Overview

Country Overview

Guinea-Bissau is one of the world’s poorest and most fragile countries. Following its independence from Portugal in 1974, Guinea-Bissau has suffered from frequent political upheaval and repeated economic shocks, leading it into a fragility and poverty trap that has made it difficult to achieve and sustain development outcomes.

Political Context

A fierce and long guerilla struggle led to late independence and left few structures in place to conduct effective governance. A brief civil war in 1998/99 and political tension, including between the civilian elites and the army, as reflected in 18 alleged, attempted, or successful military coups since independence, have only served to undermine the development of the country’s economic and social infrastructures, and contributed to intensifying the already widespread poverty. In April 2012, the latest coup d’état reversed the social and economic gains that Guinea-Bissau had previously achieved, and once again pulled the country into a political and economic crisis. However, general elections were held in early 2014, restoring democratic order. There is a consensus among the international community on the success of the transition, and there is now an urgent need to build on the progress made and support the newly elected government as it works to jumpstart the development efforts aimed at reducing poverty reduction and boosting shared prosperity.

Recent Political Developments

With high rates of voter registration and participation, the elections of April/May 2014 concluded with a win for the African Party for the Independence of Guinea and Cabo Verde (PAIGC). PAIGC’s candidate, José Mario Vaz, was elected president and was sworn in on June 23, 2014 in the presence of nine West African heads of state and representatives from international organizations and foreign countries including the United States. The swearing-in of the newly elected National Assembly took place on June 17, and the new government was appointed on July 4, led by Prime Minister Domingos Simoes Pereira. While the new government is dominated by members of the PAIGC, it is also includes five ministers (approximately 30%) from opposition political parties and five women (also 30%). Ministers from the opposition oversee the energy, industry, justice, trade, culture (conducting business reforms), social communication, labor and administrative reform portfolios. The five female ministers occupy the following key ministries: defense (with an envisioned reform and modernization of the army), justice, education, health, as well as women, family and social cohesion. The long standing army chief, General Antonio Indjai was dismissed by the president on September 16, 2014. The new army chief, General Biaguê On Ntam, was sworn in on September 19, 2014, strengthening control over the military by the civilian government.

Economic Overview

The successful elections of April/May 2014 are paving the way for an economic recovery. GDP is expected to grow by 2.5% in 2014 and 4.5% in 2015. Growth had been suppressed since the military coup of April 2012, as donor support was suspended and political uncertainty and frequent policy reversals of the transitional government derailed the cashew campaigns of 2012 and 2013. The government almost entirely suspended its public investment program as donors withdrew financing. In spite of also slashing current expenditures, the government accumulated considerable wage arrears, reaching about 5 months by June 2014, notwithstanding World Bank wage payments to health and education workers. Restricted access to concessional financing resulted in borrowing at commercial rates, weakening debt sustainability. Guinea-Bissau experienced a recession of -2.2 percent in 2012 and only grew anemically by 0.3 percent in 2013. The poor were strongly affected and food insecurity increased by 20 percentage points, by some measures.

The economy started to recover in 2014, as constitutional order was restored. The 2014 cashew marketing campaign went relatively smoothly and world prices remained buoyant.  As a result, farm gate prices have improved which should improve domestic demand and moderate rural poverty.  The new government made a considerable effort to revive revenue administration and collect fees, such as fishing compensation, resulting in an increase in revenue collection of 40% in 2014, compared to 2013. Some international partners have resumed their budget support operations, supporting the restoration of a functioning public administration. Wage arrears were cleared in early 2015.

In late 2014, the National Assembly passed budgets for 2014 and 2015 in record time. The government also prepared a national strategy for the years 2015-2020 which it presented to a donor roundtable in Brussels on March 25, 2015. The international community is optimistic about development prospects in Guinea-Bissau and about $ 1.5 billion was mobilized at the conference for the next five years, supporting the government’s key priority reforms. The expected impact on investment, growth, and economic opportunity spells good news for Guinea-Bissau’s poor. 

Development Challenges

Guinea-Bissau embodies some of the world’s toughest development challenges, combining acute and rising poverty with persistent fragility. 79% of its 1.7 million population live below the national poverty line and 33% in extreme poverty. Since its civil war in 1998/99, economic growth has barely exceeded population growth: per capita gross national income in 2013 was estimated at about $520. Most Millennium Development Goals (MDGs) are out of reach for Guinea-Bissau. There are serious infrastructure gaps, particularly in regards to the harbor, electricity, and water supply. The economy is heavily dependent on one cash crop – cashews – while rice and fuel are major imports, leaving the country vulnerable to fluctuating world prices in all three commodities. 

