Housing Finance in Equatorial Guinea
Overview
This profile is also available in French here.
To download a pdf version of the full 2019 Equatorial Guinea country profile, click here.
Equatorial Guinea is composed of a mainland, Rio Muni, and small islands, including Bioko where the capital Malabo is located, Annobon, Corisco, Elobey and others. According to the 2015 census, Equatorial Guinea’s population is 1.225 million
people. The government of Equatorial Guinea has invested heavily in building modern infrastructure which includes an interconnected transportation network of roads, airports and seaports and an electrical grid with capacity to cover 95 percent of the nation’s energy requirements.
Equatorial Guinea’s banking sector is small and concentrated with six banks – National Bank of Equatorial Guinea (BANGE), BGFI Bank, Commercial Bank of Guinea, Caisse Commune d’Epargne et d’Investissement Guinée Equatoriale. Afriland First Bank and Ecobank. Three of these hold over 80 percent of industry assets.
Up-to-date key statistics on the finance industry are not readily available. Available 2017 figures show lending rates of 15 percent, and deposit interest rates at 2.45 percent. Bank non-performing loans were reported at 27 percent. In 2016, Equatorial Guinea was reported as having 9.15 ATMs and 4.89 commercial bank branches per 100 000 adults. It had 21.74 borrowers, 205 depositors and 344 bank accounts per 100 000 adults, making its per capita rates relatively high compared with other countries in the region.
The country’s most recent household survey was conducted in 2006. At that time, it was reported that over 79 percent of the rural population and 30 percent of the urban population were living below the poverty line. While no average price of housing is available, a general sense of the cost of a house is obtainable. The cheapest government-built house is CAF8 million, available through rent to own. Within the private sector, according to one source, the price per square meter for an apartment in the city centre is CAF447 000 (US$755).
Equatorial Guinea’s score for Doing Business in 2019 is 41.94 out of 100, giving it a global ranking of 177 out of 190. This is three years of decline, with the last ranking at 162. The land administrative system and cadastre are largely paper-based,
transparency of the system is low with no officially available statistics tracking land transactions, and there is no service by the state to deliver binding documentation
or maps showing ownership, on request.
The limited finance market with restricted access also does not target lower income earners, and there are no innovative housing financing products. There is therefore
potential to introduce such products, for example housing microfinance.
Find out more information on the housing finance sector in Equatorial Guinea, including key stakeholders,important policies and housing affordability:
- Macroeconomic Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Regulation
- Opportunities
- Availability of data on housing finance
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2019 edition, which has up-to-date profiles for 55 African countries.
Download yearbookEquatorial Guinea
Macroeconomic Overview
Equatorial Guinea is composed of a mainland, Rio Muni, and small islands, including Bioko where the capital Malabo is located, Annobon, Corisco, Elobey and others. According to the 2015 census, Equatorial Guinea’s population is 1.225 million people.[1] Equatorial Guinea is bordered to the north by Cameroon, to the south by Gabon, and to the east by the Democratic Republic of Congo. The nation state is rich in arable land and mineral resources, i.e. columbite-tantalite, diamonds, gold, oil and uranium. Petroleum, its primary export, was discovered in the 1990s.[2] The government of Equatorial Guinea has invested heavily in building modern infrastructure which includes an interconnected transportation network of roads, airports and seaports and an electrical grid with capacity to cover 95 percent of the nation’s energy requirements.[3]
In 2017, Equatorial Guinea scored 1.81 out of 10 on the Economist Intelligence Unit’s Democracy Index, placing it 161 out of 167 countries.[4] Equatorial Guinea is also affected by significant corruption: according to Transparency International’s 2018 Corruption Perceptions Index, Equatorial Guinea ranks 16 points out of 100, averaging 18.55 points over the 13 years that the country has been measured.[5]
Equatorial Guinea’s economy has halved since 2012. At the time gross domestic product (GDP) stood at CFA12.5 trillion (US$22.39 billion), while today GDP is at CFA6.9 trillion (US$12.49 billion).[6] This downward trend is expected to continue, falling by a nominal 6.5 percent in 2019 from the previous year[7]. This trend is mainly attributable to the fall in state revenues from oil, a resource the country is heavily reliant on. As of 2017, for example, 75 percent of revenues were from oil.[8]
In addition, the country has high but currently manageable levels of public debt, an equivalent of 53.8 percent of its GDP in 2017. This is, however, a sharp increase from 0.5 percent 10 years previously.[9] The country recorded a government budget deficit equal to 2.3 percent of the country’s GDP in 2017, projected to fall to 0.5 percent in 2019. Inflation is projected to be 1.4 percent in 2019 and 1.9 percent in 2020, which is below the Central African Economic and Monetary Community’s (CEMAC) three percent requirement. [10]
[1] Equatorial Guinea Data Portal. http://eguinea.opendataforafrica.org/dgucsuc/population (Accessed 9 September 2019).
