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Guinea has from one-third to one-half of the world’s known reserves of bauxite (the principal ore of aluminum), plus significant reserves of high-grade iron ore at Mount Nimba and the Simandou Mountains. Alluvial gold is taken from the Niger and its tributaries, and diamond production is substantial and largely of gem-quality stones. The iron ore deposits of Mount Nimba are exploited under a shipping agreement with the government of Liberia. Mining of gem-quality diamonds increased greatly since 1984, and gold production rose substantially as well. Uranium reserves were discovered near Kissidougou, in the Forest Region, in 2007.
Hydroelectric potential is considerable because of the high rainfall and deep gorges of the Fouta Djallon, but the country’s hydropower has been only partially developed, largely to meet the demands of the alumina sector. A dam and hydroelectric power station on the Konkouré River produce nearly one-third of the country’s electricity. Yet only a small proportion of energy comes from the national grid, which supplies mainly Conakry and Kindia.
Manufacturing
Manufacturing accounts for only a small fraction of Guinea’s gross domestic product. Food-processing plants run at less than full capacity because agricultural production is insufficient and capital and managerial input are inadequate. Most industry consists of the manufacturing of light consumer goods and the primary processing of agricultural products.
Finance
Since 1984 the government of Guinea has pursued a slow process of economic reform aimed at reestablishing a free-market system. In 1986 Guinea began a process to relink its currency, the Guinean franc, with the French franc after having maintained a nonconvertible currency (one not exchangeable for foreign currencies) since 1960. The process was never completed, however.
In mid-1985 a new banking law allowed the establishment of new commercial banks to replace the publicly owned institutions (with the exception of an Islamic bank established in 1983) that had existed under the Touré government. In December 1985 three banks involving French participation began operation: the Banque Internationale pour l’Afrique en Guinée (BIAG), the Banque Internationale pour le Commerce et l’Industrie de la Guinée (BICI-GUI), and the Société Générale de Banques en Guinée (SGBG). The central bank is the Banque Centrale de la République de Guinée.
The Guinean investment code follows fairly classical lines, offering a variety of inducements to domestic and international investors in productive sectors. Benefits include waivers of import duties on capital equipment and deductions of various peripheral tax liabilities including statutory employers’ contributions. Compared with many other African countries, the extent of these investor benefits is modest.
Trade
During the Touré regime, smuggling of both imports and exports—brought on by an unrealistic exchange rate and poor returns to agricultural producers selling in the domestic market—made accurate trade figures impossible. While Guinea recorded a substantial surplus on visible trade in the 1980s, its export base was narrow and largely dependent on the mining industry for international trade earnings.
Guinea still depends heavily upon mineral exports to maintain a favourable trade balance. Exports of gold and diamonds in particular have shown substantial growth since 1984. The bauxite deposits at Fria, Kindia, and Sangaredi in the Boké region are exploited by international consortia in which the Guinea government holds major shares. Similarly mixed foreign and domestic plants produce the bauxite and alumina that provide the majority of Guinea’s export earnings. Chief imports include machinery, foodstuffs, and refined petroleum. Principal trading partners include European countries, China, and India.
Taxation
Guinea has high tax rates. Government revenue is derived chiefly from mining concessions, a value-added tax, import and export duties, excise taxes, a petroleum products tax, and taxes on commercial transactions and production. There are also various other surtaxes, stamp duties, and registration fees. Business and other licenses and personal property, building, dwelling, and vehicle taxes are handled by the prefecture administrations. Taxes on salaries and wages contribute little revenue because few people are salaried and because many wage earners work within the government.
Transportation
Guinea’s transportation system is largely based upon roads and domestic air service. Roads connect Guinea to regional centres and to Senegal and Mali. An international airport at Conakry serves jets of all sizes. Air Guinée Express operates a somewhat irregular schedule of weekly domestic flights to the hard-surfaced airports at Kankan, Labé, and Faranah and maintains occasional service to nearby international cities.
The Conakry-Kankan railway line is now mostly defunct, and there is no passenger railway service in the country. Two industrial railways serve the bauxite mining areas, including a line linking Conakry to the Fria bauxite mines. The Boké Railway runs between Kamsar and Sangaredi.
The port facilities of Conakry are extensive. There is a channel about 25 to 65 feet (8 to 20 metres) deep and dock space with modern loading equipment. The Sangaredi bauxite mine company maintains its own ore-exporting port at Kamsar. Coastal shipping, however, is limited.