Guinea: February 1999
Reforms introduced since 1985 have led to a significantly more liberal economy and trade regime in Guinea, with annual GDP growth of over 2 per cent since 1989.
Guinea should continue its reforms and improve Its infrastucture to attract more investment
Reforms introduced since 1985 have led to a significantly more liberal economy and trade regime in Guinea, with annual GDP growth of over 2 per cent since 1989. A new WTO report on Guinea's trade policies and practices notes that the country's trade balance is improving, but that Guinea should continue to implement reforms and privatization programmes so that it can fully exploit its economic potential.
The WTO Secretariat report and a policy statement by the government of Guinea, will serve as the basis for two days of discussion at the WTO's Trade Policy Review Body on 25 and 26 February 1999.
The report notes that Guinea's economy is highly dependent on the exploitation of mineral resources - mostly bauxite - and that minerals account for over 90 per cent of earnings from merchandise exports. In 1996, the European Union and the United States absorbed more than 70 per cent of Guinean exports, with alumina going mostly to the United States and diamonds and gold to Europe. Guinea's main suppliers are the European Union chiefly France the United States, Côte d'Ivoire, Japan and the Economic Community of West African States (ECOWAS).
The report notes that Guinea's import duties average 16.4 per cent and range from a low of 2 per cent to a high of 32 per cent. There is little variation among products and the rates show a generally negative escalation from unprocessed products to finished goods. The most protected goods are foodstuffs. The least taxed goods are non-electrical machinery and transport equipment. Guinea also applies other duties and charges such as preshipment inspection fees, which significantly increase the import duty. A consumption surcharge of up to 70% is also collected on both imports and locally produced goods. Like other WTO members, Guinea bound its tariffs on agricultural products in the Uruguay Round. Import duties and taxes on almost all other products have not been bound.
The mining sector benefits from the highest nominal tariff protection. Currently, the main objective of Guinea's mining policy is to promote locally processed exports of its vast mineral resources.
The report notes that Guinea has considerable potential for developing its rural activities. Reforms in the agricultural sector have led to the abolition of the marketing boards, the liquidation or privatization of most of the State enterprises and to the elimination of price controls.
Manufacturing activity in Guinea, already poorly developed, has fallen further following cessation of activities of certain State enterprises. Current constraints have failed to awaken the enthusiasm of private investors. Development is hampered by the high cost of finance and inputs, the difficulties of obtaining access to credit, the lack of infrastructure, power cuts and the structure of import duties.
The services sector, dominated by informal trade, is expanding and accounts for more than 50 per cent of real GDP. The report notes that while efforts have been made to liberalize the sector, the government's commitments under the General Agreement on Trade in Services (GATS) are limited. Informal activities, spread across all economic sectors, reportedly account for 60 per cent of GDP and supply 90 per cent of non-agricultural jobs outside the civil services.
Guinea is a signatory of the Economic Community of West African States (ECOWAS) which provides for the establishment of a customs union, free trade in services and free movement of capital and persons by 2005. However, the report notes that the timetable for the implementation of those provisions, including the establishment of the customs union is not being respected.
As a signatory to the Fourth Lomé Convention, Guinea receives aid from the European Union (EU) and a large number of Guinean products receive non-reciprocal preferential treatment upon entry to the EU. Similarly, Guinean products are granted non-reciprocal preferential access to the markets of developed countries other than the EU in the framework of the Generalized System of Preferences (GSP). The report notes however that the scope of these different non-reciprocal preferential treatments is limited, particularly by the small number of products exported by Guinea, i.e. raw materials generally subject to zero or very low most-favoured-nation (MFN) import duties in the importing countries.
Intellectual property rights in Guinea are protected by a copyright law of August 1980 and its implementing decree and the Bangui Agreement on Intellectual Property signed by some 15 African countries which established the African Intellectual Property Organization (AIPO). Work is under way in AIPO to bring the provisions of the Bangui Agreement into conformity with the obligations of WTO Members under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In the field of intellectual property, the most common infringement in Guinea is the counterfeiting of trade marks.
The report concludes that by pursuing its reforms, including privatization, and by redirecting public investment towards basic infrastructure, Guinea should be able to improve the international competitiveness of its products by reducing production costs and attracting more private capital.
Notes to Editors
The WTO's Secretariat report, together with a policy statement prepared by Guinea, will be discussed by the WTO Trade Policy Review Body (TPRB) on 25 and 26 February 1999. The WTO's TPRB conducts a collective evaluation of the full range of trade policies and practices of each WTO member at regular intervals and monitors significant trends and developments which may have an impact on the global trading system. The Secretariat report covers the development of all aspects of each of Guinea's trade policies, including domestic laws and regulations, the institutional framework, trade policies by measure and by sector. Since the WTO came into force, the areas of services and trade-related aspects of intellectual property rights are also covered.
To this press release are attached the summary observations from the Secretariat report and a summary of the government report. The full Secretariat and government reports are available for journalists from WTO Secretariat on request (call 41 22 739 5019). They are also available for the press in the newsroom of the WTO internet site (www.wto.org). The Secretariat report, together with the government policy statement, a report of the TPRB's discussion and the Chairman's summing up, will be published in hardback in due course and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992 & 1998), Australia (1989, 1994 & 1998), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia (1993), Botswana (1998), Brazil (1992 & 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 & 1998), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990, 1994 & 1998), Hungary (1991 & 1998), Iceland (1994), India (1993 & 1998), Indonesia (1991, 1994 & 1998), Israel (1994), Jamaica (1998), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mali (1998), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Namibia (1998), Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 & 1998), Sri Lanka (1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 & 1998), the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992 & 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).Back to top
The Secretariat s report: summary
Located on the west coast of Africa, Guinea is a least-developed country (LDC), independent since 28 September 1958. Upon achieving independence, Guinea opted for a socialist regime that allowed the State to intervene in most economic activities. This State intervention discouraged private initiative, and, with the starting up of mining activities in 1975, encouraged the economy to become dependent on bauxite mining. Guinea left the franc zone in 1960 and created its own Central Bank with a national currency, the Guinean franc.
