Guinea-Bissau, one of the world’s poorest and most fragile countries, has a population of about 1.8 million. Guinea Bissau’s Atlantic Ocean coast is composed of an archipelago, the Bijagos, of over 100 islands. It borders Senegal to the north and Guinea to the south and east, and despite its size, is host to a large variety of ethnic groups, languages, and religions.
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 coups attempted, plotted, or alleged. In addition to military coups, frequent changes in government are another manifestation of the country’s political instability. Between 1999 and 2009, Guinea-Bissau experienced this sort of change each year. In the last 18 months alone the country has had four governments.
Fragility in Guinea Bissau is mainly a consequence of unfinished political transformation and disconnect between state and society. The current government, led by Umaro
The ECOWAS-brokered Conakry Agreement, which was meant to end the political crisis, offers a historic opportunity for the national authorities, political leaders, and civil society to ensure stability and build sustainable peace. Implementation, however, has shown limited progress.
The UN has expressed its determination to support Guinea-Bissau in 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.
The withdrawal of the Economic Community of West African States (ECOWAS) Mission in Guinea-Bissau (ECOMIB), deployed in the country since 2012, was scheduled for September 30, 2017. The UN Security Council has welcomed a proposed 3-month extension, decided on at an ECOWAS Heads of State meeting held in Monrovia, Liberia, in June 2017, at which ECOWAS members called for the continuation of ECOMIB in Guinea-Bissau beyond this extension, too, and invited international partners to support it
Guinea Bissau’s economy continues to expand in spite of political gridlock and the suspension of donor flows to the country. Following growth of 5.1% in 2015, real Gross Domestic Product (GDP) growth was projected at above 5.1% for 2016. Inflation is expected to pick up with the pace of economic activities but should remain well below 3%. The fiscal situation is still strained by political instability and the suspension of budget support.
Available information points to a sharp consolidation in central government operations in response to the suspension of budget support by donors (approximately 2% of GDP) to realize a fiscal deficit of 4.2% of GDP in 2016 (preliminary estimates) compared to 3.7% in 2015. Project grants fell by about 22% in 2016, accounting for most of the 10% decline in total revenues. Locally funded capital projects were frozen, while those activities funded by external sources were cut in half. Government operations were funded primarily from domestic and regional sources.
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 Guinea Bissau, the outlook is highly uncertain, with pronounced risks to growth and poverty reduction. The reliance on cashew nuts for economic livelihood exposes two-thirds of the population to terms-of-trade shocks. Further diversification, either through moving up the value chain—with agricultural technology and market support systems—or through capitalizing on other green shoots in the agriculture sector will be key to bolstering the resilience of the economy. Failure to introduce urgently needed reforms to strengthen project appraisal capacity and introduce equity-based formulas for budget allocation could delay the gains from fiscal and economic improvements. Addressing high inequality in the country also requires efforts to improve service delivery and enhance access to basic services. However, accelerating or even sustaining the pace of poverty reduction will be difficult if the political situation remains unresolved, and if the major development challenges that constrain growth, inclusiveness, and sustainability are not addressed.
Bank portfolio in Guinea-Bissau
As of September 2017, the portfolio in Guinea-Bissau (as at end June 2017) comprises four projects amounting to $90.61million. The overall percentage disbursement as of June 30,
Guinea-Bissau’s portfolio also comprises two regional projects amounting to $ 84 million. Most of the regional portfolio relates
Overall, the size of the portfolio is expected to increase significantly with the coming three years with the IDA18 allocation of $87.5 million.
Last Updated: Oct 19, 2017