Overview

Country Overview

The West African nation of Guinea spans an area of 245,860 kilometers and shares borders with Guinea-Bissau, Senegal, and Mali in the north, and with Sierra Leone, Liberia, and Cote d’Ivoire in the south. According to an April 2014 population census, Guinea has a population of 11 million, with women making up more than half of the population.

Political Context

President Alpha Condé was re-elected on October 31, 2015 to a second term in the first round of the country's disputed presidential election, with 57% of the votes. He was sworn in on December 14, 2015, less than three weeks before Guinea was declared Ebola free. On December 26, 2015, President Condé appointed Mamady Youla as the country’s prime minister. Youla, a 54-year old economist, has worked both in the private sector and the government. The new 31-strong cabinet has seven women who have key ministerial roles in finance, foreign affairs and agriculture.

The new government is ready to implement an ambitious post-Ebola-recovery plan, which was endorsed by the international community, including the World Bank Group (WBG). However, the fiscal situation in the country remains extremely fragile requiring close monitoring by the World Bank and the International Monetary Fund (IMF) as well as financial assistance both in the short term and the long term.

Economic Overview

After good growth performances in 2011 and 2012, Guinea’s economy has suffered a number of setbacks, including the Ebola crisis and a sharp drop in new investment in the mining sector. These external shocks were further compounded by political unrest in the run-up to legislative elections in 2013. As a result, GDP growth dropped to 0.4% in 2014 and 0.1% in 2015 respectively. The services and mining sectors were adversely affected by Ebola in 2015 with strong contraction in the mining sector, while the agricultural sector showed resilience and was the key driver of growth in 2015.

The fiscal situation deteriorated sharply in 2015. A large part of expenditures to address the Ebola epidemic in 2014 and 2015 was financed by donors, both through and outside the budget. However, the stagnating economy affected revenue by more than 2% of GDP, while the presidential elections and attempts to boost economic activity drove an increase in spending. Following the end of the Ebola epidemic, economic growth is projected to rebound to 4% in 2016 and to 5-6% in 2017-18, although considerable downside risks remain. Agricultural production should continue to grow at the rapid pace of the previous years, and manufacturing and services should benefit from the resumption of international and domestic travel and trade, as well as the improved electricity supply in Conakry. However, the projected rebound in mining production will depend on quick improvements in the regulatory environment and in the outlook for international metal prices.

According to a World Bank and International Monetary Fund (IMF) Debt Sustainability Analysis (DSA) from January 2015, Guinea continues to be assessed at a moderate risk of debt distress. Using a higher and unified discount rate of 5% (previously 3%), which was introduced in October 2013, the team found no changes in the underlying conditions. The moderate rating is based on Guinea’s vulnerability to adverse shocks to growth, exports, FDI inflows, fiscal performance, and delays in the implementation of mining projects. The Bank and IMF teams are working closely with the authorities to ensure that all new loans in 2016 and onward are contracted with a high degree of concessionality and a strong development impact.

Social Context

Poverty affected about 55% of Guinea’s population in 2012, up from 49% in 2003, and is likely to have increased further as a result of the Ebola crisis and economic stagnation. The poverty headcount rate remained far higher in rural areas (65% in 2012) than in urban centers (35%). Poverty rates also varied significantly by region, with the highest rates observed in the remote Nzérékoré and central Labe provinces and the lowest rate recorded in the capital, Conakry.

These rates have certainly increased as the result of the Ebola crisis and economic stagnation in 2014 and 2015. This is particularly true for Macenta and Gueckedou, the two areas in the southeast that have been most affected by Ebola and that already had poverty rates above the national average. 

A recently conducted mobile phone survey in September 2015, based on interviews with close to 2,500 households across Guinea, confirmed that Ebola had a strong impact on Guinean households. Welfare levels based on asset ownership deteriorated, particularly for rural households, which is consistent with a pronounced income decline by more than 30% for rural households and women in areas severely affected by Ebola, as well as decline in food consumption. In parallel, urban unemployment doubled from 8% in 2012 to 16% in 2015 in the aftermath of Ebola, and close to 10% of households withdrew their children from school, with the large majority citing Ebola as the main factor. Surprisingly, agriculture production remained resilient and food prices were stable.  

