Sunday, July 3, 2011

Equatorial Guinea: a strange one

Browsing world statistics I sometimes come across real outliers, strange results that don't seem to match the general trends at all. Equatorial Guinea is a perfect example.

On paper the country is one of the richest in Africa, richer for instance than Saudi Arabia or Poland.

Yet that wealth does not seem to have filtered down into improved standards of living for the people. Equatorial Guinea has a life expectancy of 51, no higher than Rwanda, lower than Niger and Ethiopia. It's infant mortality rate is 88 per 1,000 live births, worse than Liberia or Sudan, nearly fifteen times worse than Poland.

Equatorial Guinea's growth is atypical too. Here is a Gapminder graph showing the growth of GDP per capita (PPP inflation adjusted US$) from 1990 to 2009, comparing Ireland, USA, Equatorial Guinea and Central African Republic:

The US grew from $33,710 to $41,256: a growth of 22.4%. Ireland experienced very healthy growth, even including the latest recession, rising from $16,905 to $35,693, a total of 111% growth. Central African Republic performed dreadfully, slipping back from $851 to $696, a decline of 18%.

Equatorial Guinea, on the other hand, simply exploded. In 1990 GDP per capita was $1,028. By 2009 it was $15,342, an increase of 1,392%! In one single year GDP per capita rose 29%. To compare Equatorial Guinea with other African countries with similar levels of wealth back in 1996...

...Is almost comical. So citizens seem to enjoy incredible improvements in wealth with very slow improvements in health. What is the key to this puzzle? Oil. From the CIA World Factbook:

The discovery and exploitation of large oil and gas reserves have contributed to dramatic economic growth but fluctuating oil prices have produced huge swings in GDP growth in recent years.... The government has been widely criticized for its lack of transparency and misuse of oil revenues...

The Factbook give further signs of Equatorial Guinea's weird economy. A 2009 estimate for unemployment is 23.3%, yet public debt is incredibly low at 4.1% of GDP.

An OECD study confirms the impression of mixed blessings from the oil boom:

The sustained economic growth and the increase in oil revenue, however, have had very little effect on poverty reduction in the country and on improving the general standard of living of the population. The poverty rate in Equatorial Guinea remains extremely high....

The contribution of hydrocarbons to GDP in 2006 was 87 per cent. The oil industry has without doubt become the engine of Equatorial Guinea’s economy, a long way ahead of other industries, including agriculture and wood.

The study adds that vaccination programmes are slow but proceeding, while health infrastructure is slowly improving. Let's hope Equatorial Guinea can turn its oil boom into the kind of wider economic development that directs its other figures in the right direction too. With GDP per capita higher than Chile, at the moment Equatorial Guinea's life expectancy lags behind Chile by nearly three decades.

5 comments:

  1. Unfortunately Equatorial Guinea is ruled by the Tyrannical and megalomaniac Theodore Nguema who overthrew his even crazier uncle macias nguema.

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    He can decide to kill without anyone calling him to account and without going to hell because it is God himself, with whom he is in permanent contact, and who gives him this strength," a presidential aide announced on the show.

    The radio show, which claims to "inform and mobilise the masses on issues of national interest", has warned against any attempt to disrupt the peace and order which, it said, had reigned since President Obiang, 61, took power in a coup 23 years ago.

    http://news.bbc.co.uk/2/hi/africa/3098007.stm

    his uncle meanwhile ruled like pol pot in the 70's and killed orcleansed a third of his country's population.

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  2. Wow thanks for that Rohan. Perhaps this is one more example showing the importance of political and institutional development along with economic development.

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  3. I don't think though that there has been any economic development worth it's name in Eq.Guinea. Just a bunch of oil got discovered, Nguema, his family and his lackeys shared the spoils. The common Eq.Guinean most likely got zilch.

    http://in2eastafrica.net/world%E2%80%99s-richest-forestry-minister-lives-large-in-us/

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  4. Do you think EQ could suffer from the "resource curse"?
    http://en.wikipedia.org/wiki/Resource_curse

    We're in the wrong careers, man. How does one get a job being a corrupt minister in some foreign oil-rich dictatorship? :)

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  5. Do you think EQ could suffer from the "resource curse"
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    not exactly, since the people were suffering from a horrible regime well before oil was discovered. But the discovery of oil has (In addition to making the rulers rich) given them more clout than they would have had without oil and helped the regime sustain itself without foreign aid.

    How does one get a job being a corrupt minister in some foreign oil-rich dictatorship? :)
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    Bucketloads of ass-kissing :P or having the right genes.

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