DIGITAL ECONOMY DIAGNOSTIC Guinea-Bissau PHOTO CREDIT: CHERIF TOURÉ Guinea-Bissau Digital Economy Country Assessment TABLE OF CONTENTS ACKNOWLEDGEMENTS V ACRONYMS VI EXECUTIVE SUMMARY VIII 1. INTRODUCTION 1 Guinea-Bissau and its Nascent Digital Economy 1 Africa’s Digital Transformation 9 The World Bank’s Digital Economy for Africa Initiative 12 2. DIGITAL INFRASTRUCTURE 14 2.1 Importance 14 2.2 Diagnostic Findings: Current State of Digital Infrastructure 15 2.3 Digital Infrastructure Recommendations 35 3. DIGITAL PUBLIC PLATFORMS 36 3.1 Importance 36 3.2 Diagnostic Findings: Current State of Digital Public Platforms 37 3.3 Digital Public Platform Recommendations 59 4. DIGITAL FINANCIAL SERVICES 60 4.1 Importance 60 4.2 Diagnostic Findings: Current State of DFS (Serviços Financeiros Digitais) 62 I 4.3 Digital Financial Services Recommendations 76 5. DIGITAL BUSINESSES 77 5.1 Importance 77 5.2 Diagnostic Findings: Current State of Digital Businesses 78 5.3 Digital Businesses Recommendations 89 6. DIGITAL SKILLS 90 6.1 Importance of Digital Skills 90 6.2 Diagnostic Findings: Current State of the Digital Skills Pillar 92 6.3 Digital Skills Recommendations 102 REFERENCES 103 ANNEXES 107 Guinea-Bissau Digital Economy Country Assessment LIST OF FIGURES Figure 1: Maps of Guinea-Bissau and ECOWAS Member States 1 Figure 2: Worldwide Governance Indicators: Guinea-Bissau (2010-2020) 2 Figure 3: Electrification Rates (2020): Guinea-Bissau vs. Aspirational, Structural, and WAEMU Peers 5 Figure 4: Nationwide Least Cost approach scenarios for electrification of Guinea Bissau, for 2025 and 2030 8 Figure 5: eGDI Score: Guinea-Bissau and Structural Peers (2010-2020) 10 Figure 6: Comparison of International Bandwidth in Guinea-Bissau and Peer Countries, 2020 (in Gbps) 15 Figure 7: Submarine cables passing along Guinea-Bissau’s coast Figure 8: Amilcar Cabral Submarine Cable Project 16 Figure 9: MTN and Orange microwave network map Figure 10: FO transport network to Senegal 17 Figure 11: Microwave backhaul network of GuineTelecom/GuineTel 18 Figure 12: OMVG fiber optic backbone 19 Figure 13: Network Coverage Map for MTN Figure 14: Network Coverage Map for ORANGE 22 Figure 15: Fixed-Broadband Subscriptions per 100 Inhabitants II Figure 16: Mobile-Broadband Subscriptions per 100 Inhabitants 24 Figure 17: Number of mobile subscriptions by operator (in millions) Figure 18: Internet penetration rate – mobile (per 100 inhabitants) 24 Figure 19: Mobile broadband average price of 1Gb of internet in Guinea-Bissau and peer 25 countries in % of GDP per capita Figure 20: Price of Terminals: Guinea-Bissau versus Neighbors (in GDP per capita per month) 26 Figure 21: Key Policies, Regulations and Legislation of the ICT sector in Guinea-Bissau 28 Figure 22: Evolution of the ICT Regulatory score (2010-2020) Figure 23: ICT Regulation by Generation in Guinea-Bissau 29 Figure 24: RWI phase 2 findings on Key regulatory Indicators for Guinea-Bissau and peers 30 Figure 25: Total tax (US$ millions) and share of income from ICT Sector, 2016-2020 31 Figure 26: Impact of VAT and overall taxes increase or decrease on the global revenue 32 Figure 27: eGDI Index Subscores for Guinea-Bissau (2012-2020) 37 Guinea-Bissau Digital Economy Country Assessment LIST OF FIGURES Figure 28: Cost of Formal Identification Cards in Guinea-Bissau vs. Structural Peers (US$) 43 Figure 29: Financial inclusion rates in the West African Economic and Monetary Union 63 Figure 30: Growth of mobile money transactions in Guinea-Bissau (in millions) 66 Figure 31: Composition of e-money transactions in Guinea-Bissau vs WAEMU (2020) 68 Figure 32: FDI and Access to Electricity: Guinea-Bissau vs Structural Peers 79 Figure 33: Measures of Financial Intermediation and Depth vs Structural Peers 83 Figure 34: Number of new firms incorporated through CFE 85 Figure 35: Women, Business, and the Law Index Score: Guinea-Bissau vs. Structural 86 and Aspirational Peers (2022) Figure 36: School Access to Electricity 94 Figure 37: Comparison of the level of digital competency of Bissau-Guineans to 99 peers from comparable countries LIST OF TABLES Table 1: Socio-economic Indicators for Guinea-Bissau 3 III Table 2: Digital Economy Foundational Pillars 12 Table 3: Market concentration Index and market rating in Guinea-Bissau and peers 23 Table 4: Core Digital Infrastructure Indicators: Guinea-Bissau and Structural Peers 23 Table 5: Packages available by volume and time from mobile operators 26 Table 6: Global ICT Regulatory Outlook for Guinea-Bissau and peers 30 Table 7: Core Digital Public Platform Indicators : Guinea-Bissau vis-à-vis its Structural Peers 37 Table 8: Overview of the banking sector in West African Economic and Monetary Union 65 Table 9: Digital Skills – Proficiency levels based on cognitive domain, complexity 90 and autonomy level needed for task completion Table 10: Literacy rates of Adults and Youth - Regional comparison 92 Table 11: Quality of Basic Education amongst students aged 7 to 14 years 93 Guinea-Bissau Digital Economy Country Assessment LIST OF BOXES Box 1: Addressing Energy Constraints in Guinea-Bissau: Recent Actions 7 Box 2: Lessons from Sub-Saharan Africa’s IXP Growth 20 Box 3: GuineTelecom/GuineTel’s Current Status and Next Steps 22 Box 4: Regional Examples of ICT Agencies: Kenya and Ghana 40 Box 5: Recommendations for how to Strengthen a National ICT Agency and 41 Sector Governance Box 6: Digital Identification in Sierra Leone 44 Box 7: Digitalizing Government Salaries: The Example of Central African Republic 47 Box 8: eProcurement in Sierra Leone 51 Box 9: Government Portals to Provide Services to Citizens in Cape Verde and Angola 53 Box 10: CivicTech in Brazil and Portugal: e-Participation 54 Box 11: Public Sector Platforms Supported through Public Sector Strengthening Project I and II 55 Box 12: Interoperability Platforms in Cape Verde and Mozambique 56 Box 13: Government Data Centers in Cape Verde and Sierra Leone 57 Box 14: Mobile Money vs. Mobile Banking 60 IV Box 15: Overview of the financial sector in Guinea-Bissau 62 Box 16: Temporary BCEAO measures taken to promote the use of digital 72 payments during the Covid-19 pandemic Box 17: Innovalab, leading digital start-up entrepreneurship in Guinea-Bissau 80 Box 18: 2021 Hack 4 Sustainable Development Goals Initiative Finalists and Winners 82 Box 19: ORIK Capital Program to Assist Start-ups 84 Box 20: Implementation of the Entreprenant Law in OHADA 86 Box 21: Rwanda’s National Digital Talent Policy 2016 95 Box 22: World Bank support to Guinea-Bissau’s Education Sector 96 Box 23: Rwanda’s national Digital Ambassador Program 100 Guinea-Bissau Digital Economy Country Assessment PHOTO CREDIT: CHERIF TOURÉ Guinea-Bissau Digital Economy Country Assessment ACKNOWLEDGEMENTS This Report was prepared by the World Bank Manager) and comprising Ami Dalal (Ami Dalal Group team led by Daniel Nogueira-Budny (Senior (Senior Investment Officer, IFC), Edoardo Totolo Operations Officer, Chapter Lead for Digital Public (Operations Officer, IFC), and Karamba Badio (Senior Platforms) and comprising the following key Investment Officer).Overall valuable guidance was members: Younes Errati (Digital Development provided by Nathan M. Belete (Country Director), Specialist, Chapter Lead for Digital Infrastructure), Anne-Lucie Lefebvre (Resident Representative), Olivia-Kelly Lonkeu (Young Professional, Chapter Michel Rogy (Practice Manager, Digital Development), Lead for Digital Financial Services); Antônio Baptista Consolate Rusagara (Practice Manager, Finance, (Senior Private Sector Specialist, Chapter Lead for Competitiveness, and Innovation), Luc Lecuit Digital Businesses); and Emily Gardner (Senior (Operations Manager), and Manuel Luengo, Senior Education Specialist, Chapter Lead for Digital Energy Specialist). Additional guidance and Skills) and Sharon Zacharia (Education Technology contributions were provided by Meskerem Mulatu Consultant, co-Chapter Lead for Digital Skills). (Practice Manager, Education) and Gael Raballand The core team also included Arthur Foch (Senior (Practice Manager, Governance). Digital Development Specialist, co-Lead), Marisa Balas (Senior ICT Consultant), João Okica (Senior The team is grateful to the peer reviews of the report: ICT Consultant), Claudio Machado (Senior ID4D Ekua Nuama Bentil (Senior Education Specialist), Consultant), Elizabeth Dodds (Editing Consultant), Maimouna Gueye (Senior Financial Sector Specialist), V Dautarin da Costa (Education Consultant), and Aneliya Muller (Digital Development Specialist), Paulette Zoua (Program Assistant). Constantin Rusu (Senior Public Sector Specialist), and Zenaida Uriz (Senior Private Sector Specialist). The team appreciates the crucial support of Michael Additional comments were provided by Jerome Jelenic (Senior Public Sector Specialist), Fatou Samba Bezzina (Senior Digital Development Specialist). (Senior Financial Management Specialist), Dolele Sylla (Senior Governance Specialist), Philippe Auffret Finally, the team would like to express gratitude to (Senior Social Protection Specialist), Chris Trimble all government and non-government organizations (Senior Energy Specialist), Sonia Sanchez Moreno and individuals for their insights and support in the (Operations Officer), Patrick McCartney (Economist), writing of this report. The team would like to especially Matteo Malacarne (Extended Term Consultant), Yuri thank the teams of the Ministry of Transport and Handem (Energy Consultant), Maria Rua Lopez (Social Communication, Finance, Commerce and Industry, Protection Consultant), Rama Barbosa (Executive National Education, and the Office of the Vice Prime Assistant), and Walessa Gomes (consultant). Minister and, in particular, the report’s technical focal points: Iatanin Davyes, Nelson de Barros, Eduardo da The team worked in close collaboration with IFC Costa, Carlos Gomes, Lassana Fati, Adilis Pereira, and colleagues, led by Josiane Kwenda (IFC Country Mamadu Saliu Djaló. Guinea-Bissau Digital Economy Country Assessment ACRONYMS ACE Africa Coast to Europe G2G Government-to-government ARN National ICT Regulator (Autoridade HR Human resources Reguladora Nacional das TICs) ICT Information and communication ASYCUDA Automated System for Customs Data technologies BCEAO Central Bank of West African IFC International Finance States (Banque Centrale des États de Corporation l’Afrique de l’Ouest) ISP Internet service provider BDAP Public Administration Database ITMA Technological Institute for the (Base de Dados da Administração Modernization of the Administration Pública) (Instituto Tecnológico para a CCIAS Chamber of Commerce, Industry Modernização Administrativa) and Services (Câmara de Comércio, ITU International Telecommunication Union Industria, Agricultura e Serviços) IXP Internet Exchange Point Center for Technological CEVATEGE Appreciation and Electronic KYC Know your customer Governance (Centro de Valorização Ministry of National Education MEN Tecnológica e Governação Electrónica) (Ministério da Educação CFE Center for the Formalization Nacional) VI of Businesses (Centro de MFI Microfinance institution Formalização de Empresas) MICS Multiple Indicator Cluster Survey CVRS Civil registry and vital statistics MoF Ministry of Finance DE4A Digital Economy for Africa MSME Micro and small and medium DFS Digital Financial Services enterprises DRE Regional directorate of education MTC Ministry of Transport and (Direção regional de educação) Communication EAGB Electricity and Water Utility of NFIS National financial inclusion strategy Guinea-Bissau (Electricidade e Águas da Guiné-Bissau) NGO Non-governmental organization ECOWAS Economic Community of West NIF Unique taxpayer identification African States number (Número de Identificação Fiscal) EDGI E-Government Development Index OADI African Intellectual Property EMIS Education management Organization (Organisation information system Africaine de la Propriété GDP Gross domestic product Intellectuelle) ODG Democracy and Governance GNI Gross national income Observatory (Observatório da GoGB Government of Guinea-Bissau Democracia e Governança) G2B Government-to-business OHADA Organization for the Harmonization G2C