The economic growth sustained by mining was slowed by the second oil shock in 1979-80 and the fall of bauxite prices. In response to the economic difficulties resulting from this situation, the first reform measures were taken by the Government at the beginning of the 1980s. The change in the political regime in 1984 favoured a certain radicalization of reforms in the direction of economic liberalization. An Economic and Financial Reform Programme (PREF) was adopted in 1985 with the support of the International Monetary Fund (IMF) and the World Bank, with a view to restoring macroeconomic and financial balances, reviving growth and improving the living conditions of the Guinean population.
Social disturbances, increases in salaries and family allowances, and decreases in alumina prices sporadically frustrated the implementation of reforms. In 1996, in response to the persisting macroeconomic imbalances, a long-term development strategy (Guinea, Vision 2010) based on exploitation of the country's potential by private operators was adopted. A second three-year Enhanced Structural Adjustment Facility (ESAF) was approved by the IMF for Guinea in January 1997.
With the exception of the 2.4 per cent and 2.9 per cent growth rates recorded for 1991 and 1992 respectively, the various reforms have led to an annual increase in real GDP of at least 4 per cent since 1989. Inflation has been contained and its level has fallen from 19.4 per cent in 1990 to 1.9 per cent in 1997. The trade balance, which is in perpetual deficit, is improving steadily; it could show a slight surplus in 1998 as a result of increased bauxite exports. However, compared with other external balances, the results of the reforms remain modest. The deficit in Guinea's current balance, which can be attributed to the services balance, including interest on external debt, is the main reason for the unfavourable overall balance: Guinea's net services imports have generally exceeded net capital flows in its favour.
The Guinean economy remains dependent on the exploitation of mineral resources with which the Guinean subsoil abounds. Bauxite (the main mineral resource), gold and diamonds are currently mined on an industrial scale. These resources undergo little local processing, but still account for over 90 per cent of the goods export revenue. Their contribution to real GDP, however is falling. Guinea also has considerable potential for the development of rural activities. Manufacturing activity, already poorly developed, has fallen following the winding up or cessation of the activities of certain State enterprises, as current constraints on the sector have failed to awaken the enthusiasm of private investors. The services sector, dominated by informal trade, is progressing, and accounts for more than 50 per cent of real GDP. Informal activities, which are a feature of all sectors, reportedly account for 60 per cent of GDP and supply 90 per cent of non-agricultural jobs outside the civil service. They range from retail trade (50 per cent of informal jobs) to vehicle repair (30 per cent of informal jobs), including exchange activities.
In 1996, the European Union and the United States absorbed more than 70 per cent of Guinean exports. Canada has also proved an important outlet for Guinean products over the past years. On the other hand, for several years Guinean exports to the Commonwealth of Independent States have been on the decrease, reflecting the end of the socialist era in Guinea, with the progressive maturing of the last counter-trade contracts. Alumina is exported mainly to the United States and Spain, and diamonds and gold to Europe. Guinea's main suppliers are the European Union (chiefly France), the United States, Côte d'Ivoire and Japan. China's share of the Guinean market fell from over 10 per cent in 1993 to 2.4 per cent in 1996 owing to the redirection of Guinea's trade towards non-socialist countries following the economic opening up of the country. The ECOWAS countries supply around 20 per cent of Guinean imports.
Under the Constitution of December 1990, the Republic of Guinea is a pluralist democracy. The President of the Republic is the Head of State, elected by direct universal suffrage for a term of five years, renewable only once. Executive power is vested in the President, who lays down the main lines of State policy and appoints the Prime Minister and other members of the Government. The Government defines and implements national policy. The National Assembly exercises legislative power, and votes the laws. The Economic and Social Council must be consulted on draft laws, plans and programmes of an economic nature.
Since 1992, Guinea has been implementing numerous reforms of a regulatory nature (publication of a code of economic activities) and of an institutional nature (reform of justice) aimed at ensuring a business environment more favourable to the development of economic and financial activities. The Investment Code, introduced in 1987 modified in 1995 and recently amended, aims at encouraging national and foreign economic operators to invest in Guinea and to contribute in this way to the achievement of the Government's objectives, namely the creation of a suitable environment for the development of the private sector in all areas. The Investment Code guarantees the same rights and obligations to private and public enterprises, whether national or foreign. It guarantees freedom to transfer capital, income and salaries for foreign natural and legal persons. However, in order to qualify for the benefits offered by the Code, enterprises must belong to the priority sectors of activity and must be approved. Among other things they must give priority to Guinean citizens as regards jobs, and maintain the quality and level of their investments. Like the Investment Code, the 1995 Mining Code provides that any national or foreign, public or private natural or legal person coming under Guinean law and possessing the necessary technical and financial capacity may exploit mineral substances or quarries in Guinea. However, the semi-industrial and small-scale mining of precious substances and the marketing of diamonds and other gems is authorized only for Guinean natural or legal persons. Moreover, the exploitation of mines and quarries qualifies for tax relief.
Guinea became a Member of the WTO on 25 October 1995 after having applied the GATT de facto from 24 June 1994. Guinea grants at least most-favoured-nation treatment to all of its trading partners. Like other WTO Members, Guinea has adopted all the results of the Uruguay Round and has accepted commitments in the form of tariff bindings and measures relating to the modes of supply of certain services. It has benefited from the treatment granted to the LDCs, notably in the form of exemptions or delayed implementation of certain provisions, and it should benefit in particular from the strengthening of rules and disciplines in the multilateral trading system. The concern in Guinea is to achieve diversification (horizontal and vertical) of production and exports, i.e. an increase in supply which will enable it to make better use of its potential and existing opportunities, as well as those which should result from continued liberalization at the multilateral level. Guinea hopes that the technical assistance provided for under the integrated technical assistance programme launched by the WTO and other organizations at the High-Level Meeting held in Geneva in October 1997 will help it to increase and diversify its production and exports while improving their quality, to make the WTO agreement more generally known and to increase the number of its trading partners.
