Economic Update Guinea-Bissau 1 FRONT COVER PHOTO CREDIT: LUCIA SOLDÀ 2 PHOTO CREDIT: ELENA TOURIÑO LORENZO 3 Guinea-Bissau Economic Update DISCLAIMER This volume is a product of the staff of the International Bank for Reconstruction and Development/The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. COPYRIGHT The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. 4 PREFACE The objective of this report is to update the Government of Guinea-Bissau, think-tanks and researchers, the public, and the World Bank’s senior management on the state of Guinea- Bissau’s economy and its outlook, together with the structural reforms it requires and the development challenges it faces. The report begins with a chapter on recent economic developments, the medium-term outlook, and risks. It includes sections on growth, fiscal policy, public debt, the external sector, monetary developments, and inflation. The second chapter examines the economic cost of gender inequality in Guinea-Bissau and assesses the impacts of girls´ education on equality. The third chapter stresses the importance of improving the skills of the workfoce to maintain sustainable growth path over the mediu term. This update was prepared by the Macroeconomics, Trade and Investment Global Practice under the guidance of Nathan M. Belete (Country Director, AWCF1), Theo David Thomas (Practice Man- ager, EAWM1) and Anne-Lucie Lefebvre (Resident Representative, AWMGW). The overall effort 5 ACKNOWLEDGEMENTS This update was prepared by the Bampoe (Program Assistant, EAWM1) Macroeconomics, Trade and Investment provided helpful administrative and Global Practice under the guidance of Nathan operational assistance. M. Belete (Country Director, AWCF1), Theo The report benefitted from comments David Thomas (Practice Manager, provided by Edouard Al-Dahdah (Lead EAWM1) and Anne-Lucie Lefebvre (Resident Country Economist, EAWDR), Ernest John Representative, AWMGW). The overall effort Sergenti (Senior Economist, EAWM1), and was led byPatrick McCartney (Economist, Theo David Thomas (Practice Manager, EAWM1). EAWM1). The peer reviewers were Fiseha Haile (Senior Economist, EAWM2) and Cristelle The first chapter was authored by Patrick Kouame (Young Professional, HAWE2). McCartney (Economist, EAWM1), with inputs from Rosa Delgado (Economist, EAWM1), The authors would like to thank and credit Daniela Marotta (Lead Economist, EAWM1), Elena Touriño Lorenzo and Lucia Soldà for Daniel Reyes (Senior Economist, EAWM1) and providing photos for the report and Carlos Sering Touray (Economist, EAWPV). Zúñiga Lossio for the graphic design and general presentation of the report. The second chapter was authored by Quentin Wodon (Director, UNESCO-IICBA) and Paula Tavares (Senior Private Sector Development Specialist, CAWA2). The third chapter was prepared by Emily Gardner (Senior Education Specialist, HAWE2), Javier Lovelle Varela (Consultant, HAWE2) and Setou Mamadou Diarra (Consultant, HAWE2). Micky O. Ananth (Operations Analyst, EAWM1), Maude Jean-Baptiste (Program Assistant, EAWM1), and Theresa Adobea 6 PHOTO CREDIT: ELENA TOURIÑO LORENZO 7 CONTENTS PREFACE 5 ACKNOWLEDGEMENTS 6 CONTENTS 8 LIST OF TABLES, FIGURES, AND BOXES 9 ACRONYMS AND ABBREVIATIONS 11 EXECUTIVE SUMMARY 13 PART I – MACROECONOMY A. Recent Developments 19 1. Real Sector 19 2. Fiscal and Debt Dynamics 23 3.Balance of Payments 30 4.Monetary Policy and Inflation 32 5. Poverty 34 B. Outlook and Risks 36 PART II – INVESTING IN HUMAN CAPITAL TO REDUCE GENDER INEQUALITY 1. Potential Economic Cost of Gender Inequality 43 2. Three Pathways to Gender Equality 54 3. Conclusions and Recommendations 79 PART III – SPECIAL FOCUS: EDUCATION 1. Overview of the Education Sector 91 2. Impact of the COVID-19 Crisis in the Education Sector 95 3. Performance of the Education Sector 100 4. Bottlenecks that are detrimental to the education sector performance 108 5. Policy Priorities 113 ANNEX 122 8 LIST OF TABLES Figure 1a: Annual Remittances 2013-2022 Figure 1b: Monthly Net Remittances 2020-2022 Box 1: Recent Political Developments Figure 2: Annual Change in real GDP and Annual Change in Raw Cashew Nut (RCN) Exports (2000-2022) Box 2: EAGB: the national utility SOE: a steady fiscal risk Figure 3: Guinea-Bissau Public Debt (Percent of GDP) Figure 4: Guinea-Bissau External Debt (percent of total) Figure 5: Price Developments of Main Import Commodities: Rice and Oil (Jan 2019 – Dec 2022) Figure 6: Changes related to cashew nut exports (y/y) Figure 7: Headline Inflation 2018-2022 Y/Y Figure 8: Credit to the Economy Figure 9: Average Per Capita Consumption (by quintiles of the income distribution) Figure 10: Current Account Balance (Percentage of GDP) Figure 11: Fiscal Performance (Percent of GDP) Figure 12: Debt Performance (Percent of GDP) Using the Latest DSA* Table 1: Socio-Professional Category of Activity by Gender and Access to Credit, 2018-19 (%) Table 2: Selected Regression Results for Wage Earnings, 2018-19 Table 3: Estimates of the Loss in Human Capital Wealth due to Gender Inequality inEarnings, 2018 Figure 13: Fertility Rate and Annual Population Growth ( %) Table 4: Estimates of Guinea-Bissau’s Produced and Natural Wealth Over Time, 1995-2018 Box 3: Potential Gender Implications of Climate Change and Weather Shocks Box 4: National policy on gender and equality (PNIEG) and draft Integral child protection code Table 5: Estimates of Women’s Economic Rights in West and Central Africa, 1970 and 2020 Table 6: Trends in the Prevalence of Child Marriage and Early Childbearing, Women by Age Group (%) Figura 14: Maps of Child Marriage and Early Childbearing for Girls, 2018-19 Age Group(%) Table 7: Relationships between Child Marriage, Early Childbearing, and Girls’ Education, 2018-19 (%)) Table 8: Trends in Educational Attainment for Girls – Completion rates by Education level (%) 9 Figure 15: Completion Rates by Gender in Guinea-Bissau (%) Table 9: Reasons for Never Enrolling or Dropping Out of School by Education Level (%) Box 5: Factors Leading to Teachers Not Spending Enough Time Teaching Table 10: Policy Options for the Education Sector Highlighted in the 2021 Economic Update Box 6: Improving learning in Guinéa-Bissau: results from a randomized control trial Box 7: Risk factors for gender-based violence in Guinéa-Bissau Table 11: Policy Options to Reduce Gender Inequality in Guinea-Bissau Table 12: Cycles of education Figure 16: Comparison of Public Expenditure on Education (share of GDP and total public spending - %) Figure 17: Learning-Adjusted Years of Schooling Pre- and Post-COVID-19 in WAEMU countries Figure18: Trends in Gross Enrollment Rate by level of education and Gender Parity Figure 19: International Comparison of Primary Completion Rate (PCR) Figure 20: Out-of-school Rate for Children by Socioeconomic Status Table 13: Repetition rate by grade, gender and area of residence Figure 21: Regional and Gender Disparities in Gross Enrollment Rates Figure 22: Average Incremental Earning Associated to Additional Year of Schooling in SSA Countries Figure 23: International Comparison of Student-teacher Ratio, Primary Table 14: Highlighted Policy Priorities Matrix atriz de prioridades políticas em destaque 10 ACRONYMS AND ABBREVIATIONS AfDB African Development Bank LICs Low Income Countries Assembly of the People United-Democratic APU-PDGB LMICs Low- and Middle-Income Countries Party of Guinea-Bissau BCEAO Central Bank of West African States IMF International Monetary Fund BOAD West African Development Bank M2 Money Supply Movement for Democratic Alterna- CAD Current Account Deficit MADEM-G15 tion CCRT Catastrophe Containment and Relief Trust MDG Millennium Development Goals CIF Cost, Insurance, and Freight MEF Ministry of Economy and Finance Ministry of National Education and DREs Regional Education Directorates MENES Higher Education DSSI Debt Service Suspension Initiative MICs Middle Income Countries Electricity and Water of EAGB NGOs Non-Governmental Organizations Guinea-Bissau Encourage early childhood ECD NPI Non-Profit Institutions development ECF Extended Credit Facility NPLs Non-Performing Loans Economic Community of African Party for Independence of ECOWAS PAIGC Guinea and Cabo Verde West-African States Programme d’Analyse des Systèmes EDP Energias de Portugal PASEC Educatifs de la CONFEMEN Early Grade Reading and Mathematics EGRA\EGMA PCR Primary Completion Rate assessment EMIS Education Management Information System PER Public Expenditure Review ESP Education Strategic Plan PP Percentage Points EU European Union PSR Party for Social Renewal Fragile and Conflict-Affected Situations FCS RCF Rapid Credit Facility (FCS) FDI Foreign Direct Investment REER Real Effective Exchange Rate Sustainable Fisheries Partnership FOB Free on Board SFPA Agreement GDP Gross Domestic Product SMP Staff Monitored Program GER Gross Enrollment Rates SNA System of National Accounts HDI Human Development Index SOEs State-Owned Enterprises HR Human Resources SSA Sub-Saharan Africa IDB InterAmerican Development Bank UM Union for Change West African Economic and Mone- IMF International Monetary Fund WAEMU tary Union 11 Page left intentionally blank PHOTO CREDIT: ELENA TOURIÑO LORENZO 12 EXECUTIVE SUMMARY Chapter 1: Recent Economic Developments and Outlook Guinea-Bissau experienced an economic slowdown in 2022, growing at 3.5 percent. Strong cashew production did not translate into economic growth as the country experienced poor export performance owing to problems with Maersk, regional fuel shortages, a fall in international cashew prices in August and low demand from India and Vietnam. This contrasts with 2021 when the economy rebounded to grow at 5% after the pandemic. By October 2022, y/y inflation increased to 7.6 percent and dampened private consumption. Poverty returned to pre-pandemic levels in 2022 and is expected to decline further over the medium term. Although the COVID-19 pandemic is estimated to have resulted in an increase in poverty, recent analyses find a gradual recovery in 2022. Poverty (based on the international poverty line of $2.15 per day) is estimated to have declined to 19.2 percent in 2022, after having risen in 2020 to 21.1 percent from 20.64 percent in 2019. The slow decline in poverty indicates a slow recovery in the economy underpinned by spillover effects of external shocks such as the war on Ukraine. The poverty rate is expected to continue its decline to 18.4 percent in 2023 to reach 17 percent by 2024. Political instability, the weak business environment, and an undiversified economy are the cause of low and volatile growth in Guinea Bissau. Recurrent political instability, rooted in competition for control over resources, remains an obstacle to economic development. Poor infrastructure hampers efficient access to markets and the development of national and regional value chains. The weak business environment, along with a history of political and institutional fragility dating back to independence from Portugal undermine private sector investment, preventing progress in economic diversification. The economy is dominated by agriculture and is almost entirely dependent on a single cash crop. Raw cashew nuts account for between 90 and 98 percent of total export earnings and provide income to around 80 percent of the population. Guinea-Bissau’s poorly diversified economy makes it highly vulnerable to external shocks and adverse climatic conditions. As cashew export performance suffered, so did domestic revenues, and the fiscal deficit (including grants) fell slightly to 5.5 percent from 5.6 percent in 2021. Despite continued infrastructure investments in 2022, low export volumes drove low total revenues, which fell from 19.6 percent of GDP in 2021 to 16 percent in 2022. A rebound in international demand for cashew, the implementation of VAT and the rollout of the Kontaktu online tax payment system should improve tax revenues in 2023. Current spending decreased and a civil service census in 2022 was conducted to remove ghost workers and civil servants hired outside of standard regulations, further reducing the wage bill and current expenditure. Consequently, the fiscal deficit declined to 5.5 percent of GDP in 2022. Despite this, debt remained high, at 80.9 percent of GDP in 2022, but is considered sustainable. Total public debt increased to 80.9 percent of GDP in 2022 from 78.3 percent in 2021, with external debt increasing from 40 percent to 41.2 percent. Nevertheless, public debt 13 remains sustainable, while the Government has committed to using only concessional borrowing going forward. The current account balance deteriorated in 2022, driven by the high costs of food and energy imports. The country is highly dependent on imports for most sectors, such as staple foods (particularly rice and wheat flour), fuel, medications, and building materials. Low cashew exports coupled with inflationary pressure on essential goods and services that Guinea- Bissau imports is expected led to a deterioration of the current account balance, from 0.3 percent in 2021 to -5.2 percent in 2022. Remittances continued to increase in 2022, with data until September indicating that net remittances are already almost as high as the whole of 2021. The economy rate of economic growth will pick up in 2023 as surplus cashew from 2022 is carried over and private consumption recovers. Growth is expected to recover in 2023, as surplus cashew from the 2022 cashew campaign is carried over to 2023 and some of it is transformed into processed cashew. The government is working with other actors in the cashew sector to streamline export processes and international demand for raw cashew should recover, as Vietnam’s stocks for transformation dwindle. On the demand side, lower inflation should encourage private consumption which will contribute to economic growth. The authorities are committed to fiscal consolidation to ensure mid-term sustainability. The fiscal deficit is projected to fall again in 2023 to 3.5 percent of GDP from 5.5 percent. Public debt is expected to remain high in 2023, at 78.2 percent of GDP, and decline to reach 75.4 percent of GDP in 2024. Despite the projected economic growth, the financing gap will remain high in the mid-term with a financing gap of approximately 0.7 percent of GDP each year due to the large wage bill, a considerable rise in interest payments and investments to ensure economic recovery. This gap is expected to be covered mainly by grants and external concessional loans. The fiscal deficit and public debt levels are expected to remain high in 2023 but converge to the WEAMU criteria in the medium term. The authorities are committed to an ambitious fiscal consolidation program to build fiscal buffers and ensure medium-term sustainability. Consequently, the fiscal deficit is projected to fall to 4.2 percent in 2022 and converge to the WAEMU criteria of 3 percent of GDP by 2025. Public debt is expected to remain high in 2022 at 78.4 percent, but to gradually decline to the WAEMU criteria of 70 percent by 2026. The outlook is uncertain and subject to substantial downside risks related to the Russian invasion of Ukraine and forthcoming legislative elections. A prolonged Russian invasion of Ukraine, or an increase in the severity of the war, could impact the economic outlook if causes supply chain shocks and slows the rate at which inflation falls. Political instability from legislative elections could affect political support for revenue mobilization and expenditure containment measures. In addition to risks arising from volatile global food and oil prices, weaker cashew nuts exports and lower than expected donor support may impact the outlook. Financial stress in state-owned enterprises, such as EAGB, and banking sector fragilities could generate contingent liabilities adding to fiscal pressures. There are also downside risks related to weather-events, particularly drought or flooding, severely impacting the agriculture sector. 14 Chapter 2: The Economic Cost of Gender Inequality Gender inequality is pervasive in Guinea-Bissau with major implications for girls’ education and child marriage, women’s ability to participate in the labor market, and the well-being of children. Girls’ educational attainment post-primary remains lower than for boys and adult women are less literate than men, with discrimination and social norms further shaping the terms of female labor force participation. Women are less likely than men to work, especially for pay. When they do, they ern less than men, which decrease their bargaining power and voice. Many girls are married or have children before the age of 18, before they may be physically and emotionally ready. Women and girls also face risks of gender-based violence in their homes, at work, and in public spaces. Their voice and agency are curtailed within the household, in the community, at work, and in national institutions where women are underrepresented in public bodies. The coexistence of formal and traditional justice systems also creates differentiated degrees of protection for women’s and children’s rights. Finally, gender inequality affects children and contributes to higher population growth, delaying the demographic transition and demographic dividend. The impacts of gender inequality on a wide range of development outcomes are large and the economic case for investing in girls and women is strong. Losses in human capital wealth in Guinea-Bissau due to gender inequality in earnings could range from US$ 2.8 billion to US$ 5.6 billion based on data for 2018. This could be an over-estimation, but there should be no doubt that the economic cost of gender inequality is very large. In addition, accounting for high population growth, which is in part due to gender inequality, estimates suggests that in per capita terms, Guinea-Bissau’s natural and produced wealth has decreased substantially over the last two and a half decades. Given that a country’s wealth is comprised of the assets that enable it to produce future income (gross national income), the trends are concerning. Women face other barriers constraining their economic participation, including legal barriers. According to the World Bank’s Women, Business and the Law (WBL) Index measuring legal barriers to women’s economic participation, women enjoy less than half of the legal rights enjoyed by men, hampering their participation in the economy through the workforce and entrepreneurship. On a scale from zero to 100, Guinea-Bissau has a WBL score of 42.5 points, the lowest performance among West and Central African countries. It has also lagged behind in implementing reforms in the last 50 years towards improving legal gender equality for women’s economic participation as compared to other countries in the sub-region. From 1970 to 2020, the index of women’s rights in Guinea-Bissau improved by only 14 points from 28.1 to 42.5. By contrast, the average for the region increased by 28 points from 39.7 to 67.8. Gender inequality also has large impacts in other areas, including fertility and population growth, under-five stunting, and women’s decision-making ability within the household. In many of those areas, associated costs are likely to be high as well. This is for example the case for the impact on fertility and population growth which affects standards of living (GDP per capita as well as wealth per capita). High rates of annual population growth are due in part to high rates of fertility, themselves driven in part by gender inequality, including a high prevalence of child marriage and early childbearing as well as low levels of educational attainment for girls and women. Child marriage and early childbearing contribute to lower educational attainment for girls, and conversely keeping girls in school is one of the best strategies to end child marriage and reduce early childbearing. While multiple policies are needed to reduce gender inequality, investing in adolescent girls is especially important given life-long benefits. 15 A wide range of policies could be advocated to reduce gender disparities and improve women’s economic empowerment; in this section the focus has centered on three key pathways towards greater equality: (i) improving laws and the regulatory framework; (ii) educating girls and ending child marriage and early childbearing; and (iii) ending gender-based violence. The main recommendations that emerge from the analysis are: (i) legal barriers must be removed to improve women’s economic opportunities; (ii) opportunities for young girls must be increased to educate girls and reduce child marriage and early pregnancies; and (iii) women’s voice and agency must be strengthened, particularly by addressing harmful gender norms and gender-based violence. Chapter 3: Education: Responding to the Pandemic and Promoting Greater Resiliency. Weak performance of the education sector and the country’s largely unskilled workforce and weak human capital levels remain a major challenge for economic development. Education has the potential to bring tremendous benefits to both individuals and the country as a whole. Education directly contributes to higher productivity and earnings, lower poverty rates, better health outcomes, and higher civic engagement. Poor quality and a lack of access to education remain significant challenges. Universal primary education is still far from a reality. Despite improvements in access to primary education over the last few decades, a third of children between the ages of 6 and 11 have never attended school, and only 42 percent of 24-29-year-olds have completed primary education. The management of the education sector at all levels, from the central ministry to the individual school, is negatively impacted by low public spending, weak capacity, and poor governance. The education system also faces persistent challenges related to frequent teacher strikes and an inadequate supply of trained teachers. But last school year there were no major strikes, and it was the second school year, after coronavirus pandemic, without major closures due to strikes in the 7 precedent years. In the last two years, salaries were paid in a regular basis and teachers who went on strike during days of absence have had their salaries docked. This is due to the support of the WB in the implementation of the Teachers Career Law. To complicate matters further, Guinea-Bissau must now also take additional steps to address the crisis in the education system because of the COVID-19 pandemic. Guinea- Bissau is among more than 150 countries that had to close its schools to reduce the spread of COVID-19. The coronavirus outbreak created a huge loss of learning time, with potential repercussions for families and children in years to come. Although the Government adopted an ambitious Education Strategic Plan for 2017-2025 that sets out government priorities to guide investments in the sector, challenges remain. First, the implementation of the plan has been delayed significantly because of the COVID-19 pandemic, and political instability. Additionally, the financing required to achieve the goal of 16 universal access to a quality basic education is still not available. Although public education spending has increased over the last decade, the sector remains largely underfunded, and Guinea-Bissau continues to have the lowest spending on education as a share of GDP compared to peer countries in Sub-Saharan Africa (SSA). Despite these significant challenges, there are several measures the country has taken and can take to decrease learning poverty and accelerate the development of its human capital. Due to strong coordinated efforts by the Ministry of Economy and Finance (MEF) and the Ministry of National Education and Higher Education (MENES), the amount of payment in arrears for teacher salaries has decreased significantly. As a result, the frequency of teacher strikes also declined in 2019/20 and there were no major strikes for school years of 2020/21 and 2021/2022. Other measures, such as greater investments in teacher training and improving access to learning materials, have the potential to transform the quality of education. Continued improvements in the management of human resources and implementation of the recently adopted Teacher Career Law started to show some results and reduce the number of teachers strikes and enhance teaching. Incorporating the use of technology at the ministry would increase the likelihood of timely and reliable data to improve planning and decision-making for the efficient use of limited resources. 17 PHOTO CREDIT: LUCIA SOLDÀ THE STATE OF THE ECONOMY 18 A. Recent developments Real Sector The post-COVID recovery in Guinea-Bissau stalled in 2022 with below anticipated growth of just 3.5 percent (1.1 percent in per capita terms), revised downwards from 5 percent, owing to a poor cashew campaign.1 A difficult cashew campaign stalled the economic recovery as various problems limited the translation of high production into economic growth. Cashew production reached 240 thousand tons, the highest production yield on record, but only 171 thousand tons had been exported by the end of December. Poor performance was partly driven by shipping disputes and regional fuel shortages affecting domestic haulage. Private sector organizations and chambers of commerce indicated difficulties with licensing and export bureaucracy at the port. Externally, warehousing problems in Vietnam and cashew trade disrupted by religious festivals in India also reduced international demand, causing all West African cashew exporting countries to finish their campaigns with unsold stock. As a result, international prices were volatile in 2022. Furthermore, the rising confidence of the private sector, which had been supported by an extended period of political stability, was shaken by recent events, including an attempted coup d’etat in February 2022 and the dissolution of the government in May 2022 in May (see Box 1). High inflation of 7.6 percent, driven by the Russian invasion of Ukraine, has compounded the problems in the real economy despite high remittances.2 High inflation, driven by an increase in food and energy prices, has dampened private consumption, negatively impacting economic growth and poverty reduction efforts despite a continuation in the upward trend of net remittances (Figures 1a and 1b). The upward trend in remittances emerged during the COVID-19 pandemic, possibly reflecting a switch from informal to formal financial channels, owing to travel restrictions. January 2023 hinted at an easing of inflationary pressures as public transport costs were reduced to pre-pandemic levels3. However, some staple foods continued to increase in price and scarcity, further highlighting the country’s dependence on food imports.4 Road infrastructure continued to be upgraded with public money and helped boost growth as 1 The figures presented in the report are World Bank staff estimates as official GDP figures are available only until 2018 (See Annex 1). 2 Inflation data from the BCEAO for January to October and remittance data from the BCEAO for January to September. 3 Shared taxis fell from 300FCFA to 250FCFA and toka-toka costs fell from 100FCFA to 50FCFA. 4 Onions almost disappeared from the market and cost 500FCFA per onion in January 2023, whereas previously they were 600FCFA for a kilogram. 19 it stimulated the construction sector. Services also recovered as lockdown measures and travel restrictions were completely withdrawn. Figure 1a: Annual remittances 2013-2022 - Figure 1b: Monthly net remittances 2020-2022 Annual Remittances 2013-2022 100.000 80.000 60.000 40.000 20.000 0 2013 2014 2015 2017 2018 2019 2020 2021 2022 Q3 Source: BCEAO Received Emitted Net Remittances Source: BCEAO Guinea-Bissau faces several important structural challenges to improve growth prospects. Reoccurring political instability lies at the root of the country’s poor performance (Box 1). A poor national road network, a low-production seaport, and costly access to the internet, hamper efficient access to markets and the development of national and regional value chains. A challenging business environment, paired with policy uncertainty and weak institutions, undermine private sector investment, preventing progress in economic diversification. 