing the 2012 Africa Cup of Nations soccer tournament, together with co-host Gabon. Four brand new stadiums have been built for the event, one of which will have the honor of hosting the opening match.
"There will be a common visa for Gabon and Equatorial Guinea during the event, allowing you to travel in both countries," says Secretary of State of Youth and Sports Ruslan Obiang Nsue. "As the organizing committee, we are also collaborating with Ghana, which has already organized two such events in the past, so their input can be valuable. For the state, the country's image, and our population, this is a way to prove that Equatorial Guinea is an open country."
By awarding Equatorial Guinea this hosting priv-elege, Ruslan Obiang Nsue says the Confederation saw that it was "an opportunity to help the development of the country, because such an event would push the development further and turn all eyes on this fast-changing economy."