CAPE TOWN, South Africa, April 4, 2022/ — Despite having vast energy resources, Guinea-Bissau has one of the least developed economies in the world. Due to the West African country’s slow progress regarding the exploitation of its energy resources, due to limited investments in infrastructure development, and political instability, little progress has also been made in expanding other sectors such as manufacturing and mining.
However, recent increases in capital expenditure are set to revitalize the economy during 2022. In addition, for the near term, addressing corruption and boosting infrastructure rollout will enable Guinea-Bissau to grow its economy by 3.9% in 2022 and ensure that inflation remains stable at 1.9%, according to development finance institution, the African Development Bank (AfDB).
Energy Developments Spur Economic Growth
The energy sector could provide Guinea-Bissau with a revenue stream for sustained economic growth. To better capitalize, the government needs to establish a capital-attractive regime and introduce new exploration and production licenses for the oil and gas industry.
This would improve investor confidence and increase the participation of global energy companies who would serve to monetize the west African country’s energy resources while creating local jobs.
Currently, on the renewable energy front, Guinea-Bissau has various projects in the pipeline that contribute to a positive financial outlook for 2022. The projects are in line with improved electrification targets, having already progressed from 6% in 2010 to 31% in 2019.
With energy being the backbone of economic growth, projects such as the 20 MW, $32.75 million Bissau Solar PV Park 1 and the $50 million Solar Energy Scale-Up and Access Project, will enable Guinea-Bissau to achieve growth targets.
In addition, the ECOWAS Regional Electricity Access Project, with funding to the tune of $338.7 million from the World Bank and partners, is set to further improve Guinea-Bissau’s economic growth outlook.
Meanwhile, the AfDB’s $30 million financial package, for the purpose of agriculture, energy, water and public works projects in Guinea-Bissau, as from 2022, could also help revitalize the economy through the refurbishment of infrastructure.
Capitalizing on the Country’s Mining Potential
Guinea-Bissau is rich in bauxite, gold, diamonds, and phosphate rock but a lack of transparency within this sector has crippled the industry’s ability to expand. Addressing corruption within the mining sector could enable the government to enhance foreign investment and ring-fence funds to advance the sector, accelerating economic growth through mining-related job creation, infrastructure development, and export earnings.
By establishing transparency and accountability within the sector, opportunities emerge in the securing of grants such as the one being provided by the AfDB to six other African countries.
This is as part of AfDB’s, ‘Governing Natural Resource Outflows for Enhanced Economic Resilience in Fragile and Transitional Countries’ initiative and access to a similar grant could enable Guinea-Bissau to significantly expand the country’s mining sector and drive sustainable economic growth in 2022 and beyond.
Manufacturing and Regional Trade Cooperation
Meanwhile, H.E. President Umaro Sissoco’s recent visit to Rwanda’s Special Economic Zone in March 2022 was a major step towards enhanced regional trade cooperation. Together with the Rwandan delegation, the President met with companies such as Rwandan food manufacturer, Africa Improved Foods, and vehicle manufacturer, Volkswagen, to discuss investment and manufacturing opportunities for Guinea-Bissau.
By leveraging regional cooperation with some of Africa’s fastest-growing economies, Guinea-Bissau could accelerate development across a variety of sectors including manufacturing, representing a key driver of economic growth.
At the same time, a 2022 feasibility study for constructing a new deep-sea port in Guinea-Bissau is a testimony to the efforts of the country to boost regional trade and attract foreign investment.
The development of the port will be critical in driving economic growth while positioning the country as a strategic west African trade hub.