Guinea-Bissau

Politics:

• Analysis

  Guinea-Bissau politics: Rising tensions and political realignments

  Guinea-Bissau's political and military landscape has witnessed increasing political tensions and some significant realignments in the past few weeks. An open clash between the legislative and the executive, against the background of an attempt to sideline parliament, revealed a fracture within the Partido da Renovação Social (PRS) that adds to an already highly factionalised political landscape. At the same time, as the prospects of a return to constitutional order begin to slowly materialise, several former members of the Partido Africano da Independência da Guiné e Cabo Verde (PAIGC) appear to be seeking to rejoin the former ruling party, which stands a good chance of winning the general election when it eventually takes place.

  Starting with the April 12th coup, 2012 was marked by a steady deterioration of Guinea-Bissau's economic, political and human rights situation. A climate of fear and intimidation, following several politically motivated beatings and assassinations, alongside a poor cashew export season and a suspension of most international assistance, made for a particularly hard year for the country and its population. Still, a number of positive developments in late 2012 and early 2013 raised the hopes that this bleak picture would gradually improve. These included the appointment of José Ramos-Horta as the new UN special representative, the change in the PRS leadership and, most recently, the call by the Economic Community of West African States (ECOWAS)-the only international body that supported the transitional arrangement-for free and fair elections before the end of the year. Overly optimistic hopes were dashed in mid-February, though, when the new PRS leadership, along with a group of small parties, proposed the extra-constitutional creation of a new transitional body, the Multi-Party and Social Transition Commission (MPSTC), which would have powers akin to parliament-thus rendering the legislature obsolete-while in effect being controlled by pro-coup political forces.

  Rising tensions between the legislative and the executive

  This attempt by the pro-coup hardliners to sideline the parliament is key to understanding the increasing tensions between parliament and the executive. These tensions first emerged in late February, when several MPs, including Ibraima Sory Djalo, a PRS member and parliamentary speaker, accused the government of financial mismanagement, of failing to submit the budget for the parliamentary approval and of generally "doing nothing" to improve the country's situation. Mr Djalo and a group of MPs even threatened to put forth a motion of no confidence against the government led by Rui Duarte de Barros, who hails from the PRS ranks. The government swiftly rebutted these accusations, claiming that parliament was paralysed throughout most of 2012 and could not have approved the budget, and adding that a recent IMF mission to the country did not find any signs of mismanagement of public funds. Regardless of the substantive matters at hand, however, this episode is significant insofar as it exposed a fracture within the PRS between the pro-government, pro-MPSTC hardliners, on the one hand, and the "doves", who make up a significant share of the PRS parliamentary group and want their party to adopt a more compromising position.

  The PAIGC is slowly preparing for a return to power

  Meanwhile, the internal race for the leadership of the PAIGC is already well under way. The key candidates are currently Braima Camará, who has taken the lead by holding a number of rallies across the country; Domingos Simões Pereira, a former executive director of the Comunidade dos Países de Língua Portuguesa (CPLP), an organisation of lusophone countries; Aristides Ocante da Silva; and José Mário Vaz, a former finance minister, who on March 7th became the latest candidate to announce his intention to stand. The PAIGC stands the best chance of winning the general election when it eventually takes place, benefiting both from its historically dominant role in Bissau-Guinean politics and from the PRS's association with the coup, which makes it unpopular with many voters.

  Reflecting the fact that the PAIGC is likely to return to power when a general election does take place, several former party members who had become disaffected during the leadership of Carlos Gomes Júnior-the former party leader and former prime minister who was ousted in the April coup and is now in exile in Portugal-have recently been seeking a rapprochement with their former party. The most notable of these is Aristides Gomes, the party's founder and a former associate of the late president João Bernardo "Nino" Vieira. Mr Gomes abandoned the PAIGC a few years ago to form a new party in repudiation of Mr Gomes Júnior's leadership, but he has now decided, along with a majority of his party's 12,000 members, to rejoin the PAIGC. The increasing hostility towards the government from the interim president, Serifo Nhamadjo, and even from Mr Djalo could constitute another strategic move aimed at paving the way to rejoining the PAIGC in the future.

  Internal threats to General Indjai: real or imaginary?

  Finally, the past few weeks have also seen increasing tensions within the armed forces. These became apparent when two important military figures-Second Lieutenant Júlio Mbali, the head of security for the army's chief of staff, António Indjai, and Colonel Latche Na Man, the commander of the Gabu military region-were suspected of treason and arrested at different times over a period of weeks. Both the underlying motives and the current status of these two men remain uncertain. Regardless of the lack of clarity or details, the arrests are suggestive either of the emergence of a real challenge to General Indjai's power coming from within the armed forces, or of his increasing concern with the risk of suffering a similar fate to that of his predecessors, several of which have been assassinated or ousted in internal power struggles.