20 BOX 01 Recent political developments Guinea-Bissau is one of the transparency and accountability poorest and most fragile in the use of public resources. countries, ranking among the bottom 10 percent on Policitcal instability has most Worldwide Governance continued, even after the worst Indicators. A cycle of continual of the COVID-19 crisis has political contestation has abated. In February 2022, after a prevented the consolidation of period of relative political stability, political, security, economic, there was another attempted and administrative structures coup by armed men in Bissau at needed to ensure the delivery of the Government Palace whilst a public services and guarantee government cabinet meeting was the safety and security of the in session. This was the 17th coup population. In its short history attempt in Guinea-Bissau since as an independent nation independence, which adds to the since 1975, the country has already high level of economic experienced two coup d’états, uncertainty and risks. President a civil war, and a presidential Embaló subsequently used his assassination. The source of this legislative powers in May 2022 to recurring instability is the fierce dissolve government and initially competition among elites for indicated that elections would control of the state. The state be held on the 18th December functions are limited with limited 2022. A transitional, interim presence in much of the country. government has been appointed This contributes towards high until the elections, which are poverty rates and low human now scheduled for June 2023. capital development. About 22.6 percent of the population live below the poverty line of US$ 1.90 per day, and the country ranks 177th out of 191 countries on the 2021 Human Development Index. Fragile and weak public institutions have also led to low 21 The economy remains highly dependent on the export of raw cashew nuts. These make up around 90 percent of export value and provide income to around 80 percent of the population, mainly smallholder farmers and temporary harvest workers. Only around 3 percent of domestic output of raw cashew nuts is processed locally to eatable cashew nut kernels. As a result, economic growth is inherently linked to the export performance of the crop (Figure 2). This dependency makes the country susceptible to external shocks, including from highly volatile international prices, and adverse climatic conditions, such as irregular rainfall or floods. Figure 2: Annual Change in real GDP and Annual Change in Raw Cashew Nut (RCN) Exports (2000-2022) Source: The Ministry of Finance and World Bank Guinea-Bissau lacks a conducive enabling environment for private sector-led growth due to low levels of infrastructure, human capital, and public services. This situation is compounded by strong elite competition for rents and a weak public administration. The investment climate does not have a conducive business environment, with the Heritage Foundation’s business freedom indicator falling from 36.9/100 to 31.5/100 in 2021 and 2022 respectively, compared to a world average of 60.3/100. Firms and households struggle to obtain access to finance, and the functioning of markets is undermined by the absence of public investments in foundational economic services, and public goods. Transport, logistics, electricity, water, and telecommunications infrastructure are in a poor state, which raises the cost of doing business. The country is part of the Economic Community of West African States (ECOWAS) region, where telecommunications markets remain fragmented and the price of Information Communication Technologies 22 (ICT) services is relatively very high. The persistent absence of these key public goods and services—through direct public investments or effective public-private partnerships (PPP)—severely limits the ability private firms to invest and of poor households to participate in economic activity, either through more productive autonomous activities or through accessing the employment opportunities that could be generated by a thriving private sector. Fiscal and Debt Dynamics The fiscal situation marginally improved in 2022. The government has committed to a fiscal consolidation program that preserves medium-term sustainability, and was reflected in the fiscal deficit narrowing slightly to 5.5 percent in 2022, from 5.6 percent in 2021. This commitment was highlighted by the completion of the IMF Staff Monitored Program (SMP), which built a track record of reforms and macroeconomic stability5 and led to agreement in January 2023 on a three-year Extended Credit Facility (ECF) with the IMF that supports a gradual fiscal consolidation. The authorities are committed to implementing measures to strengthen revenue mobilization (DMR). Tax revenues fell slightly to 9.5 percent of GDP in 2022, driven by lower-than-expected cashew exports. This was disappointing given that they reached 9.8 percent in 2021 on the back of tax reforms and the continuation of the rollout of the online tax payment system, Kontaktu, and enhanced tax compliance as well as the adoption of measures to improve internal control procedures of customs and tax directorates. 6 In 2022, the government also announced a tax package to simplify and enhance transparency of the tax system. Work has also continued on the implementation of value-added tax (VAT), supported by technical assistance (TA) from the IMF that is envisioned to be completed in June 2023, and the fiscal yield from implementation is expected to be 2.6 percent by 2027. On the expenditure side, the authorities remain committed to rationalizing the wage bill and improving overall expenditure control. Expenditure on salaries remained stable at 6.2 percent of GDP in 2022 from 6.1 percent in 2021, driven by wage bill execution 5 There were 11 structural benchmarks in the SMP which focused on three main areas of reform: public financial management, for expenditure and wage bill control; revenue mobilization; and the financial sector. All were met except the structural benchmark for the financial sector, which was to develop a government exit strategy from the undercapitalized bank that the government partly owns 6 The Kontaktu electronic system allows fiscal contributors to pay taxes online, facilitating payment efficiency and reducing paperwork. 23 exceeding the budgeted amount7 in the first half of the year from irregular hires in the public sector.8 Despite the small increase in salaries, current expenditure fell from 15.5 percent of GDP in 2021 to 14.7 percent in 2022. This helped drive a fall in total expenditure from 24.7 percent of GDP in 2021 to 21.5 percent in 2022. Spending consolidation was supported by the rationalization of the wage bill with measures including the freezing of public sector salaries and new hires, and the removal of two-thirds of advisor positions at the Presidency, Prime Minister’s Office, the Presidency of the National Assembly, and the Presidencies of the Constitutional and Audit Courts. Further expenditure control was supported by the continuation of the treasury committee. SOEs represent a large fiscal risk to the government. There is limited transparency in the SOE sector, especially with the national utility company and state-owned enterprise (SOE) Electricity and Water of Guinea-Bissau (Electricidade e Aguas da Guiné-Bissau, EAGB), which managed to accrue significant public debt in 2022, creating a total debt stock of approximately 3 percent of GDP (Box 2). A lack of transparency in the SOEs makes the identification of contingent liabilities more difficult, which increases the fiscal risks in a country with very little debt absorption capacity for additional shocks. The port of Guinea-Bissau is also a loss-making SOE, but it is unclear how much of a loss it is making or how this loss is being financed, for example. 7 The budgeted amount in the first half of the year was for 29 billion FCFA, with execution of 31.8 billion FCFA, representing an overspend of 109.6 percent. 8 A wage bill analysis was done as part of the World Bank 2019 Public Expenditure Review for Guinea-Bissau and concluded that the real wage bill was much higher than the official wage bill once incentives and other benefits, such as travel and health, were considered. For 2022, the real wage bill was approximately 119.2 billion FCFA, compared to the official age bill of 66.8 billion FCFA. The real wage bill (official wage bill) accounts for 12.1 percent of GDP (6.8 percent) and 120.7 percent of tax revenues (67.6 percent). This is much higher than the WAEMU criteria of a wage bill-to-tax revenue ratio of 35 percent. 24 PHOTO CREDIT: ELENA TOURIÑO LORENZO 25 BOX 02 EAGB: the national utility SOE: a steady fiscal risk Serious mismanagement for decades caused a technical bankruptcy in Public energy provision in Guinea-Bissau EAGB. Poor management and accounting is mainly limited to the capital region. irregularities affected the company’s The state-owned utility Electricity and financial stability. On the one hand, EAGB’s Water of Guinea-Bissau (EAGB), founded operating expenses are high mainly in 1983 and located in the capital Bissau, because of its high wage bill. The company has the objective to provide production, employs around 1000 people, whose wages transport and distribution of electricity and are above the national-average and benefit water in the national territory. However, from free electricity and water provision. only less than 20 percent of the population, On the other hand, revenue collection is most of whom live in Bissau, have access to low as EAGB does not have the capacity the electricity and water network of EAGB. to take readings in a timely manner or Some provinces have larger generator sets sometimes does not account for water and but power supply is limited and unstable. In electricity consumption. It is estimated February 2019, EAGB signed an electricity that electricity bills of around CFAF 4bn supply contract with KARPOWERSHIP, from companies and individual customers which installed a floating power station off are still outstanding. EAGB’s resulting high the shores in the harbor of Bissau. The boat debt levels are estimated at CFAF 25 bn (3 now produces and supplies all the electricity percent of GDP), including salary arrears and that EAGB sells its customers. The contract liabilities to the public treasury, commercial was five years and agreed to gradually take banks, and the National Institute for Social production capacity up to 24MW over this Security (INSS). The Government transfers period. annually around CFAF 5bn to help clearing debt. 26 A Portuguese consortium of specialists took over the management of EAGB in 2018. EAGB receives technical assistance from a consortium led by “Energias de Portugal” (EDP) to implement a management improvement and financial restructuring plan. Around 18 technical experts and specialists are tasked to modernize the customer service and A new tariff bilaterally agreed by the billing system in Bissau. However, at the government with Karpower makes EAGB outbreak of the pandemic, the consortium a large fiscal risk. The government agreed returned to Portugal and switched to a a longer, more expensive contract with teleworking regime. As a consequence, Karpower which would take their production the Government of Guinea-Bissau up to 70MW over a period of 10 years. unilaterally suspended their contract on a When the Portuguese consortium returned temporary basis, effective 1st June 2020 from Portugal, they found that monthly with them not returning until July 2021.. payments to Karpower had increased, starting from June 2021, but that reforms to increase revenue, such as receiving payment from the government for the electricity EAGB is considering significant measures it uses, were still finding resistance. This and has started to restructure their debt resulted in an unsustainable business to form a path towards sustainability. model leading to four months of arrears EAGB is expected to take firm measures to Karpower. In response, the Government to improve its financial situation. These held a roundtable in March 2022 and invited should include payroll control to reduce EAGB and the World Bank so a solution the wage bill as well as an expansion of could be found. Despite this, Karpower pre-paid meter installations. A commission activated a letter of credit worth three to collect outstanding bills has started months of arrears that was signed at the recovering outstanding electricity bills. beginning of the contract. The value of these EAGB successfully negotiated a debt arrears was over $6 million. A new letter restructuring with National Institute for of credit was signed, postponing but not Social Security (INSS), which allowed solving the problem. The donor community around 100 workers of retirement age to continues to support the Government in retire and receive their pension. An 8-year finding a solution to the problem and the debt service restructuring agreement with new contract was sent for legal analysis to a local commercial bank was achieved. evaluate its validity. The result is pending. The company has been strictly complying with the debt amortization schedule. However, potential fiscal costs of EAGB’s future operational losses presents a high risk to the government’s debt situation. 27 Total revenues deteriorated in 2022, driven in part by a fall in tax revenue. Total revenues fell from 19.6 percent of GDP in 2021, to 16 percent in 2022 driven by poor export volumes of cashew. The poor cashew campaign also drove tax revenue to fall to 9.5 percent of GDP from 9.8 percent in 2021. The tax-to-GDP ratio still remains one of the lowest in the world owing to a small tax base and poor tax administration. Excessive bureaucracy also harms the efficiency of tax collection as tax payments still mostly rely largely on human interactions and paper-based exchanges. Reforms and technical assistance from the donor community continue to try to correct these shortcomings. Several new taxes were also introduced in 2021, such as the Democracy Tax and Audiovisual Contribution, to increase the tax base. Corporate income tax recovered in 2022 from the fall in 2020 and is now higher than pre-pandemic levels in 2019. However, the percentage of this tax that comes solely from large taxpayers was significantly lower in 2022 (28 percent) than in 2019 (83 percent). The lack of domestic revenue collection capacity has created a high dependency on indirect taxes, which are mostly collected at customs during import and export procedures.9 Continued efforts towards fiscal consolidation and to improve good governance has crowded in grants. Guinea-Bissau has received several budget support commitments from partners other than the IMF. Portugal and France both gave 3.3 billion FCFA in 2022 for food security and social sector spending. Consequently, in 2022 grants reached 4 percent of GDP, down from 6.3 percent in 2021 when only Agence française de développement (AFD) gave budget support of €1.5 million but grants were still being received to support with pandemic measures. Additionally, Guinea-Bissau can expect the same amount in 2023 from AFD, and Spain who in February 2023 announced they would also support the government with grants. Total expenditure fell slightly despite limited progress for wage bill rationalization in 2022. In 2022, total expenditure fell slightly to 23.4 percent of GDP, from 23.6 percent in 2021, representing a lower fall than expected. This was driven by poor performance in wage bill rationalization as salaries reached 6.8 percent of GDP, despite the government starting a census in Q2 of 2022 to remove public sector workers who do not have a contract or should otherwise not be working for the civil service. Consequently, there was 9 Due to the ease of charging taxes at customs, some direct taxes (15 percent of direct taxes in 2019) are also collected during importation or exportation. They include a contribution to corporate taxes (Anticipação de Contribuição Industrial) and cashew nuts specific income taxes (Contribuição Predial Rustica), among others. 28 an overspend in salaries in the first half of the year as a carryover from the pandemic when additional workers were hired to support the country during the COVID-19 crisis, including, 1,500 health sector workers hired outside of the budget and without the authorization of the Minister of Finance.10 This amounts to a fiscal cost of around 0.3 percent of GDP and slightly less than a third of that in the first quarter of 2022.11 This followed 2020 when salary expenditure increased to 6.7 percent of GDP12, from 5.5 percent in 2019 and is forecasted to fall to 6.1 percent by the end of 202213. Domestically financed capital spending reached 1.5 percent of GDP as large investments in road infrastructure continue. The government rationalized non-essential expenditure in the last three months of 2022 to meet IMF targets for an ECF. The fiscal deficit has remained relatively stable and only slightly improved in 2022. The fiscal deficit improved only marginally in 2022, to 5.5 percent of GDP, after falling to 5.6 percent in 2021 from 9.9 percent in 2020. This lack of improvement was driven by higher-than-expected expenditures, especially related to the wage bill from irregular hires, and spending on the 2023 legislative elections. The domestic primary deficit decreased from 8.3 percent of GDP in 2020 to 3.7 percent in 2021, reflecting a slowing in domestically financed capital spending, particularly in the health sector.14 Despite this, debt remained high, at 81 percent of GDP in 2022, up from 78.9 percent in 2021, with the composition of external debt remaining stable at 41.2 percent of GDP. According to a joint assessment by the World bank and IMF, the country remains at high risk of debt distress. The IMF and the World Bank have supported the government to reduce non-concessional debt by implementing a policy of a zero ceiling on new non- concessional debt (Figures 3 and 4). 10 The Country Economic Memorandum for Guinea-Bissau calculates that when taking into account non-salaried remuneration and other benefits that are hidden in other budget categories, this number is actually greater than 10 percent of GDP. 11 At the end of 2021, the case was brought to the Council of Ministers and the Ministers of Health and Public Administration were dismissed. The 2022 budget gave the Minister of Finance the exclusive authority to hire new staff in the public administration. 12 Annex 2 elaborates on the COVID-19 mitigation policies enacted by the government. 13 The government started a census in Q2 of 2022 to remove public sector workers who do not have a contract or should otherwise not be working for the civil service. 14 The domestic primary balance excludes grants, foreign financed capital spending, and interest. 29 Figure 3: Guinea-Bissau Public Figure 4: Guinea-Bissau External Debt (Percent of GDP) Debt (percent of total) Exim Other Bilaterals 100 Kuwait Bank 4% Percent of GDP 80 4% 18,6 16,4 14,7 Angola India 60 16,5 17,5 22,5 25,1 8% 4% 40 11 BOAD 20 23,1 24,6 27,2 27,9 32% 0 13,4 15,8 12,8 13,3 2019 2020 2021 2022e Other BOAD External (w/o BOAD) Multilateral 8% IMF 7% IDA AfDB Other Domestic Local Banking System 26% 7% Source: Guinea-Bissau authorities and IMF and WBG Source: Guinea-Bissau authorities and IMF and WBG staff calculations. staff calculations. Balance of payments The current account balance fell into deficit in 2022, driven by the high costs of food and energy imports. The country is highly dependent on imports for most sectors, such as staple foods, fuel, medication and building materials.15 Inflationary pressure on essential goods and services (Figure 5) that Guinea-Bissau imports led to a slight deterioration of the current account balance, which fell to -5.2 percent in 2022 from +0.3 percent in 2021. This is expected to improve in 2023 to -3.5 percent, as inflationary pressures on imports decrease, despite the continued Russian invasion of Ukraine, and cashew exports rebound. Lower cashew exports have compounded increased import costs. Higher food and energy import costs in 2022 were partially offset by an appreciation of the real effective exchange rate. However, although cashew production reached the highest levels on record, international demand reduced, and export quantities were low (Figure 6). The IMF special drawing rights (SDR) allocation for Guinea-Bissau represented 2.4 percent of GDP in extra resources. The global process of allocating SDR was the largest ever allocation of about SDR 456 billion was approved on August 2, 2021 (effective on August 23, 2021). This most recent allocation was to address the long-term global need 15 Although in the past Guinea-Bissau used to be a net rice exporter, nowadays more than half of local rice consumption, the country’s main food staple, depends on rice imports. 30 for reserves, and help countries cope with the impact of the COVID-19 pandemic. Guinea- Bissau received an SDR allocation of USD $38.4 million (2.4 percent of GDP) in August 2021 which contributed to closing the external financing gap and allowed the government to pre-pay some BOAD debt. Figure 5: Price Developments of Main Import Commodities: Rice and Oil (Jan 2019 – Dec 2022) 600 140 500 120 Oil price (USD per Barril) Rice Price (USD per ton) 100 400 80 300 60 200 40 100 20 0 0 Jan-19 Jul-19 Oct-19 Jan-20 Jul-20 Oct-20 Jan-21 Jul-21 Oct-21 Jan-22 Jul-22 Oct-22 Apr-19 Apr-20 Apr-21 Apr-22 Rice Price (Left Axis) Oil Price (Brent) (Right Axis) Note: The figure presents prices in USD. Source: World Bank Pink sheet. Figure 6: Changes related to cashew nut exports (y/y) 80% 60% 40% 20% 0% 201 7 201 8 201 9 2020 2021e -20% -40% -60% Volume US$ price US$/CFAF Exchange rate CFAF value Note: The figure presents y/y changes of components of the cashew nut export value. Source: Guinea-Bissau authorities and WBG staff calculations. 31 Monetary Policy and Inflation Inflation more than doubled in 2022, reflecting continued disruptions to supply chains. Inflationary pressure increased after the pandemic and headline inflation increased from 3.3 y/y percent in 2021 to 7.6 percent y/y in 2022 (Figure 7)16. This increase was driven by supply chain disruptions and a global increase in commodity prices caused by the Russian invasion of Ukraine. Fuel shortages in the region exacerbated this problem, as transport costs increased owing to a rise in haulage times. Despite appreciating in recent years, the real effective exchange rate (REER) remains around 2010 levels. The CFAF peg to the euro has kept the REER relatively stable since 2010. REER changes tend to follow the nominal effective exchange rate (NEER), as the inflationary differential with trading partners is minimal. The REER has appreciated about 4 percent since 2019 but remains around 2010 levels. Figure 7: Headline Inflation 2018-2022 Y/Y 8 7 6 5 Percent 4 3 2 1 0 2018 2019 2020 2021 2022e (Jan-Oct) Date Source: World Bank figures and BCEAO data. Shallow financial markets limit financial inclusion and development. Access and use of financial services have increased in the last decade, fostered by the government’s decision to pay salaries only through the banking sector, but it remains low, and the stock of credit to the private sector was just 15 percent of GDP at end 2021, below the WAEMU average of 22 percent of GDP. Increasing the use of mobile phone services could advance financial inclusion by giving people outside of Bissau access to financial services. 16 BCEAO data only available until October 32 The BCEAO continued its macroprudential measures in 2022 to support financial institutions and other private companies. The liquidity of the banking system was supported by the accommodative stance of the BCEAO, and credit to the economy remained stable in 2022 (Figure 8). The COVID-19 induced economic downturn caused liquidity difficulties for private companies and banks. The BCEAO’s reduced refinancing rates as low as 2.0 percent remain in place. The fragile banking system represents a contingent liability and fiscal risk for the government, made worse by an undercapitalized bank. As of end 2021, a systemically important bank (SIB) held approximately 40 percent of all deposits in the country, but its low capitalization and very high level of non-performing loans (NPLs) pose a threat to macro-financial stability.17 The Government began looking for a strategic investor in 2021 and an asset management company is being considered as a solution with donors. This has proven difficult though, as the bank has only managed to recover approximately 10 percent of its NPLs. Long standing structural issues in the banking sector persist. These stem from the 2012 political crisis and a sharp decline in cashew prices in 2013, which damaged two banks highly exposed to the cashew sector, resulting in very high levels of NPLs. While one bank recovered, the SIB remains undercapitalized, with negative capital levels since 2017. Since December 2018, the solvency ratio in the financial sector has been negative despite a government recapitalization of SIB in December 2019.18 Financial soundness indicators show that the banking sector, excluding the SIB, recovered in 2021. In June 2021, the capital-to-risk weighted assets ratio was 21.7 excluding the SIB (3.6 including the SIB), while NPLs were just 6.5 excluding the SIB (16.6 including the SIB) Nevertheless, the sector depends on the accommodative stance of the BCEAO, which may be indicative of chronic liquidity constraints. 17 There is no NPL data for 2022 at the time of writing. NPLs in 2021 were 16.6 percent (6.3 percent excluding the undercapitalized bank) 18 The minimum requirement for the solvency ratio set by the BCEAO is 8.25 percent. In December 2019, the WAEMU average solvency ratio was 11.35 percent. Guinea-Bissau’s solvency ratio was -2.0 percent, the only country in the WAEMU with a negative ratio. 33 Figure 8: Credit to the Economy 250 18 16 200 14 12 150 10 8 100 6 50 4 2 0 0 2019 2020 2021 2022e 2023p 2024p Billions of CFA Percentage Change Source: IMF and World Bank estimations. Poverty Low levels of economic growth over the past decade have been insufficient to produce a meaningful reduction in poverty over the past decade. The national poverty rate declined by only one percentage point between 2010 and 2018, from 48.7 percent to 47.7 percent. In the capital city Bissau and in the other urban centers, poverty fell by 6 and 9 percentage points respectively while it increased by 5 percentage points in rural areas. The spatial variation in poverty trends largely reflects differences in sectoral growth over time. The agricultural sector employs more than 70 percent of the labor force and is the main source of income for most of the population- especially in rural areas and among the poorest households. However, between 2010 and 2018, the contribution of the agricultural sector to GDP averaged 2.2 percent. Although the COVID-19 pandemic is estimated to have resulted in an increase in poverty, recent analyses find a gradual recovery in 2021 followed by slower pace of decline in 2022. Using the international poverty line of $2.15 (in 2017 PPPs), poverty is projected to have declined from 19.9 percent in 2021 to 19.2 percent in 2022 – a 0.7 percentage point decline – (against a 1.2pp decline between 2021 and 2020). This corresponds to over 4,000 fewer people in extreme poverty (compared to over 14,000 people uplifted out of poverty between 2020 and 2021). The slowdown in the pace of poverty reduction in 2022 is in line with slower growth and higher inflation. Price controls on basic food items (rice, sugar, and wheat flour) and higher remittances are expected to slightly mitigate the effects of spillover effects of the war in Ukraine on household 34 wellbeing (formal remittances increased by 36 percent on average between January- June 2022 compared to the same period in 2021). Consequently, the poverty rate is expected to continue declining to 18.4 percent in 2023 reaching 17 percent by 2024. Rising food prices are likely to affect household wellbeing mainly through imported staples such as rice. Recent increases in food prices due to disruptions in global supply chains and spill-over effects from the war in Ukraine are also likely to affect the pace of poverty reduction in Guinea-Bissau. One on hand, rising food prices limits the ability of vulnerable households to increase their real incomes - especially agricultural households who are mostly poor and face declining cashew prices. On the other hand, since many households in Guinea-Bissau are producers of some staples, the increase in prices may not have large negative effects on household wellbeing. However, the increase in the price of rice, which is mostly imported, is estimated to have the largest negative effect on household welfare. Overall, the analysis indicates that inflation reduced per capita consumption across all quintiles of the income distribution, albeit marginally (Figure 9, panel b). Inflation accounts for an increase of 1 percentage point in national poverty rates in 2020 (Figure 10, panel b). For the poorest households who spend more on food, the effect of rising prices on wellbeing is likely to increase their vulnerability to sliding deeper into poverty. A resilient recovery is crucial for making up for loss gains due to COVID-19. Analysis conducted by Mendes et al (2021)19 showed that in the absence of COVID-19, household consumption level is expected to have increased resulting in a 2-percentage point decline in poverty. Prior to the pandemic, households across the income distribution were set to increase their consumption in 2020 (Figure 9, panel a). However, the impact of the pandemic in 2020 reduced per capita consumption below the levels in 2019 for most households, particularly for those located in the highest decile of the income distribution. Consequently, poverty (based on the national poverty line) is estimated to have increased by 3 percentage points. Across regions, the negative effect follows the same pattern but varies in terms of the magnitude of the effect. The region with the largest decrease in per capita consumption is Bissau. Poverty rates across regions, which were expected to decline before the pandemic, are estimated to have increased in 2020. Apart from Biombo and Bissau, poverty rates are above 50 percent (Figure 10, panel a). As a result, to reverse the trend of poverty and restore the trajectory to poverty reduction, economic recovery must be resilient and inclusive. 19 The analysis combined data from the 2018/19 national household survey and macroeconomic data on sectoral contribution to GDP growth and inflation to examine the effect of the pandemic on household welfare. It considers various channels through which the pandemic is likely to affect household welfare- including contraction in growth and disruptions in markets resulting in price increases. It offers a counter-factual scenario of outcomes in the hypothetical case that the pandemic had not occurred in 2020 (Annex 3 presents the methodology). 