The World Bank in Guinea

Bordered to the north by Guinea Bissau, Senegal, and Mali, and to the south by Sierra Leone, Liberia, and Côte d’Ivoire, Guinea enjoys sizeable endowments of natural resources, energy opportunities, and arable land. In 2022, the country's population was 13.49 million.

As the country's largest employer, the agriculture sector plays a key role in poverty reduction and rural development, providing income for 57 per cent of rural households, and employment for 52 per cent of the labour force.

In addition to this sector, natural resources and also processing industries and services are economic assets for Guinea. But to reap their full benefits and accelerate the process of structural transformation, the country needs to improve its governance.

Guinea also derives part of its revenues from mining. Experience shows, however, that mining and hydropower can have direct and indirect negative impacts on biodiversity and the environment. These potential risks will need to be carefully managed. Another major challenge for Guinea is youth unemployment and gender inequality.

Political Context

Guinea underwent a regime change on September 5, 2021, after a military coup deposed former President Alpha Conde. Since then, the country has been governed by the National Committee for Reconciliation and Development (CNRD), a military junta led by COL Mamadi Doumbouya as transition president. On August 20, 2022, COL Doumbouya appointed Bernard Gomou as Prime Minister, replacing Mohamed Béavogui, who served as the head of government from October 2021 to July 2022.

The current leadership has been negotiating with the Economic Community of West African States (ECOWAS) for a possible reduction of the transition period. In response to what it considers a lack of progress, ECOWAS has imposed gradual diplomatic, economic, and financial sanctions on a list of personalities including President Mamadi Doumbouya and all government members. ECOWAS recommends a 24-month transition period as opposed to the 36-month period sought by the military junta.

Economic Overview

• Growth slowed to 3.9 percent in 2021 after a sharp deceleration in mining activities.
• Inflation is estimated at 12.6 percent, a significant increase from 10.6 percent in 2020, due to higher food prices and disruption of supply chains (both internal and external).
• Overall fiscal deficit (including grants) has improved from 3.2 percent of GDP in 2020 to 1.8 percent in 2021. However, tax revenues remained low, at only 12.0 percent of GDP. Mining tax revenues increased from 1.7 percent of GDP in 2020 to 2.1 percent in 2021, due to improved revenue collection.
• Subsidies to the electricity sector in 2021 doubled to 20 percent of public expenditures, reflecting low tariffs and higher electricity production from the Kaleta-Souapiti hydroelectric project. At the same time, the government reduced capital spending, which was at 2.3 percent of GDP, lower than budgeted, to limit the budget deficit.
• Public debt increased from 38.2 percent of GDP in 2020 to 42.2 percent in 2021, due to pandemic-related borrowing and disbursements for the Souapiti hydroelectric project. The risk of public debt distress remains moderate.
• Inflationary pressures, due to disruption of supply chains because of the Ukrainian crisis and possible ECOWAS sanctions, could expose the country to economic shocks. Uncertainties associated with the political transition could also slow the implementation of reforms. If reforms to strengthen governance and financial performance of public services in the electricity sector are delayed, private investment and spending on social programs could be reduced.

In such a context, the government should increase domestic revenue mobilization, accelerate power sector reform, and broaden health and social protection measures.

Last Updated: Oct 13, 2022

The World Bank Group (WBG) program in Guinea is part of the Country Partnership Framework (CPP) covering the period 2018-2023 presented to the Board of Directors on June 07, 2018. This CPP originated from the Systematic Country Diagnostic (SCD) carried out in 2017, which identified the key constraints to the elimination of extreme poverty and how to foster shared prosperity in a socially and economically sustainable way. The Country Partnership Framework supports the implementation of Guinea's National Economic and Social Development Plan (PNDES) 2016-2020. It was revised in June 2021 to reflect changes since 2018 and recorded progress, feedback, and major program adjustments, including multifaceted responses to the COVID-19 pandemic. It also reflects the Guinean Government's commitment to achieving the 17 Sustainable Development Goals (SDGs) set by the United Nations and to honoring its responsibilities and priorities relating to climate change mitigation and adaptation. In this context, the CPP articulates support for the PNDES around three (3) priority areas:

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

The current World Bank portfolio in Guinea stands at $927,73 million (credits and grants) for 20 projects: 13 national operations and 7 regional operations. As of August 31, 2022, the undisbursed balance stood at US$600 million, or 64% of the total commitment, covering almost all key sectors of the economy including, among others, health, education, social protection, energy, agriculture, mining and the environment.

The IDA20 allocation for the next three years (July 2023 - June 2025) amounts to $521.1 million. Depending on the evolution of the national and global environment, $206 million could be committed during the current fiscal year 2022/2023 to strengthen the resilience of the population through social protection programs (NAFA) and local governance, and improve digital connectivity as part of a regional integration program in West Africa.

Programs to improve food security and access to clean water and sanitation could follow in 2024 and 2025, respectively.

Last Updated: Oct 13, 2022

World Bank-financed projects have yielded the following results among others:

Access to electricity

Projet d’Amélioration de l’Accès à l’Électricité en Guinée (PAAEG). Implemented in Conakry, the capital, in the cities of Kindia (northeast) and Forécariah (west) as well as in the towns of Manéah-Dubreka-Coya, the PAAEG:

• Connected 603,096 people, 52% of whom are women, to electricity
• Regularized 100,000 illegal connections in the city of Conakry
• Renovated infrastructures, densified and developed the electricity network in the cities of Conakry, Forécariah, Kindia, and in the towns of Manéah-Dubreka-Coyah

Governance

Projet d’Appui à la Gouvernance Locale (PAGL). Designed to improve the capacity of local governments to manage public financial resources in a transparent and participatory manner, and to mitigate local conflicts, the PAGL:

• benefited 4,003,160 people, including 2 million women
• enabled 356 rural communities and 33 urban communities to develop their local development plans (LDPs)
• provided training in budgeting, budget monitoring and evaluation to 100% of Guinea's local governments.   

Access to water

Projet Urbain Eau de Guinée (Urban Water Project of Guinea). Funded at $30 million, the PUEG has boosted access to improved water services in the Greater Conakry area by strengthening the operational performance of the Société des Eaux de Guinée (EDG):

• 200,000 m3 of water distributed per day in Greater Conakry
• 730,000 direct beneficiaries, 48% of whom are women
• 500 hand-washing stations installed in the Greater Conakry area.

COVID-19 Response

The World Bank has moved quickly to provide fast and flexible assistance to help Guinea combat the COVID-19 pandemic, with its response focusing on three main areas: saving lives, protecting livelihoods, and safeguarding the future. In nine months, it has committed more than $200 million to help Guinea protect both its overall economy and its poorest households. This financing included new investments, budget support, and the redeployment of existing Bank resources. 

Last Updated: Oct 13, 2022

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 the 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 helps establish democratic institutions, complementing the European Union, which has led on support for the justice sector.

As for the new development partners - several Arab countries, China, Brazil, Russia and India -, they favor sectors in which the country has a comparative advantage, namely mining and agriculture, or those where public-private partnerships could quickly turn into strictly privately-owned activities.

Last Updated: Oct 13, 2022