Guinea-Bissau is bordered by Senegal to the north and Guinea to the east and south, with the Atlantic to the west. The economic mainstays of this Portuguese-speaking country are cashew nuts (100,000 tonnes/year – the main source of export earnings) and fishing. Together, these constitute 40% of budget revenue. Agriculture represents 60% of GNP, employs 85% of the workforce and accounts for 90% of exports. Without international aid, the country is unable to cover its current payments – in particular the wages and pensions of its civil servants and armed forces.

Key issues in EU-Guinea-bissau relations

Guinea-Bissau is currently experiencing extreme hardship owing to:

• low levels of education and vocational training
• ethnic divides which undermine social cohesion
• scarcity of resources for export
• recent armed conflict
• subsequent insecurity and political instability
• the country's status as an aid orphan (abandoned by international support) during and immediately after the fighting
• the weakness of the private sector
• the handicaps resulting from insufficient rule of law.

Support from the European Development Fund (EDF) – 2008-13

Total assistance worth €100m will be channelled into:

• conflict prevention
  The country's weak points are its oversized military and administration, its inefficient legal system and corruption. Priority must be given to these areas.
• water and energy
  These sectors are key to economic and social development. The Gambia River Development Organisation (which includes Guinea Conakry, Guinea-Bissau, Senegal and the Gambia) is providing the focus for a regional project, which will provide cheaper, more reliable, renewable energy. The project could play a critical role in industrial development and the alleviation of poverty.
• budgetary aid for stabilisation
  Direct aid for stabilisation over 2-3 years, together with institutional support, will speed progress on cleaning up public finance, with a view to more structured budget support at a later date.