IMF Approves US$67.38 Million in Emergency Support to Equatorial Guinea to Address the COVID-19 Pandemic and Accidental Explosions

The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of SDR 47.25 million (about US$67.38 million, 30 percent of quota) to Equatorial Guinea under the Rapid Financing Instrument (RFI).

The disbursement will help meet the urgent fiscal and balance of payments needs stemming from the COVID-19 pandemic and March Bata explosions, and catalyze additional external resources as well as bolster the regional reserves of the Economic and Monetary Community of Central Africa (CEMAC).

The COVID-19 pandemic and the Bata explosions have inflicted heavy damage on Equatorial Guinea’s economy and have increased external financing needs in the balance of payments by an additional projected US$625 million (5 percent of GDP) in 2021-22 (relative to the EFF-supported program). The authorities have appropriately boosted critical frontline healthcare spending, including the purchase of a large batch of vaccines, and rolled out social assistance to households severely affected by the pandemic and the Bata explosions.

While tackling these crises, the authorities have taken an important initial step to address macro-critical governance and corruption challenges by adopting an anti-corruption law, which is in line with international good practices. To boost transparency, they have established two escrow accounts at the Bank of Central African States (BEAC) for pandemic and Bata emergency-related spending, and are undertaking audits of such spending.

Managing Director Kristalina Georgieva arrives and starts her first day of work at the IMF

The IMF stands ready to provide policy advice and further support to Equatorial Guinea as it battles the fallout from the pandemic and the Bata explosions, including as part of the ongoing cooperation under the EFF-supported program.

Following the Executive Board’s discussion on Equatorial Guinea, Mr. Bo Li, Deputy Managing Director and Acting Chair, made the following statement:

“The Bata explosions and still unfolding COVID-19 pandemic have inflicted heavy human and economic damage on Equatorial Guinea. The authorities are taking measures to contain and mitigate the fallout from these shocks on the most vulnerable segments of the population and limit the impact on economic activity. They have ramped up frontline healthcare and social spending and have provided limited and temporary tax relief to the private sector to cushion adverse effects on activity and employment.

“Addressing longstanding macro-critical governance and corruption challenges is critical to secure inclusive growth. The authorities met four prior actions. They adopted an anti-corruption law, in line with their obligations under the United Nations Convention Against Corruption. They have also commissioned audits for the pandemic and Bata emergency-related spending, they have established two escrow accounts at the BEAC for emergency spending, and they have committed to adhering to good public procurement practices. Continued implementation of these measures is essential for effective spending on pandemic- and reconstruction-related needs.

“To safeguard macroeconomic stability, promote inclusive growth and fight corruption, the authorities need to accelerate reforms under the EFF-supported program. The recent progress in advancing some governance reforms is welcome, but this effort must be sustained and reforms under the EFF-supported program need to be fully implemented.

“It is important that the authorities honor their commitment to prepare and publish a list of meaningful public assets for privatization, and approve regulations in line with the anti-corruption law for an asset declarations regime for public officials and the governance of the anti-corruption commission as soon as possible. Measures to strengthen banking sector stability, such as the settlement of domestic arrears and the recapitalization of the largest bank, need to be implemented without further delay. Additional efforts to safeguard social spending and enhance social protection are needed, together with continued reforms on revenue administration and strengthening public financial management framework.”

African Development Bank Group Approves EUR400 million Lusophone Compact Guarantee program to boost private sector development

The new Compact offers a big boost to business development initiatives for the Bank’s non-sovereign portfolio in its Portuguese-speaking African member countries

