Country Risk Rating

A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high. - Source: Coface

Business Climate Rating

The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Intercompany transactions can thus be very difficult to manage in the highly risky environments rated D.


  • One third of the world’s bauxite reserves
  • Largely untapped deposits of iron, gold, diamonds, uranium and oil
  • Significant hydroelectric potential
  • Gradual improvement in the business climate thanks to reform efforts


  • Reliance on prices of mining products and energy
  • Inadequate infrastructure, especially in the electricity sector
  • Difficult business climate

Current Trends

Private Investment in the Mining Sector and Public Investment in the Agricultural Sector will Encourage Steady Growth

After the shocks of the Ebola epidemic and the collapse in commodity prices, economic growth rebounded in 2016 and will reach 6.9% of GDP in 2018. The mining sector, especially the extraction of bauxite and gold, will sustain growth thanks to the stronger world demand, despite the Chinese economic slowdown, and a 50% rise in bauxite production in 2017 (propelling Guinea to fourth place in the world). The sector is also expected to benefit from international investment: the Chinese Simandou project, which gives access to one of the largest untapped deposits of high quality iron oxide in the world, and the Emirates (EGA) and UK (Alufer) projects aimed at boosting bauxite mine production. Meanwhile, agriculture and the manufacturing sector will continue as pillars of the country’s economic activity. Public investment will also help boost growth momentum. In November 2017 under the 2016-2020 five-year plan, the National Economic and Social Development Plan (PNDES), President Condé succeeded in raising USD 20 billion of finance from other countries, notably China, international development banks and private investors. The IMF supports the initiative via an Extended Credit Facility. The State has plans to develop infrastructure (roads, Conakry-Bamako-Bobo Dioulasso railway line), to increase electricity generation by constructing dams and to boost agricultural productivity, as well as to expand the processing industries. These projects will help create jobs and therefore stimulate consumption, which will, however, continue to be hit by weak purchasing power further squeezed by inflation. Inflation is largely imported because of the strong depreciation of the Guinean franc in 2016, but also because of rising food prices, which represent 38% of the consumer price index.

Stable Public and Current Account Deficits

The fiscal deficit is expected to reduce slightly in 2018 thanks to improved tax collection, higher VAT and tax receipts generated by the mining sector. However, public revenues will struggle to reach 15% of GDP. The search for finance and public/private partnerships to assure public investment will effectively limit this deficit. The debt burden is thus expected to dip due to fiscal consolidation. Nevertheless, the risk of over-indebtedness still needs to be watched because of the country’s vulnerability to external shocks, especially their effect on commodities.

The current account deficit is expected to remain stable in 2018. Good export performance, thanks to higher bauxite output and aluminum prices, will be offset by higher imports, triggered by the slight rise in energy prices, the significance of capital investments and the slight increase in private consumption. The services deficit will remain high because of elevated costs associated with imports, transport and insurance and growing demand for technical services (know-how, technology, R&D). Meanwhile, the primary account deficit will worsen as a direct consequence of increased dividend repatriation by mining companies. All in all, the deficit is also explained by worsening terms of trade since 2016.

Relatively Stable Political Climate

2017 was marked by a degree of political instability. One of the government coalition parties joined the opposition in protest against delays in the organization of local elections, leaving Alpha Condé without a parliamentary majority. The president finally managed to rally another party by offering its leader a position as presidential adviser. This reconfiguration and the splits within the opposition are expected to guarantee victory for Alpha Condé in the parliamentary elections scheduled for September 2018. Meanwhile, with 55% of the population living below the poverty threshold, daily power outages triggered social unrest and riots at the end of 2017.

The president has committed to a process of reforms aimed at achieving inclusive double-digit growth by 2020. The aim is to seize more added value from the processing of Guinea’s abundant raw materials. The State intends to improve the business climate by reforming the mining and forest codes, as well as introducing new legislation on public/private partnerships and anti-corruption measures. In 2017, Guinea jumped ten places in the Doing Business rankings and is now in 150th place. Having been Chairperson of the African Union in 2017, Alpha Condé pushed through a wave of reforms to economic governance and transparency across the continent. Finally, the president is establishing diplomatic and commercial ties with the Persian Gulf States and China, underpinned by a series of Chinese and Emirates investments particularly in the mining sector.


Coface (01/2018)