Financial Sector Regulation in Guinea: A Complex Landscape
=====================================================
In Guinea, financial transactions are largely conducted through cash and mobile money, reflecting a country where traditional payment methods still dominate. Checks and bank-to-bank transfers are less common, even for large businesses.
Banking Sector Overview
The banking sector in Guinea is small but significant, comprising:
- 19 active banks
- 19 insurance companies
- 19 microfinance institutions
- 6 e-money institutions
The Central Bank of the Republic of Guinea (BCRG) oversees the sector, serving as both the government’s treasury and supervisor of banking and credit operations.
Challenges in Debt Management
Despite efforts to improve debt management in recent years, experts say that Guinea still struggles with proper debt management. Small businesses and agricultural enterprises have turned to microfinance as a means of accessing funding due to limited access to commercial bank loans. The quality of microfinance products remains mediocre, with:
- 5% of loans being bad debt
- 17% of outstanding gross loans being non-performing
Credit to the Private Sector
Credit to the private sector is low in Guinea, at around:
- 13.6% of GDP in 2022 (compared to an average of 45% across Sub-Saharan Africa)
Loans are often available on expensive terms, with interest rates averaging:
- 15% (compared to 4% in West African Economic and Monetary Union countries)
Banking Sector Concentration
The banking sector is highly concentrated in Conakry, the capital city, and lags behind technologically. Banks tend to favor short-term lending at high interest rates.
Investment Climate
Guinea’s Investment Code guarantees the free transfer of capital, but foreign exchange controls are still in place. No US banks have local branches or operations in Guinea, although Vista Bank, a US-owned regional bank, has acquired several local banks and is expanding its presence.
EcoBank is the preferred bank for most US dealings with FATCA reporting requirements. The banking system in Guinea remains complex, with challenges including:
- Limited access to funding
- High interest rates
- Lack of technological investment