35 Figure 9: Average Per Capita Consumption (by quintiles of the income distribution) a. Effect of economic deceleration b. Effect of the increase in prices of key staples a. Effect of economic deceleration b. Effect of the increase in prices of key staples Source: Author’s calculations using 2018/19 EHCVM and National Accounts Data B. Outlook and Risks Despite a poor cashew campaign in 2022, the 2023 campaign should be strong, which will promote real economic growth of 4.5 percent. In 2023 growth should benefit from several factors. On the supply side, the agricultural sector will drive growth as the surplus cashew from the 2022 campaign has been carried over to 2023 and is still being sold. Furthermore, the country has directed some of the surplus cashew currently in warehouses in Bissau to the eleven transformation factories in the country for processing. Capacity to transform cashew is limited to 10,000 tons but this still represents a potentially positive 36 step towards increasing the value chain of the main productive sector in the country. International demand for cashew is expected to recover as Vietnam, the world’s largest exporter of processed cashew, has been exporting more cashew than it has imported, causing its stocks to fall considerably. Continued road infrastructure investment will also stimulate the construction sector. On the demand side, inflationary pressures should begin to ease on food and energy imports, as the effects of the war on Ukraine and supply chain disruptions begin to subside, which will improve private consumption and stimulate growth. Following the worldwide trend, inflation is expected to have peaked in 2022 and is projected to fall to 5 percent in 2023. Inflation will start stabilizing in 2023, as supply disruptions abate, and fuel and energy prices stabilize. In the mid-term, both being a member of the WAEMU economic and monetary zone, which provides a strong nominal anchor with its peg to the euro and a commitment by the government for fiscal consolidation will keep inflation contained, converging to 2 percent by 2025. The monetary stance is expected to remain accommodative, with the BCEAO helping to maintain liquidity in the banking sector by increasing domestic credit in the economy in the mid-term, growing 13.2 percent in 2023 to 191.9 billion CFA and increasing to 216.6 billion CFA in 2024. This may exacerbate problems with NPLs within the banking sector. Decreased external pressure in 2023 as fuel and food prices stabilize as well as improved cashew exports will cause the CAD to contract. As inflation falls, the costs of imports for essential goods, such as food and fuel, as well as the capital goods needed for investments in road recovery will complement the expected higher cashew exports and drive the CAD to decrease to 4.3 percent of GDP for 2023. Despite higher cashew nut exports, the high dependence on imports for basic needs and investments prevents quick changes in the CAD. As such, the CAD is projected to only marginally decrease in 2024 and 2025, at 4.5 and 4.2 percent respectively, as import costs fall (Figure 11). 37 Figure 10: Current Account Balance (Percentage of GDP) Source: World Bank calculations. The authorities are committed to fiscal consolidation to ensure medium-term debt sustainability. The fiscal deficit is projected to narrow in 2023 to 3.5 percent, from 5.5 percent. The World Bank will begin supporting the government’s implementation of a governance project aimed at rationalizing expenditure and controlling the wage bill and improving cash management by supporting the government with a move towards a treasury single account. The ECF program agreed with the IMF will continue supporting the recovery after the pandemic and implement needed structural reforms that include presenting a revised law to parliament on the general exemption scheme (December 2023) and revised income tax and stamp duty bills (June 2025) to bolster domestic revenue collection. The fiscal deficit is still set to narrow to 3 percent and the debt ratio to 70 percent of GDP over a 5-year term since the COVID-19 pandemic, to be in line with the WAEMU convergence criteria (Figure 12). The government has revisited the possibility allowing the mining of bauxite and phosphate reserves in the country, which will help diversify exports and has the potential to positively impact the country’s GDP and fiscal revenue. However, there is reluctance to begin investment and extraction as there is no legal framework in place to ensure environmental protection, due to the location of the reserves in the bend of a river. Despite this, there is a mining project near Farim, which has come with an investment of $200 million USD. The company have started building temporary accommodation for the workers and relocating locals, but progress has stopped because of changes to the mining agreement. Although uncertain, if the project goes ahead, estimates suggest that the project could increase GDP by 8 to 16 percent and fiscal revenues by about 50 to 80 percent during the exploration years. The IMF are supporting this sector by supplying technical assistance to develop a register of resource rights and undertake a diagnosis of the fiscal regime for natural resources. EAGB and the SIB continue to represent large fiscal risks, as outlined above. 38 Public debt is expected to remain high in 2023, at 78.2 percent of GDP, and decline to reach 75.4 percent of GDP in 2024. Despite the projected economic growth, the financing requirements will remain high over the medium term, with a financing gap of approximately 0.7 percent of GDP each year due to the large wage bill, a considerable rise in interest payments and investments to ensure economic recovery. This gap is expected to be covered mainly by grants and external concessional loans, as the government looks beyond BOAD, whose loans are almost entirely non-concessional20. In the medium term, the government is committed to fill the financing requirement from multilateral external creditors on concessional terms. Strengthened investment planning and execution to ensure value for money and better alignment with the budget process will also contribute to the decline in public debt. Figure 11: Fiscal Performance (Percent of GDP) Source: World Bank calculations. Figure 12: Debt Performance (Percent of GDP) Using the Latest DSA* Source: Joint World Bank/IMF DSA. *This version of this DSA reclassifies BOAD debt as external debt. 20 BOAD debt constitutes 17 percent of overall debt and is the country’s largest creditor. 39 INVESTING IN HUMAN CAPITAL TO REDUCE GENDER INEQUALITY PHOTO CREDIT: ELENA TOURIÑO LORENZO 40 Achieving gender equality and empowering all women and girls is the fifth sustainable development goal and a top priority for governments. Reducing gender inequality in Guinea-Bissau makes economic sense apart from being the right thing to do. The country can make progress towards this goal with appropriate policies. This report provides (1) a diagnostic of some aspects of gender inequality in Guinea-Bissau and its potential economic cost, as well as (2) a more in-depth analysis in three main areas: (i) improving laws and the regulatory framework; (ii) educating girls and ending child marriage and early childbearing; and (iii) ending gender-based violence. Policy options are suggested based on international evidence. 41 IN TRO DU C TI O N Gender inequality is pervasive in Guinea-Bissau with major implications for girls’ education and child marriage, women’s ability to participate in the labor market, and the well-being of their children. Girls’ educational attainment at the secondary and post-secondary levels remains lower than for boys and adult women are less literate than men. Apart from gender gaps in educational attainment and literacy, discrimination and social norms shape the terms of female labor force participation. Women are less likely than men to join the labor force and work for pay. When they do, they are more likely to work part-time, in the informal sector, or in occupations that have lower pay. These disadvantages translate into substantial gender gaps in earnings, which decrease women’s bargaining power and voice. Many girls are married or have children before the age of 18, before they may be physically and emotionally ready to become wives and mothers. Women and girls also face higher risks of gender-based violence in their homes, at work, and in public spaces. Their voice and agency are often lower than that of males, whether this is within the household, in the community, at work, or in national institutions. Women are underrepresented in public bodies and the coexistence of formal and traditional justice systems creates differentiated degrees of protection for women’s and children’s rights. Gender inequality affects children too. For example, children of young and poorly educated mothers often face higher risks of dying by age five, being malnourished, and doing poorly in school. Furthermore, lack of agency for women contributes to high fertility rates and population growth, delaying the demographic transition and the benefits from the demographic dividend. This section provides a diagnostic of selected aspects of gender inequality, with a few deep dives. The first part of the analysis considers a simple measure of the potential economic cost of gender inequality in terms of lost wealth. Both losses in earnings for women and the implications of high rates of population growth due in part to the relationship between gender inequality and fertility rates are considered. Thereafter, the analysis focuses on four specific themes: (i) improving laws and the regulatory framework; (ii) ending child marriage and early childbearing; (iii) keeping girls in school and improving learning; and (iv) ending gender-based violence. For each of these areas, potential options for programs and policies are suggested based on findings from the international evidence. 42 1. Potential Economic Cost of Gender Inequality Gender inequality in earnings Women play a crucial role in the economy, with their labor force participation and employment rates only slightly lower than for men. However, women are much less likely to earn a wage. Data are available from the 2018-19 EHCVM survey1 on labor force participation, employment (currently working), wage employment (wage earner), and unemployment by gender and by age group. Women are almost as likely as men to work. For prime working age groups, more than four in five women are in the labor force, versus nine in ten men. If domestic chores were accounted for, total working hours for women would probably be larger than for men, leading to higher levels of time poverty. However, women are much less likely to earn a wage and most women are self-employed in activities that have limited returns. As shown in Table 1, women are more likely than men to be self-employed in agriculture – the type of occupation most closely associated with a high likelihood of being poor2. Even when they work for a wage, women tend to be concentrated in informal activities such as selling fish, preparing food in small restaurants, or trading fruits and other foods through informal networks3. Table 1: Socio-Professional Category of Activity by Gender and Access to Credit, 2018- 19 (%) Men Women Private salaried work 46.0 56.1 Self-employment in agriculture 21.0 27.3 Self-employment in other occupation 8.2 3.0 Public salaried work 23.9 12.6 Domestic service work 1.0 0.9 Total 100.0 100.0 Source: Authors using 2018-19 EHCVM survey. 1 The full name of the survey is Enquête harmonisée sur les conditions de vie des ménages. 2 Projections suggest that one fourth of the population may be poor, with few changes over the last decade 3 UNDP (2020). 43 Regression analysis suggests that even when they are wage earners, women earn much less than men including when they have the same level of education and experience. Overall, according to data from the 2018-19 EHCVM survey, women account for only 21.2% of total wage earnings in Guinea-Bissau, versus 79.8% for men. Part of the difference comes from the fact that women are less likely to have wage earnings than men. But in addition, women are at a disadvantage even when they earn wages and have the same level of experience and educational attainment than men. Among women who earn wages, the disadvantage faced in comparison to men comes primarily from a lower number of working hours as opposed to lower wages per hour worked. This can be seen from selected regression results provided in Table 2 where female wage workers do not earn less than men when the analysis is conducted in terms of hourly earnings (the coefficient of 0.046 is not statistically significant). But women have earnings 31.2% lower than those of men when the analysis is conducted in terms of yearly earnings, in part because when women enjoy wage earnings, they tend to work fewer hours than men, possibly because of responsibilities at home. Importantly, and this is a topic that will be discussed subsequently, the premium enjoyed by workers with a primary education is not statistically significant versus those with no education at all, probably in part because of a low level of learning in schools. As to the premium for secondary education, it is small. Table 2: Selected Regression Results for Wage Earnings, 2018-19 OLS, hourly wage OLS, yearly wage Female (ref.: male) 0.046 -0.312*** Years of experience 0.013* 0.034*** Years of experience squared -0.000 -0.000 Primary education (ref.: none) -0.091 0.094 Sec./higher education (ref.: none) 0.251** 0.348*** Urban location (ref.: rural) 0.199* 0.189** Industry (ref. agriculture) 0.027 0.087 Services (ref.: agriculture) -0.221** 0.160* Source: Authors using 2018-19 EHCVM survey. Note: the regressions include a number of additional controls not shown in the Table. 44 Gender inequality in earnings leads to large economic costs for the country. The lack of economic opportunities for women entails large economic costs not only for them, but also for their households and the country. A country’s wealth mainly consists of three types of capital: Produced capital comes from investments in assets like factories, equipment, or infrastructure. Natural capital consists of agricultural land and both renewable and nonrenewable natural resources. Net foreign assets, an additional component in a country’s wealth, tends to represent a much smaller share of total wealth. Globally the largest component of national wealth is typically a country’s people. Human capital measured as the present value of the future earnings of the labor force accounts for two-thirds of global wealth4. As countries develop, the share of natural capital declines, making way for a larger share of human capital in total wealth. Gender inequality may lead to large losses in national wealth in at least two different ways. First, because gender inequality reduces women’s earnings, it reduces estimates of human capital wealth5. Second, gender inequality contributes to high fertility rates. In turn, high rates of population growth make it harder to improve standards of living and reap the benefits of the demographic dividend. In Guinea-Bissau, the direct cost of gender inequality in earnings in terms of lost human capital wealth could reach up to US$ 5.6 billion. Other scenarios would lead to lower, but nevertheless still high costs. Table 3 provides estimates of Guinea- Bissau’s wealth in 2018. Estimates for natural and produced capital are from the latest World Bank data on the changing wealth of nations6, while estimates for human capital were obtained through simple cross-country projections and are therefore only orders of magnitude7. In absolute value, Guinea-Bissau’s wealth in 2018 was of the order of $23.2 billion, including the tentative estimate of human capital wealth at US$8.8 billion. This represents an average wealth of only $12,370 per person. Based on the projections for human capital, human capital wealth accounts for only 38.1% of the country’s total wealth. One reason for the small share of human capital wealth in total wealth may be the fact that Guinea-Bissau is endowed with substantial natural wealth – especially in terms of the value of its forests (timber and ecosystem services). But another reason lies in the low levels of labor earnings for women, especially in terms of wage earnings. While the population of adult women ages 15-64 is slightly larger for women than for men, women account as mentioned above for only 21.2% of all wage earnings. If we consider the gap in wage earnings between men and women as potentially representative of the 4 Lange et al. (2018). 5 Wodon et al. (2020). 6 World Bank (2021). 7 The latest dataset on the changing wealth of nations does not include human capital data for Guinea-Bissau but given the very strong correlation between per capita GDP and human capital wealth, projections can be used to suggest estimates. 45 broader level of inequality in earnings, and if we assume for simplicity that without gender inequality, women could earn as much as men, the potential cost of gender inequality in human capital wealth for the country could be estimated at up to $5.6 billion. This is likely to be an upper bound for several reasons8. To provide a very tentative range for the cost of gender inequality, acknowledging that these are by no means precise estimates and assuming that up to half of the benefits from higher earnings for women may be offset through general equilibrium effects, Table 3 suggests that the cost of gender inequality could range from US$ 2.8 billion to US$ 5.6 billion. While other assumptions could lead to a lower or higher estimate of the lifetime potential cost of gender inequality in earnings, this cost is likely very large, thereby hampering the development of the country. Table 3: Estimates of the Loss in Human Capital Wealth due to Gender Inequality in Earnings, 2018 Total wealth Wealth per capita Estimates for Guinea-Bissau (US$ millions) (US$) Total wealth 23,201 12,379 Produced capital 3,149 1,680 Human capital 8,836(*) 4,714(*) Natural capital 11,604 6,191 Net foreign assets -388 -207 Population (millions) 1.87 - Potential cost of gender inequality 2,801to 5,602 1,495to 2,989 Source: World Bank (2021) and authors’ estimates using simple projections for human capital wealth. Note: (*) Estimates for human capital wealth are based on projections. To illustrate the magnitude of the potential benefits from reducing gender inequality, comparisons with net Gross National Income and Official Development Assistance 8 First, inequality in overall earnings and productivity between men and women is likely to be lower than inequality in wage earnings. Second, general equilibrium effects may reduce the benefits that would accrue to women of higher earnings. For example, research suggests that when women enter occupations that were previously segregated to the benefit of men, earnings for men may actually be reduced. 46 may be useful. Globally, the loss of human capital wealth due to gender inequality in earnings has been estimated at about twice the global Gross National Income of countries. In Guinea-Bissau, because of particularly high levels of gender inequality, the ratio is likely to be even larger since the country’s Gross National Income was at about US$ 1.5 billion in 2020. Another interesting comparison is with net Official Development Assistance (ODA), which consists of disbursements of loans made on concessional terms (net of repayment of principal) and grants by official agencies. The agencies included are the members of the Development Assistance Committee (DAC), multilateral institutions, and non-DAC countries. Net ODA includes loans, at least a quarter of which consists of grant elements. In Guinea-Bissau, net ODA has amounted to about 8% to 16% of Gross National Income over the last decade, depending on the year. The benefits from ending gender inequality would thereby be an order of magnitude larger than net ODA. The COVID-19 pandemic may have further exacerbated gender inequality in earnings. As mentioned earlier, women tend to work in informal activities related to agriculture and small commerce. As these activities were curtailed during lockdowns, and as schools closing led to a higher burden of domestic care, the pandemic is likely to have affected women’s earnings disproportionally. Mobility restrictions and closure of markets likely reduced their income with the rotting of fruits, vegetables, sweet potatoes, and other products cultivated by women. The pandemic also had a negative effect on cashew exports and harvest, preventing women from urban areas to participate in the harvest9. In healthcare, while men fulfill most of the administrative work, most nurses, midwives, and community health workers are female, hence women working in the healthcare sector faced heightened risk of exposure to COVID-1910. While the rate of vaccination against COVID is low in the country11, vaccination rates have been higher for men than women. Several factors could have led to this gap – including pervasive patterns of gender inequality, women´s lower literacy rate, and the lack of time because of a heavy workload including at home, as well as the lack of autonomy which limits women’s decision-making power. Vaccination campaigns targeting women were launched towards the end of 2021 to narrow the gap. Confinement measures and higher stress levels are also likely to have increase gender-based violence, which in turn may have affected the ability of women to participate in the labor force and earn a wage. International evidence suggests that strategies to improve employment opportunities for women could focus on three main areas. These three areas are (1) 9 UNDP (2021). 10 UNDP (2020). 11 Mathieu et al. (2021). 47 reducing the time spent by women in unpaid work and redistributing care responsibilities to increase the time they can allocate to the labor market; (2) giving women more access to and control of productive assets, including land and credit; and (3) addressing market and institutional failures, including reforming laws and regulatory frameworks that constrain women’s economic activities.12 As an example of inequality in access to productive assets, the 2018-19 EHCVM survey suggests that women are four times less likely than men to apply for loans, although the success rate of obtaining loans when they apply is similar. The fact that women are less likely to apply for loans may be due in part to their higher participation rates in informal savings mechanisms such as tontines13, but other factors cannot be excluded. Indeed, when women apply for loans, they are often rejected because of a lack of guarantor or a perceived poor repayment ability, while for men an incomplete application is the main reason for not getting a loan. Unfavorable laws and regulatory frameworks contribute to difficulties faced by women to obtain loans. As another example of differences in access to productive assets, survey data shows that phone ownership, phone usage, and access to the internet through a phone are all lower for women than men. Population Growth, Health, and Nutrition Apart from lower earnings for women, gender inequality contributes to high fertility rates, and thereby high annual rates of population growth. Gender inequality contributes to high fertility rates (the number of children women have over their lifetime). In part due to lack of access to family planning and modern contraception methods, many women have a larger number of children than they would like. Child marriage and early childbearing also play a role. When girls marry early or have children early, this leads them to have more children over their lifetime. High fertility rates contribute to high rates of population growth. Even when fertility rates are declining, because of a large and still growing number of women in the age group giving birth, it takes time for lower fertility to result in lower rates of population growth. As shown in Figure 1, while there has been a decline in fertility rates in recent years in Guinea-Bissau, this has not yet translated in lower population growth. The country’s population growth is slightly below the average for sub-Saharan Africa, but still high, limiting the ability to reap benefits from the demographic dividend. At some point the decline in fertility rates will lead to lower population growth rates, but for population growth to decline faster, fertility rates would need to fall further and faster. 12 Wodon and de la Briere (2018) 13 Tontines are typically groups of women belonging to a community who pool savings together as a saving mechanism that enables the group to provide loans to members or undertake investments as a group. 48 Figur 13: Fertility Rate and Annual Population Growth ( %) 8 3 2,5 6 2 4 1,5 1 2 0,5 0 0 196 1 196 3 196 5 196 7 196 9 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Fertility rate, total (births per woman) Population growth (annual %) Source: World Bank, World Development Indicators. High population growth rates make it harder to raise per capita wealth and thereby standards of living. A country’s wealth is the assets base that enables it to generate future income (Gross National Income). If a country’s wealth does not keep pace with its population growth, this can lead in the long run to declining standards of living. This risk is very much present in Guinea-Bissau. As illustrated in Table 4, trends over time in the measures of the country’s produced and natural capital available from the World Bank suggest declining levels of wealth per capita. All estimates are in real terms (constant 2018 US dollars). There was a small increase in national wealth from produced and natural capital over the last 23 years, but wealth per capita decreased significantly (-28% for produced capital, and -37% for natural capital) due to relatively high levels of population growth, which as mentioned are due to relatively high fertility rates and the large number of women of childbearing age. Globally, Guinea-Bissau is one of few countries with sharply declining wealth per capita over time. Table 4: Estimates of Guinea-Bissau’s Produced and Natural Wealth Over Time, 1995- 2018 1995 2000 2005 2010 2015 2018 Change 1995-2018 National wealth (Millions, constant 2018 USD) Produced capital 2,539 2,625 2,719 2,818 2,940 3,149 +24% Natural capital 10,640 12,282 8,547 10,190 11,682 11,604 +9% Per capita wealth (constant 2018 USD) Produced capital 2,332 2,185 2,022 1,851 1,692 1,680 -28% Natural capital 9,772 10,224 6,355 6,692 6,725 6,191 -37% Source: World Bank (2021). 49 Improving girls’ educational attainment and reducing child marriage and early childbearing would lower fertility rates and reduce population growth. The earlier women marry, the more likely they are to bear children early, leading women to have more children over their lifetime14. Depending on the age at marriage, child marriage increases the average number of children that women bear over their lifetime (total fertility) by 11 to 32 percent. Simulations suggest that ending child marriage could reduce the national fertility rate by 0.35 child nationally or about 7 percent of the baseline value. Universal completion of secondary education for girls could have an even larger impact, reducing the fertility rate by 1.35 child nationally or 28 percent of the base value. As universal secondary education for girls could help eliminate child marriage, the combined effects of universal secondary education (including by ending child marriage) could be a reduction in fertility rates of more than a third, which would in turn lead to lower annual rates of population growth and thereby a faster transition towards a demographic dividend. Better access to modern contraception could also help women manage to reduce fertility rates. Proximate determinants of fertility include the national marriage rate, the degree of contraceptive use, the abortion rate, and the average duration of post- partum infecundity (Bongaarts model). The share of adult Guinea-Bissau women using contraceptive methods was at 22.1 percent in the 2018-19 MICS. More than half of adult women are not able to meet their contraception needs. Demand factors limiting contraceptive use include both a lack of knowledge of sexual and reproductive health and gender norms that discourage women from using contraception. Supply-side factors include unavailability of modern contraception, stock-outs, and lack of qualified health staff, such as midwifes, to counsel women on, e.g., adoption of longer-term contraceptive methods. Solving both supply and demand constraints would help relieve the unmet demand for contraception, which would to some extent help to bring down fertility. Delaying marriage and childbearing and improving educational attainment for girls would have numerous benefits beyond simply reducing fertility rates and population growth. Girls marrying or dropping out of school early are more likely to have poor health and earn less in adulthood, which makes it more likely that their households will be poor. They are also at risk of intimate partner violence and lack decision-making ability within the household. Fundamentally, girls who marry, have children, or drop out of school early are disempowered in ways that deprive them of their basic rights, which affects not just them but also their children. For example, children of young mothers are often at higher 14 Onagoruwa and Wodon (2018). 50 risk of dying by age 5, being malnourished, and doing poorly in school. Detailed analysis of these impacts for a range of countries in Africa and globally have been conducted15 and effects in Guinea-Bissau are likely to be similar. Investments in early childhood development (ECD) are particularly important, especially for children at risk due to early childbearing. High rates of neo-natal mortality and stunting in Guinea-Bissau result from a lack of sufficient investments in young children. Yet investinzg in young children is one of the best investments countries can make because a child’s earliest years open a unique window of opportunity to address inequality, break the cycle of poverty, and improve a wide range of lifecycle outcomes.16 Investments in ECD usually have high economic rates of return, particularly compared to investments made later in life. Programs that address multiple drivers of malnutrition simultaneously and combine services across sectors such as health and nutrition, psychosocial/early stimulation, and improved water supply and sanitation, and that extend to communities can be especially beneficial. It should also be recognized that there are social barriers in improving ECD outcomes, as parents – and especially young mothers, are often not aware of what they can do – such as ensuring sufficient early stimulation – to improve outcomes for their children. Improving ECD outcomes thus requires mechanisms to inform parents, including mothers having children early in their life, apart from other interventions. Another key area for intervention in early childhood is the reduction of stunting. Apart from educating future mothers, both nutrition-specific and nutrition-sensitive interventions are needed17. 