Guinea is a member of the Economic Community of West African States (ECOWAS) for which the treaty was signed on 28 May 1975. The 1993 amendment to the Treaty provides, inter alia, for free trade in services and the free movement of capital and persons within the Community at the end of the five-year period following the establishment of the customs union scheduled for the year 2000. However, the timetable for the implementation of this union is not being respected. Guinea has also been a member of the Mano River Union (MRU) since 1979. The Declaration of 3 October 1973 establishing the MRU provided for the gradual introduction of a customs union and the promotion of community development projects in all sectors, including services. However, the MRU is encountering a number of difficulties in setting itself up, and trade between the three countries is therefore marginal.
As a signatory to the Fourth Lomé Convention, Guinea receives aid from the European Union. A large number of Guinean products receive non-reciprocal preferential treatment upon entry to the EU. Similarly, Guinean products are granted non-reciprocal preferential access to the markets of developing countries other than those of the European Union in the framework of the Generalized System of Preferences. The scope of these different non-reciprocal preferential treatments is limited, particularly by the small number of products exported by Guinea, i.e. raw materials generally subject to zero or very low MFN import duties in the importing countries.
As of September 1998, Guinea had not been involved in any dispute settlement procedure within the GATT, the WTO or any other trade agreement to which it is a signatory.
The reforms carried out by Guinea since 1985 have enabled it to significantly liberalize its economy and its trade. Quantitative restrictions were abolished on most products, with the exception of potatoes, whose import is prohibited from February to June each year in order to allow local production to be sold. Other restrictions are also maintained for health, security or moral reasons or under international conventions to which Guinea is a signatory. Moreover, under the Programme for the Security of Customs Revenue, the implementation of which was entrusted in June 1996 to the Société générale de surveillance (SGS), all imports whose f.o.b. value is at least US$2,000 must be covered by a descriptive import application (DDI); preshipment inspection is required if the f.o.b. value is at least US$5,000.
The following duties and taxes are levied on imports in Guinea: an import customs duty (DDE) of 2 per cent or 7 per cent; a fiscal import duty (DFE) of 6 per cent, 8 per cent, 22 per cent or 23 per cent; a clearance fee (RTL) at a single rate of 2 per cent; a community levy (PC) of 0.5 per cent on all imports from countries outside ECOWAS; and an "additional centime" (CA) of 25 per cent paid to the Chamber of Commerce. Import duties are ad valorem; however, there is a minimum levy of GF 400 per litre for wines. The simple arithmetic mean of these import duties (excluding the PC and CA) is 16.4 per cent, with a minimum rate of 2 per cent and a maximum of 32 per cent. There is little variation among products (the modal rate is 17 per cent) and the rates show a generally negative escalation from unprocessed products to finished goods: subject to exemptions, unprocessed products benefit from the strongest nominal tariff protection, followed by semi-finished goods. This should be reflected in nominal rates higher than the effective production rates.
The most protected goods are foodstuffs, and the least taxed goods are non-electrical machinery and transport equipment. Preshipment inspection fees, borne directly by the importers, can add up to about six additional percentage points to the tariff protection level (in the absence of inspection). Special taxes (which cannot be cumulated with other import duties and taxes) are levied on imports under certain particular customs regimes: a registration tax (TE) of 0.5 per cent is levied on imports carried out by enterprises approved under the Investment Code; a storage tax (TEN) of 1 per cent is levied on goods placed in storage; and a transit duty (DT) of 3 per cent is levied on the goods concerned.
A consumption surcharge has also been levied on "luxury products" since 1986. On imports, the surcharge is ad valorem and comprises eight rates, from 5 per cent to 70 per cent. It is also levied on locally manufactured products, such as beer and cigarettes. However, the method of taxing local products differs from that for imports of identical products: for example, beer produced locally is subject to a surcharge (specific) of GF 20 per bottle of 50 centilitres or less, while imported beers are taxed at 70 per cent. This difference in taxation generally observed provides additional protection for local products. The Special Tax on Petroleum Products (TSPP) is a domestic tax levied on imports of petroleum products in addition to the DDE of 7 per cent , the DFE of 8 per cent and the RTL of 2 per cent. It amounts to GF 355 per litre for petrol, GF 245 per litre for diesel, GF 160 per litre for petroleum spirit and GF 135 per litre for kerosene. Since 1 June 1996, a value added tax (VAT) of 18 per cent has been levied on imports of local products. An additional flat-rate levy of 3 per cent is applied to all imports carried out by natural or legal persons not registered for VAT. The levy is charged against the tax on industrial and commercial profits and corporation tax on behalf of the National Tax Directorate.
Under the Uruguay Round, Guinea has bound its tariffs applicable to imports of agricultural products (like the other Members of the WTO). For this purpose, it adopted rates of: 40 per cent for the import customs duty (DDE), 8 per cent for the fiscal import duty (DFE) and 2 per cent for the clearance fee (RTL). However, DFE rates of 22 per cent and 23 per cent are applied to products such as rice, flour and vegetable oil. Apart from Chapters 45 (cork and articles of cork), 47 (pulp and other cellulosic materials), 66 (umbrellas, walking sticks, etc.) and 86 (railway/tramway locomotives, rolling stock, etc.) of the Harmonized System, import duties and taxes on other products have not been bound. The DDE rates have been bound at 40, 20, 30 and 25 per cent respectively for the products in these Chapters. The DFE, TLR and TCA have been bound at rates of 8, 2, and 13 per cent respectively for those products. Thus, the bindings cover a limited number of products and moreover, they leave Guinea a certain latitude owing to the wide gap between the bound duty rates and those applied. However, these bindings do not concern products previously included in Guinea's Schedule CXXXVI, i.e. those for which the rates were bound when Guinea was a colony.
