Guinea report 11 2007

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Les Oates

GUINEA

Lansana Conté, President

Guinea: a spirit of openness A land rich in minerals and bursting with potential, the Republic of Guinea showcases opportunities in mining, telecoms, shipping and agriculture.

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estled on the West Coast of Africa, with borders on six countries that include Mali, Senegal and Sierra Leone, the Republic of Guinea is one of Africa’s poorest nations, despite being one of its wealthiest in terms of minerals, hydropower and agricultural resources. As well as gold, diamonds, bauxite and iron ore, the country produces fish, salt, coffee, rice and pineapples.

Lansana Kouyaté, Prime Minister

There might even be oil off the coast of the crescent-shaped country. In September last year, the government signed a production-sharing contract with an American exploration company to explore for offshore petroleum resources.

Charges of widespread corruption, along with a lack of infrastructure and energy supplies have, however, been keeping investors at bay, although internally the country has remained relatively stable. Now, however, as it approaches its 50th year of independence in 2008, the former French colony is sending out an important message to wouldbe investment partners: that it is open for business and preparing to undertake rigorous measures that will harness the investment it needs to get back on its feet.

General Lansana Conté, who first came to power in a bloodless coup in 1984, was elected President in the country’s first democratic elections in 1993. The septuagenarian remains in power, having been re-elected in 1998 and again in 2003. In February, he appointed new Prime Minister Lansana Kouyaté, who points out: “Guinea has lived through some difficult times since its independence—all the more unfair since its immense potential has been either under- or illexploited.”

Prime Minister Kouyaté and his team are more than prepared for the challenges that lie ahead. Poverty, for example, remains a prime concern. According to CIA figures, 47% of the country’s 9.9 million population lives below the poverty line. The paradox that so much potential exists but is under-exploited, will, the government hopes, soon be rectified, with China’s help.

The mining industry holds the most immediate opportunities.

Guinea produces at least a third of the world’s supply of bauxite, the mineral used to make aluminium. Bauxite currently makes up more than 70% of the country’s exports, with the majority of foreign aluminium companies, such as U.S.-based Alcoa and Canada’s Alcan, coming to mine the mineral and then transporting it back home for

refining. With a tonne of bauxite worth just U.S.$20 on the world market, and refined aluminium ore or alumina worth U.S.$400, it is all the more imperative that Guinea begins to generate some of this profit for itself.

Kouyaté says: “We need to fully exploit this and our other potential.

It will demand naturally tough economic policies and rigorous management of what belongs to the State, as well as our mining, maritime and agricultural resources. We also need to improve health, water and electricity services. We have come up with an emergency plan, plus a short and mid-term program, to help us tackle the problems in a coherent way. The most important thing is to create a proper judiciary environment which will enable foreign direct investment to thrive.”

With corruption an obvious impediment to foreign investment, the reforms have been Dr. Ousmane Doré, Minister of Economy, Finance and Planning

welcomed by the world’s premier finance institutions, and Transparency International— which has publicly applauded the positive work

Guinea at a glance • • • • • • • • • • •

Full name: The Republic of Guinea Population: 9.9 million Capital: Conakry Area: 245,857 sq km (94,926 sq miles) Major languages: French and various tribal languages Major religions: Islam, Christianity, indigenous beliefs Monetary unit: 1 Guinean franc = 100 centimes Main exports: Bauxite, alumina, gold, diamonds, coffee, fish, agricultural products GNI per capita: US $370 (World Bank, 2006) Internet domain: .gn International dialling code: +224

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GUINEA being done in Guinea to tackle the problem. The country has reengaged with the International Monetary Fund and the World Bank, which cut off most of its assistance in 2003, and is working closely with the two institutions, plus U.S. Treasury experts, to return to a fully funded program.

Taking its lead from former “closed” Gulf states, such as Dubai and Abu Dhabi, the government is entering into a “spirit of openness” with the focus firmly on China. “China helped us significantly when we became independent in 1958,” Kouyaté explains. “They built several enterprises in the industrial sector and invested heavily in tobacco, agriculture and tea. They built the People’s Palace, which is our National Assembly, and are currently building a 50,000-seater stadium. We have a good relationship with China and we can help each other. Guinea is rich in mineral wealth—she has bauxite, manganese, iron, tungsten, gold and diamonds. She also has a workforce waiting to start working.”