Government-to-citizen of African Business Law Guinea-Bissau Digital Economy Country Assessment OMVG Gambia River Basin Development SIGFIP Integrated Financial Management Organization Information System (Sistema Integrado de Gestão das PALOP Portuguese-speaking African Finanças Públicas) countries (Países Africanos de Língua Oficial Portuguesa) SIGRHAP Integrated Human PFM Public financial management Resource Management System of the Public PKI Public Key Infrastructure Administration (Sistema PPP Public private partnership Integrado de Gestão de Recursos Humanos da Administração P2P Person to Person Pública) RCCM Commercial and Property Credit Registry (Registo do Comércio e SSA Sub-Saharan Africa do Crédito Mobiliário) STAR-UEMOA System for Real-Time Gross Settlement ( Système de Transfert RWI Regulatory Watch Initiative Automatisé et de Règlement de SCGB Cable Society of the l’UEMOA) Guinea- Bissau (Sociedade de TVET Technical and vocational Cabo da Guiné-Bissau) education and training SICAF Integrated Administrative UNCTAD United Nations Conference on VII and Financial Control System Trade and Development (Sistema Integrado de Controle Administrativo e Financiero) UNDP United Nations Development SICA-UEMOA Automated Interbank Program Clearing System (Système UNESCO United Nations Educational, Interbancaire de Compensation Scientific and Cultural Automatisé dans l’UEMOA) Organization SIGADE Debt Management and UNICEF United Nations Children’s Fund Financial Analysis System (Sistema de Gestão e Análise USF Universal Service Fund Financeira da Dívida) USSD Unstructured Supplementary SIGAT Integrated Tax Administration Service Data Management System (Sistema WAEMU West African Economic and Integrado de Gestão da Monetary Union Administração Tributária) SIGE Education Management WARCIP West Africa Regional Information System (Sistema de Communications Infrastructure Informação e Gestão Program de Educação) WBG World Bank Group SIGEF Integrated Fiscal Management WDR World Development Report System (Sistema Integrado de Gestão Fiscal) XOF West African francs PHOTO CREDIT: CHERIF TOURÉ Guinea-Bissau Digital Economy Country Assessment EXECUTIVE SUMMARY Many Sub-Saharan African (SSA) countries— serve to highlight key policy reforms and investments including Guinea-Bissau—lack the requisite needed for African countries to achieve their digital enabling environment to capture a larger fraction transformation ambitions while also mitigating the of the global digital economy or benefit from its risks of digitization. These reports have contributed to gains and are thus at increasing risk of being left structuring policy dialogue between the authorities, behind. Rapid digital transformation is reshaping the the WBG, and other relevant actors around catalyzing global economy, driving financing inclusion, closing action toward implementation and achievement of information gaps between buyers and sellers, and digital economy objectives; they have also directly changing the way economies of scale are achieved. informed WBG country strategy documents as well In many, although certainly not all, parts of the as downstream engagements. continent, access to and affordability of broadband internet remains low; for that matter, even access to In this context, the WBG has undertaken this electricity is low, preventing Africans from being able digital economy diagnostic of Guinea-Bissau under to go online. Most public services remain offline, and the leadership of the Ministry of Transport and many Africans lack digital identity or mobile wallets Communication and the Vice Prime Minister. Based to take advantage of digital financial or other services. on desk research, virtual and in-person interviews with Digital skills and literacy remain weak. Finally, although a wide range of public and private sector stakeholders, venture capital investment on the continent continues and an April 2022 field mission to discuss preliminary VIII to grow—2021 witnessed 681 rounds of fundraising findings and proposed recommendations, this report across 640 startups, totaling US$5.2 billion in equity analyzes the constraints in each of the five foundational raised, according to the African Private Equity and pillar and puts forward actionable recommendations Venture Capital Association—structural constraints categorized by priority level and sequencing. Overall, prevent businesses from taking greater advantage of it aims to inform the national dialogue, as well as next the digital economy. Of the 716 financial technology steps, around Guinea-Bissau’s digital transformation, (fintech) companies currently operating in SSA, only a policy agenda in which the Government of Guinea- 5 percent have scaled. Bissau (GoGB) has expressed keen interest. To address these constraints, the World Bank Guinea-Bissau’s weak socioeconomic development Group (WBG) has committed, through its https:// and fragile nature were considered when analyzing www.worldbank.org/en/programs/all-africa- its digital economy and in proposing the way for- digital-transformation, to undertake country-level ward. Significant political and institutional fragmen- digital economy diagnostics across the continent. tation and instability hamper the development and These Digital Economy Country Assessments take implementation of much-needed policy reforms in the stock of challenges and opportunities across five country, including in the emerging digital economy. foundational pillars (digital infrastructure, digital public This fragility hinders political commitment to platforms, digital financial services, digital businesses, reform, effective decision-making, as well as policy and digital skills) and then propose specific, actionable, and institutional coordination—all of which are and prioritized recommendations to support prerequisites for the establishment of a strong policy countries develop vibrant, safe, and inclusive digital and regulatory environment for the digital economy, economies. The resulting synthetic country reports much-needed infrastructure investments, and policy Guinea-Bissau Digital Economy Country Assessment reforms that can support the development of public in turn, low adoption), although this should improve platforms and flourishing of digital businesses. As with the delivery of the country’s Africa Coast such, a fragility lens was applied to the pillar-specific to Europe (ACE) submarine cable connection, analysis, and recommendations were tailored to expected in November 2022. The fixed-line state- ensure they are feasible and appropriate for Guinea- owned operator, GuineTelecom/GuineTel, is in need Bissau. Likewise, the limited development of the of restructuring. Regarding the middle mile of the country—it’s GDP per capita is US$728, two-thirds broadband value chain, the country lacks a national of the population live in poverty, and health and fiber optic backbone to reach main cities and offer education indicators are amongst the lowest in the backhaul capabilities to improve the quality and world—necessitates the establishment of realistic reach of internet services (broadband internet expectations and a focus on a limited set of core penetration currently stands at 37 percent). To be issues, or “quick wins,” that could be accomplished in sure, an internet exchange point (IXP) is expected to the short term. be in place also by November 2022. Regarding the last mile, broadband internet access and affordability, The analysis of the five pillars of the digital economy while they have improved significantly in the past underscores the importance of ensuring the proper three years, remain low, particularly in rural areas. A enabling environment for digital transformation critical constraint to developing the last mile is the in Guinea-Bissau. On most digital economy country’s low electrification rates and high energy indicators, Guinea-Bissau lags its structural peers costs: the national electrification rate is 33 percent, IX Burundi, Central African Republic, The Gambia, and (56 percent in urban areas and 15 percent in rural), Sierra Leone, as per the World Bank’s latest Country according to 2020 World Bank figures. Sometimes Economic Memorandum). For example, 23 percent uneven political commitment within the GoGB has of Bissau-Guineans use the internet , compared to contributed to delays in key sector reforms such as a global average of 63 percent, according to 2020 the privatization of the incumbent operator, and the International Telecommunication Union (ITU) statistics national ICT regulator is still too weak to fulfill its (the latest for which country data is available). In regulatory mandate. The country’s universal access terms of how the country is using information fund (UAF)—an important instrument to incentivize technologies to promote access and inclusion of its private investment and encourage the deployment of people, Guinea-Bissau was ranked 186th out of 193 digital infrastructure in underserved areas—is poorly countries on the 2020 E-Government Development regulated and underutilized. Index, which incorporates access characteristics, such as infrastructure and educational levels. The next Guinea-Bissau’s digital public platforms are at paragraphs detail findings by pillar of the country’s a nascent stage, but promising initiatives for enabling environment. automated tax filing and payments as well as business registration demonstrate the potential Significant gaps in the country’s digital for developing digital services. The country is lacking infrastructure are hampering progress in the the appropriate legal and regulatory framework and other four foundational areas of Guinea-Bissau’s there is no government-wide digital transformation digital economy. Limited international connectivity strategy outlining a strategic vision and program to has led to elevated prices for internet access (and, guide the country’s ongoing digital transformation Guinea-Bissau Digital Economy Country Assessment efforts. The Institute for Modernization of the facilities in the country does not meet local demand Administration (ITMA), formally established in 2020, for formal financial services. Yet, all six banks active has taken on the mandate for leading and coordinating in Guinea-Bissau recognize digital transformation as GoGB’s digital strategy and efforts; however, it a key priority and now offer mobile banking solutions, currently lacks the financial and human resources which, given the geographic distribution of the to fully assume this mandate. The country’s lack of country’s vulnerable populations, has the potential a structured foundational identity system prevents to expand financial access to the unbanked. The the development of a digital identity scheme. Existing microfinance sector remains in a dire state, although digital public platforms in Guinea-Bissau are not the pending creation of a reference microfinance interoperable, and there is no comprehensive vision institution is expected to boost the sector’s growth. or policy on data sharing and the management of In this context, the country’s mobile money sector data and data infrastructure (services and data has registered significant growth. In 2020, the mobile infrastructure are not shared and there is no money activity rate grew by 77 percent and the value government data center). Regarding core government of mobile money transactions grew by 235 percent functions, most are digitized (with the exception of (the highest growth rate in the WAEMU region). The public procurement); however, the country’s integrated temporary measures taken by the Central Bank of financial management information system, SIGFIP, has West African States (BCEAO) to loosen regulations not been uniformly adopted by ministries and human to open mobile money accounts in the face of the resource information management is divided between COVID-19 pandemic particularly contributed to this two non-interoperable systems and maintained by growth. In general, the use of digital payment services X two separate ministries: Civil Service and Finances. is gradually rising, and demand is increasing, but the Few government-to-citizen or