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Burkina Faso: Country Brief

Burkina Faso is a low-income, landlocked, Sub-Saharan country with few natural resources and a population estimated at 16 million inhabitants in 2010. The country’s economy is dependent on cotton exports and is vulnerable to exogenous shocks, although mining has grown a great deal in the economy over the past two years. Between 2000 and 2010, Burkina Faso maintained an average growth rate of over five percent per annum. The International Monetary Fund (IMF) estimates the annual growth rate for 2012 at seven percent following contracted growth of 4.2% in 2011. The economic upturn in 2012 is due to relatively good rainfall for the 2012-2013 season. Consequently, agricultural production increased nearly 25% and cotton production posted an estimated 470,000 metric tons, representing a 13% increase over the previous season. The economy is also benefiting from a slight upturn in its output of gold (32 metric tons), which is still fetching a good price on the international markets. However, Burkina Faso’s economy is suffering the damaging effects of last year’s poor crop season and the Malian crisis, with refugees reported at nearly 100,000 to date.

Burkina’s poverty rate was estimated at 46% in 2009 and the country ranked 181st out of 187 countries in United Nations Development Programme’s (UNDPs) Human Development Index in 2011.

Political context

Burkina Faso experienced a period of domestic protest and political unrest in 2011, but the situation appears to have since stabilized.

Following the President’s appointment of a new Prime Minister and new cabinet in April 2011, extensive consultations were conducted with the different stakeholders to address the growing demand for a fairer share of economic growth and better governance. The government has embarked on a series of extensive institutional and political reforms.

The political situation in Burkina Faso could be severely tested in the coming months with the combined general and local elections - initially planned for April 2011, now being held on December 2, 2012 - and developments with the conflict in neighboring Mali and the massive influx of over 100,000 refugees.

Development challenges

Despite major market-based reforms, support to the private sector and access to basic services remain important concerns.

Vulnerability and lack of diversification

Burkina Faso’s economy relies predominantly on the performance of the cotton sector. This makes the country particularly vulnerable to fluctuating cotton prices. The 2011-2012 season endured pockets of drought in 11 of the country’s 13 regions. Despite the observed increase in gold exports (32 metric tons in 2011 against 23 metric tons in 2010), Burkina Faso needs to solve the problem of its economic vulnerability and develop a broader and more sustainable resource base with the intensification and diversification of its economy. The newly adopted Strategy for Accelerated Growth and Sustainable Development (SCADD) sets an ambitious goal of two-digit economic growth every year for the next five years in an effort to eradicate poverty.

The challenge here will be to expand growth centers in the key sectors that offer export potential and raise income in rural areas in order to create the conditions conducive to sustainable long-run economic growth. To this end, mining growth centers led by the private sector should be a major asset for the achievement of SCADD’s goals.

Human development

Sustained efforts and investments have generated positive human development trends:

  • Infant mortality fell from 107 deaths to 81 deaths per 1,000 live births (DHS, 2003) and continued its downturn to 65 deaths per 1,000 live births (DHS, 2010)
  • The maternal mortality rate dropped from 484 per 100,000 live births (DHS, 1995) to 341 deaths (DHS, 2010)
  • Gross primary school enrolment rose sharply from 57% in 2005 to 72.4% in 2009, 74.8% in 2010, and 77.6% in 2011

Despite the rising number of children enrolled in school, the child literacy rate stood at 28.7% for Burkina Faso in 2010, compared to 70% for the Sub-Saharan African region. Life expectancy at birth was 57 years according to the 2009 Institute for Statistics and Demography. This is slightly above the regional average of 50 years. Access to secondary education also improved from 20% in 2005 to 32% in 2011 for lower secondary education and from 5.6% to 10.7% for upper secondary education. Quality is still an issue for the entire secondary education system.

The government is preparing a new ten-year program to improve learning outcomes and reduce inequities. In skills development, the Burkina Faso government and the Bank have agreed to prepare and implement an ambitious reform to improve the quality of the education system, including the technical and vocational education and training (TVET) systems and higher education. The reform will give the Burkinabe economy highly skilled workers closely matched to private sector needs, which will boost youth employment.