[2] World Bank (2019). Equatorial Guinea – Overview. https://www.worldbank.org/en/country/equatorialguinea/overview (Accessed 4 September 2019).
[3] Forbes Africa (2018). Equatorial Guinea’s Golden Jubiliee: The Emergence of a new nation. October 2018 Edition. Penresa Focus on Equatorial Guinea.
[4] Economist Intelligence Unit (2018). Country Report: Equatorial Guinea.
[5] Transparency International (2019). Equatorial Guinea. https://www.transparency.org/country/GNQ (Accessed 9 September 2019).
[6] Trading Economics (2018). Equatorial Guinea GDP. www.tradingeconomics.com/equatorial-guinea/gdp (Accessed 9 September 2019).
[7] IMF (2019). Central African Economic and Monetary Community. Common Policies of Member Countries and Common Policies in support of Member Countries Reform Programs. IMF Country Report No. 19, 215. Pg. 29.
[8] Equatorial Guinea Data Portal.
[9] Central Intelligence Agency (CIA) (2018). The World Factbook.
[10] AfDB (2019). Equatorial Guinea Outlook. https://www.afdb.org/en/countries/central-africa/equatorial-guinea/equatorial-guinea-economic-outlook (Accessed 9 September 2019).
Access to Finance
Equatorial Guinea’s banking sector is small and concentrated with six banks – National Bank of Equatorial Guinea (BANGE), BGFI Bank, Commercial Bank of Guinea, Caisse Commune d’Epargne et d’Investissement Guinée Equatoriale, Afriland First Bank and Ecobank.[1] Three of these hold over 80 percent of industry assets.[2] BANGE was established as a result of a commercial alliance between the State of Equatorial Guinea and the Philippines Bank of Commerce and is the only bank operating in the country whose parent company is local. Like similar small countries which rely heavily on foreign located banks, this can present a challenge if these banks decide to move their investments abroad given scarce domestic investment opportunities or low profitability.[3] Furthermore, Equatorial Guinea has a constrained microfinance sector, which impedes access to financial services for low income groups.
Up-to-date key statistics on the finance industry are not readily available. Available 2017 figures show lending rates of 15 percent, and deposit interest rates at 2.45 percent. Bank non-performing loans were reported at 27 percent.[4] In 2016, Equatorial Guinea was reported as having 9.15 ATMs and 4.89 commercial bank branches per 100 000 adults. It had 21.74 borrowers, 205 depositors and 344 bank accounts per 100 000 adults, making its per capita rates relatively high compared with other countries in the region.[5] Only 18.9 percent of the population uses the internet and 66.4 percent are mobile phone subscribers. [6] The use of mobile banking in Equatorial Guinea is also lagging compared to the rest of Africa.[7]
The tally of the number institutions providing mortgages is not available. However, one product advertised by BANGE is for “the purchase of first or second houses, construction and improvement of a single-family home”.[8] The mortgage term is five years, at an interest rate of 2.5 percent per annum. This interest rate is relatively low, given that the same bank advertises rural credit for six percent and microloans for seven percent per annum. [9] BANGE also has a “micro bank product” for various purposes including house fittings (Crédito Equipa Tu Casa) and individual and family development credit (Crédito Desarrollo Individual Y Familiar). Interest rates on these loan products are seven percent for a 12-month term, for a maximum loan amount of CFA1 million (US$1 700).[10] More information, particularly on the terms for origination of these loans is required, however.
The World Bank Doing Business 2019 report highlights some challenges with the depth of credit information available on the economy (Equatorial Guinea receives a score of two against the Sub-Saharan average of three, and OECD average of 6.7). The reasons for this are that bureau or registry credit scores are not available to help banks and financial institutions assess the creditworthiness of borrowers for loan origination. Neither can borrowers rightfully access their data in the credit bureaus or a registry, by law.[11] A total of 8.7 percent of economically active Equatoguinean adults are registered with the credit registry.[12]
[1] Equatorial Guinea Data Portal.
