Guinea is currently governed by the National Committee for Reunification and Development (CNRD), following the 2021 coup d’état led by Colonel Mamadi Doumbouya, who serves as President. Doumbouya’s government operates under a Transition Charter which supersedes the constitution until a new constitution is promulgated; Guinea’s penal and civil codes remain in force. A Presidential decree created the National Transition Council, the transition’s legislative body, on January 22, 2022. After much negotiation with the Economic Community of West African States (ECOWAS), the ruling junta has reached an agreement on a 24-month transition timeline to return to democratic constitutional order, ending on December 31, 2024. The government is relatively pro-West, and there have been large business deals in the energy and mining sectors between the Guinean government and American companies.
Guinea enjoys sizeable endowments of natural resources, energy opportunities, and arable land.
These seeming advantages have not yet resulted in economic development, and may in fact hinder it, in an example of the famous “resource curse.” Guinea’s economy has been based on extraction of primary resources, from at least the French colonial era and the slave trade before it. This extractive paradigm and legacy of underdevelopment, combined with low levels of education, and longstanding patterns of nondemocratic governance dating back to the colonial era, have limited broad-based economic growth based on value addition, innovation, and productivity as opposed to extractive or rent-seeking investment. At the same time, a sense of national identity and unity and both formal and informal practices of solidarity that tend towards wealth redistribution may prove to be assets for the country’s development, if the government and the private sector can harness them productively.
The 2021 coup d’état, persistent corruption, and fiscal mismanagement make the near-term economic prognosis for Guinea make investment a mixed bag. In this context, Guinea has looked to foreign investment to bolster tax and export revenues and to support infrastructure projects and overall economic growth. The PRC, Guinea’s largest trading partner, dramatically increased its role in years leading up to the coup with a variety of infrastructure investments. Investors should proceed with caution, understanding that the potential for profits comes with significant political risk. Weak institutions mean that investors may secure lucrative concessions from the government in the short term, but these could be open to renegotiation or rescission in the long term. Prior to the coup, former President Conde’s government implemented reforms to improve various aspects of the investment climate. For example, the former government reduced property transfers fees from 2 to 1.2 percent of property value. The time required to obtain a construction permit was reduced and import procedures were improved. Since 2019, Guinea has implemented a permanent taxpayer identification number system that requires all payments to be made by “Real Time Gross System” (RTGS) immediate transfers. Since the coup d’état, the transition government has taken steps to fight corruption and increase transparency and made significant advancements in infrastructure.
Endowed with abundant mineral resources, Guinea has the raw materials to be an economic leader in the extractives industry. Guinea is home to a third of the world’s reserves of bauxite (aluminum ore) and bauxite accounts for more than half of Guinea’s present exports. Historically, most of the country’s bauxite was exported by Compagnie des Bauxites de Guinee (CBG; Bauxite Company of Guinea) [a joint venture between the Government of Guinea, U.S.-based Alcoa, the Anglo-Australian firm Rio Tinto, and Dadco Investments of the Channel Islands], via a designated port in Kamsar. While CBG still retains the largest reserves, the Societe Miniere de Boke (SMB; Mineral Company of Boke), a Sino-Singaporean conglomerate, has surpassed CBG as the largest single producer of bauxite. New investment by SMB and CBG, in addition to new market entrants, are expected to increase Guinea’s bauxite output significantly over the next five to ten years. The transition government instituted a reference price for bauxite in July 2022, which the Ministry of Mines expects to generate USD one billion in government revenue in 2023.
Guinea also possesses more than four billion tons of untapped high-grade iron ore, significant gold and diamond reserves, undetermined amounts of uranium, as well as prospective offshore oil reserves. Artisanal and medium-sized industrial gold mining in the Siguiri region is a significant contributor to the Guinean economy, but some suspect much of the gold leaves the country clandestinely, without generating any government revenue. In the long term, both former President Conde’s government and the transition government project that Guinea’s greatest potential economic driver will be the Simandou iron ore project, which is slated to be the largest greenfield project ever developed in Africa. The transition government reached an ambitious agreement with Rio Tinto and the PRC-backed SMB-Winning Consortium (WCS) in March 2022 to develop the rail and port infrastructure to bring ore from Simandou to market by early 2025. Negotiations continue to operationalize the infrastructure joint venture, though construction should resume on the rail and port corridor in 2023 to maintain the government’s ambitious timeline. In 2017, the governments of Guinea and the PRC signed a USD 20 billion framework agreement giving Guinea potentially USD one billion per year in infrastructure projects in exchange for increased access to mineral wealth.