Partnerships already underway Dr. Ousmane Doré, Guinea’s Minister of Economy, Finance and Planning, explains the economics in more detail. He says: “We want to bring inflation down to single figures, and boost economic growth, which was 3.7% last year and could reach 5% in the mid-term. We intend to relaunch our mining sector—obviously of great importance to us—and continue with the various mega-projects we have signed that will allow us to run and manage local development programs.”

One such project, pioneered by the Canadian-listed Global Alumina, will see local people producing an estimated 2.8 million tonnes of alumina per year from its new U.S.$3 billion plant, due to open in 2009.

Mamady Traoré, Minister of Industry, Commerce and Tourism, would like to see these new policies come into effect as soon as possible, because without them, commerce and industry will not be able to play a developmental role. As he explains: “Forty public companies have been privatized, but they have not been successful because the people who took them over, mainly Guineans, have not been able to pursue the process of transformation and development. As a consequence, most of them aren’t working anymore. The units are here, but they are under-exploited due to a lack of power.

“The government cannot develop industry without energy. It is one of the major preoccupations of the government today. There is potential at an agricultural level to develop an agro-industry, also in fishing, wood and the transformation of metals, but to exploit these, we first need to develop an energy sector.”

Development plan unveiled Traoré recently unveiled a development plan, which begins with a relaunch of the private industrial units. “We need to find people to take them over,” he says. “To develop small and medium enterprises, we absolutely need to develop infrastructure and find the means for that.

We need to assist the private sector to play a bigger role, to lead. I therefore want to strengthen the Chamber of Commerce and Industry so it can serve as an intermediary between my department and the professionals.”

The Office for the Promotion of Private Investments (Office de Promotion des Investissements Privés), also falls within the remit of the Ministry of Industry, Commerce and Tourism and is responsible for targeting and identifying potential investors. As a one-stop-shop for all

“We have a good relationship with China and we can help each other.”

Prime Minister Lansana Kouyaté

Doré also wishes to see the nation’s biggest employer, the agricultural sector, reignited, as well as more manufacturing bases in agro-industry and textiles in particular. The potential for a tourism sector is also huge, he maintains.

In development terms, there is much to be done. Many of the Republic’s regions are “locked in”, according to Doré, so road and house building are high on the agenda. “To achieve this, of course, we need to create a business environment that will facilitate private sector investment. Most of the investments will be conducted through public private partnerships. In the energy sector, for example, we already have an agreement with China to build a hydroelectric dam at Souapiti, which will need about U.S.$1 billion of investment,” he says.

Opportunities for investment also exist in telecommunications. Despite being fully privatized, penetration is currently only 7.5%.

Obtaining finance is another issue. Doré says: “We have eight banks which will only finance short-term projects. Our policy is to enable them to fully develop their role in terms of credit in the mid-term.

Globally, banks are stable here. The only issue is to make sure these banks benefit from an environment that needs investment. And that is a paradox: the banks here can only provide short-term credit, when they could be making their operations profitable by providing longterm credit for investments.”

Minister Doré also laments the unexplored potential: “Why should a country that is blessed with such wealth as ours find itself with such an appalling level of poverty?” he says. “My vision of Guinea is one of a prosperous Guinea, in which all of the sons of this country, helped with education and training, can put back the wealth the country has given them. Hope is now allowed in the sense that we have acknowledged our problem was a politico-economic one. We are now putting into place policies that could make this nation a prosperous one by 2015.”

the investor’s needs, the OPIP acts as a voice and partner for investors, providing support and guidance to interested parties as it focuses on improving the business environment, removing obstacles and helping companies develop. The organization is also responsible for promoting Guinea’s significant opportunities abroad.

Like his colleagues, Minister Traoré is optimistic about the continuing part China will play in his country’s development. He says: “There are challenges ahead, but there are many things we can do together and we are relying on China to help us end our difficulties.”

Extending a warm welcome In terms of tourism, Guinea has a number of interesting attractions, but almost no infrastructure to speak of. Minister Traoré estimates the sector is running at 10% of its potential, something he is keen to rectify. “Our accommodation facilities are weak,” he says, “so we need private investment to get these up to a good standard. However, even with high-class establishments in place, we will need to improve our tourism sites and let people know what we have.