[2] Trading Economics (2018). Equatorial Guinea: Commercial Bank Branches. https://tradingeconomics.com/equatorial-guinea/commercial-bank-branches-per-100-000-adults-wb-data.html (Accessed 9 September 2019).
[3] A good example is Sao Tome and Principe which has a similar over-reliance. See IMF (2016). Country Report Democratic Republic of São Tome and Principe. Country Report 16/175 June 2016. https://www.imf.org/external/pubs/ft/scr/2016/cr16175.pdf(Accessed 18 August 2019). Pg. 22.
[4] World Bank Databank. https://data.worldbank.org/indicator/FB.AST.NPER.ZS?locations=GQ&view=chart (Accessed 9 September 2019).
[5] For example, Cameroon has 3.64 ATMs and two commercial bank branches per 100 000 adults, and 68 bank depositors per 1 000 adults.
[6] International Monetary Fund (2018). Republic of Equatorial Guinea.
[7] International Monetary Fund (2018). Republic of Equatorial Guinea.
[8] National Bank of Equatorial Guinea ttp://www.bannge.com/en/mortages/ (Accessed 6 September 2019).
[9] National Bank of Equatorial Guinea.
[10] National Bank of Equatorial Guinea.
[11] World Bank (2019). Doing Business, Equatorial Guinea 2019. https://www.doingbusiness.org/content/dam/doingBusiness/country/e/equatorial-guinea/GNQ.pdf (Accessed 21 August 2019) Pg. 28.
[12] World Bank (2019). Doing Business, Equatorial Guinea 2019. Pg. 27.
Affordability
Historically, Equatorial Guinea has had some of the highest growth rates in Africa, which allowed it to achieve a GDP per capita (Purchasing Power Parity) of CAF19.5 million (US$33 620) in 2018. As a result, Equatorial Guinea is classified as a middle income country.[1] Yet the country ranks 141 out of 188 countries in the Human Development Index, currently scoring 0.591,[2] which shows the highly skewed distribution of wealth in the country. The country has reported relatively modest unemployment levels, compared to others on the continent, at 6.9 percent in 2018.[3] The oil-dominated economy requires a small highly skilled labour force, which makes the country heavily dependent on foreign workers.[4] The oil sector does not create a commensurate number of jobs – it employs only four percent of the labour force, yet constitutes over 85 percent of GDP. [5] This points at a need to diversify the economy, a significant economic thrust the government is pursuing.
The country’s most recent household survey was conducted in 2006. At that time, it was reported that over 79 percent of the rural population and 30 percent of the urban population were living below the poverty line.[6]
While no average price of housing is available, a general sense of the cost of a house is obtainable. The cheapest government-built house is CAF8 million, available through rent to own. Within the private sector, according to one source, the price per square meter for an apartment in the city centre is CAF447 000 (US$755).[7] A 50m2 apartment would therefore be CAF22 350 000 (US$38 000). Another source advertises a five-bedroom house at CAF3 million (US$51 000).[8] Taking the lower figure, and the mortgage product of BANGE, it would take a monthly income of CAF350 000 (US$603) to afford a mortgage.[9] This is not within the reach of most citizens, with the average salary placed at CAF250 000 (US$431). [10]
[1] CIA World Factbook (2018).
[2] World Bank (2019). Equatorial Guinea – Overview. https://www.worldbank.org/en/country/equatorialguinea/overview (Accessed 4 September 2019).
[3] Trading Economics. https://tradingeconomics.com/equatorial-guinea/unemployment-rate (Accessed 09 September 2019).
[4] World Bank (2019). Equatorial Guinea – Overview.
[5] Africa Economic Outlook (2017). Equatorial Guinea: Entrepreneurship and Industrialisation. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/AEO_2017_Report_Full_English.pdf
(Accessed 9 September 2019).
[6] Africa Economic Outlook (2017). Equatorial Guinea: Entrepreneurship and Industrialisation.
[7] Numbeo. https://www.numbeo.com/cost-of-living/country_result.jsp?country=Equatorial+Guinea
[8] Casa Guinea. https://www.casasguinea.com/
[9] This considering one-third of income is used for paying the mortgage, and there are no other related mortgage costs besides the monthly instalment.
