AfDB, Guinea sign key financing agreements to boost Simandou Project
AA – The African Development Bank Group and Guinea have signed in Abidjan, Cote d’Ivoire on 19 July 2016 a series of loan and agreements totaling USD 23 million for two key projects aimed at improving economic and financial governance and building the government technical capacities required for implementation and supervision of the Simandou Project and other large mining projects under development in the country.
The financing agreements for these two projects, the Third Phase of the Economic and Financial Reform Support Programme (loans and grants totaling USD 15 million) and the Support Project for Building the Administration’s Capacity for Integrated Project Management (two grants totaling USD 8 million), were signed by Kapil Kapoor, AfDB’s Acting Vice President for Agriculture, Water, Human Development, Governance and Natural Resources, and Olga Syradin, Ambassador of Guinea in Côte d’Ivoire.
“Both projects are linked to three fundamental priorities of the African Development Bank, what we call High Fives: Light up & power Africa, Industrialize Africa and Integrate Africa,” said Kapil Kapoor. “Indeed, these two projects will contribute to private sector development and support implementation of Guinea’s electricity sector recovery plan. They will also help improve the business climate in the mining sector and support the implementation of rail and port infrastructure projects. These infrastructures will promote integration with countries of the sub-region,” he explained.
Both projects, which are interlinked, will help Guinea achieve the following results among others:
- a jump in economic growth from 0.1% in 2015 to 5% in 2022;
- a decrease of poverty prevalence rate from 55% to 50% by 2022;
- a significant increase of budget revenue as percentage of GDP, from 18% in 2015 to more than 20% in 2017;
- the time for issuing a mining license will be cut by 6, from a current 180 days to 30 days only in 2020;
- the budget revenue from the mining sector as a percentage of overall budget revenue will increase from 16 to 20%;
- mining product exports as a percentage of GDP will increase from 17% to 20% in 2020…
The Economic and Financial Reform Support Programme aims at contributing to the promotion of robust and inclusive economic growth by improving economic and financial governance through a more efficient and transparent public finance system and a revitalized private sector. It also aims at addressing serious constraints arising from exogenous shocks (the Ebola crisis, fluctuations in commodity prices), which require substantial and coordinated support of Development Partners. It will contribute to closing the budget financing gap for 2016. The program will help improve tax and customs revenue collection, while enhancing the transparency and management of budget execution. It will also help improve the business climate and governance in the mining and energy sectors.
Given the need to strengthen the government’s technical capacity for effective implementation of this programme, it has been complemented by a new capacity building operation in the mining sector namely the Project to Build Government Capacity in the Management of Integrated Projects. This project seeks to build the government technical capacities required for implementation and supervision of the Simandou Project and other large mining projects under development in the country. The scope of the Simandou project, with construction costs estimated at USD 18 billion and the development of infrastructure running across the country (with a 650 km-long Conakry-Simandou railway corridor), is indeed a major challenge which AfDB’s support will help address.
The project will also facilitate administrative procedures for getting authorizations, licenses and permits for operating in the mining sector. It also aims to support the authorities in maximizing the socio-economic benefits of the Simandou Project: creation of dedicated tax and customs administration units, implementation of the Local Content Policy developed with AfDB support to facilitate the participation of local enterprises and job creation, implementation of a land policy that respects the interests and rights of communities directly affected by the project, management of the environmental impact, as well as the impact on gender, throughout the Simandou Project construction and operation…
In the medium term, the government intends to use the system and the institutions that will be established to manage the integrated projects that are under development.
Kapil Kapoor also emphasized the fast materialization of both projects. “Both projects have been approved by our Board less than one week ago. And here we are today for the signing ceremony. This is a clear testimony that when there is a shared vision, we can collectively move very fast and deliver results to better serve our countries,” he said.
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