“We have 300 kms of coastline, for example, with delicate sand. We have beautiful islands off the coast of the capital, Conakry. There are also spectacular mountains to climb and forests in which to hunt. We want economic operators to come here, but first we need to create a safe and secure judicial environment that will give investors the confidence to be here.”

At the moment, many visitors to the country’s hotels are made up of engineers that are contracted in to serve the various mining projects underway in the country. The mining sector is the most dynamic and lucrative to the Guinean economy. All the country’s mineral resources are easily accessible, so conditions for exploitation are very good.

However, a lack of infrastructure impedes the industry. The Ministry’s priority for 2007, therefore, is to change the conventions and

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GUINEA agreements that exist with private companies so that investors retain the right to recover their capital, while the country improves its conditions.

“We need to face our partners and discuss the situation, calmly but firmly, so that we improve our revenues and better secure the investment of those who have chosen to invest here. We need to reinforce the management of the country and improve the living conditions of the people,” notes the Secretary-General of Mining and Geology, Elhadj Alimou Diallo.

A new mining code The Ministry is currently updating its mining code, to this effect, to guarantee investments and assure local partnerships. “The government is currently in the process of restructuring and will dedicate itself to all sectors to promote the image that Guinea can be an attractive country in which to invest,” says Diallo.

“Chinese mining companies have been extremely proactive,” he says.

“They came here fairly recently, but they came with a lot of energy and strength and because of our interest, I think we can work with them very well on a long-term perspective. We are looking for win-win solutions. We are suffering from under-employment, so we need to train our staff. We have a lot of young people who walk out of school each year without a job. They need training. These are the priorities that must be met to avoid a social crisis.

“We need our investors and we are happy they are here, but we do not want to be used as a provider for the whole world. We need to move forward from selling raw material and get added value on our products. We need an immediate transformation, something that will not only enable us to improve the country’s workers and society’s revenues, but also train more people to create jobs. We need partners that will go along with us and accept the risk, who will trust us and sit down with us to discuss conditions. They bring their money and we provide our mines. Everybody must be satisfied and everybody must profit.”

Another pressing challenge is transport. Many of the road and rail networks are in a state of disrepair, and parts of the country are hard to access due to a shortage of infrastructure. Air services are also in short supply, although, as Minister of Transport Boubacar Sow points out, the Republic of Guinea benefits from the Yamoussoukro Decision—a treaty adopted by all member states of the African Union in 2005 to allow free access of air traffic between member states and so allow Africa a more prominent position in the global aviation industry.

“We are putting policies into place that could make this nation a prosperous one by 2015.”

Dr. Ousmane Doré, Minister of Economy, Finance and Planning.

Ministry of Economy, Finance & Planning, Conakry, Guinea.

the country in 2007 are likely to see the construction of a new heavy duty standard gauge railway and deepwater port.

The French Development Agency, Germany’s KfW Bank Group and the European Investment Bank recently approved a €42 million port upgrade and expansion. Citing the Port of Conakry as the lung of the country’s economy, the Transport Minister is obviously delighted.

“Each partner will finance up to €12 million and the Autonomous Port of Conakry will contribute the remainder,” he says. “Work will start in November this year, and the harbor will be deepened to 14 meters.”

However, with less than 10% of the country’s roads paved, Sow recognises that the road sector is the most urgent one to address. An urban transport company is also needed. Thanks to a study sponsored by the World Bank, Guinea will acquire 100 new buses in October.

The company will be privately managed in a joint venture between the State and the private sector.

“We also need private partners to organize train transportation between Conakry and a dry port for storage 40 kms away. We are offering a build, operate and transfer package, for the transportation of containers, waste and passengers. Studies have shown it will be a profitable operation, which will eliminate the need for big trucks to cross the city and therefore cut down on traffic. A free zone is also planned for the future.”

Finally, the Minister says, China should have faith in Guinea. He says: “We are a dynamic country and we cannot go backwards. The people are aware of it, and so our development partners. Guinea is a virgin country and the potential is there. Reforms have already started that will guarantee more FDI and soon, there will be no reason not to see a return on investment.”

Foreign relations Minister Sow says: “We have aerial agreements with all our neighbor states which means we benefit from free circulation of goods and people into our country.”

In the railways, U.K./Australian exploration and mining giant Rio Tinto, which has won a major concession to develop the Simandou iron ore project, is financing a feasibility study for a rail-road from Conakry to Niger, which, if it goes ahead, will position Conakry as a port hub for West Africa, but especially serving the landlocked Mali hinterland.

