Guinea

Booming mining sector

Growth is expected to rebound in 2025 after a slowdown in 2024 caused by the explosion of a major fuel import and storage facility in Conakry at the end of 2023. Fuel supply is expected to improve as a result road logistics being adapted following the explosion. However, the constraints of the temporary terminal will mean that 22% of gasoline imports will have to be transported by truck in 2025, which will put further pressure on transportation costs. Despite this, inflation is expected to decline in 2025 after surging in 2024. The resumption of fuel supply and declining fuel prices will favour the recovery of the economy as a whole.

But the main growth driver will remain the mining sector. After a year of record production in 2024 (140 million tonnes), bauxite production will maintain its upward trend in 2025. However, and despite the government's ambitions, the potential for converting this bauxite into alumina is limited to a single refinery. The Simandou 2040 programme aimed at exploiting the country's iron resources will continue to be the major beneficiary of foreign direct investment. Production of iron ore is expected to begin in late 2025, with a significant increase in exports expected in 2026. This project includes the construction of the 650-km Trans-Guinean Railway for transportation to the port of Conakry, which is currently being expanded. Both the railway and the extension to the port are scheduled for delivery at the end of 2025. The country will also increase its electricity production with a higher yield from the two existing hydroelectric dams. The resumption of work on the Amaria dam will, in time, increase national hydroelectric production by 40%. A USD 300 million project involving imported liquefied natural gas (LNG) that includes a 1,900 MW power plant will be operational by mid-2025, which will also improve the electricity supply. Public investment will be backed by substantial international financing agreements: USD 307 million from the ECOWAS Bank for Investment and Development and USD 41 million from the African Development Bank. However, this investment boom could be slowed by institutional difficulties and the failure to achieve some of the financial commitments.

Strategic investments despite funding challenges

The 2024 financial year was marked by a temporary relaxation of budgetary orthodoxy made necessary by the explosion. The initial 2025 Finance Act, enacted in early January, set the state on a path of strategic investment. Revenue will come mainly from taxes (83%), as well as from donations and external loans, the government's objective being to strengthen financial autonomy. This will be achieved through digitisation, intensified tax controls, broadening the tax base and equipping customs services to control mining exports. This latter point will support the contribution of mining revenues (20%) to the 2025 budget, by ensuring that bauxite operators charge market prices in their intra-group transactions. On the expenditure side, 62% will be allocated to current expenditure and 38% to investment, mainly in infrastructure. Mandatory spending will limit the state's ability to finance key sectors such as education and health. Although declining, energy subsidies will remain significant, accounting for GNF 3 trillion, which is equivalent to USD 300 million or around 1% of GDP. In addition, debt-related charges, particularly from domestic debt (55% of the total debt) – treasury bonds issued in 2023 must be repaid – will weigh heavily. Despite the end of explosion-related expenses, the budget deficit will remain significant due to the rebound in investments and to electoral expenses. It will be financed by resorting to both external and domestic debt. In mid-2024, the government submitted a request to the IMF for a program with an Extended Credit Facility, but it was rejected, in large part because of the country's slow return to democratic functioning. According to the IMF and the World Bank's debt sustainability analysis of April 2024, Guinea's overall public debt overhang risk has increased but remains moderate

The necessary imports to enable the exploitation of the Simandou deposit will weigh on the trade surplus and consequently on the current account balance. The high cost of gasoline imports will persist as the destroyed port site has been replaced by floating storage. However, the rationalisation of bauxite exploitation following the explosion, as well as the involvement of new international mining companies, point to a positive trend in exports. The latter will also be supported by a favorable international context, with rising demand for bauxite (42% of exports in 2023), for instance from China, which is a leading aluminum producer. Gold exports (50% of total exports in 2023) will increase, both in volume and in value, but could be affected by the withdrawal of certain western mining companies, who are concerned about political risk in the Sahel. The services and primary income balances will remain structurally in deficit as a result of the mining operations carried out by foreign companies. A large proportion of imports are offset by foreign direct investment. Foreign exchange reserves will remain low, i.e., the equivalent of two months of imports. The real effective exchange rate of the franc will remain high, affecting the competitiveness of non-mining products and thereby limiting the country's economic diversification.

Uncertain elections and a possible continuation of the junta's rule

Following the September 2021 coup that overthrew President Alpha Condé, a military junta led by Lieutenant Colonel Mamady Doumbouya took power. Under pressure from the Economic Community of West African States (ECOWAS), the junta committed to a transition to civilian rule in October 2022, but failed to abide by that commitment, extending the transition beyond December 2024, claiming the need to rebuild after the explosion. In August 2024, the National Transition Council (the government working under the authority of the junta) presented a draft of a new constitution, but did not meet the deadlines for holding a vote. This draft stipulates a limit of two presidential terms and the establishment of a bicameral parliamentary system. It would also allow General Doumbouya to run in the elections, contrary to what is stipulated in the Transition Charter. The referendum to adopt this new constitution is scheduled for May 2025, with presidential and legislative elections potentially being held in October. However, the political reforms, as well as the creation of a new electoral register and the population census, which are prerequisites for the elections, have not been carried out. Moreover, in October 2024, a number of political groups were deemed non-compliant and were dissolved or placed under investigation by the regime. The government denies any intention to sideline the opposition, but the junta's repressive tendencies, such as banning demonstrations and restricting the media, are fuelling mistrust. Public discontent and internal dissent could foster a counter-coup.

Relations between Guinea and ECOWAS improved at the end of February 2024 with the easing of sanctions imposed in 2022. Additionally, due to its considerable mining interests, the Chinese government will preserve good relations with local authorities in order to maintain and expand their existing mining contracts, particularly by participating in the Simandou mining project. Last, the repercussions of conflicts in neighbouring Sahelian countries represent a risk and could disrupt mining and agricultural production.

Last updated:March 2025