  A bumpy road ahead

  The divisions within the army and the PRS coupled with growing tension between the legislature and the executive and the search for a new leader of the PAIGC mean the country's political scene will remain divided. This will make the process towards the re-establishment of constitutional rule both protracted and bumpy. As in the past, the civilian administration will struggle to exert its authority over the military, which will remain a significant player behind the scenes. Together with its political allies, the army will, through backroom deals and the overhanging threat of intervention, seek to consolidate its control over the civilian institutions and ensure that the outcome of the election does not constitute a threat to its core interests. Meanwhile, Mr Ramos-Horta and ECOWAS will continue to push for the election to be held before the end of the year. As the various stakeholders vie for influence over the political processes, Bissau-Guinean politics is set to remain volatile.

  March 18, 2013

• Background

  Guinea-Bissau: Constitution and institutions

  A democratic constitution

  Guinea-Bissau is a unitary state with a centralised elected authority. The country's first post-independence constitution proclaimed a one-party state. Constitutional reforms in the early 1990s paved the way for multiparty elections, abolishing the single-party state and reintroducing the position of prime minister. In 1997 a parliamentary committee was mandated to revise the constitution and reinforce the independence of the judiciary. The 1998 Abuja peace accord provided further impetus, and the 1998-99 transitional government began to work on a project of constitutional revision that would also reduce excessive presidential power. In July 1999 parliament passed the new constitution by a two-thirds majority, limiting the tenure of the president to two five-year terms, abolishing the death penalty and preventing anyone whose parents had not been born in Guinea-Bissau from holding high office. In 2002 a major constitutional reform aimed at reducing presidential powers was debated in the National Assembly, but the then president, Mr Yala, blocked the initiative by dismissing parliament. Further amendments to the constitution are likely in the future, although it is unclear if these will have any effect given the many constitutional restrictions that have been broken in recent years.

  The president is the main authority

  The political system is officially semi-presidential, and the executive is able to appoint the prime minister and government. The judiciary is constitutionally independent, and the highest judicial authority is the Supreme Court. Parliament has a four-year mandate. According to the current constitution, the president is the head of state, but not the head of government. However, in practice, both Mr Yala and Mr Vieira have acted as if the system of government were presidential, and their continuing involvement in Guinea-Bissau's politics is in violation of the existing constitution.

  January 10, 2008

• Structure

  Guinea-Bissau: Political structure

  Official name

  República da Guiné-Bissau

  Form of state

  Unitary republic

  Legal system

  Based on the 1984 constitution, which was revised in 1993 and 1999; a new constitution was passed by parliament in April 2001 but has yet to be enacted by the head of state

  National legislature

  Assembléia Nacional Popular, with 100 members, elected for a four-year term

  National elections

  November 2008 (legislative); July 2009 (presidential); the first round of the presidential election took place on March 18th following the death of the previous president, Malam Bacai Sanhá; the second round was interrupted by a military coup on April 12th; legislative and presidential elections are now expected in April 2013

  Head of state

  Serifo Nhamadjo, interim president following the military coup on April 12th

  National government

  The president appoints the prime minister, who presides over a Council of Ministers; a transitional government was appointed in May 2012 following the military coup in April; the government's 28 members hail from the military, Partido da Renovação Social (PRS), and other former opposition parties; a new government is expected following the next national elections

  Main political parties

  Partido Africano da Independência da Guiné e Cabo Verde (PAIGC; 67 seats); Partido da Renovação Social (PRS; 28 seats); Partido Republicano para a Independência e o Desenvolvimento (PRID; three seats); Partido para a Nova Democracia (PND; one seat); Aliança Democrática (AD; one seat)

  President (interim): Serifo Nhamadjo

  Prime minister (interim): Rui Duarte de Barros

  Key ministers (transitional government)

  Agriculture & fisheries: Malam Mané

  Budget (minister of state): Tomásia Lopes Moreira Manjuba

  Civil service, labour & state reform: Carlos Joaquim Vamain

  Defence & veterans' affairs: Celestino de Carvalho

  Economy & regional integration: José Biai

  Education, culture, youth & sports: Vincent Pungura

  Energy & natural resources: Daniel Gomes

  Environment & tourism (minister of state): Agostinho da Costa

  Finance: Abubacar Demba Dahaba

  Foreign affairs & international cooperation: Faustino Fudut Imbali

  Health: Agostinho Cá

  Infrastructure: Fernando Gomes

  Interior: António Suka Ntchama

  Justice: Mamadú Saido Baldé

  Media (minister of state): Òscar Suca Baldé

  Presidency of the council of ministers, social communication & parliamentary affairs: Fernando Vaz