Currently, more than 100 million tonnes of minerals are carried in freight, but the line will be less than 300 kms from Bamako, Mali’s capital and therefore a serious contender for the region. Construction is expected to begin in 2010.

Development of iron ore deposits at Simandou in the south east of

Guinea has played an active part in efforts involving regional integration and cooperation, especially the African Union and the Economic Community of West African States (ECOWAS). It takes its role in various international organizations seriously and participates actively in the decision making process.

The country has good relations with its West African neighbors and has taken part in both diplomatic and military efforts to resolve conflicts in Liberia, Sierra Leone and Guinea-Bissau, sending peacekeeping forces to all three countries. It has also provided a place of refuge for more than 700,000 inhabitants from its beleaguered neighbors.

Now, the country really wants to take its place on the world stage and investors can be assured, that despite the challenges, the Republic of Guinea is taking significant steps in the right direction.

Ministry of Economy, Finance & Planning B.P 579, Conakry, Guinea. Tel: +224 30 45 17 95 Fax: +224 30 45 46 52 www.finances.gov.gn

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GUINEA

Getting up to speed It is upgrades all round for strategic parts of Guinea’s infrastructure.

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ith around 70% of Guinea’s commercial traffic traveling through it, the Autonomous Port of Conakry on the Atlantic Ocean is the lung of the economy and an important provider of jobs.

Its customs duties alone contribute 40% towards the national GDP, which is why the government is pressing ahead with a multi-funded expansion program. “The port dealt with 6.2 million tonnes of goods and 85,000 containers last year,” explains Oulaba Kabassan Keita, the port’s director-general, “and we are now looking to put the Port of Conakry in a highly competitive position so that it becomes one of the best in the region. With this dynamic, each actor has his role to play in the creation of richness and prosperity.”

The latest project, a 42 million upgrade to be jointly funded by the French Development Agency, the European Investment Bank, Germany’s KfW Bank Group and the port itself, will improve the port’s global standing and give it the facilities needed to serve not only Guinea, but the West African hinterland too. Kabassan says: “The expansion’s principal elements focus on an extension of the container terminal to 7,000m2, the construction of a captain’s office, and improvements to traffic circulation. An international tender will be called where those enterprises wishing to participate will be selected.

“The second part of the expansion will see the east area extended by 30 or 40 hectares. This area will be primarily reserved to increase stock

Supplying Guinea & Africa

capacity and warehouse space for goods, agricultural products and petroleum reserves for exportation, and will be offered on a build, operate and transfer basis.”

Oulaba Kabassan Keita, Director-General, Autonomous Port of Conakry

The latest expansion program is the third in a series of upgrades the port has received since it was created in June 1982 at a cost of U.S.$100 million. The first, between 1982 and 1987, focused on a modernization of the installations and the acquisition of new tag boats. The second saw a new terminal built, between 1989 and1992, which featured a landing port for incoming tankers. As Kabassan says: “These projects had a remarkable effect on the port’s economic activity, which is why we now have to upgrade again.”

Meanwhile, the port’s management team is working together with other member countries of the Port Management Association of West and Central Africa (PMAWCA) to harmonize management styles and maximize potential. “In its 35 years of existence,” the director-general explains, “the PMAWCA has achieved a form of dialogue and consultation between its members which overrides linguistic diversity and politics. It also gives an impetus to the ports’ development in terms of inter-port cooperation. This intensifies and consolidates the efforts of members year after year.”

The director-general’s main priority now is to capture a large part of the Malian market. The new Kankan-Kouremalen-Bamako road will give the Republic of Mali easy access to extremely valuable warehouse space in Guinea. The port will also manage the Debele rail terminal.

Situated 800 kms from Bamako, Mali’s capital, the terminal spans 36 hectares and has a large stock capacity.

“The port offers some tempting fiscal advantages, including customs duties guaranteed at 0.5% of the cost and freight value. The Malian operators will be offered facilities to alleviate the administration procedures, customs and security through the corridor. We will also see an improvement in nautical conditons, which will help meet Mali’s demand for hydrocarbon imports,” says Kabassan.

