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Quick Facts
- Population:
- GDP (PPP):
- $35.8 billion
- 6.4% growth
- 5.3% 5-year compound annual growth
- $1,889 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
Burkina Faso’s economic freedom score is 59.4, making its economy the 96th freest in the 2019 Index. Its overall score has decreased by 0.6 point, with a sharp drop in fiscal health and lower scores for government spending and judicial effectiveness overwhelming improvements in property rights and government integrity. Burkina Faso is ranked 9th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.
Improved political stability, increased public investment, and better macroeconomic management, coupled with robust cotton and gold exports, have enabled Burkina Faso to achieve annual growth exceeding 5 percent for the past seven years, although most citizens have yet to benefit significantly from it. Earlier reforms have led to some reduction in poverty, but weak rule of law and systemic weaknesses in the protection of property rights still hinder the emergence of a more vibrant entrepreneurial environment.
Background
The former French colony of Burkina Faso is one of the world’s poorest countries. When former President Blaise Compaoré was forced to resign after 27 years in power for trying to change the constitution’s two-term limit, President Roch Marc Christian Kaboré of the People’s Movement for Progress was elected to a five-year term in 2015. Burkina Faso has few natural resources and a weak industrial base. About 90 percent of the population is engaged in subsistence farming, and cotton is the principal cash crop. Literacy rates are well below the regional average. In addition to frequent attacks by terrorist groups linked to al-Qaeda, ongoing challenges include political insecurity in neighboring Mali, unreliable energy supplies, and poor transportation links.
Protection of private property is weak. Only about 5,000 land titles have been granted since 1960. The judiciary is weak and unwilling to prosecute senior officials charged with corruption. Challenges faced by the new government include poor access to information, limited enforcement powers of anticorruption institutions, misappropriation of public funds, and the lack of an effective separation of powers.
The top individual income tax rate is 27.5 percent, and the top corporate tax rate is 28 percent. Other taxes include a value-added tax. The overall tax burden equals 16.3 percent of total domestic income. Over the past three years, government spending has amounted to 25.8 percent of the country’s output (GDP), and budget deficits have averaged 4.7 percent of GDP. Public debt is equivalent to 38.3 percent of GDP.
Although progress has been mixed, the implementation of reforms to streamline regulations has helped to enhance the overall entrepreneurial environment. Measures to modernize the labor market and enhance its flexibility have progressed slowly. The state subsidizes fuels and electricity; maintains price supports for cotton, rice, and other staple goods; and influences other prices through state-owned enterprises.
The combined value of exports and imports is equal to 62.8 percent of GDP. The average applied tariff rate is 7.4 percent. Nontariff barriers are considerable, and foreign investment remains hindered by bureaucracy. The government has pursued banking liberalization and restructuring, limiting its direct participation, but financial firms still lack the capacity to provide a full range of modern services.