Guinea-Bissau Economy: One of the Poorest Economies

A former Portuguese colony located on the Western African shore of the Atlantic Ocean and bordered by Senegal and Guinea, Guinea-Bissau faced problems such as an untrained public administration, a highly fragmented social structure and an extremely unstable political system when it declared its independence in 1974.

Since then, Guinea-Bissau has been plagued by social and political instability that has caused a lull in economic activity. The country’s economy relies almost exclusively on its agriculture sector as well as any foreign assistance it can get.

Guinea-Bissau’s Cashew Nut Industry
Guinea-Bassau possesses fertile, arable land as well as an ideal climate suitable for growing a large variety of crops, cashew nut production dominates Guinea-Bissau’s agriculture sector. As the sixth largest producer of cashew nuts in the world, the industry represents 20 per cent of Guinea-Bissau’s total GDP as well as 85 per cent of all jobs in the country.

Yet despite being a vital part of Guinea-Bissau’s economy, the industry is extremely underdeveloped. According to the African Economic Outlook, cashew nut production in Guinea-Bissau could easily be tripled or quadrupled with the implementation of modern technology and infrastructure. The lack of cashew nut processing facilities in the country has also caused their cashew nuts to be sold well below international market prices.

Read all about Guinea-Bissau’s Economy on EconomyWatch

Guinea-Bissau’s Industry Sectors
These problems have also manifested in the rest of Guinea-Bissau’s agriculture sector as well as the other industry sectors. Guinea-Bissau’s agriculture sector made up 62 per cent of Guinea-Bissau’s GDP in 2008; services and industrial sectors contributed 23 per cent and 15 per cent respectively.

However much of Guinea-Bissau’s economy remains unaccounted for. According to the African Economic Outlook, Guinea-Bissau’s informal sector is the main source of income within the capital of Bissau, with only 75 firms registered in the entire country.

Illegal drug trafficking is also rampant in Guinea-Bissau with an estimate of nearly one tonne of cocaine passing through the country every day enroute to Europe. It’s believed that a month’s cocaine shipments through Guinea-Bissau is approximately equal to 10 times Guinea-Bissau’s gross annual national earnings.

Find out more about Guinea-Bissau’s Industry Sectors.

Guinea-Bissau’s Export, Import and Trade
Much of Guinea-Bissau’s current trade is centred around the cashew nut industry. According to the African Economic Outlook, cashew nut production was responsible for more than 95 per cent of Guinea-Bissau’s total exports in 2009. India was their largest export partner, purchasing almost 70 per cent of Guinea-Bissau’s cashew nuts.

On the other hand, most of Guinea-Bissau’s imports are primarily consumer and capital goods. In 2009, 60 per cent of its imports were made up of commodities such as rice, flour and sugar, while a further 30 per cent of their total imports came from oil. Due to the contrast between the value of their imports and exports, Guinea-Bissau is currently operating under a trade deficit. Declining cashew nut prices has also resulted in an even greater trade imbalance. In 2006, Guinea-Bissau’s exports were valued at US$133 million while its imports amounted to US$200 million.

Find out more about Guinea-Bissau’s Export, Import and Trade

Guinea-Bissau’s Economic Structure
Among its 1.657 million population, 632,700 are officially considered to be part of the Labour force. However, a large portion of Guinea-Bissau’s youths are already working. One explanation could be Guinea-Bissau’s high mortality and low life-expectancy rates. According to the UN, Guinea-Bissau has the 8th highest mortality rate in the world, while its population only has an average life expectancy of 46.4 years, ranking it among the bottom 10 nations in the world.

Many Guinea-Bissauans also receive little to no form of education. According to the African Economic Outlook, only 48 per cent of children finished primary school in 2006, while barely 17 per cent of students finish secondary school. The education system also faces the problem of poorly trained teachers, lack of teaching materials as well as sporadic attendance particularly during the cashew harvest season.

Find out more about Guinea-Bissau’s Economic Structure

Guinea-Bissau’s Economic Forecast
Guinea-Bissau’s economic forecast is bleak. The country should generally experience growth over the next five years, however this growth will not be able to lift Guinea-Bissau out of the depression. Guinea-Bissau’s economic forecast is also conditional to future structural reforms as well as continual foreign assistance.

From 2011 to 2015, Guinea-Bissau’s GDP (PPP) is likely to see an annual growth of between 5.69 to 6.51 per cent while nominal GDP (current prices, US dollars) will increase by 3.15 to 6.67 per cent during the same time period. By 2015, Guinea-Bissau’s GDP (PPP) and nominal GDP (current prices, US dollars) are predicted to hit US$2.42 billion and US$1.087 billion respectively.

Find out more about Guinea-Bissau’s Economic Forecast

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.