Guinea has had a long history of political repression, with more recent episodes of politically motivated violence around elections. The country suffered under authoritarian rule from independence in 1958 until its first democratic presidential election in 2010. It has seen continued political violence associated with national and local elections since 2010, culminating in the most recent September 2021 coup d’état.
On September 5, 2021, Colonel Mamadi Doumbouya and Guinean military special forces seized power and detained former President Alpha Conde through a coup d’état. Colonel Doumbouya declared himself Guinea’s head of state, dissolved the government and National Assembly, and suspended the constitution. The National Committee for Reunification and Development (CNRD), led by Colonel Doumbouya govern Guinea. On September 27, 2021, the CNRD released the Transitional Charter, which supersedes the constitution until a new constitution is promulgated. In accordance with the Transitional Charter, Guinea’s judicial system along with all existing laws, treaties and conventions remain in force. In October 2021, the Supreme Court Chief Justice installed Colonel Doumbouya as Head of State, Transition President, and Commander-in-Chief of the Armed Forces. In January 2022, the CNRD installed the National Transition Council (CNT), the transition government’s legislative body constituted of 81 members from various political parties, union coalitions and various sectors of civil society. In May 2022, the CNT approved a 36-month period of transition with a 24-months’ timeline for a return Guinea to civilian rule by mid-2025.
Despite a history of fiscal mismanagement, the long-term economic prognosis for 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 has dramatically increased its role through investment agreements in recent years notably in the mining and energy sector, as exemplified by its USD 20-billion-dollar loan to Guinea in September 2017 in counterparty for mining concessions revenues over a 20-year timeline. In June 2022, the World Bank ranked Guinea as a lower-middle income country, with a Gross Domestic Product (GDP) of USD 22.3 billion in 2022 and Gross National Income (GNI) per capita of USD 1,180 in 2022. Guinea is not a major trading partner of the United States. In 2022, Guinean exports to the United States in 2022 was valued at USD 7 million whereas U.S. exports to Guinea was $120 million.
According to the World Trade Organization, Guinea exported USD 11.15 billion in total merchandise in 2022 and USD 22.8 million in commercial services in 2021, mainly to the European Union, China, Ghana, India, Switzerland, and United Arab Emirates. Guinea imported USD 5.38 billion in total merchandise in 2022 and USD 1.2 billion in commercial services in 2021, mostly from the European Union, China, the United Arab Emirates, India, and the United Kingdom. Guinea’s largest single trading partner was China in 2021, with 40.9% of import value, according to Observatory of Economic Complexity data.
Endowed with abundant mineral resources, Guinea has the potential to be an economic leader in the extractives industry. Guinea has 23 percent of the world’s reserves of bauxite (aluminum ore). Bauxite is one the most exploited mining resources in Guinea, accounting for 33.7 percent of Guinea’s exports in 2021. Guinea exported over 102 million tons of bauxite in 2022, becoming the world’s second largest bauxite exporter. The Ministry of Mines reported a 19% increase in bauxite exports in 2022 compared to 2021.
In 2021, the mining sector accounted for 84 percent of Guinea’s exports, with gold and bauxite accounting for 94 percent. Most of the country’s bauxite is exported by two firms: Sino -Singaporean conglomerate Societe Miniere de Boke (SMB) via the Rio Nunez River and the Compagnie des Bauxites de Guinée (CBG) via a designated port in Kamsar. CBG is a joint venture between the Government of Guinea, U.S.-based Alcoa, the Anglo-Australian firm Rio Tinto, and Dadco Investments. New investment in CBG, in addition to new market entrants, is expected to significantly increase Guinea’s bauxite output over the next five to ten years.
Guinea also possesses over four billion tons of untapped high-grade iron ore, significant gold and diamond reserves, significant reserves of high-grade graphite, 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.
Iron exports will also likely grow rapidly within the next three to five years, as large new mines are constructed in the country’s east, along the borders with Sierra Leone and Liberia. The two most notable projects include the Simandou iron ore project, and Mount Nimba, which is operated by High Power Exploration (HPX) and subsidiary the Societe de Mines de Fer de Guinee (SMFG)
In the long term, the transition government projects 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 Simandou projects envisions major infrastructure development notably a 600km railway and a deep-water port. The transition government reached an ambitious agreement with Rio Tinto and the SMB-Winning Consortium (WCS) in March 2022 to develop the rail and port infrastructure, creating a joint venture in July 2022 to construct and operate the infrastructure corridor. The key transactional agreements between Simfer, Winning Consortium Simandou and the Government of Guinea notably the Co-Development Agreement and related agreement were concluded in August 2023. The transition government expects Rio Tinto and WCS, who each hold mining concessions for half of the Simandou deposit, to bring ore from Simandou to market by early 2025.