The Board of Directors of the African Development Bank (www.AfDB.org) Group on Wednesday approved the Lusophone Compact Guarantee Program (LCGP or the Compact), with a maximum risk exposure of up to EUR400 million. The new Compact offers a big boost to business development initiatives for the Bank’s non-sovereign portfolio in its Portuguese-speaking African member countries. The program is designed for new non-sovereign operations (“NSOs”) in the Lusophone  countries of Africa, notably Angola, Cabo Verde, Equatorial Guinea, Guinea- Bissau, Mozambique, and São Tomé and Príncipe, ( known as the PALOP), and enables the Bank to manage its risk capital over the next five years 2021-2025, while at the same time diversifying and growing its NSO portfolio over the medium to long-term. The Bank has been active in the development of specialized risk sharing vehicles, initiatives and  programs which can facilitate the use of risk transfer on specific types of Bank portfolios or assets, and this program is expected to increase the number of private sector and Public Private Partnership (PPP) projects in the PALOP as well as trade between stakeholder countries. “Over the past five years, the Bank has been committed to exploring ways to increase its lending capacity while proactively managing its credit exposures and headroom more efficiently, and mobilizing additional financial resources and investors to the continent’s development,” Bank Vice President for Corporate Services, Mateus Magala, said. As the anchor member of the Lusophone Compact, the Government of Portugal would act as the guarantor of this program, for exclusive use by the Bank. The LCGP would allow for individual Bank projects to be covered for up to the full maturity of the loan (up to 15 years) and up to a maximum of 85% of the total Bank loan principal amount, in accordance with pre-determined eligibility criteria. The Guarantee forms a very important pillar of the wider Lusophone Compact aimed at promoting and enhancing the use of financing, risk mitigation and technical assistance instruments, to unlock private sector financing. The Lusophone Compact initiative is built on a five-year General Memorandum of Understanding (“MOU”) that was signed by the Bank, the Government of the Republic of Portugal (“GOP” or “Guarantor”) and the PALOP countries to attract and unlock private sector investment and trade in, and among PALOP nations. The initiative became effective in December 2018. The PALOP remain the least economically integrated within their respective geographical regions and despite their deep shared history, even among themselves. This new Guarantee Compact is seen as a valuable tool that will serve as an additional instrument to intensify the Bank’s efforts in the financing of critical transformative NSOs in the African Lusophone countries. The program complements other Bank  initiatives to support member countries to strengthen their investment climates, increase investments and to facilitate pipeline development. “Given the adverse impacts that the COVID-19 pandemic has had on the African continent and the need to build resilience as fiscal pressures rise, the private sector plays a critical role in the process of economic recovery. Initiatives such as the LCGP will play a strategic role in equipping the Bank through a programmatic guarantee to avail headroom to contribute to boosting economic resurgence in these countries,” Samuel Mugoya, Bank Director, Syndication, Co-financing and Client Solutions, noted.

Angola to Sign Lusophone Country-Specific Compact

On 10 July 2019, The Governments of Angola and Portugal and the African Development Bank, will sign a Country-Specific Compact designed to accelerate the inclusive, sustainable and diversified growth of Angola’s private sector.

The Lusophone Compact is a financing platform, involving the African Development Bank, Portugal, and the six Portuguese-speaking countries of Africa (PALOPs): Angola, Cabo Verde, Equatorial Guinea, Guinea-Bissau, Mozambique and Sao Tome and Principe. It provides risk mitigation, investment products and technical assistance to accelerate private sector development in Lusophone African countries.

The signing of the compact follows a Memorandum of Understanding of a Development Finance Compact for Portuguese-Speaking Africa, signed during the Bank’s 2018 Africa Investment Forum held in Johannesburg, South Africa.

The compact signing ceremony will be a highlight of various events to be held at the Luanda International Fair(https://FILDA.co.ao/), aimed at invigorating Angola’s private sector and promoting economic growth. The event will convene entrepreneurs, development finance institutions and partners, investors, key public and private sector players.

The Bank will be represented by Corporate Services and Human Resources Vice President and Chair of the Lusophone Compact Steering Committee, Mateus Magala, while the Angolan Government will be represented by Hon. Pedro Luís da Fonseca, Minister of Economy and Planning. H.E. Teresa Ribeiro, Secretary of State for Foreign Affairs and Cooperation, will sign for Portugal.

Africa’s regional integration gains momentum at African Development Bank Group Annual Meetings in Malabo

“If we get integration right, Africa can develop with dignity and confidence,” African Development Bank President Akinwumi Adesina told journalists at a press conference to herald the Bank’s 2019 Annual Meetings, due to open Tuesday in Malabo, Equatorial Guinea.

The theme of this year’s meetings is ‘Regional Integration for Africa’s Economic Prosperity.” Regional integration gained momentum with the agreement on the African Continental Free Trade Area (AfCFTA) in March 2018 and is now at the threshold of its launch next month.

The AfCFTA will constitute the world’s largest free trade area, consolidating an integrated market of 1.3 billion consumers with a combined gross domestic product (GDP) of about $3.4 trillion. It is estimated that Africa’s GDP growth could reach 6% a year in a continent without borders (UNECA).

Answering questions from pan-African and international journalists, Adesina said that the Bank has invested around $1 billion through various initiatives, including cross border infrastructure, to move trade across African borders. Most has gone to small and medium enterprises – the engine of economic growth.

