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Country Brief

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Burkina Faso: Country Brief

Burkina Faso is a low-income, landlocked, Sub-Saharan country with limited natural resources and a population estimated at 16 million inhabitants in 2010. The country’s economy is dependent on cotton exports and vulnerable to exogenous shocks, though over the last two years mining is becoming increasingly important in the economy. Between 2000 and 2010, Burkina Faso maintained an average growth rate of over 5.2 % per annum. According to the IMF, annual growth rate contracted from 7.9% in 2010 to 4.2% in 2011 as a result of a series of exogenous shocks: climate shock, energy crisis, fluctuating commodity prices and global financial crisis. As for now, 11 regions out of 13 are concerned by drought and food security remains an issue. The food security may worsen in light with the Malian crisis which results in 24 000 refugees at Burkina‘s north border. However, the economy is expected to recover in 2012 (7 % of economic growth) due to: (i) a better harvest in 2012-2013 which may result in an increase in crop production and reduce the drought impact and vulnerability, and (ii) a substantial increase in gold exports as the increase in the metal’s prices on the international markets is likely to help boost the economy.

Burkina’s poverty rate is estimated at 46% in 2009 and the country ranked 181th out of 187 countries in UNDP’s Human Development Index in 2011.

Political context

Burkina Faso experienced a period of domestic protest and political unrest in 2011; however the situation appears to have normalized. Following the appointment by the President of a new Prime Minister and ministerial cabinet in April 2011, extensive consultations were undertaken with a broad range of stakeholders to address the growing demand for better shared economic growth and better governance. The government has committed to a series of important reforms.  The combined parliamentary and local government elections initially planned for April 2011 have been postponed until December 2012.  Conflict in neighboring Mali and the inflow of more than 20,000 refugees could place a strain on the political context in Burkina.

Development challenges

Despite important reforms towards the liberalization of the economy, support to the private sector and access to basic services remain important challenges.

Vulnerability and lack of diversification

Burkina Faso’s economy relies predominantly on the performance of the cotton sector. This makes the economy particularly vulnerable to fluctuating cotton prices and to the impact of climate changes. The 2011-2012 season experienced drought in 11 regions out of the 13 in the country. Despite the increase observed in gold exports (32 Metric tons in 2011 against 23 Metric tons in 2010)    Burkina Faso needs to address its economic vulnerability and develop a broader and more durable resource base through the intensification and diversification of its economy. The newly-released Strategy for Accelerated Growth and Durable Development (SCADD) was designed with an ambitious goal of a two-digit economic growth per annum over the five upcoming years to address the poverty issue.

The challenge here will be to achieve growth in key sectors offering potential for exports and increase revenues in rural areas. In this regard, growth poles based on private sector as a key actor have been designed to support the SCADD’s implementation.

Human development

Sustained efforts and investments have resulted in positive trends in human development: (i) infant mortality dropped from 107 (DHS 1995) to 81 deaths for 1000 live births (DHS, 2003) and continued to decrease to 65 deaths for 1000 live births (DHS 2010); (ii) maternal mortality ratio dropped from 484 for 100,000 live births (DHS 1995) to 341 (DHS 2010)

Gross primary school enrolment is fast increasing, from 57% in 2005 to 72.4 % in 2009, 74.8% in 2010 and 77.6% in 2011.

Despite increasing school age cohorts, the youth literacy rate is 28, 7 % for Burkina Faso in 2010, compared to 70% for the Sub-Saharan Africa region, and life expectancy at birth was 57 years (INSD, 2009), slightly above the regional average of 50 years. Access to secondary education has also improved, passing from 20% in 2005 to 32% in 2011 for low secondary. For the same period, higher secondary increased from 5.6% to 10.7%. Quality is still an issue for the entire secondary education.

The government is preparing a new ten year program putting emphasis on the improvement of learning outcomes and reduction of inequities. Regarding the skills development system, including, the TVET and tertiary education systems, the government and the Bank agreed to prepare and implement an ambitious reform to improve the relevance of the training system in order to provide the Burkinabe economy with highly skilled people with a strong link to the private sector needs and to boost the youth employment.

