Turning resource curse into development dividends in Guinea-Bissau

Abstract

This paper explores the potential risks related to the resource curse for Guinea-Bissau. To date, the country is not yet a producer of extractive resources, but its potential is high and investments are materialising. Cognisant of this, the authorities set mining/extractive industries as a core tenet of the national strategic and operational plan laid out in 2015. Risks analysed in this paper relate on the one hand to potential resource curse effects (e.g., enclave and Dutch disease), and on the other to the challenge of public financial management (PFM) and transformation of revenue into investments. Using a governance and PFM prism as analysis framework, the paper finds gaps between the de jure and de facto governance framework related to extractives. Stemming from this, policy responses are looked at including key reforms in anticipation of extractive revenues such as strengthening of PFM systems and the budget process in particular, and investing in transparency through avenues combining bottom-up (e.g., local civil society) and top-down (e.g., international compacts) approaches. Steps aiming at welcoming international transparency regulation or developing realistic local content policies are also proposed.