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Economy of Guinea

Richly endowed with minerals, Guinea possesses over 25 billion metric tons (MT) of bauxite--and perhaps up to one half of the world's reserves. In addition, Guinea's mineral wealth includes more than 4 billion tons of high-grade iron ore, significant diamond and gold deposits, and undetermined quantities of uranium. Guinea has considerable potential for growth in the agricultural and fishing sectors. Soil, water, and climatic conditions provide opportunities for large-scale irrigated farming and agro industry. Possibilities for investment and commercial activities exist in all these areas, but Guinea's poorly developed infrastructure and rampant corruption continue to present obstacles to large-scale investment projects. Joint venture bauxite mining and alumina operations in northwest Guinea historically provided about 80% of Guinea's foreign exchange. The Compagnie des Bauxites de Guinea (CBG) is the main player in the bauxite industry. CBG is a joint venture, in which 49% of the shares are owned by the Guinean Government and 51% by an international consortium led by Alcoa and Rio Tinto-Alcan. CBG exports about 14 million MT of high-grade bauxite every year. The Compagnie des Bauxites de Kindia (CBK), a joint venture between the Government of Guinea and Russki Alumina (Rusal), produces some 2.5 million MT annually, nearly all of which is exported to Russia and Eastern Europe. Dian Dian, a Guinean/Ukrainian joint bauxite venture, has a projected production rate of 1 million MT per year, but is not expected to begin operations for several years. The Alumina Compagnie de Guinée (ACG), a subsidiary of Rusal which took over the former Friguia Consortium, produced about 2.4 million MT of bauxite in 2004, which is used as raw material for its alumina refinery. The refinery supplies about 750,000 MT of alumina for export to world markets. Both the Alcoa-Rio Tinto-Alcan consortium and the Guinea Alumina Corporation (GAC), whose stakeholders include BHP-Billiton, the Global Alumina Corporation, the Dubai Alumina Corporation, and the Mubadala Development Company, have signed conventions with the Government of Guinea to build large alumina refineries with a combined capacity of about 4 million MT per year. Diamonds and gold also are mined, though Guinea’s potential in these two industries has been historically underdeveloped. By far, most diamonds are mined artisanally. The largest gold mining operation in Guinea is a joint venture between the government and Ashanti Gold Fields of Ghana. Societé Miniere de Dinguiraye (SMD) also has a large gold mining facility in Lero near the Malian border as does SEMAFO, a Canadian-based gold mining company. The Guinean Government adopted policies in the 1990s to return commercial activity to the private sector, promote investment, reduce the role of the state in the economy, and improve the administrative and judicial framework, after decades of socialism under President Sekou Touré. Despite the initial success of these programs to promote economic growth, changes in policy over the following decade up to the time of President Conté’s death made little headway in addressing the structural problems afflicting Guinea’s private sector, although there was some growth. Though growth has since slowed, the informal sector continues to be a major contributor to the economy. The government revised the private investment code in 1998 to stimulate economic activity in the spirit of free enterprise. The code does not discriminate between foreigners and nationals and provides for repatriation of profits. While the code restricts development of Guinea's hydraulic resources to projects in which Guineans have majority shareholdings and management control, it does contain a clause permitting negotiations of more favorable conditions for investors in specific agreements. Foreign investments outside Conakry are entitled to more favorable benefits. A national investment commission has been formed to review all investment proposals. The United States and Guinea have signed an investment guarantee agreement that offers political risk insurance to American investors through the Overseas Private Investment Corporation (OPIC). In addition, Guinea has inaugurated an arbitration court system, which allows for the quick resolution of commercial disputes. Until June 2001, private operators managed the production, distribution, and fee-collection operations of water and electricity under performance-based contracts with the Government of Guinea. However, both utilities are plagued by inefficiency and corruption. Foreign private investors in these operations departed the country in frustration. In 2002, the International Monetary Fund (IMF) suspended Guinea's Poverty Reduction and Growth Facility (PRGF) because the government failed to meet key performance criteria. In reviews of the PRGF, the World Bank noted that Guinea had met its spending goals in targeted social priority sectors. However, spending in other areas, primarily defense, contributed to a significant fiscal deficit. The loss of IMF funds forced the government to finance its debts through Central Bank advances. The pursuit of unsound economic policies has resulted in imbalances that are proving hard