Guinea’s abundant rainfall, sunny weather, and natural geography create advantageous conditions for hydroelectric and renewable energy production. Until recently, the most significant energy investment in Guinea was the 240MW Kaleta dam project, which began operating its first hydro turbine in May 2015. Built and financed (USD 526 million) by China International Water & Electric Corporation, Kaleta more than doubled Guinea’s electricity supply and for the first-time furnished Conakry with more reliable, albeit seasonal, electricity (May-November). The largest energy sector investment in Guinea today is the 450MW Souapiti dam project (valued at USD 2.1 billion). Souapiti began producing electricity in 2021, according to the Souapiti Management and Operating Company (SOGES), China International Water and Electric Corporation officially handed over the dam to the para-public electric agency (EDG) on June 24, 2022. The Souapiti dam is now the largest capacity producing hydroelectric power plant followed by Kaleta making hydro the main source for Guinea’s electricity. 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). Alongside these massive dams, the government is aiming to construct new transmission lines to connect the dams to both population centers and neighboring countries. 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 which supplies energy to the national grid. In April 2023, the public utility company EDG declined to renew the contract with the Turkish Karpowership barge anchored at the Port of Conakry which contributed about 10% of electricity to downtown Conakry citing that there was no longer a need for the additional supply.
Former President Conde’s government emphasized investment in solar and other energy sources to compensate for hydroelectric deficits during Guinea’s dry season. To that end, several MoU’s were concluded with investors to develop solar projects. In May 2021, EDG signed a power purchase agreement to purchase solar generated electricity from the Khouamgueli plant for 25 years. However, at this stage, there is presently no solar energy plant connected to the national electric grid.
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. However, the sector has suffered from decades of neglect and mismanagement, lack of transportation infrastructure, and lack of electricity and reliable cold chain facilities for conservation of perishables. Despite being the second largest rice producer in West Africa, Guinea is an importer of rice, its primary staple crop. The Transition Government has identified the agriculture and livestock sector as a priority sector to support economic development and increase food security. The Ministry of Agriculture and Livestock saw its budget increased by 22% in 2023 compared to 2022 with the objective to increase food security through increased agricultural production, modernizing equipment and promote greater participation in the agriculture and agri-business sector.
Guinea’s macroeconomic and financial situation is weak. 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. On March 13, 2020, Guinea confirmed its first Covid-19 case. The pandemic negatively impacted the well-being of households, particularly those working in the informal sector, with limited access to savings and financial services. 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 2022, Guinea’s economic growth increased to 4.7% while its overall fiscal deficit improved from 1.8% of GDP in 2021 to 0.9% in 2022. The IMF projects Guinea’s economic growth at 5.6% in 2023 notably attributed to the expansion of mining activities.
Like former President Conde’s government, the transition government is under pressure to deliver tangible development progress in line with growing income from the mining sector. The demand for credit, particularly for small and medium sized enterprises, exceeds available supply but remains inaccessible to the majority due to high interest rates and requirements unfamiliar for the informal sector. The government is looking to international investment to spur growth and job creation. The transition government has worked to maintain economic stability since the 2021 coup d’état, though the uncertain political situation further limits potential growth.
Guinea amended its Investment Code in 2015 and renewed efforts to attract international investors. Guinea adopted a Build-Operate-Transfer (BOT) law in 1998, but the law was never fully implemented as the government failed to adopt the decree necessary for its implementation. An October 2017 Public-Private Partnerships (PPP) law replaced the earlier BOT law, providing a clearer, updated, and more secure legal, regulatory, and institutional framework for PPP projects, including through partnership agreements, BOT schemes, concessions, public leasing, and delegated public service. PPP procurement tender processes also have been clarified and updated. The new PPP law applies to all industries except for mining (covered by the Mining Code) and petroleum related activities (covered by the Petroleum Code); however, infrastructure related to mining and petroleum exploitation activities are intended to be covered. Obligations to conduct feasibility studies and to precisely define public needs also have been increased in this new law. Guinea’s investment promotion agency created a website in 2016 to increase transparency and streamline investment procedures for new investors. However, the reality is that businesses often wait months or years to receive final approvals from one ministry or another or the President, depending on the sector. Guinea’s capacity to enforce its more investor-friendly laws is compromised by a weak and unreliable legal system.
The legal system handles domestic cases involving foreign investors unless their agreements are covered by an international arbitration clause. Although the transition charter provides for an independent judiciary, in practice the judicial system lacks independence and is underfunded, inefficient, and is perceived by many to be corrupt. Guinea is a member to the OHADA Arbitration Court, and many investors chose to opt for arbitration clauses in specialized arbitration courts to safeguard their investments.
To attract foreign investment, the 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. The third edition of the GUIF is scheduled for March 2024 in Conakry.
Political Environment
For background information on the political and economic environment of the country, please click on the link to the U.S. Department of State Countries & Areas website.