15 Wodon et al. (2017, 2018a, 2018b). 16 Black et al. (2017) 17 Nutrition-specific interventions include promotion of exclusive breast-feeding for six months, micronutrient supplements, and access to clean water and proper sanitation and hygiene practices feeding, and caregiving practices –which are provided primarily through the health sector. Nutrition-sensitive interventions include biofortification to enhance the micronutrient content of staple foods. Similarly, education can be nutrition-sensitive by distributing, where needed, deworming tablets to school children. Social protection programs can be designed to condittransfers on uptake of basic health and nutrition services, thus helping to dismantle demand-side barriers to these services. Simple hand washing with soap can also substantially reduce the risk of diarrhea and acute respiratory infections for children, which would reduce child mortality. 51 BOX 03 Potential Gender 1. Adult employment Implications of Controlling for other individual characteristics Climate Change and and the household’s location, having been affected by weather shocks is associated with a Weather Shocks decrease in the probability of employment (i.e., any type of work) for men and an increase in the As is the case for many other countries probability of both labor force participation and in West Africa, Guinea-Bissau is at risk employment for women. Looking at particular of more severe weather shocks in the sectors of occupation, having been affected by future due to climate change. According to weather shocks is associated for both men and analysis of the EHCVM survey implemented women with a higher likelihood of being engaged in 2018-19, about one fifth of households in agriculture (this could simply be because (19.8 percent) declare having been affected rural households tend to be more exposed). by climate shocks in the last few years. For both men and women, there are negative The most frequent shocks are droughts effects on the likelihood of employment in other (affecting 10.5 percent of households), sectors, but the effects tend to be larger overall followed by floods (6.9 percent), fires (4.7 for men. These larger effects for men in other percent), and landslides (0.5 percent). In sectors could be interpreted as weather shocks terms of individual characteristics, for men affecting economic activity in communities as well as women, rural individuals more and thereby employment negatively, with likely to be affected by weather shocks, as a net result women, despite their higher which is not surprising given that their involvement in domestic work, engaging in livelihood often depends on agriculture. additional work in order to help the household Individuals with less education (who cope with the shocks. Women would represent typically belong to poorer households) a source of ‘reserve labor’ in this hypothesis, are also more likely to be affected. which could lead for them to higher levels of ‘time poverty’ (i.e. working more hours than Controlling for other individual and location a time poverty threshold), since women are characteristics, regression analysis known to work higher number of hours when suggests a range of associations between including both domestic and other work. having been affected by weather shocks in recent years and outcomes related to human development, especially for education and work (these associations are not necessarily causal effects). In particular: 52 2. Children’s education and child marriage 4. School choice (enrollment by type of school) Weather shocks are associated with an increase in child marriage for girls When weather shocks lead to income (there virtually no effects for boys), and losses for households, this may affect a decrease in school enrollment for boys their decisions to enroll children in school, and girls (although the effects tend to be but it may also affect school choice. For larger for adolescent girls). For example, girls aged 6 to 11, being in a household for children aged 15 to 19, weather affected by weather shocks is associated shocks are associated with an increase with a reduction in the likelihood of being in the probability of child marriage of 3.3 enrolled in a public or faith-based school, percentage points for girls, while the effect and an increase in the likelihood of being is slightly negative but very small for boys. enrolled in a community school. For boys In addition, the likelihood of being enrolled of that age, the effects are mostly not in school decreases by 5.2 percentage statistically significant. For girls and boys points for adolescent girls, while the aged 12 to 21, somewhat similar effects effect is not statistically significant for are observed, with a reduction in the boys. Clearly, adolescent girls are more probability of girls to be enrolled in public at risk of negative effect from weather school and no effect for boys (although for shocks (higher child marriage, lower both girls and boys, the probability of being education) than adolescent boys. enrolled in a community schools is higher). 3. Child labor These various effects suggest a wide range of negative effects of weather For children aged 6 to 11, weather shocks shocks for households, and typically are associated with an increase in child larger negative effects for girls and labor for girls (increase in the likelihood women than is the case for boys and men. of household work of 4.1 percentage points), while the effect is not statistically significant for boys. Form those aged 12 to 21, the increase is positive for boys and girls alike, although slightly larger for boys. PHOTO CREDIT: ELENA TOURIÑO LORENZO 53 Three Pathways to Gender Equality 2. Three pathways to gender equality 2.1. Improving laws and the regulatory framework Women’s access to economic opportunities is linked to many factors, including inadequate laws and regulations. Greater gender equality in the law improves women’s economic outcomes, including female labor force participation, business ownership and wages, and GDP growth18. Equality of opportunity allows women to make the best choices for themselves, their families and communities. However, equal opportunities to participate in the economy do not exist where laws and regulations do not afford men and women equal status. Efforts have been made over time to strengthen the legal framework in Guinea-Bissau toward reducing gender inequality and protecting women’s rights19 and in the last decade, Guinea-Bissau has taken significant steps to adopt laws protecting women and girls from different forms of gender-based violence (see Box 2 for details). Key pieces of legislation include the 2014 Law against Domestic Violence, which criminalizes all forms of violence, including physical, sexual, psychological and patrimonial; the 2011 Law to Prevent, Fight and Suppress Female Genital Mutilation; and the Law to Prevent and Combat the Traffic of Persons, Particularly Women and Children of 2011. Other legal instruments show the State’s commitment to promoting equality in women’s access to health services, including Law 5/2007 on HIV/AIDS and Law 11/2010 on Reproductive Health and Family Planning. The Government is also currently finalizing the process for adopting a Child Protection Code, which includes important advances in protecting the rights of the girl child (see again Box 2 for details). 18 Hyland, Djankov, and Goldberg 2021; Gonzales et al., 2015. 19 The country has ratified most of the relevant international and regional instruments relating to women’s rights and gender equality, which shows a national commitment to achieving these goals. The main agreements include the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) – 1979 (ratified in 1985) and its Optional Protocol, the African Charter on Human and Peoples’ Rights – 1981 (ratified in 1985), the Convention on the Rights of the Child – 1989 (ratified in 1990), the Protocol to the African Charter on Human and Peoples’ Rights on the Rights of Women in Africa – 2003 (ratified in 2007), among others. The country has also made some progress in adopting reforms to improve women’s socioeconomic opportunities. The most recent achievement was the adoption of the Parity Law (Law 4/2018), which establishes minimum quotas for women in the political representation. 54 BOX 04 National policy on participation of women in public life, politics and decision-making; and (7) Improve gender and equality knowledge, information system, monitoring and data production in the field of gender (PNIEG) and draft equality and women’s status in the country. Integral child As to the draft of the Code for Integral Child Protection approved by the Council protection code of Ministers in October 2021 and currently in process of approval by Parliament, it introduces major changes in what The PNIEG is the guiding instrument for regards the strengthening of the child the mainstreaming of gender and women’s protection system and a modern legal empowerment by institutions and partners. framework regarding children in contact PNIEG – I (2012-2015) was never fully with the law. The main advances relevant implemented but is influenced the approval to gender equality in Guinea-Bissau of relevant laws, including on domestic include provisions on GBV training as a violence, trafficking in persons and the parity requirement for all personnel working law. PNIEG-II (2016-2025) aims to achieve withing the child protection system; clear an egalitarian society and “strengthen prohibition of harmful practices, including mechanisms for coordination and support child marriage, discriminatory traditions, to the government to systematically and female genital mutilation (FGM); mainstream gender in all laws, policies and State obligation to protect maternity, programs”. Key objectives are to (1) Improve including at work and in detention, and the legal framework of the country with the encourage breastfeeding; right of the child aim of achieving Gender Equality and Equity to have access to sexual and reproductive and guaranteeing women’s Human Rights; information and education (regardless of (2) Promote the adoption of an agenda of parental consent); duty of hospitals and gender equality in social sectors (health, health centers to provide priority and free education, justice, security, providence, health services for victims of violence housing, water); (3) Strengthen national (sexual or physical) against children; State mechanisms for gender equality and equity obligation to develop support programs and the empowerment of women in public for mothers or pregnant women or children administration; (4) Promote equal economic so that they can continue school and clear and productive opportunities for women prohibition of any type of disciplinary and men, as a strategy for the empowerment punishment on the grounds of pregnancy of women and for the reduction of poverty or maternity in schools and shelters. and inequalities; (5) Prevent and combat all forms of violence and trafficking against women and girls; (6) Promote the 55 Yet despite such efforts, significant gender inequality persists in legislation that limits women’s economic potential. According to the World Bank’s Women, Business and the Law (WBL) Index measuring legal barriers to women’s economic participation, Bissau-Guinean women enjoy less than half of the legal rights enjoyed by men, hamper- ing their participation in the economy through the workforce and entrepreneurship. On a scale from zero to 100, Guinea-Bissau has an overall Women, Business and the Law score of 42.5 points, the lowest performance among West and Central African countries. It has also lagged behind in implementing reforms in the last 50 years towards improving legal gender equality for women’s economic participation as compared to other countries in the sub-region. From 1970 to 2020, as shown in Table 5, the index of women’s rights in Guinea-Bissau improved by only 14 points from 28.1 to 42.5. By contrast, the average for the region increased by 28 points from 39.7 to 67.8. Table 5: Estimates of Women’s Economic Rights in West and Central Africa, 1970 and 2020 Country 1970 2020 Country 1970 2020 Cape Verde 36.0 86.3 Chad 39.4 66.9 Togo 25.6 84.4 Nigeria 49.4 63.1 Liberia 43.8 83.8 Mali 41.3 60.6 Burkina Faso 48.1 79.4 Cameroon 45.6 60.0 Benin 28.1 77.5 Niger 38.8 59.4 Central Afr. Republic 45.0 76.9 Gabon 43.1 57.5 Guinea 41.3 75.0 Equatorial Guinea 31.9 51.9 Gambia, The 49.4 74.4 Congo, Rep. 40.0 49.4 Sierra Leone 31.9 69.4 Mauritania 39.4 48.1 Senegal 35.0 66.9 Guinea-Bissau 28.1 42.5 Source: Women, Business and the Law data. Note: index of rights from 0 to 100. Discriminatory laws limit women’s economic autonomy, their access to employ- ment, and their income opportunities. Despite Constitutional provisions upholding the protection of fundamental rights, former colonial laws still in place reflect a patriarchal system with unequal gender roles and discriminatory rights for women within the family. The Civil Code still formally confers responsibility and power over the family solely to men, including the right to choose the family residence and to legally be head of household, limiting women’s ability to own and administer property, and determining that a married woman’s autonomy to work outside the home, open a bank account and sign a contract is 56 subject to the husband’s consent.20 It also establishes 18 as the legal age of marriage but allows girls to be married at 14 (while boys at 16) with parental consent.21 Similarly, labor market restrictions for women limit their access to employment and income opportuni- ties. The General Labor Law of 1986 restricts the jobs, industries and hours women can be employed in and does not protect women against employment or income discrimination or from sexual harassment. Labor laws also fail to provide adequate maternal, paternal and parental leave or flexible work conditions, a major impediment for women after hav- ing children22. Likewise, women’s return after maternity to equal work conditions (quality and payment) are not guaranteed. Recognition of legal constraints in different areas has led to a revision of civil and criminal laws with the aim of improving gender equality and protection against gender-based violence23; the initiative has however been ongoing for a few years with no concrete results to date. Additionally, even where formal protection of women’s rights exists, weak awareness of laws and their enforcement further undermines government efforts to enhance legal protection and equal conditions for women.24 Several factors prevent women from accessing and enjoying existing rights, registering complaints and accessing justice, including lack of awareness of laws and rights, insufficient state structures, and lack of institutional capacity and services to encourage complaints. Labor rights are rarely re- spected, and women often work without social protection, generally subordinated to men. Concerning issues of violence against women, most cases are not reported or ever reach the justice system. In addition, the strong presence of religious norms and beliefs result in a high prevalence of cases being dealt with by the traditional justice system, especially in the regions, where state presence and formal justice structures are almost inexistent. 20 According to Article 1678 of the Civil Code, the husband is responsible for managing all spousal property, including the wife’s separate property. Further, a married woman can only manage a bank account under specific circumstances, such as in the exercise of domestic administration or as the administrator of the couple’s assets (Article 1680) and unless the couple specifically chose to marry under separation of property regime, the wife cannot operate a business or engage in trade without her husband’s consent (Articles 1676 and 1686). 21 The age of sexual consent in the current Criminal Code is 12 years of age and criminal proceedings for sexual abuse of children can only begin after the victim of the crime has filed a complaint, because these crimes have a “semi-public” nature. Nonetheless, the Criminal Code is under revision and these provisions are likely going to change: the age of sexual consent is expected to increase and the crime involving sexual abuse of children will have a “public” (and not “semi-public”) nature. 22 A draft of a new Labor Code with a stronger set of protections for mothers as well as the increase of the minimum age for employment is yet to be approved by the Parliament. The draft Labor Code establishes a 90-day maternity leave as well as protection against dismissal for a pregnant or recent mother. 23 The Civil, Civil Procedure, Criminal and Criminal Procedure have been undergoing revision by a team of jurists under the initiative and supervision of the Ministry of Justice. Gender equality and better protection against sexual crimes and harmful practices are some of the many reasons behind the process of revision. The current draft of the revised Civil Code raises the minimum age of marriage to 18 years (both for men and women) and aims to eliminate differences concerning parental responsibilities between men and women. The current draft of the revised Criminal Code raises the age for sexual consent (not clear yet whether to 14 or 24 years) and establishes new types of sexual crimes aiming to increase child protection, such as criminalizing child pornography and sexual exploitation of children. 57 More generally, socio-cultural practices further limit and undermine the application of national laws toward ensuring women’s rights and economic opportunities. While formal law dictates that customary rules should not be applicable in violation of constitu- tional and civil protections, in practice the formal and traditional justice systems coexist in parallel, with most conflicts being resolved by informal and traditional structures. Simi- larly, for example, formal alimony rights ensured to women upon divorce may be forfeited by practice if she remarries or is considered to have acted against ‘moral’ behavior. In most ethnic groups, women are left without financial support in view of customary rules and lack of legal protection for women in polygamous marriages. In particular, customary and cultural practices restrict women’s access to assets and land undermining equality under the law. Although the Civil Code establishes equal inheritance rights, women are generally not allowed to inherit property from their husbands or fathers. Similarly, while the Land Law grants women and men equal rights in access to land, parallel customary provisions of most ethnic groups, which normally regulate land distribution and rights to use land for agricultural purposes in rural areas, do not allow women such rights. Women are rarely landowners, despite being responsible for most agricultural work. Such limited access to land – as a key source of collateral - likewise deprives women of credit, and limits their agricultural productively, excluding them from the key productive sector in the economy. Some policies and national strategies have been put in place aiming to promote gender equality and addressing GBV, but effective implementation is lacking. These policies include the National Policy on Gender Equality (2016-2025), the Justice Reform Program, and the National Strategy for Fighting Female Genital Mutilation (2018-2022). However, implementation has also been limited. Multiple government transitions, insuf- ficient budgetary resources, and lack of clear leadership to ensure multisectoral support have resulted in very poor, if any, effectiveness of such initiatives. Information exists on government plans to put in place a social protection system prioritizing the most vulner- able, in particular women, children and refugees as part of the 2025 Government Strate- gy,25 but the status of the initiative is unknown (see Box 2 above on the PNIEG). Addressing more systematically gender inequalities in the legal framework would improve opportuni- ties for women at home, in the labor market, and in the financial markets among others. Specific recommendations will be made in the concluding section. 25 SITAN, 2015. 58 2.2 Educating Girls and Ending Child Marriage and Early Childbearing Gender inequality manifests itself early in life, but it is especially detrimental in ad- olescence due to the risks of child marriage and early childbearing. Girls who marry or have children before the age of 18 often do so before they are physically and emotionally ready to become wives and mothers. Educating girls, ending child marriage, and prevent- ing early childbearing is essential for girls to have agency, not only within their household, but also in the labor market and in their communities. It is also essential for countries to reach their full development potential. Building in part on global and regional work on the benefits from educating girls, this section documents trends in child marriage, early childbearing, and low educational attainment for girls over time in Guinea-Bissau, as well as their impact. Despite some progress, challenges to end child marriage and early childbearing re- main massive. Table 6 shows trends in child marriage and early childbearing for girls in Guinea-Bissau and a few comparator countries26. Child marriage continues to affect more than one in five girls (22.4% prevalence among girls ages 18-22), with early childbearing also affecting more than one in five girls (21.3% prevalence among girls ages 18-22). There has been progress in recent years, since rates are higher for slightly older girls, but over the long run, progress has been limited since especially for early childbearing, almost as many girls ages 18-22 have children before the age of 18 as was the case for women ages 41-49 when they were younger. As shown in Figure 2, there are important differences between regions, with regions further east typically having a higher prevalence of child marriage and early childbearing. In many cases, girls who marry before the age of 18 enter into informal unions with men who are more than 10 years older than them. Due to the high prevalence of polygamy, many also enter into marriage as a second wife. One out of every three women married before the age of 19 lives with one or more cowives. 26 The trends are based on estimates for different age groups typically using the latest demographic and health surveys (DHS) for each country, although for Guinea-Bissau estimates are based on the 2018-19 MICS as the latest DHS is older. Child marriage is defined as entering in a formal or informal union before the age of 18. Early childbearing is defined as having a first child before the age of 18. 59 Table 6: Trends in the Prevalence of Child Marriage and Early Childbearing, Women by Age Group (%) Child marriage Early Childbearing 18-22 23-30 31-40 41-49 18-22 23-30 31-40 41-9 Benin 29.8 36.0 36.7 35.8 18.7 23.2 25.3 25.9 Burkina 49.8 52.0 53.5 51.0 25.2 30.1 29.1 27.7 Cote d’Ivoire 28.1 29.9 34.6 35.0 26.3 26.4 26.9 32.2 Guinea-Bissau 22.4 30.3 32.4 29.5 21.3 28.4 26.2 23.6 Nigeria 39.8 43.9 40.7 44.4 25.6 29.4 29.2 33.2 Senegal 26.9 29.3 31.6 33.0 14.4 17.0 18.8 16.5 Togo 20.8 29.8 31.2 33.6 15.0 20.8 21.2 24.5 Source: Authors´estimation using DHS and MICS data. Figure 14: Maps of Child Marriage and Early Childbearing for Girls, 2018-19 Age Group(%) Child marriage, girls ages 18-22 (%) Early Childbearing, girls ages 18-22 (%) Source: Authors’ estimation using 2018-19 MICS. Child marriage is the likely cause of most cases of early childbearing. Estimates based on the timing of marriage and childbearing suggest that in West Africa, about two thirds of all instances of early childbearing (a girl having her first child before the age of 18) are due to child marriage. The proportion for the share of children born of mothers younger than 18 due to child marriage is even higher. These estimates could be valid for Guinea-Bissau too. While the timing of births and marriage is an imperfect way to identify causality, early childbearing seems due in most cases to child marriage, with girls married early getting pregnant as a result. Early childbearing may lead to child marriage, but this is less likely. 60 The issues of child marriage, early childbearing, and low educational attainment for girls are closely related. Child marriage and early childbearing lead some girls to drop out of school, and conversely, keeping girls in school helps in reducing the risk of child marriage and early childbearing. In West and Central Africa, completion rates for lower secondary education account for 60 percent of the variation in the prevalence of child marriage between countries, pointing to the important role of schooling at the secondary level in ending child marriage, as noted in the literature27. Econometric analysis also suggests that the causality between child marriage and early childbearing on the one hand and girls’ educational attainment on the other goes both ways and is rather strong28. The close relationship between child marriage and girls’ education can also be illustrated through a simple typology of adolescent girls according to their marriage and schooling status. Table 7 provides measures of the share of girls in various categories. The results suggest that after a certain age, many girls may have to choose between marriage and schooling. In addition, once a girl is married, it is very difficult for her to remain in school: less than one percent of all girls ages 15-19 are both married and in school. Put simply, the fact that for many girls, the options are to continue schooling or marry but not both suggests that causality may run both ways: child marriage reduces education prospects for girls, and better education (and employment) opportunities for girls reduce the likelihood of marrying early. Table 7: Relationships between Child Marriage, Early Childbearing, and Girls’ Educa- tion, 2018-19 (%) Girls ages 15-19 by status (%) In school, not married, aged 15-16 26.34 In school, not married, aged 17-19 26.29 Out of school, not married, aged 15-16 11.26 Married, not in school, any age 15.49 Out of school, not married 17–19 years 19.94 Married and in school, any age 0.67 Total 100.0 Source: Authors using 2019-19 MICS. 27 The figure also suggests that as secondary schooling rates rise, the marginal impact on child marriage may be lower. This could be because it is often more difficult to reach the “last mile” (ending as opposed to only reducing child marriage) in this area as in many others. 28 On the impact of child marriage on education, see Field and Ambrus (2008), Nguyen and Wodon (2014), and Wodon et al. (2016). 61 Among the various strategies to delay marriage and childbearing, providing incentives to keep girls in school tends to be the most proven intervention. Although interventions to educate girls and delay marriage and childbearing need to be country- specific, lessons can be learned from the international experience. Many countries have passed laws to prevent marriage before the age of 18, but this is typically not enough. Targeted interventions are also needed to yield benefits. These interventions may include (1) programs providing life skills and knowledge of reproductive health; (2) programs expanding economic opportunities; and especially (3) programs keeping girls in school or enabling them to return to school. The focus on these three types of interventions stems from a body of evidence showing that they can have positive impacts. The three types of programs are hypothesized to potentially delay marriage and childbearing and increase educational attainment in various ways. They are based on different theories of change (see Botea et al., 2017). Summary findings are provided below based on an assessment of close to 40 interventions29. They suggest that keeping girls in school should be a priority. A first category of programs emphasizes the empowerment of girls through life skills and knowledge of reproductive health. The typical intervention is that of a “safe space club” for adolescent girls. These clubs constitute delivery platforms for convening girls with a trusted adult mentor at a specific time and place. The approach was pioneered by Building Resources Across Communities (BRAC) in South Asia and the Population Council in Africa and Latin America. The clubs have proven effective when implemented well. By combining socializing, fun, and access to mentors, the clubs are attractive for girls to attend. From there, other services are delivered. Clubs can be held in a variety of settings, including schools or community centers. Girls meet regularly and with the help of the mentors, are able to discuss a range of issues, including those related to SRH. They learn life skills, including “soft” or socio-emotional skills such as critical thinking and problem solving, communication and negotiation (for example within their household). One of the objectives is often to boost girls’ self-awareness and self-esteem so that they can explore and fulfill their own aspirations. In many cases, safe space clubs are also used to impart “hard” skills such as literacy and numeracy or basic business skills. These programs have helped improve SRH knowledge and behaviors. This includes an increase in girls undergoing HIV testing or counseling, an increase in the use of modern contraception or other family planning methods, a reduction in the desire for practicing female genital mutilation for daughters in countries where the practice is prevalent, a reduction in the risk of intimate partner violence when the program also reaches out to men, an increase in self-esteem, and gains in specific skills taught during safe space sessions, for example 29 Botea et al. (2017). To be included in the review, interventions had to fulfill the following selection criteria: (1) targeting girls aged 10–19 either exclusively or as part of a broader target group; (2) providing life skills and knowledge of sexual and reproductive health (SRH), economic opportunities, or educational opportunities; (3) demonstrating results in terms of improving the health of young women, especially as regards SRH, or delaying marriage or childbearing; and (4) having been tested in a developing country, usually in sub-Saharan Africa, but also in other low-income settings such as Bangladesh or parts of India. 