to correct. Under then-Prime Minister Diallo, the government began a rigorous reform agenda in December 2004 designed to return Guinea to a PRGF with the IMF. Although exchange rates temporarily improved, these reforms did not slow down inflation, which hit 27% in 2004, 30% in 2005 and, according to the Economist Intelligence Unit, 34.7% in 2006 and 23.4% in 2007. Exchange rate stability is an ongoing concern. The Guinea franc (GNF) was trading at 2,550 to the dollar in January 2005, reached a low of 5,554 to the dollar in October 2006, and averaged approximately 4,500 to the dollar in 2007 and 2008. The official exchange rate was approximately 5,000 GNF to the dollar in July 2009, but the unofficial exchange rate was about 7,000 GNF to the dollar. In 2007, the IMF launched a new Poverty Reduction Growth Facility for Guinea to support a three-year IMF program with the objective of reducing poverty and securing debt relief for the country under the Heavily Indebted Poor Countries (HIPC) initiative. As of late 2008, Guinea was on track to achieve debt reduction under the HIPC initiative. However, after the December 23, 2008 coup d’état, the status of the HIPC program remains unclear. In 2009, both the World Bank and the IMF stopped their programming to Guinea. By the end of February 2010, Guinea was officially $16 million in arrears to the World Bank. Despite the opening in 2005 of a new road connecting Guinea and Mali, most major roadways connecting the country's trade centers remain in poor repair, slowing the delivery of goods to local markets. Electricity and water shortages are frequent and sustained, and many businesses are forced to use expensive power generators and fuel to stay open. In 2004, the Guinea Alumina (GAC) joint venture (with investments by Global Alumina, BHP Billiton, Dubai Aluminum, and Abu Dhabi’s Mubadala Development) began feasibility studies on a 650 sq. km bauxite mining site. In 2008, the company started the “early works” phase of their project which includes infrastructure construction on the mining site, the refinery facility, and a transportation network. Alcoa and Rio Tinto-Alcan are also in the early construction phase of a smaller refinery in the area. Taken together, they represent the largest private investment in sub-Saharan Africa since the Chad-Cameroun oil pipeline, and could see a 40% increase in Guinea’s bauxite production upon completion. The $5 billion GAC project is currently moving slowly due to falling commodity prices and massive government intervention. Though production from the site was originally scheduled to commence in mid-2012, it is not likely to reach the production stage until 2014 or 2015. GAC announced in November 2009 that they plan to continue with the construction of their refining plant in 2011. Rio Tinto signed an agreement with the Government of Guinea in 2003 to develop an 110 sq. km iron mine in Simandou. The company has invested nearly $500 million to date in feasibility studies and early development of their mining site. In December 2008, the government announced that it would be revoking part of Rio Tinto’s Simandou contract. The case is still under consideration in Guinean court. Due to the security situation, government interference, and global commodity prices, Rio Tinto has temporarily slowed its operations at Simandou. Investment and economic growth slowed considerably in 2009 due to falling commodity prices, the global economic crisis, and CNDD economic mismanagement. After seizing power, CNDD President Moussa Dadis Camara declared that all commercial contracts negotiated under the former regime would be subject to immediate audit and review. True to his word, Camara waged several contract campaigns in his first six months in power against large international mining companies including Rio Tinto, Rusal, and AngloGold Ashanti. Since September 2009, the insecurity created by government hostility toward investment has been compounded by violent political crackdowns and fracturing within the military. Many companies already operating in Guinea have slowed exploration efforts considerably in fear that falling prices and government intervention could precipitate massive investment losses. New investments also decreased significantly in 2009. Though the political situation seemed to be improving as of March 2010, the health of Guinea’s economic future remains unclear. GDP (CIA est.): $4.54 billion. Annual real economic growth rate (2008 est., CIA World Factbook): 2.9%. Per capita GNI (2009 est., World Bank): $410. Avg. inflation rate (2008 est., CIA World Factbook): 30%. Natural resources: Bauxite, iron ore, diamonds, gold, salt, hydropower, uranium, fisheries. Industry (36.1% of GDP, 2007 CIA est.): Types--mining, light manufacturing, agricultural processing. Agriculture (23.7% of GDP, 2007 CIA est.): Products--rice, cassava (tapioca), coffee, bananas, sweet potatoes, palm products, pineapples, cattle, sheep, goats, timber. Trade: Exports (2007): bauxite, alumina, diamonds, gold, coffee, pineapples, bananas, palm products. Major markets--European Union, U.S., China, Eastern Europe, South Korea, Cote d’Ivoire. Trade balance (2009 CIA est.): -$210 million. Official exchange rate (July 2009): Approx. 5,000 Guinean francs=U.S. $1. Fiscal year: January 1-December 31.