[10] This figure for average salary obtained from CAHF (2018). Equatorial Guinea. http://housingfinanceafrica.org/app/uploads/Eq-Guinea-2018-Final.pdf (Accessed 10 September 2019). Pg. 2.
Housing Supply
Currently, 40.3 percent of Equatorial Guinea’s population is reported as living in urban areas, with the urbanisation rate estimated at 4.28 percent annually (2015-2020).[1] The broader population growth of the country is 3.6 percent.[2] Housing is largely self-built from natural materials, i.e. wooden planks or palm thatch, cane and mud walls.
There is a formal state programme for social housing which aims to ensure better access to service infrastructure. [3] Through the programme, the government has built more than 9 000 units, available through rent-to-own mechanisms. However, the programme, which was highly subsidised by the state, has been suffering since the drop in the price of oil and came to a halt in 2015. The programme has been variously described as too small, however, to be effective, vulnerable to corruption and to elite capture,[4] and arguably poorly targeted.[5] Further, data on expenditure, product types and delivery is scarce. The Centre for Affordable Housing Finance (CAHF) has previously reported that the state planned to spend CFA1 492 billion (US$2.6 billion) on social housing. By mid-2014, only CFA388 billion (US$670 million) or 26 percent had been spent.
Furthermore, according to CAHF, the government funded a series of public housing blocks in Bioko Norte, for low income earners in 2015. More than 1 000 houses were also built in Sampaka, a small town north of Malabo.[6] Another more recent report reported that more than 8 600 state-subsidised homes were delivered on the island of Bioko in 2019. [7]
[1] Central Intelligence Agency (CIA) (2018). The World Factbook.
[2] World Bank Data Bank. https://data.worldbank.org/indicator/SP.POP.GROW?locations=GQ (Accessed 09 September 2019).
[3] Africa Economic Outlook (2017). Equatorial Guinea: Entrepreneurship and Industrialisation.
[4] AFP (2019). Public housing in Equatorial Guinea a mirage for the poorest. https://www.france24.com/en/20190523-public-housing-equatorial-guinea-mirage-poorest (Accessed 21 August 2019).
[5] IMF (2015). Republic of Equatorial Guinea 2015 Article IV Consultation – Press Release; Staff Report; and Statement by the Executive Director for the Republic of Equatorial Guinea. IMF Country report 15/260. https://www.imf.org/external/pubs/ft/scr/2015/cr15260.pdf (Accessed 10 September 2019). Pg. 43.
[6] CAHF (2018). Equatorial Guinea http://housingfinanceafrica.org/app/uploads/Eq-Guinea-2018-Final.pdf (Accessed 10 September 2019). Pg. 3.
[7] AFP (2019). Public housing in Equatorial Guinea a mirage for the poorest.
Property Markets
Equatorial Guinea’s score for Doing Business in 2019 is 41.94 out of 100, giving it a global ranking of 177 out of 190. This is three years of decline, with the last ranking at 162. It registers a relatively low score of four on the quality of the land administrative system index, against an average score of 8.8 in Sub-Saharan Africa.[1] The land administrative system and cadastre are largely paper-based, transparency of the system is low with no officially available statistics tracking land transactions, and there is no service by the state to deliver binding documentation or maps showing ownership, on request.[2] The titling and cadastre systems also do not cover the full extent of the country, nor the largest city in the country. The cost of procedures to register property is high, at 12.5 percent of the cost of the property, compared to the Sub-Saharan average of 7.6 percent. It takes 23 days to register a property.
[1] World Bank (2019). Doing Business, Equatorial Guinea 2019. https://www.doingbusiness.org/content/dam/doingBusiness/country/e/equatorial-guinea/GNQ.pdf (Accessed 21 August 2019) pg. 22-24.
[2] World Bank (2019). Doing Business, Equatorial Guinea 2019.
