Agence de Promotion des Investissements Privés Private Investment Promotion Agency

Doing Business and investment opportunities in Guinea

REPUBLIC OF GUINEA

Travail- Justice - Solidarité

UK-Guinea Trade & Investment Forum LONDON, FEBRUARY 24TH 2016

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Key Data

Area : 245 857 km2

Population : 10,5 million

GDP : USD 6,7 BN

Inflation : 9%

GDP per capita 2015 : $493 per capita

Life expectancy : 56 years

Gross debt/ GDP (2012) : 21%

GDP composition by sector:

Agriculture (22,9%), Industry (32.9%), services (36.6%)

Priority sectors:

Energy, Agriculture, Infrastructures, Health, Education and Mining.

Key Information

Political stability : In 2010 the first democratic elections took place seeing the victory of President Condé and opening a new page in the history of a country “blessed by gods” according to the old saying. In october 2015, President Alpha Condé was reelected for a second five-years term

A rich soil with a lot of mineral natural resources : bauxite, diamonds, gold, iron, oil and gas

An incredible potential for agriculture (6 millions hectares of cultivable land), breeding and water related industries; the 3 most important rivers of the region (Senegal, Gambia and Niger) sourcing in Guinea meaning

Source: Estimation 2015,

from Cadrage macroeconomique, novembre 2015

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Following the election of Prof. Alpha Condé in 2010 an important number of measures have been taken that improved the business environment and made it “friendly” to both local and foreign actors.

Economic - Social

Debt relief and increased economic growth Increase in tax collection and foreign exchange reserves

Price and exchange rate stabilization Revival of public Investments in primary sectors Fight against food insecurity Improving healthcare services Investment in infrastructures, especially in energy and transportation

Institutional

Reforms in the justice sector Strengthening and professionalization of the Agency for the Promotion of Private Investment,

the entry desk to doing business in the country, amendment to the investment code… World Bank /IFC “Doing Business”: since 2012, creation of an Ad Hoc Committee to improve

the climate and the position of Guinea in the report Privatization of public utilities and operational disengagement (decentralization and use of

PPP) Sub-regional integration through sub-regional organizations (Mano River Union, ECOWAS,

OMVS, OMVG, etc.) 4

BUSINESS REFORMS AND IMPROVEMENTS AS PART OF DOING BUSINESS

• Company creation from 2 months to 48 hours.

• A new Investment Code that strengthen the guarantees granted o a private investor and provide easier access to tax and custom incentives.

• Reducing costs and relaxing procedures including the removal of the minimum capital and the ability to draw up Articles of Association in a private document for Limited Liability Companies.

• The drastic reduction of the documentations processing time involved in the granting of permits and licenses, which have gone from 2 months to 1 month in the first quarter of 2014.

• The reduction of costs and processing time of ownership transfer requests (existence of the one stop shop).

• Flexibility for the renewal of the tax identification number from 3 months to 6 months (SARL) and 3 months to 12 months (SA).

• The reduction in frequency of lump sum payments (VF) and deductions from salaries and Treatment (RTS) from Monthly to Quarterly.

• Strengthening investor protection through the new OHADA legislation.

• Reducing the threshold of risk reporting from 15 MGNF to 5 MGNF at the Central Bank.

• Facilitating the process of water and electricity connection.

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BENEFITS OF THE INVESTMENT THE 2015 CODE

For non-tax incentives, the Investment Code in force, defines in its articles 1-7, liberties, rights and guarantees granted to investors :

Rights to free

enterprise

Right to capital

transfer

The principle of

equality between

public and

private sectors

The protection

of acquired

rights

Equal treatment

between persons

or entities, of

Guinean or

foreign

nationality 6

TAX RELIEF

Incentive tax break are provided at all levels to foster economic transactions and productive investments THE INVESTMENTS CODES At the installation phase and/ or extension:

• Companies have a minimum a maximum of two years to install and are exempt from all customs on their goods and equipment except of the RTL, which is of 2% and 5% of the registration tax.

In the operation phase:

• Companies are subject to import raw materials at an RTL of 2% and a single fee of 6% for all customs duties throughout the life of the company. An importation tax of 18% recoverable on manufactured items and sold products.

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TAX RELIEF (cont’)

Companies are also exempt corporate taxes for a period of five to eight years depending on their physical location, In summary, they benefit from :

• The 50% and 25% of the BIC tax for the 1st and 2nd tax year, • The exemption for 5 years and 50% reduction over the next 3 years of the payroll tax (training

taxes and lump sum deposits)

Other exemptions specific to each sectors are summarized as follows :

a) The SME : exemption from the IMF for three years; b) Exporting companies: an exemption for five years from the BIC tax in the same proportion as

the sales generated between export and total sales; c) Companies developing natural resources and local materials: 5 years of taxable income

reduction of 20% of intermediate consumption of Guinea; d) Businesses located in economically weak areas: 5 years of reduced tax rate of 30%, 40%, and

60% depending on the zones 2, 3 and 4. e) For companies whose investment volume is over 500 million GNF, have greater benefits than

those granted in the Codes of Investment, according to a special agreement submitted to parliament, E.g. SOBRAGUI, BONAGUI, SODEFA etc.