For exports, a fiscal export duty (DFS) of 2 per cent is levied on all products with the exception of mineral products and derivatives, and coffee. The DFS is 3 per cent for gold and diamonds produced on a small scale (or 2 per cent if such gold is exported by the Central Bank) and GF 25,000 per tonne of scrap. A tax of US$13 is levied per tonne of coffee. A 2 per cent tax is levied on all re-exported products. Taxes are also collected by the Central Bank on exports of bauxite and alumina and paid into a special account as an advance payment on the various taxes payable by the Guinea Bauxite Company (Compagnie de Bauxite de Guinée - CBG) and FRIGUIA (which produces alumina). These advance payments are from US$8 to 9 per tonne of bauxite (they vary according to the world price for bauxite) and amount to US$1.75 per tonne of alumina. The tax (advance payment) on alumina is actually collected at a rate of US$0.5 per tonne of bauxite consumed in producing it.
Exports are subject to Descriptive Export Applications (DDE), which replace the export licences abolished in 1986. The formalities for obtaining a DDE take not more than three working days. Exports of gold and diamonds produced on a small scale are carried out by the BCRG. For the purpose of promoting exports, tax and customs advantages are granted by the different codes in the form of suspension of duties and taxes; temporary admission; exemption from the tax on industrial and commercial profits for five years (in proportion to the export turnover); and reimbursement of VAT credits on inputs and factors of production used to manufacture the exported goods (for the purpose, exports are zero-rated for VAT). Moreover, in addition to the privileges common to the various regimes under the Investment Code, further advantages are granted to enterprises (whether exporters or not) which make use of Guinean products representing over 50 per cent of their intermediate consumption during the fiscal year.
Since 1986, price controls have been progressively streamlined in Guinea. In practice, only petroleum products are regulated. These prices, set by an interministerial technical council and kept identical throughout the country thanks to an equalization system, are approved for one year. The scale of charges taken into account in forecourt prices is revised monthly. Moreover, thanks to the reform of State enterprises in the framework of the Structural Adjustment Programme, it has been possible to substantially reduce State involvement in economic activities. However, the implementation of these reforms has been slowed down over the past five years by the lack of purchasers for certain companies.
In Guinea, intellectual property rights are protected by the Bangui Agreement on Intellectual Property signed by some 15 African countries and establishing the African Intellectual Property Organization (AIPO), as well as a copyright law of August 1980 and its implementing decree. Work is under way in the AIPO to bring the provisions of the Bangui Agreement into conformity with the obligations of WTO Members under the Agreement on Trade-Related Aspects of Intellectual Property Rights. In Guinea, the Industrial Property Service (SPI) is the national structure for liaison with the AIPO. In the field of intellectual property, the most common infringement in Guinea is the counterfeiting of trade marks. Penalties have consisted in seizure of the products concerned, the fate of which is decided by the plaintiffs (right holders). The Guinea Copyright Office has had problems enforcing these rights among the main users of the works concerned.
The economic reforms embarked upon by Guinea under the structural adjustment programmes in place since 1985 have affected the different sectors of activity to varying degrees. In the agricultural sector, these reforms have enabled the agricultural produce marketing bodies to be abolished, most of the State enterprises operating in the sector to be liquidated or privatized and the price controls which applied to the main agricultural products to be lifted. However, the objectives of the agricultural policy currently being implemented, namely food self-sufficiency and increased agricultural exports, have made it possible to prohibit imports of potatoes from February to June of each year and to apply flat-rate values to others (notably rice and certain beverages). The average import duty on agricultural products (16.6 per cent) is slightly above the average for all imports (16.4 per cent). Relief from duties and taxes is also granted to inputs used in agricultural production; agricultural income is not taxable. The State has maintained its presence in two branches: cotton, which is still not very developed, via a project structure supervised by the Compagnie française pour le développement des textiles, and in the oil palm and rubber tree branch, through a State enterprise created in 1987.
Mining is the sector which benefits from the highest nominal tariff protection. However, the liquidation and privatization of State enterprises have reduced Government intervention in the activities of this sector. At present, the Société des bauxites de Kindia is the only State enterprise whose privatization is not being considered. The main objective of mining policy is currently to promote exports of Guinea's vast mineral resources, after they have been processed locally. With that in mind, a system of taxation in stages (mining tax of zero to 10 per cent) has been introduced, with the highest rates being applied to exports of unprocessed mineral products. Furthermore, export duties of 2 or 3 per cent are levied on products such as gold, diamonds and other gemstones; these duties amount to GNF 25,000/tonne on ferrous scrap and US$8 to 9/tonne on bauxite, compared with US$1.75/tonne on alumina. Tax and customs advantages are also provided for under the Mining Code in favour of investment in this sector. Agreed rates (reduced rates) for the specific tax on petroleum products are likewise applied.
The manufacturing sector remains poorly developed, despite the Government's disengagement from certain activities. Private sector reluctance to take over the privatized industries can be explained by the problems experienced in the sector. Indeed, development is hampered by the high cost of finance and inputs, the difficulties of obtaining access to credit, the lack of infrastructure, and the power cuts as well as the structure of import duties (negative escalation from unprocessed products to finished goods). These different factors push up the cost of certain inputs and basic services, which generally cost more in Guinea than in other countries of the West African subregion, thereby limiting the international competiveness of Guinean manufactured products.
