West African Monetary Zone (WAMZ) and the Financial Sector of Guinea

Introduction

The West African Monetary Zone (WAMZ) is a regional economic union consisting of six member countries, including Guinea. As the only Francophone country in the region, Guinea’s financial system faces unique challenges and opportunities for growth.

WAMZ and WAEMU: A Path to Economic Integration

While the WAMZ plans to join the West African Economic and Monetary Union (WAEMU), individual members, including Guinea, will join WAEMU directly without creating a monetary union. This move is expected to promote economic integration in West Africa, but its implications on Guinea’s financial sector remain to be seen.

The State of Guinea’s Financial System

Guinea’s financial system is characterized as shallow and informal, with total financial sector assets representing only 22% of GDP. However, there has been an increase in mobile financial services, contributing to financial inclusion:

• Key Statistics:
  • Total financial sector assets: GNF 24,188,541 (approximately $3.7 billion USD)
  • Commercial banks: 16
  • Nonbank deposit-taking institutions: 21
  • Insurance companies: 12
  • Mobile wallet users: approximately 13.8% of the population (end-2017)

Dominance of Foreign-Owned Commercial Banks

The financial sector in Guinea is dominated by foreign-owned commercial banks, with three top banks representing approximately 57.4% of total banking sector assets.

Questions for Discussion

1. Implications of a Shallow and Informal Financial System: What are the implications of Guinea’s shallow and informal financial system, and how can they be addressed?
2. WAEMU Membership: How will the planned membership of WAMZ countries in WAEMU affect economic integration in West Africa?
3. Foreign-Owned Banking Sector: What are the benefits and challenges of having a foreign-owned banking sector in Guinea?
4. Mobile Financial Services: How can mobile financial services be further developed to improve financial inclusion in Guinea?