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World Bank Document Report No. 58296-GW Report No. 58296-GW GUINEA-BISSAU Country Economic Memorandum TERRA RANCA! A FRESH START Public Disclosure Authorized January 12, 2015 Global Practice: Macroeconomics & Fiscal Management Gunia-Bissau Public Disclosure Authorized Country Economic Memorandum Country Public Disclosure Authorized Document of the World Bank Public Disclosure Authorized CURRENCY EQUIVALENT Currency unit = CFA Franc (CFAF) Exchange rate as of 05/30/2014 US$1 = 481 CFAF FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AIDS Acquired Immune Deficiency Syndrome ANP National People’s Assembly APR Annual progress report AQIM Al Qaeda in the Islamic Maghreb ASECNA Agency for Aerial Navigation Safety in Africa and Madagascar ASYCUDA Automated System for Custom Data BCEAO West African States’ Central Bank BEE Business-enabling environment BFA Burkina Faso BOAD West Africa Development Bank BPC Business Plan Competition CAIA Celula de Avaliacão de Impacte Ambiental CBOs Community-Based Organizations CCIA Chamber of Commerce Industry and Agriculture of Guinea-Bissau CDD Community-Driven Development CDM Clean Development Mechanism CEM Country Economic Memorandum CENFA National Center of Training and Administration CET Common External Tariff CFAA Country Financial Accountability Assessment CFAF African Financial Community Franc CFE Center for Business Registration CoM Council of Ministers CPAR Country Procurement Assessment Review CPLP Community of Portuguese Language Countries CPU Central Procurement Unit CPV Cabo Verde CRW Crisis Response Window CSO Civil Society Organization DB Doing Business DFC Directorate of Financial Control DGGM Directorate General of Geology and Mining DGO Directorate of Budget DENARP II Guinea-Bissau’s Second Poverty Reduction Strategy Paper DRC Domestic Resource Cost DRRP Demobilization Reinsertion and Reintegration Program DTIS Diagnostic Trade Integration Study DBT Dulombi, Boe, and Tchetche ii EAC East Africa Community EAGB Electricity and Water Company of Guinea-Bissau ECF Extended Credit Facility ECOMIB ECOWAS Mission in Guinea-Bissau ECOWAP ECOWAS Agriculture Policy ECOWAS Economic Community of West African Countries EEWRP Emergency Electricity and Water Rehabilitation Project EFA Education For All EGRG Economic Governance Reform Grant EITI Extractive Industries Transparency Initiative ENA National Administration School EPA Economic Partnership Agreement EPCA Emergency and Post-Conflict Assistance EU European Union FAO Food and Agriculture Organization FBG BioGuinea Foundation (Fundacao BioGuinea) FCPF Forest Carbon Partnership Facility FCS Fragile and Conflict-Affected States FDI Foreign Direct Investment FFEM Fonds Français pour l’Environnement Mondial FIAL Fund for Local Environmental Initiatives FIAS Foreign Investment Advisory Services FSF Fragile State Facility FSU Universal Service Fund FUNPI Fund to Promote Industrialization of Agricultural Products GDP Gross Domestic Product GEF Global Environment Facility GHA Ghana GNB Guinea-Bissau GNI Gross National Income HDIs UNDP Human Development Indices HFO Heavy Fuel Oil HIP High-Impact Program HIPC Heavily-Indebted Poor Country HIV Human Immunodeficiency Virus IBAP Institute of Biodiversity and Protected Areas IDA International Development Association IFAD International Fund for Agriculture Development IGAP Public Administration Inspectorate-General IGF General Finance Inspectorate ILAP Light Survey for Poverty Assessment (Inquérito Ligeiro para Availação da Pobreza) IMF International Monetary Fund INE National Institute of Statistics INEP National Institute for Studies and Research IPSA Integrated Poverty and Social Assessment ISN Interim Strategy Note ISP Internet service provider IUCN International Union for Conservation of Nature LDC Least-Developed Country LDCF Least-Developed Countries Fund iii LDP Letter of Development Policy LIC Low Income Countries LPG Liquefied Petroleum Gas MAB Man and Biosphere MDG Millennium Development Goal MDRI Multilateral Debt Relief Initiative MFI Microfinance Institution MIRP Multisector Infrastructure Rehabilitation Project MLI Mali MNR Ministry of Natural Resources MoF Ministry of Finance MTO Money-Transfer Organization MW Mega-Watts NER Niger NGO Non-Governmental Organization NPL Non-Performing Loans NSDS Strategy for the Development of Statistics NSIA Nouvelle Société Interafricaine d’Assurance NSS National Statistical System ODA Official Development Assistance OECD Organisation for Economic Co-operation and Development OMVG Gambia River Development Organization (Organisme de Mise en Valeur du fleuve Gambie) PA Protected Area PAIGC African Party for the Independence of Guinea and Cabo Verde PARAP Public Administration Reform Support Project PEFA Public Expenditure Financial