$Unique_ID{COW01540} $Pretitle{374} $Title{Guinea The Country} $Subtitle{} $Author{Embassy of Guinea, Washington DC} $Affiliation{Embassy of Guinea, Washington DC} $Subject{guinea guinea's investment estimated mining government guinean opportunities conakry foreign} $Date{1990} $Log{} Country: Guinea Book: Background Notes on Guinea Author: Embassy of Guinea, Washington DC Affiliation: Embassy of Guinea, Washington DC Date: 1990 The Country Official name: Republic of Guinea Capital: Conakry Size: 95,000 square miles (about the size of Oregon) Location: The "bulge" of the West African coast; borders Mali, Cote d'Ivoire, Liberia, Sierra Leone, Guinea-Bissau and Senegal Climate: Tropical with a rainy season from May to October and dry season from October to May Average temperature range: 74F - 85F Average annual rainfall: Approximately 200 inches Introduction to Guinea After twenty-five years of centralized economic management, Guinea found itself in a very critical economic situation at the beginning of the 1980s. In 1985, as a response to this situation, the present government, under the leadership of General Lansana Conte, embarked upon a reform program to transform Guinea from a state-controlled economy into a market economy. This program is receiving the full encouragement and support of the World Bank and International Monetary Fund which have respectively provided two structural adjustment loans and two stand-by loans. The reforms are already beginning to have an impact upon the Guinean economy. In 1987, the growth rate of Guinea's Gross Domestic Product (GDP) in real (inflation adjusted) terms was 5.9%, and the estimated GDP growth rates for 1989 and 1990 are respectively 6% and 5% in real terms. This renewed economic vigor will help unleash the potential of Guinea's considerable natural resources in agriculture, energy, fisheries and mining. These natural resources include: - an estimated 7.6 million hectares of arable land of which only 28 percent is currently being cultivated; - coastal waters that are among West Africa's richest and most unexploited in terms of their fish resources; - possible offshore petroleum reserves; - the considerable and virtually untapped hydroelectric resources of the Gambia, Niger and Senegal rivers; - an estimated 20 billion tons of bauxite reserves which amounts to almost one-third of the world's reserves of this mineral; - an estimated 15 billion tons of iron ore; - an estimated 400 million carats of diamonds; and - an estimated 5 million tons of uranium. These resources offer Guinea's economy a tremendous potential for rapid growth. Therefore, investors should keep Guinea in mind if they are seeking potentially high growth opportunities for their investments. The Economy Gross Domestic Product (GDP): $2.48 billion (estimated 1988) Per Capita GDP: approximately $400 in 1989 GDP Growth Rate: 5% (estimated 1988) Total Imports: $509 million (estimated 1988) Total Exports: $553 million (estimated 1988) Principal Imports: Petroleum, machinery, transportation equipment, food stuffs and consumer goods Principal Exports: Bauxite, aluminum, diamonds, pineapples, bananas, palm products and coffee Foreign Debt: $1.784 billion in 1987 Labor Force: 2.5 million The Guinean economy is primarily agricultural, with four out of five Guineans relying upon subsistence agriculture for their living. Mining, however, is the economy's most robust sector and provides approximately 90 percent of Guinea's export revenue. In 1988 and 1989, it also provided about 72 percent of Guinea's tax revenue and represented 25 percent of its GDP. Bauxite and diamonds are the principle products of Guinea's mining sector. With regard to bauxite, Guinea is the world's second largest producer of this mineral and produces approximately 19 percent of the world's total output. Guinea also possesses almost one third of the world's bauxite resources (about 20 billion tons) and has a long-term production potential of between 10 and 15 tons per annum. With regard to diamond mining, production was 130,000 carats in 1989 and reached a high of 210,000 carats in 1987. Other minerals found in Guinea include gold, iron ore and uranium. Of these, only gold is actually being mined, although plans have been underway for several years to develop a rich iron ore deposit at Mount Nimba. Gold mining is currently being pursued on an industrial scale by one firm, Aurifere de Guinee, and also occurs at the artisinal level. Over the past few years, agricultural production has increased dramatically in Guinea. Production of cash crops such as coffee, palm kernels and pineapples has recovered, and farm products are expected to become an increasingly important component of the country's exports. Guinea's manufacturing sector is very small and accounted for less