E Guinea seeks investment boost with image overhaul

Thu Jun 24, 2010 3:50pm IST

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* Hires U.S. public relations firm

* Seeks reputation as good place to do business

* Perception of corruption hard to shake, analysts say

By Richard Valdmanis

DAKAR, June 24 (Reuters) - Equatorial Guinea is stepping up efforts to clean up its image as one of Africa's most corrupt and repressive nations, hiring U.S. public relations experts to fend off criticism and revive dwindling investment.

The stakes are high for the tiny West African state, where oil reserves accounting for most of the country's revenues are in decline and pressure is rising for reforms that will benefit its impoverished population.

The country was listed 12th from bottom in a list of 180 countries ranked on efforts to stamp out graft by Berlin-based Transparency International in 2009.

It suffered the latest blow to its reputation last week when U.N. culture and education body UNESCO suspended a prize named after its president Teodoro Obiang Nguema following complaints by human rights groups.

"Equatorial Guinea wants a voice and it wants to be seen as a good place to do business," said David Mayorga from Qorvis, a U.S. public relations firm hired by Equatorial Guinea in May.

"There is a feeling that the country has been misrepresented and they want to fix that," he said of the former Spanish colony, which often seems isolated from the big clubs of former British and French colonies on the continent.

Qorvis has already issued more than a dozen media releases, most countering corruption claims and promoting government moves to improve education and healthcare for its 650,000 citizens.

Qorvis has joined a handful of U.S.-based public relations firms on the country's payroll that includes Cassidy and Associates, a company that has billed about $7 million to Malabo since 2005, according to U.S. State Department records.

UPHILL BATTLE

Equatorial Guinea is not the first country with an image problem to hire public relations experts. Saudi Arabia, Libya, Nigeria, and South Africa have all done the same. And like some of the others, its rebrand effort could be a challenge.

"The problem is you can only rebrand something if it is working properly to begin with," said Rolake Akinola of political risk analysis group Eurasia Group.

"Without genuine reform, it will be seen as plastering over the cracks," Akinola said. Obiang took power in a 1979 coup. He won a fresh 7-year term in a landslide election last year that critics said was rigged.

His government has been the target of U.S. and Spanish inquiries into the use of tainted money to buy multi-million dollar estates in the United States and Spain.

And in April, the country was suspended from the Extractive Industries Transparency Initiative, an international programme aimed at improving transparency in the use of resource revenues, adding heft to rights group allegations the government enriches itself with petrodollars while neglecting its citizens.

"Ever since the 1990s they've been trying to rebrand. And each time they do, something that makes that effort more difficult comes along," said analyst Antony Goldman.

MORE THAN PRIDE

Still, the country has raised its profile by placing an official to head central African bloc CEMAC's central bank, and by winning a role as host to the African Union summit next year and co-host with Gabon of the 2012 African Nations Cup soccer tournament -- events that will expose to it more scrutiny.

The renewed public relations effort is being fought for more than just pride, experts said.

"This is to attract investment," said Eurasia's Akinola. "Many companies have avoided the country because of the reputational risk. Winning some international legitimacy will help it diversify its investor base."

The country discovered big offshore oil reserves in the 1990s and drew a rapid influx of investment from mostly U.S. energy firms such as Exxon Mobil (XOM.N) Marathon Oil (MRO.N) and Hess (HES.N) that turned it into a big oil supplier.

But production started to decline earlier this decade, and the pace of investment has fallen by about 30 percent between 2005 and 2008 to $1.3 billion, according to the latest United Nations statistics.

The country has since tried to draw investment to become a regional LNG (liquefied natural gas) export hub using domestic and regional natural gas reserves and more recently penned a deal with little-known Canadian resource company Sillenger to look for prospective minerals deposits onshore. (Editing by Mark John)

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