Efforts have been made to liberalize the services sector, largely dominated by informal trade. However, they have been followed up by little in the way of commitments at the multilateral level, which means that the irreversibility of the reforms is not guaranteed. Guinea's bindings are limited to measures concerning modes of supply of certain services in the field of transport, hotel services, veterinary medicine and social services. Moreover, the monopolies enjoyed by certain private or mixed enterprises have been sanctioned in the supply of certain services, either de facto (because of the small size of the market) or as a transitional step towards future full liberalization. Thus, the Société de télécommunications de Guinée (SOTELGUI), which is currently 60 per cent owned by Telecom Malaysia Berhard and 40 per cent owned by the Guinean Government, has a monopoly over the supply of basic telecommunication services. The autonomous port and the airport of Conakry are managed by public or semi-private enterprises, where the Government is a majority shareholder.
As can be seen from the growth rate of the economy and the GDP per capita for almost a decade, the reforms introduced with a view to liberalizing the Guinean economy have begun to bear fruit. However, it will be some time before Guinea will be able to fully exploit its enormous potential. This is due to the lack of infrastructure, one of the main reasons for the relatively high cost of inputs and basic services. By pursuing its reforms, including privatization, and by redirecting public investment towards basic infrastructure, Guinea should be able to improve the international competitiveness of its products by reducing production costs, and to attract private capital. By strengthening its competition policy, Guinea would be able to ensure that the reform of State enterprises did not result in the transfer of monopolies originally held by those enterprises to private companies. This threat, which is favoured, inter alia, by the limited size of the market, appears to be taking concrete form in certain branches of activity.
Like the other developing countries, Guinea would like the results of the Uruguay Round to be more widely known. According to the authorities, this is particularly necessary and urgent owing to the fact that, not having directly participated in the negotiations, certain aspects of these results and the scope of certain commitments are not very well understood. This is true, for example, for Guinea's commitments in the form of tariff bindings. Thus, Guinea would appreciate technical assistance in this respect.Back to top
POLICY REVIEW BODY: GUINEA
1. The Republic of Guinea is situated on the west coast of Africa. It covers an area of approximately 245,000 km2 and has a population of 7.1 million (most recent census of 1997), i.e. an average density of 17 inhabitants per km2.
2. Annual per capita income in Guinea is US$513, which places it in the category of the world's least-developed countries (LDCs).
3. With respect to the economic situation in Guinea, it should be noted that the change in political regime of 3 April 1984 marked the birth of a new system for managing the country. From the political standpoint, the cornerstone of the system is pluralist democracy, while from the economic standpoint it is the encouragement of private initiative and free enterprise.
4. Until 1984, the Guinean economy, which at the time was highly centralized, was in a difficult situation, with a negative growth rate, an overvalued currency and a GDP of less than US$300.
5. In 1986, Guinea firmly opted for a liberal economy. With the help of two of its main development partners, the IMF and the World Bank, it launched a structural adjustment programme.
6. This programme essentially aimed at re-establishing macroeconomic balances with a view to creating the necessary conditions for sustainable economic growth in the country.
7. Specifically, the programme involved:
(i) Complete restructuring of the country's banking system, with the creation of six private commercial banks;
(ii) change of currency, readjustment and liberalization of the exchange rate against the main foreign currencies;
(iii) privatization of all State enterprises;
(iv) reduction in civil service personnel.
8. Following these reform measures, GDP growth rate in real terms rose to an average of 4.4 per cent during the period 1987-1990.
9. The inflation rate fell from 71.9 per cent in 1987 to 3 per cent in 1996, and the current balance-of-payments deficit dropped from 13.4 per cent of GDP in 1988 to 8.9 per cent in 1995.
10. In 1996, the new Guinean authorities brought in following the restructuring of the Government in July of that year, with the appointment of the Prime Minister, set as the main targets of Guinea's current economic policy:
(i) To achieve economic growth in real terms of about 4.9 per cent of GDP per year (5 per cent on average for the rural sector);
(ii) to reduce the inflation rate;
(iii) to reduce the external current account deficit in order to rebuild official reserves in a significant way;
(iv) to reduce the budget deficit;
(v) to increase primary savings;
(vi) to reduce the deficit in the current account of the balance of payments;
(vii) to consolidate and improve the legal and institutional framework;
(viii) to strengthen primary education and improve the quality of educational services;
(ix) to develop human resources.
11. To that end, the Guinean Government took certain concrete steps while at the same time seeking to promote and attract foreign direct investment by redirecting its resources towards priority and high value-added sectors:
(i) Adoption of a programme for ensuring the security of customs revenue in cooperation with an independent surveillance company;
(ii) improvement of the collection of fishing fees;
(iii) increase in revenue from the special tax on petroleum products;
(iv) control and reduction of exemptions;
(v) reduction of State expenditure by more than 30 per cent.
12. The liberalization of Guinea's economic activities has found concrete expression in the trade area through:
(i) Transfer to the private sector of all commercial functions formerly exercised by the State;
(ii) creation of structures for private sector support and promotion;
(iii) continued implementation of the programme to build up export facilitation infrastructures;
(iv) integration of trade into the production process with active private sector participation;
(v) determination and improvement of trade regulations;
(vi) adaptation of Guinean laws and regulations to bring them into line with the new requirements of the multilateral trading system resulting from the WTO Agreements.
13. Generally speaking, the main objective of Guinea's trade policy is to develop the trade sector in the country in order to make it a leading instrument of support for the production sector (industry, agriculture, crafts, etc.) and to enable it to play its full role as an engine of growth and economic development.
14. To that end, the Guinean Government will pursue its efforts to:
(i) Guarantee and preserve complete liberalization of the trade professions;
(ii) ensure the maintenance of a policy of free prices and competition;
(iii) streamline the formalities for setting up enterprises;
(iv) promote crafts and tourism;
(v) broaden the foundations of the structure permitting permanent consultations with the private sector.