62 in the areas of financial literacy or basic literacy and numeracy. At the same time, without additional interventions related to schooling or employment and livelihoods, it is not clear that safe spaces are sufficient to delay marriage and childbearing (this may not have been a primary goal of these projects). Therefore, it is important to consider programs whereby safe spaces have been combined with livelihood opportunities and incentives to remain in school, usually with larger impacts on the age at marriage and childbearing. A second category of programs combines an emphasis on empowering girls, often through safe spaces, with an additional focus on providing livelihood opportunities. These programs are appropriate for girls who are not in school. For these girls, building skills for income-generation may provide an alternative to early marriage and childbearing. Two groups of interventions are distinguished: livelihood interventions, and financial literacy and access to financial services. Impacts on the age at marriage and early childbearing tend to be larger than with life skills or SRH knowledge alone, but not in all cases. Given their focus on economic opportunities, these programs often have had some success in increasing earnings, employment, and savings. Several of the programs also succeed in increasing the use of modern contraceptives and enhancing SRH knowledge, which may help delay childbearing. In some cases, the programs also succeed in delaying the age at marriage and reducing teen pregnancies. For example, the BRAC Uganda Empowerment and Livelihoods for Adolescent Girls program increased the likelihood of girls engaging in income-generating activities by 32 percent, increased self-reported routine condom use by those sexually active by 50 percent, reduced fertility rates by 26 percent, and reduced the reporting of unwanted sex by 76 percent. There were also reductions in teenage pregnancies and child marriage as well as a shift in gender dynamics in the community30. Adding a livelihood dimension to life skills and SRH knowledge programs may help delay marriage and childbearing, but not in all cases. The focus on economic opportunities may also help in ensuring regular participation by girls in the programs. A third set of programs focuses on keeping girls in school, enabling them to return if they dropped out, or directly delaying marriage. These interventions tend to be the most successful. The literature suggests that multiple intervention options are available to keep girls in school and delay marriage31. In a few cases, evaluations also show that programs providing incentives for schooling quite often succeed in keeping girls in school and sometimes in delaying marriage and childbearing. Some of these programs enable girls who dropped out of school to go back. Cash transfers (conditional or unconditional) to incentivize girls’ education, promote health, and support families during shocks may be 30 Bandiera et al. (2020). 31 Kalamar et al. (2016). 63 effective in incentivizing performance. These are often related to child school attendance or preventive medicine visits. A significant body of research shows that CCTs are effective in improving school outcomes among children in developing countries, and such initiatives have now been introduced in more than 29 low-income countries worldwide. CCT and income support programs also have positive outcomes, such as reduced child labor, increased schooling, and improved childhood nutrition32. Although not all programs succeed in all areas, the evidence is broadly convincing that in comparison to the other two types of programs reviewed above, those focusing on schooling for girls or in some cases on delaying marriage through financial incentives may be more successful in delaying marriage and childbearing. These three types of interventions are not meant to be exhaustive, nor are they mutually exclusive. For example, to improve educational attainment for girls, additional interventions are needed. The three types of interventions listed above were selected because their evaluations looked at changes in SRH knowledge, child marriage, and early childbearing. The various programs and interventions are also not mutually exclusive but may in fact complement each other. While some of the programs work better than others in delaying marriage and childbearing and improving educational attainment for girls, all three categories of programs have benefits. By targeting different groups of girls, for example those in school or with the potential to return to school as well as those who dropped out and may be unable to return, all three categories of programs should be considered to improve opportunities for adolescent girls. In addition to delaying marriage and childbearing, improving girls’ education provides a range of other benefits, including higher earnings in adulthood. Yet challenges remain massive. Table 8 shows trends in educational. Three measures are considered: the shares of girls of various ages completing primary, lower secondary, or upper secondary education with age groups are defined to allow girls a few years beyond the normal completion age (to account for late entries and repetition). Thanks in part to the Education for All and other initiatives, there has been progress especially at the primary and lower secondary levels. In Guinea-Bissau, while less than 15 percent of women aged 41–49 completed their primary education, half of girls aged 15–18 and 19- 21 do so according to the MICS. For other counties, gains have also been large. However, completion rates remain low. For secondary education, gains have also been achieved, but completion rates are even lower, at just over one in four girls for lower secondary and less than one in seven girls for upper secondary. While survey estimates differ from 32 Bastagli et al. (2018). 64 government estimates reported to the UNESCO Institute of Statistics (UIS), the lower secondary completion rate from the MICS at 27.7 percent for girls ages 18-20 in 2018-19 is close to the UIS estimate at 28.5% in 2020. As shown in Figure 3, there are growing differences in completion rates between boys and girls at higher education levels. The differences at the primary level are small, but larger at the lower and upper secondary levels. As for child marriage and early childbearing, there are differences between regions. Table 8: Trends in Educational Attainment for Girls – Completion rates by Education level (%) Primary Lower secondary Upper secondary 15- 19- 23- 31- 41- 18- 21- 25- 31- 41- 21- 25- 31- 41- 18 22 30 40 49 20 22 30 40 49 24 30 40 49 Benin 46.6 41.2 26.3 12.7 9.9 24.2 25.2 14.2 7.8 4.3 10.3 5.5 3.6 1.5 Burkina 28.6 20.1 14.7 9.7 6.5 11.1 12.5 7.4 5.7 4.0 2.3 2.0 1.5 1.3 Cote d’Ivoire 51.0 40.7 34.7 28.1 26.3 20.8 28.5 17.9 13.4 9.5 13.8 10.8 6.9 4.3 Guinea-Bissau 49.3 50.1 39.4 26.3 14.3 27.7 29.2 24.2 16.8 7.9 13.3 12.8 7.5 3.0 Nigeria 71.3 66.3 63.9 63.0 59.3 54.9 59.2 48.2 45.5 36.2 50.2 42.2 39.6 31.0 Senegal 51.4 56.0 33.7 17.2 16.7 35.8 41.3 22.6 12.0 11.4 25.8 15.8 7.6 5.2 Togo 62.2 59.0 44.5 28.5 24.5 29.3 36.3 20.0 12.8 9.8 10.3 5.6 3.1 2.0 Source: Authors´estimation using DHS and MICS data. Figure 15: Completion Rates by Gender in Guinea-Bissau (%) 60,0 49,3 51,1 48,6 4 0,0 29,2 23,6 20,0 13,3 0,0 Primary (ages 15-18) Lower secondary (ages 21-24) Upper secondary (ages 25-30) Girls Boys Source: Authors´estimation using DHS and MICS data. While some constraints to stay in school are common to boys and girls, girls face difficult odds due to entrenched patters of gender inequality. As mentioned earlier, girls may face social pressures to marry early and are at risk of an early pregnancy, both of which lead girls to drop out of school. Girls also have more responsibilities at home than 65 boys for cooking or taking care of siblings, reducing time for study. Simply going to school may not be safe for girls. A framework is useful to help identify the reasons leading girls (and boys) to never enroll in school or drop out prematurely. Five steps that are required for girls to go to school and learn while in school: (1) schools must have the capacity to welcome girls and be accessible; (2) going to school must be safe for girls; (3) schools must be affordable considering the out-of-pocket, opportunity, and potential social costs of sending girls to school; (4) girls must be able to learn while in school – this refers not only to traditional academic subjects but to socio-emotional and life skills, and in addition parental preferences for what children should learn in school must also be taken into account; and (5) pregnant and married girls should be allowed to remain in school, and second chance programs should be available for girls whose circumstances do not allow them to be in school. Issues related to social norms as to when an education is considered completed play a larger role in leading girls (and boys) to drop out of school early. Using data from the 2018-19 EHCVM survey, Table 9 categorizes reasons mentioned by parents as to why their children never enrolled in school or dropped out of school. For children who never enrolled in school, the analysis is carried among children aged 7 to 12 since after age 12, it is highly unlikely that the children will go to school. The survey includes 14 potential responses by parents on reasons for never enrolling that are grouped according to five categories in Table 9, following the framework in Figure 7. When children who started primary school drop out of school at that level or later, the survey includes 17 potential responses by parents as to why. These modalities are again grouped according to same five broad categories. A few findings stand out: • Never enrolling in primary school: Lack of accessibility of schools is a key reason why some children never enroll since it accounts for more than a third of such instances. The issue of some children being sick or handicapped plays a smaller role. Cost also looms large, accounting for more than a fourth of the children never enrolling in school. Social norms account for most of the other children never enrolling and play a much larger role for girls than for boys. It is also important to note that the share of children aged 7-12 who never enrolled in schools is high, at one in five. Late enrollment in primary schools contribute to a higher likelihood to drop out in adolescence. • Dropping out of school: Lack of accessibility of schools matters less for dropping out when enrolled, which is not too surprising given that the question on the reason to drop out is asked here to children who already went to school. Social norms seem to matter a lot at all levels, especially for girls. This is reflected in parents considering that their children completed their education (suggesting low expectations), and for girls by the fact that some families are not willing for them to continue their education. The desire to 66 marry or a pregnancy as factors leading girls to leaving school is also observed, starting with girls in primary schools. Cost is also a factor, although more for boys than girls. At the secondary level, for boys and girls alike, the main reason to drop out is the perception that children are considered to have completed their studies. This reason is mentioned more in Guinea-Bissau than in other WAEMU countries that implemented the survey, suggesting particularly low expectations, or perhaps a perception that further studies may not be worth pursuing. The fact that many children start school later than in other countries may also be a factor. All this translates into likely high levels of “learning poverty” – the inability to read and understand a simple text even among the children that have gone to primary school. Table 9: Reasons for Never Enrolling or Dropping Out of School by Education Level (%) Dropping out Never Lower Upper Primary Enrolling Secondary Secondary Reasons mentioned Boys Girls Boys Girls Boys Girls Boys Girls Schools not accessible 39.0 34.6 5.3 4.9 2.2 3.7 0.5 0.9 Opportunity cost 31.3 25.9 36.6 17.4 28.8 23.4 13.0 16.3 Social norms 16.4 28.5 42.1 60.1 62.5 66.3 86.1 82.9 Lack of learning 3.9 2.4 13.2 12.8 3.4 2.7 0.4 0.0 Others 9.4 8.5 2.9 4.9 3.1 4.0 0.0 0.0 All 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: Authors’ estimates from EHCVM 2018-19. The performance of the education system in terms of learning outcomes is also low, which may affect parental willingness to invest in the education of girls (and boys). As noted in the 2021 World Bank Economic Update33, assessments of learning outcomes in grades 2 and 5 suggest that performance in both Portuguese and Mathematics is low across the board. Less than half of grade 2 students were able to answer questions correctly and scored on average only 48 percent and 50 percent in in Portuguese and mathematics respectively. By grade 5, students’ scores decreased even further – only one-third were able to answer questions correctly and scored in Portuguese and mathematics 39 percent and 31 percent on average, respectively. The poor performance of students is related in part to the low quality of the teaching force. Many teachers do not have the requisite 33 World Bank (2021a). 67 of the main reasons for lack of satisfaction based on questions in the EHCVM survey suggests that those reasons are very similar for boys and girls, which is not surprising, since what affects the quality of schooling is similar for both. Teacher absenteeism and strikes are mentioned the most, followed by a range of reasons related to the lack of resources in schools (overcrowded classrooms, lack of books/supplies, lack of teachers, lack of tables/ benches/equipment, etc.) Poor quality of teaching is mentioned less, but this does not imply that it is not an issue, as parents may not know about the fact that many teachers may be poorly trained or the possibility of adopting better approaches to teaching. The literature however suggests that there are options to improve educational outcomes. In a recent blueprint for low and middle-income countries34, priorities for programs and policies are categorized in five pillars: (1) Learners are prepared and motivated to learn; (2) Teachers are effective and valued; (3) Learning resources, including curricula, are diverse and of high quality; (4) Schools are safe and inclusive spaces; and (5) Education systems are well-managed. In terms of cost-effective interventions, a review of the evidence35 suggests that the most cost-effective interventions include providing families with information on the returns/benefits from education returns and its quality. This can help encourage parents to send children to school. Good investments (highly cost-effective interventions) include structured pedagogy combined with teacher training and learning materials, programs to teach children at the right skill level, and pre-primary education. Promising interventions include providing early stimulation to young children and involving communities in school management. But interventions that are not effective are investments in various inputs including computer hardware without additional changes (like teacher training or better school management) to use those inputs effectively. Policy options were highlighted in the 2021 World Bank Economic Update. The 2021 Economic update for Guinea-Bissau suggested short term (ST) and medium term (MT) options to improve educational outcomes for both boys and girls. Educational outcomes are poor for boys and girls alike in Guinea-Bissau, and many of the constraints faced by girls to go to school and learn while in school are not fundamentally different from the constraints faced by boys. Poor learning in school, lack of schools nearby, and the out- of-pocket as well as opportunity costs of schooling lead girls to drop out of school, but this also applies to boys. Therefore, many interventions to improve educational outcomes for girls may apply as well to boys. The World Bank 2021 Economic Update report noted 34 World Bank (2020a). 35 World Bank (2020b). 68 that the management of the education sector at all levels, from the central ministry to individual schools, is negatively impacted by low public spending, weak capacity, and poor governance. Teacher strikes and an inadequate supply of trained teachers are also major issues. The COVID-19 crisis has further exacerbated the challenges faced by the sector, creating a huge loss of learning time,with potential repercussions for families and children in years to come. In addition, while the Government adopted an ambitious Education Strategic Plan for 2017-2025, implementation has been delayed in part due to teacher strikes resulting from arrears in the payment of salaries36, the pandemic, and political instability. Financing of the strategy is also an issue, with Guinea-Bissau having one of the lowest levels of public for education as a share of GDP in Sub-Saharan Africa. Table 10 provides a summary of the recommendations made. Table 10: Policy Options for the Education Sector Highlighted in the 2021 Economic Update Policy Options Timeline Theme 1: Transform the quality of education to improve learning outcomes Provide high-quality in-service training to improve teachers ST content knowledge/ pedagogy Finalize curriculum reform and include scripted teaching lessons to ST improve learning outcomes Theme 2: Improve the management and efficient use of available resources Implement the Teacher Career Law including performance reviews and ST, MT a consolidated database on teachers to improve teacher management (i.e., recruitment, payment of salaries on-time, etc.) Incorporate technology/rapid surveys to produce timely and reliable ST, MT education statistics for planning Theme 3: Adopt policies that address internal inefficiency and optimize educational outcomes Expand early childhood development programs to increase children’s MT readiness for primary school Develop distance learning for remedial education, out- of-school ST, MT students, and school closings Source: Authors’ estimates from EHCVM 2018-19. 36 As noted in the 2021 Economic update, due to strong coordinated efforts by the MEF and MENES, the amount of payment in arrears for teacher salaries has decreased, with the frequency of teacher strikes also deceasing in 2019/20. Other measures, such as more investment in teacher training and improving access to learning materials, have the potential to transform the quality of education. Continued improvements in the management of human resources and implementation of the recently adopted Teacher Career Law should reduce the number of teachers strikes and enhance teaching. Incorporating the use of technology at the ministry would increase the likelihood of timely and reliable data to improve planning and decision-making for the efficient use of limited resources. 69 knowledge and pedagogical skills needed to teach effectively. Parental responses as to BOX why they may not be satisfied with schools give insights in some of the issues. An analysis of the main reasons for lack of satisfaction based on questions in the EHCVM survey 05 suggests that those reasons are very similar for boys and girls, which is not surprising, since what affects the quality of schooling is similar for both. Teacher absenteeism and strikes are mentioned the most, followed by a range of reasons related to the lack of resources in schools (overcrowded classrooms, lack of books/supplies, lack of teachers, lack of tables/benches/equipment, etc.) Poor quality of teaching is mentioned less, but this does not imply that it is not an issue, as parents may not know about the fact that many teachers may be poorly trained or the possibility of adopting better approaches to Factors Leading to teaching. Teachers Not Spending Enough Time Teaching UNICEF recently completed a study entitled time to teach to assess whether teachers were absent from schools and how much time they were allocating to teaching. Just over one in four teachers reported that they were absent from school regularly, or at least once a week. Teachers also reported lack of time spent on task (i.e., teaching), absence from the classroom and late arrival or early departure from school. Absences were more likely in rural than urban areas. Teacher strikes were among the top reasons for absences from school, late arrival/early departure and absences from the classroom, with strikes motivated by late payment of salaries, but also affected by school leadership practices. In terms of recommendations, the study suggested five priority areas: (1) improving employment conditions in the public sector, especially by reducing delayed salary payment; (2) engaging communities, by empowering school management committees (self-managed schools have lower teacher absenteeism); (3) improving teacher training (teachers who believe they have the knowledge and skills to teach are less absent); (4) strengthening school leadership (given that head teachers can serve as role models); and (5) ensuring learning continuity (especially when schools are closed, as has been the case during the pandemic). 70 BOX Source: World Bank (2021). Note: ST = short term, MT = medium term 06 Improving learning in Guinea-Bissau: results from a randomized control trial A recent experiment suggests that large learning gains can be achieved with appropriate interventions. The study evaluated an intervention that created simple schools offering four years of education to primary-school aged children in lieu of attending public schools. The intervention uses a bespoke curriculum which includes teacher training materials and teaching and learning materials for both teachers and students. It also employed frequent monitoring and assessment of teachers and children and regular community outreach and involvement. The analysis suggests that children receiving the intervention scored 58.1 percentage points better than controls on early grade reading and math tests, demonstrating that the intervention taught children to read and perform basic arithmetic, from a counterfactual condition of very high illiteracy. The results provide evidence that children in poor areas may benefit from concerted, impactful interventions in education other than those usually considered. 71 A recent small-scale survey suggests that 97 percent of women had experienced gender-based violence in the last eight years, the majority of which (86 percent) in their homes. PHOTO CREDIT: ELENA TOURIÑO LORENZO Women are underrepresented in public bodies and suffer from cultural and religious norms that tend to perpetuate harmful and traditional practices in violation of women and girls’ human rights. The National Policy on Gender and Equality (PNIEG) finds that men hold two thirds of government positions. In ministries affecting women’s economic empowerment, such as Agriculture and Education, women hold even fewer positions. The share of women in ministerial positions and in Parliament is low as well. Unequal decision-making capacity hampers women’s ability to shape the country’s socioeconomic development and makes it more difficult to prevent harmful and traditional practices resulting from cultural and religious norms. Girls are still subject to female genital mutilation (FGM), particularly in rural areas. A large share of women live in polygamous households, which may reduce their agency. A Study on Customary Law37 indicates that the six main ethnic groups in the population accept and practice polygamy, which is often considered to increase the risk of intimate partner violence38. In addition, the coexistence of formal and traditional justice systems creates differentiated degrees of protection to women’s and children’s rights, with customary laws generally not protective of women and children’s rights.39 In some ethnic groups, customary laws do not allow women to inherit property, which is rather passed on to a male heir. Similarly, some groups practice widow inheritance, forcing the widowed women to marry a male relative of the deceased husband. While formal law dictates that customary rules should not be applicable in violation of constitutional and civil protections, in practice the formal and traditional justice systems coexist in parallel, with most conflicts being resolved by informal and traditional institutions at the local level, including the heads of district, the village and/or tribal chiefs and, more recently, the Access to Justice Centers (CAJ). Especially in rural areas, traditional systems of customary law and practices still are applied in a majority of cases, with few protections for women. Gender-based violence, in particular domestic violence, is pervasive and persistent. National estimates of gender-based violence are not available as Guinea-Bissau is one of the few countries globally that has not conducted a prevalence survey on intimate partner violence and sexual violence, either as part of a demographic and health survey (DHS) or as a standalone violence against women survey. Nevertheless, a recent small-scale survey suggests that 97 percent of women had experienced gender-based violence in the last eight years, the majority of which (86 percent) in their homes40. In that survey, two out of 37 Bastos et al. (2011). 38 Klugman et al. (2014). 39 UN CEDAW (2017). 40 See RENLUV-GC/GB (2019). The study surveyed 120 individuals from all regions of the country to assess the situation and provide a typology of violence against women. The study also includes a comparative analysis with a previous similar survey conducted in 2010, as well as qualitative data on the perception of violence among different social groups. According to the study, a total of 24.285 cases of violence were reported to different institutions between 2010-2018, namely: Psychological violence 73 three of women having experienced violence never made a complaint, whether formally or informally (including to traditional authorities, religious leaders or the police). Barriers to reporting or seeking care, especially from formal sources are multifold, including shame and stigma, financial barriers, perceived impunity for perpetrators, lack of awareness of available services or access to such services, cultural beliefs, threat of losing children, fear of getting the offender in trouble, fear of retaliation, discriminatory and stereotypical attitudes toward victims in courts and law enforcement settings, and distrust of health care workers. On one hand, prevailing gender norms uphold male entitlement to use violence to discipline women or children who have disobeyed or behaved outside of their socially expected role, or to force them to comply with their will. On the other hand, there is strong social stigma and shame around violence and sex, particularly concerning intimate partner violence and sexual violence, discouraging women and children from disclosing experiencing violence. Violence against children is also widespread, at home and in schools, with Sexual harassment affecting mostly girls. Four in five children aged 1-14 years having been subjected to psychological aggression or physical punishment, much of which is considered disciplinary action. Abusive disciplining is a prevalent cultural practice and persistent form of violence against children. This includes two thirds of children subjected to at least one form of psychological aggression and an even larger share subjected to (sometimes severe) physical punishment.41 Of all forms of violence against children, sexual violence, especially in a domestic environment and against girls, is likely the most underreported42. Sexual harassment and abuse in schools, as a form of transactional sex, is also pervasive and affects mainly girls. While no comprehensive data exists, sexual abuse in schools is reported by NGOs and international partners as highly pervasive, with male teachers and non-teaching staff requesting sexual favors in exchange of grades or required documentation. Such forms of transactional sex often occur in a context of constrained choices and extremely limited negotiating power of women and adolescent girls43. In Guinea-Bissau, according to stakeholders, girls in this situation do not know where to report the abuse and fear possible consequences of doing so. Among teachers, the lack of pedagogical skills, knowledge on child development and child-centered response, combined with no system in place for disciplinary action and violence referrals, (7593 cases); Physical violence (7115 cases); Sexual violence (2665 cases); Forced marriage (1366 cases); Social violence (1311 cases); Economic violence (1217 cases); Female genital mutilation (764 cases). While the survey covered the entire country, the majority (80%) of cases reported were in the autonomous region of Bissau (the capital), which is largely attributed to the lack of GBV services and institutions in other regions, where complaints rarely reach any formal reporting mechanisms. 