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.
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.
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.
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