世界发展银行-Escaping-the-Low-Growth-Trap---Guinea-Bissau-Country-Economic--Memorandum_104页_2mb

Summary of Guinea-Bissau Country Economic Memorandum

Core Content

Guinea-Bissau is a small West African country with a population of around 1.9 million, rich in natural resources and possessing a strategic geographical location. Despite its potential, the country remains one of the poorest and most fragile in the world due to perennial political instability, weak institutions, and an underdeveloped private sector. The Country Economic Memorandum (CEM) outlines key constraints to growth and proposes reform options to promote sustained and inclusive economic development.

Main Constraints to Growth

1. Fragility and Political Instability

   • Political instability and weak governance have severely hindered economic development.
   • The country has experienced multiple coups since independence, creating an environment of uncertainty.
   • Weak public institutions and poor public administration are major sources of fragility.
   • The economic impact of instability and conflict between 1998 and 2018 is estimated at around US$1.1 billion.
   • The security sector reform is stalled, with over 30% of public servants employed in the security sector.

2. Weak Human Capital Base

   • The education system is underperforming, with low completion rates and poor learning outcomes.
   • A third of children aged 6–11 have never attended school, and learning outcomes are significantly below SSA averages.
   • Large gender and regional disparities exist in education access and quality.
   • Teacher strikes are frequent and have become a key driver of poor education quality.

3. Missing Private Sector

   • Private investment is extremely low, at 2% of GDP, the second lowest in the world.
   • The private sector is constrained by a complex and outdated regulatory framework, high costs of doing business, and political risk.
   • Women face significant barriers to economic participation due to gender inequality in the legal and regulatory environment.

Impact of the COVID-19 Crisis

• The pandemic is expected to worsen existing constraints and hinder growth.
• Low commodity prices and reduced external demand could negatively impact the economy.
• School closures have disrupted learning and may lead to a loss of 0.2–0.5 years of schooling.
• The crisis could also exacerbate political and social instability, leading to a potential social crisis.
• Public spending is needed to support affected individuals and businesses, but the government has limited fiscal space.
• Strengthening the business climate and promoting digital technologies are key to recovery and sustainable growth.

Reform Options for Sustained Growth

Strengthening Governance

• Enhance political leadership in public financial management (PFM) reforms.
• Develop an operational PFM plan with clear and measurable indicators.
• Reestablish the Treasury Committee to improve expenditure controls.
• Implement a treasury single account at the Central Bank to consolidate government cash.
• Update the budget classification system to align with WAEMU guidelines.
• Provide financial and administrative autonomy to the Court of Auditors.
• Conduct regular audits by the Inspector General and separate entities.
• Secure political support for justice sector reforms, including the Justice Reform Program (2015–2019).
• Accelerate the demobilization and retirement of military, police, and national guard personnel through pragmatic pay-out mechanisms.

Investing in Human Capital

• Stabilize the education system by implementing teacher reforms, including performance assessments and in-service training.
• Improve teaching quality through curriculum modernization and teacher training.
• Prioritize early education to enhance literacy and numeracy.
• Expand pre-school infrastructure and staff to improve school readiness.
• Strengthen governance and planning to improve data for decision-making.
• De-politicize the education system to ensure continuity and responsiveness to learning challenges.

Improving the Business Climate

• Relaunch business environment reforms and reestablish the Business Environment Reform Commission.
• Promote the formalization of firms through simplified procedures and mobile financial services.
• Improve land tenure management by digitizing land records and strengthening the General Directorate of Geography and Cadastre.
• Address trade facilitation bottlenecks by enacting streamlined customs procedures and ratifying the WTO Trade Facilitation Agreement.
• Strengthen gender equality legislation to ensure equal opportunities for women in employment, credit, and property ownership.

Key Findings

• Guinea-Bissau has a mono-crop economy, heavily dependent on cashew exports, which makes it vulnerable to global shocks.
• Real GDP growth has averaged 3.3% from 2000–2019, lower than the SSA average.
• Private investment is minimal, reflecting a poor business environment and political risk.
• The education system is in crisis, with low learning outcomes and high dropout rates.
• The private sector is almost non-existent and requires significant reform to become a driver of growth.
• Political instability and weak governance are the root causes of the country's economic stagnation.
• The CEM proposes a comprehensive reform agenda, emphasizing governance, education, and the business climate as key areas for intervention.
• A virtuous cycle between governance and private sector development is essential for long-term growth.
• Digital technologies and transparent public financial management are critical for recovery and growth.
• Flexible and realistic reform approaches are necessary to avoid overcommitment and underdelivery.

Conclusion

Guinea-Bissau's path to escaping the low-growth trap requires a multifaceted approach, focusing on strengthening governance, improving human capital, and creating a more conducive environment for the private sector. These reforms, if implemented effectively, can help promote sustainable and inclusive growth.