government-to- number and volume of transactions remains small business platforms exist—although KONTAKTU from a regional perspective. Furthermore, regional shows promising signs of simplifying and digitizing authorities have yet to secure the full interoperability the declaration, calculation, and payment of taxes. of digital payment systems. Lastly, the lack of demand CivicTech also does not currently exist. alongside regulatory constraints are limiting the development of the second generation of DFS such as Digital financial services (DFS) have increased digital loans or digital insurance products, and fintech significantly over the past two years due to the boom companies still struggle to emerge in Guinea-Bissau. of the mobile money industry. However, as of 2021, The country also lacks a national financial inclusion close to 43 percent of Bissau-Guineans (particularly strategy as well as a financial education strategy, and, women and rural dwellers) remain excluded from the subsequently, has no financial education programs, formal financial system , the GoGB has not yet made which further undermines the growth of financial DFS a national policy priority, access to Unstructured inclusion. Supplementary Service Data (USSD) channels is not regulated, and significant market challenges impede Guinea-Bissau’s digital business landscape is further growth. Overall, the demand for and use of basic embryonic. Its growth has been hampered by one of (first-generation) DFS is growing in Guinea-Bissau. The the most difficult and informal business environments country’s banking sector remains underdeveloped in the world: more than 90 percent of the active and compared to the rest of the West African Economic employed population works in the informal sector. and Monetary Union (WAEMU) region, with limited Owing to years of chronic political and institutional services offered outside of Bissau. The scarcity of bank instability, Guinea-Bissau has not been able to Guinea-Bissau Digital Economy Country Assessment catalyze significant domestic or international private Education struggles with very limited capacity and sector investment due to key constraints associated low digital competency amongst education ministry with poor telecoms infrastructure and utility officials, which complicates the adoption of digital access (notably electricity), a very weak regulatory solutions. Inconsistent leadership has led to fluctuating environment with uneven enforcement of laws institutional arrangements within the education and regulations, and limited access to finance and sector and, ultimately, its weak performance. Overall, markets. The lack of a consolidated business reform the sector suffers from ineffective administrative data agenda or MSME support agency, in addition to the collection and management, which leads to inefficient absence of a structured public-private dialogue or sectoral planning and execution. Furthermore, coordinated mobilization of diaspora know-how and the lack of infrastructure required to support the capital, also weighs on overall reform identification and development of digital skills in the education sector momentum. The few existing digital startups present is a significant barrier, as only 17 percent of schools in the country are supported by a thin ecosystem have regular access to electricity (much less the made up of a small network of incubators (Innovalab internet). Additionally, students’ acquisition of skills— being the most prominent, which recently helped including digital skills—is hampered by untrained GoGB develop and deploy an online registration and teachers, pervasive teacher strikes, and limited tracking platform for nationwide COVID-19 testing). Ad school resources. There is a significant gender gap in hoc business plan competitions and other innovation- digital skills, with almost three times more men (37 related, call-for-proposal initiatives have been a useful percent compared to 13 percent for women) reported launchpad for local entrepreneurs. Notwithstanding having ever used the internet. A small private sector XI the existence of these digital start-ups, however, very and limited tertiary education institutions result few have been able to transition sustainably into the in an inadequate supply of digital literacy training market due to very difficult access to funding and opportunities. The resulting low foundational skills few avenues for continuous upskilling of developers. further impede the development of a digitally enabled The establishment of a one-stop shop (Center for the workforce; it also negatively impacts the other four Formalization of Businesses, CFE) has streamlined foundational pillars. However, forthcoming updates to the business registration and formalization process, the school curriculum can be a window of opportunity although coverage is limited to Bissau and usage for embedding plans for the systematic development and support to CFE has fallen flat. Critical updates of digital skills across the school system. to legislative and regulatory decrees are needed to enable digital entrepreneurship, including reforms Across these five pillars, four crosscutting around consumer protection, intellectual property issues stand out. These include the need for enforcement, data protection and privacy, data use reliable electricity, the need for increased affordable and reuse, e-signature, regulations on e-commerce broadband access, gaps in the country’s legal and and e-procurement, access to and sharing of regulatory framework, and limited strategic leadership information, and cybersecurity. and intergovernmental coordination on digital transformation. A core challenge across all of these GoGB is committed to boosting the country’s digital issues, as well as the pillars, is the country’s extreme skills, however, it does not have the capacity to political instability and fragmentation. invest in the necessary ways to make this a reality. The Government does not possess a digital skills Going forward, GoGB will need to undertake policy or national strategy. The Ministry of National concerted reform efforts across the five pillars, Guinea-Bissau Digital Economy Country Assessment while acknowledging the fragility-related clear and credible commitment to reform, low constraints, in order to support the development institutional effectiveness (including poor institutional of a vibrant, safe, and inclusive digital economy. coordination), subpar capacities among high-level The table below presents prioritized, short-term officials and the civil service to make and implement recommendations from the five pillars, taking policies, mismanagement and capture, and donor into account the many ways in which political dependence. Annex Table 4 presents a prioritized and fragmentation and instability affect policy-making sequenced table of recommendations for the short-, and implementation in Guinea-Bissau: lack of medium-, and long-term. XII Guinea-Bissau Digital Economy Country Assessment # RECOMMENDATION RESPONSIBLE Digital Infrastructure Improve international connectivity by completing the delivery of the ACE submarine cable link and the Suro-Antula SGCB 1 backbone. WARCIP PIU Privatize the incumbent operator GuineTelecom/GuineTel and determine what to do with its assets and existing 2 MTC infrastructure. Strengthen the transparency of the sector through the publishing of the annual audit reports of the UAF and the 3 establishment of a telecom observatory that includes key sectoral data and publish it on the telecom regulator’s ARN website. Digital Public Platforms Build institutional leadership and coordination to spearhead necessary measures, including development of sector 4 strategy, preparation for the undertaking of legal and policy reforms, and development and enforcement common IT VPM standards. Develop a countrywide, digital transformation strategy with a whole-of-government and citizen-centric approach with 5 VPM an eye towards harmonizing existing and pipeline initiatives. Reinforce the supremacy and use of SIGFIP by rolling out the system to more budgeting entities, issuing a circular 6 requiring its use for budget preparation and execution, and boosting IT support and change management to ensure MoF proper usage. Digital Financial Services Design and adopt a financial inclusion strategy that takes into account DFS and includes a specific focus on 7 MoF women, rural dwellers and MSMEs. Enhance financial capabilities and resilience by designing a national financial education strategy with a specific 8 MoF focus on women and on digital literacy (in line with BCEAO’s financial education-related projects). XIII Adopt a regulation to ensure fair and equitable access to the USSD channel (including fair pricing and quality of 9 MoF access to USSD channels). Digital Businesses Conduct a mapping exercise to identify sectors or start-ups with high potential for digital leapfrogging in the Guinea- 10 MCI Bissau economy. Develop a functional framework for Public-Private Dialogue which would gather key stakeholders to enable 11 MCI troubleshooting and overview of private sector needs and business environment priorities on a regular basis. Design and deploy a short-term publicly supported seed capital pilot program in cooperation with existing 12 MCI ecosystem stakeholders, enabling quick support to promising start-ups and emerging businesses in the ICT space. Digital Skills Conduct sensitization campaigns for education sector leadership and teachers’ unions on the importance of 13 technology and digital skills for smoother education sector management and service delivery as well as for MEN employability of youth and participation in society for students. Undertake a digital skills needs assessment and develop a basic digital skills development section of the 14 Education Sector Plan that caters to skill building across all levels of Guinea-Bissau’s education and skilling MEN ecosystem. Design a mass digital skilling initiative for women and youth that leverages mobile-friendly platforms, with a focus on 15 MEN women, to address the skills gap found in the needs assessment. INTRODUCTION PHOTO CREDIT: CHERIF TOURÉ GUINEA-BISSAU AND ITS NASCENT DIGITAL ECONOMY 1. Guinea-Bissau is a small, West African state, rich forests, and natural habitats.Guinea-Bissau’s in untapped natural resources. With a population geographical position is also advantageous in of around 1.9 million, the country is highly diverse terms of transport and trade; it is one of 15 and characterized by a wide range of ethnic groups, countries in the Economic Community of West languages, and religions. Guinea-Bissau consists African States (ECOWAS), a regional group with of a mainland, a large archipelago of islands, the mandate of promoting economic integration and various coastal islands. It has the highest (Figure 1). Yet, despite its enormous development proportion of natural wealth per capita in West potential, Guinea-Bissau remains one of the least Africa, primarily from agricultural land, fisheries, developed countries in the world. Figure 1: Maps of Guinea-Bissau and ECOWAS Member States 1 Source: World Bank. 2. Extreme political and institutional fragility hamper Guinea-Bissau was ranked 162 out of 180 in the 2021 Guinea-Bissau’s development. The state is highly 1 Transparency International Corruption Perceptions centralized and has a limited presence outside the Index, with a score of 21 out of 100. 2 Further capital. Weak state institutions, poor public financial complicating matters is the fact that Guinea-Bissau management (PFM), and limited spending on service is one of the most coup-prone and politically unstable delivery (a large portion of public expenditure is countries in the world, with the latest coup attempt— absorbed by the security sector, even though the the 17th since independence from Portugal in 19743 country is beset by no significant external threats or —occurring in February 2022. This fragility stems active internal conflicts) lie at the heart of the country’s from several drivers, including elite fragmentation fragility (see Figure 2). This context severely weakens and rent seeking, a captured and poorly diversified accountability and allows corruption to flourish: economy vulnerable to shocks,security sector 1 Guinea-Bissau is one of the most fragile countries in the world. According to the Fragile States Index, however, its fragility has slowly declined over the past decade: besides improvements to its aggregate score, it has increased its ranking, from the 15th most fragile country in 2013 to the 23rd in 2021. 