Cesar A. Mba Abogo, Equatorial Guinea’s Minister of Finance and Economic Planning, who co-hosted the press conference, spoke about the country’s significant efforts on the economic and infrastructure front, to connect markets in Central Africa.

“It is a real privilege to host the Bank’s Annual Meetings… the Bank’s High 5s – are very much in line with our development strategy between now and 2025,” Abogo said, revealing that the country’s road networks both in Malabo and throughout the mainland, were better than across large parts of Africa. In addition, Equatorial Guinea has invested in social housing and will continue to improve human capital, through capacity building and training programmes, while recognising the challenges presented by skill shortages.

Equatorial Guinea had been selected as host of the Annual Meetings because of its economic potential and because Central Africa could benefit a great deal from regional integration, said Adesina.

“We believe that the potential is immense, but the level of integration is not enough, ” he said.

Regional integration is one of the Bank’s High 5s and is seen as pivotal to boosting Africa’s economic development.

The Bank is committed to accelerating Africa’s integration process. In the last five years the Bank has invested more than $15 billion in the construction of regional infrastructure in energy, transport and ICT. Some of these projects include a $93.8 million loan for the long-awaited Trans-Gambia bridge linking the Gambia and Senegal, resulting in a 50% cut in freight costs and improved transport, health and education services for 900,000 local people.

Earlier in the morning at a media breakfast, Adesina underscored the importance of regional integration in Africa.

“If we get our integration right, Africa will be more competitive, will be able to create a massive amount of jobs and, more importantly, Africa can develop in dignity and confidence,” Adesina said.

The Annual Meetings will be an opportunity for experts, governments, businesses, civil society, think tanks and academia to share their candid assessments on regional integration efforts and dialogue on critical issues concerning Africa’s development.

Equatorial Guinea all set for the African Development Bank’s 54th Annual Meetings

“When you put your forces together, you can achieve the critical mass to be solid player on the global scene,” African Development Bank’s Chief Economist and Vice President of Economic Governance & Knowledge Management Celestin Monga told journalists at a press conference ahead of the Bank’s Annual Meetings.

Equatorial Guinea will host the Bank’s 54th Annual Meeting, from 11-14 June 2019, under the theme ‘Regional integration for Africa’s economic prosperity.’ The Meetings will bring together about 2000 delegates. They provide a unique forum for governments, businesses, civil society, think tanks, academia, and the media worldwide, to dialogue on critical issues concerning Africa’s development.

Secretary-General of the Bank Vincent Nmehielle hosted the press event held at the Bank’s headquarters in Abidjan. Senior management in attendance included Vice-president, Private Sector, Infrastructure and Industrialization, Pierre Guislain; Vice President Corporate Services and Human Resources, Mateus Magala and Gauthier Bourlard from the Bank’s Resource Mobilization and Partnership Department.

In his opening remarks, Nmehielle explained that the 2019 Annual Meetings are an opportunity to show why regional integration is important. “Equatorial Guinea is one of the most developed countries in Africa, but not many people know that,” he added.

The meetings will include statutory sittings of the Governors and shareholders of the Bank, and a series of knowledge events, including discussions around the Africa Economic Outlook, one of the Bank’s flagship reports. A High-Level Presidential Dialogue on Boosting Africa’s Economic Integration will provide Heads of States an opportunity to discuss challenges and corrective measures to fast track Regional Integration.

Robust conversions on regional value chains in agriculture are on the meetings’ agenda.

“Trade is and will remain the main engine of growth for many of our countries. More than 60% of global trade now occurs in global value chains. We need to see that African economies are getting into global value chains, not just to process unprocessed raw commodities but transform goods creating value additions, creation jobs locally,” Monga noted.

Over 75 percent of Sub-Saharan African countries have a population of less than 25 million, and about half the countries have a gross domestic product (GDP) of less than US$10 billion in 2017 (nominal terms). Deeper market integration for goods, infrastructure services, and key factors to bring together the fragmented economies of Africa.

For Guislain, “Regional integration is part of our core mandate and our DNA. It has been since inception in 1964.” A borderless Africa is the foundation of a competitive continental market that could serve as a global business center, journalists’ heard.

On the Continental Free Trade Area, which came into force on May 30th, the Bank has provided the grounds to the African Union Commission to launch the Secretariat with close to $ 5 million.