15. The principal objective of the Guinean Government's policy in the field of agriculture is to rapidly ensure food security for all of the country's populations and to supply foreign markets with export goods that are competitive from the point of view of quality, quantity and price.
16. To that end, the Guinean Government launched, in 1986, a vast programme for the development and modernization of agriculture with the active participation of the private sector and the support of its main bilateral and multilateral development partners.
17. This programme, which is still under way, essentially aims at:
- Improving production methods in rural areas to increase the output of farmers;
- introducing systems for financing agriculture in rural areas;
- improving agricultural sector output by creating and managing pilot plantations and nursery production, with subsidization of the purchase of selected seedlings by farmers;
- restoring and extending the rural dirt road network;
- promoting the use of agricultural inputs.
1. The policy of the Guinean Government in this sector targets at comprehensive coverage of energy demand throughout the country in the best possible conditions.
2. To that end, the following measures are planned:
- Rehabilitation of existing production, transport and distribution facilities and creation of new units, while at the same time ensuring a regular supply of spare parts;
- updating of studies under the Production and Transport Master Plan with a view to revising the national investment programme in that sector;
- improvement of technical, commercial and financial management in the sector;
- improvement of the current institutional framework by establishing the necessary legal and financial conditions for introducing the different types of private energy production;
- development of a rural electrification programme;
- continuation of the campaign to promote new and renewable forms of energy.
3. The Government's objectives in this sector focus mainly on reviving its programme for the industrialization of the country, beginning with support for private operators.
4. This policy will involve:
- Helping certain industrial units that have already been privatized or that are currently being privatized to revive their activities;
- streamlining of the formalities for setting up new enterprises;
- creating serviced industrial zones in the main regions of the country;
- creating a framework for establishing relations between Guinean and foreign operators.
5. The mining sector has long been the driving force of the Guinean economy, accounting alone for more than one third of the country's GDP. In view of its potential and the prospects for exploiting that potential, this sector will be called upon to play an increasingly important role in the country's economy.
6. The Government's objectives in this area include:
- The strengthening and restructuring of existing enterprises such as the Compagnie des Bauxites de Guinée (CBG), the Société Friguia, the Société des Bauxites de Kindia (SBK), the Société aurifaire de Guinée (SAG), and the Projet diamants kimberlitiques;
- the adoption of a more favourable institutional, legal and financial framework (Mining Code, creation of a single window for mining investors, the Centre de Promotions et de Développment Minier (CPDM);
- the medium- and long-term implementation of major mining projects such as:
- an integrated aluminium factory project with a capacity of 200,000 T/year;
- the Dian Dian alumina and bauxite complex with a capacity of 1,000,000 T/year;
- the Nimba Simandou project and the Transguinean Railway with a deep-water port at Conakry, capacity 50,000,000 T/year.
7. It must be pointed out that the above-mentioned projects require considerable capital mobilization involving several hundreds of millions of US dollars, and that this, in itself, is one of the major objectives of the Guinean Government in its effort to achieve sustainable development for the country.
8. Here, the objective is to maximize the economic and social benefits for the country of exploiting its fisheries and pastures. This takes account of the need to safeguard the balance of the ecosystem and the sustainability of the exploitation of resources while seeking to increase the contribution of fishing and livestock to food security, job creation, improving the income of fishermen and breeders and boosting the State revenue.
9. Accordingly, the Government is seeking to:
- Introduce an efficient system for the planning and rational management of resources by strengthening the monitoring and protection of fishing zones and by conducting research;
- step up its combat against epizootics and develop a livestock food supply base;
- strengthen basic infrastructures and improve the value added of fishing and livestock products;
- support the export of fishing and livestock products and the investments made in that respect, and improve the value added of fishing products;
- encourage the emergence of economic operators in the areas of small-scale fishing, industrial fishing, aquaculture and breeding;
- decentralize and improve the monitoring and surveillance of Guinean territorial waters.
10. The reorganization of the Guinean banking system was among the Government's priorities in launching the major economic reforms in 1986.
11. In the context of these reforms, banking activities were liberalized, the national banks were closed and the BCRG restructured and restored to its status of bank of issue, responsible for controlling and monitoring the entire Guinean banking system.
12. Since then, six private commercial banks have been set up and are currently operating in Guinea.
13. The main objectives of the Government in this area remain:
- Further consolidation of the country's banking and financial system;
- deployment of the banking system towards the interior of the country with a view to introducing more secure means of payment (cheques, transfers, cards, etc.) throughout the national territory;
- more comprehensive supervision of the banking and financial system, including mutual and rural credit networks;
- assistance with the introduction of mechanisms to facilitate investment and provide the necessary financing;
- creation of a financial market as a tool for providing enterprises with long-term savings.
(b) Transport, communications and telecommunications
14. The Government's objectives in this area are to ensure infrastructure maintenance and rehabilitation, and access to efficient transport, communication and telecommunication networks.
15. The reaction of the private sector to the complete liberalization of activities in these areas has been very encouraging. Private road transport throughout the country has developed considerably.
16. The general objectives are the following:
- Rehabilitation of the main airports of the country's interior by the installation of new airport facilities;
- restructuring of the national airline, Air Guinée, with the privatization of part of its capital;
- development of the activities of the Conakry International Airport through the implementation of its master plan aimed at doubling traffic to and from Conakry by the year 2000.
