Private Sector Development
Burkina Faso is attempting to improve its business environment. In the World BankÃ¢â‚¬â„¢sÃ‚Â Doing BusinessÃ‚Â report for 2010, the country was ranked 151st out of 183Ã‚Â countries, a three-place improvement over 2009. It remains the leading reformer in the WAEMU zone and these efforts have led to improvements in three of the ten indicators used in theÃ‚Â Doing BusinessÃ‚Â ranking. In terms of obtaining construction permits, the introduction of a construction permit facilitation centre (Centre de facilitation des actes de construire) made it possible to reduce the number of procedures to obtain permits from 32 to 15, and to bring the time required down from 226Ã‚Â days to 15Ã‚Â days. The cost of executing contracts fell, while the number of documents required in international trade for both exporters and importers has begun to fall. However, the measures to protect property rights and enforce contract arrangements remain generally inefficient,Ã‚Â among other reasons because of delays in obtaining judgements. According to theÃ‚Â Doing Businessreport, debt recovery costs remain high in Burkina Faso, representing 81.7% of the debt, versus 50% on average in sub-Saharan African countries.
Another challenge for the development of the private sector is to improve economic competitiveness by extending and modernising infrastructure. The idea is to reduce the high cost of factors of production (electricity, telephones, water, information and communication technologies [ICTs], etc.). The difficulty of accessing credit and the low level of qualifications of the workforce compound this challenge.
Financial System Development
The financial sector is well structured by the monitoring rules introduced under the framework of WAEMU banking regulations. A number of prudential regulations exist that are rigorously applied by the WAEMU banking commission. The observation of these rules enabled the country to avoid the direct effects of the international financial crisis on the financial system.
In 2010, 11 banks andÃ‚Â five financial establishments existed in Burkina Faso. These institutions primarily concentrated their activities in short-term financing, particularly in trade and granting seasonal loans for cotton. The banks are thus overexposed to risk linked to the cotton sector.
Another weakness of the national financial system is the high rate of interest (12%), which makes the banks less competitive. Lease-purchasing is not very well developed, with just one financial establishment (Burkina Bail) operating in this market.
The microfinance sector is flourishing. However, it has serious shortcomings particularly in terms of governance and the systems of information and management of these institutions. Supervision remains weak compared with the increasing importance of the sector, which includes 81Ã‚Â institutions and holds more than XOFÃ‚Â 78Ã‚Â billion in assets. The new law for the regulation of decentralised financial systems aims to reduce the risks associated with the development of the sector and to secure transactions.
In 2010, the authorities adopted a development strategy and action plan for the financial sector. Some banks (Banque commerciale du Burkina,Ã‚Â Banque ouest-africaine) increased their social capital with a view to conforming to the new regulatory arrangements. These require that the minimum capital of banks in the WAEMU zone be increased to XOFÃ‚Â 10Ã‚Â billion between now and the end of 2011.
Other Recent Developments
In 2010, privatisation focused primarily on the large cotton-ginning companyÃ‚Â SociÃƒÂ©tÃƒÂ© burkinabÃƒÂ¨ des fibres textilesÃ‚Â (Sofitex), which had been hard hit by the crisis in the sector following a sharp drop in world prices. After a recapitalisation in 2009, the state-owned 65% of the companyÃ¢â‚¬â„¢s capital. The importance of the cotton sector in the economy prompted the authorities to continue reforming the company in order to improve the sectorÃ¢â‚¬â„¢s financial viability. Thus in 2010, the Sofitex board of directors undertook a new recapitalisation, valued at XOFÃ‚Â 16.4Ã‚Â billion. In addition, the company committed to reforms with the aim of reducing operating costs. Notably, the company was restructured with a new internal audit department and the creation of a procedures manual and an information system for management.
In the domain of public administration, the authorities formulated a public-service quality charter and a ten-year strategic plan to modernise the state. Efforts have been made in decentralising the processing of administrative documents by public bodies. The programme of public-finance reform is progressing satisfactorily. In this regard, the authorities proceeded in 2010 with the second evaluation of public finance management under the Performance Evaluation Framework, which revealed an improving trend in the national system.
