Financial Crime World

Banking Compliance Procedures in Equatorial Guinea: A Challenge to Business Growth

Introduction

Starting a business in Equatorial Guinea is a complex process that requires compliance with numerous regulations. The country’s ranking of 186th out of 190 economies in terms of ease of doing business, as reported by the World Bank’s Doing Business report, highlights the challenges faced by entrepreneurs.

Challenges in Banking Compliance Procedures

The banking system in Equatorial Guinea is relatively underdeveloped, and regulatory requirements can be onerous. This presents a significant challenge for businesses seeking to establish themselves in the country.

Regulatory Complexity

  • Multiple licenses and approvals are required from various government agencies.
  • The process can take up to 12 months to complete.
  • The cost of obtaining these licenses and approvals is approximately $8,000.

Access to Electricity: A Concern for Businesses

While Equatorial Guinea has made significant progress in expanding its electricity grid, the reliability of supply remains a concern. In some years, new commercial connections to the grid are not issued, resulting in a “no practice” mark on the procedures, time, and cost indicators.

Registering Property: A Lengthy Process

Registering property is another challenge faced by businesses in Equatorial Guinea. The process requires multiple steps and can take up to 6 months to complete.

Challenges in Accessing Credit

Getting credit remains a challenge for businesses in Equatorial Guinea, despite progress made in developing the financial sector. Access to credit remains limited.

Protecting Minority Investors: An Area of Concern

While the country’s regulatory framework provides some protections for minority shareholders, enforcement can be weak.

Paying Taxes: A Significant Burden

Paying taxes is a significant burden for businesses in Equatorial Guinea due to the complex tax regime and multiple regulations that must be complied with.

  • Companies must submit various returns.
  • The tax regime is complex.

Trading Across Borders: A Challenge Due to Lack of Infrastructure

Trading across borders is also a challenge due to the lack of developed infrastructure and regulatory frameworks.

Enforcing Contracts: Weak Enforcement

Enforcing contracts is another area where the business environment in Equatorial Guinea falls short. While progress has been made in developing the judicial system, enforcement can be weak.

Resolving Insolvency: A Significant Challenge

Resolving insolvency is also a significant challenge for businesses in Equatorial Guinea. The country’s insolvency framework provides some protections for creditors, but the process can be lengthy and expensive.

Conclusion

While Equatorial Guinea has made progress in developing its business environment, banking compliance procedures remain a major challenge for entrepreneurs. Addressing these challenges will require significant reforms to regulatory frameworks and institutional capacity building.