Burundi: Fraudulent Activities Plague Financial Markets, Experts Reveal

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Widespread Inefficiencies and Corruption Exposed in New Study

September 2016 - A recent study has shed light on the financial sector in Burundi, revealing widespread fraudulent activities and inefficiencies that have hindered economic growth and development.

Key Findings

• The financial system in Burundi is plagued by a high level of fragmentation, with a narrow credit market that favors “insiders” - mostly affiliated with political elites.
• This has led to:
  • A shortage of long-term stable resources
  • Inefficient allocation of resources
  • Weak supervision and regulation

The Masked Underlying Weaknesses

Despite the profitability of some banks, experts warn that this masks underlying weaknesses in the financial sector. The study highlights the need for:

• Greater competition
• Financial innovation
• Access to finance, particularly for the “stranded middle” - middle-income households and medium-sized firms - who are struggling to access credit due to a lack of a “missing middle credit market”.

Opportunities for Improvement

Recent developments in the financial sector, such as the penetration of foreign banks, may provide an opportunity to boost competition and improve financial services.

Impact on Burundi’s Economy and Stability

The study’s findings come at a time when Burundi is facing significant economic challenges, including:

• High inflation
• Large trade deficit
• Widespread poverty

The revelation of fraudulent activities in the financial markets has raised concerns about the potential impact on the country’s economy and stability.

Call for Action: Greater Transparency and Accountability

The researchers are calling for greater transparency and accountability in the financial sector to prevent further fraud and ensure that resources are allocated efficiently and effectively.