2 According to the Mo Ibrahim Foundation, Guinea-Bissau ranks well below the African average rating of overall governance quality (41.4/100 vs 48.8/100) and has the worst score in West Africa – faring particularly bad on indicators relating to anti-corruption. The country also fares poorly on the World Bank’s World Governance Indicators, with particularly low scores in the areas of government effectiveness, regulatory quality, rule of law and control of corruption. 3 In addition, there have been four successful coups d’état and a short but devastating civil war, from 1998 to 1999. Guinea-Bissau Digital Economy Country Assessment interference in politics and the economy, weak and country’s political instability from 1998-2018 was inequitable administration of justice, social exclusion, estimated by the World Bank to be approximately drug trafficking, and the lack of natural resource US$1.1 billion, nearly the same as the country’s gross governance (African Development Bank Group and domestic product (GDP) in 2018: US$1.2 billion (World World Bank Group, 2020). The economic cost of the Bank, 2020a). Figure 2: Worldwide Governance Indicators: Guinea-Bissau (2010-2020) 2 Source: Worldwide Governance Indicators (database). 3. Guinea-Bissau’s economy is predominantly rural, incomes and consumption levels and touched off an agricultural, and highly dependent on a single cash acute food security crisis in 2021 (World Bank 2020a; crop. Economic growth has been low and volatile World Bank, 2021a). for decades, as periods of growth are frequently interrupted by adverse weather, declining international 4. The country is characterized by high rates of cashew prices, and political instability. Agriculture poverty and low human development outcomes. accounts for over 45 percent of GDP and employs Political instability, a public sector unable to fulfill about 80 percent of the labor force, the majority its core functions, and weak economic diversity of which are smallholder subsistence farmers. The have combined to make Guinea-Bissau one of economy is reliant on the cashew nut, which makes the poorest countries in the world. Two-thirds of up 85 percent of the value of the country’s exports. the population live in poverty (i.e., on US$1.90 a Since 2020, the country has faced falling cashew day), and one-third live in extreme poverty (i.e., on prices (on a downward trajectory since 2018), rising US$1.25 or less a day), with poverty significantly food prices, contractions in global trade, restricted higher in rural areas. The impact of the COVID-19 access to markets, and economic disruptions due to crisis is estimated to be reversing modest gains COVID-19 (as well as trade and value chain disruptions in poverty reduction, leading to a 2.4 percentage- accompanied by increasing inflationary pressures point increase in poverty in 2020 and exacerbating resulting from the war in Ukraine), which lowered food insecurity. Guinea-Bissau remains near the bottom of the Human Development Index, ranking Disruptions in basic service provision due to 175th out of 189 countries in 2020. Education and the pandemic is further deteriorating human health outcomes are weak. Child and maternal development outcomes, leading to a 12 percent mortality rates are among the highest in the world increase in child mortality and 10 percent increase and more than one third of the population lacks in maternal mortality in 2020 (Table 1; World Bank, access to safe water for drinking and bathing. 2020a; World Bank, 2021a). Table 1: Socio-economic Indicators for Guinea-Bissau INDICATOR VALUE SOURCE DEMOGRAPHY Population (millions) 2.0 WB (2022) Urban population (% of total population) 44.20 WDI (2020) Youth population (% of total population, under 25) 61.7 UNDESA (2020) Life expectancy at birth (years) 58.32 WDI (2019) Infant mortality rate (per 1,000 live births) 51.40 WDI (2020) Adult literacy rate (% of people ages 15 and above) 45.58 WDI (2014) Youth literacy rate (% of people ages 15-24) 60.40 WDI (2014) Labor force participation (% of total population, ages 15-64) 67.9 EHCVM (2018) Employment in agriculture (% of total labor force) >85 Paviot et al. (2019) ECONOMY AND SHARED PROSPERITY GDP (current US$, billions) 1.43 WDI (2020) GDP per capita (current US$) 793.9 WB (2022) GDP growth (annual %) 3.8 WB (2022) 3 Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population) 66.2 PLR (2020) Poverty headcount ratio at national poverty lines (% of population) 47.7 EHCVM (2018) Gini index (World Bank estimate) 50.7 WDI (2010) Access to electricity, national / rural (%) 31.04 / 12.90 WDI (2019) 5. Guinea-Bissau suffers from stark gender inequalities, is just under 50 percent, it is above 60 percent for although relevant data is hard to come by. A majority women (MICS, 2018). Women also face barriers in of the Bissau-Guinean population (at 50.6 percent), terms of economic inclusion, access to land and women are also the main economic agents in the other assets, and access to agriculture inputs and primary and secondary sectors, responsible for 55 training. Life expectancy for a Bissau-Guinean woman percent of agricultural production and a large share is almost three years less than a man. The country of the non-formal economy (associated with economic has an overall Women, Business, and the Law score activities linked to commerce). Notwithstanding, of 42.5 points, which is significantly below the regional women are vulnerable in terms of access to the means (69.9 points) and global (75.2) averages as Bissau- of production, goods, services, education, health, Guinean women enjoy less than half of the legal rights and training. In education—boys are 1.5 times more enjoyed by their male counterparts, hampering their likely than girls to start general secondary education participation in the economy through the workforce and, while the overall illiteracy rate in Guinea-Bissau and entrepreneurship. They are also frequent victims Guinea-Bissau Digital Economy Country Assessment of human rights violations: early and forced marriage, that only 27.9 percent of indicators needed to monitor domestic and sexual violence, and sexual harassment the Sustainable Development Goals from a gender in the workplace. Over half of girls and women aged perspective were available, with just 1 percent of the 15-19 have undergone female genital mutilation. indicators scoring high, 8 percent scoring medium, However, gender-disaggregated data for Guinea- and 19 percent scoring low; this is lower than the SSA Bissau is lagging. As of December 2020, the United averages, at 7 percent, 10 percent, and 21 percent, Nation’s Women Hub’s SDG Dashboard illustrated respectively. Sector Context 6. Guinea-Bissau’s digital economy is nascent and Deficiencies in Guinea-Bissau’s digital (and physical) constrained by significant bottlenecks. A digital infrastructure have limited the volume of internet economy refers to the part of economic output traffic, as well as access to and affordability of derived from information and communication internet services; this has hampered access to technologies (ICT) and digital technologies with a markets and services (particularly for women), limited business model based on digital goods or services. export opportunities for businesses, decreased More specifically, it incorporates all economic job opportunities, dampened efficiency (including activity reliant on, or significantly enhanced by the through higher labor productivity), and kept marginal use of digital inputs, including digital technologies, costs and pricesof final goods and services high 4 digital infrastructure, digital services, and data. It (Minges, 2016). Limited ICT is contributing to low refers to all producers and consumers, including the processing capabilities in the cashew economy, government, that are utilizing these digital inputs in complicating the country’s move to higher value their economic activities4. Significant constraints in chain segments. The lack of ICT harms not only the the areas of digital infrastructure and digital public government’s performance but especially those platforms have stifled wider development, leading most vulnerable; for example, smallholders cannot to the limited provision of digital public and financial obtain daily pricing data via mobile phones or easily services, a still nascent digital business environment, coordinate to strengthen their bargaining power and and dampened supply of and demand for digital skills. gain higher margins on the sales of cash crops. The relative absence of low-fee, digital financial services 7. Guinea-Bissau’s still nascent digital economy has kept bank account penetration low, as Guinea- exacerbates its binding constraints, identified in Bissau has just 1.8 commercial bank branches per the World Bank Group’s (WBG) 2016 Systematic 100,000 adults; women particularly suffer when Country Diagnostic as lack of inclusiveness and low financially excluded. Finally, ineffective public financial rural productivity, low and unstable economic growth, management (PFM)—including, particularly, back- fragility and weak governance. Weak information office information management systems—contribute systems, poor human resource management, and to fragility by perpetuating weak governance through the lack of platforms to increase citizen participation regressive public spending, continuation of corrupt and engagement contribute to poor service delivery. practices, and cronyism. 4 The distinction from the broader measure of the “traditional” economy is that the digital economy does not include outputs from firms that are non-digital in nature and produced using minimal digital inputs. OECD (2020). Access To Eletricity 8. Reliable access to electricity is particularly low. Bissau), resulting in reduced activities for companies At 33 percent, Guinea-Bissau has one of the lowest and households. Currently, there is limited capacity electrification rates in SSA—and, outside of Bissau, to supply affordable and quality power to most of this rate falls to 15 percent (the figure is over 56 the population as the electricity grid remains limited percent for urban areas). Guinea-Bissau’s access to the capital, causing large disparities in energy to electricity is actually higher than three of its access across regions. Secondary cities rely on diesel structural peers (Sierra Leone, Burundi, and CAR), generators for electricity supply (for a few hours a day) and two of its WAEMU fellow countries (Burkina Faso while other smaller cities increasingly rely on solar and Niger), but much lower compared to the average power mini grids and rural households on individual SSA rate of 48.3 percent and other aspirational and solar systems (a minority of affluent individual or WAEMU peers (Figure 3). The country is characterized private-sector consumers rely on expensive back- by severe electricity shortages (particularly outside of up generators). Figure 3: Electrification Rates (2020): Guinea-Bissau vs. Aspirational, Structural, and WAEMU Peers 5 Source: World Bank (2020a). 