2021 Index of Economic Freedom

Guinea-Bissau

OVERALL SCORE54.9
WORLD RANK139
Rule of Law

Property Rights39.5

Judicial Effectiveness50.8

Government Integrity20.2

Government Size

Tax Burden88.7

Government Spending88.7

Fiscal Health69.6

Regulatory Efficiency

Business Freedom37.9

Labor Freedom61.0

Monetary Freedom86.7

Open Markets

Trade Freedom55.8

Investment Freedom30.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 1.9 million
  • GDP (PPP):
    • $3.7 billion
    • 4.6% growth
    • 4.9% 5-year compound annual growth
    • $2,072 per capita
  • Unemployment:
    • 2.5%
  • Inflation (CPI):
    • 0.2%
  • FDI Inflow:
    • $30.6 million

Guinea–Bissau’s economic freedom score is 54.9, making its economy the 139th freest in the 2021 Index. Its overall score has increased by 1.6 points, primarily because of an improvement in trade freedom. Guinea–Bissau is ranked 29th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

The economy of Guinea–Bissau has been at the lower end of the mostly free category since 2012 when it escaped the ranks of the repressed. Guinea–Bissau is one of the world’s poorest countries. Weak rule of law, other institutional failings, and endemic corruption have permitted illegal activity to flourish. Power struggles appear to take precedence over policy improvement.

IMPACT OF COVID-19: As of December 1, 2020, 44 deaths had been attributed to the pandemic in Guinea–Bissau, and the economy was forecast to contract by 2.9 percent for the year.

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Background

Conflict has wracked Guinea–Bissau almost continuously since independence from Portugal in 1974. A contested presidential election in late 2019 plunged the country into crisis. Two competing governments were formed, and after months of unrest during which a number of former senior ruling party officials temporarily fled the country and the military briefly took control of some government buildings, Umaro Sissoco Embaló, a former prime minister and general, was confirmed as the sole president. Guinea–Bissau is highly dependent on subsistence agriculture, the export of cashew nuts, and foreign assistance, which normally accounts for approximately 80 percent of its budget. The incomes of approximately two-thirds of the population are below the extreme-poverty line.

Rule of LawView Methodology

Property Rights 39.5 Create a Graph using this measurement

Judicial Effectiveness 50.8 Create a Graph using this measurement

Government Integrity 20.2 Create a Graph using this measurement

Because the legal system is weak and painfully slow, protection of property rights is generally poor, and enforcement of contracts can be difficult. The judiciary has little independence and is barely operational. Judges are poorly trained and inadequately and irregularly paid. Corruption is pervasive, including among senior government figures. Many officials are suspected of facilitating the country’s status as a transit hub for cocaine trafficking from South America to Europe.

Government SizeView Methodology

The top individual income tax rate is 20 percent, and the top corporate tax rate is 25 percent. The overall tax burden equals 10.3 percent of total domestic income. Government spending has amounted to 19.4 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.7 percent of GDP. Public debt is equivalent to 65.0 percent of GDP.

Regulatory EfficiencyView Methodology

Guinea–Bissau’s poor business environment continues to deteriorate. The country scores very poorly in entry costs needed to start a business, which are the equivalent of approximately 89 percent of per capita income. Guinea–Bissau’s labor force participation rate was lower in 2019. The government has made efforts to reduce subsidies on fuel and has raised electricity rates.

Open MarketsView Methodology

Guinea–Bissau has one preferential trade agreement in force. The simple average tariff rate is 12.1 percent, and nontariff barriers continue to impede trade. The law treats foreign and domestic investment equally, but government openness to foreign investment is below average. High credit costs and scarce access to financing hinder entrepreneurial activity, although bank credits to the private sector have increased.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Mauritius772.1
2Rwanda68.3-2.6
3Botswana67.6-2.0
4Seychelles66.32.0
5Cabo Verde63.80.2
6Namibia62.61.7
7Côte d'Ivoire61.72.0
8Tanzania61.3-0.4
9South Africa59.70.9
10Benin59.64.4
11Ghana59.2-0.2
12The Gambia58.82.5
13Nigeria58.71.5
14Uganda58.6-0.9
15Gabon58.11.4
16Senegal580.0
17Madagascar57.7-2.8
18Togo57.53.4
19Niger57.32.6
20Guinea56.50.0
21Burkina Faso56.5-0.2
22Djibouti56.23.3
23Mauritania56.10.8
24São Tomé and Príncipe55.9-0.3
25Comoros55.72.0
26Mali55.6-0.3
27Eswatini55.1-0.2
28Kenya54.9-0.4
29Guinea-Bissau54.91.6
30Angola54.22.0
31Lesotho53.5-1.0
32Cameroon53.4-0.2
33Malawi530.2
34Sierra Leone51.73.7
35Ethiopia51.7-1.9
36Mozambique51.61.1
37Republic of Congo50.78.9
38Chad50.40.2
39Zambia50.4-3.1
40Burundi49.90.9
41Equatorial Guinea49.20.9
42Liberia49.20.2
43Democratic Republic of Congo49-0.5
44Central African Republic48.8-1.9
45Eritrea42.33.8
46Zimbabwe39.5-3.6
47Sudan39.1-5.9
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