Report No. PIN66
Report No. PIN66
Guinea CAS: Public Information Notice
World Bank Board Discusses
Guinea Country Assistance Strategy
On July 25, 2001, the World Bank Board of Executive Directors discussed the Bank
Group's Country Assistance Strategy (CAS) Progress Report for the Republic of
Guinea. The Report reviews developments since the 1997 CAS, analyses the Bank's
experience in implementing its assistance strategy, and presents the Bank
Group's lending and non-lending program for the next 12 to 18 months.
Since the dismantling of its centrally-planned economy in the mid-1980s,
although Guinea has made remarkable progress in diverse areas, including price
liberalization, public sector divestiture, the financial sector, public
expenditure management, and trade and exchange rate policies, its record has
been somewhat mixed overall. From 1984-mid-1996, progress in specific areas was
often followed by policy slippages, particularly in 1995 when the IMF ESAF was
derailed after two months and the Bank's portfolio of projects was constantly
plagued by counterpart fund and project management issues. From 1996-2000,
Guinea's leaders made a determined push for reform with a marked growth and
poverty reduction bias. They also increasingly favored consultative and
participatory governance, allied with  community empowerment.   Guinea's Vision
2010 is illustrative of this new and promising approach.
Over the 1990-2000 period, economic developments have been broadly
satisfactory, despite worsening security conditions in neighboring countries and
heavy terms of trade losses stemming from the decline in world prices of bauxite
and alumina, Guinea's main exports. Guinea also made significant strides in
human development, particularly in education and health. However, it still faces
formidable challenges. The mixed performance of the economy since the mid-1980s
has not made it possible to make a significant dent in income poverty (much of
which is concentrated in the rural economy). Guinea's social development
indicators remain worse than the average in Africa. Despite significant progress
in education over the last decade (gross school enrollment increased from under
30 percent in the late 1980s to 56 percent in 1999 and primary school enrollment
for girls more than doubled, increasing from 20 to 40 percent), illiteracy
remains high. Furthermore, budget execution still leaves a lot to be desired.
Although the health sector has witnessed important achievements
(decentralization of decision making, development of primary health facilities
and district hospitals, launch of a three-year rolling plan), it is under-
funded, with an uneven distribution of public sector personnel. Guinea's
development is constrained by a widespread lack of basic infrastructure, and
poor access and high transport costs hamper the delivery of agricultural
products to potential domestic and export markets. Lack of resources for road
maintenance and expansion of the road network impedes rural development and
undermines agricultural productivity. Access to safe drinking water in rural
areas is limited to 49t of the population. Although over 70t of the population
live in rural areas, less than 1 of rural households has access to electricity.
The Guinean economy remains singularly undiversified, depending on mining for
79t of its merchandise exports, 25t of government fiscal revenue and 17t of GDP.
Civil service reform is a relatively unfinished agenda ( the Civil Service
Ministry has begun putting together the building blocks of a long-term
administrative reform) and developing and implementing a comprehensive and



coherent strategy to improve governance, strengthen the judiciary and increase
transparency continues to be a major challenge.
The Bank's assistance strategy focused on helping reduce poverty in Guinea, in
line with the objectives of Vision 2010. The focus was on:
* Improving access to basic services;
* Increasing economic growth and creating income-earning and employment
opportunities, particularly for the rural poor; and
* Improving governance and strengthening institutional and human capacity.
Since the 1997 CAS was discussed, the Board has approved one adjustment
operation (PEMAC or SAC III) and six investment operations (the Village
Community Support Program, the Capacity Building for Service Delivery Program,
the Micro finance LIL, the Pre-Service Teacher Education LIL, the Urban project
and the Population and Reproductive Health project). Our support has been
having a significant impact in terms of our strategic objectives and Guinea's
development goals. Service delivery in the priority sectors is being enhanced,
particularly in education and health, and the intention of the government is to
further strengthen efforts to bring service delivery closer to beneficiaries
through decentralization. PEMAC supported the introduction of a partial medium-
term expenditure framework covering non-wage recurrent expenditure in four
priority areas to redirect public expenditures toward priority sectors and
strengthen budget implementation, monitoring and control. It now remains to
expand the framework to the remaining sectors of government activity.
The Bank is looking more and more to anchoring its assistance in a decentralized
approach aimed at enhancing the capacity of local communities to take charge of
their future and at ensuring optimal use of financial resources. The CDD
approach is being implemented under the Urban III project (the first APL in
Guinea), and under the Village Communities Support Program (VCSP) and the
Capacity Building for Service Delivery project. Although it is too early to
judge their overall impact, the VCSP and CBSDP are already respectively helping
develop the capacity of local communities to manage local development, and
improving the capacity and effectiveness of regionally-managed service delivery
public agencies. The Third Urban Project stands out within the existing
portfolio as an innovative operation that is working particularly well because:
target populations are sharply defined; performance indicators are defined and
can be unambiguously measured; and project sub-components incorporate capacity
building. In the area of increasing economic growth prospects, the already
closed Agricultural Services project and Mining Promotion Project have achieved
good results although there is admittedly scope for doing even more to enhance
revenue generation. Bank support has also been geared toward helping strengthen
the regulatory framework to encourage private sector participation in the
growth-oriented sectors.
Guinea's Interim Poverty Reduction Strategy Paper/Joint Staff Assessment were
presented to the Board in December 2000 and preparation of the full PRSP is
underway. The next full CAS will be elaborated on the basis of priorities set
in the full PRSP, which is expected to be completed by Government by the end of
December 2001. Over the next 12 to 18 months, and until the new CAS is
completed, Bank supported activities in Guinea will involve completing the
program set out in the 1997 CAS as well as addressing two urgent emerging
issues: the HIV/AIDS epidemic and the reconstruction needs arising from the
refugee/internally displaced persons (IDP) issue. Bank activities would also
utilize the ongoing enhanced HIPC initiative and PRSP process to support reforms
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to address poverty reduction issues more rapidly and effectively with particular
emphasis on governance, fighting corruption and the social sectors.
The FY01 program comprised presentation of the HIPC decision point documents
and the Joint Staff Assessment to the Board in December 2000. There were no
lending activities in FY01. In FY02, the program includes four operations
(including a supplemental).   These are the SAC IV (US$50 million), which
accompanied this CAS Progress Report, the Education-for-All Program (US$70
million ), a Supplemental to the Third Water Supply Project (US$25 million) and
a Rural Energy LIL (financed by IDA for US$5 million and the GEF for US$2
million). The FY03 lending program includes a multi-sectoral Reconstruction
Project (US$10 million), to respond to the urgent needs engendered by the border
conflicts, and a multi-sectoral HIV/AIDS Program (US$10 million), which has been
added given the need to address the mounting incidence of AIDS. Both are on
standby for possible advancing to FY02. In addition, there is the judicial
capacity building project (US$10 million) and a mining sector LIL (US$5 million)
in FY03.
The thrust of the non-lending program over the net 12 to 18 months will be to
support preparation of a full PRSP and to bring key economic and sector work up-
to-date. The ESW program will include: (i) fiduciary assessments, involving
analyses of Guinea's public expenditures (a PER in FY02), procurement (CPAR in
FY02), and financial management systems (a full CFAA in FY03 further to the
Rapid Fiduciary Assessment in FY01); and (ii) cross-cutting assessment of
Guinea's social, structural and key sectoral development policies, including
social impact analyses of macroeconomic and structural policies.
OUSMAN JAH
Q:\My Documents\Guinea Country Public Information Notice.doc
September 13, 2001 9:19 PM
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