Geography of Guinea

Guinea is located on the Atlantic Coast of West Africa and is bordered by Guinea-Bissau, Senegal, Mali, Côte d'Ivoire, Liberia, and Sierra Leone. The country is divided into four geographic regions: A narrow coastal belt (Lower Guinea); the pastoral Fouta Djallon highlands (Middle Guinea); the northern savannah (Upper Guinea); and a southeastern rain-forest region (Forest Guinea). The Niger, Gambia, and Senegal Rivers are among the 22 West African rivers that have their origins in Guinea. The coastal region of Guinea and most of the inland have a tropical climate, with a rainy season lasting from April to November, relatively high and uniform temperatures, and high humidity. Conakry's year-round average high is 29oC (85oF), and the low is 23oC (74oF); its average annual rainfall is 430 centimeters (169 inches). Sahelian Upper Guinea has a shorter rainy season and greater daily temperature variations. Official Name: Republic of Guinea Area: 245,860 sq. km. (95,000 sq. mi.), about the size of Oregon. Cities: Capital--Conakry. Other cities--Guéckédou, Boké, Kindia, N'Zérékoré, Macenta, Mamou, Kankan, Faranah, Siguiri, Dalaba, Labe, Pita, Kamsar. Terrain: Generally flat along the coast and mountainous in the interior. The country's four geographic regions include a narrow coastal belt; pastoral highlands (the source of West Africa's major rivers); the northern savanna; and the southeastern rain forest. Climate: Tropical.

Government of Guinea

Until the December 23, 2008 coup d’état, Guinea was a constitutional republic in which effective power was concentrated in a strong presidency. Legislative elections, previously scheduled for June 2007, have been repeatedly delayed. The government currently is controlled by a military junta and is operating without a legislative body. Government administration is carried out at several levels; in descending order, they are: eight regions, 33 prefectures, over 100 subprefectures, and many districts (known as communes in Conakry and other large cities, and villages or "quartiers" in the interior). District-level leaders are elected; the president appoints officials to all other levels of the highly centralized administration. The interim president of the military junta currently governs Guinea with the assistance of a civilian prime minister. The military junta is represented by a National Council for Democracy and Development. Although outside of the country, Captain Moussa Dadis Camara remains the president of the CNDD and the self-proclaimed head of state while General Konate has assumed the title of interim President of the Republic. The CNDD suspended the constitution, as well as political and union activity. With the signing of the January 15 Ouagadougou Accords, General Konate signaled his intent to establish a transition government under the leadership of a civilian prime minister and to organize elections within six months. Konate appointed opposition political leader Jean-Marie Dore as Prime Minister in January and Dore officially appointed his cabinet on February 15. Twenty-four ministers of the 34-member cabinet are civilians. The remaining 10 positions are military officers appointed by the CNDD. The constitution remains suspended, but political and union activity is currently allowed. Guinea has more than 100 registered political parties, of which six were represented in the National Assembly before it was suspended in December 2008. Although key bilateral and multilateral partners condemned the coup, the Guinean population initially welcomed Captain Camara and the CNDD. By August 2009, many opposition leaders and citizens were increasingly concerned by Camara’s public statements, lack of progress on key issues, and his dictatorial tendencies. Although Camara still has some supporters, particularly in the Forest Region, citizens are generally optimistic about Konate’s leadership, the establishment of a civilian transitional government, and the promise of elections. Elections have been repeatedly delayed since 2007, but are now expected to be held by mid-year 2010. Principal Government Officials President of the CNDD--Captain Moussa Dadis Camara Prime Minister (Head of Government)--Kabine Komara Minister of Economy and Finance--Captain Mamadou Sande (currently suspended) Minister of Foreign Affairs--Alexandre Cece Loua Minster of Security--General Mamadouba Camara Minister of National Education and Scientific Research--Alpha Kabine Camara Minister of Defense--General Sekouba Konate Ambassador to the United States--Mory Karamoko Kaba Ambassador to the United Nations--Alpha Ibrahima Sow Guinea maintains an embassy in the United States at 2112 Leroy Place, NW, Washington, DC 20008 (tel. 202-483-9420) and a mission to the United Nations at 140 E. 39th St., New York, NY 10016 (tel. 212-687-8115/16/17). Type: Republic. Constitution: 1990; amended 2001; constitution was suspended on December 23, 2008. Independence: October 2, 1958. Anniversary of the Second Republic, April 3, 1984. Branches: Executive--elected president (chief of state); current head of state is a military officer who seized power; prime minister (head of government); cabinet of civilian ministers. Legislative--elected National Assembly (114 seats); dissolved on December 23, 2008. Judicial--Supreme Court. Administrative subdivisions: Region, prefecture, subprefecture, rural district. Political parties: Pro-government--Party for Unity and Progress (PUP). Opposition--Rally for the Guinean People (RPG), Union for Progress and Renewal (UPR), Union of Democratic Forces of Guinea (UFDG), Union for Progress of Guinea (UPG), Union of Republican Forces (UFR). Suffrage: Universal over age 18. Central government budget (2008, estimate): $942 million.

