Economy of Burkina Faso

The economy of Burkina Faso is based primarily on subsistence farming and livestock raising. Burkina Faso has an average income purchasing-power-parity per capita of $1,900 and nominal per capita of $790 in 2014. 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 remained subject to fluctuations in world prices.<br>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.

Top Sectors in Burkina Faso

Agriculture in Burkina Faso

Burkina Faso's economy is primarily agrarian, with a large percentage of the population engaged in subsistence farming and livestock raising. Key agricultural products include sorghum, millet, maize, rice, cotton, and livestock such as cattle, sheep, and goats.

Mining in Burkina Faso

Burkina Faso has significant mineral resources, including gold, manganese, zinc, and limestone. Gold mining is particularly important, with Burkina Faso being Africa's fourth-largest producer of gold. The mining sector contributes significantly to the country's export revenue and economic growth.

Textiles in Burkina Faso

The textile industry is another important sector in Burkina Faso, with cotton being a major cash crop. The country has a number of cotton ginning factories and textile mills that produce cotton yarn, fabrics, and garments for both domestic consumption and export.

Services in Burkina Faso

The services sector in Burkina Faso includes a range of activities such as trade, transport, telecommunications, finance, and tourism. While the services sector is relatively small compared to agriculture and mining, it plays an important role in the country's economy, particularly in urban areas.

Livestock in Burkina Faso

Livestock rearing, including cattle, sheep, goats, and poultry, is an important source of income and food security for many rural households in Burkina Faso. Livestock products such as meat, milk, and hides contribute to both domestic consumption and export earnings.

Burkina Faso - Key Economic Indicators

Exports and Imports

Burkina Faso's exports primarily consist of agricultural products such as cotton, gold, livestock, and shea nuts. In recent years, gold has become the country's leading export, comprising a significant portion of total export revenue. Imports mainly include machinery, petroleum products, foodstuffs, and manufactured goods. The total value of exports in 2023 was approximately $4.5 billion, while imports amounted to around $6 billion, resulting in a trade deficit of approximately $1.5 billion.

Infrastructure

Infrastructure development in Burkina Faso is essential for supporting economic growth and enhancing connectivity both domestically and internationally. Major infrastructure projects include the construction and rehabilitation of roads, bridges, airports, and telecommunications networks. The total length of roads in Burkina Faso is approximately 15,000 kilometers, with ongoing efforts to expand and improve road networks to facilitate trade and transportation across the country.

Balance of Trade

Burkina Faso faces a trade deficit, with imports exceeding exports by approximately 33% in 2023. The trade deficit poses challenges for the country's economic stability and highlights the need for measures to boost export competitiveness and reduce import dependency. Efforts to diversify exports, improve agricultural productivity, and promote value-added industries are crucial for addressing the trade imbalance.

Fiscal Policy

Burkina Faso's fiscal policy aims to sustainably manage government spending and revenue generation to support socioeconomic development. Government spending is allocated to various sectors, including education, healthcare, infrastructure, and social welfare programs. Tax revenue constitutes around 18% of GDP, with the main sources being value-added tax (VAT), income tax, and customs duties. Efforts to improve tax administration and compliance are ongoing to enhance revenue collection and fiscal sustainability.

Monetary Policy

The Central Bank of West African States (BCEAO) oversees monetary policy in Burkina Faso, aiming to maintain price stability and support economic growth. The BCEAO implements measures such as interest rate adjustments, reserve requirements, and foreign exchange interventions to manage inflation and ensure monetary stability. Collaboration with regional and international financial institutions contributes to effective monetary policy implementation.

Trade Agreements

Burkina Faso is a member of several regional and international trade agreements aimed at facilitating trade and promoting economic cooperation. As a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU), Burkina Faso benefits from preferential trade arrangements with other member countries. Additionally, Burkina Faso has trade agreements with various countries and regions, providing opportunities for market access and diversification of trade partners.

Environmental Regulations

Burkina Faso has implemented environmental regulations to address environmental challenges such as deforestation, soil degradation, and water pollution. These regulations aim to promote sustainable natural resource management, biodiversity conservation, and climate change adaptation. Efforts to enforce environmental laws and promote eco-friendly practices are essential for safeguarding Burkina Faso's natural resources and ensuring long-term environmental sustainability.

Tax System in Burkina Faso

Capital Gains Tax: Burkina Faso imposes a capital gains tax on profits derived from the sale of investments, including real estate, stocks, and other assets. The capital gains tax rate is typically around 10% but may vary depending on the nature of the investment and the duration of ownership.
Corporate Tax Rate: The corporate tax rate in Burkina Faso is 27.5% for most businesses. However, mining companies are subject to a higher corporate tax rate of 35%, reflecting the importance of the mining sector to the country's economy.
Sales Tax: Burkina Faso applies a value-added tax (VAT) to goods and services, with a standard rate of 18%. Certain goods and services may be subject to reduced VAT rates or exemptions, depending on government regulations.
Property Tax: Property tax in Burkina Faso is levied on the value of real estate owned by individuals and businesses. The tax rate varies depending on factors such as the location, size, and use of the property.
Payroll Tax: Burkina Faso imposes a payroll tax, also known as social security contributions, on wages and salaries to fund social security programs. The payroll tax rate is typically around 15%, with both employers and employees contributing to the social security system.
Tax Deductions and Credits: Burkina Faso offers various tax deductions and credits to individuals and businesses to reduce their tax liabilities. These may include deductions for certain expenses, such as healthcare, education, and charitable contributions, as well as incentives for investments in specific sectors or regions.
Tax Compliance: Tax compliance in Burkina Faso remains a challenge due to factors such as informal economic activities, limited tax administration capacity, and compliance issues among taxpayers. Efforts to improve tax compliance include modernizing tax administration systems, enhancing taxpayer education and awareness, and strengthening enforcement measures.

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