9. The cost of electricity in Guinea-Bissau is among (for power generation) for resale and or use in private the highest in SSA. The lack of reliable grid electricity vehicles (World Bank, 2016a; World Bank, 2019a). supply, coupled with low returns, render services not In February 2021, GoGB approved the adoption commercially viable on their own. Furthermore, as a of the Least Cost Development Plan,5 promoting result of limited generation (30 megawatts), many a mix of hydro-based imports and domestic consumers rely upon gasoline or diesel generators, renewable energy resources. In line with this plan, even though these may cost up to four times the the WB-financed Gambia River Basin Development national electricity tariff (of US$0.39kWh), according Organization (OMVG) energy project is focused on to USAID data. This leads to inflated costs of expanding the electricity grid in the capital and electricity, making the critical service out of reach on connectingGuinea-Bissau to the hydropower for many. of Guinea-Conakry (box 1). While gains have been made in boosting access to electricity (particularly 10. Many of the constraints keeping electricity in Bissau), expanding access in rural areas has been generation low and prices high are currently being slower to come by (World Bank 2021). The World addressed and results should start becoming Bank is also financing US$50 million of a US$113.15 apparent. Reasons for the country’s lack of electricity million Solar Energy Scale-up and Access project, generation capacity and unreliability of power whose objective is to increase access to electricity supply include political instability, lack of planning, and enable solar power generation, negotiations fragmented donor assistance, high levels of technical for which were completed in April 2022. The World and commercial losses of energy produced, political Bank’s Global Electrification Platform can help the 6 interference and poor management of the state- government plan for the least-cost electrification, owned utility (Electricidade e Aguas da Guine- proposing different Nationwide Least Cost approach Bissau, EAGB), non-payment for services (EAGB has scenarios for electrification of Guinea Bissau, for a collection rate of 69 percent and 33 percent total 2025 and 2030 (Figure 4). The scenarios are based network losses), high dependency vis-à-vis a single on assumptions of (i) bottom-up demand target energy provider (i.e., Karpower), and the participation (Poverty-GDP), (ii) social and productive uses of public officials in the theft of gasoline and diesel demand, (iii) estimated on-grid cost (US$0.078/kWh). 5 Through a ministerial decree dated February 23, 2021 (Despacho No. 01/GMRNE/2021). Guinea-Bissau Digital Economy Country Assessment Box 1: Addressing Energy Constraints in Guinea-Bissau: Recent Actions In 2015, GoGB approved two action plans and an investment plan (Plano de Ação Nacional para a Eficiência Energética, Plano de Ação Nacional para as Energias Renováveis, and Plano de Investimento para a Energia Sustentável). These were aligned with the SEforALL Action agenda to set 2030 energy policy objectives and strategies to increase energy access both on grid and off grid, exploit renewable energies, and improve energy efficiency and reliability. The Government’s strategy is focused on three main objectives: • At least 80 percent access to electricity (from a 2012 baseline of 12 percent), most of which is to be produced by renewable energy sources (from a 2012 baseline of around 2 percent) by 2030 (at least 50 percent penetration of renewables in the national grid in 2030 and 80 percent penetration of renewables in energy generated in off-grid systems network); • At least 75 percent of the country’s population has access to safe and modern sources for cooking (from a 2012 baseline of 7 percent); and • Energy efficiency through the adoption and internalization of rational and efficient practices of energy production and consumption. Since February 2019, Guinea-Bissau has experienced the transition and complete transformation of its power generation mix from diesel to heavy-fuel oil, following the commissioning of a 17-30 MW power 7 barge. This milestone is expected to decrease fuel theft, double the installed electricity capacity, and reduce generation costs by over 34 percent. A consortium led by Electricidade de Portugal took over EAGB’s key management positions under a service contract started in May 2019, which appears to be slowly improving the company’s operational and financial performance. In February 2021, GoGB adopted the Least Cost Development Plan, promoting a mix of hydro-based imports and domestic renewable energy resources.  The WB-financed OMVG Interconnection project is focused on expanding the electricity grid in the capital and on connecting Guinea-Bissau to the hydropower of Guinea-Conakry. The US$711 million project extends the West African power pool transmission by means of financing transmission lines and substations. The Global Electrification Platform can help the government plan for the least-cost electrification, proposing different Nationwide Least Cost approach scenarios for electrification of Guinea Bissau, for 2025 and 2030. Sources: Government of Guinea-Bissau, 2017a; Government of Guinea-Bissau, 2017b. Figure 4: Nationwide Least Cost approach scenarios for electrification of Guinea Bissau, for 2025 and 2030 2025 SCENARIO 2030 SCENARIO By 2030, it would be possible to connect 2.5 million people: 1 million By 2025, it would be possible to connect 1.4 million people: 848,000 through the Existing Grid (dark blue), 687,000 through New grid connection through the Existing Grid (blue), 417,000 through Stand Alone PV (light blue), 634,000 through Stand Alone PV (yellow), 155,000 through (yellow), and 155,000 through Mini Grid PV Hybrid (red), with an Mini Grid PV Hybrid (red), and 1,000 through the Mini Grid Hydro (green), investment of US$98 million. with a total investment of US$334 million. 8 Source: GEP platform at https://electrifynow.energydata.info. 11. Low electricity availability and reliability in Guinea- aspects of modern life, access to electricity is a core Bissau has a negative impact on broadband internet requirement for the development of a digital economy. access both in terms of increasing the price and Governments therefore need to simultaneously slowing down the penetration rate. This poses a increase electricity and broadband access otherwise it serious constraint to the connectivity of schools, would impede the creation of effective digital payment hospitals, businesses, households, and government solutions and gateways, constrain government efforts institutions, undermining the digital transformation to provide efficient and effective services, delay efforts and consequently the digital economy. the digitalization of existing enterprises and the Sustainable Development Goal 7 calls for ensuring development of innovative digital startups, and slow universal access to affordable, reliable, and modern down the process of acquiring skills and competencies energy services. Besides being an essential part of all needed for the digital economy. Guinea-Bissau Digital Economy Country Assessment AFRICA’S DIGITAL TRANSFORMATION 12. Leveraging the digital economy can be citizens, governments, and businesses cope with the transformational for Sub-Saharan African (SSA) pandemic. According to the Bank’s Business Pulse countries. Rapid digital transformation is reshaping Surveys, shortly following the shock of COVID-19, the global economy, driving financing inclusion, one third of firms increased or started to use internet, closing information gaps between buyers and social media, and digital platforms for business sellers, and changing the way economies of scale purposes (World Bank, unpublished). On the public are achieved. Africa’s internet economy is poised sector side, in Malawi, the Government rolled out to reach US$180 billion by 2025 (up from US$115 the Thandizo health system app, which supports the billion in 2020), accounting for 5.2 percent of the testing, tracking, isolating, and treating of suspected continent’s GDP (Google and IFC, 2020). There is COVID-19 patients as well as shares public health increasing evidence of the positive impact of access information in English and Chichewa. In Benin, to internet and mobile technologies in SSA on growth the Government launched an e-learning platform (Katz and Callorda, 2019), jobs (Hjort and Poulsen, for online courses at public universities, allowing 2019), innovation (Georges, Mensah, and Traore, students to continue their tertiary studies without 2021), firm productivity (Karim Abreha et al., 2021), endangering their health. In Rwanda, fees on mobile agricultural productivity (Ordu, Cooley, and Goh, money transfers, bank account to mobile money 2021), and, critically, household consumption levels transfers, and on payment for all contactless point (Bahia et al., 2020). These “digital dividends” can of sale transactions by merchants were removed to 9 include (i) greater inclusion thanks to an expansion help minimize face-to-face interactions. In Ghana, the of the information base, (ii) greater efficiency thanks Ministry of Health partnered with Zipline to pilot the to lower information costs, and (iii) greater innovation delivery of emergency public health supplies, including as information goods help bring transaction costs COVID-19 testing kits, to remote areas. For the most down toward zero (World Bank Group, 2016). part, however, Guinea-Bissau has been limited in leveraging digital technologies in its response to the 13. The COVID-19 pandemic has accelerated the pandemic, as it does not possess the core foundations digital transformation worldwide, as many countries necessary to leverage the digital economy.6 The Bank’s have been able to leverage digital technologies latest Country Economic Memorandum for Guinea- to ensure business and education continuity, Bissau acknowledges this: “Unlike the case in many prevent service interruptions, and otherwise cope SSA countries, lack of basic digital technologies means with social distancing. Country-level policies and that Guinea-Bissau is missing out on remote learning interventions have facilitated digital connectivity which would have helped mitigate the loss of learning and the deployment of digital platforms to help caused by the pandemic.”7 6 As part of the West African Economic and Monetary Union (WAEMU), Guinea-Bissau has lowered fees on digital payments in line with measures taken by the Central Bank of West African States (BCEAO) in response to the pandemic. 7 World Bank (2020a) p 28. Incipient examples of the Government’s leveraging of digital tools to respond to the crisis include the establishment of a public portal for COVID-19 (https://gbsive.hispmoz.org/), modeled after an identical one for Mozambique, which offers citizens the ability to register for a COVID-19 exam online and then obtain the results. 14. While many SSA countries are participating in constraints prevent businesses from taking greater the digital revolution, the continent as a whole—and advantage of the digital economy. Of the 716 financial Guinea-Bissau, in particular—is not yet prepared to technology (fintech) companies currently operating capture a larger fraction of the global digital economy in SSA (none of which are based in Guinea-Bissau), or benefit from its gains. Detailed below, access to only 5 percent have scaled9. Focusing in on Guinea- and affordability of broadband internet remains low; Bissau, the country lags its structural peers (Burundi, for that matter, even access to electricity is low—just Central African Republic, Gambia, and Sierra Leone)10 48 percent of SSA has access to electricity, which on most digital economy fronts. Just 23 percent hampers the digital transformation. Most public of Bissau-Guineans were reported to be using the services remain offline, and many Africans lack internet in 2020, compared to a global average of digital identity or mobile wallets to take advantage 63 percent, according to ITU statistics;11 in terms of of digital financial or other services. Digital skills and how the country is using information technologies to literacy remain weak. Finally, although venture capital promote access and inclusion of its people, Guinea- investment onthe continent continues to grow—with Bissau was ranked 186th out of 193 counties on US$493.5 million received for the first half of 2020 the E-Government Development Index (EGDI), (Google and IFC, 2020) and, according to Disrupt which incorporates access characteristics, such as Africa, even more was expected for 2021 —structural 8 infrastructure and educational levels (Figure 5).12 Figure 5: eGDI Score: Guinea-Bissau and Structural Peers (2010-2020) 10 0,4 Burundi Central African Republic Guinea-Bissau Gambia Sierra Leone 0,3 0,2 0,1 0 2008 2010 2012 2014 2016 2018 2020 Source: e-Government Development Index (UN, 2020). 