Economy of Burkina Faso

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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 soils, 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 resources, 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 Burkinabe 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 institutions 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 Burkinabe 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. [3]


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.

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[4] 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.

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