Guinea

Guinea is located on the Atlantic Coast of West Africa and is bordered by Guinea-Bissau, Senegal, Mali, C�te d'Ivoire, Liberia, and Sierra Leone. The country is divided into four geographic regions: A narrow coastal belt (Lower Guinea); the pastoral Fouta Djallon highlands (Middle Guinea); the northern savannah (Upper Guinea); and a southeastern rain-forest region (Forest Guinea). The Niger, Gambia, and Senegal Rivers are among the 22 West African rivers that have their origins in Guinea.

The coastal region of Guinea and most of the inland have a tropical climate, with a rainy season lasting from April to November, relatively high and uniform temperatures, and high humidity. Conakry's year-round average high is 29 degrees C (85 degrees F), and the low is 23 degrees C (74 degrees F); its average annual rainfall is 430 centimeters (169 inches). Sahelian Upper Guinea has a shorter rainy season and greater daily temperature variations.

Guinea has four main ethnic groups
--Peuhl (Foula or Foulani), who inhabit the mountainous Fouta Djallon;
--Malinke (or Mandingo), in the savannah and forest regions;
--Soussous in the coastal areas; and
--Several small groups (Gerz�, Toma, etc.) in the forest region.

West Africans make up the largest non-Guinean population. Non-Africans total about 10,000 (mostly Lebanese, French, and other Europeans). Seven national languages are used extensively; major written languages are French, Peuhl, and Arabic.

The area occupied by Guinea today was included in several large West African political groupings, including the Ghana, Mali, and Songhai empires, at various times from the 10th to the 15th century, when the region came into contact with European commerce. Guinea's colonial period began with French military penetration into the area in the mid-19th century. French domination was assured by the defeat in 1898 of the armies of Almamy Samory Tour�, warlord and leader of Malinke descent, which gave France control of what today is Guinea and adjacent areas.

France negotiated Guinea's present boundaries in the late 19th and early 20th centuries with the British for Sierra Leone, the Portuguese for their Guinea colony (now Guinea-Bissau), and the Liberia. Under the French, the country formed the Territory of Guinea within French West Africa, administered by a governor general resident in Dakar. Lieutenant governors administered the individual colonies, including Guinea.

Led by Ahmed S�kou Tour�, head of the Democratic Party of Guinea (PDG), which won 56 of 60 seats in 1957 territorial elections, the people of Guinea in a September 1958 plebiscite overwhelmingly rejected membership in the proposed French Community. The French withdrew quickly, and on October 2, 1958, Guinea proclaimed itself a sovereign and independent republic, with S�kou Tour� as president.

Under Tour�, Guinea became a one-party dictatorship, with a closed, socialized economy and no tolerance for human rights, free expression, or political opposition, which was ruthlessly suppressed. Originally credited for his advocacy of cross-ethnic nationalism, Tour� gradually came to rely on his own Malinke ethnic group to fill positions in the party and government. Alleging plots and conspiracies against him at home and abroad, Tour�'s regime targeted real and imagined opponents, imprisoning many thousands in Soviet-style prison gulags, where hundreds perished. The regime's repression drove more than a million Guineans into exile, and Tour�'s paranoia ruined relations with foreign nations, including neighboring African states, increasing Guinea's isolation and further devastating its economy.

S�kou Tour� and the PDG remained in power until his death on April 3, 1984, when a military junta headed by then-Lt. Col. Lansana Conte seized power.

Richly endowed with minerals, Guinea possesses an estimated one-third of the world's proven reserves of bauxite, more than 1.8 billion metric tons (MT) of high-grade iron ore, significant diamond and gold deposits, and undetermined quantities of uranium. Guinea has considerable potential for growth in the agricultural and fishing sectors. Soil, water, and climatic conditions provide opportunities for largescale irrigated farming and agroindustry. Possibilities for investment and commercial activities exist in all these areas, but Guinea�s poorly developed infrastructure and rampant corruption continue to present obstacles to largescale investment projects.

