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Guidance Overseas business risk for Guinea

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Guidance Overseas business risk for Guinea

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Information on key security and political risks which UK businesses may face when operating in Guinea.

1.Overview

Guinea is one of the poorest countries in Africa yet has a remarkable and largely untapped natural resource wealth, including the world’s largest, relatively accessible bauxite reserves as well as high-quality iron-ore. Guinea was a fragile democracy in the period from 2010 to 2021, with President Alpha Condé being its first elected president. President Condé won a disputed third term in the October 2020 presidential elections but was removed from power in a coup lead by the head of the Special Forces Colonel, Mamadi Doumbouya on 5 September 2021.

The International Monetary Fund (IMF) 2024 country’s report indicates that mining accounted for 21% of Guinea’s GDP and over 90% of its exports. While the country has large reserves, the development of many of its minerals has been constrained by a lack of infrastructure, legal issues and alleged corruption.

Guinea is the world’s second largest producer of bauxite and home to the world’s largest reserves of bauxite at 7.4 billion tonnes. Bauxite is the main source of aluminum, much of which is processed in China. Guinea accounts for about 22% of the world’s production of bauxite, producing 123 million tonnes in 2023, according to the Ministry of Mines’ Bulletin Annuel. Bauxite exports have recently increased due to a rapid upscale in production by Chinese-led SMB.

Société Minière de Boké (SMB) is by some way the largest producer (44m tonnes in 2023) with Compagnie des Bauxites de Guinée (CBG), Chalco and Global Aluminium Corporation (GAC) the next largest (14-16m tonnes each in 2023).Revenues from industrial gold production, including by Anglo Gold Ashanti (South Africa), and artisanal gold and diamond mining are also significant.

Iron ore will soon replace bauxite and gold as the country’s major export earner. Between March 2022 and April 2024 Guinea negotiated a series of agreements with industrial partners for the co-development of the infrastructure that will support the export of the high-grade iron ore reserves at Simandou. The Government of Guinea has a 15% stake in the mines owned by the Chinese/Singapore consortium led by SMB Winning and Baowu (blocks 1 & 2) and by Rio Tinto and Chinalco (blocks 3 & 4) and also has a 15% stake in the new 600+km railway and new port of Morebaya currently under construction.

The transport infrastructure is due to be completed by December 2025 with the first export of ore also due by this date. Simandou is the largest known deposit of its kind, holding more than 2 billion tonnes of high-grade iron ore.

The Simandou project, together with plans to seek an international credit rating and to create a Sovereign Wealth Fund are seen as being the catalysts for a period of rapid economic growth. The Government of Guinea are developing a 15-year development plan (2025-2040) called Simandou 2040 to capitalise on the benefits of the Simandou project which is expected to generate $2bn a year from the mines alone.

The 5 pillars of Simandou 2040 are:

  • agriculture, food industry and commerce
  • education and culture
  • infrastructure, transport and technologies
  • economy, finance and insurance
  • healthcare and well-being

In particular, the 600+km rail corridor is expected to give a significant boost to the industrialisation and commercialisation of the agriculture sector. Currently poor road, rail and port facilities make export of fresh products difficult.

With support from the International Monetary Fund (IMF), World Bank, the African Development Bank (AfDB) and other international donors, work is underway to increase infrastructure investment, to strengthen public procurement procedures and to encourage a broad range of trade and investment partners.

The British Embassy in Conakry has been open since 2003. UK Government support to commercial activity in Guinea is focused mainly on the mining, infrastructure and energy sectors. There is no DBT presence.

2.Political

Guinea gained its independence from France in 1958. The first President of Guinea, Sekou Touré, held power from 1958 until 1984. The second, Lansana Conté, held power from 1984 until he died in 2008. A military junta led by Captain Dadis Camara took power in 2008 until an assassination attempt in December 2009 caused him to flee the country. A transition government took over and organised democratic Presidential elections in 2010, which President Alpha Condé won. Condé was re-elected in 2015.

After changing the constitution in March 2020, Condé ran for a third term, which he won with 59.5% of the votes in October 2020. Condé was ousted on Sunday, 5 September 2021 by the head of the Special Forces, Colonel Mamadi Doumbouya. The National Committee of Reconciliation and Development (CNRD) was established quickly after the coup as the central body made up of defence and security forces. The constitution and state institutions, including the Parliament, were suspended.

