Equatorial Guinea is a country with considerable untapped potential for entrepreneurial activities. However, significant policy changes will be required in the short term to foster a culture of entrepreneurship and fully capitalize on the country’s natural advantages.
Without a doubt Equatorial Guinea is a country with many problematic aspects. But while it is true that several aspects of the country discourage entrepreneurship, there is at the same time hope for a better future: the country also has some positive aspects which are highly conducive to entrepreneurship.
Firstly, the language is an asset that can be exploited. In this global and intercommunicated world, every country has to strengthen their relationships with other nations; not only in the diplomatic or political sense, but in trade and business as well. Equatorial Guinea has a huge advantage by having Spanish as their official language, with many of the population also speaking French. Spain or France themselves, with their high income levels, present plenty of opportunities for entrepreneurs, without forgetting about all the other regions where Spanish and French are spoken like South America and some other countries in Africa. Therefore, while local language can be a huge barrier to international trade in some countries, in Equatorial Guinea´s case it is an advantage.
In addition, the near future will bring Equatorial Guinea a unique opportunity to change its image as perceived by the rest of the world. The African Nations Cup in 2012 will be held there, presenting an excellent chance to improve the country’s image, which has been affected by the dictatorial regime. This change to the national image, as well as the investment in infrastructure likely to flow through from hosting the Cup, will be vital for the future of the country.
Finally, the advance of the internet and communications technology has also helped to decrease the investment required to find local partners in Equatorial Guinea as it has in other parts of the world; hopefully, internet penetration in Africa will continue to grow over the years.
In order to determine the steps that must be taken to capitalize on these advantages, however, it is necessary to analyze the basic conditions required for entrepreneurship to flourish. An entrepreneur doesn’t need help, doesn’t need gifts; the entrepreneurial spirit is wild, is strong, it’s almost unstoppable. What’s the only thing entrepreneurs need? A friendly framework that makes their dreams possible. Because entrepreneurs are dreamers but also realistic, they cannot begin a project or make investments without some certainty about the future. They cannot begin something without an underlying stability which enables them to take on credit or draw up financial budget.
Stability, then, is a basic prerequisite for entrepreneurs to invest in a country. With a stable legal and economic framework in place, individuals are more inclined to take commercial risks in order to pursue their dreams and initiate new projects. But in an unstable environment, serious uncertainty will discourage investment in new ideas and stifle economic growth. For example, a legal system that encourages new business is essential for promoting entrepreneurship; if investors wanting to start a business are faced with nothing but obstacles and expenses, their enthusiasm will wane sharply. Elements like private capital protection, on the other hand, will encourage investment.
Encouraging international investment, meanwhile, is key to improving economic stability – another critical part of the framework for entrepreneurship. In poor or emerging economies, foreign investment is frequently a key aspect in economic growth. In Equatorial Guinea itself, the start of local operations by the multinational Mobil was a highlight of local economic history. The challenge for the future is to bring more international capital to Equatorial Guinea´s economy, but there are extensive changes that must be made to facilitate foreign investment; changes to the legal system, to the image of the country, to security, to the political system and to infrastructure. That additional capital will create a dynamic and prosperous business environment for entrepreneurship.
To strengthen the country’s economy more generally, the government will need to reinforce the institutions and also effect some changes to wealth distribution across society. The current social structure is unsustainable; much of the country’s wealth is presently concentrated in a very small percentage of the total population, causing a huge disparity between rich and poor which could lead to civil conflict. The correct path has to be a concrete plan for distribution of income. Creating a middle class would boost consumption, production, access to the financial system and ultimately would make the economy more prosperous. The middle class is the biggest source of entrepreneurs in developed economies; this section of society must grow larger in Equatorial Guinea in the years to come.
By way of example, Kuwait could be used as a benchmark or best practice indicator for Equatorial Guinea in terms of income distribution. While oil production is at comparable levels in Kuwait and Equatorial Guinea, the income distribution and quality of life are completely different. In Kuwait, the people receive a number of benefits from the government, and the country’s healthy economy is a reflection of that.
Beyond wealth redistribution, Equatorial Guinea faces other challenges in long-term policymaking if it is to push through sustainable economic change. For example, an aggressive educational plan has to be launched as soon as possible. A good place to start would be a ten-year plan to radically improve literacy. Why ten years? Because 45% of the population is currently aged 15 or younger, a concerted effort through the educational system now could yield a substantially more literate generation moving into the workforce in ten years’ time. If this were combined with long-term policymaking to improve the conditions for entrepreneurship, it would provide this new workforce with a business environment offering them opportunities and growth paths. Together, two projects of this nature could dramatically change the state of the country in a relatively short time.
While these are the most important actions that need to be taken, there are also other changes that could be made to help encourage entrepreneurship. Individuals need the initiative to look for options like importing and distributing or exporting; to help promote this, Equatorial Guinea could for example focus on certain agricultural products to gain a competitive advantage in specific goods.
There is a lot of work ahead, but if correct decisions are taken to effect long-term policy shift, Equatorial Guinea could build a friendly framework for entrepreneurship to flourish and develop.
By Santiago Cortes L.