2018 Index of Economic Freedom

Guinea-Bissau

overall score56.9
world rank118
Rule of Law

Property Rights31.1

Government Integrity27.3

Judicial Effectiveness53.5

Government Size

Government Spending85.6

Tax Burden86.4

Fiscal Health87.1

Regulatory Efficiency

Business Freedom47.8

Labor Freedom61.1

Monetary Freedom77.4

Open Markets

Trade Freedom65.2

Investment Freedom30.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 1.7 million
  • GDP (PPP):
    • $2.9 billion
    • 4.8% growth
    • 2.6% 5-year compound annual growth
    • $1,730 per capita
  • Unemployment:
    • 6.5%
  • Inflation (CPI):
    • 1.5%
  • FDI Inflow:
    • $19.6 million
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Guinea–Bissau’s economic freedom score is 56.9, making its economy the 118th freest in the 2018 Index. Its overall score has increased by 0.8 point, with significant improvements in fiscal health and judicial effectiveness outpacing declines in the property rights, tax burden, and government spending indicators. Guinea–Bissau is ranked 15th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.

A political stalemate in since 2015 has resulted in weak governance, but the main power brokers, including the military, are reluctant to dampen the fragile economic recovery and thus likely to continue efforts to improve the management of public finances and tighten spending controls. The judicial system remains inefficient and vulnerable to political interference, and corruption is perceived as widespread. The overall regulatory framework is not conducive to starting businesses and discourages broad-based employment growth.

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Background

Guinea–Bissau has been wracked by conflict almost continuously since independence from Portugal in 1974. José Mário Vaz was elected president in 2014. In 2015, he sparked a political crisis by firing Prime Minister Domingos Simões Pereira, head of the ruling African Party for the Independence of Guinea and Cape Verde. Vaz also quickly dismissed several successor governments and by November 2016 had named Umaro Sissoco Embaló the country’s fifth prime minister within a two-year period. Guinea–Bissau is highly dependent on subsistence agriculture, the export of cashew nuts, and foreign assistance, which normally comprises about 80 percent of its budget. Two out of three people living in the country have incomes below the extreme poverty line.

Rule of LawView Methodology

Property Rights 31.1 Create a Graph using this measurement

Government Integrity 27.3 Create a Graph using this measurement

Judicial Effectiveness 53.5 Create a Graph using this measurement

Protection of property rights is generally weak. The judiciary has little independence and is barely operational. Judges are poorly trained, inadequately and irregularly paid, and subject to corruption. Anticorruption laws are not implemented effectively, and officials in all branches and at all levels of government engage in corrupt and nontransparent practices with impunity.

Government SizeView Methodology

The top personal income tax rate is 20 percent, and the top corporate tax rate is 25 percent. The sales tax is 10 percent on certain commodities. The overall tax burden equals 18.4 percent of total domestic income. Over the past three years, government spending has amounted to 21.9 percent of total output (GDP), and budget deficits have averaged 2.3 percent of GDP. Public debt is equivalent to 46.3 percent of GDP.

Regulatory EfficiencyView Methodology

Private-sector development remains severely challenged by the opaque regulatory environment, although there have been incremental improvements to make it easier to run a business in recent years. Much of the labor force is employed in the public sector or the informal economy. Although the government has removed fuel subsidies, it continues its “pass-through” pricing mechanism and also still heavily subsidizes electricity.

Open MarketsView Methodology

Trade is significant for Guinea–Bissau’s economy; the combined value of exports and imports equals 65 percent of GDP. The average applied tariff rate is 9.9 percent. Nontariff barriers impede trade. Political instability has served as a barrier to foreign investment. The underdeveloped financial sector continues to provide a very limited range of services. Many people still rely on informal lending and have no bank accounts.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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