Investment climate in Burundi
According to Africa Development Bank Group (Burundi Economic Outlook) Burundi achieved average annual growth of 4% between 2010 and 2014, but due to the social and political environment in 2015, the growth rate fell and GDP is estimated to have dropped by 4.1%. This resulted in the country getting advances from the central bank (Banque de la République du Burundi) to finance the budget deficit in 2015. The socio-political situation since April 2015 have created major challenges for economic activity and disrupted the growth patterns of Burundi. Latest estimates indicate the real gross domestic product (GDP) was around -4.1% in 2015 as against 4.7% in 2014 and 4.5% in 2013. Inflation remained steady at an average 5.5% in 2015, compared with 4.4% in 2014 resulting from stable exchange rate, good harvests and the continuing drop in international oil prices. According to Ministry of Finance, Burundi continues to suffer from a weak mobilization of internal resources (11.7% of GDP in 2015 compared with 12.9% in 2014 and 13.1% in 2013) and from a substantial fall in foreign aid (-33% in 2015). The budget deficit rose from 1.2% of GDP in 2014 to 5.7% in 2015. This also resulted in a steep fall in the official reserves (less than two months of import cover in 2015, compared with four months in 2014) mainly because of broad government recourse to borrowing from the central bank to finance the deficit. The current account deficit, transfers included, is estimated at 4.5% of GDP in 2015 compared with 9.5% of GDP in 2014. The situation in Burundi is also by lack of support from the donors until a political solution is found to the current political tensions. According to Trading Economics Burundi had single digit inflation rates in 2015. Inflation reduced from 4.7% in March 2015 to 4.3% in March 2016. The inflation rate in Burundi was recorded at 12.90 percent in January of 2017.
Doing business in Burundi
The highlights of World Bank score of doing business in Burundi is summarized as follows;
|Topic||World Bank 2017 rank||World Bank 2016 rank||Change|
|Starting a business||18||14||-4|
|Dealing with Construction Permits||169||165||-4|
|Protecting Minority Investors||137||136||-1|
|Trading across the boarders||160||160|
The country has not made many improvements because of the political situation in the country.
According to United Nations Statistics Division the population of Burundi was estimated at 11.5 million people in 2016 with a population growth of 3.3% per year.
According to United Nations Statistics Division, the urban population was estimated at 12.1 % of the total population in 2015 with average growth of 5.7% for the period from 2010 to 2015.
Attraction of foreign investments
Burundi established, Investment Promotion Authority (API), to facilitate potential investors in investing in Burundi and also to ensure laws and regulations that benefit investors are put in place with the aim of improving the business climate. API has also established a one-stop investment center to facilitate and simplify business registration in Burundi. API has also created a follow-up mechanism to make sure that investors are really implementing projects for which they received tax exemptions and other advantages provided in the investment code.
Restrictions on Foreign investment
The Investment Code encourages investments in Burundi with good investment incentives. There is no explicit discrimination legal or otherwise against foreign investors at any stage of the investment process. There is however a requirement for foreign investors that receive fiscal or any other tax or credit exemption to employ a given number of local workers. Majority of the local workers lack the skills to support foreign investors. The 2013 new mining code, stipulates that the Government of Burundi has to own at least 10 percent of shares in any foreign company with an industrial mining license.
Legal and Arbitration Dispute Settlement
Burundi’s legal system contains standard provisions guaranteeing the right to private property and the enforcement of contracts. Burundi has a written and consistently applied commercial law which allows for the judgments of foreign courts to be accepted and enforced by local courts. Monetary judgments are usually made in the investor’s currency. The country court system has a special commercial chamber dedicated to settling commercial disputes/conflicts at the appeal level. The Government of Burundi accepts international arbitration, and recognizes and enforces foreign arbitral awards. Investment disputes between foreign investors and local private parties can be referred to international arbitration for settlement. Burundi has also created a local Center for Arbitration and Mediation to handle such disputes but the centre has not yet been made operational. The country is a member state of the International Centre for Settlement of Investment Disputes (ICSID convention). Burundi also became a member state to the ICSID Convention in 1969. Lastly Burundi became the 150th country to become a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). Burundi is a member of the Multilateral Investment Guarantee Agency and, in 2006, signed an agreement with the Overseas Private Investment Corporation (OPIC).
Right to Private Ownership and Establishment
Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity permitted by Burundian law. Private entities may freely establish, acquire and dispose of interests in business enterprises. Land in Burundi is however quite scarce and ownership or access to it is one of the most politicized issue. It is therefore difficult to resolve land disputes through the court system. The uncertainty around land ownership seriously hampers private investment from investors that require land for investment purposes.
Protection of Property Rights
Secured interests in both real and movable property are recognized under Burundian law and under the investment code but enforcement of interests are extremely difficult.
Protection of Intellectual property
The law guarantees adequate protection for intellectual property as patents, copyrights and trademarks but enforcement in the courts are quite difficult. Burundi has however adopted the 1995 agreement on Trade-Related Aspects of International Property Rights (TRIPS), which introduced global minimum standards for the protection and enforcement of virtually all intellectual property rights (IPR). The only relevant area where TRIPS applies is the protection of pharmaceutical products, most of which are imported and distributed under the auspices of international donors in full compliance with WTO regulations. Burundi is also a signatory to the 1997 and 2000 UN World Intellectual Property Organization (WIPO) treaties governing industrial property and patent law.
Burundi got a corruption index of 20 and ranks number 159 least corrupt nation out of 175 countries according to the 2016 Corruption Perceptions Index reported by Transparency International.
Burundi’s unexploited natural resources include gold, copper, uranium, tungsten, nickel, tin, peat, platinum, limestone, vanadium, tantalum, niobium, kaolin, cobalt, rare earth oxides, peat, arable land and hydropower
Investment climate in Burundi has been summarized to include the following