7 november 2022

Aan het eind van het jaar is het goed om weer eens een overzicht te hebben van de Burundese economie. The Exchange Africa voorzag recent in een overzichtsartikel over Burundi business governance, dat we gespreid over drie dagen overnemen. Het is geschreven door June Njoroge.

Deel 1: Historie
Deel 2: Status quo, landbouw en klimaat
Deel 3: ICT, industrie, energie, toerisme

Burundi: New Dawn – Reforms Chart Fresh Economic Path for Burundi

Vandaag Deel 1

Better known as the ‘heart of Africa’, Burundi’s economic pulse has been slow over the years, but the rhythm is steadily gaining momentum, dancing to the tune of President Évariste Ndayishimiye, given his recent purge of top officials amid a raft of policy reforms.

Deeply entrenched corruption among government officials, coupled with a history tainted with conflicts and civil wars, has slacked Burundi’s economic growth to the proverbial slump. Under his predecessor the late Pierre Nkurunziza, the country was uncivil with corrupt government officials enjoying state protection and the status of being ‘untouchable’.

However, among President Ndayishimiye’s reforms is to crack down on monopolies held by party elites over various economic sectors. Burundi has been facing fuel, cement and sugar shortages for months, and President Ndayishimiye believes that top officials were behind the shortages so as to hike prices and milk the opportunity. Another purge occurred in June, as the president sought to remove the chaff from his judiciary, firing 35 magistrates accused of obstruction of justice and corruption.

Despite it being the poorest nation in the world, Ndashimiye has been keen to open a new chapter for Burundi. Furthermore, he has been on a house clean-up campaign to root out the so-called inhibitors of progress. The political reshuffle is bound to bring the much-anticipated reforms that Burundians have desired, and chart a new economic pathway to quash challenges impeding economic recovery.

As the country marked 60 years of independence in July, there was little in terms of economic achievements given the six-decade period the country has had to build itself. It was a vivid reminder of how conflict and corruption can tear apart the entire economic fabric of a nation. Burundi was ranked at 185th place out of 189 countries in the 2019 Human Development Index (HDI). Inarguably, no economy can thrive in such unrest. Conflict has hindered Burundi’s economic progress and depleted the country of investment opportunities.

Brief History of Burundi’s Economy

Since independence in 1962 from Belgium, Burundi has been plagued by a cycle of civil wars. The country has witnessed five eruptions of civil wars which have claimed the lives of over 500,000 people and stemmed a refugee crisis of over a million people. The last two are said to have dented Burundi’s economy the most–the 1993 to 2005 civil war and the last one from 2015 to 2018. The latter was instigated when Nkurunziza sought to change the constitution to guarantee him a third term in office. Political violence broke out and gross human rights violations took place. This brought up a sea of sanctions that were deleterious to the economy. To start with the country had barely recovered economically from years of civil war. Imposed by the EU and the US, as well as individual countries like Belgium, the sanctions froze financial support for Burundi’s budget. This generated both fiscal and balance-of-payments difficulties. For instance, the EU froze 432 million euros in funding, abiding by Article 96 of the Cotonou Agreement. The sanctions dwindled foreign direct investment and aid flow, and additionally denied the country access to the World Bank and the IMF.

Nonetheless, in 2020 when push came shove, the country was thrust headlong into a recession caused by both the financial sanctions and the Covid-19 pandemic. Economic growth contracted to 3.3 percent in 2020 from 4.2 percent in 2015. President Ndayishimiye was sworn in the same year, and began to pursue a path towards lifting the sanctions that were choking his economy. In November 2021 and early 2022, both the US and the EU had lifted the sanctions, giving the country a shot at rebuilding its economy and re-engaging with international partners. The budgetary support comeback, together with inflows from FDI offered the country financial relief to reignite development in key growth areas. The Russian-Ukraine war dealt yet another blow to the fragile economy, which has been grappling with a severe lack of foreign currency and rising government debt. Currently, the country’s debt-to-GDP ratio stands at 72.4 per cent.

Lees morgen deel 2.