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History of Guinea

The area occupied by Guinea today was included in several large West African political groupings, including the Ghana, Mali, and Songhai empires, at various times from the 10th to the 15th century, when the region came into contact with European commerce. Guinea's colonial period began with French military penetration into the area in the mid-19th century. French domination was assured by the defeat in 1898 of the armies of Almamy Samory Touré, warlord and leader of Malinke descent, which gave France control of what today is Guinea and adjacent areas. France negotiated Guinea's present boundaries in the late 19th and early 20th centuries with the British for Sierra Leone, the Portuguese for their Guinea colony (now Guinea-Bissau), and the Liberia. Under the French, the country formed the Territory of Guinea within French West Africa, administered by a governor general resident in Dakar. Lieutenant governors administered the individual colonies, including Guinea. Led by Ahmed Sékou Touré, head of the Democratic Party of Guinea (PDG), which won 56 of 60 seats in 1957 territorial elections, the people of Guinea in a September 1958 plebiscite overwhelmingly rejected membership in the proposed French Community. The French withdrew quickly, and on October 2, 1958, Guinea proclaimed itself a sovereign and independent republic, with Sékou Touré as President. Under Touré, Guinea became a one-party dictatorship, with a closed, socialized economy and no tolerance for human rights, free expression, or political opposition, which was ruthlessly suppressed. Originally credited for his advocacy of cross-ethnic nationalism, Touré gradually came to rely on his own Malinke ethnic group to fill positions in the party and government. Alleging plots and conspiracies against him at home and abroad, Touré's regime targeted real and imagined opponents, imprisoning many thousands in Soviet-style prison gulags, where hundreds perished. The regime's repression drove more than a million Guineans into exile, and Touré's paranoia ruined relations with foreign nations, including neighboring African states, increasing Guinea's isolation and further devastating its economy. Sékou Touré and the PDG remained in power until his death on April 3, 1984. A military junta--the Military Committee of National Recovery (CMRN)--headed by then-Lt. Col. Lansana Conte, seized power just one week after the death of Sékou Touré. The CMRN immediately abolished the constitution, the sole political party (PDG) and its mass youth and women's organizations, and announced the establishment of the Second Republic. In lieu of a constitution, the government was initially based on ordinances, decrees, and decisions issued by the president and various ministers. Political parties were proscribed. The new government also released all prisoners and declared the protection of human rights as one of its primary objectives. It reorganized the judicial system and decentralized the administration. The CMRN also announced its intention to liberalize the economy, promote private enterprise, and encourage foreign investment in order to develop the country's rich natural resources. The CMRN formed a transitional parliament, the "Transitional Council for National Recovery" (CTRN), which created a new constitution (La Loi Fundamental) and Supreme Court in 1990. The country's first multi-party presidential election took place in 1993. These elections were marred by irregularities and lack of transparency on the part of the government. Legislative and municipal elections were held in 1995. Conte's ruling Party for Unity and Progress (PUP) won 76 of 114 seats in the National Assembly, amid opposition claims of irregularities and government tampering. The new National Assembly held its first session in October 1995. Several thousand malcontent troops mutinied in Conakry in February 1996, destroying the presidential offices and killing several dozen civilians. Mid-level officers attempted, unsuccessfully, to turn the rebellion into a coup d'etat. The Government of Guinea made hundreds of arrests in connection to the mutiny, and put 98 soldiers and civilians on trial in 1998. In mid-1996, in response to the coup attempt and a faltering economy, President Conté appointed a new government as part of a flurry of reform activity. He selected Sidya Touré, former chief of staff for the Prime Minster of the Cote d'Ivoire, as Prime Minister, and appointed other technically minded ministers. Touré was charged with coordinating all government action, taking charge of leadership and management, as well as economic planning and finance functions. In early 1997, Conté shifted many of the financial responsibilities to a newly named Minister of Budget and Finance. In December 1998, Conté was re-elected to another 5-year term in a flawed election that was, nevertheless, an improvement over 1993. Following his reelection and the improvement of economic conditions through 1999, Conté reversed direction, making wholesale and regressive changes to his cabinet. He replaced many technocrats and members of the Guinean Diaspora that had previously held important positions with "homegrown" ministers, particularly from his own Soussou ethnic group. These changes led to increased cronyism, corruption, and a retrenchment on economic and political reforms. Beginning in September 2000, the Revolutionary United Front (RUF) rebel army, backed by Liberian President Charles Taylor, commenced large-scale attacks into Guinea from Sierra Leone and Liberia. The RUF, known for their brutal tactics in the near decade-long civil war in Sierra Leone, operated with financial and material support from the Liberian Government and its allies. These attacks destroyed the town of Gueckedou as well as a number of villages, causing large-scale damage and the displacement of tens of thousands of Guineans from their homes. The attacks also forced the UN High Commissioner for Refugees (UNHCR) to relocate many of the 200,000 Sierra Leonean and Liberian refugees residing in Guinea. As a result of the attacks, legislative elections scheduled for 2000 were postponed. After the initial attacks in September 2000, President Conté, in a radio address, accused Liberian and Sierra Leonean refugees living in the country of fomenting war against the government. Soldiers, police, and civilian militia groups rounded up thousands of refugees, some of whom they beat and raped. Approximately 3,000 refugees were detained, although most were released by year's end. In November 2001, a nationwide referendum, which some observers believe was flawed, amended the constitution to permit the president to run for an unlimited number of terms, and to extend the presidential term from 5 to 7 years. The country's second legislative election, originally scheduled for 2000, was held in June 2002. President Conté's Party of Unity and Progress (PUP) and associated parties won 91 of the 114 seats. Most major opposition parties boycotted the legislative elections, objecting to inequities in the existing electoral system.