  State security & public order (minister of state): Basílio Mancuro Sanca

  Territorial administration & local governments: Baptista Té

  Trade, industry & crafts: Abubacar Baldé

  Transport & communications (minister of state): Carlos Nhaté

  Governor of regional central bank (BCEAO)

  Koné Tiémoko Meyliet

  January 07, 2013

Economy:

• Background

  Guinea-Bissau: Economic background

  Main economic indicators, 2007(a)
  Real GDP growth (%)	3.7
  GDP (CFAfr m)	177.9
  Consumer price inflation (av; %)	3.0
  Current-account balance (US$ m)	-36.8
  Foreign debt (US$ m)	993.4(b)
  Average exchange rate (CFAfr:US$)	480.1
  (a) Economist Intelligence Unit estimates. (b) 2006.
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  January 10, 2008

• Structure

  Guinea-Bissau: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011b	2012b
  GDP at market prices (CFAfr bn)	387.0	390.5	418.5	432.1	434.2
  GDP at market prices (US$ m)	864.1	827.0	845.0	915.7	848.4
  Real GDP growth (%)	3.2	3.0	3.5	5.3a	-1.8
  Consumer price inflation (av; %)	10.5	-1.7	2.5	5.0a	2.8
  Population (m)	1.5	1.5	1.5	1.6	1.6
  Exports of goods fob (US$ m)	128.1	121.6	126.0b	244.6	125.0
  Imports of goods fob (US$ m)	-198.8	-202.3	-206.2b	-327.6	-222.4
  Current-account balance (US$ m)	-92.9	-113.6	-89.8b	-95.9	-119.7
  Foreign-exchange reserves excl gold (US$ m)	124.4	149.8	137.2	200.7a	164.5
  Exchange rate (av) CFAfr:US$	447.81	472.19	495.28	471.87a	511.75
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2011	% of total	Components of gross domestic product 2011	% of total
  Agriculture, forestry & fishing	56.4	Private consumption	86.5
  Industry	13.0	Government consumption	12.4
  Services	30.5	Fixed investment	13.4
  		Stockbuilding	0.2
  		Exports of goods & services	20.7
  		Imports of goods & services	-33.3
  Principal exports 2011	US$ m	Principal imports 2011	US$ m
  Cashew nuts	203.4	Food products	67.8
  Fish & shrimps	7.6	Petroleum products	65.7
  		Capital goods	63.2
  Main destinations of exports 2011a	% of total	Main origins of imports 2011a	% of total
  India	41.5	Portugal	28.3
  Nigeria	33.9	Senegal	15.6
  Brazil	8.7	China	4.7
  Togo	7.9	Cuba	3.8
  Spain	2.7	US	3.8
  a Derived from partners' trade returns, subject to a wide margin of error.

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  Download text file (csv format)

  January 07, 2013

• Outlook

  Guinea-Bissau: Country outlook

  Guinea-Bissau: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Following the coup in April 2012, the military will retain significant influence over political affairs, thus undermining stability and preventing a swift return to constitutional order. The interim authorities' weak international backing and lack of popular legitimacy, coupled with a fragmented political scene, will hinder effective government, including efforts to reform and downsize the army. Restoring a measure of political stability, including support from development partners, will depend upon the holding of free and fair elections and reinforcing civilian control over the military. The military coup undermined recent improvements in the public finances and much donor support has been withdrawn. The fiscal deficit will rise to 3.1% of GDP in 2013, before falling to 2.9% of GDP in 2014. Assuming normal weather conditions and improvements in political stability, economic growth is expected to rebound to 2.2% in 2013 and 3.6% in 2014 as agricultural growth and public investment pick up. Although exports will recover slightly in 2013, the country's dependence on imported food and fuel means that the current-account deficit will remain wide at an average of 12.3% of GDP in the 2013-14 forecast period.

