2014 Index of Economic Freedom

Guinea-Bissau

overall score51.3
world rank143
Rule of Law

Property Rights20.0

Freedom From Corruption20.2

Limited Government

Government Spending86.6

Fiscal Freedom89.0

Regulatory Efficiency

Business Freedom40.5

Labor Freedom61.4

Monetary Freedom74.4

Open Markets

Trade Freedom61.4

Investment Freedom30.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 1.6 million
  • GDP (PPP):
    • $1.9 billion
    • -1.5% growth
    • 2.7% 5-year compound annual growth
    • $1,223 per capita
  • Unemployment:
  • Inflation (CPI):
    • 2.2%
  • FDI Inflow:
    • $16.2 million
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Guinea–Bissau’s economic freedom score is 51.3, making its economy the 143rd freest in the 2014 Index. Its score has increased by 0.2 point, with improvements in labor freedom and the management of government spending outweighing declines in investment freedom, trade freedom, and freedom from corruption. Guinea–Bissau is ranked 33rd out of 46 countries in the Sub-Saharan Africa region, and its overall score remains well below the world and regional averages.

Guinea–Bissau was first graded in the 1999 Index, and its economic freedom has advanced since then by nearly 18 points. With no decline in any of the 10 economic freedoms and dramatic score improvements in the area of market openness as measured by trade freedom and financial freedom, the country advanced out of the ranks of the “repressed” in 2012 and recorded its highest score ever in 2014.

Guinea–Bissau’s progress toward greater economic freedom will require deeper institutional reforms to ensure an effective transition to an open market economy under the rule of law. Corruption and weak enforcement of property rights drain economic resources, and the judicial system lacks transparency and independence.

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Background

President Joao Vieira, ousted in 1998, won the presidency in 2005 but was assassinated in March 2009. Malam Bacai Sanha, who won an emergency election in June 2009, died in January 2012, and a military coup in April prevented an election to determine his successor. Manuel Serifo Nhamadjo became acting president in May 2012 as part of a transitional arrangement. Guinea–Bissau remains highly dependent on subsistence agriculture, the export of cashew nuts (the country’s most important commercial crop), and foreign assistance. Agriculture employs over 80 percent of the labor force and accounts for over 60 percent of GDP and about 90 percent of exports. The country is a major transit point for drugs and arms trafficking by international criminal gangs. GDP contracted by 1.5 percent last year.

Rule of LawView Methodology

Property Rights 20.0 Create a Graph using this measurement

Freedom From Corruption 20.2 Create a Graph using this measurement

Corruption is pervasive, driven in large part by the illicit drug trade. With weak institutions and porous borders, Guinea–Bissau has become a major transit point for Latin American drug traffickers moving cocaine to Europe. Scant resources and endemic corruption severely challenge judicial independence. Judges and magistrates are poorly trained, irregularly paid, and highly susceptible to corruption and political pressure.

Limited GovernmentView Methodology

The top individual income tax rate is 20 percent, and the top corporate tax rate is 25 percent. Other taxes include a sales tax. The overall tax burden is 8.6 percent of GDP. Government spending is 21 percent of gross domestic output. Public debt has been rising and recently reached about 60 percent of GDP. Fiscal uncertainty remains high after a coup in 2012.

Regulatory EfficiencyView Methodology

Establishing a business has become streamlined, but other regulatory requirements remain burdensome. Minimum capital requirements exceed three times the average level of annual income. The formal labor market is underdeveloped. The government maintains price controls on key products by imposing reference prices for fuel and basic foods.

Open MarketsView Methodology

Guinea–Bissau’s average tariff rate is 11.8 percent. Political unrest has been a deterrent to foreign investment. The underdeveloped financial sector is a serious impediment to private-sector growth. Most economic activity remains outside of the formal banking sector, and medium-term and long-term financing is not easily accessible.

Country's Score Over Time

Bar Graph of Guinea-Bissau Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Guinea-Bissau to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.5-0.4
2Botswana721.4
3Cape Verde66.12.4
4Rwanda64.70.6
5Ghana64.22.9
6South Africa62.50.7
7Madagascar61.7-0.3
8Swaziland61.24.0
9Zambia60.41.7
10Uganda59.9-1.2
11The Gambia59.50.7
12Namibia59.4-0.9
13Burkina Faso58.9-1.0
14Gabon57.80.0
15Tanzania57.8-0.1
16Côte d'Ivoire 57.73.6
17Kenya57.11.2
18Benin57.1-0.5
19Seychelles56.21.3
20Djibouti55.92.0
21Mali55.5-0.9
22Malawi55.40.1
23Senegal55.4-0.1
24Niger55.11.2
25Mozambique 550.0
26Nigeria54.3-0.8
27Guinea53.52.3
28Mauritania53.20.9
29Cameroon52.60.3
30Liberia52.43.1
31Burundi51.42.4
32Comoros51.43.9
33Guinea-Bissau51.30.2
34Sierra Leone50.52.2
35Ethiopia500.6
36Togo49.91.1
37Lesotho49.51.6
38São Tomé and Príncipe 48.80.8
39Angola47.70.4
40Central African Republic46.7-3.7
41Chad44.5-0.7
42Equatorial Guinea44.42.1
43Republic of Congo 43.70.2
44Democratic Republic of Congo40.61.0
45Eritrea38.52.2
46Zimbabwe35.56.9
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