Preparing for an e-ready future Guinea is also looking to China to help it get up to speed with information and communication technologies (ICT). Despite the potential for more, the penetration rate is only 7.5%. The traditional operator is Sotelgui, but since the market was privatized in 1995, four more providers have come onstream, in the form of Intercel, Areeba, Celcom and Orange. Although the country has had Internet access since 1997, the sector has only just started to take off.

Minister of Communication, Justin Morel, says: “The ICT sector is developing slowly. We want to develop cyber cities and cyber parks and really make the most of the information superhighway. We have a U.S.$9 million pilot project of e-governance in partnership with the Conakry Autonomous Port Corniche Nord, Commune de Kaloum BP 805 Conakry, Republic of Guinea Tel:+224 30 43 14 72 Fax:+224 30 47 72 82 pac@eti-bull.net www.portautonomedeconakry.com

Thierno Diallo, Director-General, Sotelgui

Chinese government. The idea is to move towards e-banking in the mid-term. We have an old friendship with China, and rely on them to offer us their expertise.”

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GUINEA

Guinea has 300 kms of coastline on the Atlantic Ocean.

Telecommunications company Sotelgui hopes to follow up its success in 2005/6 with another prosperous year. Guinea’s original service provider, which offers fixed cable and wireless plus full mobile services to a growing number of the population, increased its number of cell phone subscribers to 181,500, while Internet usage grew exponentially in 2006.

The company, which employs around 1,300 people, has already explored links with Asian partners. Guinea was one of the first African countries to have a strategic partnership with an Asian investor in the form of Telekom Malaysia Berhad (TM), which owns 60% of Sotelgui.

Meanwhile, China’s Huawei Technologies provides Sotelgui’s GSM and

Novotel Conakry—hospitality at its best. www.accor.com

(especially rural-dwellers) in terms of telecommunications. Also, it is creating advantages in socio-economic aspects and improving the quality of life here.”

The Guinea effect Finally, the country’s landmark hotel is looking to attract more leisure customers. “At the moment, 98% of our clientele are corporate customers”, says Patrick Martial, general manager of the Novotel Conakry. “This is a shame, because Guinea is, in my opinion, the ultimate African country to discover, and one of the most beautiful on the continent. The mountainous terrain, the tropical climate, the

“We are looking to put the Port of Conakry in a highly competitive position, so that it becomes the best in the region.” Oulaba Kabassan Keita, Director-General, Autonomous Port of Conakry CDMA equipment. “We are in favor of all cooperative initiatives through the long-term development of equipment, infrastructure, qualification of human resources and improvement of universal access for the Guinean people,” says Sotelgui’s director-general, Thierno Diallo.

Priorities for this year include the acquisition of more cabling to build a submarine cable through West Africa, an upgrade of the existing fixed-line network, development of services, the implementation of more wi-fi technology to reach areas without Internet access, and the extension of the Internet bandwidth by the end of the year. “The greatest potential, however, is in cell phone technologies” says Diallo. He adds: “The rapid changes in telecoms leave room for improvement. Sotelgui wants to develop new products and services. Our latest performances are outstanding, however.

“Our penetration rates increased from 1.95% in 2005, to 3.82% in 2006, and are at nearly 5% today. Sotelgui has demonstrated that it is providing major contributions for the good of the population

culture—it is an amazing country and I do hope the tourism sector opens up in the near future. Guineans are extremely friendly people.”

The hotel reflects Guinea’s history. The oldest part, for example, was built in 1947 and was known as “l’Hotel de France”. In 1978, the French hotel group Accor added the more modern section. It now has 217 rooms and apartments, wi-fi access, a fitness center, a business center, restaurants, bars and an ocean-fronted swimming pool. “The setting, in the Kaloum neighborhood, is very pleasant,” says Martial.

“It is close to most amenities. It is owned 45% by the state, 45% by Accor and 10% by the World Bank, so it is an important hotel that will need big investments in the future.

“I first ran the hotel from 1984-1986, and came back 20 years later because I missed this extraordinary country. I have met people who have lived here for several years for work and who come back to live because they miss it. That is the effect Guinea has on you.”

Business Focus

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Communicate freely with SOTELGUI GSM CDMA TDMA FIXED WIRE INTERNET SMS ROAMING GPRS

Quartier Almamya, BP. 2066 – Conakry, République de Guinée Tel:+224 30 45 37 50 Fax:+224 30 45 03 06 www.sotelgui.net.gn

SOTELGUI

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