Joint venture bauxite mining and alumina operations in northwest Guinea provide about 90% of Guinea's foreign exchange. The Compagnie des Bauxites de Guinea (CBG), a joint venture in which 49% of the shares are owned by the Guinean Government and 51% by an international consortium (mostly U.S. and Canadian interests), exported about 12.5 million MT in 2000. The Compagnie des Bauxites de Kindia (CBK), a joint venture between the Government of Guinea and Russki Alumina, produces some 2 million MT, nearly all of which is exported to Russia and Eastern Europe. Dian Dian, a Guinean/Ukrainian joint bauxite venture, has a projected production rate of 1 million MT per year, but is not yet under production. The Alumina Compagnie de Guin�e (ACG), which took over the former Friguia Consortium, produces about 650,000 MT of alumina annually.

Diamonds and gold also are also mined and exported on a largescale. AREDOR, a joint diamond mining venture between the Guinean Government (50%) and an Australian, British and Swiss consortium, began production in 1984 and mined diamonds, which are 90% gem quality. Production stopped from 1993 until 1996, when First City Mining of Canada purchased the international portion of the consortium. More recent diamond mining ventures include HYMEX and the South African De Beers Corporation. DeBeers has operated in Guinea since 1994. The largest gold mining operation in Guinea is a joint venture between the government and Ashanti Gold Fields (85%) of Ghana. Other concession agreements have been signed for iron ore, but these projects are still awaiting preliminary exploration and financing results.

The Guinean Government has adopted policies to return commercial activity to the private sector, promote investment, reduce the role of the state in the economy, and improve the administrative and judicial framework. Guinea has the potential to develop, if the government carries out its announced policy reforms, and if the private sector responds appropriately. So far, corruption and favoritism, the border conflict, lack of long-term political stability, and lack of a transparent budgeting process have dampened foreign investor interest in major projects in Guinea.

Reforms since 1985 include eliminating restrictions on agriculture and foreign trade, liquidation of some parastatals, the creation of a realistic exchange rate, increased spending on education, and cutting the government bureaucracy. Since the beginning of the reform programs, both the number of public enterprises and the civil service payroll have been cut in half. Under 1996 and 1998 IMF/World Bank agreements, Guinea continued fiscal reforms and privatizations, and shifted governmental expenditures and internal reforms to the education, health, infrastructure, banking, and justice sectors.

In July 1996, President Lansana Cont� appointed a new government, which promised major economic reforms, including financial and judicial reform, rationalization of public expenditures, and improved government revenue collection. A concerted effort by the government to implement this program had begun to bear fruit in advancing Guinea�s economy and commercial sector into the intermediate stages of development, expanding international trade, agricultural production, and manufacturing capabilities. Then in 1997 the head of that government was stripped of his responsibilities, which were mainly economic, and finally fired in 1999. The economy has shown little progress since and growth has slowed. Corruption and a lack of set goals in development are the main causes of this downward turn of the economy. The informal sector continues to be a major contributor to the economy.

The government revised the private investment code in 1998 to stimulate economic activity in the spirit of a free enterprise. The code does not discriminate between foreigners and nationals and provides for repatriation of profits. While the code restricts development of Guinea�s hydraulic resources to projects in which Guineans have majority shareholdings and management control, it does contain a clause permitting negotiations of more favorable conditions for investors in specific agreements. Foreign investments outside Conakry are entitled to more favorable benefits. A national investment commission has been formed to review all investment proposals. The United States and Guinea have signed an investment guarantee agreement that offers political risk insurance to American investors through OPIC. In addition, Guinea has inaugurated an arbitration court system, which allows for the quick resolution of commercial disputes.

Until June of 2001, private operators managed the production, distribution and fee-collection operations of water and electricity under performance-based contracts with the Government of Guinea. However, both have continued to battle inefficiency, corruption and nepotism over the past year, and foreign private investors in these operations have recently departed the country in frustration. The Government of Guinea is giving itself one year to clean up the problems with the companies and hopes to then search for new partners to operate these utilities. The Government of Guinea hopes to strengthen the financial health of the energy sector by improving invoicing and collections, containing costs and improving services. New electric power sector regulations will pave the way for greater private investment in the energy sector. The 1995 elimination of the public monopoly on petroleum product importation and commercialization means private distributors are now operating in Guinea.