Demography

The 2006 census posted a demographic growth rate of 3.1% (compared to 2.3% in 1996). This rate is due to a combination of negative factors; a growing gap between birth and death rates, fertility rates stabilizing at very high levels and very slow adoption of modern contraception methods. According to DHS 2010, modern contraception prevalence rose two points in seven years – from 13% to 15%. This unbridled population growth is doubling the population with each new generation and seriously hindering the impact of initiatives to reduce poverty and further human development, especially in the education and health sectors.

The country is reviewing its policy and developing strict measures to control demographic growth.

Gender

A three-year Operational Action Plan (PAO-20) was passed in December 2010 to flank the adopted 2009 National Policy for Gender Promotion. Following the socio-political crisis in early 2011, the President of Burkina Faso appointed a new Minister for the Promotion of Women in the cabinet reshuffle. The Minister’s new team introduced policy shifts to better address gender inequalities, mainstream gender issues, and speed up the implementation of the Operational Action Plan despite the tiny national budget allocated to the Ministry (0.01%). The Minister has asked donors to consider earmarking at least 15% of their sector budget support for gender promotion in Burkina Faso.

Women represent about 52% of the population in Burkina Faso. To empower women in the decision-making sphere, Burkina Faso has passed a law introducing a 30% quota for female candidates on the upcoming lists of candidates for the combined general and local elections scheduled for December 2012.

In September 2012, the Burkina Faso government held the 3rd National Women’s Forum on Mainstreaming Gender in the Implementation of the SCADD. The forum, held under the patronage of the President of Burkina Faso, reviewed the issues and challenges of the cross-cutting nature of gender in the SCADD, addressed how to develop human capital for Burkina Faso’s sustainable development, discussed the need to facilitate women’s access to financing to support female business initiatives, and submitted specific requests to the President of Burkina Faso with a view to reducing gender inequalities by 2015.

 

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

The government has set ambitious targets for growth and development in the 2011-2015 SCADD. To this end, it held a consultative group meeting with the support of the World Bank in Paris in early February 2012. This event rallied traditional donors and the private sector. The consultative group managed to secure pledges of US$5.3 billion representing 96% of the total financing requirement, which is estimated at US$5.5 billion. The remaining four percent will be financed by donors who did not attend the consultative group meeting. The number of donors and private sector players attending the meeting and the quality of their participation marked a return to normal, and donor confidence returned following the social unrest of 2011.

The World Bank’s strategy in Burkina Faso 

Following the implementation of the 2010-2012 Country Partnership Strategy, endorsed by the Board of Directors in September 2009, the Bank is preparing a new strategy with the African Development Bank (AfDB). This strategy will be aligned with the new Strategy for Accelerated Growth and Sustainable Development (SCADD).

 

The current Bank portfolio in Burkina Faso covers 17 national projects for a commitment of US$997 million, including the latest development policy operations (DPO) in the new line of Growth and Competitiveness Credits (GCC-1), and six regional projects for an earmarked US$140 million. The portfolio’s overall performance is satisfactory, with current implementation standing at 4.5 years

Below are a few selected areas in which the World Bank has contributed to Burkina Faso’s development performance:

Agriculture

Agriculture, including the livestock and food processing sectors, accounts for about 40% of gross domestic product (GDP) and employs over 80% of the population. Burkina Faso’s economy relies predominantly on the performance of the cotton sector – which represents 32% of exports. This makes the economy particularly vulnerable to fluctuating cotton prices and climate change effects. Burkina Faso needs to address its economic vulnerability and develop a broader and more sustainable resource base by scaling up and diversifying its economy.

Rural development

Over the past 30 years, the Burkina Faso government has demonstrated a strong commitment to environmental protection and the sustainable management of its land and forestry resources.  It has developed a Ten-Year General Investment Plan (2008-2018) and sector strategies for the environment, forestry, and adaptation to climate change. Burkina Faso has also developed a number of successful pilot forest conservation and agroforestry projects.

Energy Sector

Burkina Faso has no known fossil fuel resources. Petroleum product consumption is entirely dependent on highly expensive imports brought in by road from ports over 1,000 kilometers away.  The country’s hydroelectric potential is limited, with less than 100 megawatts of potential capacity on five identified sites. The total generating capacity of the installed base of hydroelectric power plants is a mere 35.9 megawatts and is highly vulnerable to erratic rainfall. Moreover, full use is not made of the other renewable energy sources (such as solar power). The combination of these factors has hindered Burkina Faso’s ability to increase access to electricity. If the country is to address its main challenges, it will need to build its capacity to meet a growing demand for energy services, step up energy supply efficiency and equity by reforming the pricing and subsidies policy, improve access to energy services for the rural and suburban populations, secure a sustainable supply of cheaper electricity from neighboring countries, and increase the share of renewable energies in the energy mix.

These challenges are being addressed by the broader development of the West African Power Pool (WAPP), designed to generate economic benefits by improving the power grid and creating a regional electricity market for member states. The extension of the Cote d’Ivoire-Bobo-Dioulasso transmission line to Ouagadougou, financed by the Energy Sector Development Project, serves as a launch pad for this regional integration initiative.  The Ouagadougou region’s power supply will gain a greater mix and reliability from then hooking up Ouagadougou with Bolgatanga (Ghana) via the abovementioned interconnection. This connection is due to be operational in 2014. The current Energy Access Project is supporting Burkina Faso’s actions to ramp up energy access and use and improve living conditions in selected rural, suburban, and urban areas. Other donors such as the African Development Bank, the West African Development Bank, the Indian Government – through EXIM Bank – and the French Development Agency (AFD) are also helping the Burkina Faso government raise its electrification rate.

Transport sector

The transport sector portfolio comprises four projects:

  • The Transport Sector Project has helped the country conduct investments, studies and reforms. Of note among the reforms are the road maintenance fund and road safety. The project has raised the Rural Access Index and lengthened the school year from eight to nine months in project areas. The percentage of roads in good and fair condition increased from 53% in 2003 to 7% in 2010. The project has also improved 3,336 km of dirt roads and funded the Transport Sector Strategy update.
  • The Air Safety and Security Project has helped bring the country into line with ICAO air safety and security standards. It has provided assistance for Burkina Faso to set up an independent national civil aviation agency (ANAC) and has provided capacity building for 365 experts. The Regional Transport and Transit Facilitation Project has improved transport sector stakeholders’ knowledge of transport and transit regulation principles.

Private sector

The World Bank Group’s support to the private sector takes the form of the dialogue on strengthening the role of the private sector and its contribution to the economy, and assistance with a range of reforms launched by the Government for a buoyant, competitive private sector.

Burkina Faso has conducted three important reforms contained in the Doing Business 2012 report: starting a business, dealing with construction permits and getting credit.

The Private and Financial Sector Development Department’s portfolio covers two major projects:

  • The Competitiveness and Enterprise Development Project (PACDE), with a US$30.7 million budget, has contributed to the development of the country’s private sector by creating the conditions for improved competitiveness, business development, and investment promotion. This project is currently in progress, with additional financing of US$20 million approved in 2010. The major project outcomes to date have been:  
    • Reduced government involvement in business activities with the restructuring and privatization of public enterprise and a greater role for the private sector
    • Improved access to telecommunications services
    • More business start-ups due to streamlined procedures and business development services
    • An improvement in contract enforcement driven by support to the Ministry of Justice and the arbitration and mediation departments
    • Increased buoyancy and competitiveness for the assisted businesses via the matching grant
    • Stronger private sector support institutions, particularly the Chamber of Commerce of Burkina Faso, which houses the Arbitration and Mediation Center and the Burkina Faso House of Enterprises. This project is also supporting the promotion of private investment and broader access to financial services.
    • The telecommunications sector reform raised teledensity (number of telephone lines per 100 inhabitants) from 1.5 in 2003 to 27.6 in 2009.

The Burkina Faso House of Entreprises Maison de l’Entreprise du Burkina Faso, MEBF) contributed to business development and set up a one-stop shop housing the Business Formalities Center (Centre de Formalités des Entreprises, CEFORE) to assist with business start-ups and the Construction Permit Formalities Center (Centre de Facilitation des Actes de Construire, CEFAC) for the issue of construction permits. These actions reduced the number of days required to start up a business from 45 in 2007 to seven in 2011. As of June 2012, some 22,500 business start-ups had been registered by the one-stop shop and nearly 8,000 new jobs had been created by businesses assisted by the project.

The Bagré Growth Pole Project

The Government of Burkina Faso has received a US$115 million grant from the World Bank to implement the Bagré Growth Pole Project.

The Bagré Growth Pole Project is part of the World Bank’s Strategy for Africa and, more specifically, the World Bank’s 2010-2012 strategy for Burkina Faso. This strategy identifies growth centers as assets to improve economic competitiveness and foster job creation.

The project’s main purpose is to help build economic activity in the growth center, thereby increasing private investment, employment generation, and agricultural production. The first Conference of Investors for the Bagré Growth Pole Project is set for September 19 to 21, 2012.

Mining Sector 

The Bank advised the authorities to apply to the Extractive Industries Transparency Initiative (EITI) to improve the governance and transparency of the mining supply chain. Burkina Faso benefits from a trust fund for EITI implementation and has accordingly produced reports, built capacities, and improved communications for interested players and stakeholders. The country is now at the candidate country stage.

The Mining Sector Development Department’s portfolio

  • The Mineral Development Support Project

The Burkina Faso government has received a US$33 million grant from the World Bank to implement the Mineral Development Support Project. The project is briefed to build the management capacities of the main Burkina Faso institutions working in the mining sector.
The project is aligned with the World Bank’s strategy for Africa, with its 2010-2012 strategy for Burkina Faso, and with the four pillars of the SCADD. It is already underway with capacity building activities for the ministries of mines, finance, and the environment.
Note that a major mining promotion action is scheduled in Ouagadougou for December 6 to 8, 2012.

Water and sanitation

The Board approved a US$80 million project in May 2009 for strategic continuity of Bank support to the drinking water supply sector. This new operation is set up to support the government’s work on achieving the water and urban sanitation Millennium Development Goals (MDGs), and consolidate the achievements of the sector reform. The project’s specific target is to provide access to safe drinking water for 527,000 people, and improved sanitation services for 246,000 individuals and 120,000 students by December 2015.  The project is progressing satisfactorily and no particular problems have been reported to date.

Burkina Faso has an extensive Water and Sanitation Program (WSP) in progress. In 2006, Burkina Faso was selected as a focus country with in-country WSP staff working on the ground. The WSP has since provided the government with proficient support in the preparation/adoption of a Water and Sanitation MDG strategy, a road map and an action plan, the development of pro-poor strategies, sector coordination and policy dialogue, on-site sanitation, and sector financing and monitoring, decentralization, the development of local management tools for planning, budgeting, monitoring and evaluation (M&E) and delegated management for access to water and sanitation services by the poor.

The World Bank’s response to the food crisis

The poor 2011-2012 season harvests due to local pockets of drought across the country come as a reminder that Burkina Faso needs assertive action to strengthen its economy’s resilience to exogenous shocks. Food production was far below the 2010-2011 season, with cereal production down 20% and other food crops (yams, sweet potatoes, cowpeas, etc.) down 21%. The situation forced the government to declare food deficits in 170 (48%) of the country’s 351 communes. An estimated 400,000 to 500,000 children under five-years-old are at risk of chronic malnutrition.

The World Bank responded to the government’s requests for assistance with this crisis by proposing the use of already-operational instruments in the form of the projects and programs, whose briefs will remain unchanged. For example, Phase II of the National Land Management Program will distribute 5,021 metric tons of maize to 166 communes and 140 metric tons of rice to the six Malian refugee sites. The Bank has also raised its budget support from US$70 million to US$90 million for the country to tackle this food crisis and provide food to Malian refugees currently estimated at over 100,000.

A Japanese grant of US$3 million is being put together to support the government’s initiative.

