Guinea’s Financial System Sees Significant Growth in 2018

Conakry, Guinea - The West African country of Guinea has experienced a significant increase in its international reserves, reaching 3.6 months of imports at the end of March 2019, representing an 8-4 percent year-on-year growth.

Capital Inflows Drive Economic Growth

The upward trend is attributed to significant capital inflows, which have supported the country’s economic outlook. The government’s decision to prohibit the use of certain chemical products for environmental reasons has disrupted artisanal gold production, however, this is expected to be mitigated by continued strong foreign direct investment in the mining sector.

Infrastructure Development and Governance Improvements

The development of infrastructure projects will continue to stimulate construction, and improvements in governance and electricity supply are expected to support the growth of the private sector in the medium term. The country’s financial stability framework is also being strengthened, which will help manage potential vulnerabilities in the financial sector under less favorable economic conditions.

Overview of Guinea’s Financial System

Guinea’s financial system is shallow and informal, with total financial sector assets representing only 22 percent of GDP. However, the introduction of mobile financial services has been a key factor in financial inclusion, with approximately 13.8 percent of the population having access to a mobile wallet at the end of 2017.

Banking Sector Dominance

The banking sector dominates the financial system, accounting for 94.6 percent of total financial sector assets. The top three banks represent around 57.4 percent of the total assets of the banking sector, with two of them belonging to French international groups and one to a Malaysian financial group.

Challenges Ahead

Despite the growth in the financial sector, there are concerns about the performance of non-bank deposit-taking institutions, which saw a decline of almost 20 percent in their total assets in 2018. The insurance sector also saw a decline in its share of total assets, due to slow growth compared to the banking sector.

Positive Economic Outlook

Overall, Guinea’s economic outlook is positive, with continued strong foreign direct investment and infrastructure development expected to drive growth. However, there are challenges that need to be addressed, including financial inclusion and the performance of non-bank deposit-taking institutions.