White Gold in Burkina Faso

	Burkina Faso is dependent on cotton for 60 to 70 percent of the country’s export earnings.

June 8, 2005 – Cotton has a special significance in Burkina Faso – one of the world’s poorest countries.

Top quality cotton is a source of national pride and is known as Burkina Faso’s “white gold”.

The importance of cotton in this country, located in the heart of the Sahel, can’t be under-estimated.

Burkina Faso is dependent on cotton for 60 to 70 percent of the country’s export earnings.  It represents about six percent of GDP. So the performance of the cotton sector is a dominant factor in the country’s economic growth, fiscal stability, efforts to reduce poverty and promote jobs.

And in contrast to other countries in the region, Burkina Faso is seen as managing its cotton sector well, with the government spearheading a number of reforms of the cotton industry – a factor which has helped the country maintain a real economic growth rate of more than five percent a year for the past decade.

World Bank president Paul Wolfowitz will gain first hand knowledge of the dominance of the cotton industry when he visits the SOFITEX cotton ginning company in Bobo-Dioulasso. SOFITEX is privately managed, with the State continuing to hold a 13 percent stake in the company.

The World Bank has been an active supporter of reforms in Burkina Faso’s cotton sector, aimed at increasing competitiveness in world markets. Last year, two new companies took over cotton operations in two zones of the country. The World Bank Group’s Multilateral Investment Guarantee Agency, MIGA, issued a guarantee totaling US$38 million to DAGRIS of France for its investment in SOCOMA - one of the two new companies to begin operations last year.

Wolfowitz’s visit will also allow him to gain an insight into a major issue now confronting Burkina Faso – a drop in world cotton prices. Late last year, cotton prices fell by 30 percent in dollar terms, creating economic difficulties for all cotton exporting nations of Africa.

The decline in cotton prices is seen in part as resulting from subsidies given to OECD cotton growers by their governments. There have been calls for these subsidies to be eliminated, as well as calls for African cotton exporting countries to improve their competitiveness.

The World Bank believes Burkina Faso’s economy would be less vulnerable to swings in the world cotton market, if its production and exports were more diversified.

The Bank has also been supporting local communities to plan and undertake village based development projects. Wolfowitz will visit a number of these projects. They include a small scale dam and reservoir that’s allowed the local community to develop fisheries, livestock and irrigated crops; a forestry management scheme for sustainable harvesting of wood for heating and cooking; and a community well, providing not only  local people with access to clean drinking water by also helping increase livestock production and reduce the time women spend hauling water.