8 Disrupt Africa (2020). According to the latest data from Disrupt Africa, 303 African tech startups have raised a combined total of US$1.1 billion in 2021 up to August 11, significantly higher than the US$700 million estimated for 2020. 9 Wheeler Institute for Business and Development at the London Business School and the UK Foreign, Commonwealth and Development Office (2021). Companies were considered “scaled” based on four criteria: number of end users (be it consumers or businesses), revenue, total funding, and employees. 10 Guinea-Bissau’s latest Country Economic Memorandum (World Bank 2020) identified structural peers based on the following criteria: (i) population size; (ii) GDP per capita; (iii) dependence on agriculture; (iv) life expectancy; (v) trade-to-GDP ratio; and (vi) government revenue (percent of GDP). In addition to these criteria, aspirational peers represent countries that had a similar GDP per capita of +/- 30 percent of Guinea-Bissau’s GDP per capita in 2000-2005, but that grew 2 ppts faster than the country in 2005-2018; these include Laos, Rwanda, and Tajikistan. 11 The ICT Development Index monitors progress towards a global information society, with performance ranked based on ICT infrastructure, use, and skills. 12 The EGDI is a composite measure of three important dimensions of e-government, namely: (i) provision of online services, (ii) telecommunication connectivity, and (iii) human capacity. Guinea-Bissau Digital Economy Country Assessment 15. Digital transformation could help leverage Guinea- of men have access to internet as opposed to 13 Bissau’s resilience factors and support increased percent of women. access to quality basic services, expanded economic opportunities, and enhanced resilience.A larger digital 17. To be sure, without the proper analog complements economy could lead to greater financial inclusion, the (including robust policy and regulatory frameworks development of new jobs, greater service delivery, as well as risk-mitigation strategies), embracing the access to new markets, lower transaction costs, digital economy—particularly in a fragile country such higher productivity, and a work force better able to as Guinea-Bissau—can amplify elite voices, hollow out take advantage of new opportunities. Indeed, ITU the labor market, or lead to even more concentrated (2020) estimates that a 10 percent increase in mobile markets. The WBG Strategy for Fragility, Conflict and internet penetration in Africa is estimated to increase Violence 2020-2025 highlights the potential that GDP per capita by 2.5 percent. According to recent digital transformation can play in promoting the research from Nigeria, increased mobile broadband transition out of fragility but warns that it can also coverage reduces the proportion of households below widen economic gaps and drive exclusion. Indeed, the poverty line, driven by an increase in labor force digital transformation is increasing risks around participation and employment—particularly among cybersecurity, data privacy, and market concentration. women—that allowed for higher food and non-food The digital divide can aggravate exclusion and consumption in rural areas (Bahia et al., 2020). inequality; if designed and implemented properly, ICTs have the potential to support a country’s transition 11 16. Digital transformation could also help address out of fragility (Kelly and Souter, 2014; United Nations the country’s gender gap. While primary data and World Bank. 2018). That being said, the economic around the digital gender divide is not available, potential of digital transformation— including estimates suggest that women’s use of the opening up and reusing data, unleashing digital internet is much lower than that of men. According entrepreneurship, and enabling a digital workforce—is to the Digital 2022 April Global Statshot Report, too large to ignore; rather, what is needed is to mitigate the proportion of individuals who own a mobile the downside risks (African Development Bank, 2017). telephone is 60.7 percent for women and 87.2 Ensuring that Guinea-Bissau’s digital divide is not percent for men. The proportion of youth and further widened, and that data leads to better lives adults with ICT skills, depending on the skill, varies will require supporting regulations that allow firms from 1.3 to 2.4 percent for women, and from 1.5 to connect and compete, skills development that to 13.0 percent for men (MICS, 2018). Similarly, augments rather than replaces, institutions that are the multiple indicator survey indicates that 20 capable and accountable, and a new social contract for percent of men have access to media information data use that promotes the public good (World Bank as opposed to 5 percent of women, and 37 percent Group, 2016; 2021). THE WORLD BANK’S DIGITAL ECONOMY FOR AFRICA INITIATIVE 18. This diagnostic of Guinea-Bissau’s digital economy digitization. These reports have contributed to is part of the WBG’s Digital Economy for Africa (DE4A) structured dialogue between authorities, the WBG, initiative, stemming from the WBG’s recognition that 13 development partners, the private sector, and non-state the digital economy can help accelerate achievement actors around concentrating efforts, catalyzing action, of the Sustainable Development Goals (SDGs) and the and enabling progress toward implementation and World Bank Group’s twin goals. Through the DE4A, achievement of digital economy objectives; they have which supports the operationalization of the African also directly informed World Bank systematic country Union’s Digital Transformation Strategy for Africa diagnostics and country partnership frameworks, as (2020-2030), the WBG has committed to undertaking well as downstream engagements. country-level digital economy diagnostics across the continent in order to take stock of challenges and 19. This diagnostic is based on a widely tested opportunities across the five foundational pillars of the methodology focused around the five foundational, digital economy and then propose specific, actionable, building-blocks of a vibrant, inclusive, and safe digital and prioritized recommendations to support countries economy. These pillars are briefly described in Table to develop vibrant, safe, and inclusive digital economies. 2, below. Chapters 2-6 detail (i) the importance, (ii) The resulting country reports serve to highlight key diagnostic findings, and (iii) recommendations along policy reforms and investments needed for African the five foundational pillars and a sequenced and countries to achieve their digital transformation prioritized list of recommendations is found in Annex ambitions while also mitigating the risks of growing Table 4. 12 Table 2: Digital Economy Foundational Pillars PILLAR DEFINITION Digital Provides the way for people, businesses, and governments to get online and link with Infrastructure local and global digital services, thereby connecting them to the global digital economy. Digital Public Offer public products and services through digital channels for all aspects of life, allowing for access Platforms to public services and support increased efficiencies of core government operations. Digital Financial Allow individuals and businesses to conduct transactions—such as paying, saving, borrowing, and Services investing—electronically or online, thereby expanding financial inclusion. Digital Enable the creation of a digital economic ecosystem and allow traditional Businesses “offline” businesses to adopt new technologies and business models. Enhance the adoption and use of digital products and services, as economies require a digitally Digital Skills savvy workforce to build digital economies and competitive markets. 13 https://www.worldbank.org/en/programs/all-africa-digital-transformation Guinea-Bissau Digital Economy Country Assessment 20. Across these five pillars, four crosscutting issues dampened private sector investments. stand out: the need for reliable electricity, the need • Legal and regulatory framework needed for the for increased affordable broadband access, gaps in digital economy: many critical policies and regulations the country’s legal and regulatory framework, and are either missing or outdated in Guinea-Bissau. Of limited intergovernmental coordination on digital particular concern is the lack of cybersecurity policies transformation. Addressing these four issues, and measures. GoGB needs to be more proactive in alongside the country’s political economy challenges, improving the security and resilience of national is critical for progress along the five foundational infrastructure and services to protect its country’s pillars. digital sovereignty, as well as personal, business, and • Reliable electricity: low electricity availability and state rights. reliability in Guinea-Bissau has a negative impact on • Strategic leadership and intergovernmental broadband access—and thus, the digital economy— coordination on digital transformation: Limited both in terms of increasing the price and slowing down political leadership and inter-ministerial coordination— the penetration rate. Electricity is a critical aspect to exacerbated by high levels of political fragmentation ensuring the country’s enabling environment for digital and instability (and related political economy issues), transformation. not to mention the institutional division of the sector’s • Broadband access: Issues of access—including leadership among government entities—complicates international connectivity, the lack of a fiber optics digital initiatives requiring more than one agency and backbone, and the weak capacity of the national the use or reuse of government data. This limited 13 telecoms regulator—slow Guinea-Bissau’s digital coordination also negatively impacts coordination transformation. The country’s fragility has shortened on the donor side, which contributes to duplication time horizons, undermined infrastructure reforms, and of efforts and the development of siloed systems. 13 1. DIGITAL INFRASTRUCTURE PHOTO CREDIT: CHERIF TOURÉ Guinea-Bissau Digital Economy Country Assessment IMPORTANCE 21. Key indicators defining digital Infrastructure broadband penetration could lead to a GDP growth are access, quality, and affordability of broadband of 2.5 percent in Africa, or 5.2 percent according to internet. Digital infrastructure is conceptually broken Google and IFC (2020). Guinea-Bissau’s relatively down into four parts that comprise the broadband small ICT sector provides a modest contribution to value chain. The First Mile covers international the country’s GDP (2.4% in 202014) compared to other connectivity: ensuring that the internet enters a sectors, such as agriculture and services; however, country (i.e., through undersea international or cross- it’s underlying potential is substantial. ITU modeling border terrestrial links)—the international gateway— for Africa has demonstrated that the potential gain and other necessary infrastructure (such as landing of a 10 percent increase in broadband penetration stations). The Middle Mile is how the internet passes in Guinea-Bissau could lead to an additional GDP through a country: the national backbone, intercity of US$189 million and US$32.6 million more in networks, IXPs, and local hosting of content. The tax revenue, enabling the country to achieve a 17.3 Last Mile is where the internet reaches the end-user: percent tax-to-GDP ratio. network components (such as local access networks) and other mobile and fixed broadband infrastructure. 