Burundi is a small landlocked country with a total area of 27,830 square kilometers. Densely populated, it has a population of approximately 10.6 million inhabitants. The economy is dominated by subsistence agriculture, which employs 90% of the population, though cultivable land is extremely scarce. More than a decade of conflict has devastated much of the country’s physical, social and human capital however substantial improvements have occurred over the past decade, thanks to a relatively well performing demobilization program. The army has largely retreated back to its barracks, roadblocks and checkpoints have been disassembled, and night curfews were lifted. Security and legal entities are under the government’s control and the army is now seen as one of the main stabilizing institutions. A reform of the police is also underway, with the aim of making it more professional, in order to restore the people's trust in the institution. Economic reforms and institution building are also ongoing.
The preparations for next year’s elections have begun, with several agreements reached recently amongst key stakeholders. However, there are concerns about the possibility of President Nkurunziza running for a third term. The international community continues to call for a more fair and inclusive process and has expressed concern regarding the narrowing space for opposition parties to freely carry out their activities. In this context, a roundtable fostering an open and frank dialogue on the politico-economic developments since the October 2012 Geneva conference took place in Bujumbura on December 11and 12, 2014.
Burundi is enjoying its first decade of moderate economic growth however poverty remains widespread. The share of the population deprived of basic food needs declined by 6 percentage points between 2006 and 2012 but remains high at 60%. Inequalities between the capital, Bujumbura, and the rest of the country, remain high but are decreasing despite rapid economic growth in urban areas. In rural areas, 61.5% of the population cannot meet their basic needs in terms of calorie intake, versus 41% in Bujumbura. Burundi’s ranking on the UNDP’s Human Development Index increased by 2.5% per year between 2005 and 2013 as education and health outcomes have significantly improved over the period yet the country still ranks low at 180th out of 187 countries in 2013. Per capita gross national income more than doubled between 2005 ($130) and 2013 ($280).
Burundi is making the transition from a post-conflict to a stable and growing economy. After significant improvements to consolidate peace and security, the country’s development program is shifting gradually towards modernizing public finance, strengthening basic social services, and upgrading economic infrastructure and institutions, particularly in the energy, mining, and agricultural sector, with an increasing participation of the private sector. The goal now is to grow a more stable, competitive and diversified economy with enhanced opportunities for employment and improved standards of living.
Over the last decade, economic growth in Burundi has oscillated between 4 and 5%. Economic growth is expected to accelerate slightly to 4.8% in 2014 (up from 4.5% in 2013) boosted by the recovery in the coffee sector and momentum in the construction and service sectors. Inflation continues to decline reaching 3.5% in October 2014, down from 24% in March 2012, reflecting a prudent monetary policy helped by a recent decrease in the prices of imported goods, including oil.
Burundi’s economy is handicapped by two main weaknesses: limited fiscal space and narrow export base making both fiscal and external positions very vulnerable.
The domestic and external macroeconomic environment has improved. Increase in coffee prices (up by 45% in the past 12 months) have given a boost to the economy. The external balance is also projected to improve. The declining trend in consumer prices is continuing and the inflation rate fell below 3.5% as of May 2014. The exchange rate has stabilized at around 1,550 BiF per dollar and the level of foreign reserves stood at around 4 months of imports at the end May 2014.
However, concerns remain on the fiscal front. Revenue mobilization weakened in the first half of 2014 (7.6% below target), partly as a result of the effort to streamline tax payments (in January 2014, the government abolished the 4% advance for imported products and suppressed the 1% minimum tax on enterprises). While these measures are expected to enhance private sector activities, they have had a short-term fiscal cost which has only been partially compensated by revenue earned from the award of a new telecommunication license (which generated approximately 0.3% of GDP in additional revenue). As a result, the government has strictly controlled public spending. The overall execution rate was only 22.3% by the end of April 2014.
Last Updated: Jan 12, 2015