Guinea | problems and reforms

Problems and reforms

In 2002, the IMF suspended Guinea's Poverty Reduction and Growth Facility (PRGF) because the government failed to meet key performance criteria. In reviews of the PRGF, the World Bank noted that Guinea had met its spending goals in targeted social priority sectors. However, spending in other areas, primarily defense, contributed to a significant fiscal deficit.[ citation needed] The loss of IMF funds forced the government to finance its debts through Central Bank advances. The pursuit of unsound economic policies has resulted in imbalances that are proving hard to correct.

Under then-Prime Minister Diallo, the government began a rigorous reform agenda in December 2004 designed to return Guinea to a PRGF with the IMF. Exchange rates have been allowed to float, price controls on gasoline have been loosened, and government spending has been reduced while tax collection has been improved. These reforms have not reduced inflation, which hit 27% in 2004 and 30% in 2005. Currency depreciation is also a concern. The Guinea franc was trading at 2550 to the dollar in January 2005. It hit 5554 to the dollar by October 2006. In August 2016 that number had reached 9089.

Despite the opening in 2005 of a new road connecting Guinea and Mali, most major roadways remain in poor repair, slowing the delivery of goods to local markets. Electricity and water shortages are frequent and sustained, and many businesses are forced to use expensive power generators and fuel to stay open.

Even though there are many problems plaguing Guinea's economy, not all foreign investors are reluctant to come to Guinea. Global Alumina's proposed alumina refinery has a price tag above $2 billion. Alcoa and Alcan are proposing a slightly smaller refinery worth about $1.5 billion. Taken together, they represent the largest private investment in sub-Saharan Africa since the Chad-Cameroon oil pipeline. Also, Hyperdynamics Corporation, an American oil company, signed an agreement in 2006 to develop Guinea's offshore Senegal Basin oil deposits in a concession of 31,000 square miles (80,000 km2); it is pursuing seismic exploration. [60]

On 13 October 2009, Guinean Mines Minister Mahmoud Thiam announced that the China International Fund would invest more than $7bn (£4.5bn) in infrastructure. In return, he said the firm would be a "strategic partner" in all mining projects in the mineral-rich nation. He said the firm would help build ports, railway lines, power plants, low-cost housing and even a new administrative centre in the capital, Conakry. [61] In September 2011, Mohamed Lamine Fofana, the Mines Minister following the 2010 election, said that the government had overturned the agreement by the ex-military junta. [62]

Youth unemployment, remains a large problem. Guinea needs an adequate policy to address the concerns of urban youth. One problem is the disparity between their life and what they see on television. For youth who cannot find jobs, seeing the economic power and consumerism of richer countries only serves to frustrate them further. [63]

Mining controversies

Guinea has large reserves of the steel-making raw material, iron ore. Rio Tinto was the majority owner of the $6 billion Simandou iron ore project, which it had called the world's best unexploited resource. This project is said to be of the same magnitude as the Pilbara in Western Australia. [64]

In 2009 the government of Guinea gave the northern half of Simandou to BSGR [65] for an $165 million investment in the project and a pledge to spend $1 billion on railways, saying that Rio Tinto wasn't moving into production fast enough. The US Justice Department investigated allegations that BSGR had bribed President Conté's wife to get him the concession, [66] and so did the Federal Bureau of Investigation, the next elected President of Guinea, Alpha Condé, and an assortment of other national and international entities.

In April 2014 the Guinean government cancelled the company's mining rights in Simandou. BSGR has denied any wrongdoing, and in May 2014 sought arbitration over the government of Guinea's decision to expropriate its mining rights in the country. [67]

In 2010 Rio Tinto signed a binding agreement with Aluminum Corp. of China Ltd. to establish the joint venture for the Simandou iron ore project. [68] In November 2016, Rio Tinto admitted to paying $10.5 million to a close adviser of President Alpha Condé, in order to obtain rights on Simandou. [69] Conde said he knew nothing about the bribe and denied any wrongdoing. However, according to recordings obtained by FRANCE 24, the Guinean authorities were aware of the Simandou briberies. [70]

Further, In November 2016, former mining minister of Guinea, Mr. Mahmoud Thiam, accused head of Rio Tinto’s Guinea operation department of offering him a bribe in 2010 with the aim of regaining Rio Tinto's control over half of the undeveloped Simandou project.

In September 2011, Guinea adopted a new mining code. The law set up a commission to review government deals struck during the chaotic days between the end of dictatorship in 2008 and Condé coming to power. [71]

In September 2015, the French Financial Public Prosecutor’s Office launched an investigation into President Alpha Conde’s son, Mohamed Alpha Condé. [72] He was charged with embezzlement of public funds and receiving financial and other benefits from French companies that were interested in the Guinean mining industry. [73] [74]

In August 2016, son of a former Prime Minister of Gabon, who worked for Och-Ziff’s Africa Management Ltd, a subsidiary of the U.S. hedge fund Och-Ziff, was arrested in the US and charged with bribing officials in Guinea, Chad and Niger on behalf of the company in order to secure mining concessions [75] and gain access to relevant confidential information. [76] The investigation also revealed that he was involved in rewriting Guinea’s mining law during President Conde’s rule. [77] In December 2016, the US Department of Justice announced that the man pleaded guilty to conspiring to make corrupt payments to government officials in Africa. [76]

According to a Global Witness report, Sable Mining sought iron ore explorations rights to Mount Nimba in Guinea by getting close to Conde towards the 2010 elections, backing his campaign for presidency and bribing his son. [78] These allegations have not been verified yet but in March 2016 Guinean authorities ordered an investigation into the matter. [79]

The Conde government investigated two other contracrs as well: one which left Hyperdynamic with a third of Guinea's offshore lease allocations as well as Rusal's purchase of the Friguia Aluminum refinery, in which it said that Rusal greatly underpaid. [80]

Minority and women's rights

Homosexuality is illegal in Guinea. [81] Same sex relations are considered a strong taboo, and the prime minister declared in 2010 that he doesn't consider sexual orientation a legitimate human right. [14]

According to Anastasia Gage, an associate professor at Tulane University, and Ronan van Rossem, an associate professor at Ghent University, [82] female genital mutilation in Guinea had been performed on more than 98% of women as of 2009. [83] In Guinea almost all cultures, religions, and ethnicities practice female genital mutilation. [84] The 2005 Demographic and Health Survey reported that 96% of women have gone through the operation. Prosecutions of its practitioners are nonexistent. [14]

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