  DOMESTIC POLITICS: The military coup in April 2012 threw Guinea-Bissau into a political crisis, and once again highlighted the army's overwhelming influence on civilian affairs. Until credible elections are held, a legitimate civilian administration is installed and civilian control over the military is reinforced, political instability is set to persist. Although the military has returned to barracks, it appears intent on seeking to prevent any development that could constitute a threat to its core interests, including army reforms and the return of the ousted prime minister, Carlos Gomes Júnior, who had sought to reform the army with the backing of Angola. The army has threatened to intervene again should Mr Gomes Júnior, who is currently in exile in Portugal, return to the country, and the military will retain significant sway over political affairs. The interim authorities' capacity to rein in the army's powers and prevent it from intervening will be restricted by its lack of popular legitimacy and the fact that it owes its position largely to its support from the military. The military's excessive influence over the political scene is likely to hinder effective government, including attempts to downsize and reform the armed forces-a crucial requirement for boosting political stability in the longer term. Moreover, efforts to crack down on the illegal narcotics trade and to fight the culture of impunity among the country's elites, both of which are essential for strengthening political stability, are likely to be undermined by the lack of constitutional order, as well as the weak capacity of both the judiciary and the law-enforcement agencies. The transitional arrangement, brokered by the Economic Community of West African States (ECOWAS), reflects the political groups that opposed the democratically elected pre-coup administration led by the Partido Africano da Independência da Guiné e Cabo Verde (PAIGC) and its leader, Mr Gomes Júnior. Although work in the National Assembly, in which the PAIGC still holds a two-thirds majority, resumed in late November, tensions between the legislature and the executive are expected to hinder effective policymaking. In contrast to ECOWAS, most of the country's international partners-including the Comunidade dos Países de Língua Portuguesa, an organisation of lusophone countries; the former colonial power, Portugal; Angola; the EU; the UN; and the African Union-have refused to recognise the transitional authorities and have called for the re-establishment of constitutional order. The perceived lack of legitimacy and the weak international backing of the transitional administration will remain a major source of political instability until constitutional order is restored. In addition, worsening food security and rising living costs, compounded by weak government capacity to address these issues, could fuel popular resentment and trigger protests against the regime. Similarly, continued infringements of human rights and political freedoms, including the intimidation of political activists critical of the transition, will do little to promote national cohesion and political stability. Furthermore, divisions within the military leadership could prompt destabilising power struggles.

  INTERNATIONAL RELATIONS: Relations with Guinea-Bissau's traditional development partners have come under serious strain following the military coup and the continued influence of the army leadership over civilian matters. European donors had already suspended aid before the coup, and the IMF has suspended its three-year Extended Credit Facility (ECF) programme with the government. A return to constitutional rule and the withdrawal of the military from civilian affairs will be crucial for the resumption of aid flows to the government. Moreover, Angola, an increasingly important source of funding, has withdrawn most of its support following the ousting of its ally, Mr Gomes Júnior. Part of the gap in funding is likely to be covered by financing from other sources-in particular, ECOWAS and Nigeria. The influence of ECOWAS, which has long played a leading role in aiding the country, will be boosted by the withdrawal of Angola, and it will be the country's ultimate guarantor of security for the foreseeable future. China, which prior to the coup offered generous budget support and credit lines as part of its efforts to expand its influence across the region, might also maintain at least part of its support. The US-which has been less firm than the EU in its rejection of the interim solution-will remain focused primarily on the country's position as a hub for international drug-trafficking networks. Senegal is an important regional partner and favours co-operation between the two countries' military forces in order to help control rebel movements in Senegal's Casamance region, which borders northern Guinea-Bissau.

  POLICY TRENDS: The political and economic disruptions following the coup have undermined macroeconomic stability and policy implementation, derailing progress on fiscal reforms and ongoing efforts to restrain inflation and contain the current-account deficit. The country's US$33.3m three-year (2010-13) ECF arrangement with the Fund has been suspended and the future of the programme, which focused on boosting economic growth and improving public finance management, is now in doubt. Future support from the Fund and most other international donors will be dependent on restoring constitutional order and holding credible elections. In the short term, the interim government is likely to focus on re-establishing essential economic functions, including the payment of civil servants' salaries and the distribution of seeds, fertilisers and basic foods in order to prevent a food crisis and ensure a decent harvest. However, implementation of longer-term policies as well as larger public investment projects will be hindered by political uncertainty, as well as by growing tensions between the Assembly and the interim government. Similarly, efforts to industrialise the agricultural sector, boost pro-poor spending, improve the business climate and attract foreign investment will prove difficult under the current circumstances. Once constitutional order has been re-established, the Fund and other donors will urge the government to resume structural reforms, which are needed to create a more competitive and diversified economy. At the moment, Guinea-Bissau is heavily dependent on just one key export: cashew nut sales generated over 80% of total export receipts in 2011. Revenue collection will be hindered by political instability and weakened government capacity in the aftermath of the coup. Earnings from cashew nut exports will be undermined by the troubles in the cashew sector caused by the political upheaval following the coup, which has led to reduced government support for farmers and has fuelled smuggling to neighbouring countries. Moreover, low external demand means that exporters could face difficulties selling some of their stocks, further harming government revenue. The withdrawal of support from most major donors will also undermine revenue, although ECOWAS and Nigeria will cover part of the gap. As a result of the revenue shortfalls, overall spending will fall and an expected increase in investment spending is unlikely to materialise. Plans to increase the reference prices of key products (fuel, rice, cashews, sugar and flour), and thus reduce implicit subsidies on these items, will be difficult to implement as consumers face rising prices in the wake of food shortages and the economic disruptions caused by the coup. The fiscal deficit is expected to widen from an estimated 2.7% of GDP in 2012 to 3.1% in 2013 as election-related spending increases and government capacity remains weak, before narrowing to 2.9% of GDP in 2014 as economic activity picks up and political stability improves.

