Financial Crime World

Guinea’s Banking Regulations: A Landscape Dominated by Cash Transactions

Overview of Guinea’s Banking System

In Guinea, cash transactions reign supreme, with even large business deals being settled in cold hard cash. According to experts, checks and bank transfers are relatively rare compared to the ubiquity of cash payments in Guinean Francs and foreign currencies.

Key Statistics

  • 19 active banks
  • 19 insurance companies
  • 19 microfinance institutions
  • 6 e-money institutions
  • Central Bank (BCRG) oversees Guinea’s banking and e-currency sector

Challenges Facing the Banking Sector

Critics argue that Guinea does not properly manage debt and its treasury is overly involved in the process. While improvements have been made since 2017-2018, more work needs to be done to ensure a smoother financial landscape.

Microfinance Sector Growth

  • Rapid growth of microfinance sector
  • Net increase in deposits and loans
  • However, quality of products remains mediocre
  • Bad debt accounts for five percent of loans
  • Approximately 17 percent of gross loans outstanding are at risk

Limited Credit to Private Sector

Credit to the private sector is woefully low, sitting at around 13.6 percent of GDP in 2022, compared to the Sub-Saharan Africa average of 45 percent.

High Interest Rates

When credit is available, it comes with expensive terms: the BCRG reports that the average commercial lending interest rate was 15% in 2022.

Technological Lags and Concentration

The banking sector is highly concentrated in Conakry and lags behind technologically. Banks tend to favor short-term lending at high interest rates, making it difficult for businesses to access funding.

Recent Developments

In a surprise move, Vista Group acquired Guinea’s largest bank, BICIGUI, in July 2021, with plans to rebrand the 87 branches as VISTA. The acquisition has sparked hopes of expansion and modernization in the sector.

For foreign investors, navigating Guinea’s banking regulations can be complex. While the country guarantees the free transfer of capital, no US banks have local branches or operations in Guinea. EcoBank is the preferred bank for most US dealings with FACTA reporting requirements.

Conclusion

As the banking landscape continues to evolve in Guinea, one thing remains certain: cash transactions will remain a dominant force in the country’s financial sector.