Guinea - Market OverviewGuinea - Market Overview
Despite persistent corruption and fiscal mismanagement, the long-term economic prognosis of Guinea remains promising, buoyed by strong endowments of natural resources, energy opportunities, arable land, and ample, reliable rainfall. Constrained by an austere budget, Guinea has increasingly looked to foreign investment to stimulate growth. China, Guinea’s largest trading partner, has dramatically increased its role through investment agreements. Guinea is one of the world’s poorest countries, with a GDP of only $6.6 billion. Underdevelopment has limited its exposure to international trade. Guinea is not a major trading partner with the United States. In 2015,imports to and exports from the United States represented just 2% and 3%, respectively, of the total value of goods passing through Guinea’s Port. Guinea’s largest trading partner is China, although the European Union collectively accounts for over 40% of Guinea’s imports.
Endowed with abundant mineral resources, Guinea has the potential to be an economic leader in extractive industry. Guinea is home to over half the world’s reserves of bauxite (aluminum ore). Bauxite is the most active mining sector in Guinea, accounting for over half of Guinea’s present exports. Guinea also possesses over four billion tons of untapped high-grade iron ore, significant gold and diamond reserves, undetermined amounts of uranium, as well as prospective off-shore oil reserves. In 2016, mineral resources, primarily gold and bauxite, accounted for 85% of Guinea’s exports. Most of the country’s bauxite is exported by Compagnie des Bauxites de Guinee (CBG) via a designated port in Kamsar or Chinese conglomerate SMB via the Rio Nunez River. CBG is a joint venture between the Government of Guinea, U.S. company Alcoa and Anglo-Australian firm Rio Tinto. New investment in CBG in addition to new market entries are expected to significantly increase Guinea’s bauxite output over the next five to ten years. Depressed commodities markets, however, have slowed mining development in other areas, particularly in iron, stalling other mining developments, including the once-promising iron ore deposit in Guinea’s interior known as Simandou.
Guinea’s abundant rainfall, sunny weather, and natural geography bode well for hydroelectric and renewable energy production. The most singificant energy investment in Guinea is the 240MW Kaleta Dam project that began operating its first hydro turbine in May 2015. Built and financed ($526 million) by China, Kaleta more than doubled Guinea’s electricity supply and for the first time furnished Conakry with relatively dependable electricity. The government is seeking backing for even larger hydroelectricity projects and investing in distribution infrastructure to become an energy supplier in West Africa. A second major dam, Souapiti, is already under construction with Chinese backing. The government is also looking to invest in solar and other energy sources to compensate for lost hydroelectric production in Guinea’s dry season.
Agriculture and fisheries are another area 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. The sector has suffered from decades of neglect and mismanagement and was the sector hit hardest by the 2014-2015 Ebola crisis. Guinea also remains an importer of rice, its primary staple crop.
Guinea’s macroeconomic and financial situation is weak but improved over the past two years. Ebola crippled Guinea’s economic growth prospects in 2014 and 2015, leaving the government with few financial resources to support the Guinean economy. Decreased natural resource revenues and ill-advised government loans strained an already sparse government budget. 6 – 7% growth returned to Guinea in 2016 and will likely be maintained into 2017, but the government is under pressure from segments of Guinean society to deliver tangible development progress. The demand for credit, particularly for small and medium sized enterprises, exceeds available supply. The government is increasingly looking to international investment to increase growth and job creation.
Guinea has recently updated its Investment Code and renewed efforts to attract international investors. Guinea’s investment promotion agency rolled out a new website (invest.gov.gn) in 2016 to increase transparency and streamline investment. However, Guinea’s capacity to enforce its more investor-friendly laws is compromised by a weak and unreliable legal system.
Guinea Trade Development and Promotion