Policy and Regulation
Horozonte 2020 was launched in 2007 as the country’s overall strategic development plan. It identifies, as part of its projected outputs, the “creation of urban local plans for all cities” and “development of the water and sanitary sector” and “collection and treatment of household waste. “[1] Other priorities set out in the plan include developing and implementing adequate regulations for the housing market and increasing and diversifying financial support for social housing construction projects.[2] The government has created the Social Development Fund with a budget of US$1 billion to support the strategy.[3]
Little information is available on the successes of this programme, although the challenges posed by declining government oil revenues have reportedly had a detrimental impact on its implementation.[4]
One of the most significant challenges to the economy is the lack of transparency in the use of revenues from the country’s main export, oil. Equatorial Guinea has applied for membership of the extractive industries transparency initiative (EITI). Equatorial Guinea also has weaknesses in managing its public finance system.[5] A number of reforms to address this have been implemented, including better control and tracking of public spending and enhanced revenue administration.[6] The sustainability of these measures will depend on political will. Given Equatorial Guinea’s over-reliance on oil revenues, reforms have also targeted increasing the proportion of non-resource tax revenues through stimulating growth and diversification within the private sector.[7] Again, little data is available on the success of these measures.
Access to credit has improved through amendments to the Organisation for the Harmonisation of Corporate Law in Africa (OHADA) [8] Uniform Act on Secured Transactions.[9] This allows a broader range of assets to be used as collateral, using proceeds of the asset as security, and introducing the possibility of out-of-court enforcement. The regional public credit registry (for the Central African Monetary Union) now also provides online access to information for banks.[10]
[1] EGs Strategic plan “Horizon 2020” http://www.equatorialguineapress.com/2010/09/equatorial-guineas-2020-development.html (Accessed 9 September 2019).
[2] African Development Bank Group (2018). Equatorial Guinea Economic Outlook. https://www.afdb.org/en/countries/central-africa/equatorial-guinea/equatorial-guinea-economic-outlook/ (Accessed 9 September 2019).
[3] National Development: Horizon 2020 Initiative in Equatorial Guinea. https://borgenproject.org/horizon-2020-in-equatorial-guinea/ (Accessed 09 September 2019).
[4] National Development: Horizon 2020 Initiative in Equatorial Guinea.
[5] AfDB (2019). Equatorial Guinea Outlook. https://www.afdb.org/en/countries/central-africa/equatorial-guinea/equatorial-guinea-economic-outlook (Accessed 09 September 2019).
[6] Fouda, L.M. (2018). Statement at the End of an IMF Visit to Conduct the First Review of Equatorial Guinea’s Staff-Monitored Program. The International Monetary Fund (IMF). https://www.imf.org/en/News/Articles/2018/07/11/pr18287-equatorial-guinea-statement-at-the-end-of-an-imf-visit (Accessed 10 September 2019).
[7] African Development Bank (2019). Economic Outlook https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/2019AEO/AEO_2019-EN.pdf (Accessed 10 September 2019). Pg. 175.
[8] OHADA is a system of corporate law and implementing institutions adopted by seventeen West and Central African nations in 1993 in Port Louis, Mauritius.
[9] This was done in 2012.
[10] World Bank (2019). Doing Business, Equatorial Guinea 2019. https://www.doingbusiness.org/content/dam/doingBusiness/country/e/equatorial-guinea/GNQ.pdf (Accessed 21 August 2019). Pg. 55.
Opportunities
Economic opportunities in Equatorial Guinea lie in diversification beyond the oil industry, into other economic sectors, a reality which the state acknowledges. From a housing perspective, this means delivering products that target the more affordable segment, not employed by the relatively well-paid oil industry. The limited finance market with restricted access also does not target lower income earners, and there are no innovative housing financing products. There is therefore potential to introduce such products, for example housing microfinance.
Availability of data on housing finance
Access to data on housing finance in Equatorial Guinea is a challenge, and little information and data is available publicly or online. The country also does not have the multilateral actors and donors, whose activities often come with data collection and analysis, given its middle income status. State openness on information has improved, with the country’s adoption in 2019 of the International Monetary Fund’s (IMF’s) Enhanced General Data Dissemination System, which publishes essential macroeconomic data.[1] The data therein, while still insufficient, will improve with time.
[1] IMF (2019). Equatorial Guinea Implements the International Monetary Fund’s Enhanced General Data Dissemination System https://www.imf.org/en/Countries/GNQ# (Accessed 9 September 2019).
Websites
National Bank of Equatorial Guinea http://www.bannge.com/en/
Numbeo https://www.numbeo.com/cost-of-living/country_result.jsp?country=Equatorial+Guinea
Trading Economics. https://tradingeconomics.com/equatorial-guinea/indicators
World Bank https://www.worldbank.org/en/country/equatorialguinea/overview