Demography

The 2006 census established the demographic growth rate at 3.1% (compared to 2.3% in 1996). There’s a combination of negative factors: (i) a growing divergence between the birth and death rates, (ii) a fast acceleration of population growth; a stagnation of fertility rates to very high levels; (iii) a very slow adoption rate of modern contraception (prevalence rate for modern method adoption increased by 2 points in 7 years- from 13% to 15%- (Source: DHS 2010)). This unbridled demography leads to the doubling of the population at each generation and greatly undermines the impact (mainly in the education and health sectors) of initiatives undertaken to reduce poverty and foster human development.

The country is reviewing its policy and taking strong measures to control the demographic growth.

Gender

Following the adoption of the 2009 National Policy for Gender Promotion, a related triennial Operational Action Plan (PAO-20) was adopted in December 2010. Consequent to the socio-political crisis in early 2011, the President of Burkina appointed a new Minister for the Promotion of Women (MPF) as part of its new cabinet. The new MPF team revisited its orientations to better address gender inequalities, mainstream gender, and accelerate the implementation of the PAO despite the extremely small national budget allocated to the Ministry (0.01%). The MPF has called donors to consider allocating at least 15% of their sectoral budget support to the promotion of gender in Burkina.

Women represent about 52% of the population in Burkina. In terms of women empowerment at the decision-making sphere, Burkina has adopted a law introducing a 30% quota of women candidates on upcoming legislative electoral lists scheduled for December 2012.

Implementation of the new Strategy for Accelerated Growth and Sustainable Development (SCADD)

The Government has set ambitious targets for growth and development for the SCADD period of 2011 – 2015. In that regards, the Government has held a Consultative Group meeting with the support of the World Bank earlier in February 2012 in Paris. This event has succeeded in mobilizing both traditional donors and private sector. The outcomes of the CG were the commitment of US$ 5.3 billion representing 96% of the total financial needs estimated at US$ 5.5 billion. The remaining 4% will be financed by donors who did not attend the CG meeting. Regarding the number and quality of the attendances from donors and private sector, this CG showed the come back to normalcy and the trust of donors in the aftermath of the 2011 social unrests.

 

The World Bank’s strategy in Burkina Faso 

After the implementation of the 2010-2012 Country Assistance    Strategy which was endorsed by the Board of Directors in September 2009, the Bank is engaged in the preparation of a new joint strategy with the AfDB. It will be aligned with the new Government’s Strategy for Accelerated Growth and Sustainable Development so called (SCADD).

 

 The current Bank portfolio in Burkina Faso is composed of 17 national projects representing a commitment of 1020 million USD including the last DPO in the series of Poverty Reduction Support Credit (PRSC), and 6 regional projects representing engagement commitment of 140 million USD. The portfolio’s overall implementation performance is satisfactory, with average on-going implementation duration of 4.1 years.

A few selected areas outlined below where the World Bank contributed to Burkina’s development results:

Agriculture

Agriculture, including livestock and agro-processing sectors, accounts for about 40 percent of GDP and employs over 80 percent of the population. Burkina Faso’s economy relies predominantly on the performance of the cotton sector – which represent 32 percent of exports. This makes the economy particularly vulnerable to fluctuating cotton prices and to the impact of climate changes. Burkina Faso needs to address its economic vulnerability and develop a broader and more durable resource base through the intensification and diversification of its economy.

Rural development

Over the past 30 years, the Government of Burkina Faso has shown strong commitment to environment protection and sustainable management of its land and forest resources.  It has prepared sectoral strategies for environment, forestry, adaptation and mitigation along with a 10-year global investment plan (2008-2018). Moreover, Burkina Faso has also developed various successful pilot projects in the field of forest conservation and agro-forestry.

Energy Sector

Burkina Faso has no significant known fossil fuel resources. Petroleum product consumption is entirely dependent on imports by road at high cost from ports over 1,000 km away.  The Country’s hydroelectric potential is limited, with less than 100 MW of potential capacity in five identified sites. The total hydropower plants installed capacity is only 35.9MW and is highly vulnerable to erratic rainfall conditions, and other renewable sources of energy (such as solar) are not fully exploited. The combination of these various factors has hindered Burkina Faso’s ability to expand access to electricity. Addressing the main challenges require: (i) additional capacity to meet an increasing demand for energy services; (ii) improving the efficiency and equity in energy services provision by reforming the tariff and subsidy policy in a context of high supply costs, and by a sound demand side management strategy; (iii)  expanding  access of energy services to rural and peri-urban populations; (iv) achieving sustainable supply of cheaper electricity from neighboring countries; and (v) increasing renewable share in the energy mix.

