How did Guinea-Bissau shift from a state-planned economy toward a freer market economy?

Guinea-Bissau transitioned from a state-planned economy toward a freer market model primarily through structural reforms initiated in 1987. Supported by the World Bank and the International Monetary Fund, the government significantly reduced the number of state-owned enterprises and shifted development priorities away from industrial projects in favor of agriculture.1

This liberalization was accompanied by a major restructuring of the financial sector beginning in 1989, which replaced the National Bank of Guinea-Bissau with specialized institutions, including a central bank and a commercial bank. Further integration into the regional economy occurred in 1997 when the country joined the West African Economic and Monetary Union and the Franc Zone. This move led to the replacement of the Guinean peso with the Communauté Financière Africaine (CFA) franc, with monetary authority shifting to the Central Bank of West African States. Despite these efforts, the economy continues to face significant challenges, including debt and mismanagement, leaving the nation among the world's poorest.21