41 Data from MICS surveys. 42 Challenges faced by children faced with sexual abuse include lack of support by family to report the case to authorities, lack of cooperation by health personnel to take appropriate measures and report the case to the police, insufficient medical care, lack of psychosocial support and insufficient protection measures and structures (such as shelters) which would allow for a separation from the abuser. 43 Luke and Kurtz 2002. 74 create unsafe environments where sexual harassment is prevalent. In addition, education around gender norms and on sexual and reproductive health are rare or non-existent, which contributes to a culture of silence and taboo around these issues. Despite domestic violence legislation, several factors, including limited enforcement capacity, lack of state structures, and unawareness of the law, prevent protection and response.44 In particular, limited law enforcement services, no GBV referral mechanisms and protocols, and little to no first-line support services for GBV survivors in all relevant fields – including health, legal, and psychosocial – are among key barriers for enhanced protection. The situation is particularly concerning in rural areas. Moreover, there are insufficient resources, equipment, and adequate infrastructure. In addition, a strong reliance on religious and traditional justice, combined with unawareness of laws prevents women and girls from accessing their rights. Incidents of gender discrimination and gender-based violence are most often resolved by leaders of “community justice” system, based on religious and traditional norms. This traditional justice system is especially prevalent in the regions, where state presence and formal justice structures are almost inexistent.45 44 PNIEG-I, p. 46 45 Guerreiro et al. (2011). 75 BOX 07 Risk factors for gender-based violence in Guinea-Bissau Risk factors include high levels of violence against children starting at a young age, low levels of education and income, exposure to and high prevalence of violence in the home, as well as prevalent beliefs and attitudes condoning violence and gender inequality. Guinea-Bissau is a patriarchal society which has historically been indifferent to women’s rights and needs. Family dynamics are male-dominated, and still formally legitimized by the Civil Code. Polygamy is generally accepted and prevalent, and child and forced marriage is still a prevalent cultural practice. Social norms prioritize family honor and the perception that violence is and should be addressed as a ‘family’ matter. In addition to the fear and shame survivors feel after experiencing violence, they are often blamed for it, and discouraged from reporting. Communities, especially in rural areas still generally accept and engage in harmful practices which have been prohibited and/or criminalized by laws, such as FGM, early and forced marriage and domestic violence. This is rooted in deep traditional and religious beliefs and practices, and often times fear of supernatural punishment is invoked to perpetuate the behaviors. Inexistence of school policies and adequate training including for teachers to prevent and respond to GBV contribute to the perpetuation of violence and lack of redress. Societal risk factors include weak legal structures and law enforcement, limited awareness of laws and rights, high levels of impunity and limited existence of specialized services for addressing GBV. 76 Female genital mutilation (FGM) is also highly prevalent. Data on the prevalence of FGM among women of different ages from the EHCVM survey suggest very limited progress over time in reducing the practice. Indeed, in the last MICS, the share of girls ages 15-18 who have been circumcised (46.8 percent) is only marginally lower than the corresponding share for older women. There are important differences in the prevalence of FGM between urban and rural areas, and between regions. But the largest differences are by education level, with women with higher educational attainment much less likely to be victims of FGM than women with lower educational attainment. The role of education in reducing FGM has been shown to be important in other countries as well46. Cultural and religious norms perpetuate harmful practices, which are often viewed as a means to preserve honorability of women, in violation of women and girls’ human rights. According to data from the latest MICS, a significant percentage of men and women consider domestic violence acceptable (37 percent of men and 36.4 percent of women). Many women are in polygamous relationships (39.2 percent of women, according to the latest MICS survey, but given the high acceptance of the practice in all ethnic groups, real prevalence is likely much greater47). In addition, many girls as young as 3 or 4 years old are married off by families through pre-matrimonial contracts48, driven primarily by customary practices and social norms, as well as by economic needs. The practice is seen protecting girls including from the risk of out-of-marriage pregnancy, which would decrease her chances to get married. FGM is likewise deeply rooted in societal norms, including the “fanado”, an initiation ritual that prepares boys and girls for adult life and to perpetuate community tradition, which involves circumcision of boys and female genital mutilation of girls. Significant barriers to the eradication of FGM remain, including community resistance. Nonetheless, the adoption of a law against the practice in 2011 has raised greater awareness on the issue and several communities have publicly abandoned the practice. Civil Society Organizations play a key role for community awareness raising activities and providing the very limited services available to GBV survivors. Short term projects were funded by the UN-System to address forms of GBV such as sexual harassment in schools (RENALJEF), and a multi-year project funded by the European Union “No na cuida de no vida, mindjer” (2018-2021) involved several NGOs such as Mani Tese, Fundação Fé e 46 Onagoruwa and Wodon (2018b). 47 A Study on Customary Law indicates that the 6 main ethnic groups which make up the majority of the population in Guinea- Bissau (Balanta, Mandinga, Manjaca, Papel, Mancanha and Fulani), accept and practice polygamy, which is considered to increase the risk of intimate partner violence. (Bastos 2011). 48 As per Plan, 2018, in the region of Gabu and rural areas of Bafatá and Cacheu, the decision-making power on whether or not a girl get married resides mostly with the parents, aunts and uncles. The most influential person is the father. When parents marry their daughter(s) early, their decision is often influenced by the early onset of girls’ sexual activity which starts between 11 to 14 years. Girls seldom have the necessary agency to refuse a marriage proposal which had been found suitable by their parents. 77 Cooperacão (FEC), Caritas and Ente Nazionale Giuseppini del Murialdo (ENGIM) working on several fronts, including by raising awareness in the population, promoting autonomy for women, enhancing referral systems, and assisting victims of GBV. During the pandemic, an online platform “Bioksan” was created as a joint project of the Ana Pereira Foundation and RENLUV, assisted by the UN-System and the World Bank, aimed at protecting gender equality during the COVID-19 pandemic. Since March 2020, Bioksan reached out to close to 90,000 people, including 47,000 women and girls informing them about COVID-19 and GBV in Guinea-Bissau, the risks of increased sexual abuses and other human rights violations of women and girls due to the pandemic, and provided training for police as well as other justice, health and education professionals on GBV. The platform received and referred more than a hundred cases of GBV, including domestic violence and forced marriage. Enhancing efforts to address gender-based violence in Guinea-Bissau involves a range of areas. Improving awareness and data collection on GBV is a key first step to tackle the issue. Addressing additional barriers to reporting and seeking care is necessary, including expanding access to information and services for survivors, putting in place mechanisms to improve the effectiveness of the judicial system in dealing with cases and enforcing legislation, and ensuring that funding is in place to enable adequate infrastructure and human resources for prevention, protection and response. In particular, establishment of GBV referral pathways and protocols and the building of capacity are needed to reduce the reliance on informal support mechanisms. Education around gender norms and GBV, particularly in schools, would contribute to addressing violence against women and girls. 3. Conclusions and Recommendations The impacts of gender inequality on a wide range of development outcomes are large and the economic case for investing in girls and women is strong. Losses in human capital wealth in Guinea-Bissau due to gender inequality in earnings could reach up to US$5.6 billion based on data for 2018. This could be an over-estimation, but there should be no doubt that the economic cost of gender inequality is very large. In addition, accounting for high population growth, which is in part due to gender inequality, estimates suggests that in per capita terms, Guinea-Bissau’s natural and produced wealth has decreased substantially over the last two and a half decades. Given that a country’s wealth is comprised of the assets that enable it to produce future income (gross national income), the trends are concerning. 78 Gender inequality also has large impacts in other areas, including fertility and population growth, under-five stunting, and women’s decision-making ability within the household. In many of those areas, associated costs are likely to be high as well. This is for example the case for the impact on fertility and population growth which affects standards of living (GDP per capita as well as wealth per capita). High rates of annual population growth are due in part to high rates of fertility, themselves driven in part by gender inequality, including a high prevalence of child marriage and early childbearing as well as low levels of educational attainment for girls and women. Child marriage and early childbearing contribute to lower educational attainment for girls, and conversely keeping girls in school is one of the best strategies to end child marriage and reduce early childbearing. While multiple policies are needed to reduce gender inequality, investing in adolescent girls is especially important given life-long benefits. Further barriers to gender equality constraining women’s economic participation limit the country’s ability to reach its full socio-economic development potential. The unique challenges women face in accessing the labor market and assets, as well as decision-making opportunities outside the household have large implications not only for their economic well-being, but that of their families and their communities. While discrimination and social norms continue to shape the terms of female labor force participation, their entrepreneurship and financial opportunities, as well as their voice and agency, the entire country will continue to bear the economic costs of gender inequality. A wide range of policies could be advocated to reduce gender disparities and improve women’s economic empowerment; in this section the focus has centered on three key pathways towards greater equality: (i) improving laws and the regulatory framework; (ii) educating girls and ending child marriage and early childbearing; and (iii) ending gender- based violence. The main recommendations that emerge from the analysis are: (i) legal barriers must be removed to improve women’s economic opportunities; (ii) opportunities for young girls must be increased to educate girls and reduce child marriage and early pregnancies; and (iii) women’s voice and agency must be strengthened, particularly by addressing harmful gender norms and gender-based violence. Policy options for reducing gender inequality are provided in Table 11. Although these options are not exhaustive of the programs and policies that could be implemented to reduce gender inequality, they would contribute to progress in this area. PHOTO CREDIT: ELENA TOURIÑO LORENZO Table 11: Policy Options to Reduce Gender Inequality in Guinea-Bissau Objetive Recommendations Improving laws and the regulatory framework for women’s economic autonomy, employment and income opportunities Support gender In the family: (i) Allow women to be heads of households and choose equality in the where to live on the same basis as men; (ii) Allow women to work in family, the labor the same sectors and jobs as men and independently decide about market, and working outside the home; (iii) Grant women equal property financial markets ownership and administrative rights within marriage and address social discrimination. In the labor market: (i) Adopt legislation on equal pay for work of equal value; (ii) Ensure protection against sexual harassment in employment; (iii) Expand maternity leave benefits, introduce paid paternity and parental leaves and prohibit the dismissal of pregnant women; and (iv) Improve laws affecting women's pension, including equalizing regulations on retirement and accounting for childcare periods in benefits. In the financial market: (i) Prohibit gender-based discrimination in access to credit; and (ii) Allow women to open bank accounts and register a business on the same basis as men. Establish an appropriate institutional framework in favor of gender Strengthen equality, including strengthening mechanisms for coordination and implementation support toward integrating gender in laws, policies and programs; and enforcement of and ensure adequate budgetary resources for improving state women’s rights structures and institutional capacity for implementing legislation. P highe girls b (i) xpanding e-primar girls be (ii) ensuring girls ( b ) rig ge, which w including (iii) ting g girls which w g childbearing 81 adequ budg ving ting legisl Improving opportunities for adolescent girls Improve girls’ Promote higher educational attainment for girls by (i) expanding education and end pre-primary education for girls to be ready for primary school; (ii) child marriage and ensuring that girls (and boys) start primary school at the right age, early childbearing which would help reduce dropouts including at the primary level; and (iii) implementing pilot targeted interventions for adolescent girls to transition to secondary school and remain in school which would help reduce child marriage and early childbearing Improve learning in school among others through (i) high-quality in-service training; (ii) curriculum reform; and (iii) piloting scripted teaching lessons for better teaching. Raise the minimum age of sexual consent, end legal exemptions that allow child marriage and ensure protections against sexual harassment in schools. Develop customized programs for adolescent girls, including life skills and knowledge of sexual and reproductive health. Ensure the management of the education sector and time on task for teachers through (i) implementation of the Teacher Career Law and payment of salaries on-time; and (ii) technology/rapid surveys to produce timely and reliable statistics. Strengthening women’s voice and agency and addressing gender-based violence Strengthen Strengthen the institutional framework and mechanisms for gender women’s equality throughout the social sectors and promote initiatives to empowerment in strengthen women's participation in decision-making and leadership society and positions in public administration. promote equality in (i) Facilitate women's access to justice, including for victims of access to rights and domestic violence, through gender-sensitive training for judicial and justice police personnel and know-your-rights awareness campaigns; and (ii) Strengthening GBV protection and support, including through creating and reinforcing specialized services and by establishing GBV referral pathways, as well as expanding Access to Justice Centers. Promote awareness (i) Develop and implement advocacy campaigns targeting political and build capacity leaders (at communal, regional and national level), decision makers, to end harmful and religious leaders; (ii) Strengthen partnerships with civil society; norms and and (iii) Invest in research and data collection on gender inequalities discrimination with public availability of the results of this work. 82 PHOTO CREDIT: ELENA TOURIÑO LORENZO 83 References Bandiera, O., N. Buehren, R. Burgess, M. Goldstein, S. Gulesci, I. Rasul, and M.Sulaiman. (2020). Empowering Adolescent Girls: Evidence from a Randomized Control Trial in Africa, American Economic Journal: Applied Economics, 12(1): 210-59. Bastagli, F., J. Hagen-Zanker, L. Harman, V. Barca, G. Stuege, and T. Schmidt (2018). The Impact of Cash Transfers: A Review of the Evidence from Low- and Middle-income Countries, Journal of Social Policy, 48(3): 569-94. Bardasi E., Wodon, Q. (2010) Working Long Hours and Having No Choice: Time Poverty in Guinea, Feminist Economics Bastos, F. L., et al. (2011). Direito Consuetudinário vigente na República da Guiné-Bissau. Balantas, fulas, mancanhas, manjacos, mandingas, papeis (Relatório final de projeto). Bissau: PNUD, Programa de Apoio aos Órgãos de Soberania e ao Estado de Direito (PAOSED), Faculdade de Direito de Bissau. Black, M. M., S. P. Walker, L. C. H. Fernald, C. T. Andersen, A. M. DiGirolamo, C. Lu, D. C. McCoy, G. Fink, Y. R. Shawar, J. Shiffman, A. E. Devercelli, Q. T. Wodon, E. Vargas-Baron, and S. Grantham-McGregor. (2017). Early Childhood Development Coming of Age: Science through the Life Course, The Lancet, 389 (10064): 77-90. Botea, I., S. Chakravarty, and S. Haddock, and Q. Wodon. (2017). Interventions Improving Sexual and Reproductive Health Outcomes and Delaying Child Marriage and Childbearing for Adolescent Girls, Ending Child Marriage Notes Series. Washington, DC: The World Bank. CNAPN. (2018). Estratégia Nacional para o abandono da MGF/E, 2018-2022, Guiné-Bissau, Coord. Fatumata Djau Baldé Fazzio, I., A. Eble, R. L. Lumsdaine, P. Boone, B. Bouy, P. J. Hsieh, C. Jayanty, S. Johnson, and A. Filipa Silva. (2021). Large learning gains in pockets of extreme poverty: Experimental evidence from Guinea-Bissau, Journal of Public Economics 199: 104385. Field, E. and A. Ambrus. (2008). Early Marriage, Age of Menarche, and Female Schooling Attainment in Bangladesh. Journal of Political Economy 116(5): 881-930. 84 Gonzales, Christian, Sonali Jain-Chandra, Kalpana Kochhar, and Monique Newiak. (2015). Fair Play: More Equal Laws Boost Female Labor Force Participation. Washington: IMF Staff Discussion Note SDN/15/02. Guerreiro et al. (2011). Estudo sobre o Acesso à Justiça na Guiné-Bissau: Regiões de Cacheu e Oio e Sector Autónomo de Bissau. UNDP. Hyland, Marie, Simeon  Djankov, and Pinelopi  Koujianou  Goldberg. (2021). 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UNDP. (2020). Building Back Better Starts Now. COVID-19 Socio Economic Impact Analysis for Guinea-Bissau UNDP. (2021). Guinea-Bissau Gender Analysis. Wodon, Q., and B. de la Brière. (2018). Unrealized Potential: The High Cost of Gender Inequality in Earnings. Washington, DC: World Bank. Wodon, Q., C. Male, A. Nayihouba, A. Onagoruwa, A. Savadogo, A. Yedan, J. Edmeades, A. Kes, N. John, L. Murithi, M. Steinhaus, and S. Petroni. (2017). Economic Impacts of Child Marriage: Global Synthesis Report, Washington, DC: World Bank and ICRW. Wodon, Q., C. Male, and A. Onagoruwa. (2020). A Simple Approach to Measuring the Share of Early Childbirths Likely Due to Child Marriage in Developing Countries, Forum for Social Economics, 49(2): 166-79 Wodon, Q., C. Montenegro, H. Nguyen, and A. Onagoruwa. (2018). Missed Opportunities: The High Cost of Not Educating Girls. The Cost of Not Educating Girls Notes Series, Washington, DC: World Bank. World Bank. (2001). Engendering Development through Gender Equality in Rights, Resources, and Voice, Washington, DC. World Bank. (2012). World Development Report 2012: Gender Equality and Development. Washington, DC. World Bank. (2015). Global Monitoring Report 2015/16: Development Goals in an Era of Demographic Change, Washington, DC. World Bank. (2018). World Development Report 2018: Learning to Realize Education’s Promise. Washington, DC. 86 SPECIAL FOCUS: EDUCATION PHOTO CREDIT: ELENA TOURIÑO LORENZO 87 Education brings tremendous benefits to individuals and societies—benefits that are especially needed in countries characterized by Fragile and Conflict-Affected Situations (FCS). FCSs present a critical development challenge that threaten efforts to end extreme poverty in both low- and middle-income countries. By 2030, up to two- thirds of the world’s extreme poor could live in FCSs. Guinea-Bissau suffered a civil war in 1998 and four coups and seventeen attempted coups since independence and is thus considered as in an FCS. For individuals, education attainment is associated with higher productivity and earnings, lower poverty rates, better health outcomes, and higher civic engagement. For countries, education contributes to innovation and growth, better- functioning institutions, greater intergenerational social mobility, higher levels of social trust, and a lower likelihood of conflict. Evidence also demonstrates that the role of education in post-conflict reconstruction is essential. Education can accelerate progress by advancing economic development, strengthening humanitarian action, contributing to security and state-building, and mitigating the impacts of disasters. Guinea-Bissau adopted in 2017 an ambitious Education Strategic Plan for 2017- 2025 (ESP) that sets out government priorities to guide investments in the sector. The plan prioritizes (i) expanding education coverage to achieve universal basic primary education; (ii) improving the quality of education at all levels; (iii) supporting technical and vocational education and training and higher education appropriate to the needs of the country; and (iv) strengthening the governance of the sector by improving monitoring, decentralization, and financial management. Successful implementation of the ESP depends not only on increased investment, but also on political and institutional stability. The Ministry of National Education (MEN) identified five priority actions for its first triannual plan (2017–19). These include improving financial and human resource management, strengthening the Education Management Information System 88 (EMIS), and improving pedagogical supervision. However, high staff turnover, coupled with frequent teacher strikes, has severely undermined efforts to improve the education system. Implementation of the ESP has been slow due to delays in organizing planned in-service teacher training programs, school inspection and monitoring and evaluation system, weak capacity in the sector The first triannual plan was updated in 2020 and currently MEN working together with donors to develop a new triannual plan for the second phase of implementation. The management of the education sector at all levels, from the central ministry to the individual school, is affected by low capacity, poor governance, and insufficient spending. Guinea-Bissau’s education system faces persistent challenges related to constantly recurring teacher strikes, an inadequate supply of trained teachers, low public spending, and weak governance. Clear policies and regulations to govern the education sector are lacking, including those related to the recruitment, training and management of teachers and school directors. The lack of a functional EMIS also limits the availability of timely and reliable data which are needed to guide the development of sector policies and to properly monitor and evaluate the implementation of sector programs. Despite having been stated as a priority sector for nearly all successive governments since 2014, the fiscal resources allocated to education are inadequate to meet its growing demand. The education sector budget is limited and highly reliant on donor financing. Over 90 percent of the education sector budget is allocated to covering teachers’ salaries, leaving limited resources to address other needs of the sector. In addition, in the past, not all teachers have been paid on a regular basis due to a lack of fiscal resources and accumulated wage arrears, resulting in frequent teachers’ strikes and the suspension of classes Despite some progress in improving access, the country continues to face important challenges in achieving its human development goals. Key bottlenecks include (i) a continued large share of out-of-school children, mostly from poorer families and in rural areas; (ii) low learning outcomes; (iii) large numbers of youth without formal education, a direct concern for the future human capital stock of the country and individuals’ potential livelihoods; (iv) important inefficiencies in current public spending; and (v) limited access to post-basic education. The adverse impacts of the COVID-19 pandemic could have further weakened the education system. Guinea-Bissau is among more than 150 countries that closed its 89 schools to reduce the spread of COVID-19, imposing high social and economic costs for families and learners. All educational institutions (from pre-school to higher education) were closed in March 2020. Schools only reopened in July 2020 in order to close out the 2020/21 term in September 2021. The pandemic created a significant loss of learning time in Guinea-Bissau, preventing most school-age children from covering the material set out in the school curriculum. Unlike in some other countries, learning losses are likely greater in Guinea-Bissau, as the use of digital technologies or radio for distance learning has not been an option for almost all students. Additionally, school meals programs, which normally operate in around 40 percent of schools, were no longer accessible while schools were closed. The time out of school likely also increased dropouts among the most vulnerable. The chapter is organized into three sections. The first section provides an overview of the education sector in terms of its organization, national strategy, and financing. The second section discusses the impact of the COVID-19 crisis on the education sector and learning outcomes; while the third section describes the performance of the education system across different dimensions, including completion and retention rates, learning outcomes, and returns to education. Key bottlenecks that to education sector performance are discussed in the fourth section. The fifth section concludes with several priority actions and policy priorities to improve sector performance 1. Overview 1. of Overview of the the Education Education Sector Sector a) Education sector organizational structure The organizational structu re of the education sector is largely centralized and managed by the MEN. Administrative responsibilities are held by 11 Regional Education Directorates (DREs), corresponding to nine administrative regions and two educational sub-regions in charge of issues related to school management and pedagogical supervision with the support of the Sector Inspectors. The MEN is responsible for: (i) the national education policy and strategy formulation, planning, monitoring and evaluation; (ii) operations and administration; and (iii) supervision and control. However, due to prolonged periods of instability, the roles and responsibilities of each at the different levels has become less clear over time. 90 Guinea-Bissau’s formal basic education system is centered around three cycles. It includes three cycles of basic education from grades one to nine (Table 6), which are common across Lusophone Africa. The first two cycles, which are compulsory and free, constitute the full cycle of primary education in comparison to international standards. The third cycle is comparable to lower secondary school and requires students to pay a fee49. Basic education is followed by three years of secondary education, both general and technical schools, before four years of higher and tertiary education. Table 12: Cycles of education Pre-school Basic education Secondary education Tertiary education EB1 EB2 EB3 (Grade 1-4) Grades 5-6 Grades 7-9 Grades 10-12 Age 3-5 Age 6-11 Age 12-14 Age 15-17 Age 18-21 Note: Grades 1-4 (EB1) are the first cycle, Grades 5-6 (EB2) the second cycle, and Grades 7-9 (EB3) are the third cycle. Basic education is followed by three years of secondaty education, both general and technical schools, before four years of higher and tertiary education. The low quality of primary education represents one of the key challenges facing the education sector in Guinea-Bissau. Results from a relatively recent assessment of learning outcomes in grades 2 and 5 in Portuguese and mathematics demonstrate very low levels of learning achievement. Average scores for grade 2 students in both Portuguese and mathematics are low across the board, whether a student lives in an urban or a more rural area, is a boy or girl, or attends a public or a community school. Even more concerning are the scores in grade 5. The results demonstrate a significant decline in levels of learning achievement between grades 2 and 5, especially in mathematics. While grade 2 students only mastered half of the material taught, in grade 5 this drops to less than a third. Education sector strategy: goals and priorities The government has set out an ambitious sector plan to achieve universal primary education. The MEN developed an Education Sector Plan (ESP) for the period 2017–25, 49 Lower secondary (Grades 7-9) annual school fees are estimated to 11,000 CFA (about US$20). While the secondary (Grades 10-12) annual school fees are estimated to 17,000 CFA (about US$31). 