Guinea’s Economic Outlook Brightens as Reserves Surge

Conakry, Guinea - Guinea’s gross international reserves have seen a significant increase, reaching 3.6 months of imports at end-March 2019, up from 3.3 months a year earlier. This upward trend is expected to continue, driven by strong foreign direct investment in the mining sector and infrastructure projects.

Positive Economic Outlook

The country’s economic outlook is also positive, with the government expecting continued growth and stability in the medium term. The business climate has improved, and governance issues are being addressed, which should support the development of the private sector.

Strengthening Financial Stability

In a move to strengthen financial stability, Guinea has prohibited the use of certain chemical products for environmental reasons, which has disrupted artisanal gold production. However, this is expected to have a positive impact on the country’s overall economic performance in the long run.

Regional Developments

The West African Monetary Zone (WAMZ), of which Guinea is a member, is driving modernization projects and convergence criteria for the creation of a monetary union. The WAMZ includes six countries, including Guinea, and plans to merge with the West African Economic and Monetary Union (WAEMU) in the future.

Financial System Improvement

Despite challenges, the Guinean financial system has shown signs of improvement, with mobile financial services playing a key role in increasing financial inclusion. According to the International Monetary Fund (IMF), total financial sector assets represent just 22 percent of GDP, but the introduction of mobile wallets and payment services has increased access to banking services for more than 13 percent of the population.

Banking Sector

The country’s financial sector is dominated by banks, with 16 commercial banks and 21 nonbank deposit institutions. However, the share of insurance companies and non-deposit-taking institutions in total assets has declined in recent years due to slow growth and performance issues.

Cross-Border Cooperation

In a bid to improve cross-border cooperation, Guinea’s banking sector is largely foreign-owned, with three of the largest banks belonging to French international groups. Only one bank offers Islamic banking services, while two others have Islamic banking windows.

Conclusion

Overall, Guinea’s economic outlook is bright, driven by strong foreign investment, improved governance, and increasing financial inclusion. The country’s efforts to strengthen its financial stability framework are also expected to benefit from the current favorable economic conditions.