  ECONOMIC GROWTH: Disruptions following the coup, including to the distribution of seeds and fertilisers, and delays to the expected boost in infrastructural spending and planned foreign investment in mining will act as a drag on economic growth. The withdrawal of support from Angola and other donors, as well as the disruptions to the country's Fund programme, will further undermine the growth outlook. Increased support from ECOWAS, Nigeria and, potentially, China will cover only part of the gap left by the withdrawal of other donors. Moreover, continued low external demand for Guinea-Bissau's main export crop, cashew nuts, risks depressing incomes in the rural sector and could hurt agricultural growth in 2013. Nevertheless, assuming normal weather conditions and an uninterrupted cashew trading season, the economy is expected to rebound from an estimated contraction of 1.8% in 2012 to growth of 2.2% in 2013. As political stability improves and the public investment programme picks up again, growth is expected to quicken to 3.6% in 2014. The sound monetary policies of the regional central bank, Banque centrale des Etats de l'Afrique de l'ouest, and expected moderation in global food and oil prices will be positive factors in helping to control inflation over 2013-14. The interim government is likely to renege on the previous administration's promises to increase the pass-through of global prices into domestic prices and this will also help to contain inflation. We expect the average rate of inflation to decline to 2.4% in 2013 and further, to 2.2%, in 2014 as food prices continue to fall, fuel prices remain stable and agricultural output rises.

  EXTERNAL ACCOUNT: The CFA franc, which is pegged to the euro at CFAfr655.96:EUR1, will fluctuate against the US dollar in line with the euro:dollar exchange rate (on the assumption that the CFA franc/euro peg is maintained). We expect the dollar to weaken slightly against the euro in 2013, before strengthening in 2014. As a result, the average exchange rate of the CFA franc will appreciate from an estimated CFAfr512:US$1 in 2012 to CFAfr511:US$1 in 2013 and then depreciate to CFAfr518:US$1 in 2014. On the external front, exports will be dependent on the performance of the cashew sector, which typically generates more than 80% of export revenue. After a sharp drop in output and prices in 2012, official cashew exports are expected to pick up over 2013-14, albeit slowly as external demand remains weak. Although the upturn in exports will outpace growth in imports, the current-account position in 2013-14 will continue to be weighed down by high imports, which, despite falling prices, will remain buoyant as volumes rise. Overall, we expect the current-account deficit to narrow from an estimated 14.1% of GDP in 2012 to 12.7% of GDP in 2013 and 11.9% in 2014. The deficits are expected to be financed by the country's foreign-exchange reserves, credits from international partners, including ECOWAS, China and Nigeria, as well as by the accumulation of arrears. Although the country's debt levels were significantly reduced after the major donors granted it debt relief in 2010, the high current-account deficits risk leading to a renewed increase in external debt levels and thus undermine longer-term debt sustainability.

  January 08, 2013

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Country Briefing

Land area

36,125 sq km

Population

1.63m (CIA World Factbook estimate, 2012)

Main town

Bissau (capital), population 419,004 (2012 World Gazetteer estimate)

Weather in Bissau

Tropical: hottest month, April, 23-33°C; coldest month, January, 19-23°C

Languages

Portuguese, Crioulo, French, Balanta, Fula, Manjaco, Mandinga, Pepel

Measures

Metric system

Currency

CFA franc (CFAfr), the common currency of the Union économique et monétaire ouest-africaine (UEMOA); tied to the euro at a fixed exchange rate of CFAfr655.957:EUR1; the CFA franc replaced the peso in May 1997 at an exchange rate of P65:CFAfr1

Time

GMT

Public holidays

January 1st; January 20th (Heroes' Day); March 8th (Women's Day); May 1st; August 3rd (start of anti-colonial struggle); August 19th; September 24th (Independence Day); October 26th; November 14th; December 25th

January 07, 2013