Development Challenges

Despite great success in stopping the spread of the Ebola epidemic, serious challenges remain in addressing the impact of the epidemic. In December 2015, the epidemic had cost the lives of more than 11,300 people in Guinea, Sierra Leone, and Liberia, including more than 500 health care workers. The number of new cases peaked at more than 50 per week in early 2015 before gradually declining as containment efforts took effect.

The Guinea Ebola Recovery Plan, presented at the World Bank Spring Meetings in April 2015, represents the government’s ambitious and wide-ranging attempt to relaunch the economy in the aftermath of Ebola. In terms of financing, the total estimated cost of this plan over the 2015-2017 period amounts to almost $3 billion, with $857 million for 2015, $1.2 billion for 2016, and $864 million for 2017.

As part of the international response, the World Bank Group significantly scaled up its support to the Ebola-affected countries. Overall, the WBG has mobilized close to $1.6 billion in financing for the countries hardest hit by the crisis, including $400 million announced in August and September 2014 for the emergency response. The funds have financed Ebola-containment efforts in Guinea, Liberia, and Sierra Leone, helped families and communities cope with the economic impact of the crisis, and rebuilt essential public health systems to guard against future disease outbreaks.

Last Updated: Apr 13, 2016

World Bank Group Engagement in Guinea

The Board of the World Bank Group (WBG) discussed the FY14-FY17 Country Partnership Strategy (CPS) for Guinea in October 2013. The CPS supports Guinea’s Third National Poverty Reduction Strategy Paper (PRSP3) that was approved by the Government of Guinea in May 2013, and focuses on: (i) improving governance; (ii) stimulating growth and economic diversification; and (iii) supporting human development. A mid-term Performance and Learning Review (PLR) of the CPS was approved on August 28, 2015: (i) to inform the WBG Board of Executive Directors, the government, and other stakeholders on progress so far with reaching the strategy’s objectives; and (ii) to draw lessons and highlight changes to the CPS to ensure that it remains relevant and effective. The main findings of the PLR are that the overall strategy of the CPS remains valid but that some adjustments are needed, especially in light of the Ebola epidemic.

The Bank is designing operations to help Guinea address the economic impact of the Ebola epidemic, which includes improving food security, developing social protection, facilitating access to water and sanitation, and to supporting key reforms aimed at improving public financial management and transparency in the mining and energy sectors. 

Last Updated: Apr 13, 2016

The national International Development Association (IDA) portfolio consists of 10 approved operations for a total of $234 million. The disbursement ratio is at 15% as of March 10, 2016. There are 7 regional projects with an IDA commitment of $217 million for a disbursement rate of 54%. The World Bank Group’s program is contributing to putting in place potentially transformative building blocks in the priority sectors of energy, agriculture, mining, governance, and regional integration in Guinea.  The portfolio grew substantially because of additional support related to the Ebola epidemic.

Emergency Response to the Ebola Virus Outbreak

Guinea was declared Ebola free on December 27, 2015 before the resurgence of new cases on March 17, 2016. In addition to weak health systems, combatting the disease is complicated by cultural habits and mistrust of central authorities.

Disruptions in international trade, investment, and domestic production have had a very serious economic impact. Frequent market closures resulted in crop losses and reduced activity in the rural areas, and private sector companies closed which increased unemployment. The health system has been further weakened as many health facilities are no longer operational due to the desertion of personnel, avoidance by the population, and disruption in basic supplies. The impact of this on other social sectors continues to grow and there is a particular need to provide support for a growing number of orphans.

Following a slow start, the international community provided substantial assistance to Guinea in combatting the epidemic. The World Bank has provided a total $153 million to the Ebola response in Guinea, including $50 million in budget support.  

Last Updated: Apr 13, 2016

In addition to the Bretton Woods institutions, the main development partners financially supporting the country are the African Development Bank, the European Commission, the Islamic Development Bank, and the French Development Agency (Agence Française de Développement). However, on specific issues, other institutions and partners are crucial. The United Nations (UN) coordinates interventions in the area of security reform, with contributions from bilateral aid, as well as from ECOWAS and the African Union. USAID plays a crucial role in establishing democratic institutions, complementing the work of the European Union (EU). The EU has led the work on support for the justice sector. Non-traditional development partners, including Arab countries, China, Brazil, Russia and India, have focused on areas closely linked to Guinea’s comparative advantage such as mining and agriculture, or where public private partnerships could yield a rapid transfer to purely private activities. 

Last Updated: Apr 13, 2016


LENDING

Guinea: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments