History Last updated March 2008 
Burkina Faso is a poor, landlocked, sub-Saharan country of 13 million inhabitants. It is bound by Benin, Togo, Ghana, and Côte d’Ivoire in the south, by Mali in the north and in the west, and by Niger in the east. Burkina Faso has limited natural resources and rainfall, an economy that is strongly dependent on cotton exports, and a vulnerability to natural disasters and regional instability. Burkina Faso has nonetheless achieved real gross domestic product (GDP) growth rates of over 5 percent per year since 1994. Real per capita income has increased 20 percent since 1994. Per capita income was US$430 in 2007 compared to US$590 for low income countries and US$750 for Sub-Saharan African. Poverty incidence decreased from 54 percent in 1998 to about 40 percent in 2007. Positive trends in social welfare have accelerated, with infant mortality rates falling from 107 per 1,000 live births in 1995 to 97 in 2003. The gross primary school enrollment rate has also risen quickly, from 44 percent in 2000 to 57 percent in 2005. Other social indicators rank at or below the averages for Sub-Saharan Africa: in 2005, literacy rate was 30 percent and life expectancy at birth was 43 years, compared to 35 percent and 46 years for Sub-Saharan Africa. Burkina Faso was ranked 176th out of 177 countries in the 2007 Human Development Index (HDI), published by the United Nations Development Program. Political context Burkina Faso has enjoyed political stability since 1987 with the “rectification” of the revolution, including a shift toward more market-oriented economic policies and re-engagement with the international community. Legislative elections took place in May 2007. In the last presidential elections in November 2005, President Blaise Compaoré won a third, five-year term. Municipal elections took place on April 23, 2006, resulting in the first-ever elections of local governments for 302 newly established rural communes. In early 2008, several protests erupted in Ouagadougou and other towns against the “high cost of living”. In early marches there was some violence and property destruction, and many demonstrators were arrested. A peaceful protest in Ouagadougou on March 15 drew large numbers of people. The government has taken measures to temporarily suspend import taxes on a set of basic commodities in response to the rising cost of living. Economy Over the past 10 years Burkina Faso has established a good track record on macroeconomic performance, and has sustained a real growth rate of more than 5 percent per annum. However, Burkina’s undiversified economy remains vulnerable to external and climatic shocks. Since 1991 the country has implemented substantial economic and social reforms with support from the World Bank, the IMF, and other donors. Much progress has been made in liberalizing the economy and developing the private sector. However, deeper structural and institutional reform is needed to support diversification of an economy still based on agriculture characterized by low productivity and a single export crop (cotton). In 1997 Burkina Faso became eligible for debt relief under the original HIPC Initiative. It reached its completion point under the original HIPC Initiative and eligibility under the enhanced HIPC Initiative in June 2000 (World Bank Board) and July 2000 (IMF Board). In 2006 Burkina also qualified for the multilateral debt reduction initiative leading to cancellation of outstanding debts to the World Bank, IMF and African Development Bank. In 2000, Burkina Faso became one of the first developing countries to prepare a full Poverty Reduction Strategy Paper (PRSP). Donors have progressively aligned support to the PRSP. A second PRSP is scheduled to be presented in 2009/2010. To support PRSP implementation International Development Association (IDA) channels resources through a wide range of instruments, including traditional investment loans, budget support and community level capacity building and investment. IDA’s current portfolio of projects covers 8 sectors (agriculture, health, education, energy, transport, local level capacity building, urban management, and economic management). Over the last 8 years, budget support is provided by IDA through a series of annual Poverty Reduction Support Credits (PRSCs). In recent years, the PRSCs have underpinned privatization and spin-offs in the cotton sector, liberalization of the telecommunications and reforms in the electricity sector, as well as investment climate reforms aimed at reducing the cost of doing business in Burkina. The current PRSC series puts emphasizes on economic and export diversification, investment climate reform, increasing public-private partnerships for infrastructure and energy development and supporting administrative and fiscal decentralization. Burkina Faso’s external environment remains fragile. While world prices for cotton — Burkina’s main export commodity — have slightly improved in recent years after a 15 percent decline in 2005, cotton revenues remain very vulnerable to climatic shocks. With food and oil prices rising worldwide (oil prices rose by 43 percent, nearly doubling since 2004 and the prices of many foodstuffs are rising rapidly since end 2007), inflationary pressures are likely to compound this challenge. Key issues (among others) being examined by the Government with the support of the World Bank include (i) how to better mitigate economic risks in the face of price, exchange rate and climatic volatility, (ii) how to identify new sources of growth and improve the investment climate, (iii) what reforms are needed for a more effective financial sector, (iv) avenues to increase the efficiency of government expenditure and ensure that it is pro-poor, (v) how to achieve effective decentralization, (vi) how to improve governance, and (vi) how best to finance Burkina’s significant infrastructure needs. For general information on the country and economy, refer to the: Donor coordination Paris Declaration on Aid effectiveness defined a number of commitments on the part of donors and country partners. The implementation of these international commitments should enable a partner country like Burkina Faso, which depends strongly on external assistance, to reach a higher level of effectiveness in the implementation of its economic and social policies. Since 2005 a lot of work has been carried out by IDA, donors and government. The United Nations System, the European Commission Delegation and IDA jointly organized on 13 June, 2005 a meeting of the whole donor community represented in Burkina Faso. It was decided that a technical secretariat be established to help support Burkina Faso donors in the implementation of the Rome and Paris recommendations. In 2007 they agreed to take far-reaching and monitorable actions to make aid more effective as they look to the achievement of Burkina Faso’s ‘’Plan d’Action National de l’Efficacité de l’Aide’’. They agreed to work together on a future Joint Assistance Strategy. Government has nominated a National Coordinator for Aid Effectiveness as an interface with donor’s community present in Burkina Faso. He played now a great role in the harmonization process. To improve the effectiveness of their aid, promote harmonization, alignment on the country’s PRSP and a focus on country results, IDA and other donors have been providing direct budget support while financing sector-wide programs in basic education, health, HIV/AIDS and water supply. In health, a pooled funding mechanism channels resources directly to health districts and hospitals on the basis of indicators that can be tracked over time. In education, donors plan to concentrate their interventions on the 20 provinces with the lowest primary school enrollment rates. Overall, strong donor harmonization has contributed to more predictable aid flows and encouraged the use of country systems. IDA Since the beginning of 1994, total IDA commitments for Burkina Faso have amounted to US$1.2 billion, funding 72 operations. This includes 10 budget support operations, including six Poverty Reduction Support Credits. Sustained support for Burkina’s transition to a market economy has been critical and has made a measurable difference in a number of areas. The current IDA portfolio consists of $642 million financing 19 active projects, including three regional programs. The Country Assistance Strategy (CAS) for the FY06-09 period was approved by the World Bank Board of Executive Directors in July 2005. The CAS supports the pillars of the national poverty reduction strategy with analytic work, technical advice, on-going operations and new financing. It is built around a results framework that explicitly defines the links between IDA-supported activities, direct outcomes of these activities and the country’s higher-level development outcomes. The CAS seeks to contribute to the following four outcomes: - Accelerated and shared growth
- Improved access to basic social services
- Increased employment and income opportunities for the poor
- Better governance with greater decentralization
The CAS was reviewed at mid-term (May 2007) in consultation with Burkina Faso’s government, civil society, and development stakeholders, with the aim of making concrete recommendations to strengthen its effectiveness. It found that CAS implementation has been satisfactory overall and recommended : (i) strengthening the Government and donors’ response to the 2007 cotton crisis; (ii) restructuring Bank support to Private Sector Development with the objective of supporting mining sector investments and SME development among others, (iii) making further efforts towards harmonization, (iv) integrating a gender focus more systematically into WB supported operations, (v) improving the monitoring of fiduciary processes, and (vi) launching governance diagnostics. In 2007, cotton sector restructuring was the intense focus of an in depth Bank/Government dialogue and price and competitive measures were taken to stem cotton sector losses. These measures are bearing fruit at the end of the 2007/2008 campaign although considerable challenges remain. A sharper focus on private sector development is being put in place with considerable progress in doing business indicators (Burkina jumped from the 130 th to the 105 th rank in the overall ratings in 2007) and specific efforts to improve understanding of needed financial and private sector reforms. Also Governance diagnostic exercises involving civil society have started and the Bank is supporting the Government in improving the functioning of government control and audit institutions. A new 2010-2013 CAS is will be prepared starting mid-2008. IFC IFC’s strategy for Burkina Faso is focused on: (i) improving the investment climate (ii) building up the capacity of SMEs and micro enterprises and that of institutions that can support them, and (iii) proactive support to project development in the financial, tourism and mining sectors, with a particular emphasis on junior miners. IFC’s operations in Burkina are covered from the IFC regional office in Accra, Ghana. IFC’s current held investment portfolio amounts to US$2.7 million. Recently, the Board approved a $12 million equivalent loan (yet to be disbursed) and up to US$30 million of equity into Onatel, the newly-privatized telecom operator. IFC has also extended US$6 million loan to BACB specifically for the banks SME customers. IFC is also providing TA assistance to the bank in areas of risk management, implementation of effective credit processes, etc., as well as operational guidance for a new micro-finance unit to be incorporated within the bank. Simultaneously, PEP Africa, in collaboration with FIAS and the World Bank, has established the Doing Business Better program to strengthen specific areas within the business environment. The program has already begun to deliver results, with government addressing issues related to the cost of property transfers and land title registration, as well as to the labor code. Finally, IFC’s Grassroots Business Organization (GBO) Department is providing assistance to the Ouagadougou Handicraft Village. IFC is teaming with the World Bank to provide advice and support to the government in its search for a sensible approach regarding the proposed new airport. IFC has sponsored a study to to review the model proposed by the government to implement the new airport, and to assess alternative options to designing the public-private partnership. MIGA MIGA’s portfolio in Burkina Faso consists of two projects in support of the country’s manufacturing and tourism sectors. These projects, financed by French and Malian investors, have a combined gross exposure of US$46.1 million. In the most recent of these investments, MIGA issued guarantees (against the risks of transfer restriction, expropriation and war and civil disturbance) to a Malian investor for its equity investment and loan guarantee toward a hotel renovation and expansion. The project will help to facilitate the Government's’s efforts to establish itself as a regional center for business tourism. It addresses three of MIGA’s priority areas, as it represents a (i) south-south investment (ii) in one of the poorest IDA-eligible countries (iii) in Africa. It is also a joint collaboration between IFC and MIGA and supports the Bank Group’s country assistance strategy for Burkina Faso, which identifies the development of the private sector as one of its pillars. Contacts Ishac Diwan
Country Director
The World Bank
69, Dr. Isert Road, Accra, Ghana
Tel: (233-21)-229-681/ 5337+3100
Email: idiwan@worldbank.org Michelle Keane
Acting Country Program Coordinator
The World Bank
1818 H Street, N.W. MSN J8-806
Washington D.C. 20433
Tel: (202) - 473-2534
Fax: 202 473 51 39
Email: MKeane1@worldbank.org Gilles B. Alfandari
Senior Economist
The World Bank
1818 H Street , NW. MSN J9-903
Washington , DC 20433
Tel: (202) 458 9498
Email: Galfandari@worldbank.org Asmaou Diallo-Bah
Sr. Country Program Assistant
The World Bank
1818 H Street, N.W. MSN J8-806
Washington, DC 20433
Tel: 202 473 6046
Email: Adiallobah@worldbank.org |
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