2013 Index of Economic Freedom

Guinea-Bissau

overall score51.1
world rank138
Rule of Law

Property Rights20.0

Freedom From Corruption22.0

Limited Government

Government Spending82.0

Fiscal Freedom89.1

Regulatory Efficiency

Business Freedom41.3

Labor Freedom54.0

Monetary Freedom72.7

Open Markets

Trade Freedom65.3

Investment Freedom35.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 1.7 million
  • GDP (PPP):
    • $1.9 billion
    • 5.3% growth
    • 3.6% 5-year compound annual growth
    • $1,144 per capita
  • Unemployment:
  • Inflation (CPI):
    • 5.0%
  • FDI Inflow:
    • $19.4 million
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Guinea–Bissau’s economic freedom score is 51.1, making its economy the 138th freest in the 2013 Index. Its score has increased by 1.0 point due to gains in the control of government spending and freedom from corruption that offset declines in labor and monetary freedoms. Guinea–Bissau is ranked 30th out of 46 countries in the Sub-Saharan Africa region, and its overall score remains well below the world and regional averages.

Guinea–Bissau has joined a number of other African countries in embracing the merits of regulatory and budgetary reforms. Moderate improvements over the past few years include simplifying the business start-up process and keeping public spending under better control.

However, the institutional setting for economic development remains somewhat oppressive. Corruption and weak enforcement of property rights drain economic resources, and the judicial system lacks transparency and independence. The lack of progress in enhancing the trade and investment regimes continues to undermine the emergence of a dynamic private sector, holding back productivity gains and job growth.

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Background

President Joao Vieira, ousted in 1998, won the presidency in 2005 but was assassinated in March 2009. A presidential candidate and a prominent member of parliament were murdered in June 2009. Malam Bacai Sanha, who won an emergency election in June 2009, died in January 2012, and a military coup in April 2012 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 most important commercial crop), and foreign aid, including assistance from the International Monetary Fund. Agriculture employs over 80 percent of the labor force and accounts for over 60 percent of GDP and about 90 percent of exports. Guinea–Bissau is a major transit point for the trafficking of drugs and light arms by international criminal gangs.

Rule of LawView Methodology

Property Rights 20.0 Create a Graph using this measurement

Freedom From Corruption 22.0 Create a Graph using this measurement

Protection of property rights is extremely weak, and the rule of law remains uneven across the country. The judiciary is influenced by widespread corruption among the political elite. Judges are poorly trained and poorly paid. Traditional practices prevail in most rural areas, and persons who live in urban areas often bring judicial disputes to traditional counselors to avoid the official system’s costs and bureaucratic impediments.

Limited GovernmentView Methodology

The top income tax rate is 20 percent, and the top corporate tax rate is 25 percent. The sales tax has been reduced to 10 percent on certain commodities. The overall tax burden is 7.9 percent of total domestic income. Government spending has decreased to 24.5 percent of total domestic output. Public debt is about 45 percent of GDP.

Regulatory EfficiencyView Methodology

The business start-up process has been simplified and made less time-consuming but still takes nine procedures. Completing licensing requirements takes more than 150 days and costs over seven times the level of average annual income. With the labor market relatively underdeveloped, most formal employment remains confined to the public sector. The government maintains price controls on key products.

Open MarketsView Methodology

The trade-weighted average tariff rate is 9.9 percent, and bureaucratic customs procedures add to the cost of trade. Political instability, foreign exchange restrictions, and inadequate regulatory capacity discourage investment. The financial sector remains underdeveloped, providing a very limited range of services. Many people still rely on informal lending and have no bank accounts.

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
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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