Maritime, river and land transport:
- Improvement in the organization of road traffic in the city of Conakry (road signs, marking out of stops, safety);
- development of the road network by restoring the dirt and paved roads and asphalting the trunk roads;
- construction of bridges on the Fatala and the Niger;
- restructuring and privatization of the Société générale de transport guinéens (SOGETRAG);
- computerization of the management of the country's vehicle fleet and the system for the delivery of transport documents (driving licences, registration documents, transport authorizations, etc.) as well as the management of statistical data on road accidents;
- construction of new bus stations at Conakry and in the interior of the country;
- organization of cross-border road transport with a view to subregional integration;
- rehabilitation of the first 36 kilometres of the Conakry-Niger railroad with a view to constructing a dry port in the outskirts of Conakry at mileage point PK 36/38, and restoring a passenger train on that segment;
- maintenance in working order of the 662 kilometres of railroad between Conakry and Kankan (second largest town) and extension of that line up to the Nimba and Simandou mountains (Transguinean Railway) with a view to combining passenger and freight transport with heavy mineral transport.
34. The liberalization of the telecommunications sector in Guinea has brought about significant progress with the rapid and dynamic take-over by the private sector of activities freed by the State, for example:
- Setting up of the Société des télécommunications de Guinée (SOTELGUI) (60 per cent private and 40 per cent State) and the Office de la poste guinéenne (OPG);
- granting of operating licences for value added services (cellular) to three other private operators, TELECEL, SPACETEL and WIRELESS.
35. The objectives are:
- The installation of a short-wave radio emission centre for national and international coverage and a maritime radio station;
- installation (coastal station) of a frequency management centre and an official network for the administration;
- installation of 500,000 telephone lines by the year 2010;
- resumption of postal financial services (savings bank, national and international payment orders);
- development and improvement of postal services.
36. In addition to its considerable potential in the fields of mining, energy and agriculture, Guinea also has much to offer in the field of tourism. Nonetheless, tourism remains one of the least developed activities in Guinea.
37. Thus, the development of tourism is one of the Government's priorities. Its main objectives in this area are:
- To lay the foundations for a proper takeoff of the Guinean tourist industry by developing an integrated tourist package with an improved image of Guinea as a destination, encouraging professionals in the sector to invest in Guinea, training human resources and developing a tourist code;
- encouraging and facilitating the private-sector development of tourist sites and access roads throughout the country.
38. The Government's promotional activities in this area consist in:
- Encouraging initiatives for the creation of trades chambers;
- developing and implementing a handicrafts code;
- implementing a policy aimed at encouraging the creation of craft villages;
- organizing sales exhibitions of Guinean crafts both at home and abroad.
39. With the State's withdrawal from all economic activities, trade has been completely liberalized. Import and export operations have been facilitated and transferred to the private sector.
40. The import licences required during the State trading period were abandoned in 1986 and replaced by Descriptive Import Applications (Demandes descriptives d'importations DDI).
41. DDIs are required for the import of goods with an f.o.b. value of at least US$2,000. Goods whose f.o.b. value exceeds US$5,000 are subject in addition to preshipment inspection of quantity, quality and price.
42. Goods whose value is less than US$2,000 are not subject to DDIs, but to an Import Description (Descriptif d'importation DI) and are not subject to preshipment inspection.
43. As in all other countries, the import into Guinea of products that are hazardous to human health is prohibited. The import of strategic goods linked to State security is subject to a special authorization (firearms, ammunition, explosives, etc.).
44. As in the case of imports, export licences, which had been mandatory, have been abandoned and replaced by Descriptive Export Applications (Demandes descriptives d'exportation DDE). Thus, all Guinean goods exports, whatever the destination, have been liberalized since the beginning of the major reforms in 1986.
45. Before 1985, Guinean trade was essentially conducted by the State through state trading enterprises and through a barter system for imports and exports with its former Eastern European partners.
46. In 1986, Guinea's new trade policy based on complete liberalization of trading activities in the country was defined in a keynote address by the Head of State.
47. The Constitution is the supreme law in Guinea. Legislative power is vested with the National Assembly which votes on the laws. The President of the Republic promulgates and ratifies the laws, and is also vested with the authority to negotiate and conclude international agreements. He may delegate that authority to a minister or to any other member of the Executive.
48. Where there is a need to amend legislation in order to bring it into conformity with the provisions of an agreement, it is the National Assembly that votes on the law authorizing such an amendment.
49. In Guinea, as in a number of other countries, trade policy is implemented by several institutions and executive bodies of the Government.
50. It is the Minister for the Promotion of the Private Sector, Industry and Trade, as the main person in charge of Guinea's trade policy, who submits, where necessary, bills pertaining to trade. The laws governing trade are:
- Law on the Control of Goods;
- Law on Free Competition and Pricing Policy;
- Law on Weights and Measures;
- Law on the Code of Economic Activities;
- Law on Tourism.
51. The Ministry for the Promotion of the Private Sector, Industry and Trade is in charge of the planning, formulation, implementation and administration of Guinea's trade policy. Trade laws drafted by the Ministry (in cooperation with other ministries) are submitted to the Legislative for consideration and a vote.
52. It is the Ministry for the Promotion of the Private Sector, Industry and Trade that prepares trade policy measures in consultation with:
- The private sector as represented by its different support and promotion bodies (Chamber of Commerce, Industry and Crafts of Guinea, Guinean National Council of Employers, Guinean Traders' Association, Guinean Foreign Investors' Club, National Union of Guinean Industrialists, etc.); and
- the other competent institutions: Ministry of the Economy and Finance (National Customs Directorate), Ministry of Planning and Cooperation, Ministry of Agriculture, Water and Forests.
17. In Guinea, private sector participation in the development of trade policy takes place through structures created with the State for consultations on various aspects of the national economy (Advisory Committee on Prices, for example).
18. Having opted for a liberal economy, Guinea has long been seeking to create the necessary conditions for harmonious integration into the world economy by developing its trade relations and diversifying its trading partners.
19. The Government's main objective in this respect is to create an environment favourable to the development of Guinea's participation in international trade while ensuring increased market opportunities for Guinean products abroad.
