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Quick Facts
- Population:
- GDP (PPP):
- $32.8 billion
- 4.0% growth
- 5.1% 5-year compound annual growth
- $1,782 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
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Burkina Faso’s economic freedom score is 60.0, making its economy the 95th freest in the 2018 Index. Its overall score has increased by 0.4 point, with a substantial improvement in judicial effectiveness and smaller gains in business freedom and property rights outweighing declines in fiscal health, labor freedom, and investment freedom. Burkina Faso is ranked 8th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.
Although the majority of citizens have yet to benefit significantly from it, sound macroeconomic management, coupled with robust cotton and gold exports, has enabled Burkina Faso to achieve growth rates in excess of 5 percent annually for the past six years. Earlier reforms have resulted in some poverty reduction, but weak rule of law and systemic weaknesses in protection of property rights still hinder development of a more dynamic entrepreneurial environment.
Background
The former French colony of Burkina Faso is one of the world’s poorest countries. When President Blaise Compaoré was forced to resign after 27 years in power for trying to change the constitution’s two-term presidential limit, Roch Marc Christian Kaboré of the People’s Movement for Progress was elected to a five-year term in 2015. The country has few natural resources and a weak industrial base. About 90 percent of the population engages in subsistence farming. Cotton is the main cash crop. Youth literacy rates are well below the sub-Saharan Africa average, although school enrollments have risen. The country suffers frequent attacks from al-Qaeda–linked terrorist groups. Long-term challenges include political insecurity in neighboring Mali, unreliable energy supplies, and poor transportation links.
Challenges faced by the government include a weak judiciary, limited enforcement powers of anticorruption institutions, misappropriation of public funds, and the lack of any effective separation of powers. Protection of private property is weak. Only about 5,000 land titles have been granted since 1960. Courts lack resources and are often unwilling or unable to conduct effective prosecutions of senior officials charged with corruption.
The top individual income and corporate tax rates are 27.5 percent. Other taxes include a value-added tax. The overall tax burden equals 20.6 percent of total domestic income. Over the past three years, government spending has amounted to 23.3 percent of total output (GDP), and budget deficits have averaged 3.3 percent of GDP. Public debt is equivalent to 32.5 percent of GDP.
The overall business environment compares favorably with those of neighboring countries, but inadequate energy supply and poor business infrastructure constrain commercial activity. Measures to modernize the labor market and enhance its flexibility have progressed slowly. The state subsidizes fuels and electricity, maintains price supports for cotton, and influences other prices through the public sector.
Trade is significant for Burkina Faso’s economy; the combined value of exports and imports equals 63 percent of GDP. The average applied tariff rate is 9.6 percent. Nontariff barriers impede trade. Government openness to foreign investment is above average. Banking liberalization and restructuring have encouraged competition in the financial sector. The use of credit has reached a level equivalent to over 20 percent of GDP in recent years.