These challenges are addressed in the wider framework of the development of the West Africa Power Pool (WAPP), designed to bring about economic benefits through the strengthening of the transmission network and other actions to facilitate electricity trade between member states.  Against this background, the extension of the existing Cote d’Ivoire-Bobo-Dioulasso transmission line to Ouagadougou financed under the Power Sector Development Project serves as a stepping stone towards a better integrated region.  To diversify and improve the reliability of supply for the Ouagadougou region, the interconnection with Ghana through the abovementioned interconnection between Bolgatanga (Ghana) and Ouagadougou, is expected to be operational in 2014. To increase access to, and use of energy services to improve living conditions in selected rural, peri-urban, and urban areas, the current Energy Access Project under implementation supports Burkina Faso’s efforts in expanding access to energy.  Other donors such as the African Development Bank, the West Africa Development Bank, the Indian Government through EXIM Bank and the French Development Agency (AFD) are also assisting the Government of Burkina Faso to achieve a better electrification rate. "

Transport sector

The transport sector portfolio comprises four projects (two projects which are closing in less than one year, one regional project closing in 2014 and the new airport project under preparation). The transport sector project helped the country to undertake various sector knowledge studies and investment. Also some reforms such as road fund, road safety, data management have been implemented. The project has improved the Rural Access Index and increased the teaching time in project affected area from 8 to 9 months while the percentage of road in good and fair condition has increased from 53 % in 2003 to 70% in 2010. The project has rehabilitated 3336 km of earth roads. The project has funded the update of the Transport sector strategy. The air safety project has helped the country to comply with the ICAO norms in terms of air transport security and safety. In that way, the project helped the country to create an autonomous aviation agency (ANAC) and funded capacity building for 365 experts in air transport safety and security as well as safety equipments. The regional transport and transit facilitation project has helped to improve the knowledge of transport sector stakeholders of transit and transport regulations principles. Donsin Transport Infrastructure Project is planned to be approved on March 2013.

Private sector

Burkina has realized three reforms in Doing Business 2012: starting a business, dealing with construction permits and getting credit.

Officially launched on February 14, 2012 by the Prime minister, the new program aims at deepening and broadening the scope of work covered in the previous program. Burkina Faso investment climate program will do further work on the following aspects:

  • Licensing reforms: Systematically streamline the licensing requirement and also design an electronic register for licenses;
  • Trade logistics: Streamline import and export processes and introduce a Risk Management Awareness program for border inspections;
  • OHADA implementation: ensuring the maximum impact in Burkina of the legal amendments of the OHADA uniform acts. The project will assist the government in implementing the revised OHADA Uniform acts at national level.

The 30.7 million US Dollar Competitiveness and Enterprise Development Project contributed to private sector development in Burkina Faso by creating conditions for improved competitiveness, enterprise development and investment promotion. This project is ongoing with an additional financing of 20 million US dollars approved in 2010. Key results achieved:

  • The reform in the telecom sector led to an increased teledensity (number of telephone lines per 100 inhabitants) from 1.5 in 2003 to 27.6 in 2009) ;
  • The Maison de l’Entreprise du Burkina Faso (MEBF) assisted in the development of enterprises and set up a  one- stop shop counter for business creation, the delivery of construction licenses etc….
  • The project contributed to the reduction of number of days needed to create an enterprise from 45 in 2007 to 7 in 2011; 22 000 new enterprises were registered through the one stop shop, and nearly 7000 new jobs were created by enterprises supported by the project as of December 2011;
  •  The project also contributed , together with IFC’s program to the reduction of the delay for the issuance of  construction permits from 226 days in 2004 to 30 days today and to the constant improvement of the country’s ranking in the Doing Business report;
  • The Bank has advised the authorities to apply to the Extractive Industries Transparency Initiative (EITI) with a view to strengthening the governance and transparency of the mining supply chain. Burkina is now at the stage of candidate country for the EITI initiative.