23. Guaranteeing access to affordable and Finally, the Invisible Mile consists of the hidden good quality broadband internet has increased elements vital for ensuring the integrity of the entire substantially since the onset of the COVID-19 value chain: radio spectrum, network databases, and pandemic. Reliance on digital services has proven to 14 laws and regulations to ensure market dynamism and be the determining factor for the continuity of social an open and fair competition. This chapter’s findings and economic activity in the face of the public health are structured along these four segments. crisis and resulting social distancing measures. The pandemic has shed further light on the impact of the 22. Accessible, reliable, and affordable broadband digital gap on our quality of life, our ability to earn a internet is the backbone of an inclusive and living, and our access to vital public services. Recent sustainable digital economy. Improvements in digital data from Mckinsey (2020) show that economies infrastructure can drive the emergence of new job have jumped five years forward in consumer and opportunities, lead to substantial socioeconomic business digital adoption in a matter of weeks. Banks benefits, and promote gender equality, particularly in have transitioned to remote sales and service teams industries that rely heavily on ICT such as information, have launched digital outreach to customers, helping professional, scientific, and technical services, as boost finance access—to the digitally connected, well as management and administrative services. that is. In many countries, schools pivoted to online Studies (Lehr et al., 2006; Kolko, 2010; Katz and learning, as the pandemic response has convinced Koutroumpis, 2012; Gilchrist, 2015) have established governments to amend relevant regulations in order a clear and positive correlation between broadband to keep up with changing needs. Given the societal penetration and its impact on GDP growth. An and economic changes over the past two years, increase in broadband internet penetration can lead digital connectivity—including, critically, accessible, to a significant increase in GDP, most significantly in reliable, and affordable broadband internet—is more Africa. According to the ITU, a 10 percent increase in important than ever before. 14 This contribution is calculated based on the different taxes imposed on the telecom sector (VAT, profit, customs etc.) DIAGNOSTIC FINDINGS: CURRENT STATE OF DIGITAL INFRASTRUCTURE International Connectivity (First Mile) 24. Despite being a coastal country, Guinea-Bissau cable landing station in Suro will be linked to the did not have a direct connection to a submarine cable entry of the OMVG project in Antula through a 33km until recently, relying instead on costly terrestrial fiber optic backbone, currently under construction links and satellite service for international capacity. and expected to be operational by November 2022. As a result, international bandwidth in Guinea-Bissau This link will allow redundant fiber optic connectivity is below most of its peers (Figure 6). In 2017, Guinea- through the interconnection of Bissau with the OMVG Bissau joined the Bank-financed West Africa Regional network, which incorporates fiber optic capacity for Communications Project (WARCIP), under which the telecommunications and will eventually be connected country is establishing a direct connection to the to the submarine cable stations in the Gambia, ACE submarine fiber optic cable that landed in Suro Guinea, and Senegal. This strategic interconnection (23km from the capital Bissau) in February 2018. The will place Guinea-Bissau in a better position at the GoGB established a Special Purpose Vehicle (SPV), regional level, allowing for better exchange of excess the Sociedade de Cabo da Guiné-Bissau (SCGB), capacity and of digital goods and services with which is a member-owned Public-Private-Partnership neighboring countries. When complete, the combined (PPP), of which 51 percent is owned by the private key infrastructure is expected to significantly sector (the two telecom operators Orange and MTN) decrease the cost of international connectivity, and 49 percent by the state. The SCGB owns and leading to annual savings to mobile operators of operates the submarine cable landing station and approximately US$5 million, according to World Bank 15 provides landing station access to its members and projections (World Bank, 2017), which will then be will provide the ACE capacity once the cable becomes passed on to consumers in the form of lower prices, operational in November 2022. Additionally, the ACE while offering much higher data throughput capacity.15 Figure 6: Comparison of International Bandwidth in Guinea-Bissau and Peer Countries, 2020 (in Gbps) 67 46 21 8 1 CAR GUINEA-BISSAU BURUNDI THE GAMBIA SIERRA LEONE Source: Telegeography. Note: Sum of all capacity deployed by internet backbone providers, content providers, research and education networks, and enterprises. 15 Similar Bank projects have seen significant decreases in the retail price for internet access and usage following reductions of the wholesale price; for example, following connection to the ACE cable, the average retail price for internet in The Gambia dropped from US$5,000 in 2012 to US$500 in 2014. Guinea-Bissau Digital Economy Country Assessment 25. The continued reliance on costly terrestrial links for gross national income (GNI) than that of its structural international capacity, until now, has caused elevated peers. These high prices have depressed usage, with prices for internet access and, in turn, depressed the country registering significantly less international usage. Both Orange and MTN—the country’s only capacity requirements than its peers. two active private telecoms providers (detailed more below)—have relied on the connection to the Sonatel/ 26. The operationalization of the ACE submarine cable Orange Network in Senegal to which Orange connects (expected in November 2022) is a major advance that is through a fiber optic terrestrial link between Bissau and set to improve the country’s international connectivity Contuboel, and MTN through a terrestrial link between and allow it catch up with other countries that have Bissau and São Domingos (where Sonatel has onward received similar support.17 The GoGB is also planning connections to the SAT-3 submarine cable landing in to strengthen international connectivity by joining a Dakar, as well as through satellite access, via Intelsat). second submarine cable: it is currently assessing the In addition, Orange and MTN also have terrestrial links opportunity to join the Amilcar Cabral Submarine Cable to Guinea-Conakry where they can both access the Project. Part of the ECOWAS Broadband Backbone ACE submarine cable. This purchase of international Infrastructure Program INTELCOM II, this project aims connectivity at high wholesale costs translates into at strengthening the international connectivity of the high retail prices of broadband internet services, island nation of Cape Verde and its nearest mainland making Guinea-Bissau’s prices among the highest in neighbors—Senegal, Guinea, Guinea-Bissau, Liberia, the region. The wholesale price for 1 megabyte (MB) Sierra Leone, and The Gambia—by linking them 16 of international bandwidth in Guinea-Bissau is, on to the submarine Cable Ella Link, which connects average XOF160 (US$0.26) through the Senegal link, Brazil to Europe (Figure 8). The cable, estimated at XOF210 (US$0.34) via the Guinea-Conakry link, and 2,000km, will run from Cape Verde to Liberia, with XOF1,500 (US$2.41) via satellite16 . As detailed below, three branching units to Guinea-Bissau, Guinea, and the cost of a data-only 1.5GB mobile broadband Sierra Leone, and two stubs for future expansion to basket is a greater percentage of Bissau-Guineans’ the North and South, respectively.18 Figure 7: Submarine cables passing along Guinea-Bissau’s coast Figure 8: Amilcar Cabral Submarine Cable Project Source: ITU (https://www.itu.int/itu-d/tnd-map-public/). Source: PIDA, Priority Action Plan for the period 2021-2030. 16 Compared to a monthly pricing of $43 for 1Mb/s international bandwidth in Mauritania following the deployment of a submarine cable and an average of $50 to $60 a month for the same bandwidth in Africa. 17 The delays in the operationalization of this connection are a result of delays in the disbursement of the Government’s and telecom operators’ contribution to the budget of the SCGB and delays in the appointment of representatives, which held back for long periods critical decisions over the landing station. The other countries that received similar support are indicated in figure 7. Backhaul Network (Middle Mile): 27. Guinea-Bissau’s limited middle mile infrastructure deployed independently by the two telecom operators, consists mainly of microwave mini links, an embryotic Orange and MTN, inside Bissau to connect some radio fiber optic metropolitan network inside Bissau, and towers and exchange traffic with the central network. a transport link to the Sonatel network in Senegal This very limited metropolitan transport network to provision international capacity. Largely based on consists of 16 service sites for MTN and 15 for Orange, mobile technology, the backhaul network is supported 19 which allows them to commercialize high speed fixed by radio towers with microwave links connecting the broadband but only for some specific customers and a available access network sites to the central network. limited number of institutions. To provide international The microwave mini link network is composed of capacity, the telecom operators are connected to the 357 microwave sites covering over 2,500km (Figure Sonatel network in Senegal through a terrestrial fiber 9). This backhaul capacity is not only insufficient to optic transport link which allows them to access serve demand but also costly to operate, very energy- international capacity of the submarine cable in demanding, and only capable of limited bandwidth. The Senegal, albeit at a high cost: $0.26 for every 1MB fiber optic transport network is restricted to small links (Figure 10). Figure 9: MTN and Orange microwave network map Figure 10: FO transport network to Senegal 17 Source: ARN 28. The country’s incumbent operator GuineTelecom/ linking the cities of Bissau (Brá), Mansôa, Bambadinca, GuineTel went bankrupt in 2014, but it still has assets Bafata, Mafanco, and Gabú.20 Communications with deployed. The history and status of the operator is the rest of the country and with neighboring Senegal detailed below (see Box 3). These comprise a backhaul through radio beams are carried out via a 110 meters network based on microwave technology linked in a master tower in Brá supporting different antennas modest Plesiochronous Digital Hierarchy (PDH) in (Figure 11). The incumbent’s cable backhaul and access the north, east, and south of the country, as well as infrastructure was mostly lost due to acts of copper a more capable Synchronous Digital Hierarchy (SDH) theft and vandalism after the companies closed. 18 The pre-feasibility study for the project was conducted by Deloitte two years ago, and the project is currently preparing to launch the feasibility study, which is expected to be finalized by February 2023. 19 The term backhaul refers to telecom transmission of data. It implies a high-capacity line: high-speed line capable of transmitting high bandwidth at very fast speeds. 20 PDH has a lower implementation cost but is limited to a capacity of 1.544 Mbps but can reach a maximum of 566 Mbps through multiplexing. SDH cost more to imple- ment but has a basic capacity of 97.928 Mbps and can reach up to 40 Gbps. Guinea-Bissau Digital Economy Country Assessment Figure 11: Microwave backhaul network of GuineTelecom/GuineTel Source: Lynx, 2019. 