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REFORMS IN THE JUSTICE SECTOR

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• Bring justice closer to litigants and creation of the Consitutional court (completed) and the chambers of commerce (in progress)

• Strengthen the capacity of the judiciary system, including in TIC

• Establish a judicial decisions control mechanism to assess the fairness and transparency rules in the way of justice

• The Superior Council of the Magistracy was set up in April 2014

• The national justice policy reform was adopted on July 16, 2014

• Popularization of new OHADA guidelines in progress

• Training of judges and members of judiciary and recruitment of 100

• Enactment of the law on judicial organization (completed in august 2015) and implementation of an integrated company registration system in lower courts in progress

• Upgrading of penal and civil codes in progress

• Strengthnening anti corruption units’ capacities

The judicial system is experiencing a profound reform with the following objectives :

Alternatives

• Arbitration

• Mediation

• Conciliation

Judicial modes

• Ordinary courts

• Special Courts

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Guinea: A promising sector in a country blessed with rich agro-climatic conditions

Lands − 6.2 million hectares of land, less than − 25% of which are cultivated annually

Rivers − 6 250 km-long river network − Including 1 161 waterways and 23 river

basins

Irrigation − 364 000 hectares of irrigable land − Only 30 200 hectares currently irrigated

The Government has adopted a National Policy for Agricultural Development, with the overarching aim of creating a modern, productive, sustainable and competitive agricultural sector

The door is wide open to private investment and PPPs in order to reach these objectives, above all in supply, production, sales and agricultural extension services

Example of investment opportunities amongst many others

Production and transformation

of Hevea

Production, processing and export of fruits and

vegetables

Production and processing of rice

Production, processing and export

of niche products

Production and processing of

palm oil

Focus on :

Agricultural exportation crops : to promote under a number of PPP and BOT the production expansion, as well as the development of local product transformation

The Government will: provide 20 year renewable lease necessary, ensure financing and the participation of international research centres, subsidise the establishment of formation and educative centres favour the participation of donors, NGO, and create a sturdy safety net for private sector to engage

Rice culture development: to increase land dedicated to rice as well as improve techniques to boost efficiency and replace imports by local production

Over USD 55 million has been provided by public donors through a series of programmes that will work in synergy with these projects

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Only 30% of Guinea’s 43 493 km of road are paved making the country one of the poorest performers in West Africa

6 959 km national roads, 15 657 km prefectural roads and 20 877 km community roads

In 2012, 48% of the paved road network was categorized as poor quality

Guinean roads have not been maintained for twenty years

3 lines operated by mining companies

Conakry-Fria Kamsar-Sangarédi Conakry-Kindia

Built by mining companies Reassigned at the end of the concession period

1 major axis connecting Conakry to Kankan (662 kilometers) ceased operations in 1995

Almost no rail traffic due to the acute dilapidation of infrastructure and rolling stock

Rail traffic is almost non-existent Insufficient road infrastructure

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95% of Guinea's foreign trade depends on maritime transport

Port capacity of Guinea could quickly become inadequate taking into account the exponential growth of trade

Port capacity close to saturation

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Roads − 13 595 km of roads of which 1 959 km are paved − Several projects envisaged in Conakry and the

country Railways − One national line Conakry – Kankan (662 km) but

out of order (project of reconstruction) − Network essentially linked to bauxite

exploitation: Kindia – Conakry (125 km), Fria – Conakry (140 km) and Kamsar – Sangarédi (130 km)

− Several projects including the trans-Guinean linked with the development of the iron mine in the Simandou region

Airports − Only one international airport Conakry Gbessia − 14 national airports of which 4 linked to the

mining industry − Project of a second International Airport in

Maferinya, 70 kilometers from Conakry (near the Sierra Leone mining sites)

Ports

− 3 ports Conakry, Kamsar and Benty

− Extension of the Conakry port signed and several other projects programmed for the mining industry

Waterways

− 450 km usable on the Niger from Kouroussa and on the Milo from Kankan to Bamako

Water

− In rural areas only 52,8% of the households have access to drinkable water

− Only 13,0% of the households benefit from sanitation system and 80,0% are throwing their wastes in the streets

− 6 000 MW hydroelectric potential p.a of which only 2,0% is used

− 129 hydroelectric sites identified

Energy

− Electricity access rate was 18,1% in 2007

− Other projects Amariya, Fomi

− Ambition to export energy

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Project Estimated budget

(MEUR)

