Guinea-Bissau, one of the world’s poorest and most fragile countries, is a small state in West Africa covering an area of 36,948 square km with a population of around 1.8 million.
Guinea-Bissau has a history of political and institutional fragility dating back to its independence from Portugal in 1974. The country is one of the most coup-prone and politically unstable countries in the world. Since independence, four successful coups have been recorded in Guinea-Bissau, with another 16
An ECOWAS road map in September 2016 is designed to end the political crisis, and the Conakry Agreement that followed it in October—brokered by ECOWAS and supported by the United Nations and other international partners—offer a historic opportunity for the national authorities, political leaders, and civil society to ensure stability and build sustainable peace.
The UN has expressed its determination to support Guinea-Bissau in achieving progress on key reforms outlined in the Conakry Agreement, aimed at creating a conducive environment for the holding of legislative and presidential elections in 2018 and 2019, the reform of the Electoral Code, and the promulgation of a new law on political parties that would enhance parties’ autonomy and internal democracy. These reforms would be a step toward the creation of an environment conducive to national reconciliation.
Guinea Bissau’s economy continues to expand in spite of political gridlock and the suspension of donor flows to the country. Following growth of 4.9% in 2015, real gross domestic product (GDP) growth is projected at above 5% in 2016, based on preliminary information suggesting a good 2016 cashew season. The prices of 350-450 FCFA per kilogram of cashews for producers and $1,400 per on average for exports were also very positive. Inflation is expected to pick up with the pace of economic activities but should remain below 3%. The fiscal situation is still strained by political instability and the suspension of budget support.
Available information for the first quarter of 2016 points to a sharp consolidation
The controversial government bailout of two commercial banks (equivalent to almost 6% of GDP) has not been fully resolved. The constitutional court is yet to rule on the legality of the transaction, but the current administration has declared the contract null and void and requested that the banks implement corrective steps to unwind the transaction in their balance sheet. The West African Economic and Monetary Union (WAEMU) Banking Commission – the supervisory authority with responsibility to assess the health of financial institutions - is yet to intervene, but both banks will likely need to be recapitalized, should the transaction be reversed.
Real GDP growth is projected to average 5% over 2016-2018. The pickup in growth reflects the assumption that output from the agriculture sector will remain fairly robust and that political stability is achieved to allow for a return of donor financing that would support a recovery in the secondary sector. This growth path also reflects the assumption of a recovery in electricity and water generation.
Given the history of fragility in
There is also an urgent need to address rising inequality in the country through efforts to improve service delivery and enhancing the access to basic services. Equally important are efforts to address agricultural technology and market support systems that are likely to have a positive impact in the cashew sector.
Last Updated: Apr 19, 2017