An economy forcing change – Gómez de Mercado
Equatorial Guinea is opening its economy which is impacting on all levels of society
Among sub-Saharan nations, and despite a fall in oil and gas prices, Equatorial Guinea continues to attract international investor interest – a trend helping to bring the country out of the shadows, says Francisco García Gómez de Mercado, partner at Madrid-based Estudio Jurídico Gómez de Mercado which operates alongside Malabo’s Ponciano Mbomío Nvó (as members of lexprudens network).
“Despite the evident difficulties and issues that surround doing business in Equatorial Guinea, hydrocarbons continue to finance the government’s programme of infrastructure development and to position the country as a regional gas and liquified natural gas (LNG) distribution hub.”
Increased projects activity has seen contractor interest from countries as diverse as China, Morocco, Egypt, and the former Yugoslav republics, he says.
Significant progress is being made across many sectors, including the precarious electricity grid, as work continues on new power plant.
“However the award of most infrastructure projects, including roads, ports and housing, is highly centralised and, hence, it is clearly important to have experience dealing with the central Authorities,” notes Gómez de Mercado.
The country’s dominant oil and gas sector has, to date, been dominated by US multinationals, with dedicated production, transformation and shipping facilities. But recent months have seen companies including Gas Natural-Unión Fenosa and Galp Energía assess the viability of new distribution and processing facilities on Bioko island – the location of the capital.
“The major international opportunities lie predominantly in servicing the hydrocarbon industry and in infrastructure, but opportunities also exist in sectors such as foods – as a net importer, there remain attractive opportunities in production, processing and marketing,” says Gómez de Mercado.
He cautions however that challenges do surround doing business in the country. Governmental positions change frequently and very often people cannot deliver what they offer, although as a former Spanish colony, advantages can be found (Spanish law is, for example, still in force).
He acknowledges that Equatorial Guinea may not be a model for democracy and openness, but increasing wealth and foreign investment are forcing change.
“Investors need however to know in advance how the country works, its economy and government remain very centralised but economic progress and investments continue to be made, and there is clearly no desire to go backwards.”