People of Guinea

Guinea has four main ethnic groups: Peuhl (Foula or Foulani), who inhabit the mountainous Fouta Djallon; Malinke (or Mandingo), in the savannah and forest regions; Soussous in the coastal areas; and Several small groups (Gerzé, Toma, etc.) in the forest region. West Africans make up the largest non-Guinean population. Non-Africans total about 10,000 (mostly Lebanese, French, and other Europeans). Seven national languages are used extensively; major written languages are French, Peuhl, and Arabic. Nationality: Noun and adjective--Guinean(s). Population (July 2009 estimate, CIA World Factbook): 10,057,975, including refugees and foreign residents. Refugee population (2009 UNHCR est.): 21,488 Liberians, Sierra Leoneans, and Ivoiriens. Population of Conakry: 2 million. Population of largest prefectures--Guéckédou (487,017), Boké (366,915), Kindia (361,117), N'Zérékoré (328,347), Macenta (365,559). Annual growth rate (2009 estimate, CIA World Factbook): 2.572%. Ethnic groups: Peuhl 40%, Malinke 30%, Soussou 20%, other ethnic groups 10%. Religions: Muslim 85%, Christian 8%, traditional beliefs 7%. Languages: French (official), national languages. Education: Years compulsory--8. Enrollment--primary school, 64.32% (male 78.71%, female 69.03%); secondary, 15%; and post secondary, 3%. Literacy (total population over age 15 that can read and write, 2003 est.)--29.5% (male 42.6%, female 18.1%). Health (2009 est.): Life expectancy--total population 57.09 years. Infant mortality rate (2009)--65.22/1,000. Work force (2006, 3.7 million): Agriculture--76%; industry and commerce--18%; services--6%.