The government of Equatorial Guinea is applying an industrial city model to secure foreign investment and diversify the country’s economy. Through a special economic zone, single administrative agency and attractive terms for companies at the Industrial City of Mbini (ICM), the Ministry of Mines, Industry and Energy (MMIE) aims to attract investors and grow Equatorial Guinea’s industrial base.
Incentives and structure
The industrial city will have its own investment regulations. A multi-departmental management agency administering the entire city will create a one-stop shop for investors. To incentivize new industries to setup operations at Mbini, special sanctions will be given for labour requirements, customs and taxation. These breaks are designed as a progressive scheme, with more generous relief at the beginning of operations, and as time passes the exemption percentages will decrease until they reach a point where they are equal to the prerogatives of the current applicable laws and regulations.
Within the city a special economic zone will handle imports and exports of products and materials. The government also wants to give special consideration to small and medium-sized businesses, so there will also be allocated zones for these companies.
The core concept is to create a secure environment for international and domestic investors with the target of jobs creation in Equatorial Guinea and a reduction of the economy’s reliance on oil and gas revenue. This project presents an excellent opportunity for the country to broaden its economic base if it is carried out correctly.
The agency managing the industrial city will be an arm of the industry department in the MMIE, but it will consist of individuals from several governmental ministries to fulfil the notion of a one-stop shop. The agency will be the authority that approves investment applications and issues operational permits for the city and special economic zone, and it will ascertain how regulations are applied to different sectors.
Investors will be able to submit their applications to the agency and receive all the necessary licenses and permits from the relevant government departments within a short time. At present, establishing a business in Equatorial Guinea can take from six to 18 months. Much of this time is taken by having to get the approval of many different governmental bodies. Investors that struggle with the time and difficulty of registering a company today should be more comfortable with the process and certainty of investing in the ICM.
The industrial city model has not been as successful as anticipated in other countries in the region, for example Angola and Gabon. The main difficulty is always attracting the right investors. For Mbini, the government is actively reaching out to companies from heavy industry to high-tech. The target industries are technology (such as industrial electrical equipment), automotive, healthcare, pharmaceuticals, textiles, agro-industrial, foodstuff and refining raw materials (such as lumber, mineral resources and oil and gas), among others. Later on, the ICM will host banks, hotels and a conference centre to offer resident companies all the facilities they may need.
The location has been established and basic electricity and water infrastructure is already in place. The plan is to develop Mbini in phases instead of developing all zones within the industrial city at once. The government will rely heavily on investors contributing to the construction of infrastructure.
On April 30, 2015 at the Equatorial Guinea-Asia Economic Forum in China, the MMIE and China Dalian International Cooperation (Group) Holdings signed a memorandum of understanding (MoU) that will establish a path of collaboration between the two entities and aims to achieve consensus on the preliminary technical studies to develop the industrial city. Incidentally, and as part of a development plan in the energy sector, the MMIE signed a second MoU with China Machinery Engineering Corporation. The purpose of that document is to engage in talks in reference to technical and financial feasibility studies of a new streetlight factory and lighting accessories for the Industrial City of Mbini.
Legal and timeframe
Centurion has worked directly with the MMIE to establish a legal framework as part of the overall roadmap for the project. This involved ensuring the framework was in line with the constitution and legislation system of Equatorial Guinea. The framework is being reviewed by the MMIE and is expected to be approved within the first half of 2015 before it is submitted to parliament, with a decree anticipated to be passed before the end of 2015. In advance of a decree being passed, the MMIE is already working to attract investors and has signed joint venture agreements with some companies. Ideally, the first residents of the Industrial City of Mbini will begin operations by 2016.
By Cristina Sánchez Cosme
Senior Associate Lawyer