Economy Of Burkina Faso
Burkina Faso is one of the poorest countries in the world with an average income per capita of €250 (US$300). More than 80% of the population relies on subsistence agriculture, with only a small fraction directly involved in industry and services. Highly variable rainfall, poor soils, lack of adequate communications and other infrastructure, a low literacy rate, and a stagnant economy are all longstanding problems of this landlocked country. The export economy also remains subject to fluctuations in world prices.
The country has a high population density, few natural resources, and a fragile soil. Industry remains dominated by unprofitable government-controlled corporations. Following the African franc currency devaluation in January 1994 the government updated its development program in conjunction with international agencies, and exports and economic growth have increased. Maintenance of its macroeconomic progress depends on continued low inflation, reduction in the trade deficit, and reforms designed to encourage private investment.
The Burkinabé financial system represents 30% of the country’s GDP and is dominated by the banking sector, which accounts for 90% of total financial system assets. Eleven banks and five non-bank financial institutions operate in the country.
The banking sector is highly concentrated, with the three largest banks holding nearly 60% of total financial sector assets. Banks are generally adequately capitalized, but remain vulnerable due to their overexposure to the cotton sector, the prices of which are subject to significant oscillations.
As of 2007, the World Bank estimated that 26% of the Burkinabé population has access to financial services. The Central Bank of the West African States (BCEAO) reports that about 41 microfinance institutions (MFIs) operate in the country, serving a total of 800,000 customers. Burkina Faso is a member of the regional Bourse Regional des Valeurs Mobilières (BRVM) located in Abidjan, Ivory Coast. As of 2009, the regional stock exchange’s market capitalization reached nearly 10% of Burkina Faso’s GDP.
Burkina Faso was ranked the 111th safest investment destination in the world in the March 2011 Euromoney Country Risk rankings.
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