Financial Crime World

Guinea’s Economy Sees Positive Outlook, Reserves Reach 4% Increase

Conakry, Guinea - The economy of Guinea has shown a positive trend, with gross international reserves increasing to 3.6 months of imports at the end of March 2019, up from 3.3 months in 2018.

Factors Contributing to the Positive Outlook

  • Significant capital inflows
  • Strong foreign direct investment in the mining sector
  • Improvement in the business climate
  • Increase in electricity supply

These factors are expected to support private sector development in the medium term. Despite a disruption to artisanal gold production due to government restrictions on certain chemical products for environmental reasons, the economic outlook remains positive.

Financial Stability Framework

The strengthening of Guinea’s financial stability framework is seen as timely, as it will help manage potential vulnerabilities in the financial sector if needed. The country’s financial system is shallow and informal, with total financial sector assets representing just 22% of GDP. However, the introduction of mobile financial services has been a key factor in increasing financial inclusion, with around 13.8% of the population having access to a mobile wallet at the end of 2017.

Banking Sector

  • The banking sector dominates the financial system, accounting for 94.6% of total financial sector assets
  • Commercial banks are subsidiaries of foreign groups, with the top three banks representing approximately 57.4% of the total assets of the banking sector
  • The government holds a minority share in three commercial banks

Insurance and Non-Deposit-Taking Institutions

  • While the number of insurance companies and non-deposit-taking institutions has increased, their share in the total assets of the financial sector declined in 2018 due to slow growth rates and performance issues
  • Cross-border cooperation is expected to play an important role in addressing these challenges

Convergence Criteria

The convergence criteria established by the West African Monetary Zone (WAMZ) are driving modernization projects undertaken by Guinea’s central bank. The country plans to join the WAMZ directly without creating its own monetary union.

Overall Outlook

Guinea’s economy is expected to continue growing, with a positive outlook driven by strong foreign direct investment and an improving business climate.