Quick thought: Could Guinea be West Africa’s Singapore?

Guinea is a small country most people have heard of but have not the slightest idea where it is located. Most would confuse it with Papua New Guinea, the island state near Indonesia. In fact, Guinea is a West African nation bordered by the Ivory Coast, Sierra Leone, Mali, Senegal, Liberia and Guinea-Bissau. What reasons could there possibly be for having any interest in this nation of 12.4 million people?

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Guinea like many other countries in Africa is slowly unshackling its past. Although Guinea had inflation of 8.5% last year, they managed to achieve real growth of 6.7%. How are they achieving this? Similar to Ethiopia, Guinea is making it easy to do business.

According to the ‘Doing Business’ rankings, the business climate in Guinea is rapidly improving with an improvement of 25 places since 2013. It doesn’t end there. The government of Guinea has seen that ‘red tape’ is detrimental to attracting new business. In Guinea it takes a mere 72 hours to set up a company and 29 days to get a building permit (Doing Business In Africa 2019). These are numbers that businesses in some parts of the developed world would never even dream of.

Foreign Direct Investment (FDI) flowing into Guinea is rapidly growing and the number of companies founded in 2017, is more than double what it was in 2015. Furthermore, the government has done well to not only contain their inflation but to also reduce their deficit in recent years.

Other than creating an attractive business environment, Guinea has launched their National Economic and Social Development Plan (PNDES) with four main pillars:

  • Promoting good governance
  • Ensuring the economy is sustainable and inclusive
  • Developing human potential (average age in 2018 is 17.3)
  • Sustainable management of natural capital

By 2040, Guinea hopes that the PNDES will have fostered growth for all citizens in its society, to raise millions out of poverty and create a rising middle class. The government is heavily focused on infrastructure and according to ‘Investing Guinea 2019’ they have 52 projects in the pipeline. Guinea’s minster of planning and Economic Development, ensures investors and citizens that their priority targets are infrastructure and energy. For someone like myself, with the highest beliefs in renewable energy, it is great to see that governments are committing to develop their economies on renewables.

I have long been a supporter of internally driven growth. If the government of a nation is not on board to achieve growth (think Zimbabwe), no amount of aid will put them on the right track. However, when the government is as determined to achieve growth as is the case with Guinea, it is bound to happen eventually. At the beginning of 2017, Guinea’s public debt was about 41% of its GDP, which seems large but is in fact one of the lowest in Sub-Saharan Africa. I believe this is largely due to the government leveraging public-private partnerships (PPPs) rather than using the aid tap. This also ensures that to a large extent, Guinea does not have foreign powers meddling in its politics or attempting to determine its foreign policy from the outside.

As with most African growth tales, there is one character that features prominently – China. Guinea has set up a framework agreement with Beijing to the value of US$ 20 billion between now and 2040. The money will be aimed at roads, but will also include universities. What has largely created suspicion is that these loans come with mining concessions for China. I personally have no problem with this approach as long as it remains clear and transparent which the minster of planning and Economic Development asserts it is. Only time will tell.

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The port of Conakry, in Guinea’s capital, is undergoing expansions that are unprecedented to the region. Once again, these developments are largely being carried out by Chinese companies, however the port will remain operated by Bolloré Africa Logistics which is absolutely vital to creating internal growth. The day the operator of the Port of Conakry is no longer African, the alarm bells should start ringing.

These substantial road and port infrastructure projects combined with investment in education, a prime geographic position and continued improvement of governance makes Guinea a very attractive investment location to be monitored over the next 10 years. I would not recommend to investors to dive in just yet, but be sure to keep a careful eye on what could be the Singapore of West Africa.


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