Economic studies
Burkina Faso

Burkina Faso

Population 20.9 million
GDP per capita 831 US$
D
Country risk assessment
C
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Synthesis

major macro economic indicators

  2019 2020 2021 (e) 2022 (f)
GDP growth (%) 5.7 1.9 3.0 4.0
Inflation (yearly average, %) -3.2 1.9 3.6 4.0
Budget balance (% GDP)* -3.2 -5.7 -5.5 -5.0
Current account balance (% GDP)* -3.3 -0.1 -2.5 -4.0
Public debt (% GDP) 43.9 47.8 49.5 50.0

(e): Estimate (f): Forecast *Grants included

STRENGTHS

  • Major producer of gold (sixth-largest in Africa) and cotton (third-largest in Africa in 2020)
  • Member of the West African Economic and Monetary Union, which ensures the stability of the CFA franc against the euro
  • Support from the international financial community (one of the first countries to benefit from the HIPC initiative)

WEAKNESSES

  • Economy highly exposed to weather-related hazards
  • Vulnerable to changes in cotton and gold prices
  • Heavily dependent on external aid
  • Weak electrical infrastructure
  • Population pressure, extremely high poverty rate, increased by massive population displacement, extremely low score on Human Development Index and critical food insecurity
  • Significant informal sector and failing business environment
  • Presence of armed Islamist groups (foreign and domestic), particularly in the north and east of the country.

Risk assessment

Growth threatened by security risks

After rebounding in 2021, growth should firm in 2022, but the worsening security situation could hamper activity. Private consumption (70% of GDP) will drive growth as health-related measures are eased. With the agricultural sector (25% of GDP) employing over 80% of the labour force, a good agricultural season should boost household income. However, population displacement due to insecurity, particularly in the northeast of the country, will continue to disrupt agricultural production. High prices for foodstuffs, which account for nearly one-third of the household goods basket, will continue to stoke inflationary pressures. Growth will also be stimulated by government investment under the National Economic and Social Development Plan, which provides for investments in the cotton-textile, agri-food and construction materials sectors, as well as in road infrastructure, including the project to build a motorway linking the capital Ouagadougou and Yamoussoukro in Côte d'Ivoire. Several public-private investment projects are expected to come on stream as part of the Yeleen rural electrification plan. These include the project by French group Urbasolar to build a 30MW solar power plant. Furthermore, low customs duties on ore exports will continue to attract foreign investors in the mining sector (11% of GDP). However, the deteriorating security situation may hinder the flow of investment. The start of production at the Bomboré mine, scheduled for 2022, should boost gold production. As prices are expected to remain relatively high, this should support export earnings (85% gold). Cotton export earnings (10% of exports) are likewise poised to benefit from favourable prices.

 

International aid to support public and external accounts 

Although the budget deficit is set to remain well above the WAEMU criterion (3% of GDP), it should nevertheless continue to decline in 2022. Mining (20% of government revenues) will drive much of the increase in government revenues. Capital investment spending (40% of total spending) and increased security spending (15%) are expected to temper the reduction in the public deficit. Financing will rely on international donors (World Bank and African Development Bank). The country will continue to benefit from the Debt Service Suspension Initiative, which saw a EUR 5.9 million debt deferral agreement signed with France in November 2021.

 

The current account deficit will widen in 2022, reflecting a smaller trade surplus, as import growth, driven in particular by capital goods and energy products, is set to exceed the increase in export earnings. A larger transportation services bill will cause the services deficit to increase. The primary income deficit will widen as profit repatriation by foreign firms, mainly in the mining sector, increases, while the secondary income account will remain in surplus due to current international cooperation and inflows of expatriate remittances. With the security situation continuing to constrain FDI (excluding ore), loans from multilateral organisations are expected to finance this deficit. In August 2021, the IMF approved a USD 164.4 million disbursement of special drawing rights to WAEMU members to help replenish WAEMU's pooled foreign exchange reserves.

 

Military coup in the wake of worsening security risk

Since 2015, insecurity in the Sahel region linked to the activity of armed jihadist groups affiliated with al-Qaeda and the Islamic State organisation has resulted in more than 2,000 deaths and 1.4 million displaced persons (nearly 6% of the population), according to the United Nations. Attacks in the three-borders region (shared with Mali and Niger) on civilian and military targets have intensified. In early November 2021, an assault on a gendarmerie outpost in Inata was one of the deadliest attacks on security forces, killing 57 people, including 53 gendarmes, even though personnel stationed at the facility had warned superiors about their precarious situation two weeks before the attack. This fuelled widespread anger with the authorities, and the Prime Minister and his government resigned on 8 December 2021 after a series of protests criticising the administration’s inability to combat the recurring jihadist attacks. The November 2020 legislative and presidential elections that had handed victory to President Kaboré and his People's Movement for Progress (MPP) party were marred by turnout of only 50% due to widespread insecurity. The next government did not last long, as it was dissolved and the president arrested in a military coup on 24 January 2022, following mutinies. The troops criticise their living conditions, insufficient equipment and supplies, and demand the departure of their leaders, largely supported by the civilian population.

 

The country will continue to rely on international cooperation in its fight against terrorism, as it participates in the G5 Sahel force alongside Mali, Chad, Mauritania and Niger. France, which has begun to reorganise its counter-insurgency forces under Operation Barkhane, will continue to deploy troops in the three-borders region as part of the Takuba Task Force, a European multinational military task force.

 

Last updated: February 2022

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