Guinea – Election Delay Jeopardizes Stability

A political truce concluded in mid-2018 helped to calm domestic tensions, but the respite proved temporary, and a renewed eruption of violent protests prompted officials to postpone legislative elections that were scheduled to take place in January. The government’s failure to adhere to the terms of an agreement reached between President Alpha Condé’s governing RDR and the main opposition UFDG, specifically with regard to the reservation of local government positions for non-RDR appointees, prompted UFDG leader Cellou Dalein Diallo and other opposition figures to call for general strikes. Tensions are heightened by a historical ethnic rivalry between the Malinké, who are the main constituency of the RDR, and the more numerous Fula, who form the core base of support for the UFDG.

Condé’s expression of interest in running for a third term, which is currently prohibited under the constitution, has prompted accusations that the president harbors authoritarian ambitions, and opposition leaders have pointed to the heavy-handed response of security forces and the postponement of the legislative elections as a validation of the charge. The opposition has responded by forming the FNDC, a four-party alliance backed by civil rights groups and trade unions. To the extent that the coalition is perceived by Condé and his allies to be a real threat to its hold on power, the creation of the FNDC figures to intensify the already unhealthy political dynamic.

The economic outlook is clouded by yet another setback for efforts to develop the massive Simandou iron-ore reserves, the fate of which was thrown into doubt in 2017, when Rio Tinto announced it was pulling out of the project. The venture appeared to be salvaged when Chinalco reached a deal to buy Rio Tinto’s interest, but the transaction remained incomplete at the expiration of the agreement in October. The more recent resolution of a long-running legal battle over the other half of the Simandou concession eliminates a significant deterrent to attracting alternative investors, but an implied investment of more than $20 billion in construction of the mine and related infrastructure means that a new owner will likely bide its time until metals prices return to a level that offers some assurance of profitability.

Support from the IMF and other multilateral assistance has helped to bolster the reserves cushion, which is currently sufficient to provide about 3.5 months of import cover, and should be enough to ensure adequate funding for essential budget commitments. Real GDP growth will continue at a fairly healthy clip of 5.5%–6% in 2019–2020, with the contribution from the mining sector reinforced by solid agricultural production and robust construction activity.

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