On 6 September 2021, Doumbouya announced that mining companies would continue operations and that the new regime would respect international business commitments. The new authorities published a Charter saying that a new unity government and a National Council of Transition led by the CNRD would be in charge of conducting the transition. Doumbouya was sworn in as transitional President on 1 October 2021.

Violence has been sporadic in Guinea, with short outbreaks particularly around election periods and mostly along ethnic lines, reflecting the largely ethnic based political parties. Violence also reflects popular frustration at the continuing low level of development, despite Guinea’s natural resource wealth. Large-scale protests and social unrest marked the legislative elections and the constitutional referendum held in March 2020 and the presidential election in October 2020. Public demonstrations have been banned since May 2022.

In October 2022 the Transitional Authorities agreed with ECOWAS, the regional body of West African states, a two-year timetable for returning to constitutional order by the end of 2024. This timing has slipped with a referendum on a new constitution expected in the first half of 2025 and presidential, legislative and local elections later in the year.

Unlike most of the neighbouring countries, Guinea has not had any major civil conflict but has received refugees from previously conflict-ridden neighbours.

3.Economy

Despite having some of the world’s biggest and most extensive bauxite reserves, world-class iron-ore, gold, diamonds and other minerals, Guinea’s massive resource wealth has been largely undeveloped. This is now changing with significant increases in bauxite production and the prospect of iron ore exports from Simandou starting at the end of 2025. Steps are being taken to ensure that the increase in bauxite production translates into a comparable increase in Government revenue and that the future revenues from Simandou are reinvested in infrastructure and human capital.

Guinea is also known as ‘the water tower of West Africa’, with 4 major rivers rising there, which gives it strong hydro potential. Significant hydro capacity has been achieved thanks to construction of the Kaleta (240Mw) and Souapiti (450Mw) hydroelectric dams, and other dams are under construction. However, reduced rainfall because of climate change, and poor maintenance of back-up HFO power stations means that electricity shortages in the capital Conakry and elsewhere have been a major challenge in 2024. A number of regional and national power transmission projects, as well as investments in solar, should improve the situation in the medium-term but electricity supply will remain unreliable in the short-term.

The Guinean economy was significantly hit by the COVID-19 pandemic but remained resilient, thanks to the mining sector. According to the IMF, growth is expected to be 6.2% in 2024, and to remain at similar levels in 2025 and 2026 as a result of Simandou investments. Inflation caused by spikes in transportation and food prices, and supply disruptions reflecting the compounding impact of COVID-19 and the Russia–Ukraine war has fallen in the course of 2024 and is predicted by the World Bank to decline to an average of 7.8 percent in 2025-26.

Guinea’s economy is heavily dependent on the mining and exports of minerals, particularly the mining of bauxite. Bauxite production has been expanding as a result of new mines opening. Production in 2024 was 123 million tonnes compared to 103mt in 2022 and Artisanal gold mining activity has also remained buoyant accounting for significantly more exports in 2023 than industrial production (58,058kg as opposed to 18,630kg according to Ministry of Mines figures)

In 2022 whilst under the Economic Community of West African States (ECOWAS) embargo, the Guinean junta kept its borders with Mali open with the aim to take advantage of this to rehabilitate the corridor between the 2 countries and increase Guinea’s export to Mali and traffic at the port of Conakry.

Despite the focus on mining, economic diversification as envisaged in the vision of Simandou 2040 will be key to setting Guinea’s economy on a higher, sustainable growth path. The success of this will rest on ability of the government to increase infrastructure investment (e.g. construction and public works) to increase Guinea’s growth potential.

4.Human rights

Guinea’s record on freedom of expression in the media have declined since closure of the country’s three main media groups in May 2024 and the abduction on 3 December 2024of investigative journalist Marouane Camara. However, despite continuing concerns about human rights abuses (including the forced disappearance of activists) civil society continues to advocate for a more transparent governance and return of democracy.

Victims of the 28 September 2009 massacre and human rights organisations are still awaiting compensation after condemnation of the then junta leader Captain Moussa Dadis Camara and seven other people declared guilty of the killing of 150 unarmed demonstrators and the rape of over 100 women.

Other human rights issues include the environmental impact of mining activities on local communities and the conditions in prison and detention centres, gender violence including forced and early marriage, and Female Genital Mutilation (FGM). Guinea has the second highest recorded rate of FGM in Africa.

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