Magala shared an update on the Compact Lusophone and how “it provides an opportunity to strengthen economies of countries that share a common language, history, and culture.” He also fielded a few questions from the Portuguese-speaking journalists from Guinea Bissau and Cabo Verde.

Gauthier Bourlard representing the Bank’s Resource Mobilization and Partnership Department provided an update on the African Development Fund (ADF) 15th replenishment. ADF, the concessional loan arm of the Bank, seeks to increase funding for fragile countries, focusing on cross cutting themes such as gender, governance, climate change and the private sector. The next round of negotiations with donor countries is slated for early July in Madagascar before a decision is made later in the year.

Twenty-eight journalists from twenty-one Africa countries attended the press conference, moderated by Dr. Victor Oladokun, the Bank’s Director of Communication and External Relations. The journalists are taking part in a three-day Sustainable Development Reporting Course, first of its kind at the Bank, organized in collaboration with the Thomson Reuters Foundation.

Congo and OPEC: A marriage of mutual need

By NJ Ayuk (CEO) Centurion Law Firm

The Republic of the Congo has suffered dearly during the oil collapse; and Congolese President Denis Nguesso has pledged that the country would no longer be sitting on the side lines — suffering the effects of global decision-making in the oil industry without a voice. In an official communiqué announcing the bid for OPEC membership, he stated that he wished to “place our country in the rank of the world’s leaders.”

Congolese President Denis Nguesso

In January, officials from the Republic of Congo announced the country’s application for membership of the Organization of Petroleum Exporting Countries (OPEC). This is no small move. After years of challenges with the collapse in the price of oil, the Republic of Congo is emerging from this period with a renewed agenda, focused on becoming an active voice in the global stage, rather than a silent victim of international oil price swings.

For Congo, OPEC membership means greater access to information, partnerships, contacts and a voice at the decision-making table. But, perhaps more than ever, it is OPEC that is to benefit from the rise in African political voices, particularly that of Congo.

At nearly 2 billion barrels of crude oil of proven reserves in a vastly underexplored territory, Congo represents a sleeping giant amidst African oil producers. An improved business climate has brought profound benefits to the country’s oil industry. New developments by French oil company Total in Congolese territory are set to expand the country’s oil output from 280,000 barrels per day to 350,000 in 2018.

An enhanced sector outlook coupled with new discoveries and strong leadership by younger and more capable leaders is rapidly attracting the interest of investors across the world. The election of Thérésa Goma to the position of director general of hydrocarbons in March is an example of a change in mentality, as is the ascendance of Jean Marc Tchicaya to the position of hydrocarbons minister — a younger and more dynamic figure than any of his predecessors.

Brazzaville is the host city of the headquarters of the African Petroleum Producers Organization, a club that has been gaining renewed relevance in recent years as African leaders search for intra-African cooperation on matters of energy. Further, Congo has also been expanding its bilateral relationships with the likes of Angola, Nigeria and Equatorial Guinea, moving towards a new policy of gas utilization.

The entrance of Congo as an active voice in OPEC can bring a much stronger foothold for the Vienna-based organization in the African oil circle, and reinforce its capability to coordinate production cuts and joint-strategies across the continent when necessary. For OPEC, this means greater representation, greater control over the world’s output, and in the end, greater power.

For Congo, the country will sit side-by-side with key oil giants, like Saudi Arabia and Venezuela; as well as Gabon, Angola, Nigeria and Equatorial Guinea, further reinforcing the strength of African voices amongst the cartel. It will be able to learn and contribute to policy and decision-making, and it will be ever more prepared to deal with the volatility of crude prices.

Congo’s bid for integration within the cartel also comes at a paramount moment for African foreign policy, as dependence in commodity prices and shifts in the international order have made ever more apparent the need for regional and intra-continental cooperation. African leaders are finally waking up to the fact that their international stand will not depend on the bilateral agreements they can reach with the likes of the US or China, but on their ability to cooperate and seek continent-wide agendas that can benefit Africa as a whole.

A united African voice

Let’s take a moment to look at Equatorial Guinea, and what this small nation has achieved in recent months with a change in foreign affairs strategy, with due credit given to the leadership of Gabriel Obiang Lima, Minister of Mines, Industry and Energy. Since it joined the OPEC in May 2017, Equatorial Guinea gained a de facto seat at the international negotiating table. Suddenly, a nation that produces around 130,000 barrels of crude per day (which is less than 2% of Saudi Arabia’s output), is given a say on international production cuts, price-managing strategies and access to a plethora of contacts and close partnerships that would otherwise be beyond its reach. It is no surprise that since then, Mr. Obiang Lima has been much more present in the press, speaking on behalf of his own nation but also as a member of the oil group. His main message is geared towards other Sub-Saharan African oil producers, and it reads: “Join OPEC, make your voice count”.