International Finance Corporation in Burkina Faso

IFC has been working in Burkina Faso with its Doing Business Better in Burkina Faso program since 2006. The first assistance-advisory phase culminated in March 2010 with a significant contribution to improving the country’s indicators and its ranking in the Doing Business Report.
On February 14, 2012, the Prime Minister officially launched a new program to build on the achievements of the first and extend the reform coverage. Burkina Faso’s new Better Business Environment Program promotes the following tracks:

  • Business license reforms: the aim of this track is to identify and analyze all the business licenses in use and provide technical assistance to simplify license issuing procedures; 

  • Trade procedure improvements:this strand is designed to simplify import and export procedures, introduce risk management into border inspections and controls, and set up an electronic one-stop shop to collect customs pre-clearance documents (SYLVIE);

  • Implementation of the Organization for the Harmonization of Business Law in Africa (OHADA): At the national level, this component assists the government with the implementation of revised OHADA uniform acts at national level to improve the impact of these acts on economic activity. Technical assistance will also support training and outreach activities on these revised acts.

  • Promotion of the health sector: this element will be implemented by the Health in Africa Initiative program to improve the policy and regulatory framework governing private health professionals and build their capacities. Assistance is planned for the revision of health sector legislation and regulations, especially on private health practice. This project is due to start in October 2012. The initiative is also tasked with helping the Ministry of Health define a National Strategy for the Development of the Private Health Sector by the end of 2012. The two anchor activities are scheduled for the start of 2013 are: the creation of an Electronic Registrar for healthcare establishments and the definition of a National Strategy for Public-Private Partnership in the Health Sector.

In 2009, International Finance Corporation (IFC) launched direct investment operations in Burkina Faso, focusing initially on the telecommunications and mining sectors
.
In April 2009, IFC bought three percent of the shares in Onatel and lent US$8.7 million to the company to develop its network nationwide.

In mining, IFC invested in two companies involved in exploration to help them set up their environmental and social programs:

  • In December 2009, IFC started investing in Gryphon Minerals. It has invested a total of US$6.6 million in the company to date.
  • In March 2010, IFC took a US$6.8 million shareholding in Volta Resources.

IFC’s regional operations have also created opportunities for companies and group subsidiaries in Burkina Faso. In July 2008, for example, in accordance with a financial package granted to Ecobank Transnational, Inc. (ETI), Ecobank’s parent company, Ecobank-Burkina Faso signed a Trade Finance agreement providing a guarantee of up to US$5 million.

Similarly, IFC invested in the Marina Market and Hôtel Indépendance groups in 2008 to boost their investments in the subregion countries.

In 2011, IFC developed an investment strategy for Burkina Faso to concentrate its action in the agrifood sector, infrastructures, financial intermediation, and tourism under the SCADD.

In keeping with this strategy, Banque de l’Habitat du Burkina Faso (BHBF) and IFC signed a first agreement for a three percent holding in the bank. The BHBF, Burkina Faso’s leading housing bank, helps bolster the country’s financial sector while demonstrating the commercial viability of the mortgage system. IFC rounded out its investment with a US$600,000 assistance program to scale up the bank’s operations during its critical growth phase.

In total, IFC’s investments in Burkina Faso since 2008 come to US$30.1 million.

The government is actively taking the lead in coordinating and harmonizing donor activities: an internet-driven aid management platform has been set up for the government to systematically monitor donor in-bound funds and back up data on the National Action Plan for Aid Effectiveness (PANEA). This platform will also help align donor assistance with the country’s development priorities, improve the predictability of aid flows, and make for closer coordination of aid. A joint group comprising the government, technical and financial partners, civil society organizations and the private sector reviewed the PANEA in light of the recommendations of the Accra High-Level Forum/Paris Declaration on Aid Effectiveness and the Burkinabe Government’s Partnership Framework for Aid Effectiveness. Burkina Faso’s development partners have also been focusing their internal consultations on streamlining their action and avoiding discord with the Government.

Through July 31, 2012, the Bank was a member of the Troika set up to work on multidisciplinary policy and economic dialogue with the government.

Last updated October 2012




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