Burkina Faso flag Burkina Faso: Economic and Political Overview

The economic context of Burkina Faso

Economic Indicators

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In recent years, Burkina Faso experienced strong economic growth, driven by gold and cotton production. The coronavirus crisis negatively impacted this dynamic, as GDP growth slowed down to an estimated 1.9% in 2020 (IMF). Boosted by high gold production levels and prices and rising agricultural output, activity rebounded strongly in 2021 (6.7%) and is expected to remain robust in 2022 (5.6%) and 2023 (5.3%) (IMF). However, the January 2022 military coup could be economically disruptive in the short term (The Economist Intelligence Unit).

To face the Covid-19 pandemic, the government has launched a recovery plan estimated at FCFA 394 billion, including social measures such as exoneration on water and electricity bills and subvention to food prices. This plan, the drop in fiscal revenues and increasing security costs have affected the state’s resources. Public deficit rose to -5.7% GDP in 2020 and remained at a high level in 2021 (-5.6% GDP) (IMF). It is expected to reduce gradually to -4.8% GDP in 2022 and -4% GDP in 2023 before returning under the WAEMU criterion of 3% by 2024 (IMF, World Bank). The higher deficit led to an increase in the public debt, which reached 48.2% GDP in 2021 and is expected to further rise to 48.9% GDP in 2022 and 49.1% GDP in 2023 (IMF). Inflation turned positive in 2020 due to the pandemic, driven by high food prices and an increase in rental costs and energy prices (World Bank). Estimated by the IMF at 1.9% in 2020, it reached 3% in 2021 and is forecast to gradually decrease to 2.6% in 2022 and 2.5% in 2023 (IMF). The 2022 budget focuses on education, security and defence, health and rural development. Reducing poverty and violence related to the jihadi insurgency is a major challenge. Besides, the National plan for economic and social development is channelling public investments in road infrastructures and construction. Burkina Faso's economy is hampered by its faulty infrastructure, including electrical infrastructure. The country is also vulnerable to the volatility of oil import prices as well as gold and cotton prices. In the medium term, the country will have to modernize its public affairs management, readjust public finances, reform the financial system and improve the business climate. Burkina Faso is considered to have a high risk of over-indebtedness, as it is extremely dependent on foreign aid.

According to the World Bank, around 40% of the population still lives below the poverty line of USD 1.25 a day. In recent years, the country has made considerable progress in the area of education. The completion rate in primary schools is 64.3% for girls and 56.6 % for boys. Nevertheless, insecurity and terrorism are taking a heavy toll in several regions of the country, negatively affecting the education sector. More than 1.4 million persons have been internally displaced, and by May 2021, more than 10% of educational institutions were closed because of the insecure environment (World Bank). In 2020, the unemployment rate in the country was at 5% (ILO estimate).

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 15.99e17.38e19.9321.8923.93
GDP (Constant Prices, Annual % Change) 5.7e1.9e6.75.65.3
GDP per Capita (USD) 787831e9269881,050
General Government Gross Debt (in % of GDP) 42.046.548.248.949.1
Inflation Rate (%) -3.21.9e3.96.02.0
Current Account (billions USD) -0.52-0.03-0.51-0.90-1.02
Current Account (in % of GDP) -3.3e-0.2-2.5-4.1-4.3

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

The economy of Burkina Faso is mainly based on agriculture, but the country is Africa's 4th largest producer of gold. The agricultural sector accounted for an estimated 18.4% of Burkina Faso’s GDP in 2020. About 26% of the population is engaged in subsistence farming and cotton is the main cash crop (World Bank). Other cash crops are groundnuts, shea nuts and sesame. Staple crops are pearl millet, sorghum, maize, and rice.

The industrial sector is dominated by State-owned corporations, and contributed to 32.6% of GDP in 2020. It employs 25% of the total workforce of the country (World Bank). Gold accounts for 85% of the country’s total export revenues (World Bank), thus making Burkina Faso really sensitive to the fluctuations in the price of this commodity.

The services sector accounted 40.8% of the GDP in 2020, and employed 49% of the total workforce - almost 30% of these jobs were generated in the financial system. The banking sector – which is very dense, with the three largest banks holding almost 60% of total financial sector assets, is one of the economy’s pillars.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 26.2 25.2 48.6
Value Added (in % of GDP) 20.4 30.0 41.2
Value Added (Annual % Change) 1.7 2.3 8.4

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
56,5/100
World Rank:
124
Regional Rank:
21

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

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Latest Update: July 2022

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