The amended 2013 Mining Code stipulates that raw ore producers in Guinea begin processing raw ore into refined or processed products within a few years of development, depending on the terms of the individual investment and the mandate with the Ministry of Mines and Geology. As the refining mandate has not been enforced, the transition government called upon bauxite concessionaires to solidify refining plans in 2022 and continues to push for alumina refineries. U.S.-based West Africa LNG signed a $300 million investment agreement with the transition government in March 2022, which will provide the steady state power to operate refineries through liquified natural gas. The PRC is reportedly offering coal-based solutions to meet the potential demand.
Guinea’s abundant rainfall and natural geography bode well for hydroelectric and renewable energy production. The largest energy sector investment in Guinea is the 450MW Souapiti dam project (valued at USD 2.1 billion), begun in late 2015 with Chinese investment, which likewise completed the 240MW Kaleta Dam (valued at USD 526 million) in May 2015. Kaleta more than doubled Guinea’s electricity supply and for the first-time furnished Conakry with more reliable, albeit seasonal, electricity (May-November). Souapiti began producing electricity in 2021. A third hydroelectric dam on the same river, dubbed Amaria, began construction in January 2019 and is expected to be operational in 2024. The Chinese mining firm TBEA is providing financing for the Amaria power plant (300 MW, USD 1.2 billion investment). If corresponding distribution infrastructure is built, and pricing enables it, these projects could make Guinea an energy exporter in West Africa. In addition, U.S.-based Endeavor began operating Project Te in November 2020, a 50MW thermal plant on the outskirts of the capital. Former President Conde’s government emphasized investment in solar and other energy sources to compensate for hydroelectric deficits during Guinea’s dry season, a priority maintained under the transition government.
Agriculture and fisheries hold other areas of opportunity and growth in Guinea. Already an exporter of fruits, vegetables, and palm oil to its immediate neighbors, Guinea is climatically well suited for large-scale agricultural production and export. Nonetheless, the sector has suffered from decades of neglect and mismanagement, lack of transportation infrastructure, and lack of electricity and a reliable cold chain. Guinea is an importer of rice, its primary staple crop.
Guinea’s macroeconomic and financial situation is weak. The aftermath of the 2014-2016 Ebola crisis left former President Conde’s government with few financial resources to invest in social services and infrastructure. Lower natural resource revenues stemming from a drop in world commodities prices and ill-advised government loans strained an already tight budget in the years following the Ebola crisis. The IMF disbursed USD 66.60 million under Guinea’s third extended credit facility from 2018 to 2020. In December 2022, the IMF disbursed USD 71 million to Guinea under the food shock window of the rapid credit facility due to food insecurity caused in part by Russia’s invasion of Ukraine.
A shortage of credit persists, particularly for small- and medium-sized enterprises, and the government is increasingly looking to international investment to increase growth, provide jobs, and kick-start the economy. After Guinea confirmed its first case in March 2020, the COVID-19 pandemic negatively affected the well-being of households, particularly those working in the informal sector with limited access to savings and financial services. Violence surrounding the March 2020 legislative election and constitutional referendum, as well as the October 2020 presidential election, all negatively affected Guinea’s growth prospects. Guinea experienced an Ebola epidemic from February to June 2021. Despite its able handling of the epidemic, which kept deaths to a minimum, cross-border trade with Liberia, Ivory Coast, and Sierra Leone was reduced temporarily during the outbreak. The transition government has worked to maintain economic stability since the 2021 coup d’état, though the uncertain political situation further threatens potential growth.
Prior to the coup, Guinea passed and implemented an anti-corruption law, updated its Investment Code, and renewed efforts to attract international investors, including a new investment promotion website put in place in 2016 by Guinea’s investment promotion agency to increase transparency and streamline processes for new investors. That said, Guinea’s capacity to enforce its more investor-friendly laws is compromised by a weak and unreliable legal system. Then President Conde inaugurated the first Trade Court of Guinea on March 20, 2018. Transition President COL Doumbouya created the Court to Repress Economic and Financial Crimes (CRIEF) to handle cases involving embezzlement, corruption, and misuse of public funds over one billion GNF (approximately $110,000) in December 2021.
To attract foreign investment, the Private Investment Promotion Agency (APIP) and the Ministry of Commerce, Industry, and Small and Medium Enterprises hosted the second annual Guinea Investment Forum (GUIF) in Dubai in February 2022, following the inaugural event in Guinea in February 2021.
|TI Corruption Perceptions Index||2022||147 of 180||http://www.transparency.org/research/cpi/overview|
|Global Innovation Index||2022||132 of 132||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2021||$296 million||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2021||$1,020||https://data.worldbank.org/indicator/NY.GNP.PCAP.CD|