Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
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 during the slave trade, under colonial rule, and then 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’etat.
On September 5, 2021, Colonel Mamadi Doumbouya and Guinean military special forces seized power and detained former President Alpha Conde through a military coup d’état. COL 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), which is led by COL Doumbouya and includes a significant number of military officers, governs Guinea. On September 27, 2021, COL Doumbouya released the Transitional Charter, which supersedes the constitution until a new constitution is promulgated; Guinea’s penal and civil codes remain in force. In October 2021, the Supreme Court Chief Justice installed COL Doumbouya as Head of State, Transition President, CNRD President, and Commander-in-Chief of the Armed Forces. The CNRD installed the National Transition Council (CNT), the transition government’s legislative body, on February 5, 2022, and in May 2022, the CNT approved a 36-month timeline for elections to return Guinea to civilian rule by mid-2025.
Despite a history of fiscal mismanagement and an extractive economic model that tends toward rent-seeking, 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 public budget, Guinea has increasingly looked to foreign investment to stimulate growth. China has dramatically increased its role through investment agreements in recent years, as exemplified by its September 2017 decision to loan USD 20 billion to Guinea over a 20-year timeline. Guinea remains one of the world’s poorest countries, with a Gross Domestic Product (GDP) of USD 15.85 billion in 2021 and Gross National Income (GNI) per capita of USD 1,020 in 2020. Underdevelopment has limited its exposure to diversified international trade. Guinea is not a major trading partner of the United States.
According to the World Trade Organization, Guinea exported USD 10.4 billion in total merchandise in 2021 and USD 22.8 million in commercial services in 2021, mainly to the European Union, China, Ghana, India, Switzerland, and the United Arab Emirates. Guinea imported USD 4.1 billion in total merchandise in 2021 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 2020, with 40.8% 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 the most active mining sector in Guinea, accounting for 25.5 percent of Guinea’s exports in 2020. Guinea exported about 86.5 million tons of bauxite in 2021, becoming the world’s largest bauxite exporter. Bauxite exports increased by four percent from 2020 to 2021, according to the Natural Resource Governance Institute.
In 2020, the mining sector accounted for 97 percent of export revenue, with gold and bauxite together accounting for 88 percent of Guinea’s exports. 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 Guinee (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, 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 sites include the Simandou iron ore project, and Mount Nimba, which is operated by High Power Exploration (HPX) and its subsidiary the Societe de Mines de Fer de Guinee (SMFG).
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 the largest untapped iron ore deposit in the world and slated to be the largest greenfield project ever developed in Africa. The transition government reached an ambitious agreement with Rio Tinto and the Chinese-led 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 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, 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). The project began in late 2015 with Chinese investment but started regulating water for Kaleta in September 2019. Souapiti began producing electricity in 2021, according to the Souapiti Management and Operating Company (SOGES), and the China International Water and Electric Corporation officially handed over the dam to the Government of Guinea on June 24, 2022. 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. Former President Alpha Conde’s government also signed an emergency agreement in December 2019 to buy power from the 105 MW Turkish Karpowership barge berthed in Conakry’s port. Former President Conde’s government emphasized investment in solar, wind, and other energy sources to compensate for hydroelectric deficits during Guinea’s dry season. Toward that end, former President Conde’s government entered into several Memoranda of Understanding with the private sector to develop solar projects.
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. That said, 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. 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 affected 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 2018, former President Conde’s government borrowed excessively from the Central Bank (BCRG), which threatened the first review of Guinea’s current International Monetary Fund (IMF) program. Lower than forecast natural resource revenues in 2019 due to heavy rains and political violence threatened the fourth review, which Guinea passed in April 2020. In December 2020, the Executive Board of the IMF completed its fifth and sixth reviews of Guinea’s economic performance. The completion of these reviews enabled the immediate disbursement of USD 49.47 million – bringing total disbursements under Guinea’s third extended credit facility to USD 66.60 million before the program’s end.
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. 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’etat, though the uncertain political situation further limits potential growth.
Guinea updated 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 previous 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 PPP law seeks to increase infrastructure development in Guinea. Under the new law, Parliament no longer needs to approve Guinean government contracts with private companies, as was required under BOT, apart from mining contracts. Obligations to conduct feasibility studies and to precisely define public needs also have been increased in this new law. Guinea’s investment promotion agency implemented a website in 2016 to increase transparency and streamline investment procedures for new investors. That said, 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.
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.
Political & Economic Environment: State Department’s website for background on the country’s political environment.