than 2 percent of its GDP in 1986. Opportunities Trade Opportunities American exporters to Guinea will continue to face stiff competition from French and other European suppliers who have lower shipping costs, as well as historical and linguistic links to Africa. American firm will find major opportunities to supply equipment and services for the infrastructure projects being funded by multilateral donor organizations such as the World Bank and the African Development Bank. Other opportunities for trade are provided by - Guinea's mining companies which require large amounts of heavy equipment and supplies for their operations; and - Guinea's reliance upon imports for much of its food requirements. To pursue these trade opportunities, an ability to conduct business in French is important. Business people should also be prepared to spend long periods of time in Guinea, developing personal contacts in order to be effective. In general, U.S. exporters are also urged to insist upon a confirmed, irrevocable letter of credit before shipping any products to Guinea. Investment Opportunities The promotion of foreign investment is an important element of the Government of Guinea's efforts to stimulate economic growth. Consequently, the government has taken several steps to increase Guinea's appeal to foreign investors. These include the improvement of the country's infrastructure and administrative and judicial framework, and the enactment of new investment and mining codes which provide incentives for foreign investors. To date, the bulk of foreign investment in Guinea has occurred in the mining sector, specifically in the mining and processing of bauxite. Opportunities for further investment in this sector may still exist, especially in the industrial mining of gold and diamonds. However, the most attractive opportunities for investment in Guinea may be in its agricultural and fishing sectors. In the former sector, large-scale irrigated farming may be possible because of Guinea's soil, water and climatic conditions, while agroindustrial and food processing facilities could be established to process the resulting agricultural products. With regard to the latter sector, Guinea currently harvest only about one-eighth of its ocean fisheries' potential, which are estimated to exceed 200,000 tons per year, and many of the species found in Guinean waters, such as shrimp and lobster, are of high commercial value. Other opportunities for investment in Guinea may exist in small-scale industry and construction. Potential investors should realize that, outside of the mining sites, the lack of reliable telecommunications, energy and transportation infrastructure and a dearth of highly skilled managers are constraints on doing business in Guinea. They must also realize that the general weakness of the Guinean legal and administrative systems can lead to ad hoc arrangements which are not based upon merit. In addition, the acquisition of rights to land are complicated by the absence of a legal land tenure, ownership, and title system. However, these latter problems concerning land acquisition are expected to be addressed soon in laws enacted by the Guinean government. For American investors who would like to invest in Guinea, the Overseas Private Investment Corporation (OPIC) provides an investment guarantee program. This program provides political risk insurance to American inventors and has been in existence since May 1962 when the United States and Guinea signed an investment guarantee agreement. In the past, the OPIC program for Guinea has provided investment coverage to Compagnie des Bauxites de Guinee and currently insures an American loan to AREDOR, the country's joint venture-industrial diamond mining company. In addition, several other American mining and agribusiness firms have registered with OPIC, indicating their preliminary interest in investing in Guinea. Privatization Opportunities In pursuing its policies of liberalizing the economy and reducing the role of the state in commercial and industrial activity, the Government of Guinea has privatized thirty state enterprises. The government's objective is to partially or fully divest itself of all enterprises in its portfolio with the exception of those that provide basic public services (e.g., water distribution, telecommunications and electricity production and distribution). Therefore, this process of privatization is expected to continue and present foreign investors with future acquisition opportunities. U.S Economic Activity in Guinea U.S. Exports to Guinea: $34.7 million (estimated 1988) U.S. Imports from Guinea: $139.3 million (estimated 1988) Principal U.S. Exports to Guinea: Rice, used clothing, chemicals and industrial machinery Principal U.S. Imports from Guinea: Bauxite U.S. Market