The World Bank in Guinea

The West African nation of Guinea is bordered to the north by Guinea Bissau, Senegal, and Mali, and to the south by Sierra Leone, Liberia, and Côte d’Ivoire. In 2017, the country had a population of 12.7 million.

Political Context

President Alpha Condé was re-elected to a second term in office with 57% of the vote in October 2015. In May 2018, President Condé announced a cabinet reshuffle and appointed Kassory Fofana prime minister. Presidential elections are scheduled for 2020.

Economic Overview

• Growth stood at around 10% in 2016 and 2017, before slowing to 5.8% in 2018. Growth nevertheless remains robust, driven by foreign direct investment (FDI) in the mining sector. The mining industry grew at an annual rate of roughly 50% in 2016 and 2017, while the non-mining sector posted a 5.4% growth rate in 2018, with investment in infrastructure and the expansion of the primary and tertiary sectors remaining strong.
• Inflation, which stood at 9.8% in 2018, approached double-digit levels, owing to an increase in fuel prices and electricity rates.
• The fiscal balance improved from -2.1% of GDP in 2017 to -1.1% in 2018, owing to reduced subsidies on fuel prices, higher electricity rates, and constraints on hiring and promotions in the public sector.
• Despite these measures, tax revenue fell by 0.8% of GDP to 12.5% in 2018. An extraordinary transfer of 0.4% of GDP from the Post and Telecommunications Regulatory Agency helped improve the fiscal balance.
• With respect to expenditure, investments fell by 0.8% of GDP despite an increase in capital expenditure of 0.7% of GDP financed by external resources. The budget deficit was essentially financed by external resources, which was due to the fall in domestic funding.
• The risk of debt distress remains moderate, even though non-concessional external borrowing increased in 2018. The total public debt-to-GDP ratio fell from 39.6% in 2017 to 37.6% in 2018.

The Guinean economy continues to grapple with two main risks in 2019: the country must sustain macroeconomic and fiscal reforms and ensure social and political stability. The slow pace of infrastructure development could decelerate growth. On the external front, lower commodity prices and a global economic slowdown could undermine growth in Guinea.

Development Challenges

Agriculture and natural resources, as well as the manufacturing and services sectors, are some of Guinea’s economic assets. Agriculture is the country’s main source of employment and is critical for poverty reduction and rural development, providing income for 57% of rural households and employment for 52% of the workforce.

While natural conditions are favorable for growth, Guinea must improve its governance if it hopes to fully realize this potential and step up the structural transformation process. Guinea is becoming increasingly vulnerable to climate change, with an overall rise in average temperatures and a decline in annual rainfall, particularly in the northwestern and northeastern regions.

Guinea is endowed with vast natural resources, especially mining and hydropower resources, which could generate substantial income. Experience shows, however, that mining and hydropower can have serious negative effects, both direct and indirect, on biodiversity and the environment. These potential risks will require careful management.

Another major challenge facing Guinea are the gender gaps in the areas of education and agricultural productivity, and with regard to employment and decision-making opportunities. Taken together, these factors diminish women’s prospects and undermine the country's growth trajectory. Other major constraints include weak human capital (with low literacy rates), a poor health system, a lack of quality agricultural inputs, weak sector and local government management capacity, limited access to finance, and high unemployment, especially among young people.

Last Updated: Nov 25, 2019

At the donor conference held with the Guinean Government and Guinea’s development partners in November 2017, a total commitment of $21 billion was made by the country’s partners and the private sector. These funds will support implementation of the new national economic and social development plan. The World Bank pledged $1.6 billion and the International Finance Corporation (IFC), $750 million.

The World Bank’s engagement in Guinea is determined by a new six-year Country Country Partnership Framework (CPF) for FY2018-23. This CPF for Guinea focuses on three pillars:

• Fiscal and Natural Resource Management;
• Human Development;
• Agricultural Productivity and Economic Growth.

The current World Bank portfolio in Guinea stands at $897.17 million (credits, grants, and trust funds) covering 15 national operations ($538.97 million), 9 regional operations ($358.20 million), and 4 trust funds.

In 2018, the Government of Guinea and the World Bank signed six financing agreements covering such projects as the Guinea-Mali Interconnection project. This project aims to increase the energy supply to Eastern Guinea, enable electricity trade between the two countries, and boost Guinea’s electricity export capability for power exports to the other West African Power Pool countries.

The other projects that were approved during this fiscal year cover the following areas and sectors: strengthening of macroeconomic stability and institutional capacity; promotion of the West Africa Unique Identification for Regional Integration and Inclusion program; reproductive, maternal, neonatal, and child health; agriculture; and energy.

In 2019, the Guinean Government and the World Bank signed two financing agreements covering such projects as the Guinea Project for Results in Early Childhood and Basic Education and the Support to MSME Growth, Competitiveness, and Access to Finance Project. The first project is designed to improve access to and the quality of basic education. The second project is set to increase investment in fragile countries by helping create new markets. It is also contributing to the Digital Economy for Africa (DE4A) initiative.

Last Updated: Nov 25, 2019

World Bank-financed projects have, inter alia, yielded the following results:

Citizen engagement

The Village Community Support Project launched in 2000 by the Guinean Ministry of Territorial Administration and Decentralization with support from the World Bank and the Agence française de développement has already:

• Financed 1,500 microprojects across the country’s 304 rural communes, covering such areas as the construction of schools, markets, and health centers.

Agricultural transformation

The West Africa Agricultural Productivity Program (WAAPP)  has:

• Helped over 300,000 direct beneficiaries (approximately 42% women), whose incomes have increased by 30%;

• Improved the living conditions of seed producers by creating a gross added value of 4 million Guinean francs ($440) in income per hectare of rice per season.
• Increased the demand for laborers and local artisans beyond Guinea’s borders.
• Generated an increase in rice production for a gain of 675 million Guinean francs ($74,000) with technology transfers such as the use of parboiling kits to improve the quality of rice seed.

Social safety nets

The Productive Social Safety Nets project implemented in the four “natural” regions of Guinea:

• Has helped over 32,000 beneficiaries who have received regular cash transfers;
• Has financed 331 microprojects;
• Is set to reach a further 25,000 beneficiaries through US$16 million in additional financing for the program.
• Has also provided vocational training to many women to help them conduct income-generating activities and take part in community projects.

Last Updated: Nov 25, 2019

In addition to the Bretton Woods institutions, Guinea’s main development partners are the African Development Bank, the European Commission, the Islamic Development Bank, and Agence française de développement.

The United Nations coordinates interventions in security reform, with contributions from bilateral aid as well as from ECOWAS and the African Union.

USAID plays a crucial role in helping establish democratic institutions, complementing the European Union, which has led 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 advantages in mining and agriculture, or on sectors where public-private partnerships could rapidly transform into solely private concerns.

Last Updated: Nov 25, 2019