20. To that end, Guinea has concluded the following agreements:
- Agreement Establishing the WTO;
- the Lomé Convention between the ACP and the EU;
- the ECOWAS Treaty;
- the Mano River Union.
21. Guinea is a signatory to the Fourth Lomé Convention between the European Union and the ACP countries, under which it exports goods to the Community market free from customs duty and other charges on a non-reciprocal basis.
22. As an original Member of the WTO, Guinea attaches to its Membership the importance it deserves. Guinea hopes that the WTO Agreements will serve as a basis for increasing the share of developing countries in general and LDAs in particular in world trade, in the framework of a new rules-based multilateral trading system.
23. The Guinean economy depends largely on its exports of mining products. Guinea sincerely hopes that the rules deriving from the Uruguay Round Negotiations will benefit its economy and that the downward trend in the benefits linked to the Generalized System of Preferences (GSP) will be reversed.
24. As one of the LDCs and a beneficiary of the GSP, Guinea hopes that all its exports, including mining products, will continue to benefit from the tariff concessions (duty-free status or considerably reduced duty) in the developed and developing countries.
25. Guinea is also a founding member of the Economic Community of Western African States (ECOWAS). However, this Organization is currently suffering from an unstable geographical context in the subregion. Accordingly, its vocation as an integration body is overshadowed by the concern for stability and the maintenance of peace in the area. The same is true for the Mano River Union. In the face of these realities, Guinea's objective is to ensure that economic priorities urgently resume their place at the forefront of subregional concerns. To that end, Guinea has sought to revive the political will needed to restore the raison d'être of these two groupings and their vocation as economic integration bodies.
26. It should also be noted that Guinea has concluded standard bilateral trade agreements with a certain number of countries. These agreements provide for most-favoured-nation treatment and do not grant any particular tariff preferences. The countries in question are Guinea-Bissau, China, Tunisia, Egypt, Turkey, Côte d'Ivoire, Mali and Ukraine.
27. In April 1997, Guinea concluded a trade and tariff convention with Morocco providing for total exemption from tariffs and taxes with equivalent effect for certain Guinean and Moroccan products traded between the two countries, taken from Schedules 1 and 2. The products covered by this convention are those originating entirely in one of the two countries or having undergone a degree of processing of 40 per cent or less.
28. Guinea was also among the first countries to accede to the Global System of Trade Preferences (GSTP) and also signed the Agreement Establishing the Common Fund for Commodities as well as the International Coffee Agreement.
(a) Customs duties
29. A few years ago, in order to meet the requirements of a liberal economy, Guinea embarked on a thorough reorganization of its customs system and its tariffs.
30. The import duties and taxes currently in force are:
- The import customs duty (droit de douane d'entrée - DDE) at a normal rate of 7 per cent and a reduced rate of 2 per cent;
- the fiscal import duty (droit fiscal d'entrée - DFE) at a rate of 8 per cent (except on rice, for which there is a flat rate of GF 58,752 per tonne, and flour and vegetable oil for which the normal rate is 23 per cent and the reduced rate is 6 per cent);
- the clearance fee (redevance pour traitement de liquidation - RTL) of 2 per cent;
- the surcharge for the consumption of certain so-called luxury items, at rates of 20 per cent, 30 per cent, 40 per cent, 60 per cent and 70 per cent according to the nature of the product.
31. Apart from the above duties and taxes, Guinea also levies the internal taxes listed below on certain products. Some of these taxes are also levied on national production. They are:
- Value added tax (VAT) at a rate of 18 per cent;
- Special Tax on Petroleum Products (TSPP) of GF 355 per litre of petrol, GF 245 per litre of diesel and GF 160 per litre of oil;
- Registration Tax (TE) at a rate of 0.5 per cent (investment code regime);
- Storage Tax (TEN) at a rate of 1 per cent;
- Transit Duty (DT) at a rate of 3 per cent;
- Additional Centime (CA) for the Chamber of Commerce at a rate of 0.25 per cent;
- ECOWAS Community Levy (PC) at a rate of 0.5 per cent.
32. The documents required for customs transactions are the Tax Statement (BDT) delivered by the government supervisory body, the SGS, the purchasing invoice, the bill of lading or airway bill, the DDI, the certificate of origin and, where applicable, the phytosanitary certificate.
(b) Customs valuation and preshipment inspection
33. The customs valuation procedure currently in force in Guinea is based on the Brussels Definition of Value i.e. the normal price of the goods or the price which they would fetch at the time of registration of the detailed declaration and at the place of introduction into the customs territory.
34. In June 1996, Guinea signed a contract with the Société générale de surveillance (SGS) for the preshipment inspection of all goods imported in the framework of the operation known as the Programme for the Security of Customs Revenue (Programme de sécurisation des recettes douanières PSRD). The SGS controls the quantity, quality and price of the goods and determines the customs value and tariff heading, monitors the settlement and recovery of duties and taxes, and handles the documentary and physical follow up of the suspensive arrangements and of customs duty exemptions.
35. One of the first measures taken by the Government in 1986, the year of the great economic reforms in Guinea, was to liberalize trade. All of the state trading enterprises (131 at the time) were closed down, import and export licences eliminated, all trading functions transferred to the private sector, the State banks closed, import and export restrictions removed, and structures for the support and promotion of the private sector introduced (Chamber of Commerce, Employers' Federation, trades associations, etc.). At the same time, steps were taken to rationalize tariffs with a view to facilitating import and export activities. The complete computerization of customs services as well as port services at Conakry and the liberalization of the exchange rate of the Guinean Franc against foreign currencies also contributed to facilitating trade activities.
36. In order to strengthen its trade liberalization efforts, the Guinean Government promulgated a law on competition and freedom of prices. This law aims to monitor any infringements of free trade practices, such as agreements, mergers, take-overs, withholding of stocks, monopolies and oligopolies. Back to top