Guinea’s Economy Sees Significant Growth in 2018

Strong Economic Outlook

The Central Bank of Guinea (BCRG) has reported a significant increase in the country’s gross international reserves, reaching 3.6 months of imports at end-March 2019, up from 3.3 months in 2018. This positive economic outlook is expected to continue, driven by strong foreign direct investment in the mining sector and future investments in infrastructure projects.

Improving Business Climate

The government’s efforts to increase the supply of electricity to the economy and strengthen governance are also expected to improve the business climate. However, artisanal gold production has been disrupted due to the government’s prohibition on certain chemical products for environmental reasons.

Financial System Challenges

Guinea’s financial system remains shallow and informal, with total financial sector assets representing only 22% of GDP. The country is largely cash-based, but the introduction of mobile financial services has helped increase financial inclusion, with around 13.8% of the population having access to a mobile wallet at end-2017.

Banking Sector Dominance

The banking sector dominates the financial system, accounting for 94.6% of total financial sector assets, while non-bank deposit-taking institutions and insurance companies represent 2.5% and 2.8%, respectively. 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 due to slow growth rates compared to the banking sector.

Foreign Ownership

The country’s financial system is characterized by a high level of foreign ownership, with all commercial banks being subsidiaries of foreign groups. The top three banks represent approximately 57.4% of the total assets of the banking sector.

Strengthening Financial Stability Framework

The government has taken steps to strengthen the financial stability framework, which is seen as timely and beneficial for the country in case it needs to manage potential vulnerabilities in the financial sector under less favorable economic conditions.

Overall Outlook

Overall, Guinea’s economy is expected to continue growing, driven by strong foreign direct investment and infrastructure projects, despite some challenges in the financial sector.