Republic of Guinea: Overcoming Growth Stagnation to Reduce Poverty
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Report No. 123649-GN Public Disclosure Authorized REPUBLIC OF GUINEA OVERCOMING GROWTH STAGNATION TO REDUCE POVERTY Public Disclosure Authorized SYSTEMATIC COUNTRY DIAGNOSTIC March 16, 2018 International Development Association Country Department AFCF2 Public Disclosure Authorized Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency Sub-Saharan Africa Department Public Disclosure Authorized WORLD BANK GROUP IBRD IFC Regional Vice President: Makhtar Diop : Vice President: Dimitris Tsitsiragos Country Director: Soukeyna Kane Director: Vera Songwe : Country Manager: Rachidi Radji Country Manager: Cassandra Colbert Task Manager: Ali Zafar : Resident Representative: Olivier Buyoya Co-Task Manager: Yele Batana ii LIST OF ACRONYMS AGCP Guinean Central Procurement Agency ANASA Agence Nationale des Statistiques Agricoles (National Agricultural Statistics Agency) Agence de Promotion des Investissements et des Grands Travaux (National Agency for APIX Promotion of Investment and Major Works) BCRG Banque Centrale de la République de Guinée (Central Bank of Guinea) CEQ Commitment to Equity CGE Computable General Equilibrium Conseil National pour la Démocratie et le Développement (National Council for CNDD Democracy and Development) Confédération Nationale des Travailleurs de Guinée (National Confederation of CNTG Workers of Guinea) CPF Country Partnership Framework CPIA Country Policy and Institutional Assessment CRG Crédit Rural de Guinée (Rural Credit of Guinea) CWE China Water and Electricity DEC Development Economics DSGE Dynamic Stochastic General Equilibrium DTIS Diagnostic Trade Integration Study ECD Early Childhood Development ECF Extended Credit Facility ECOWAS Economic Community for West African States EDG Electricité De Guinée (National Electricity Corporation) EITI Extractive Industries Transparency Initiative ELEP Enquête Légère pour l’Evaluation de la Pauvreté (Poverty Assessment Survey) EPC Engineering, Procurement, and Construction EU European Union FDI Foreign Direct Investment FER Fonds d’Entretien Routier (Road Maintenance Fund) FEWS Famine Early Warning Systems Network FNDL Fonds National de Développement Local (National Fund for Local Development) GCR Global Competitiveness Report GDP Gross Domestic Product GFCF Gross Fixed Capital Formation GNF Franc Guinéen (Guinean Franc) HDI Human Development Index HIPC Highly-Indebted Poor Country HRV Hausmann - Rodrik – Velasco (2005) ICT Information and Communications Technology IMF International Monetary Fund INS Institut National de la Statistique (National Statistics Institute) LIC Low-Income Country LPI Logistics Performance Index iii LTGM Long-Term Growth Model MFI Microfinance Institution MoU Memorandum of Understanding MPI Multidimensional Poverty Index MSMEs Micro, Small, and Medium Enterprises MTEF Medium-Term Expenditure Framework NOAA National Oceanic and Atmospheric Administration NPL Non-Performing Loan NRGI Natural Resource Governance Institute NSS National Statistics System Programme Accéléré de Sécurité Alimentaire et Nutritionnelle et de Développement Agricole Durable (Accelerated Program of Food and Nutritional Security, and PASANDAD Sustainable Agriculture Development) PFM Public Finance Management PIM Public Investment Management PIMI Public Investment Management Index Programme National d’Investissement Agricole et de Sécurité Alimentaire (National PNIASA Agricultural Investment and Food Security Plan) Plan National de Développement Economique et Social (National Economic and Social PNDES Development Plan) Programme National d’Infrastructures Rurales (National Program for Rural PNIR Infrastructure) PRSP Poverty Reduction Strategy Paper RPG Rassemblement du Peuple de Guinée (Rally of the People of Guinea) SCD Systematic Country Diagnostic SDG Sustainable Development Goal SMEs Small and Medium Enterprises SNA Systems of National Accounts (United Nations) SOE State-Owned Enterprise SSA Sub-Saharan Africa TFP Total Factor Productivity UFDG Union des Forces Démocratiques de Guinée (Union of Democratic Forces of Guinea) UNDP United Nations Development Programme UNICEF United Nations Children’s Fund USAID United States Agency for International Development WAEMU West African Economic and Monetary Union WDI World Development Indicators WGI Worldwide Governance Indicators WHO World Health Organization iv TABLE OF CONTENTS Executive Summary ..................................................................................................................................... vii I. Introduction and Country Context ............................................................................................................. 