Burundi: Economy

Burundi's economy is based predominantly on agriculture, accounting for 45% of GDP in 2009. Agriculture supports more than 90% of the labor force, the majority of whom are subsistence farmers. Although Burundi is potentially self-sufficient in food production, the civil war, overpopulation, and soil erosion have contributed to the contraction of the subsistence economy by 30% in recent years. Large numbers of internally displaced persons have been unable to produce their own food and are dependent on international humanitarian assistance. Food imports accounted for 12.5% of total imports value in 2009.

The main cash crop is coffee, which accounted for 55.6% of exports in 2009. This dependence on coffee has increased Burundi's vulnerability to fluctuations in seasonal yields and international coffee prices. Coffee processing is the largest state-owned enterprise in terms of income. Although the government has tried to attract private investment to this sector, only a small number (12) of the 120 washing stations were sold to a foreign private company. Efforts to privatize other publicly held enterprises have likewise stalled. Other principal exports include tea and raw cotton.

Little industry exists except the processing of agricultural exports. There is potential wealth in petroleum, nickel, copper, gold, and other natural resources; however, these resources are not being exploited. Former studies reported evidence of offshore petroleum deposits in Lake Tanganyika as well as in the plain of Rusizi, although the uncertain security situation had prevented meaningful investor interest. Despite an improvement in the security situation, the lack of adequate infrastructure--transportation and energy--has limited industrial development, which is hampered by Burundi's distance from the sea and high transport costs. Lake Tanganyika remains an important regional trading point.

Burundi is heavily dependent on bilateral and multilateral aid. International Monetary Fund (IMF) structural adjustment programs in Burundi were suspended following the outbreak of violence in 1993; the IMF re-engaged Burundi in 2002 and 2003 with post-conflict credits, and in 2004 approved a $104 million Poverty Reduction and Growth Facility loan. In preparing a transition support strategy, the World Bank identified key areas for potential growth, including the productivity of traditional crops and the introduction of new exports, light manufactures, industrial mining, and services. Both the IMF and the World Bank assisted the Burundians in preparing a Poverty Reduction Strategy Paper, released in February 2007. More than 70% of Burundians live below the poverty line. Serious economic problems include the state's role in the economy and the question of governmental transparency, and debt reduction. In January 2009, the IMF and the World Bank decided that Burundi satisfied the requirements toward reaching its completion point under the Heavily Indebted Poor Countries Initiative (HIPC) and waived $424 million in debt.

Based on Burundi's successful transition from war to peace and the establishment of a democratically-elected government in Burundi in September 2005, the U.S. Government lifted all sanctions on assistance to Burundi on October 18, 2005. Burundi also became eligible for trade benefits under the African Growth and Opportunity Act (AGOA) in December 2005, but no Burundian industries have yet taken advantage of AGOA benefits. Burundi joined the East Africa Community in 2007.

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