VIII. TRADE AND PROJECT FINANCING COMMERCIAL BANKING SYSTEM GUINEA'S COMMERCIAL BANKING SECTOR WAS LEGALIZED BY REFORMS OF 1985 AND 1986. GUINEA'S FORMAL FINANCIAL SECTOR CONSISTS OF THE CENTRAL BANK AND SIX COMMERCIAL BANKS. ONLY THE LARGEST OF THE BANKS HAS AN EXTENSIVE NETWORK OF BRANCHES OUTSIDE OF CONAKRY. ACCEPTANCE OF MODERN BANKING PRACTICES HAS BEEN SLOW TO TAKE ROOT IN GUINEA, WITH ONLY A SMALL PERCENTAGE OF THE POPULATION, CENTRALIZED IN CONAKRY, UTILIZING THE SYSTEM. COMMERCIAL BANKS ESTABLISHED BETWEEN 1985 AND 1993 INCLUDED THREE FRENCH BANKS, A MOROCCAN BANK, AND AN ISLAMIC BANK. IN 1993, THE WORLD BANK PROVIDED TECHNICAL ASSISTANCE FOR RESTRUCTURING OF TWO OF THE BANKS, BOTH OF WHICH WERE IN PRECARIOUS FINANCIAL POSITIONS DUE TO UNSOUND LENDING PRACTICES. EFFORTS TO RECAPITALIZE AND REFORM PORTFOLIO MANAGEMENT ARE ONGOING. IN CONJUNCTION WITH ONGOING REFORM EFFORTS IN THE FINANCIAL SECTOR, THE GOG IS PREPARING REVISED COMMERCIAL BANKING LEGISLATION TO INITIATE PROVISIONS FOR TIGHTENED LENDING RESTRICTIONS, HIGHER RESERVE REQUIREMENTS, AND MORE STRICTLY ADMINISTERED BORROWER QUALIFICATION. FOREIGN EXCHANGE CONTROLS AFFECTING TRADING RESTRICTIONS REMAIN ON THE EXPORT OF CAPITAL BY GUINEAN NATIONALS AND FOREIGN INVESTORS IN GUINEA. THESE ARE FULLY OUTLINED IN PARAGRAPHS 78-81. AVAILABILITY OF FINANCING THE SIX COMMERCIAL BANKS GENERALLY LIMIT THEIR ACTIVITIES TO SHORT AND MEDIUM TERM FINANCE, WITH VERY LIMITED LENDING PRACTICES. COMMERCIAL INTEREST RATES ARE VERY HIGH, AVERAGING 27 PERCENT IN 1993. COMMERCIAL LOANS, THUS, ARE SCARCE AND EXPENSIVE. SEVERAL DONOR PROGRAMS HAVE SET UP CREDIT GUARANTEE MECHANISMS THROUGH THE COMMERCIAL BANKS, FOR AGRICULTURAL AND SMALL ENTERPRISE LENDING. THESE AS WELL, HOWEVER, ARE DIFFICULT FOR EXPATRIATES TO ACCESS. FINANCING EXPORTS/METHODS OF PAYMENT MOST U.S. EXPORTERS DEALING WITH GUINEAN IMPORTERS RECEIVE DIRECT PAYMENT THROUGH INTERNATIONAL TRANSFER. IF NOT, EXPORTERS ARE ENCOURAGED TO INSIST UPON AN IRREVOCABLE LETTER OF CREDIT BEFORE SHIPPING PRODUCTS TO GUINEA. TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE DUE TO ITS POOR CREDIT RATING, GUINEA IS INELIGIBLE FOR EXPORT-IMPORT BANK PROGRAMS. THERE ARE, HOWEVER, TWO REGIONAL U.S. DEPARTMENT OF AGRICULTURE EXPORT PROMOTION PROGRAMS FOR WHICH GUINEA IS ELIGIBLE: THE DAIRY EXPORT INCENTIVE PROGRAM AND A GSM-102 CREDIT PROGRAM. FOR MORE DETAILS, INTERESTED BUSINESSES SHOULD CONTACT THE U.S. DEPARTMENT OF AGRICULTURE. 1. THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD), A MEMBER OF THE WORLD BANK GROUP MAKES LONG-TERM LOANS AT MARKET- RELATED RATES PRIMARILY TO DEVELOPING NATIONS. THE INTERNATIONAL DEVELOPMENT AGENCY (IDA), THE SOFT LOAN WINDOW OF THE WORLD BANK, LENDS TO THE POOREST OF THE DEVELOPMENT COUNTRIES. BOTH THE IBRD AND IDA WORK TO PROMOTE BROADLY BASED ECONOMIC GROWTH AND FREQUENTLY FOCUSES ON STRUCTURAL ADJUSTMENT, SECTORAL REFORM AND INDIVIDUAL PROJECT LENDING AND OPERATE UNDER THE SAME SET OF PROCUREMENT GUIDELINES. TYPICALLY THE WORLD BANK DOES NOT FINANCE THE ENTIRE COST OF A