Through initiatives like LNG2Africa and bilateral partnerships with many African counterparts, Equatorial Guinea has been pushing an African agenda in recent years that is based on the clear understanding that intra-African cooperation can have a profound impact in raising the continent’s profile in the international stage. Mr. Obiang Lima knows that a united African voice can be heard much louder than if he speaks for himself, and that African representation in OPEC can further boost the continent as a whole.

OPEC’s new breath

The successful results of the production cuts by OPEC have shown the cartel is regaining its stand in the international stage, demonstrating flexibility to the new market realities. Certainly, chief figure amongst all in the effort to bring sustainability to the international oil market was Mohammad Barkindo. The Nigerian Secretary General of OPEC spearheaded the landmark December 2016 agreement that saw the oil cartel and 11 non-OPEC members (including Equatorial Guinea at the time) sign on the cut down of 1.8 million barrels of crude oil per day (2% of global output), which has been extended until the end of 2018 and resulted in the progressive rising of crude oil to more sustainable prices that we witness today. When US President Donald Trump attacked OPEC recently for maintaining “artificially high prices”, his comments were met by a strong stand from Mr. Barkindo: “The Declaration of Cooperation entered into by 24 producing countries in December 2016 and implemented faithfully since 2017 has not only arrested the decline but rescued the oil industry from imminent collapse.” His statement is hard to argue with.

However, OPEC cannot sit idle on its own success. The need for coordination with several non-members for any global strategy to work also demonstrates how the organization needs to secure a wider net and solidify its position in order to continue to reach its goals. Its agenda is aligned with that of African nations at a time when these players wish to have more control over the commodities they are so dependent on.

Congo’s move towards membership of OPEC is a major landmark step that should not only be greeted and celebrated by the cartel, but also be followed by other nations across the continent. As the world’s remaining frontier market for oil exploration, Africa is increasingly positioning itself as the linchpin region for the future of the world’s energy industry. African nations cannot afford to not be at the negotiating table when the great decisions about their future are made, neither can OPEC afford to keep them out.

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Author Biography – NJ Ayuk (CEO) Centurion Law Firm

NJ Ayuk JD/MBA is a leading energy lawyer and a strong advocate for African entrepreneurs, he is recognised as one of the foremost figures in African business today. A Global Shaper with the World Economic Forum, one of Forbes’ Top 10 Most Influential Men in Africa in 2015, and a well-known dealmaker in the petroleum and power sectors. He is the author of “Big Barrels” Africa Oil and Gas and Its quest to prosperity.  He is the founder and CEO of Centurion Law Group and the Africa Energy Chamber of Commerce.

AU Chairperson condemns any attempt to seize power by force in Equatorial Guinea

Equatorial Guinea President Teodoro Obiang Nguema Photo: AFP/Getty Images

The Permanent Representative of Equatorial Guinea to the African Union and Ambassador to Ethiopia, Mr. Simeon Oyono Esono, on Monday informed the Chairperson of the African Union Commission, Moussa Faki Mahamat, that the Equatorial Guinean authorities had foiled an attempted coup involving foreign mercenaries.

The Chairperson of the African Union Commission, Moussa Faki Mahamat, received the Permanent Representative of Equatorial Guinea to the African Union and Ambassador to Ethiopia, on Monday.

The Chairperson of the Commission thanked the Permanent Representative for the information provided. He recalled the African Union’s principled stand on the rejection of unconstitutional changes of government, in accordance with its relevant instruments, and expressed the African Union’s strong condemnation of any attempt to seize power by force in Equatorial Guinea, as well as its commitment to the respect of legality and to the stability of the country.

According to the BBC, a minister said at least 30 armed men from Chad, Cameroon and the Central African Republic were arrested late last month.

The minister further disclosed that the armed men were found with rocket launchers, rifles and ammunition just over the border in Cameroon.

The border between Cameroon and Equatorial Guinea has been sealed for nearly two weeks due to the alleged coup attempt.

Mr Obiang has been in power for nearly 40 years, taking power in a coup by ousting his own uncle, Francisco Macias Nguema, who was shot by firing squad.