Mr. Sandé was appointed Minister of Energy and Hydroelectric Power in February 2009. When Africa Review interviewed him he was still Minister of Economy and Finance, and it is in that capacity that he answered all our questions.
What reforms are necessary to attract investors?
Insecurity has been Guinea’s main problem. But in very little time we have managed to clamp down on corruption and drugs. This means that entrepreneurs who come here will, first of all, feel personally safe. By focusing on this area, we have turned Guinea into a country where it is really possible to invest. It is not tax reforms that will prevent a company from coming here, but insecurity. Nowadays you can go out in Conakry, at any time, and you will not hear a single gunshot. Before, drug-traffickers drove in large Americans cars, but nowadays we rarely see any of these. Guinea is gradually becoming a more stable country for investors. Nevertheless, we will of course grant some favours to investors when they move in here if they will utilise Guinean workforce.
What are the priorities of your Ministry and the economic reforms in process?
The Ministry’s priority nowadays is to put the Guinea’s macroeconomic situation back on its feet. Even before the seizure of power by the CNDD, the country’s macroeconomic situation was really catastrophic. Over the past ten years, the situation was such that the hijacking of public funds had become a tradition. There was no State authority. From a political point of view there was a legal void, and from the economic point of view, the presidential clan had completely plundered the State’s assets. Almost all of the gold reserves at the Central Bank were hijacked. In sum, there was a general paralysis. In spite of the lack of means and the retreat of donors following this unconstitutional seizure of power, we have decided to not bet on big programmes since they need a long time to be executed. To start, we had to try to tackle sectors of primary concern, and see how we could help people out. The government’s priority is that of the Ministry of Economy and Finance. So we have to make water and electricity available to people as fast as we can. But to reach this objective we need financial resources. When donors pulled out, foreign inancial backing dropped. So, the priority for me is using internal means to reinforce and assure the collection of internal resources. This depends on improving tax collection mechanisms, but also on the customs service, because they are the State’s two key revenue sources. Nowadays, we are quite happy with the functioning of these two services. Revitalising these areas has also required additional measures. We have sought to improve our computer systems and to integrate it with the tax services (customs and taxes). Moreover, we are tied by budgetary constraints imposed by the Bretton-Woods institutions. It is for that reason that we received a joint ission of the IMF and the World Bank which took place in Guinea at the end of March 2009. Its goal was to redefine the macroeconomic situation, but also to analyze the impact of the world financial crisis on our economy. We are really very happy, because we had just taken office at the end of December 2008 when we were visited by these institutions.
For one whole week we – the Ministry of Economy and Finance, the Central Bank and the Ministry of Planning – worked together with the IMF and the World Bank, assessing our economic and financial problems. The donors made us realise that we had to revitalize the macroeconomic situation. We had to set new targets for GDP growth, because the former targets could not be achieved due to the international financial crisis. Guinea is a rich country, but rich in its soil. To exploit these resources would allow us to solve our problems. We have the 2nd largest bauxite reserves in the world. For 50 years, Guinea has been exploiting bauxite mines as well as gold and diamonds. Nowadays, with the financial crisis, almost all industrialized countries are in recession. These countries import our resources, and now the prices of our raw materials have dramatically dropped. Obviously, this has had a negative impact on our revenue inflows and GDP. In fact, We have been losing approximately 500 billion [USD] per year due to falling raw material prices and lower demand. So the problem that we have today is linked to the world financial crisis. But now we have to face another problem: our high debt levels. Guinea is a developing country with a great deal of debt. We not only have to pay the debt but also interest on the debt. We could have solved all these problems in the past, but did not. As the Minister of Economy and Finance, I find this extremely frustrating. Previous governments could have solved this situation. But they did not do so. Developed countries have a debt relief programme for heavily indebted developing countries. Once a certain debt-burden threshold is reached, called the “decision point” the HIPC (Heavily Indebted Poor Countries) Initiative enters into effect. If we could reach this point, we would obtain a reduction of 75% of our debt, which would correspond to 2.4 billion dollars. Today, our main objective is to take all the necessary measures, financial and economical, but also political, to benefit from this initiative. It is for that reason that we have made the commitment to start reforms with the help of the IMF.
What are your expectations for Guinea’s relationship with the EU and the African Development Bank (AfDB)?
We are always happy to be able to meet country friends or partners of Guinea. The first thing that we ask other countries is to give us not only their financial aid, but also their political support. We were in Brussels to deliver the political component – i.e., how to get back on track in terms of instituting a constitutional government – and improve our financial situation. Guinea, throughout the Cotonou agreements, has always benefited from the help of the European Union, which is the top donor to Guinea. With this meeting, we wanted first of all to close the deal for the 9th EDF (European Development Fund), which amounts to 86 million dollars approximately, but also to get the 10th EDF (132 million dollars) which would allow us to finance development projects in Guinea. If dialogue is renewed with this Institution as a bilateral partner, it will allow us to establish directs contacts with all its individual country members.
Our meeting with the African Development Bank falls within the same framework. We cannot forget that since the seizure of power, the contact group is with us. This latter is managed by the representatives of the CEDEAO. The AfDB is present from the economic point of view and, from the very start, African countries have supported us politically. Today we have a budget deficit above 200 billion of Guinean francs, and we will make up for it.
Do you count on the private sector and on foreign investors to revitalize the economy in Guinea?
In Africa there is not really a financial crisis because the financial system is very weak. This crisis just accentuated and further damaged a system which was already economically weak. It did not reach our banks but it did affect the overall economy. The raw materials which served as our main revenue sources are now worth far less; prices have dropped sharply. In addition, developed countries which we depended on for financial aid have also been severely impacted by the crisis. We are highly aware that we need a healthy private sector to recover from this crisis. And in order to do that, we inevitably have to encourage foreign investors.