Guinea-Bissau Economic Structure

The Republic of Guinea-Bissau has an economy that has long been plagued by internal conflict and strife, ever since its independence in 1974. Due to an extensive period of both social and political instability, there has been a depression in economic activity with new economic pursuits failing to get off the ground. It’s existing industries remain underdeveloped and underutilised. Furthermore, social and economic infrastructure has suffered from years of violence in the country.

The Republic of Guinea-Bissau has an economy that has long been plagued by internal conflict and strife, ever since its independence in 1974. Due to an extensive period of both social and political instability, there has been a depression in economic activity with new economic pursuits failing to get off the ground. It’s existing industries remain underdeveloped and underutilised. Furthermore, social and economic infrastructure has suffered from years of violence in the country.

As such, Guinea-Bissau’s economic structure is weak. Despite receiving financial and security aid from foreign countries, government policies are hard to implement due to political instability and corruption. hhose that were eventually implemented were barely beneficial, contributing to only a slight improvement for Guinea-Bissau’s economy.

In 2009, Guinea-Bissau’s President Joan Bernardo Vieira and Army Chief of Staff General Batista Tagme Na Wai, were assassinated within 24 hours of each other. Three senior politicians were also killed while campaigning for the presidential elections in the same year.

Surprisingly, the election process itself was relatively peaceful. Malam Bacal Sanhá from the ruling Partido Africano da Independência da Guiné e Cabo Verde (PAIGC) was elected as president on 26 July 2009, in an election declared to be free and transparent by 150 observers from the EU, African Union (AU) and the Comunidade dos Países de Língua Portuguesa (CPLP). Hopes are on Mr. Sanhá, who is part of the liberation movement to bring stability to the nation.

Unfortunately, Mr. Sanhá is likely to face multiple structural issues that need to be addressed in order to reinvigorate the economy. Guinea-Bissau remains one of the poorest countries in the world and like many other former colonies in Africa, the sudden pullout of their former colonial masters left a structural vacuum that included an untrained public administration, a highly fragmented social structure and an extremely unstable political system.

Consequently, Guinea-Bissau’s economic performance has suffered. The country relies almost exclusively on agriculture and irregular foreign aid, with agriculture making up 62 percent of their GDP and foreign aid accounting for 80 percent of the government’s budget in 2004.

The poverty and internal discord faced by the people in Guinea-Bissau has also led a large percentage of Guinea-Bissauans turning to illegal activities such as drug trafficking and the smuggling of prohibited goods. Poor tax administration combined with a massive informal sector has meant that the government often encounters difficulty in mobilising public resources. Tax revenues remain low, at about 10 percent of the national GDP, and will continue to remain so unless tax reforms are implemented alongside improved administrative capabilities.

Guinea-Bissau’s Economic Geography

Much work is required within Guinea-Bissau and on its social infrastructure if it wishes to facilitate economic growth.

Guinea-Bissau is located on the Western African shore of the Atlantic Ocean and is bordered by Senegal and Guinea. The majority of the land is low-lying with a coastal plain that rises slightly to a savannah terrain.

Only 10 percent of all roads in Guinea-Bissau are paved. Roads are often flooded and practically un-drivable during the rainy season, causing transportation of people and goods within Guinea-Bissau to become extremely difficult if not impossible. While recent foreign funding from organisations like the EU and the West African Development Bank have ensured that the primary roads, at least, are in good condition, long-term maintenance and repair remain a challenge for the government. 

The Port of Bissau, is also poorly managed and underdeveloped. At present, it’s responsible for 85 percent of Guinea-Bissau’s exports and more than 90 percent of its imports. However, it’s also operating at four times its maximum capacity while employing poorly trained workers who have to work with generally poor conditions and equipment.

Guinea-Bissauans also face problems with public utilities. Electricity in Guinea-Bissau is imported from neighbouring Senegal and the supply is confined primarily to the capital of Bissau along with seven other urban centres. According to the African Economic Outlook, currently only 20 percent of the population has access to electricity at only 70 percent of the time. Foreign funding appears to be the most likely solution to fix this issue.

Guinea-Bissau’s Population and Labour Force

Guinea-Bissau has a population of 1.657 million people and a 632,700 strong labour force. Due to the constraints within the country, official government data is hard to come by. The IMF and CIA World Fact Book have no available data on Guinea-Bissau’s unemployment rate.

However, according to 2006 estimates by The African Economic Outlook, 46.87 percent of young people aged 15-24 living in the capital of Bissau were unemployed,compared to 19.34 percent of the same age group living in rural areas.

Guinea-Bissau’s young labour force could be a result of its high mortality and low life-expectancy rates. According to the UN, Guinea-Bissau has the 8th highest mortality rate in the world. Its population has an average life expectancy of 46.4 years, ranking it among the bottom ten nations in the world. Poverty, conflicts, rampant HIV/AIDS infection, poor healthcare and poor social infrastructure, are just some of the many reasons that contribute to this startling statistic.

Many Guinea-Bissauans receive little to no form of education. According to the African Economic Outlook, only 48 percent of children finished primary school in 2006, while barely 17 percent of students finish secondary school. Problems that plague the education system include poorly trained teachers, lack of teaching materials as well as sporadic attendance, particularly during the cashew harvest season.

Among the Guinea-Bissauans who eventually go out to work, many either turn to illegal activities or the informal sector. The majority of the labour force are employed in the agriculture sector that contributes to nearly 95 percent of all jobs.

Guinea-Bissau’s Industry Sectors

The agriculture sector made up 62 percent of Guinea-Bissau’s GDP in 2008; services and industrial sectors contributed 23 percent and 15 percent respectively.

Within the agriculture sector, cashew nut production remained Guinea-Bissau’s key industry. As the sixth largest producer of cashew nuts in the world, the industry represents 20 percent of Guinea-Bissau’s GDP as well as providing 85 percent of all jobs. Despite this, cashew nut production remains a highly underdeveloped industry, with little to no forms of modern technology being utilised.

The cashew nut industry remains a key source of income, however is not as lucrative as other potential industries. Guinea-Bissau has a wealth of natural resources such as oil, bauxite and phosphates yet to be exploited due to political and social instability. If Guinea-Bissau was able to tap into these resources, it is estimated that Guinea-Bissau’s foreign exchange and fiscal revenues would triple.

Within the agriculture sector there is also area for diversification. Guinea-Bissau possesses fertile lands as well as an ideal climate to grow a variety of crops. Unfortunately the farmers have neither the training nor the resources to grow anything besides cashew nuts.

In an effort to diversify agriculture as well as the economy, a major agricultural project, PRESAR (Rural and Agricultural Sector Rehabilitation Project), was implemented in five of eight regions in Guinea-Bissau. Financed by the African Development Bank (AfDB), PRESAR aims to improve horticulture and livestock through sharing technology as well as providing financial and agricultural assistance to farmers.

Read more on Guinea-Bissau’s economy, including industry information and trade statistics on EconomyWatch below.