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 Côte d’Ivoire in the south. Guinea has a population of 12.6 million, according to World Bank estimates in 2015.

Political Context

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

The Government of Guinea has a new development plan for the period 2016-20. The plan is its unique development document, replacing the following documents: the third Poverty Reduction Strategy Paper (PRSP3) for 2013–15, the Quinquennial Plan (2011–15), and the Post-Ebola Recovery Plan (2015–17). The plan was validated by the Council of Ministers on 23 February 23 2017. The adoption of the plan by the Country’s National Assembly will close the validation process. This last step is expected to happen before the organization of the Consultative Group, which should be held by the end of 2017.

Economic Overview

Guinea is slowly emerging from the twin shocks that adversely affected its economy in 2014 and 2015, Ebola and low commodity prices. Gross Domestic Product (GDP) grew at 5.2% in 2016, driven by increased production of bauxite and gold as well as a resilient agriculture sector. Services and manufacturing continue to stagnate in the aftermath of Ebola. GDP growth is projected at 4.4% for 2017. The recent, successful completion of an ECF (Extended Credit Facility) program with the International Monetary Fund (IMF) has the potential to contribute to better macroeconomic management and economic recovery. This is the first time Guinea has successfully completed a program with the IMF.

Guinea’s fiscal situation improved in 2016 with a smaller fiscal deficit of 1.3% compared to a deficit of 8.9% of GDP in 2015. Government revenue increased to 19.2% of GDP in 2016, compared to 17.2% of GDP in 2015. Revenue performance reflected a number of policy measures to improve domestic revenue mobilization, coupled with a reduction in expenditure. However, despite a reduction in public spending, pro-poor expenditures were preserved, as illustrated by the increased share of the health sector in the national budget from 2.5% in 2015 to 5% in 2016. The expected deficit for 2017 is 0.2% of GDP. The inflation rate was, however, still high, and is expected to be 9.7% in 2017, owing to Guinea’s currency depreciation and increased domestic prices.

According to a World Bank and IMF Debt Sustainability Analysis (DSA), Guinea continues to be assessed at a moderate risk of debt distress. Using a higher and unified discount rate of 5% (previously 3%), 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 World Bank and IMF teams are working closely with 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, but this percentage is likely to have increased as a result of the Ebola crisis and economic stagnation in 2014 and 2015. This is particularly true for parts of the country most affected by Ebola and that already had poverty rates above the national average. 

A mobile phone survey conducted in September 2015 and 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 had deteriorated, particularly for rural households, a result consistent with a pronounced decline in income by more than 30% for rural households and for women in areas that were severely affected by Ebola. A decline in food consumption was also noted in these same households. In parallel, urban unemployment had doubled from 8% in 2012 to 16% in 2015, and close to 10% of households had withdrawn their children from school, with most citing Ebola as the main factor for doing so. Surprisingly, agricultural production remained resilient and food prices were stable.  

The poverty headcount rate remains far higher in rural areas (65% in 2012) than in urban centers (35%). A new household survey to be launched in 2017 will contribute to updating the information about poverty in Guinea.

Development Challenges

Despite great success in stopping the spread of the Ebola epidemic, serious challenges remain in addressing the impact of the disease. In December 2015, the epidemic had cost the lives of more than 11,300 people in Guinea, Sierra Leone, and Liberia, including those of over 500 health care workers.

Furthermore, the Guinean economy will face two main risks in 2017: The first challenge is maintaining macroeconomic and fiscal reform; and the second is to ensure socio-political stability.

Another particularly difficult challenge for Guinea has been the suspension of the $20 billion Simandou Project in July 2016. This ambitious project, involving Rio Tinto and others, was expected to bring high quality iron ore to the international market, and create up to 50,000 jobs. In July 2016, Rio Tinto announced a scaling down of its presence in Conakry and in the country as a whole. Simandou’s suspension sends signals to the international mining community, and will have ripple effects on the Guinean economy.

In October 2016, Rio Tinto announced that it had signed a non-binding agreement to sell its stake in the project to the Chinese state-owned firm, Chinalco Mining Corporation. Negotiations were to reach a final agreement by the end of 2017. This could potentially be a pathway to finally develop Simandou.

Last Updated: Apr 01, 2017

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), approved by the Government of Guinea in May 2013, and focused 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 in August 2015 to: (i) 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 were that the overall strategy of the CPS remains valid but that some adjustments are needed, especially in light of the Ebola epidemic.

A Systematic Country Diagnostic (SCD) was launched in the drafting of a new Country Partnership Framework (CPF) to be delivered in the second quarter of FY18.

Last Updated: Apr 01, 2017

The International Development Association (IDA) portfolio consists of 11 approved operations for a total of $270.9 million. The disbursement ratio stood at 11% as of February 2017. There are seven regional projects with an IDA commitment of $236.5 million, including an additional financing of $23 million for the West African Agriculture Productivity Project approved in February 2017 by the Board of Administrators. 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.

Last Updated: Apr 01, 2017

In addition to the Bretton Woods institutions, the main development partners 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 some Arab countries, China, Brazil, Russia and India, have focused on areas closely linked to Guinea’s comparative advantages in mining and agriculture, or on sectors where public–private partnerships could rapidly transfer to purely private concerns

Last Updated: Apr 01, 2017


LENDING

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

*Amounts include IBRD and IDA commitments

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