Last Updated: Apr 20, 2015

World Bank Group Engagement in Guinea-Bissau

Guinea-Bissau joined the World Bank in March 1977, three years after independence. The first operation was approved in 1979 for a road construction and restoration project. Since then, the International Development Association (IDA) has approved 38 projects for Guinea-Bissau amounting to about $434 million.

Following the 2012 coup, the international community suspended its support to Guinea-Bissau and the Bank immediately triggered the operational policy and Bank procedure OP/BP 7.30 on “dealing with de facto governments” which led to the suspension of the Bank’s development program. In December 2012, the Bank resumed disbursements of ongoing programs to maintain the progress made under these programs and limit the negative impact on the poor. The Bank remained under O.P.7.30 until the electoral process was successfully completed in May 2014 and a new government was sworn-in.

On March 24, 2015, the World Bank Group resumed full development operations in Guinea-Bissau. The Bank’s recommendations for re-engagement and other policy measures, contained in a Guinea-Bissau Country Engagement Note, lay out the milestones for World Bank Group support to the country over the 2015-2016 period. It signals the normalization of relations between the Bank Group and Guinea-Bissau, and is designed to provide immediate short-term support to the government, to help build key institutions, to strengthen public sector capacity, and restore essential services. As a first step towards re-engagement the World Bank also approved $5 million for the Public Sector Strengthening Project. This financing in both IDA credits and grants will improve Guinea-Bissau’s public finance management in order to create a foundation for enhanced transparency and accountability in the management and use of public resources.

The current active portfolio for Guinea-Bissau consist of five national IDA operations ($67.5 million), one regional IDA operation ($6 million) and two trust fund operations ($7.68 million) for a total commitment amount of $75.3 million. The largest share of the portfolio is in social protection (31%), followed by water (28%), energy & extractive industries (21%), environment & fisheries (10%), and financial and private sector development (10%). In FY14, the World Bank Group delivered three emergency IDA operations amounting to $45.5 million, which was five times the average yearly allocation ($9 million) for Guinea-Bissau. Trust-funded grants provide support to rural community driven development and technical assistance to the emerging extractive industry sector. The World Bank has also supported non-lending activities in Guinea-Bissau such as a Public Expenditure Management and Financial Accountability Review (PEMFAR) and a Country Economic Memorandum (CEM).

International Finance Corporation (IFC):

As part of the World Bank Group's re-engagement in Guinea-Bissau, IFC is working with the World Bank to support the improvement of service delivery with private sector participation in key infrastructure sectors including water, electricity, and ports. IFC will also directly finance private sector projects to encourage others to invest, as well as improve the investment climate and enhance both access to finance and the capacity of the country's small and medium enterprises.

Last Updated: Apr 20, 2015

Emergency Food Security Support Project

At the request of the government of Guinea-Bissau, the World Bank implemented the project as a response to the 2008 international food price crisis. The objective of the Emergency Food Security Support Project (EFSSP) was to improve food security for the most vulnerable populations, including children, and increase smallholder rice production in project areas.

Under this recently completed project, the number of students receiving one meal a day on average was 14,102, 49% of whom were girls. The project also generated 285,000 work days against a target of 160,000 work days initially planned for the duration of the project. About 9,100 tons of paddy rice is estimated to have been produced on the rehabilitated rice land under the project, exceeding the project’s target of 7,500 tons.

The support of this project was strengthened by a second parallel operation funded by the European Union Food Crisis Rapid Response Facility Trust Fund (EUFRF). EUFRF had similar development objectives and project components as the EFSSP. The food-for-work program under EUFRF dealt with the rehabilitation of rural feeder roads, which were critical to enhancing welfare by improving access to the project’s areas. Under this trust fund (now closed), the number of students receiving one meal a day on average was 28,030, 48% of whom were girls. The project generated 165,000 work days against a target of 162,000 work days planned. The direct beneficiaries under the food for work program were 7,310 participants and indirect beneficiaries were 43,860, with a total of 51,170 beneficiaries against a planned target of 18,900 beneficiaries at the end of the project. There has also been considerable progress in the rehabilitation of feeder roads. In February 2011, only 67 km of roads were completed. By the end of June 2011, 205 km of roads out of a total of 300 km, were completed. In addition, the project also achieved the planned procurement of seeds, fertilizers and agriculture equipment.

Last Updated: Apr 20, 2015

Guinea-Bissau’s main development partners are the European Union (EU) together with European bilateral donors, the Economic Community of West African States (ECOWAS), the West Africa Economic Monetary Union (WAEMU), the West Africa Development Bank (BOAD), the African Development Bank (AfDB), the United Nations agencies, the World Bank Group and the IMF. Important emerging non-traditional donors are Angola, China, and Iran. 

Last Updated: Apr 20, 2015


LENDING

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

*Amounts include IBRD and IDA commitments