91 identifying challenges the sector faces and the necessary reforms. The plan focuses on: (i) increasing access to basic education; (ii) improving the quality of education at all levels; (iii) developing training (technical, vocational, and higher education) appropriate to the needs of the country; and (iv) strengthening the governance of the sector by improving monitoring, decentralization, and financial management. However successful implementation depends on increased investment in the sector. The costing model used to calibrate the sector plan estimated at least 500 new classrooms would need to be constructed between 2018 and 2025 to achieve universal primary enrollment while keeping the pupil-teacher ratio at 50. The required additional investment to meet this goal is US$8 million, with salaries estimated to increase annually by 3 percent from 2018 to 2025.The cost per pupil was estimated to be around US$42 annually. Given recent salary increases50, these estimates are likely to be a lower bound of the investment required to achieve the educational targets. Additional resources will also be needed to alleviate the shortage of qualified teachers, and the lack of publicly provided inputs within schools that place serious constraints on the quality of the education sector. Education Sector Financing Although public education spending increased over 2010–18, the sector remains largely underfunded. According to the 2018 Public Expenditure Review (PER), education spending almost doubled in real terms between 2010 and 2015, from US$13.3 million to US$31.7 million. However, in 2017 and 2018, education spending remained at 2.2 percent of Gross Domestic Product (GDP), well below the 4-6 percent recommended by the Global Partnership for Education. More than 90 percent of current public education expenditures cover teacher and other staff salaries. The sector is heavily reliant on donor support for investments, funding nearly all non-recurring expenditures. Guinea-Bissau has the lowest spending on education as a share of GDP compared to peer countries in Sub-Saharan Africa (SSA). Education spending in Guinea-Bissau, both as a share of total government spending and as share of GDP, is the lowest within WAEMU countries and with respect to the average for SSA (Figure 15). Total education spending amounts to 2.2 percent of GDP (or 16.2 percent of total public expenditure) 50 Teacher salaries increased in the last two years because of reforms specific to the Ministry of Education and the civil service as a whole. In September 2018, all civil servants were granted a pay-rise on the basis of a new salary grid, which unambiguously raised salaries for all teachers and set out a new minimum salary of FCFA 50,000 /month (around US$90). In November 2019, the government also began to apply the new remoteness and chalk allowance set out in the revised Teacher Career Law. Amid threats of more strikes, between December 2019 and February 2020, teachers with recognized higher qualifications were granted a further salary increase. 92 whereas the WAEMU average is 4.4 percent (or 18.9 percent of total public expenditure). Government spending on education as a share of total public spending is also below the range of 17-25 percent recommended by the Global Partnership for Education. Figure 16: Comparison of Public Expenditure on Education (share of GDP and total public spending - %) Education spending as share of GDP (%) 22,7 25 21,5 21,8 17,7 18,3 18,9 17,8 20 16,2 16,5 16,8 16,8 15 10 5 2,1 3,8 3,9 4,0 4,4 4,4 4,6 4,7 4,9 5,4 6,0 0 Low income Niger WAEMU average Burkina Faso Guinea-Bissau Benin Mali Senegal Côte d'Ivoire SSA average Togo Source: Authors´ estimations based on World Development Indicators (WDI) December 2020. The distribution of resources reflects the fact that universal primary education has been prioritized but spending may be regressive. According to the 2018 Public Expenditure Review, the share of primary education in public expenditures was at 46 percent in 2013 whereas secondary and post-secondary education represented 39 percent and 14 percent, respectively. Spending by level is disproportional to the enrollment distribution, with primary education receiving less than half of public resources but accommodating about 70 percent of total enrollment in public schools. In contrast, secondary education represents one-third of students and receives 40 percent of the resources. Note, however, that one cannot make a definitive statement about whether spending is regressive or not without controlling for unit cost which is supposedly higher in post primary education. The case for primary education is also based on equity considerations as it benefits all income groups while the share of students from the lowest quintile declines as the level of education rises. With the bulk of the sector’s funding primarily going to salaries, Guinea-Bissau’s education spending is not in line with best practices. The lion’s share of recurrent expenditure is accounted for by staff salaries while non-salary recurrent expenditure accounts for less than 10 percent. The same spending pattern is reflected in primary 93 education. This low spending on non-salary recurrent expenditures also puts the country below benchmark suggested by the Global Partnership for Education. Low spending on critical educational inputs and investments raises concerns about the sector’s capacity to meet the needs of a growing student population while also achieving universal primary education. Spending on goods and services—which supports the purchase of textbooks, teacher training, curriculum development and school maintenance—is very low in Guinea-Bissau, less than 3 percent of recurrent expenditure. Spending on goods and services has declined in real terms for most of the past years. Construction of schools and classrooms is lagging behind (the average class size exceeded 100 students in 2013), further compounded by poor geographical distribution. Most critical inputs, from textbooks, school material, training and school meals to the construction of classrooms, are funded by donors and non-governmental organizations (NGOs). Relying on external funding for these inputs is not only unsustainable but renders the sector vulnerable to a cut off in aid. For example, in 2020, nearly all schools in the countries lacked any learning materials since there was a gap in donor financing and delays in finalizing an ongoing curriculum reform. If Guinea-Bissau does not change its current funding structure—that is, the education sector continues to receive only two percent of the GDP, and sixteen percent of public resources from domestic resources — and, as important, the country does not achieve improvements in its resource uses, the problem of out-of-school children and youth will only grow. 2. Impact of the COVID-19 Crisis in the Education Sector In response to the global COVID-19 pandemic, Guinea-Bissau was among more than 150 countries to have closed its schools to reduce the spread of COVID-19, imposing high social and economic costs for families and learners. All educational institutions (from pre-school to higher education) closed the third week of March 2020 and remained closed until July. However, they were allowed to reopen for three weeks to finalize end- of-year examinations. On September 29, 2020, the MEN officially declared the closure of the academic school year 2019-2020 and the opening of the new academic school year 2020-2021. When schools close, an estimated 346,700 learners are out of school unable to continue their education. Unlike the case in many SSA countries, lack of basic digital technologies means that Guinea-Bissau misses out on remote learning which would have helped mitigate the loss of learning caused by the pandemic. 94 PHOTO CREDIT: ELENA TOURIÑO LORENZO 95 The potential learning losses and economic costs from Guinea-Bissau’s frequent school closures, due to either teacher strikes or COVID-19 prevention measures, are severe. A World Bank simulation tool allows countries with learning outcome data to estimate how much learning may be lost and the economic cost of school closures. In many countries, prior to the pandemic, learning outcomes were already low. On average in WAEMU countries, children could expect to complete 7.2 years of school by age 18. However, when adjusted for the quality of learning, this becomes only 4.3 years of schooling on average. The tool estimates that if schools remain closed for only 3 months, the average years of schooling adjusted for quality drops by another 0.21. If schools remain closed for 5 months, the estimated loss is 4.3. In the worst-case scenario, children’s effective years of schooling becomes as low as 3.83. In monetary terms, this reduces an individual’s potential yearly earnings by $164. In present value terms (in 2017 PPP), for this cohort of students, the potential loss in earnings would be a staggering US$34 billion. Lack of learning outcome data makes it impossible to calculate costs just for Guinea- Bissau. However, it becomes very clear that frequent school closures in recent years, at times nearly half of the school year, come with a very high economic cost. Figure 17: Learning-Adjusted Years of Schooling Pre- and Post- COVID-19 in WAEMU countries 3,8 WAEMU average 4,0 4,3 5,1 Togo 5,4 5,6 Learning-Adjusted Years of Schooling 4,3 Senegal 4,5 4,8 2,3 Schools closed for 5 Niger 2,4 months of school year 2,6 Schools closed for 3 2,4 months of school year Mali 2,6 Baseline 2,7 3,8 Burkina Faso 4,0 4,2 5,2 Benin 5,5 5,7 3,8 Côte d'Ivoire 4,0 4,2 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 Source: Authors’ estimations based on HCI data and Simulation tool. In March 2020, a few weeks before the beginning of the state of emergency, a new government took office bringing in new ministers, as well as new appointments to most director general positions in the MEN. The abrupt change of leadership slowed down the ability of the ministry to develop a contingency plan for the education system PHOTO CREDIT: ELENA TOURIÑO LORENZO 96 during the state of emergency. The period of school closures mandated by the state was yet another disruption to the school calendar. Even before the school closures, the academic year 2020 had already started with the threat of teacher strikes, mostly concentrated in the capital. School closures had immediate negative effects through the loss of opportunity to learn, but the crisis was likely to have even longer-lasting negative effects on human capital, as dropouts likely increased, and the learning losses might be more difficult to recover. The school closures due to COVID-19 were comparable to the prolonged periods of school closures as a result of teacher strikes those children in public schools had already dealt with on a regular basis. However, the subsequent economic downturn and reduced fiscal capacity reduced the government’s ability to push for the implementation of reforms in the education sector which were intended to bring more stability and reduce disturbances in the system. Without drastic remedial efforts and an acceleration in measures to increase education access and quality, there will be major long-term costs in lost human capital accumulation for this generation. Cross-country simulations at the time showed the following educational outcomes under a conservative scenario of just 5 months of school closures but it will take years before we see how accurate these simulations are51: • Average schooling (adjusted for quality) completed per child in Low Income Countries (LICs)/Middle Income Countries (MICs) could fall from 7.9 to 7.3 years—a substantial drop by historical standards. • Learning Poverty could rise from 53 percent before the pandemic to 63 percent. This would have a particularly adverse effect on Sub Saharan Africa, which had the highest levels of learning poverty to begin with and therefore is likely to emerge from the pandemic with an even deeper crisis. • The share of youth currently in early secondary school who fail to achieve minimum functional literacy and numeracy could rise from 40% before the pandemic to 50%. • At least 24 million children, from preprimary to tertiary level education, might never return to school. • The children affected by learning losses stand to lose $10 trillion in future lifetime earnings (equivalent to 8% of the global Gross Domestic Product (GDP)). For each child, this is equivalent to losing a year of labor earnings. 51 Azevedo, J. P., Hasan, A., Goldemberg, D., Iqbal, S. A., & Geven, K. (2020). Simulating the Potential Impacts of COVID-19 School Closures on Schooling and Learning Outcomes. 97 • COVID-19 is posing a significantly higher risk to girls’ education and well-being. Girls are more likely to drop out of school, also more vulnerable to violence and face child marriage and adolescent fertility. 3. Performance of the Education Sector Status of access in primary and secondary education The education sector in Guinea-Bissau has made progress on access to basic education although Gross Enrollment Rates (GERs) at the secondary and tertiary levels remain low.52 GERs increased across all levels of education between 2014 and 2018, with the largest gains registered at the first cycle of the basic education level (EB1) where the GER increased from 132 percent in 2014 to 156 percent in 2018. Access at the secondary level also increased from 45 percent to 66 percent over the same period but remains low. This indicates that gains at the primary level have not yet spill over into the secondary levels. Access at the tertiary level registered a 3 percent increase (from 1 percent to 4 percent) over the same period. Figure 18: Trends in Gross Enrollment Rate by level of education and Gender Parity 156% 2014 2018 132% 97% 91% 90% 84% 77% 7… 59% 100% 97% 82% 66% 85% 83% 76% 57% 45% 4% 1% EB1 EB2 EB3 Second ary Tertiary EB1 EB2 EB3 Second ary Tertiary Gross enrolment rate (GER) Gender Parity Index (GPI) Source: Authors’ estimations based on MICS-2014 and EHCVM 2018. Index in Guinea-Bissau Despite access to basic education significantly improving over time, in terms of uni- versal access, the sector has still not achieved either the Millennium Development Goals (MDG) or the more recent Sustainable Development Goals (SDG). The Primary 52 The Gross Enrollment Rate (GER) is defined as the number of students enrolled in a given level of education, regardless of age, expressed as a percentage of the official school-age population corresponding to the same level of education. GER can exceed 100 percent due to the inclusion of over-aged and under-aged students because of early or late entrants, and grade repetition. In this case, a rigorous interpretation of GER needs additional information to assess the extent of repetition, late entrants, etc. 98 Completion Rate (PCR) still stands at 64 percent in 2018 and the gender gap is significant across all education levels. Girls’ attendance at the third cycle of basic education (EB3) is 16 percent lower than boys (Figure 17). In secondary education the gender gap in atten- dance is 10 percent. An international comparison with other SSA countries shows that the PCR in Guinea-Bissau is slightly higher than the SSA average (Figure 18). Figure 19: International Comparison of Primary Completion Rate (PCR) 63% 64% Burkina… Gambia, … Guinea-… South… Mozamb… Cote… Maurita… South… Zambi a CAR Uganda Angola Tanzania Namibia Benin Burundi Senegal Mali Gabon Lesotho Eswatini Source: Authors’ estimations based on EHCVM 2018 and Education Statitics (EdStats). a) Out of school, dropout and repetition Around 21 percent of children between the ages of 6 and 11 have never attended school due to sociocultural, economic, and geographical barriers. The large share of out-of-school children is one of the challenges for Guinea-Bissau’s human capital accu- mulation. This is particularly true for children living in rural areas and from poor house- holds. Furthermore, 26 percent of children between 6 and 11 years old are currently out- of-school. The incidence of out-of-school children affects disproportionately children from economically disadvantaged groups and rural areas where more than half of them are out-of-school. About 43 percent of 6-11-year-olds from households in the poorest quintile have never attended school, compared to only 11 percent for children from the richest quintile. School dropout rates are also higher among children from the poorest quintile for 6-11-year-olds and 12-14-year-olds. The gap is also large between urban and rural areas: 36 percent of rural 6-11-year-olds have never attended school, compared to 11 percent in urban areas. 99 Despite the Government’s efforts, about 43 percent of 6-year-olds have never at- tended school. Due to a range of sociocultural, economic, access and other barriers, al- most one third of children between the ages of 6 and 11 have never attended school (Fig- ure 19). This is particularly true for children living in rural areas and poor children. 50% Never attended school Dropped-out 40% 3 0% 43% 20% 36% 28% 27% 26% 21% 21% 10% 15% 14% 13% 11% 11% 5% 5% 0% Urban Urban National Rural National Rural Male Female Male Female Poorest Richest Poorest Richest 6-11 y ears 12-14 years Source: Source: Authors’ estimations based EHCVM 2018. There are important sources of inefficiencies within the system yet to be tackled. The repetition rate is especially high in the EB1 level at 19 percent, followed by 11 percent in the EB3 level and 10 percent in the EB2 level (Table 2). Repeating classes affects the students’ ability to complete their education cycle on time, increasing the likelihood of dropping out and delaying their ability to join the labor market and therefore reducing their lifetime potential earnings. These internal inefficiencies result in substantial costs for the Government. According to the 2018 PER, the internal efficiency coefficient for Guinea-Bissau was estimated at 53.4 percent in 2010 which is significantly lower than the 80 percent benchmark target recommended by GPE.53 In other words, nearly half of the scarce public resources allocated to primary education are lost. This can be attributed mainly to the high dropout rate. Without students dropping out, the internal efficiency coefficient would have been 86 percent. Table 13: Repetition rate by grade, gender and area of residence 53 The internal efficiency coefficient is calculated as the ratio of the ideal number of student-years required to produce a number of graduates from a given student cohort in elementary/secondary education to the actual number of student-years spent to produce the same number of graduates, expressed as a percentage. 100 Table 13: Repetition rate by grade, gender and area of residence Gender Area Total Male Female Rural Urban Grade 1 34% 32% 41% 24% 33% Grade 2 17% 16% 17% 15% 16% EB1 Grade 3 14% 13% 17% 10% 14% Grade 4 11% 11% 12% 9% 11% Grade 5 11% 9% 10% 10% 10% EB1 Grade 6 9% 9% 9% 9% 9% Grade 7 11% 11% 13% 10% 11% EB1 Grade 8 10% 12% 7% 12% 11% Grade 9 10% 9% 11% 9% 9% Source: Authors’ estimations based EHCVM 2018. Learning outcomes The persistent access and quality challenges are reflected in the Guinea-Bissau’s learning outcomes and data shows that children are failing to master literacy and numeracy skills. Like many other countries, Guinea-Bissau faced a serious learning crisis even before the COVID-19 pandemic. Results from an assessment based on the Program for the Analysis of Education Systems (Programme d’Analyse des Systèmes Educatifs de la CONFEMEN (PASEC)) revealed poor performance in Portuguese and mathematics. In fact, less than half of grade 2 students were able to answer questions correctly and scored on average only 48 percent and 50 percent in Portuguese and mathematics re- spectively. By grade 5, students’ scores decreased even further – only one-third were able to answer questions correctly and scored in Portuguese and mathematics 39 percent and 31 percent on average, respectively. The poor performance of students is related to the low quality of the teaching force. Only a small portion of teachers has the requisite knowledge and pedagogical skills needed to teach effectively: only 68 percent of teach- ers possess the content knowledge required to teach Portuguese to grade 2 students. Similarly, only 46 percent of teachers possess the content knowledge required to teach mathematics to grade 2 students. The same assessment found that 98 percent and 94 percent of teachers in grade 5 were unable to answer correctly more than 95 percent of questions in mathematics and in Portuguese, respectively. 101 PHOTO CREDIT: ELENA TOURIÑO LORENZO Regional and gender disparities Access to secondary education differs significantly across regions as well as be- tween urban and rural areas. Although regional basic gross enrolment rates are relative- ly high, three regions (Gabu, Bafata, and Oio) registered gross attendance rates below the national level in 2018. In terms of disparity in access to secondary education, the same three regions have gross attendance rates below 25 percent, whereas Bissau recorded a ratio of 142 percent. Furthermore, gross basic attendance in rural areas is 46 percentage points lower than in urban areas. This gap further increases to 88 percentage points in secondary education (Figure 20). There is also a slightly gender disparity in access to basic and secondary education. Girls’ attendance at the third cycle of basic education (EB3) is 16 percent lower than boys (Figure 17). At the secondary level of education, for instance, the GER for girls stands at 63 percent compared to 70 percent for boys. The incidence of out-of-school among 12-14 years children is also slightly higher among girls with 18 percent compared to 16 percent among boys. Figure 21: Regional and Gender Disparities in Gross Enrollment Rates Bas ic education Secondary education GABU 77 17 BAFATA 85 27 OIO 91 23 TOMBALI 104 29 CACHEU Region 111 55 BOLAMA_BIJAGOS 127 64 QUINARA 129 29 BIOMBO 136 59 SAB 141 142 National 109 66 Male 113 70 Area Gender Female 106 63 Urban 137 113 Rural 91 25 Source: Authors’ estimations based EHCVM 2018. 103 Human capital in Guinea-Bissau One of the major constraints to Guinea-Bissau’s economic development is its largely unskilled workforce and weak human capital. Poor quality education and a lack of access have led to an acute shortage of skilled labor. The literacy rate for adults is around 57 percent, but this varies significantly between gender and geographical location. On average, only 40 percent of adults living in rural areas are literate. For women in these areas, the percentage goes down to 25 percent. Despite improvements in access to primary education in recent decades, a considerable percentage of the population continues to be underserved. Today, about 21 percent of children between the ages of 6 and 11 have never attended school and only 42 percent of 24-29-year-olds completed primary education. Universal primary education is still far from a reality. Low educational attainment remains a major obstacle to improving labor productivity and generating income. According to the 2021 UNDP Human Development Index (HDI), Guinea-Bissau ranked 177 out of 191 countries in terms of human development. Economies that have grown rapidly over an extended period have made substantial investments in the education of their citizens. In Guinea-Bissau, these efforts need to be urgently prioritized. Human capital is a key driver of labor productivity and inclusive growth. It is also an important pillar of social cohesion and trust in institutions. However, underinvestment in human capital, driven by weak and inefficient systems, and political instability have led to frequent strikes and disruptions in education services. b) Returns to education Education is a positive and profitable investment in Guinea-Bissau. At the national level, an additional one year of education is associated with an average increase of (7 percent) in monthly earnings. However, the rate of return associated with an additional one year of education is below the WAEMU and SSA averages. Estimates from the Mincerian regression (the detailed methodological note of estimating private rates of return to education as well as the regression results are presented in Annex 4), by gender, area of residence, and sector of employment are presented in Figure 21. Furthermore, it indicates better returns for women and high productive sectors. For the same level of educational attainment, women have a higher rate of return (8.3 percent) than men (6.1 percent). This suggests that there are less educated women than men in the labor force. The rate of returns on education in the service sector is higher than in the other sectors 104 suggesting that productivity in the services sector is higher. While other factors can also justify the incremental earnings, labor market conditions such as clear signals for skills and conducive labor supply conditions such as adequate number of educated people, are important elements for competitive wage setting. Figure 22: Average Incremental Earning Associated to Additional Year of Schooling in SSA Countries 11,0% 10,0% 8,3% 6,9% 6,7% 6,9% 6,1% 4,6% 5,1% 4,3% Nationa WAEM Industr Rural Male Service SSA av. Urban Agricult Female U av. ure y s l Source: Authors’ estimations based EHCVM and similar surveys for the rest. 4. Bottlenecks that are detrimental to the education sector performance a) Teacher strikes The educational system has been undermined by an array of political and social disturbances. For more than a decade, teacher strikes have been used to claim the payment of salary arrears, push for pay and benefit reforms, and improvement in working conditions, and are often connected to politics. Regular teacher strikes are the main source of disruption in the school year and one of the key drivers of poor-quality education. Salary arrears most frequently affect new teachers entering the public system whose first salary payments often arrive months late. In the last seven years, except for 2020/21 and 2021/22, at least one-third of each school year, has been negatively affected by teacher strikes. According to sectoral 105 stakeholders, teacher strikes are one of the key drivers of poor quality of education, limiting the number of days of schooling per year, contributing to high student dropout and negative public perceptions of public schools (UNICEF, 2018). The regular nature of the strikes made parents and students skeptical about the public education system. Once the strikes end, many students (notably in secondary schools) do not go back to class and school directors appeal to the media for them to return54. As striking teachers were often still paid because of a lack of efficient monitoring, up to 60 percent of all salaries paid to teachers were paid to those who are not actually teaching because they were on strike. However, during the last two school years, measures were in place that enabled the MEN to stop payments for teachers on strike. This significantly contributed to avoiding further teacher strikes those years. One of the root causes of recurring teacher strikes is political instability. Some of the causes of the recent teacher strikes were related to payroll management (salary arrears and adjustments), working conditions, and the implementation of the Teacher Career Reform. However, the root causes of the strikes lie in the political instability that has affected the country and the weak capacity of the institutions involved (MEN, Ministry of Finance and Ministry of Public Administration) to define clear rules and implement them effectively. With frequent changes of government, newly appointed ministers and, often, senior civil servants find themselves negotiating with the teachers’ unions. The union’s demands are often such that fleeting governments are unlikely to stay in power long enough to achieve them; the inability to fulfill all their requests usually extends or prompts new strikes. Moreover, the strikes often happen alongside periods of political instability. In the last decade, teachers’ unions have lobbied for the revision and implementation of a Teacher Career Reform. In a bid to “instill more incentives to the professional trajectory of teachers”, in 2011 the government approved the Teacher Career Reform (“Estatuto Carreira Docente” nº2 / 2011), which sets out the key duties and benefits of all public sector teachers in Guinea-Bissau. The original 2011 version of the law included several open-ended articles, which required further revision and updating such as: providing continuous support and motivation, in the form of high-quality in-service training and strong school leadership, to allow teachers to continually improve; teacher performance assessments and in-service teacher training—not just salary increases; and completing the planned reforms to the teacher certification system and ensure that all teachers, including contract teachers, are identified and have the right qualifications 54 See, for example, http://angnoticias.blogspot.com/2020/02/ensino-publico_14.html. 106 to teach. However, political instability prevented this from happening. Given that the proposed reforms were expected to result in salary increases for the majority of teachers, the failure to implement them became a major source of tension and one of the root causes of many of the teacher strikes over the past decade. A comprehensive revision of the Teacher Career Law was approved by Parliament in October 2018 and the government has been making concrete efforts to put in place the changes contained therein. The revised Teacher Career Law sets out a new and more generous payment structure for public sector teachers, along with other policies. The new payment structure (i) assigns higher salaries to those teachers with higher qualifications (e.g. university degrees or teacher certificates) and those who have spent more years in the sector; (ii) new monetary incentives through a remoteness