A landlocked State in Central Africa, Burundi is one of the most densely populated countries on the continent with 470 inhabitants per square kilometer. Its economy is heavily reliant on the agricultural sector, which, despite the paucity of arable land, employs 80% of the population. Poverty is mainly rural and overwhelmingly affects small farmers.
Political Context
Pierre Nkurunziza has been in power since 2005. Following a referendum, the country adopted a new constitution in June 2018 based on the 2000 Arusha Agreement for Peace and Reconciliation in Burundi. Among other things, it establishes a seven-year presidential term starting with the next general elections scheduled for May 2020. The outgoing president has announced that he will not be standing for re-election.
The country also has a National Assembly and a Senate whose members will be elected for five years. Legislative and commune-level elections will be held on the same date, while Senate elections will be held in July 2020.
Economic Overview
- The economy is recovering slowly, with growth expected to reach 1.6% in 2018 compared to 0.5% in 2017, after two consecutive years of recession in 2015 (-3.9%) and 2016 (-0.6%).
- A fragile recovery that remains below the 4.2% recorded from 2004 to 2014 and facing many challenges: a lack of budgetary resources to finance public investment, a persistent shortage of foreign exchange with falling international reserves, the vulnerability of the financial sector, the increase in fiscal and current deficits.
- After rising to 16.1% in 2017, inflation fell sharply to -2.6% (deflation) in 2018. Deflation continued in 2019 and stood at -4.2% in August 2019. This is due to a good agricultural season that has lowered food prices. However, this persistent deflation may also reflect lower demand.
- External accounts remain vulnerable, with a very sharp increase in the current account deficit, estimated at 14.3% of GDP in 2018 compared to 11.3% in 2017. This deterioration is linked to the widening trade deficit, combined with the decline in international aid transfers to NGOs.
- Foreign exchange pressures have continued, with a sharper drop in foreign exchange reserves and negative impacts on imports. International reserves covered just 0.9 months of imports in June 2019. The parallel market premium remains high at 70% in July 2019. The banking sector’s soundness has improved with capitalization and liquidity ratios above regulatory standards and profitability indicators on the rise. However, bank portfolio quality remains a concern, with the level of non-performing loans reaching 9% in May 2019.
Social Context and Development Challenges
Most of the Burundian population lives in poverty, especially in rural areas. The level of food insecurity is almost twice as high as the average for sub-Saharan African countries, with about 1.77 million people in need of humanitarian assistance in 2019 according to the Humanitarian Response Plan (HRP), which is estimated at $106 million.
Climatic hazards and the resurgence of epidemics often aggravate this situation.
Moreover, agriculture, which is the main source of employment (nearly 80% of the population), does not generate enough income and contributes only 40% of GDP. Access to water and sanitation remains very low and less than 5% of the population has access to electricity (including 52.1% of urban households and 2% of rural households).
The country has made progress in slowing population growth, with a fertility rate that declined from 6.4 to 5.5 children per woman on average between 2010 and 2017.
Owing to its proximity to the Democratic Republic of Congo, Burundi is also exposed to the Ebola epidemic that has been affecting the country since June 2018 and has taken measures to prevent and control the disease, with the support of the World Bank, by setting up screening and treatment centers near borders.
Last Updated: Nov 20, 2019
