Financing a company or a shop in Bissau
In Guinea-Bissau, an entrepreneur gets a bank loan mainly when the business is formally registered, keeps accounts and offers collateral; Bissau banks favour trade, imports and the cashew season, while microfinance serves very small activities.
Workshops and shops in Bissau with no registration
Most businesses in Guinea-Bissau, from small traders to workshops in Bissau, operate without registration or accounts. This informality is the first obstacle to credit, because the bank cannot measure turnover or profitability with any reliability.
Registering at the business formalisation centre
In Bissau, the Centre de formalisation des entreprises brings together the start-up formalities: articles of association, entry in the trade register and a tax identification number. Every bank requires these documents to open a business account.
OHADA law and security interests
As a member of OHADA, Guinea-Bissau applies the Uniform Act on secured transactions. A pledge over the business, a charge on stock or equipment and a mortgage can therefore secure a loan, provided they are entered in the register.
Banks serving companies
Banco da África Ocidental, Banco da União, Ecobank and the branches of Orabank, Banque Atlantique and Coris Bank finance SMEs. The pan-African groups also provide import and foreign exchange services that are useful for importers based in Bissau.
Pre-financing the cashew season
Cashew marketing accounts for a large share of short-term lending. Exporters and middlemen borrow to buy the crop from growers, then repay after shipment through the port of Bissau, over a period of a few months.
Working capital loans and overdrafts
For traders importing rice, cement or foodstuffs, the bank offers overdrafts, advances against goods or documentary credits. These facilities remain subject to the bank usury rate of 14% a year that applies throughout WAMU.
Investment and business equipment
Buying a lorry, a generator or processing equipment is financed with a medium-term loan. With no specialised leasing companies, vehicle leasing in Guinea-Bissau remains a limited option for most small and medium-sized firms.
Local processing and agribusiness
Few cashew nuts are shelled locally, and projects for processing plants look for long-term funding. They often combine equity, bank credit and support from donors such as the African Development Bank to reach the amounts required.
Seamstresses, mechanics and microloans
A seamstress, a motorbike mechanic or a fish seller usually starts with a microloan in Guinea-Bissau, which is easier to obtain than a bank loan. Regular repayments then build a record that helps when approaching a bank.
Farm businesses and cooperatives
Rice, mango or cashew cooperatives can borrow collectively. The guide to loans for farmers in Guinea-Bissau details these mechanisms, often supported by rural development projects and by the international partners present in Bissau.
Business plan and financial statements
The bank expects a business plan costed in CFA francs, cash-flow forecasts and, for an existing company, financial statements that follow the West African SYSCOHADA accounting system. A chartered accountant in Bissau can help prepare them.
The company's credit bureau file
Companies are also recorded at Creditinfo VoLo. Payment incidents by the manager or the firm weigh on the decision, so it pays to settle any arrears before submitting a new financing application to a bank.
Stages of SME financing in Bissau
- Register the company at the business formalisation centre and obtain the tax identification number.
- Open a business account and run your takings through it for several months.
- Prepare a business plan and cash-flow forecasts in CFA francs, along with any available financial statements.
- Identify possible collateral: pledge, charge on equipment, mortgage, personal guarantee from the manager.
- Submit the application, answer the analyst's questions and agree to a visit of the business.
- Sign the loan agreement, register the security and keep track of repayments on the account.
Costs of a business loan in Guinea-Bissau
| Item | Benchmark | What makes it vary |
|---|---|---|
| Bank annual percentage rate | 14% a year maximum (indicative) | Sector risk, collateral, term |
| Commitment fee | Percentage of the amount | Bank and type of facility |
| Registration of OHADA security | Registry and notary fees | Type and amount of collateral |
| Documentary credit fees | Commission per transaction | Import value, correspondent bank |
| Insurance on financed assets | Annual premium | Value of equipment or stock |
Company file for a bank in Guinea-Bissau
- Articles of association and trade register extract (RCCM)
- Tax identification number (NIF)
- Business plan and cash-flow forecasts
- SYSCOHADA financial statements for recent years
- Business account statements
- Manager's identity document and CV
- Pro forma invoices for the equipment to be financed
Why a Bissau bank turns down an SME loan
- Applying for credit with no accounts and takings received only in cash, which the bank has no way of verifying.
- Funding a long-term investment with an overdraft, which triggers a cash crisis by the following season.
- Offering as collateral a plot with no registered concession, which the bank cannot take a mortgage on.
- Paying a consultant who claims to secure guaranteed funding from a foreign fund in exchange for an upfront fee.
- Underestimating a possible fall in cashew prices, which can leave stock unsellable at the expected price.
Questions about loans for entrepreneurs in Guinea-Bissau
Must a business be registered to borrow from a bank in Bissau?
Yes, in practice. Banks ask for a trade register extract, a tax identification number and a business account. An informal activity can, however, start with a microloan and then formalise to gain access to bank credit.
What collateral is accepted in Guinea-Bissau?
OHADA law allows a pledge over the business, a charge on equipment or stock, a mortgage on property and a personal guarantee. To be enforceable against third parties, these securities must be properly entered in the relevant register.
Do banks finance the cashew season?
Yes, it is one of the main uses of short-term credit. Funding goes mostly to exporters and large middlemen with purchase contracts, collateral and experience of previous seasons, rather than to small collectors.
Are there public funds for young entrepreneurs in Guinea-Bissau?
One-off programmes funded by donors or the State have existed, but no permanent and widely accessible scheme could be verified. It is advisable to ask the ministry in charge of the economy and the cooperation agencies present in Bissau.