Share of Guinean Imports: 6% Politics and Government Guinea gained its independence from France on October 2, 1958. From then until his death in April 1984, President Sekou Toure governed the country as a one-party, socialist state with centrally planned economic development and production dominated by collective agriculture and state industries. A Military Committee for National Redressment (CMRN) headed by President Lansana Conte assumed power just one week after Sekou Toure's death. It immediately abolished the constitution and the sole political party and established the Second Republic. Since then the CMRN has reorganized the judicial system and decentralized government administration. It has also adopted a policy of liberalizing the economy, promoting private enterprise and encouraging foreign investment to develop Guinea's abundant natural resources. Although the CMRN has banned political parties, it has declared the observance of human rights as one of its primary objectives. Government rule in Guinea is based upon decrees and ordinances issued by the CMRN, the President, and various government Ministers. The government, itself, consists of the President and 36 Cabinet members. These include 4 Ministers of State, 11 Ministers, 15 Secretaries of State, 2 Governors, the Chief of the Army and Gendarmerie, the Chief of Protocol, and the Permanent Secretary of the CMRN. People Population: 6.48 million in 1987 Annual growth rate: 2.5% Ethnic Groups: Foulah, Malinke, Soussou and 15 smaller tribes Religions: Muslim - 85%, Christian - 10%, Animism - 5% Languages: French (official); Susu, Fula and Mandingo are the most popular local languages Adult Literacy rate: 35% Demographics Guinea's population is composed of four major ethnic groups: the Sousous, who dominate the coast; the Foulani in the Fouta Djallon mountains; the Malinkes in the savannah regions; and the Forestal tribes in the forest regions. This population is relatively young, with 43% of Guineans under the age of 15. It is also a relatively rural population, with only 22% of all Guineans living in urban areas. French is the official language of Guinea and is the most commonly spoken language in administrative and business circles. It is taught in the schools and is spoken by all officials in large towns. In ordinary conversation, however, Guineans use the language of their ethnic group. Eight years of schooling are compulsory in Guinea. Nevertheless, the country's primary school attendance rate remains at 36 percent, while the secondary school attendance rate is 15 percent. Conakry is Guinea's largest city with a population of about 705,000. It is located on Guinea's southern coast and is the country's capital, main port, and commercial center. Other cities include Kankan with a population of 76,633, Kindia with a population of 35,904 and N'Zerekore with a population of 55,360. Monetary and Banking System Guinea's currency is the Guinean Franc (GF). The official exchange rate for the Guinean Franc is set weekly by auction at the Central Bank of Guinea. It is currently at approximately 630 GF to the U.S. Dollar. The import and export of the Guinean Franc is prohibited. A major restructuring of Guinea's banking system occurred in 1985 and 1986. Six state banks were closed, and three new commercial banks were established with private participation. Beginning in 1987, bank branch offices were opened throughout the country, extending the benefits of reform to Guineans outside of Conakry. The Labor Force Guinea has a labor force of 2.5 million and an ample supply of unskilled and semi-skilled labor. However, trained managers and qualified technical personnel are in short supply. Guinea's Investment Code attempts to address this dearth of skilled workers by compelling businesses to demonstrate their objectives with respect to job creation and training of Guinean nationals in order to benefit from preferential tax treatment. After the present government came to power, Guinea's labor movement was reorganized into seventeen industrial unions and one confederation, the National Confederation of Guinean Workers (CNTG), which are now independent of the government. Economic Infrastructure Ports The port of Conakry, which can accommodate vessels up to 20,000 tons, is Guinea's principle port. It consists of an ore loading facility; ten berths, totaling 4,833 feet in length; and an area for small vessels. Storage facilities at this port include 59,475 cubic meters of warehouses and 25,285 cubic meters of sheds. A major rehabilitation project is currently underway to increase the port capacity at Conakry. Guinea has a second deepwater port at Kamsar. This port is used by the Compagnie des Bauxites de Guinee to export over 10 million tons of bauxite annually. Air Transportation