Financial Crime World

Guinea’s Economy Booms: International Reserves Surge to 4%

Conakry, Guinea - The economy of Guinea has experienced a significant boost in international reserves, reaching 3.6 months of imports at end-March 2019, representing a 7% year-on-year increase.

Positive Economic Outlook

Guinea’s economic outlook is positive, driven by:

  • Continued strong foreign direct investment in the mining sector and infrastructure projects
  • Strong growth in international reserves

However, the government’s decision to prohibit certain chemical products for environmental reasons has disrupted artisanal gold production.

Financial Stability Framework Strengthened

The Financial Stability Supervisory Committee (FSSR) has been established to strengthen the financial stability framework. This move is expected to be beneficial in managing potential vulnerabilities in the financial sector under less favorable economic conditions.

Progress Towards Joining West African Monetary Zone (WAMZ)

Guinea is making progress towards joining WAMZ, a regional initiative aimed at promoting economic integration and stability. However, the country’s financial system remains shallow and informal, with:

  • Total financial sector assets representing just 22% of GDP
  • The banking sector dominating the financial landscape, accounting for 94.6% of total financial sector assets

Mobile Financial Services Increase Financial Inclusion

Mobile financial services have played a crucial role in increasing financial inclusion, with approximately 13.8% of the population having access to a mobile wallet and associated payment services at end-2017.

Insurance Sector Slow Growth Rate

Despite an increase in the number of insurance companies and non-deposit-taking institutions, their share in the total assets of the financial sector declined in 2018. The insurance sector’s slow growth rate has contributed to this decline, while serious performance issues have affected the real amount of total assets of nonbank deposit-taking institutions.

Banking Sector Dominated by Foreign-Owned Commercial Banks

The country’s banking sector is largely dominated by foreign-owned commercial banks, with three top banks representing approximately 57.4% of the total assets of the banking sector. The government holds a minority share in three commercial banks, highlighting the need for cross-border cooperation.

Conclusion

Overall, Guinea’s economy is poised for growth, driven by strong foreign direct investment and infrastructure projects. However, the country must address its financial inclusion challenges and strengthen its financial stability framework to ensure sustainable economic development.