Guinea: Strike threats mar groundbreaking debt deal
|Publisher||Integrated Regional Information Networks (IRIN)|
|Publication Date||19 October 2012|
|Cite as||Integrated Regional Information Networks (IRIN), Guinea: Strike threats mar groundbreaking debt deal, 19 October 2012, available at: http://www.refworld.org/docid/5087baf32.html [accessed 30 January 2015]|
Trade union leaders in Guinea are contemplating a general strike over salary demands and other grievances, after the government proposed a raise for civil servants far lower than unions are demanding.
"It's starting," said an analyst in the capital Conakry, referring to friction, as the government's call for continued belt-tightening loses some of its force now that Guinea has reached a long-sought debt relief deal.
The World Bank and the International Monetary Fund on 26 September approved US$2.1 billion debt relief package for Guinea, under the Heavily Indebted Poor Countries (HIPC) Initiative.
Many observers say the government of President Alpha Condé, in appealing to the people to accept austerity measures until after the decision, created unrealistic expectations. "Wait till the PPTE [French acronym for HIPC], all will be better after PPTE - that's what we heard from the government for months," said Mohammed Barry.
Guinea has the world's largest bauxite reserves, as well as significant deposits of iron, gold and diamonds, and has enormous agricultural potential, yet still most people struggle to eat two proper meals a day. More than half of Guineans live in poverty; the level has increased steadily for the past five years.
The Condé government, which came to power in 2010 after the country's first competitive election, has received high marks for stabilizing the currency, bringing down inflation and other macroeconomic reforms - this after inheriting, according to the World Bank, "a massively mismanaged and unbalanced economy, rampant poverty and social tensions, large accumulated debts and arrears, low growth and an ineffective public service".
Conveying the need for continued fiscal restraint is just one of many challenges observers say the government faces following the HIPC decision.
"This is just a first step on a long road full of more sacrifices," said civil society leader and former agriculture minister Abdourahamane Sano. "There is a huge job ahead to consolidate the gains… and the government must do better at communicating that."
The government acknowledges a gap, according to André Loua, adviser in Guinea's Finance Ministry. "There was perhaps insufficient communication about what the debt relief actually represents," he told IRIN. "The government is now putting in place a strategy to more fully explain this."
Loua said the HIPC agreement - in which Guinea's annual external debt service will fall from an average of $170 million to $49 million - is "but the beginning of a long process, but a process that, properly carried out, will indeed result in better living conditions for the people".
While the HIPC initiative is meant in part to free up funds for poverty reduction and development, the debt relief - and the macroeconomic reforms that got Guinea there - will not automatically be felt by the struggling farmer or Conakry's degree-holding unemployed youth.
"This $120 million per year, of course, does not allow us in a short time to address all Guinea's needs - roads, building schools, rehabilitating hospitals, raising salaries, and more," said Kabiné Komara, former prime minister and once a director at the African Export-Import Bank. But he said the reforms Guinea has put in place lay a foundation for economic growth that can progressively meet these needs and improve people's living conditions.
Union leaders - who are pushing for a 200-percent raise - say times are tough, with salaries stagnant against a high cost of living. The government has said pay rises must be gradual; this week it proposed a 15-percent raise for civil servants, up from its 10-percent offer last week. (Currently most civil servants earn between $50 and $150 a month.)
Scraping to get by
As tough as conditions might be for a government worker raising a family, most Guineans scrape to get by in the informal sector or are unemployed. Prices of fuel and staple foods shot up after Condé took power and remain high. The cost of basic goods continues to climb. A sack of onions nearly tripled in price in recent weeks - to about $18, said a woman in Conakry.
"Average citizens without stable jobs, if we don't score some kind of work today, we don't eat today - simple as that," said 27-year-old driver Sow Mamadou Oury.
Throughout Conakry, young men and women weave in and out of traffic hawking snacks, clothing, toilet paper, toys. According to Guinea's June 2011 progress report on poverty reduction, as of 2007 more than two-thirds of the working population were "independent workers". Formal enterprises are "rarely created" in Guinea, it notes, while informal activities "barely provide a living".
For Guinea to attract more private enterprises it will have to become more business-friendly - for example, improving electricity, facilitating access to finance, tackling corruption. The country is ranked 179 out of 183 countries in the World Bank and International Finance Corporation's annual index of business regulation and enforcement.
Both the mining and agricultural sectors could significantly better people's living conditions, the World Bank says, and both are severely hampered by poor infrastructure and mismanagement. The Condé government has made a push to revive agriculture.