Accountability PEMFAR Public Expenditure Management and Financial Accountability Review PFM Public Financial Management PIM Public Investment Management PNIA National Program for Agricultural Investment PITF Political Instability Task Force PPD Public-Private Dialogue PPGD Public Procurement General Directorate PPIAF Public-Private Infrastructure Advisory Facility PPP Purchasing Power Parity PPP Public-Private Partnership PRA Procurement Regulatory Authority PRGF Poverty Reduction and Growth Facility PRS Social Renewal Party PRSP Poverty Reduction Strategy Paper PSD Private Sector Development PSIA Poverty and Social Impact Analysis PSRDP Private Sector Rehabilitation and Development Project RCU Reform Coordinating Unit RDSS Reform of the Defense and Security Sector REDD Reduced Emissions from Deforestation and Forest Degradation ROC Reform Oversight Committee ROIS Reform Oversight and Implementation Structure SDR Special Drawing Right iv SEAT State Secretariat for the Environment and Tourism SEN Senegal SIGFIP Integrated Public Financial Management System SMP Staff-Monitored Program SNA National Accounts System SNAP National System of Protected Areas (Sistema Nacional das Areas Protegidas) SOE State-Owned Enterprise SOPs Series of Projects SPF State- and Peace-Building Fund SSA Sub-Saharan Africa SSPER Security Sector Public Expenditure Review SSR Security sector reform SSU Sector statistical units SYGADE Debt Management Analysis System TA Technical assistance TCI Trade Complementarities Index TEUs Twenty-Foot Equivalent Unit TFP Total Factor Productivity TFSCB Trust Fund for Statistical Capacity Building TOS Terminal Operating System TSA Treasury Single Account TSC Technical Steering Committee UN United Nations UNCTAD United Nations Conference on Trade and Development UNDC UN Office on Drugs and Crime UNDP United Nations Development Program UNWTO United Nations World Tourism Organizations WAEMU West-African Economic and Monetary Union WAGP West African Gas Pipeline WAPP West African Power Pool WARFP West Africa Regional Fisheries Project WDI World Development Indicators WDR World Development Report WFP World Food Program WGI Worldwide Governance Indicators WWF World Wildlife Fund Vice President: Makhtar Diop Country Director: Vera Songwe Sr. Practice Director: Marcelo Giugale Practice Manager: Miria Pigato Task Team Leader: Marek Hanusch v TABLE OF CONTENTS TERRA RANCA! A FRESH START CHAPTER 1: DEVELOPMENT CHALLENGES IN GUINEA-BISSAU AND THE CASE FOR A TURNAROUND AGENDA ....................................................................................................................................... 1 1. INTRODUCTION ......................................................................................................................... 1 PART I: ECONOMIC, POLITICAL, AND SOCIAL OVERVIEW ................................................................. 2 2. THE ECONOMIC CONTEXT ......................................................................................................... 2 3. RECENT ECONOMIC DEVELOPMENTS ....................................................................................... 5 4. POVERTY IN GUINEA-BISSAU .................................................................................................... 7 5. POLITICS AND INSTITUTIONS .................................................................................................. 11 6. FRAGILITY, INSTITUTIONS, AND ECONOMIC DEVELOPMENT ................................................. 14 PART II: THE LOGIC OF THE CEM .................................................................................................... 19 7. CONSTRAINTS TO DEVELOPMENT .......................................................................................... 19 8. AN AGENDA FOR GROWTH, POVERTY REDUCTION AND SHARED PROSPERITY ..................... 24 CHAPTER 2: ADDRESSING KEY INFRASTRUCTURE CONSTRAINTS ..................................................................... 30 1. INTRODUCTION ....................................................................................................................... 30 PART I: THE POWER SECTOR .......................................................................................................... 32 2. PROBLEMS AND SOLUTIONS IN THE ELECTRICITY SECTOR ..................................................... 32 3. PROBLEMS AND SOLUTIONS IN THE PETROLEUM SECTOR ..................................................... 38 PART II: THE PORT OF BISSAU ........................................................................................................ 39 4. BACKGROUND AND KEY ISSUES .............................................................................................. 39 5. INVESTMENT AND INSTITUTIONAL
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