Funding

intentions (MUSD) Duration

Highway construction (Bambeto and

Hamdallaye Cosa and Enco 5) 180,0 PPP ND

Logistic Transport Platform Kouriah ND PPP ND

National road construction Mamou-Dabola-

Kouroussa 311,0

PPP: FED, BAD,

FKD, World Bank 36 months

Construction of 2-lane highway between

Conakry and Mamou 327,0 (USD)

PPP: FED, BAD,

FKD, World Bank

70-75

months

Rehabilitation of the railway between PK40

and the Malian Border 40,0 (USD) Donors ND

Extension of the eastern Conakry’s port 627 (USD) PPP TBD ND

Creation of an Airline Company for the

Mano River Union TBD Seeking partners ND

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Project Estimated budget

(MUSD)

Funding

intentions

Gap to fill

(MUSD)

Rehabilitation and strengthening of

hydropower production 74,5 KDF, EIB, IDA 24

Rehabilitation of thermal power plants

Tombo 38,0 IDB 20

Rehabilitation and strengthening of the

transmission network 115,1

Exim Bank

EIB, Ecowas, IDA 20.4

Rehabilitation and extension of the

distribution network of the city of Conakry 404,0 BADEA -

Research projects of small and micro

hydroelectric dams To be determined Seeking partners -

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Project Name Area Estimated Cost

(M USD) Investment Type

Hydroelectric projects in the medium to long term (consolidation of the recovery plan)

Poudaldé (90 MW), feasability stage Boke 300 BOT (SEMAFO)

Morisanako (100 MW, prefeasability stage

2014) Mandiana 470,8 (2014) BOT/PPP

Gozoguezia (48 MW, feasability stage since

1983) Macenta 160 BOT/PPP

Regional projects

Interconnection line 1677 km including 575 km in Guinea (Sambagalou 128 MW)

OMVG 654 Public

Koukoutamba 294 MW, stage before detailed

project + interconnection line OMVS 713 PPP

Boureya, 114 MW, stage of feasibility studies OMVS 381 PPP

Fomi, 90 MW, stage of feasibility studies ABN 503 PPP

World-Class Mining Deposits and Global Partnerships

Mining for Success The mining sector is a significant contributor to

economic growth The mining sector accounts for 20% of Guinea’s GDP,

represents 30% of export revenues and provides 80% of its foreign currency inflow

Guinea holds 2/3 of the world’s bauxite deposits Guinea is the 5th largest bauxite producer

worldwide Reserves are estimated at 20 billion metric tons and

resources at 40 billion metric tons Highest quality bauxite deposits with grades of

40%-62% alumina Guinea also holds some of the largest and highest

quality iron ore deposits on the planet Multi-billion tonne reserves and resources, in the

same proportions as that of bauxite High grade hematite deposits only require simple

mining methods, meaning the industry is very competitive with regards to mining costs

Guinea also has gold, diamond, copper and nickel deposits

Bauxite Gold

Iron One Cooper & Nickel

Conakry

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Bauxite

Nickel Fer

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Bauxite: Guinea holds the world’s largest deposits; reserves estimated to 40 billion tones, with a grade higher than 40%.

Iron ore: Guinea has the largest and best untapped iron ore deposits in the world; 20 billion tones of world-class reserves (high grade: more than 60%).

Gold: 700,000 tones.

Diamond: 30 million carats, with proven ability to discover other interesting primary deposits.

Base metals (nickel, copper, cobalt, manganese...): proven indices that should

be confirmed by further researches.

Mining Sector – Private Sector Opportunity

Mining sector opportunities

Management of mining sites

Private training centres for workers

Procurement of related services

Construction of mining sites and relevant infrastructure

A number of opportunities related to the mining industry value chains will be offered to the private sector

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In addition to Conakry, SEG manages 24 out of 33 towns in the countryside, 9 of which are still not equiped.

The production has barely doubled while consumption has almost tripled.

2000-2013

2000-2013

Water consumption has increased from 13 to 33,35 millions m3, between 2000-2012.

Water production has double, passing from 27,8 to 60,8 millions m3.

Guinea is known as the water towel of West Africa, but the production of water is still low and huge unsatisfied demand exist.

