Economy of Burkina Faso
Encyclopedia
Burkina Faso
is one of the poorest countries in the world with an average income per capita of €250 (US$300). More than 80 percent of the population relies on subsistence agriculture
, with only a small fraction directly involved in industry
and services
. Highly variable rainfall, poor soil
s, lack of adequate communications and other infrastructure
, a low literacy rate, and a stagnant economy are all longstanding problems of this landlocked country. The export
economy also remains subject to fluctuations in world prices.
The country has a high population density, few natural resource
s, and a fragile soil
. Industry remains dominated by unprofitable government-controlled corporations. Following the African franc currency devaluation in January 1994 the government updated its development program in conjunction with international agencies, and exports and economic growth have increased. Maintenance of its macroeconomic
progress depends on continued low inflation, reduction in the trade deficit, and reforms designed to encourage private investment.
The Burkinabé financial system represents 30 percent of the country’s GDP and is dominated by the banking sector, which accounts for 90 percent of total financial system assets. Eleven banks and five non-bank financial institution
s operate in the country.
The banking sector is highly concentrated, with the three largest banks holding nearly 60 percent of total financial sector assets. Banks are generally adequately capitalized, but remain vulnerable due to their overexposure to the cotton sector, the prices of which are subject to significant oscillations.
As of 2007, the World Bank estimated that 26 percent of the Burkinabé population has access to financial services. The Central Bank of the West African States (BCEAO) reports that about 41 microfinance institutions (MFIs) operate in the country, serving a total of 800,000 customers.
Burkina Faso is a member of the regional Bourse Regional des Valeurs Mobilières (BRVM) located in Abidjan, Ivory Coast. As of 2009, the regional stock exchange’s market capitalization reached nearly 10 percent of Burkina Faso’s GDP.
Burkina Faso was ranked the 111th safest investment destination in the world in the March 2011 Euromoney Country Risk rankings.
For purchasing power parity comparisons, the US Dollar is exchanged at 470.70 CFA Francs only. Mean wages were $0.56 per manhour in 2009.
Current GDP per capita of Burkina Faso grew 13 percent in the Sixties reaching a peak growth of 237 percent in the Seventies. But this proved unsustainable and growth consequently scaled back to 23 percent in the Eighties. Finally, it shrank by 37 percent in the Nineties. Average wages in 2007 hover around 2 to 3 dollars per day.
Although handicapped by an extremely resource-deprived domestic economy, Burkina remains committed to the structural adjustment program it launched in 1991. It has largely recovered from the devaluation of the CFA in January 1994, with a 1996 growth rate of 5.9 percent.
Many Burkinabé migrate to neighbouring countries for work, and their remittances provide a substantial contribution to the balance of payments. Burkina is attempting to improve the economy by developing its mineral
resources, improving its infrastructure, making its agricultural and livestock sectors
more productive and competitive, and stabilizing the supplies and prices of cereal
s.
The agricultural economy remains highly vulnerable to fluctuations in rainfall. The Mossi Plateau in north central Burkina faces encroachment from the Sahara
. The resultant southward migration means heightened competition for control of very limited water resources
south of the Mossi Plateau. Most of the population ekes out a living as subsistence farmers, living with problems of climate, soil erosion
, and rudimentary technology. The staple crops are pearl millet
, sorghum
, maize
, and rice
. The cash crops are cotton
, groundnuts
, karite (shea nuts), and sesame
. Livestock, once a major export, has declined.
, Ouagadougou
, Banfora
, and Koudougou
. Manufacturing is limited to food
processing, textile
s, and other import substitution heavily protected by tariffs. Some factories
are privately owned, and others are set to be privatized. Burkina's exploitable natural resources are limited, although a manganese
ore
deposit is located in the remote northeast. Gold
mining has increased greatly since the mid-1980s and, along with cotton, is a leading export moneyearner.
Burkina Faso
Burkina Faso – also known by its short-form name Burkina – is a landlocked country in west Africa. It is surrounded by six countries: Mali to the north, Niger to the east, Benin to the southeast, Togo and Ghana to the south, and Côte d'Ivoire to the southwest.Its size is with an estimated...
is one of the poorest countries in the world with an average income per capita of €250 (US$300). More than 80 percent of the population relies on subsistence agriculture
Subsistence agriculture
Subsistence agriculture is self-sufficiency farming in which the farmers focus on growing enough food to feed their families. The typical subsistence farm has a range of crops and animals needed by the family to eat and clothe themselves during the year. Planting decisions are made with an eye...