In terms of the fight against corruption, the state monitoring authority, the (AutoritÃƒÂ© supÃƒÂ©rieure de contrÃƒÂ´le de lÃ¢â‚¬â„¢Ãƒâ€°tat) published its 2010 audit report, the contents of which were largely reported in the national press. This report clearly underlines responsibility for mismanagement. Still, the country fell in the 2010 report by Transparency International, the leading civil society organisation devoted to transparency and probity in public and economic life.Ã‚Â Burkina Faso ranked 98th out of 178Ã‚Â countries assessed, down from 79th place in 2009. This fall was due to the fact that the majority of cases of financial malpractice brought to light by the monitoring authority went unpunished.
The development of infrastructure was an important arm of the authoritiesÃ¢â‚¬â„¢ policy in 2010. Projects to construct road infrastructure were ongoing, particularly works to reinforce, tarmac and enlarge local and national roads. The key sections involved are the Ouagadougou-SakoinsÃƒÂ© road, the Koudougou-DÃƒÂ©dougou road, the Yegueresso-DiÃƒÂ©bougou road and the link road to Hamile, the Ouagadougou-PÃƒÂ´ road up to the border with Ghana, and the Dori-TÃƒÂ©ra road up to the border with Niger. In terms of urban infrastructure, work focused on interchanges as well as developing a commercial zone in Ouagadougou. The social and hydro-agricultural infrastructure (bridges, dams, schools, sanitation structure, etc) that was damaged or destroyed by the 2009 and 2010 floods was also rebuilt. The challenge is to make these infrastructure durable as they are generally overloaded and have no effective maintenance system.
Poor electricity supply created real bottlenecks, with almost systematic blackouts throughout the first quarter of 2010. This crisis situation caused by inadequate supply from electricity-exporting countries (CÃƒÂ´te dÃ¢â‚¬â„¢Ivoire, Ghana), prompted the authorities to respond with initiatives. They continued to reinforce the national electricity network, particularly by finalising the Bobo-Dioulasso-Ouagadougou interconnection, by building a new 18Ã‚Â megawatt power plant at Ouagadougou and by introducing an energy consumption reduction policy in public administration buildings. They also continued the programme to create a national interconnected network by linking isolated plants, and by electrifying several towns and villages.
Infrastructure (roads, railways, electricity, ICTs) is crucial for improving the economic competitiveness of a landlocked country like Burkina Faso. To deal with the large deficiencies in this area, the authorities should develop a legal instrument designed to promote public-private partnerships and encourage private foreign direct investment.
Management of natural resources and the environment
In 2010, Burkina Faso continued to prepare and develop its first public report with a view to adhering to international best practice in natural-resource management under the framework of the Extractive Industries Transparency Initiative by May 2011.
The authorities also subscribed in 2010 to the Mining Governance and Growth Support Project, which forms part of the programme to strengthen management capabilities in the mining sector and harmonise regional mining policies.
Income from the natural resource sector remained very low (less than 1% of GDP). To boost this level, the authorities throughout 2010 undertook a series of studies aimed at improving the sectorÃ¢â‚¬â„¢s governance and socio-environmental impact. These studies should result in the revision of the mining code. The government also proceeded to increase taxes on gold royalties raising them from 3% to 5% of turnover.
The modernisation of agriculture is key to the countryÃ¢â‚¬â„¢s development policy. In 2010, the authorities adopted a series of eight application texts implementing land law in rural areas. The Millennium Challenge CorporationÃ¢â‚¬â„¢s programme drew on these measures to conduct work on the ground, notably in issuing deeds to rural property.
In terms of promoting agriculture, the authorities continued discussions as part of the process of harmonisation and intervention co-ordination with a view to developing a national rural sector programme.
The main action undertaken in the livestock sub-sector was the adoption of a new national sustainable development policy.