PROJECT. RATHER, IT FINANCES THE COMPONENTS OF A PROJECT PURCHASED WITH FOREIGN EXCHANGE, WHICH ON AVERAGE IS ABOUT 40 PER CENT OF THE TOTAL PROJECT COST. EACH PROJECT MAY COVER A WIDE VARIETY OF SECTORS AND CAN INVOLVE ANYWHERE FROM ONE TO HUNDREDS OF SEPARATE CONTRACTS PROVIDING EXPORT BUSINESS OPPORTUNITIES FOR SUPPLIERS WORLDWIDE. CONTACTS: U.S. DEPARTMENT OF COMMERCE LIAISON TO THE U.S. EXECUTIVE DIRECTORS OFFICE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H. ST., NW WASHINGTON D.C. 20433 TELE: (202) 458-0118 FAX: (202) 477-2967 OFFICE OF MULTILATERAL DEVELOPMENT BANKS U.S. FOREIGN COMMERCIAL SERVICE U.S. DEPARTMENT OF COMMERCE ROOM H-1107 WASHINGTON D.C. 20230 TELE: (202) 482-3399 FAX: (202) 273-0927 2. THE AFRICAN DEVELOPMENT BANK (AFDB), HEADQUARTERED IN ABIDJAN, COTE D'IVOIRE, IS AN INTERNATIONAL FINANCIAL INSTITUTION CREATED BY AFRICANS IN 1963 TO PROMOTE THE ECONOMIC AND SOCIAL DEVELOPMENT OF ITS MEMBER AFRICAN COUNTRIES. FOUNDED WITH INITIAL CAPITAL RESOURCES OF USD 250 MILLION, IT HAS AUTHORIZED CAPITAL TODAY OF OVER USD 22.3 BILLION. THE BANK BELONGS TO THE AFRICAN DEVELOPMENT BANK GROUP (ADBG) WHICH ALSO INCLUDES THE AFRICAN DEVELOPMENT FUND (ADF) AND THE NIGERIAN TRUST FUND (NTF). THE AFDB MAKES LOANS TO DEVELOPMENT PROJECTS IN 51 COUNTRIES IN AFRICA. THE ADB PROVIDES DEVELOPMENT FINANCING ON CONCESSIONARY TERMS TO THE POORER AFRICAN MEMBER COUNTRIES. THE NTF WAS ESTABLISHED BY THE GOVERNMENT OF NIGERIA IN 1976 TO ASSIST IN THE DEVELOPMENT EFFORTS OF THE POORER ADB MEMBERS. THE ADFB HAS 21 NON- REGIONAL MEMBERS. THE UNITED STATES JOINED IN 1982. CONTACTS: U.S. DEPARTMENT OF COMMERCE LIAISON OFFICE TO THE U.S. EXECUTIVE DIRECTORS OFFICE AFRICAN DEVELOPMENT BANK AVE. JOSEPH ANOMA 01 B.P. 1387 ABIDJAN 01, COTE D'IVOIRE TELE: (225) 21-46-16 FAX: (225) 22-24-37 OFFICE OF MULTILATERAL DEVELOPMENT BANKS U.S. & FOREIGN COMMERCIAL SERVICE U.S. DEPARTMENT OF COMMERCE ROOM H-1107 WASHINGTON, D.C. 20230 TELE: (202) 482-3399 FAX: (202) 273-0927 *THE AFRICAN DEVELOPMENT BANK'S PRIVATE SECTOR WINDOW IN ABIDJAN ALSO HAS SOME FUNDING AVAILABLE FOR DEVELOPMENT- ORIENTED BUSINESS PROJECTS. THE CONSTRUCTION OF A PRIVATELY RUN (PARTLY U.S. OWNED) FLOUR MILL PROJECT WAS CO-FINANCED BY AN AFDB LOAN. THE OVERSEAS PRIVATE INVESTMENT CORPORATION WILL ACCEPT APPLICATIONS FOR INVESTMENT PROJECTS IN GUINEA. THE U.S. TRADE AND DEVELOPMENT AGENCY HAS A SMALL PROGRAM TO ASSIST IN THE FINANCING OF FEASIBILITY STUDIES THAT MEET SIGNIFICANT U.S. EXPORT CRITERIA. LOCAL BANKS WITH A CORRESPONDENT U.S. BANKING ARRANGEMENTS THESE INCLUDE THE BANQUE INTERNATIONALE DE COMMERCE ET INDUSTRIE (BICIGUI), WITH CITY BANK OF NEW YORK AND THE FRENCH AMERICAN BANKING CORPORATION; THE SOCIETE GENERALE DES BANQUES EN GUINEE (SGBG) IS AFFILIATED WITH SGB OF NEW YORK; THE BANQUE ISLAMIQUE DE GUINEE (BIG) IS LINKED TO FIDELITY BANK OF NEW YORK; THE UNIONE INTERNATIONALE DES BANQUES EN GUINEE (UIBG) IS AN AFFILIATE OF CREDIT LYONNAIS, OF FRANCE, WITH BRANCHES IN NEW YORK. FULL ADDRESSES FOR THESE LOCAL BANKS ARE LOCATED IN APPENDIX C, SECTION 4.