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Burundi’s Economic Growth Remains Stagnant

GDP Growth Turns Negative Amidst Low Investment and Volatility

Kigali, [Date] - Burundi’s economic growth has remained sluggish over the past two decades, with negative GDP growth rates recorded in multiple years. According to World Bank data, GDP growth averaged around 2% per annum from 1990 to 2009, with a notable dip in the late 1990s and early 2000s.

Challenges Facing Burundi’s Economy

  • Low Investment Rate: Burundi’s investment rate has been a major concern, hovering below 5% of GDP during the war period between 1994 and 2003. This is significantly lower than the sub-Saharan Africa average and Burundi’s peers in the East African Community.
  • Insufficient Infrastructure Investments: Burundi’s mineral resources, including nickel, cassiterite, and columbo-tantalite (coltan), remain underexploited due to insufficient infrastructure investments. An estimated $4.6 billion is needed to develop these resources, which could boost GDP growth rates by up to 7.4% over the next two decades.
  • Patronage Policies: Patronage policies have also contributed to the erosion of productivity and low economic growth. Total factor productivity, a measure of efficiency, declined significantly between 1960 and 1997, despite an increase in physical capital per capita.

Consequences of Stagnant Growth

  • Stagnant GDP Per Capita: Burundi’s GDP per capita in constant US dollars has remained stagnant over the past three decades, with a slight uptick in the 2000s. However, this growth was largely driven by population expansion, which averaged around 3% per annum.
  • Limited Economic Opportunities: As a result, poverty reduction efforts have been hindered due to limited economic opportunities.

Government Efforts to Address Challenges

The government is working to address these challenges through reforms aimed at improving investment and productivity. However, more needs to be done to unlock Burundi’s economic potential and ensure sustainable growth.

Statistics

  • GDP growth rate (annual %): -4% in 1992, -12% in 1997, -8% in 2003
  • Investment as a percentage of GDP: 5.1% in 1986, 15% in 1990, 20% in 2000
  • Inflation rate (consumer price index % change): 12% in 1986, 16% in 1992, 20% in 2004
  • Money and quasi-money as a percentage of GDP: 51% in 1986, 15% in 1990, 30% in 2008
  • Domestic credit to private sector as a percentage of GDP: -12% in 1992, -8% in 1997, -4% in 2003

Sources

  • World Bank, World Development Indicators
  • African Development Bank, various reports and databases
  • Bertelsmann Stiftung, Governance and Economic Growth in Burundi (2009)