, with only a small fraction directly involved in industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
and services
Tertiary sector of industry
The tertiary sector of the economy is one of the three economic sectors, the others being the secondary sector and the primary sector .The service sector consists of the "soft" parts of the economy, i.e...
. Highly variable rainfall, poor soil
Soil
Soil is a natural body consisting of layers of mineral constituents of variable thicknesses, which differ from the parent materials in their morphological, physical, chemical, and mineralogical characteristics...
s, lack of adequate communications and other infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
, a low literacy rate, and a stagnant economy are all longstanding problems of this landlocked country. The export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
economy also remains subject to fluctuations in world prices.
The country has a high population density, few natural resource
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
s, and a fragile soil
Soil
Soil is a natural body consisting of layers of mineral constituents of variable thicknesses, which differ from the parent materials in their morphological, physical, chemical, and mineralogical characteristics...
. Industry remains dominated by unprofitable government-controlled corporations. Following the African franc currency devaluation in January 1994 the government updated its development program in conjunction with international agencies, and exports and economic growth have increased. Maintenance of its macroeconomic
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
progress depends on continued low inflation, reduction in the trade deficit, and reforms designed to encourage private investment.
The Burkinabé financial system represents 30 percent of the country’s GDP and is dominated by the banking sector, which accounts for 90 percent of total financial system assets. Eleven banks and five non-bank financial institution
Non-bank financial institution
A non-bank financial institution is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFIs facilitate bank-related financial services, such as investment, risk pooling, contractual savings, and market...
s operate in the country.
The banking sector is highly concentrated, with the three largest banks holding nearly 60 percent of total financial sector assets. Banks are generally adequately capitalized, but remain vulnerable due to their overexposure to the cotton sector, the prices of which are subject to significant oscillations.
As of 2007, the World Bank estimated that 26 percent of the Burkinabé population has access to financial services. The Central Bank of the West African States (BCEAO) reports that about 41 microfinance institutions (MFIs) operate in the country, serving a total of 800,000 customers.
Burkina Faso is a member of the regional Bourse Regional des Valeurs Mobilières (BRVM) located in Abidjan, Ivory Coast. As of 2009, the regional stock exchange’s market capitalization reached nearly 10 percent of Burkina Faso’s GDP.
Burkina Faso was ranked the 111th safest investment destination in the world in the March 2011 Euromoney Country Risk rankings.
Macro-economic trend
This is a chart of trend of gross domestic product of Burkina Faso at market prices estimated by the International Monetary Fund with figures in millions of CFA Francs.| Year | Gross Domestic Product | US Dollar Exchange | Inflation Index (2000=100) |
|---|---|---|---|
| 1980 | 412,240 | 211.29 CFA Francs | 45 |
| 1985 | 642,387 | 449.22 CFA Francs | 67 |
| 1990 | 848,910 | 272.26 CFA Francs | 65 |
| 1995 | 1,330,159 | 499.12 CFA Francs | 88 |
| 2000 | 1,861,522 | 711.86 CFA Francs | 100 |
| 2005 | 3,027,196 | 526.56 CFA Francs | 115 |
For purchasing power parity comparisons, the US Dollar is exchanged at 470.70 CFA Francs only. Mean wages were $0.56 per manhour in 2009.
Current GDP per capita of Burkina Faso grew 13 percent in the Sixties reaching a peak growth of 237 percent in the Seventies. But this proved unsustainable and growth consequently scaled back to 23 percent in the Eighties. Finally, it shrank by 37 percent in the Nineties. Average wages in 2007 hover around 2 to 3 dollars per day.
Many Burkinabé migrate to neighbouring countries for work, and their remittances provide a substantial contribution to the balance of payments. Burkina is attempting to improve the economy by developing its mineral
Mineral
A mineral is a naturally occurring solid chemical substance formed through biogeochemical processes, having characteristic chemical composition, highly ordered atomic structure, and specific physical properties. By comparison, a rock is an aggregate of minerals and/or mineraloids and does not...
resources, improving its infrastructure, making its agricultural and livestock sectors
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
more productive and competitive, and stabilizing the supplies and prices of cereal
Cereal
Cereals are grasses cultivated for the edible components of their grain , composed of the endosperm, germ, and bran...
s.
The agricultural economy remains highly vulnerable to fluctuations in rainfall. The Mossi Plateau in north central Burkina faces encroachment from the Sahara
Sahara
The Sahara is the world's second largest desert, after Antarctica. At over , it covers most of Northern Africa, making it almost as large as Europe or the United States. The Sahara stretches from the Red Sea, including parts of the Mediterranean coasts, to the outskirts of the Atlantic Ocean...
