WASHINGTON, June 26, 2012 — The World Bank today approved an International Development Association (IDA*) US$90 million grant which aims to increase cotton exports to more than 400,000 tons, mining revenues from 1.8 percent of GDP in 2011 to 3 percent of Gross Domestic Product (GDP); and food reserves to 70,000 tons in Burkina Faso, the multilateral institution announced today.
The First Growth and Competitiveness and Grant will also catalyze private sector growth and employment, improve governance and public resource management, and build resilience and reduce vulnerability.
Specifically, the new grant will support the Government of Burkina Faso aims to:
- Catalyze private sector growth and employment by assisting the government to develop an input fund for cotton and improved competitiveness of cotton sector and aims to improve the production of cash crops.
- Improve governance and public resource management by providing a framework for greater transparency in the mining sector.
- Build resilience and reduce vulnerability through improved transfer of funds to decentralized communities; stronger microfinance access, especially for women; and, help to better monitor food security and greater food distribution to poor vulnerable areas.
The Bank notes that mining and cotton have been major drivers of economic growth. Strong reforms in the 2000s facilitated a surge of foreign direct investment (FDI) in the mining sector. As such, the Bank says Burkina is now considered one of the best mining jurisdictions in West Africa due to favorable investment laws, good geology, and stability.
Initial government estimates suggest that food grain production in 2012 will be 20 percent lower than in 2011, although cotton production will increase. Overall, government fiscal support and external food aid will be needed in 2012 to handle the food insecurity both of the local population in deficit areas and of Malian refugees.
The Bank lauded Burkina Faso for providing solid macroeconomic management, combined with favorable commodity prices, to deliver solid growth.
“Our aim is to help the Government of Burkina Faso to give greater power and profit share to producer associations and farmers. The cotton sector, which is the backbone of the rural economy, accounts for more than 2 million jobs, and has reformed significantly in the last decade,” says Madani M. Tall, Country Director, Benin, Burkina Faso, Togo and Cote D'Ivoire.
The Bank announced that it proposes a four-year programmatic series of Growth and Competitiveness budget support operations to Burkina Faso covering the years 2012-14. The planned series includes four Growth and Competitiveness (GC) operations and the IDA grant of US$90 million approved today will be the first among them.
Future programs are expected to be aligned with the government’s budget cycle. The proposed series supports government implementation of Burkina Faso’s Poverty Reduction Strategy Paper (Stratégie de Croissance Accélérée et de Développement Durable – SCADD). The first two IDA financings are envisaged to account for more than 30 percent of general budget support provided to Burkina Faso by development partners in 2012.
Burkina had an average real economic growth rate of more than 5 percent between 1995 and 2010 and GNI per capita has risen from US$360 in 2005 to US$570 in 2011. Continued macroeconomic and fiscal stability have contributed to steady improvements in many economic and social indicators. In 2011, economic growth slowed to an estimated 4.2 percent, but medium-term forecasts remain optimistic. Growth in 2012 is projected at 7.0 percent, with reduced agricultural production offsetting improvements in gold production and private sector activity.
This Development Policy Grant is the first of a series of four operations and consists of a single tranche.
* The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing loans (called “credits”) and grants for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 81 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 108 countries. Annual commitments have increased steadily and averaged about $15 billion over the last three years, with about 50 percent of commitments going to Africa.