allowance to motivate teachers to accept positions in rural and more remote areas of the country; and (iii) includes subsidy for supplies for teachers to use in their classrooms, known as the “chalk subsidy”. As of November 2019, payments to teachers and their salaries were adjusted to account for the new remoteness and chalk subsidies. Then, between December 2019 and February 2020, the MEN worked to collect all evidence needed to confirm teachers’ different qualifications and adjust their salaries accordingly. The World Bank team and MEN are working together to develop a comprehensive database that contains all of the information on teachers needed to effectively implement the law. b) Management of human resources The MEN has staff at the national level and in the regional directorates, as well as school directors and teachers at the school level. According to the 2018 Public Expenditure Review (PER), there were approximately 10,994 teaching and 1,052 non- teaching staff (including contract teachers) in the education sector. About 8,985 staff are on the MEN’s payroll, of which 89 percent are teachers. While teachers constitute a key input into education and represent the largest cost element in the budget, the distribution of teachers across schools varies widely, which is a cause for concern from an equity and efficiency point of view. A recent study showed a large variation in student-teacher ratios across schools. The average ratio is 64.2 students per teacher whereas the bottom 10 percent of schools have ratios below 37 and the top 10 percent have ratios over 102. This is among one of the largest ranges of student-teacher ratios across schools in the world (Figure 22). The variation in ratios is also substantially larger within regions than between regions. While these large variations 107 are worrying from an equity point of view, more work is needed to understand how far this affects educational outcomes. Given that teachers also absorb the lion’s share of the budget, an efficient teacher workforce is crucial. Figure 23: International Comparison of Student-teacher Ratio, Primary 57 64 47 40 40 42 36 36 37 38 28 21 23 Sahara… Guinea Niger d'Ivoire Leone income Guinea- World Chad Senegal Mali Verde Sierra Togo Cabo Bissau Sub- Cote Low Source: Torsten Figueiredo Walter (2018) for Guinea-Bissau and UNESCO Institute for Statistics (http://uis.unesco.org/). Data as of February 2020. Key constraints in terms of human resources management in the education sector include (i) teacher performance; and (ii) delays in the hiring process. Low levels of knowledge of subject matter impact teacher performance. A learning assessment showed that 94 percent of teachers in grade 5 were unable to answer all the questions in Portuguese55. Additionally, delays in hiring process affect service delivery at the schools. Hiring is often not coordinated with the school year, with newly recruited teachers often arriving several months late in the school year. For example, the MENES was still hiring and nominating teachers for the school year 2017/18 in April 2018. By the time these teachers started to work, the school year was nearly over. In 2019, the MENES made serious efforts to implement a strategy developed with the support of the World Bank. Working together with the Ministry of Public Administration and Ministry of Finance, the MENES was able to hire almost all teachers by November which was a drastic improvement over previous years. Learning materials The last time the country adopted a new school curriculum was in 1984 and there is a serious need to modernize and revamp the primary school curriculum. The new curriculum should be more streamlined, integrate existing subjects and encourage more 55 An assessment based on the Program for the Analysis of Education Systems (Programme d’Analyse des Systèmes Educatifs de la CONFEMEN (PASEC)) II. 108 active teaching pedagogies. While an updated curriculum should have a positive impact on quality, there is a serious need to train teachers on the new curriculum and provide additional support during its implementation. Also, given limited capacity of teachers in Guinea-Bissau, the resources provided to teachers should not only include manuals and guides but additional aides like scripted teaching lessons. While textbooks are instrumental to student learning, greater attention needs to be given to developing a textbook policy, procurement and dissemination plans, and ensuring means for storage and use at the school level. The lack of adequate learning materials has hampered education quality and most schools fail to provide students with any learning materials. Even when donor-financed initiatives to print textbooks, often dissemination is weak. The last textbook distribution in 2016 encountered many challenges like textbooks being sold on the black market and a large number of textbooks remained in central-level warehouses due to insufficient data on school locations, number of students, etc. Education statistics and planning The lack of education statistics and school level data continues to be major barrier to service delivery in education. The last published education data is from 2014/15. While data collection instruments have been developed and a significant number of train- ings have taken place, the high level of turnover of school directors and regional directors hampers the ability to collect reliable school level data. Without proper training, even when data arrives at the central ministry, the questionnaires are often fraught with errors and data entry/cleaning at the central level is challenging. Due to the lack of basic statis- tics, planning in the sector is extremely weak; knowing the number of schools, locations, number of students and teachers, etc. is essential to be able to effectively plan. Incor- porating more technology such as collections via electronic questionnaires and tablets or implementing rapid surveys via SMS is critical to ensure the availability of timely and reliable data. The survey was implemented as a census of every public and community school that offers at least one year of the first cycle of basic education (Grades 1-4) in three regions of Guinea-Bissau: Oio, Bafata and Gabu covering a total of 746 schools. The National Institute for Statistics (INE – Instituto Nacional de Estatística) was contracted as the agency to oversee data collection. In an effort to streamline data collection and 109 reduce error, tablets were chosen as the tool for data collection using the software Survey Solutions in its Portuguese version. Enumerators captured data directly into the tablets, which, once connected to an internet source, were able to instantaneously report data to the central server for review. Public spending Guinea-Bissau’s education spending is not in line with international best practices and benchmarks. As of 2018, education spending still remained at 2.2 percent of GDP, well below the 4-6 percent recommended by the Global Partnership for Education. With the lowest spending on education as a share of GDP within WAEMU, Guinea-Bissau is not dedicating enough public resources to reach its stated goal of universal primary education in the country. As the student population continues to grow, education spending needs to increase significantly in order to have the resources required to train and recruit the required number of teachers, purchase of textbooks, construct and maintain schools, etc. Low spending on education has left the country reliant on external financing which is still insufficient to meet the current demand and unsustainable. 5. Policy Priorities Human capital plays a key role in promoting economic growth, improving livelihoods, and strengthening social cohesion. Without a rapid acceleration in improvements in human capital, economic development will continue to stagnate in Guinea-Bissau. Despite progress in access, the country continues to face important challenges in achieving its human development goals. The following highlights some key policy actions to address some of these challenges. Transform the quality of education to improve learning outcomes Improve teaching quality to achieve learning for all. Efforts need to be made to improve the quality of both pre-service and in-service teacher training programs. Given the high number of inadequately trained teachers already in the system, it is critical that resources be allocated for regular, structured continuous professional development. This training should focus not only on content knowledge but include a strong practical component 110 to ensure teachers are well-equipped to perform effectively in the classroom. Boosting teacher knowledge on its own is unlikely to lead to significant improvements in learning outcomes; teachers also need to know how to translate that knowledge into effective learning in the classroom. Finalize the curriculum reform and provide in-depth training for teachers and additional support during its implementation. Given teachers’ limited capacity and based on positive experiences in other countries, additional support for teachers beyond just manuals is needed. Scripted teaching lessons and interactive radio instruction programs can help teachers augment their teaching practices and can have a significant impact on improving learning outcomes, particularly in the early grades. The key principles of successful interventions include: (i) providing teachers with support materials, like teaching guides and scripted lessons, that can facilitate their day-to-day work; (ii) providing coaching and regular feedback to teachers to improve their classroom practices; (iii) ensuring that all children have reading material; and (iv) ensuring a simple and effective curriculum to guide teachers. Develop a textbook policy and dissemination strategy to ensure all students have access to learning materials. A more sustainable and less donor driven approach is needed to avoid gaps in the availability of learning resources. Various scenarios on how often, where, and how best to disseminate textbooks so they reach the schools needs to be analyzed. Based on these findings, a national textbook policy should be adopted. Then, together with the textbook policy, budgetary resources in annual national education budget should be allocated to finance these costs as most efficiently as possible. Improve the management and efficient use of available resources Implement all the policies that are part of the Teacher Career Reform – not just the increases in teacher salaries. Teacher strikes lead to enormous losses in education in- vestments. Implementing the Teacher Career Reform will help to reduce the strikes but should also be done to help improve teacher performance. The government should strive to implement transparent performance reviews, with guidelines provided and written assessments, as outlined in the recent Teacher Career Reform. Moreover, performance reviews by school inspectors and school directors will be crucial after the end of the pro- bation period of newly recruited teachers, so that entry into the teaching profession be- comes more merit-based and attracts more effective teachers. Since the Teacher Career 111 Reform introduced a remoteness subsidy to motivate teachers to work in remote areas, it will be important to ensure that criteria for redeployment in schools in a different region are in place. Eliciting clear preferences over schools when teachers are first recruited and adhering to teacher preferences as much as possible can limit mobility throughout the year. It is also important to complete the planned reforms to the teacher certification system and ensure that all teachers, including contract teachers, are identified and have the right qualifications to teach. Improve teacher recruitment processes so teachers are hired on time and ready to begin at the start of each school year. To avoid having classrooms without teachers for several months of the school year, strong coordination between the MENES, the Ministry of Public Administration, and Ministry of Finances is required. Detailed processes and procedures for each Ministry have been clarified to avoid delays and bottlenecks, including specific deadlines on when schools need to send requests, when MENES needs to share this with the Ministry of Public Administration to begin hiring, etc. The MENES should also accelerate the development of a database that compiles all related information on teachers (i.e., salary payments, contracts, school locations, etc.) in one place so they are better positioned to coordinate teacher recruitment, deployment, performance evaluations, etc. Prioritize the collection of timely and reliable education statistics. The lack of data to inform decision-making and appropriately plan various programs/interventions hampers planning at every level. Solutions that incorporate technology need to be accelerated to overcome issues with quality control and timeliness of data. Existing questionnaires should also be simplified giving priority to the most basic education data so at least information on the number of schools, teachers, students is known and can be used to disseminate learning materials, plan training activities, and conduct regular monitoring and supervision visits at the school level. Rapid surveys using SMS have shown to be effective in Guinea-Bissau with relatively high response rates and a reasonable level of accuracy. This type of survey is both cost-effective and relatively simply to administer if the volume of data collected is kept to a minimum. A combination of rapid surveys and electronic questionnaires using tablets should be used to improve the availability of data that can be used for decision-making. 112 Adopt policies that address the internal inefficiency issues to optimize educational outcomes Given the financial resource constraints under which the public sector is operating, there is a strong rationale to explore potential efficiency savings, that is, savings arising from more efficient use of resources. Repetition and dropout rates as well as delayed entry are an important source of internal inefficiency, and to address these issues, there should be a mandatory enrollment age and automatic promotion at least within the primary education level. Instead of relying on repetition to improve educational outcomes, alternative measures to shore up performance should be explored such as remedial education, off-school support, or special teachers’ schemes. Encourage early childhood development (ECD) programs to increase children’s readiness for primary school, promote learning abilities, help reduce factors that affect internal efficiency (dropout, repetition, and delayed entry), and increase probability of having longer productive lives in the labor market. ECD programs have the potential to strengthen the foundation of the education system, enabling children to transition more easily into primary school and to do so with greater ease. This in turn increases the likelihood of joining primary school on time and therefore reduces the likelihood of dropping out and delayed entry, which are an important source of inefficiency in Guinea- Bissau. It also increases the likelihood of joining the labor market earlier which could have a significant cumulated impact on the lifetime income stream of the individual. Table 8 summarizes some targeted actions and policy priorities the government can take to improve the overall performance of the education sector, in terms of quality, efficiency and equity. The matrix also suggests a timeline for the adoption of these measures along with a suggested order of priority. 113 Table 14: Highlighted Policy Priorities Matrix Identified Reform Timeline Theme 1: Transform the quality of education to improve learning outcomes Provide high-quality in-service training, to improve teachers content ST knowledge and pedagogy Finalize curriculum reform and include scripted teaching lessons to ST improve learning outcomes in basic literacy and numeracy Theme 2: Improve the management and efficient use of available resources Implement the Teacher Career Law including transparent performance ST + MT reviews and development of a consolidated database on teachers to improve overall management (i.e., recruitment, payment of salaries on-time, etc.) Incorporate technology and rapid surveys to produce timely and reliable ST, MT education statistics that can be used for planning and decision-making Theme 3: Adopt policies that address internal inefficiency and optimize educational outcomes Expand access to ECD programs to increase children’s readiness for MT primary school. 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Washington, D.C. http://pubdocs.worldbank.org/en/487971608326640355/External-WB-EDU-Re- sponse-to-COVID-Dec15FINAL.pdf World Bank unpublished. “Bridging the Technological Divide: Firm-level Adoption of Tech- nology in the post-COVID World.” 118 PHOTO CREDIT: ELENA TOURIÑO LORENZO 119 ANNEX 1: Availability of national accounts information in Guinea-Bissau In 2017, the National Statistics Institute (INE) adjusted their methodology of the elaboration of National Accounts from the System of National Accounts (SNA) 1993 to SNA 2008. Consequently, the base year changed from 2005 to 2015. With the new methodology, nominal GDP in 2015 was revised upwards by 9.9 percent, amounting to CFAF 681.3 bn. The striking revision is due to the integration of three new data sources on enterprises: 1. A general census of enterprises and statistical and fiscal declarations. 2. A survey with non-governmental organizations, churches and political parties. 3. Registries of energy production outside of Bissau as well as on research and development. The new methodology also included revision on the supply and demand side on GDP. On the supply side, better data on electricity production as well as production of formal and informal non-agricultural enterprises was included. The information also accounts for non- profits institutions. On the demand side, better data on final household and NPI consumption was included and the gross fixed capital formation was upward revised. Finally, CIF and FOB values for imports were adjusted. The release of a new National Accounts base year implied a revision of the previously published series. The information is available until 2018. The publication of national accounts for 2019- 2021 is delayed. The growth estimations employed in the report are IMF and World Bank estimation based on information from the Ministry of Finance. 120 ANNEX 2: Policy Response to the COVID-19 Crisis MITIGATION/HEALTH MEASURES Containment measures Mandatory quarantine for infected and suspects of COVID-19 of at least 14 days. Initial closures of International air, sea and land borders. Systematics sanitary checks at the airport and land borders. Presentation of a negative COVID test (RT-PCR) certificate not older than 72 hours upon arrival. Suspension of inter-region transportation, except for emergencies. Mitigation measures Mandatory use of masks. Limited allowed capacity of clients in shops. Nationwide closure of schools and universities. (March to October) Prohibition of large events and (religious) gatherings. Closure of non-essential services and activities. Initial countrywide curfew from 11am to 7am, later successively relaxed from 12noon,2pm,4pm or 8pm onwards. Limitation to 10 participants at funerals. Initially, complete abolishment of public transport, later permitted at lowered capacity. Awareness campaigns and installation of a free hotline for COVID-19 suspects Reinforcement of national laboratory capacities (six virology laboratories were opened in six months). Creation of the High Commission for COVID-19 to devise policy measures Creation of the Center for Health Emergency Operations to establish health expenditure priorities. Creation of a new open-air market in Bissau that allows physical distancing among vendors. 121 SOCIAL MEASURES Distribution of 20.000 rice bags and 10.000 sugar bags throughout the country. Wage subsidy for COVID-19 frontline workers Cash transfer program for families in need (CFA 0.7bn) Prohibition of price speculation. Off-budget projects by the international community ECONOMIC AND FISCAL MEASURES On-lending of CFAF 15bn from COVID-19 T-bills to the banking sector to provide financing support for the cashew marketing campaign. Reduction of the tax base and taxes on cashew exports. Postponement of cashew marketing campaign to May 25th compared to its usual start in late-March. Import duty exemption for 50.000 tons of rice and 30.000 tons of sugar. Moratorium of tax and customs declaration and payments (without penalty) Provision of funds of CFAF 0.6bn to support the agricultural campaign. Increased spending for medicine, food, medical equipment (CFAF 0.2bn) and the rehabilitation of the National Hospital Simao Mendes (CFAF 0.1bn). Payment of salary arrears especially in the health and education sectors. Transfers of CFAF 1.4 bn to the High Commission for COVID-19. Monetary and macroprudential measures by the BCEAO: Reduction of the refinancing rates first to 2.5 percent, then 2 percent. Relaxed collateral requirements and support for firms with repayment difficulties. Moratoriums for loan reimbursement. Introduction of COVID-19 treasury bills at concessional terms. Reduced fees for digital financial transactions. 122 ANNEX 3: Poverty and distributional impacts of the COVID-19 crisis on households Quantitative information from household-level and national account data are used to examine the impact of the pandemic on the welfare of households in Guinea- Bissau. The survey used in the study was conducted in 2018/19 and covered 5,351 households and includes data on household consumption and other demographics data. The analysis employs consumption levels to describe household’s welfare distribution. Additionally, growth projections were obtained from the World Bank’s before and after the shock. The analysis examines the effect of the COVID-19 pandemic on the welfare of households through the price and macro channels. To estimate the impacts through the macro channel, two scenarios are constructed for 2020: (i) the scenario without COVID-19 that corresponds to growth projections conducted prior to the pandemic and (ii) the scenario with COVID-19 that employs the final growth number for 2020. The source of the information is the World Bank. Based on these projections, we update household consumption per capita using data from the 2018/19 household survey using sectoral growth projections, which are available for agriculture, industries, and services as follows: Where represents the household (i) consumption in a 2018/2019 according with household survey (FCFA). represents the projected household (i) consumption in a 2020 (FCFA). represents the real growth rate of the consumption of the household “i” between 2019-2020. Employing information on the sector of the head of the household (the information is available for 4,719 households out of the 5,351 unities), we calculated the poverty rate (headcount ratio) as well the average consumption in each scenario. 56 The poverty line defined in 2018/2019 (271,071.8 FCFA) was also updated to 2020 values by applying the national inflation rate of 1.8 percent in 2020. 56 In the household data, a total of 632 head of families are considered “inactive”, and for those families we used the national growth projections for 2020 (see annex for details on the numbers used in this exercise). 123 The impact of an increase in the prices of stable have two effects. For net consumer households, the increase in prices would affect their purchasing power and, therefore, reduce their welfare. For net producer households (ie. local producers in the agricultural sector), the increase in prices would bring more income increasing their welfare. We employ data from the National Institute of Statistic for the average inflation in the last 12 months for 54 products (Table A3.1). The price of 45 of these goods increased in 2020. Matching this information with the household survey, we compute the level of household welfare achieved from consuming the identified basket of goods in a pre-COVID scenario by expressing the value of the basket of goods 2018/19 prices. The COVID scenario is constructed by estimating the level of welfare achieved by households when they consume the same basket of goods valued at their 2020 prices. The differences in household welfare pre and during COVID-19 scenarios shows the additional resources needed by households to maintain their standards of living to pre-COVID levels. The estimated gap in welfare can reasonably be attributed to disruptions in markets due to the pandemic. Table A3.1 Inflation in 2020 for Main Products in the Consumer’s Banket. 124 ANNEX 4: Estimating private rates of return to education A simple definition of the return of education is the differential between the prices of highly and poorly educated labor. A high return of education is an indication that the certain type of human capital and skills is in demand and a signal for individual in a position to sell their labor services at the higher price by “investing” in their human capital. One of the most common sources of rates of return estimates are Mincerian earnings functions. These functions apply regression analysis to earnings data on a cross- section of individuals to relate people’s earnings and to their level of schooling and their work experience. The regression coefficient on the schooling variable can, under certain assumptions, be interpreted as the private returns to education.57 The analysis presented in this section does not claim any causality but pure associations. In fact, just because a person with a college degree earns more than a person without such a degree does not necessarily mean that college education causes the difference in pay. Rather, the person who went to college might have some characteristics that make him or her more productive in the labor market, resulting in higher earnings. It is possible, for exam ple, that high-ability people are more likely to go to college and are more productive. Therefore, it is uncertain whether the higher education premium reflects a higher return to education or a higher market value of unobserved skills. In the attempt to alleviate this selection problem, the regression model includes some demographic factors as control variable such as age, gender, rural/urban location, economic sector, region as well as work experience. Nevertheless, there are many other observable and unobservable factors that might affect both the probability to work and to work in a specific sectors and occupation and the return of the education per se. The Mincerian method consist of estimating log earnings equations of the form: 57 See Becker and Chiswick (1966), Mincer (1974), Willis (1986) and Rosen (1977) for further details and discussion on this issue. 125 where is the natural log monthly earnings individual i; is years of schooling (as a continuous variable); is labor market potential experience (estimated as ); is potential experience- squared; and is a random disturbance term reflecting unobserved abilities. Therefore, can be viewed as the average rate of return to years of schooling to wage employment. The list of control variables is kept deliberately small to avoid overcorrecting for factors that are correlated with years of schooling. Note that we estimate the log function of monthly earnings as a function of education and a vector of control variables. The total monthly earnings is computed by summing together any payment, profit or gain from main and secondary occupations regardless of sector of activities. Education level definition is based on formal education attainment and people with informal education are coded to no education category. The sample includes the working age population (age 15-64) based on ILO definition. The vector of control variables includes age, gender (a dummy equal to 1 if male), and the years of work experience (defined as the difference between age and years of schooling). The p-values for statistical significance of the estimated coefficients are not reported in the figures but are presented in The earnings function method can be used to estimate returns at different schooling levels by converting the continuous years of schooling variable (S) into a series of dummy variables, say , , and (where b is basic schooling, s is secondary schooling, tv TVET schooling and t is tertiary) to denote the fact that a person has achieved that level of schooling. The omitted level is people with no schooling and that dummy is not in the equation to avoid matrix singularity. The estimation equation in this case is of the form: After fitting this “extended earnings function” (using the above dummies instead of years of schooling in the earnings function), the private rate of return to different levels of schooling can be derived from the following formulas: 126 where , and stand for the total number of years of schooling for each successive level. Care has to be taken regarding the foregone earnings of primary school-aged children. In the empirical analysis that follows, we have assigned only three years of foregone earnings to this group, following tradition (Psacharopoulos 2004). MINCERIAN REGRESSION RESULTS Variables Ceof Variables Ceof Education (years) 0.069*** Basic education 0.193*** (0.004) (Ref: No education) (0.061) Experience 0.060*** Experience 0.053*** (0.007) (0.008) Experience*Experience -0.001*** Experience*Experience -0.001*** (0.000) (0.000) Sex: Female -0.253*** Tertiary 1.166*** (0.047) (0.079) Some secondary 0.418*** (0.069) TVET 0.699*** (0.094) Sex: Female -0.296*** (0.046) Constant 9.677*** Constant 9.963*** (0.090) (0.100) Num obs. 2,285 Num obs. 2,285 R-squared 0.162 R-squared 0.178 Standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 127 PHOTO CREDIT: ELENA TOURIÑO LORENZO 128 Guinea-Bissau 2023