Guinea's international airport, G'bessia, is located about 8 miles outside of Conakry. It is served by UTA French Airlines from Paris, SABENA from Brussels, and KLM from Amsterdam. Several African airlines such as Air Afrique, Ghana Airways, Nigeria Airways and Air Zaire provide connections to various West and Central African cities, and Air Guinea flies to Bamako, Freetown, Dakar as well as several domestic destinations. Railroads Guinea has a 587 mile long railroad network. It is used primarily for moving bauxite and alumina from mines and processing sites to port loading facilities. Consequently, Guinea's railways play only a very minor role in the transportation of passengers and general freight, although there is a single track line providing service to Kindia, Mamou, Dabola and Kankan. Roads Guinea has approximately 700 miles of paved roads and about 5,400 miles of unpaved roads. Heavy annual rains from May to November and poor maintenance cause transport on many of these roads to be difficult. However, two road projects (Conakry-Mamou and Guekedou-Seredou) have recently improved the general transport situation in Guinea. Telecommunications The telephone system in Guinea is overloaded and requires upgrading. Long-distance telephone calls are possible, but service is generally unreliable. Telegraph service is available through the Post, Telephone and Telegraph office at high rates and is often delayed. Energy Guinea is believed to have considerable energy resources. These include possible offshore petroleum reserves and the huge hydroelectric potential offered by the Niger, Gambia and Senegal rivers. Guinea's hydroelectric resources which are estimated at 63 GW remain virtually untapped. The national electricity company, SNE, supplies less than ten percent of Guinea's population, and the SNE's generating capacity is far below the total demand for electricity. Electricity is mainly available in large towns and mining sites. However, electricity supply is extremely unreliable in Conakry because of a lack of maintenance, spare parts and equipment. Summary of Guinea's Investment Code The Government of Guinea enacted a new investment code in 1987 which conforms to its policies of economic reform and promotion of foreign investment. This code simplifies the procedures required for investing in Guinea and contains provisions for the protection of foreign investors. Among these provisions are the repatriation of profits, fair compensation in event of expropriation in the public interest and non-discrimination between foreigners and nationals. The code also entitles foreign investments outside of Conakry to added benefits. In general, the new investment code provides incentives to promote the establishment and development of - Small and medium-sized enterprises (SMEs); - exporting enterprises (with the exception of those that produce minerals and their bi-products); - enterprises that produce non-traditional exports; - enterprises that upgrade natural resources and local raw materials; and - enterprises established outside the Conakry urban area. While it restricts the development of Guinea's mineral, forestry, and hydraulic resources to projects in which Guineans have management control and a majority shareholding, the code does contain a clause permitting negotiations of more favorable arrangements for foreign investors in specific agreements. A National Investment Commission (NIC) has been established to authorize all incentive benefits granted under the Guinean Investment Code. This body is supposed to rule on all applications for incentive benefits within 30 days of receipt or at the first scheduled meeting of the commission, whichever is sooner. If the application is approved, the NIC issues a decree which specifies the investment benefits granted to the investor. If denied, investors can supply supplementary information and re-apply for benefits. Contacts For Further Information Contacts for Further Information in U.S. Embassy of the Republic of Guinea to the United States of America 2112 Leroy Place Washington, D.C. 20008 Telephone: (202) 483-9420 and (202) 483-9421 The Permanent Mission of Guinea to the United Nations 820 Second Avenue New York, NY 10017 Telephone: (212) 697-6330 Key Contacts in Guinea Individuals interested in doing business or investing in Guinea can contact the following institutions there: Chambre de Commerce d'Industrie et d'Agriculture (The Chamber of Commerce, Industry and Agriculture) B.P. 545 Conakry, Guinea Telephone: (224) 44-44-95 or (224) 44-18-37 Telex: 2125 Micomex Centre National de Promotion des Investissements Prives (The National Center for the Promotion of Private Investment) B.P. 1518 Conakry, Guinea Telephone: (224) 44-37-65 Telex: 22168 C N P GE Contact: Mr. Himi Yansane, Directeur General