Water and sanitation

To allow strategic continuity in the Bank support to the water supply sector, a US$80M follow up project has been approved by the Board in May 2009. This new operation aims to: (i) support the Government’s efforts towards achieving urban water and sanitation MDGs, and (ii) consolidate the achievements of the sector reform. The project specific objective is to provide access: (i) to safe drinking water to 527,000 persons, and (ii) to improved sanitation services to 246,000 persons and 120,000 students by December 2015.  The project is progressing satisfactorily and there is no particular issue to raise at this point.

There is a strong Water and Sanitation Program (WSP) in Burkina Faso. In 2006, Burkina was selected as a focus country with in-country WSP staff presence. Since then, WSP has successfully supported the Government of Burkina Faso in: (i) the preparation/adoption of a WSS MDG strategy, roadmap and action plan, (ii) the development of pro-poor strategies, sector coordination and policy dialogue, (iii) onsite sanitation, sector financing and monitoring, (iv) decentralization, development of local management tools for planning, budgeting, M&E and delegated management for access to WSS services by the poor.

Food Crisis Response

 The poor results of the 2011-12 agricultural season, driven by localized droughts across the country, come as a reminder that the country needs bold actions to strengthen the resilience of its economy to these exogenous shocks. As a consequence of the 2011-12 season, a large share of the rural population is facing serious threats of food insecurity in 2012. Food production was significantly lower in 2011-12 as compared to 2010-11, with cereal production falling by 20 percent and the production of other food crops (yam, sweet potato, cowpea, etc.) by 21 percent. The situation forced the Government to declare 170 communes out the country’s 351 communes (48 percent) as food deficit communes. It is estimated that about one million people are immediately at risk of serious food insecurity (first quarter 2012), and this number is predicted to more than double during the second quarter. Among those, 400,000 to 500,000 children under five years old are exposed to chronic malnutrition. In light of this context, the Bank is preparing a JSDF of US$ 3 million to support the Government’s initiative.

International Finance Corporation in Burkina Faso

In April 2009, IFC and the Government of Burkina Faso signed a Share Purchase Agreement of up to 3% of Onatel’s capital and provided a USD 8.7 million loan to this latter. In mining, IFC acquired in 2009 a 3 million dollar share in Gryphon Minerals followed by three subsequent rights issues in December 2009, September 2010, and recently in November 2011 for a total amount of $6.6 million. This participation will allow Gryphon to finance its on-going exploration program in the South western part of Burkina Faso.  In March 2010, IFC engaged a 6.8 million US dollar participation in the capital of Volta Resources, yet another mining company. This will support the company in financing its exploration operations as well. Notable is the fact that IFC’s activities alongside these two companies include assistance in the management of environmental and social issues.

IFC signed, in July 2008, a Trade Finance agreement with Ecobank-Burkina Faso, as part of an investment package with its parent, Ecobank Transnational Inc. (“ETI”). The Trade agreement provides a trade finance guarantee for up to US$ 5 million. As of December 31, 2011, utilization for the six months ended that date was US$12.3 million.

IFC agreed to invest up to 3% in BHBF, the first bank in Burkina Faso dedicated to housing, helping to strengthen the country’s financial sector while demonstrating the commercial viability of mortgage lending. IFC will complement its investment with a strong advisory services program $600,000 to strengthen the bank’s operations during its critical growth phase.

Since 2008 IFC also provided loans to two companies, Marina Market and Hotel Independence in order to sustain their regional activities. Globally, since 2008, on investment side IFC’s commitment in Burkina Faso totalizes USD 30.1 million.

The Government is actively taking the lead in coordinating and harmonizing donor activities: an internet-supported aid management platform was set up to help the Government systematically monitor donor in-bound funds and will back-up the National Action Plan for Aid Efficiency (PANEA). This platform will also facilitate the alignment of donor assistance with the country’s development priorities, improve predictability of aid flows and reinforce aid coordination. A joint group composed of the Government, Technical and Financial Partners, Civil Society organizations and private sector reviewed the PANEA in relation to the recommendations of the Accra High Level Forum/ Paris Declaration on Aid Effectiveness and the Burkinabe Government’s Framework on Aid Efficiency. Furthermore, Burkina Faso’s development partners focused their internal consultations on rationalizing their action and avoid dissonances vis-à-vis the Government.

 

Last updated April 2012




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