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 13.53 million. As the country's largest employer, the agriculture sector plays a key role in poverty reduction and rural development, providing income for 57% of rural households, and employment for 52% 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
Ecowas, at its 62nd summit on December 4, 2022, validated the 24-month transition timetable effective January 2023 and called on the transition authorities to hold a national dialogue including all political actors. The inclusive inter-Guinean dialogue, which began on November 25, at the initiative of President Doumbouya, ended on December 20, 2022, with the participation of 35 socio-political entities under the coordination of three lady-facilitators. The conclusions contain 13 thematic points including the ten priority points drawn up jointly by the transition authorities and Ecowas, including (i) the general census of the population and housing, (ii) the administrative census for civil status purposes, (iii) the establishment of the electoral register, (iv) the elaboration of the new constitution, (v) the organization of the referendum, (vi) the elaboration of organic laws, (vii) the organization of local elections, (viii) the organization of the legislative elections, (ix) the establishment of institutions and (x) the organization of the presidential election. The four main socio-political coalitions boycotted and rejected the conclusions and recommendations of the dialogue. This political standoff between the Forces Vives de Guinee (the Active Forces of Guinea) and the transition authorities led to protests resulting in casualties in mid-February. In response to what it considers not inclusive, Ecowas decided during the African Union summit on February 18-19 to maintain sanctions on Guinea, imposing travel bans on members of government and other senior officials and called on the Guinean authorities to create a joint monitoring and evaluation committee, to refrain from any unilateral action that could undermine the spirit of collaboration between the two parties, and to carry out an inclusive national dialogue with all actors, while guaranteeing their security and freedom.
In early March, Prime Minister Bernard Goumou invited these main actors to join the dialogue process, but they once again declined the call and laid down a number of preconditions, including an end to the prosecution and judicial harassment of socio-political actors, a new dialogue framework under the chairmanship of Ecowas and the lifting of the suspension of freedom of protests. In this political-cul-de-sac, the mediation of religious leaders made it possible to bring the two parties to the negotiating table.
Economic Overview
- Growth accelerated to 4.7% in 2022 after a sharp acceleration in mining activities.
- Inflation is estimated at 12.1%, a slight decrease compared to 2021 (12.6%) due to restrictive monetary policy and a strong appreciation of the exchange rate.
- Overall fiscal deficit (including grants) improved from 1.8% of GDP in 2021 to 0.9% in 2022. However, tax revenues remained low, at only 10.6% of GDP. Mining tax revenues remained stable at 2.1% of GDP.
- Subsidies to the electricity sector have decreased from 2.8% of GDP in 2021 to 1.9%. At the same time, the country has increased its capital expenditure, which was 1.4% of GDP, higher than what was achieved in 2021.
- Public debt has decreased from 40.4% of GDP in 2021 to 35.2% in 2022 due to the repayment of domestic bonds and securitized debt.
- Uncertainties associated with the political transition could also slow the implementation of reforms. In particular, delays in reforms aimed at strengthening governance and financial performance of the electricity utility could reduce private investments and spending on social programmes.
In such a context, the government would benefit from increasing domestic revenue mobilization, deepening power sector reform and increasing health and social protection measures.
Last Updated: Mar 29, 2023