. The resultant southward migration means heightened competition for control of very limited water resources
Water resources
Water resources are sources of water that are useful or potentially useful. Uses of water include agricultural, industrial, household, recreational and environmental activities. Virtually all of these human uses require fresh water....
south of the Mossi Plateau. Most of the population ekes out a living as subsistence farmers, living with problems of climate, soil erosion
Erosion
Erosion is when materials are removed from the surface and changed into something else. It only works by hydraulic actions and transport of solids in the natural environment, and leads to the deposition of these materials elsewhere...
, and rudimentary technology. The staple crops are pearl millet
Pearl millet
Pearl millet is the most widely grown type of millet. Grown in Africa and the Indian subcontinent since prehistoric times, it is generally accepted that pearl millet originated in Africa and was subsequently introduced into India. The center of diversity, and suggested area of domestication, for...
, sorghum
Sorghum
Sorghum is a genus of numerous species of grasses, one of which is raised for grain and many of which are used as fodder plants either cultivated or as part of pasture. The plants are cultivated in warmer climates worldwide. Species are native to tropical and subtropical regions of all continents...
, maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
, and rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
. The cash crops are cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
, groundnuts
Peanut
The peanut, or groundnut , is a species in the legume or "bean" family , so it is not a nut. The peanut was probably first cultivated in the valleys of Peru. It is an annual herbaceous plant growing tall...
, karite (shea nuts), and sesame
Sesame
Sesame is a flowering plant in the genus Sesamum. Numerous wild relatives occur in Africa and a smaller number in India. It is widely naturalized in tropical regions around the world and is cultivated for its edible seeds, which grow in pods....
. Livestock, once a major export, has declined.
External trade
Industry, still in an embryonic stage, is located primarily in Bobo-DioulassoBobo-Dioulasso
Bobo-Dioulasso is a city with a population of about 435,543 , the second largest city in Burkina Faso, Africa, after Ouagadougou, the nation's capital. The name means literally, "home of the Jula who speak Bobo," and is possibly a creation of the French who misunderstood the identity complexities...
, Ouagadougou
Ouagadougou
Ouagadougou is the capital of Burkina Faso and the administrative, communications, cultural and economic center of the nation. It is also the country's largest city, with a population of 1,475,223 . The city's name is often shortened to Ouaga. The inhabitants are called ouagalais...
, Banfora
Banfora
Banfora is a city in south western Burkina Faso with a population of 63,300 people . It is the capital of the Comoe province. It has grown around the sugar cane industry. The city lies south-west of Bobo-Dioulasso, on the Abidjan – Ouagadougou railway. The main ethnic groups are the Gouin,the...
, and Koudougou
Koudougou
Koudougou is a town in the province of Boulkiemdé, west of Ouagadougou, the capital of Burkina Faso. It is mainly inhabited by Mossi, and has 131,825 inhabitants, as of 2006...
. Manufacturing is limited to food
Food
Food is any substance consumed to provide nutritional support for the body. It is usually of plant or animal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals...
processing, textile
Textile
A textile or cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn. Yarn is produced by spinning raw fibres of wool, flax, cotton, or other material to produce long strands...
s, and other import substitution heavily protected by tariffs. Some factories
Factory
A factory or manufacturing plant is an industrial building where laborers manufacture goods or supervise machines processing one product into another. Most modern factories have large warehouses or warehouse-like facilities that contain heavy equipment used for assembly line production...
are privately owned, and others are set to be privatized. Burkina's exploitable natural resources are limited, although a manganese
Manganese
Manganese is a chemical element, designated by the symbol Mn. It has the atomic number 25. It is found as a free element in nature , and in many minerals...
ore
Ore
An ore is a type of rock that contains minerals with important elements including metals. The ores are extracted through mining; these are then refined to extract the valuable element....
deposit is located in the remote northeast. Gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
mining has increased greatly since the mid-1980s and, along with cotton, is a leading export moneyearner.
External links
- West African Agricultural Market Observer/Observatoire du Marché Agricole (RESIMAO), a project of the West-African Market Information Network (WAMIS-NET), provides live market and commodity prices from fifty seven regional and local public agricultural markets across Benin, Burkina Faso, Côte d'Ivoire, Guinea, Niger, Mali, Senegal, Togo, and Nigeria. Sixty commodities are tracked weekly. The project is run by the Benin Ministry of Agriculture, and a number of European, African, and United Nations agencies.
- Burkina Faso latest trade data on ITC Trade Map