1 II. Assessing Progress Toward the Twin Goals .............................................................................................. 4 III. Guinea’s Growth Performance .............................................................................................................. 19 IV. Analytical Framework for Identifying Constraints ................................................................................. 30 V. Constraints to Achieving Shared Prosperity and Poverty Reduction ..................................................... 34 VI. Pathways and Prioritization of Binding Constraints .............................................................................. 76 VII. Data and Knowledge Gaps .................................................................................................................... 90 Annex 1: Summary of Key Findings on the HRV Approach as Applied to Guinea ...................................... 93 Annex 2: Comparator Benchmarking .......................................................................................................... 95 Annex 3: Pathways to Structural Transformation and Reform Priorities ................................................. 100 Annex 4: Data Diagnostics for World Bank Group Client Countries Template ......................................... 103 LIST OF BOXES Box 1: Understanding Poverty Reduction in Kankan .................................................................................... 6 Box 2: Revision of the National Accounts Data ........................................................................................... 19 Box 3: Cross-Country Benchmarking and Diagnostic Framework .............................................................. 33 Box 4: The Changing Role of Guinea’s Army ............................................................................................... 38 Box 5: A Case Study of Guinea’s Procurement Practice ............................................................................. 42 Box 6: Assessing the Impact of an Agricultural Input Subsidy Program in Guinea ..................................... 44 Box 7: A Review of Pre- and Post-Independence Agricultural Policy to 2008 ............................................ 47 Box 8: Mobile Money in Guinea.................................................................................................................. 52 Box 9: Stakeholder Consultations for the Guinea SCD ............................................................................... 78 Box 10: The National Economic and Social Development Plan (PNDES) .................................................... 80 LIST OF FIGURES Figure 1: Analytical Framework ................................................................................................................... xi Figure 2: Poverty Trends in Guinea, 2002–2014 ........................................................................................... 4 Figure 3: Growth and Shared Prosperity, 2007–2012 .................................................................................. 5 Figure 4: Non-monetary Poverty Trends, 2000–2014 .................................................................................. 6 Figure 5: Changes in Regional Poverty and Inequality, 2007–2012 .............................................................. 7 Figure 6: Monetary Poverty Profile in 2012 .................................................................................................. 8 Figure 7: Nonmonetary Poverty Profile in 2012 ........................................................................................... 9 Figure 8. Livelihood and Rural Populations in 2014 ...................................................................................... 9 Figure 9: Non-monetary Poverty by Livelihood Zone, 2014 ....................................................................... 10 Figure 10: Monetary Poverty Maps, 2014 .................................................................................................. 11 Figure 11: Guinean Household Vulnerability, 2012 .................................................................................... 13 Figure 12: Typology and Profile of Guinean Households, 2012 .................................................................. 14 Figure 13. Main Sources of Income by Well-being Status .......................................................................... 14 Figure 14. Poverty, Income and Population by Sector, 2012 ...................................................................... 15 Figure 15: Poverty, Income and Farm Household Access to the Main Public Infrastructure, 2012 ........... 15 Figure 16. Migration and Population Growth, 2007–2014 ......................................................................... 16 Figure 17: Ownership of