29. There are several ongoing efforts to improve the OMVG project is planning to commercialize 60 fibers 18 country’s middle mile. The GoGB is currently conducting (out of the 72 available), providing high throughput studies for a national fiber optic backbone to reach and a better and more affordable alternative for the country’s main cities and offer the necessary backhaul capacity between those cities. The OMVG backhaul capabilities to improve the quality and reach infrastructure has already been deployed and the of broadband internet services. This is crucial, as the feasibility study on commercializing excess capacity lack of a strong backhaul network has had significant is complete. Finally, there are also regional efforts to implications on the capacity of telecom operators to support the middle-mile through the aforementioned provide affordable and high-quality broadband internet ECOWAS INTELCOM II program. The program includes services across the country. In October 2020, GoGB a component dedicated to the development of a approved a project relaunching GuineTelecom/GuineTel, national broadband backbone for Guinea-Bissau transforming the former into the state’s ICT operator and Liberia and is currently preparing to conduct an for fixed line, internet, and television; GuineTelecom independent assessment of the status of the national will be responsible for the national backbone. The backbone projects in both countries. This effort is backbone was planned to be delivered under a PPP in-line with regional trends witnessed in different with support from the WB-financed WARCIP project, countries in West Africa to strengthen regional but the plan was eventually dropped due to a lack of integration and allow for the free transition of data, political commitment. Moreover, the WB-financed and digital goods and services between countries, OMVG energy project (Figure 12), includes a 1,750km with the aim of supporting regional exchange and fiber optic backbone that links the cities of Salthino, promoting e-commerce and digital entrepreneurship Banbadinca, and Mansoa to Bissau (Antula). The at the regional level. Figure 12: OMVG fiber optic backbone Source: Feasibility study for the commercialization of excess capacity of the 225kV Interconnection Network Fiber Optic Guard Cable of the OMVG. 30. While Guinea-Bissau does not yet have a national by the SCGB and hosted in the landing station of IXP, the GoGB has finished conducting the feasibility the ACE submarine cable. Consequently, the IXP study and will soon begin the implementation of an will benefit from good national and international 19 IXP, which should be operational by November 2022. connectivity, as well as an efficient and simplified IXPs are an important part of the middle mile. They maintenance and will have a high resilience improve the quality of connectivity (since traffic against incidents and outages (Marpij, 2022). The does not have to take unnecessary detours), reduce implementation of the IXP in Guinea-Bissau follows cost (as local traffic no longer uses international the successful example of other countries in Africa capacity), create value (through a reduction in the under WB-financed projects such as Mauritania latency of transmissions between Internet access and Togo. This milestone will provide a strong providers) and open new prospects for growth and incentive for private investment by allowing content development (considering the servers of Internet providers to establish themselves in the country service providers (ISPs) are installed in good and encouraging and improving the deployment of connectivity conditions; Box 2). The upcoming IXP digital public platforms and digital financial services, in Guinea-Bissau will be deployed with the support allowing for better e-commerce and data exchange of the World Bank and will be owned and managed at the regional level. Guinea-Bissau Digital Economy Country Assessment Box 2: Lessons from Sub-Saharan Africa’s IXP Growth In Africa, too much internet traffic has to travel overseas, an inefficient way of handling the exchange of local internet traffic that results in higher costs and slower speeds. This has led to several initiatives aiming at establishing national and regional IXPs, including the African Internet Exchange System project, initiated by the African Union Commission. In 2010, the Africa peering and interconnection community set a 2020 goal of locally exchanging 80 percent of internet traffic consumed in Africa, with only 20 percent routed from outside the continent. While the 80/20 goal was not reached, South Africa, Kenya, and Nigeria are examples of well-managed, trusted by local stakeholders, and widely used IXPs that handle at least 80 percent of localized traffic in the first country, followed by 70 percent in the latter two countries (as of 2020). Furthermore, the number of IXPs founded in Africa (47) has tripled since the launch of the goal in 2010; six of those are in South Africa (four are in Tanzania and three in Nigeria). The growth of African IXPs has enabled cost savings for the 50 or more connected networks now exchanging traffic locally rather than using expensive international transit. In Kenya, KIXP grew from carrying a peak traffic of 1 Gbps in 2012 to 19 Gbps in 2020, with cost savings quadrupling to US$6 million per year. In Nigeria, IXPN grew from carrying just 300 Mbps to peak traffic of 125 Gbps in 2020, with cost savings increasing forty times over, to US$40 million per year. Following the establishment of the IXP in Namibia, latency was reduced from 300ms to 2ms, saving the country US$1.8 million in one year. 20 There have been however, less successful experiences for IXP deployment in Africa. The Gambia launched its first IXP in July 2014, located at Gamtel’s Serekunda Exchange and is thus referred to as Serekunda IXP or SIXP. However, the SIXP has suffered from insufficient international capacity (1Gbps through ACE) and a technical weakness of the team in charge of its maintenance leading to repeated failures and high downtime. This situation led to the SIXP being barely used, and telecom operators choosing to turn to their excess international capacity to exchange traffic elsewhere instead of locally through the available SIXP. This is a concrete example of the impact of the efficiency of the IXP on its usage and in turn its profitability. Source: Kende 2020a; Kende 2020b; The Program on Infrastructure Development in Africa (PIDA) project for African Internet Exchange System (AXYS) 31. However, to guarantee the efficiency of the IXP and of all actors to the IXP. Finally, the SCGB will need to ensure its full positive impact on the digital economy resolve any governance issues and show consistent of Guinea-Bissau, the GoGB will need to commit to and untethered commitment to the productive and a number of critical improvements and reforms. timely functioning of the PPP and the infrastructure First, sufficient capacity will have to be provided to it manages, including the IXP, in order to reassure allow the IXP to host not only the actors available future interconnected operators and present a in the market today, but any future prospects, competitive offer to attract the interest of foreign such as content providers and new entrants to investors. These reforms will ensure high buy-in from the market. The GoGB will also need to make sure all actors in the sector and avoid Guinea-Bissau a effective and strong market regulation is in place, scenario of unsuccessful IXP deployment such as the and that includes incentives for the interconnection one witnessed in the Gambia (see box 2). Access Network And Market Structure (Last Mile): COMPETITION & MARKET STRUCTURE 32. Guinea-Bissau’s telecom market has a good have seen growth in recent years, with Orange history of liberalization, but the market today outperforming MTN in 2020 partially thanks to has limited competition, with no active players in technology upgrades that Orange introduced to its the fixed segment and a mobile segment that is network, and which has allowed it to provide more evenly split between two private MNOs. Today’s appealing offers to customers (more on that in the 21 mobile telecom market in Guinea-Bissau is a following paragraphs). The ISP segment in Guinea- duopoly of two active private operators: Mobile Bissau however has not seen much success, with Telecommunications Network (MTN, a subsidiary several ISPs21 present but remaining nonoperational of the South African group MTN), and Orange (a due to high costs and limited profitability. The entry subsidiary of Senegal’s SONATEL, both belonging to of ISPs is also not facilitated by regulation, requiring the French telecommunications mother company them to have a specific license to be able to operate Orange Group). The third mobile operator, GuineTel, within Guinea-Bissau as opposed to the general belonging to the state-owned incumbent, was the authorizations regime applied in other countries of first to start a mobile network in 2004; however, the subregion (such as Mauritania). Finally, the fixed it has ceased operations since the bankruptcy of line segment in Guinea-Bissau is residual and has the parent company GuineTelecom in 2014 (Box 3). not seen any development since being brought to Orange and MTN compete for the country’s mobile a standstill in 2014 following the bankruptcy of the market with equal market share and similar network incumbent operator GuineTelecom/GuineTel which coverage (Figures 13 and 14). Both Orange and MTN held a monopoly over the segment. 21 Cajutel bissau, Tagara telecomunicações, Intersat, Eguitel telecomunicações, and MSB/net sem fios. Guinea-Bissau Digital Economy Country Assessment Box 3: GuineTelecom/GuineTel’s Current Status and Next Steps The fixed-line state-owned operator GuineTelecom was privatized in 1989, with a 51 percent stake taken by Portugal Telecom and the remaining 49 percent held by the GoGB. The GoGB subsequently created GuineTel, a mobile subsidiary, which was awarded a global system for mobile communication license to operate in the mobile segment launching its services in 2004. However, following market liberalization in 2003 and the entry of the two private operators Orange and MTN, the two companies were plagued by poor performance and low profits, leading to the withdrawal of Portugal Telecom in 2010. This withdrawal caused severe financial difficulties for the two companies and ultimately led to their bankruptcy in 2014. The poor performance of the incumbent can be explained by two main factors: (i) a failed policy of market liberalization which did not grant GuineTelecom and GuineTel enough time to implement the necessary restructurings and modernizations to be able to compete in a liberalized market; and (ii) insufficient investments from shareholders, which left the two companies exposed and unable to match multinationals with superior investment capacities (Orange and MTN). After six years of inactivity, GoGB decided in 2020 to liquidate 80 percent of the shares of GuineTelecom to the private sector to allow the incumbent to resume operations. The GoGB is contemplating selecting IFC as a transaction advisor to advise the Interministerial Commission in this important transition. Consequently, the Government has undertaken actions to increase the value of the incumbent in preparation for the anticipated international bid to sell some of its shares, including the granting of licenses to both 22 GuineTelecom and GuineTel in September 2021, effectively allowing them to start operating immediately after privatization. The Government has also financed the interconnection of the GuineTelecom/Guinetel network to the Suro-Antula backbone deployed under the WARCIP project (under construction and expected to be operational in June 2022), granting the incumbent direct access to the ACE international capacity and to the OMVG fiber optic backbone. Figure 13: Network Coverage Map for MTN Figure 14: Network Coverage Map for ORANGE Source: 2021 GSM Association. Source: 2021 GSM Association. 33. In light of the current situation of the telecom active players, as well as the mobile and fixed broadband market, market performance and competitiveness segments, shows the extent to which Guinea-Bissau’s are suboptimal. A market concentration assessment market is still underdeveloped and registers lower using the Herfindahl-Hirschman Index (HHI) for the 22 performance than peers in all three aspects (Table 3). Table 3: Market concentration Index and market rating in Guinea-Bissau and peers Sierra Guinea- Herfindahl-Hirschman Index (HHI) Gambia Burundi Rwanda Senegal Uganda Leone Bissau MNO (GSMA, 2020) 2957 4044 4181 5048 5176 4094 4110 Mobile Broadband (GSMA Intelligence, 2020) 3612 4124 4404 5084 5448 4404 4029 Fixed broadband (Telegeography, 2020) n/a 4254 n/a 7073 1846 9742 n/a Highly under-developed (HH>8000) / Under-developped (5000