Economy and Business in Guinea-Bissau

Economy and Business in Guinea-Bissau

Guinea-Bissau is one of Africa’sand the world’s least developed countries, both after economic and social development. The country has limited natural resources and relies heavily on international aid. Lack of political stability around 2000 has further complicated development. Until the independence of Portugal in 1973, there was a war of liberation in Guinea-Bissau for several years, after which a large part of the Portuguese population left the country, with capital and knowledge. The lifeblood of the country’s economy, agriculture, was largely destroyed as a result of the war, which also led to many being displaced from their homes and had to be repatriated at the end of the war. After independence, the authorities chose a centralized planning economy with strong state participation. This was stated last in the 1980s, when Guinea-Bissau, from 1987, also implemented an economic structural adjustment policy, with liberalization of the economy and privatization of state-owned enterprises. An aid and loan-financed investment program from the mid-1970s, with an emphasis on industrial travel, was not realized, and the country is still dependent on agriculture, which employs approx. 85% of the working population of the population.

After the liberation, Guinea-Bissau has received considerable financial support from Western countries, especially the Nordic countries, and above all Sweden. After the civil war 1998-99, the state reduced public spending, and after a period of continued instability, a short-term economic crisis program was implemented in 2004.

Agriculture and fishing

Agriculture is the basis of Guinea-Bissau’s economy, accounting for about 85% of employment and approx. 55% of GDP. The colonial power Portugal did not develop plantation agriculture in Guinea-Bissau, where agriculture is thus run by small farmers, and a large part of the production takes place for its own consumption. The most important crops produced for sales are cashews, coconuts, palm kernels, peanuts and cotton. Otherwise, rice, corn, cassava, coconuts and sweet potatoes are also grown, of which rice is the most important basic food – with increasing imports towards the end of the 1990s. In the savannah areas, livestock farming is the most important industry, and some forestry is run. Forests cover almost 40% of the country’s land, and cover the country’s need for fuel and timber. Animal husbandry is run inland, especially in the north, with meat production essential for local consumption. Some hides and skins are exported.

Guinea-Bissau has rich fishing resources, and the fishing industry is subject to political efforts, but as of 2000 had not yet reached the point where the country could export fish. It is estimated that potential annual catches in Guinea-Bissau’s waters are approx. 250,000 tonnes, and the revenues from this can be the country’s most important source of income. The revenues from the fisheries sector come mainly from the sale of fishing rights in the country’s fishing zone, mainly to the EU. Sales of such licenses were the country’s second most important source of export revenue in the early 2000s, following cashew nuts. It is believed that the country loses large sums of illegal fishing annually, which the authorities have no way to prevent.

Mining and industry

The country’s mineral resources have been exploited to a small extent, and mapping is still ongoing to some extent, especially after petroleum. Bauxite is found in the Boé area, and phosphate in Cacheu and Oio. Oil exploration began in the 1960s and intensified as a priority development area from 2000. Some deposits have been identified and a conflict with Senegal on maritime borders was resolved in 1993, after which the two countries in 1995 signed an agreement on joint management of border areas..

Guinea-Bissau has little industry, substantially limited to the production of food for local consumption, as well as the processing of wood products and cotton. Most of the industrial business is located near Bissau.

In 2014, the production of electrical energy was 31.6 GWh. Per capita consumption is around 17 kWh. Most of the country’s power consumption is produced in private power plants. The energy consumption in Guinea Bissau is entirely dependent on imported petroleum products as well as on domestic use.

Economy and Business in Guinea-Bissau

Foreign Trade

Since its release, the country has had a considerable current account deficit abroad. Exports are dominated by cashews (about 95% of export revenues, 2001) and peanuts – as well as sales of fishing rights. Portugal is traditionally the most important trade link, which also accounts for a large proportion of aid to and investment in Guinea-Bissau, which is heavily dependent on international development aid. Because of. The dominant role of cashews has been given as an export commodity, India has become a key trading partner.

Guinea-Bissau applied for membership in the franc zone in 1987 and joined the Union économique et monétaire ouest-africaine in 1997, and the same year was incorporated into the franc zone, whereby the West African CFA became the country’s currency and replaced the peso.

Transport and Communications

Guinea-Bissau’s transport network is poorly developed, but considerable road construction (about 3500 km) was done during the colonial period, mainly based on military, strategic needs. From 1990, the country has received aid to improve the road network, and plans include building a main road that will link Guinea-Bissau to Gambia and Senegal, from north to south in the country, and from Guinea-Bissau to Guinea. As of 1995, it was approx. 4400 km of roads in the country. There is no railway in Guinea-Bissau. There is considerable potential for increased water transport, with around 85% of the population living within a distance of 20 km from navigable waterways. There is an international airport outside Bissau, and 10 smaller airports for domestic traffic. The main port city is Bissau.

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