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West Africa Policy Note - Note 01, July 2014
With a small and underdeveloped banking sector as well as an embryonic microfinance segment, Guinea-Bissau is barely able to harvest the growth benefits that could accrue from a more efficient and effective financial intermediation. Acknowledging that the financial sector’s vulnerabilities are very much driven by the fragile political and economic environment, there are key policy recommendations that the country ought to follow in order to improve the status quo. In this regard, more robust policies, regulations and procedures should be implemented in order to strengthen the financial sector, and promote financial deepening. But getting regulation right will not be enough. Political stability, economic formalization of firms and diversification away from the cashew sector as well as stricter enforcement of the rule of law are also needed.