Gap to be filled in 2014 (Conakry)

Daily need (M3) : 308

000

Estimated production (M3)

: 167 000

= 46%

Deficit (M3) : 141

000

Surface water : 85%

Drill water : 15%

Water sector in Guinea: huge potential, huge opportunities

Opportunities

Challenges

Existence of a legal and regulatory framework

Existence of surface water resources

Existence of drill water resources

Existence of unsatisfied demand

Filling the existing deficit

Ensuring regular supply of drinking water and increasing the production

Upgrading the sewer and distribution network distribution

Reducing losses of water

Upgrading the quality of water resources

Mobilising support for funding

Opportunities and challenges

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Reduction of technical and commercial losses in the district of Matoto

Cost : 1,6 millions USD and Type of investment: Public / Public

Increasing water Production from catchment areas of Kakoulima and Kobayah

Cost : 1,78 millions USD and Type investment: Public / Public Upgrading of water catchment in Kakoulima Cost : 26,96 millions USD and Type of investment: Public /

Privé

Ensuring water production and supply in the city of Siguiri

- Cost: 8,997 millions USD and Type of investment: Public / Privé

Ensuring water production and supply in the city of Boffa

- Cost: 9,008 millions USD and Type of investment: Public / Privé

Ensuring water production and supply in the city of Dinguiraye

- Cost: 0,380 millions USD and Type of investment: Public / Public

Ensuring water production and supply in the city of Kouroussa

- Cost: 0,320 millions USD and Type of investment: Public / Public

Ensuring water production and supply in the city of Kissidougou

- Cost: 0,350 millions USD and Type of investment: Public / Public

Conakry

Countryside

Water sector in Guinea: investments opportunities

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• Concerned cities: Kindia, Boké, Labé, Mamou, Faranah, Kankan et N’Zérékoré

• Works to be carried: Upgrading & reinforcing drinking water supply chains for Production, Transport, Storage and Distribution

- Estimated Cost : USD 84 millions

Upgrading & reinforcing drinking water supply chains in the 7 regional capitals

Equipment of 3 remaining cities (Beyla, Fria and Koubia)

Upgrading the sewer and distribution network distribution in 17 secondary

urban areas

- Estimated Cost: USD 56 millions

• Infrastructures, Production, Transport,

Storage and Distribution

- Cost : 17 millions USD

Covered cities by urban water in Guinea

uncovered cities

Covered cities

Urban water: investment Opportunities in the countryside

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The sector offers huge opportunities evidenced by :

The banking rate of the population : (6.64% comparatively to 29.42% in Ghana and

29.66% in Nigeria) ;

The rate of implementing microfinance in Guinea (6.7% in contrast to 33.6% in Senegal

and 44.4% in Togo) ;

The implementation rates of insurances (0.46% against 1.13% in the UEMOA) ;

The financial shortfall in the economy : the ratio credit to the economy (excluding BDT)

on PIB (9.75% against18.2% in the WAEMU and 28% in Ghana);

The lack of specialized financial institutions.

Guinean financial sector: huge opportunities to seize

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Among the banks in activities : • Return on assets 2% in 2013, above the minimum standard of the profession which is 0.5%. • 15 active banks compared to 11 at the end of 2010 • 17 MicroFinance Institutions (IMF) compared to 13 in 2010 • 9 insurance companies compared to 7 at the end 2010 • 2 electronic payment companies

Among the banks in activities : • 2 subsidiaries of French banks • 7 banks from the West African sub-region • 4 affiliates of Maghrebian and Arab banks • 1 belonging to a malaysian group • 1 affiliated to a Central African group

Indicators 2010 2011 2012 2013 2014

Number of bank branches 75

84

98

112

121

Number of point of service IMF

369

432

485

507

510

Number of insurance intermediaries

55

94

103

83*

NA

200520062007200820092010201120122013

Profit

High returns and increasing number of financial institutions

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Regulatory and Institutional framework : Enactment of a new banking law that brings innovations such as the protection of

depositors, reinforcing supervision, introduction of the right for any citizen or Guinea resident to have an account etc.

Enactment of the Law on Money Laundering Enactment of the Law on Financing Terrorism Enactment of the Law on leasing to facilitate the financing of PME/PMI Creation of the National Processing Unit of Financial Information (CENTIF) Upgrading the national payments system to modernize and automate various banking

transactions Enactment of the Central Bank new legal forms The rivival of the credit risk register Reduction of transactions costs (no more tax on transactions in foreign exchanges) Flexibilization of interest rates on savings Introduction of risk based supervision for commercial banks increase of commercial bank’s capital requirement from USD 6 to 12 millions

A PROFOUND CHANGE IN THE FINANCIAL SYSTEM

The Guinea Private Investment Promotion Agency (‘The Agency’) is a Government agency, established to promote and facilitate investments in Guinea. The objective of The Agency is to create an enhanced, transparent and effective environment that encourages private investments and the development of the Guinean economy.

Under the Presidency of the Republic of Guinea, The Agency enjoys a financial autonomy and a transparent management in order to carry out its mission.

Contact Gabriel Curtis, Managing Director 252 KA 022 Street, Commune de Kaloum BP : 2024 Conakry, Rep of Guinea Tel: (+224) 656 31 11 11 E-mail: dg@apip.gov.gn Website: www.apip.gov.gn

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The Private Investment Promotion Agency of Guinea