PRESS RELEASE
PRESS/TPRB/89
13 November 1998 Continued
liberalization in Burkina Faso Should sustain its economic growth Back to top
Burkina Faso should scale down State
intervention in the production and marketing of its major exports and eliminate the
prohibitions and special authorizations applicable to these products.
A new report by the World Trade
Organization, the first one on Burkina Faso's trade policies and practices, states that
these measures run counter to the objective of diversifying and promoting exports fixed by
Burkina. The report notes that in 1991 Burkina Faso embarked upon large-scale trade reform
which, together with the devaluation of the franc of the Communauté financière africaine
(African Financial Community), has helped to boost the international competitiveness of
some Burkina products and the growth of real GDP since 1994. The report points out,
however, that extensive trade liberalization efforts still have to be made in order to
promote exports with a view to sustainable economic growth.
The WTO Secretariat's report and the
general policy statement submitted by the Government of Burkina Faso will be used as a
basis for the review of Burkina Faso's trade policies and practices, which will take place
at the same time as the review of Mali, on 18 and 20 November 1998.
The report notes that, as a result of
the structural adjustment programmes undertaken by Burkina Faso in 1991 with the support
of the International Monetary Fund, the structure of import duties has been simplified,
some non-tariff obstacles eliminated and inflation kept in check. The performance of
government finance and the current balance has been less successful. Burkina's exports,
mainly cotton, livestock products and gold, are affected by fluctuations in world prices
and only cover about half of imports, resulting in a chronic deficit in the trade balance.
This is a contributory factor in the structural deficit of the current account, sustained
by the negative balance in services caused by large outgoings for freight, insurance and
interest on the external debt, which have increased as a result of the devaluation of the
CFA franc.
Burkina Faso imports its heavy
equipment from developed countries, especially France, and its petroleum products from
Nigeria and Côte d'Ivoire. Burkina Faso's exports enjoy the preferential treatment given
to developing countries by the European Union and developed countries.
Burkina Faso is a founder member of the
West African Economic and Monetary Union (WAEMU), the Economic Community of West African
States (ECOWAS), and has signed bilateral trade agreements and investment agreements with
several countries.
Burkina Faso's import duties are among
the highest in the WAEMU. The simple arithmetic average of import duties is 31.1 per cent,
with a minimum of 6 per cent and maximum of 37 per cent. In addition, Burkina levies a
value added tax of 18 per cent and excise duty on domestic products and imports. Products
of the mining industry, timber, transport equipment, scientific equipment and
non-electrical machinery are the least taxed. The rate of import duty on other products is
near or at the maximum level.
Agriculture accounts for almost 40 per
cent of Burkina's real GDP and over half of its export earnings. Cotton is the main export
product and supplies 40 per cent of these earnings. Burkina Faso exports cotton
principally to Switzerland, Mauritius and Indonesia. As a result of the various reforms
implemented by the Burkina Government and the devaluation of the CFA franc, cattle exports
to other countries in the subregion have increased sharply. The devaluation of the CFA
franc has also helped to accelerate agricultural reform by making certain local products
more competitive. As a result of the improvement in world prices and producer prices,
cotton exports have also risen.
The report notes, however, that the
objective of promoting exports conflicts with measures aimed at the valorization of
certain products and food self-sufficiency. For example, raw sheep and goat hides and
skins cannot be exported, even though domestic industries do not have the capacity needed
to process all those produced. Likewise, the special authorizations required for the
export of shea nuts and cereals, for reasons of food self-sufficiency, make Burkina's
participation in international trade in these goods unstable.
Gold is mainly exported to France and
accounts for around 10 per cent of export earnings. The new Mining Code in force since
1997 gives the same advantages to nationals and foreigners. The marketing of products of
the mining industry has been liberalized and non-tariff barriers abolished. The mining
sector is the sector in which tariff protection is lowest.
The manufacturing sector is not highly
developed and consists of around 60 plants which mainly manufacture food products and
textiles, principally for the domestic market. The structure of import duties and the high
cost of inputs, however, hinder the international competitiveness of manufactured goods
produced locally. This sector enjoys the greatest tariff protection.
The services sector provides over 40
per cent of real GDP and is dominated by trading activities. Burkina's commitments under
the General Agreement on Trade in Services (GATS) are limited and do not cover certain
services unilaterally liberalized by Burkina under structural adjustment programmes. A
dynamic informal sector accounts for around 25 per cent of GDP and 80 per cent of
non-agricultural employment.
The new Investment Code entered into
force in 1995 and was amended in 1997 with the objective of promoting productive
investment to assist Burkina Faso's economic and social development. It guarantees
domestic and foreign enterprises the same rights and obligations and gives export-oriented
enterprises many advantages.
The report states that intellectual
property rights in Burkina are protected by the Bangui Agreement, and also by a 1983 Order
on copyright. Counterfeiting mainly concerns manufactured products, including medicines,
and has become much more common following the devaluation of the CFA franc.
Notwithstanding the existence of legislation, the measures taken to combat counterfeiting
remain limited.
The report concludes that the
additional costs due to high import duties will be reduced when the CET enters into force
and it should help to lessen nominal tariff protection in Burkina and eliminate
distortions due to exemptions, which are sometimes of an ad hoc nature and do not act as
any kind of incentive to investors, particularly foreign investors. Burkina's imposition
of technical standards for around a dozen products and of a safeguard clause for sugar,
even though it did not reserve this right, shows that the WTO Agreements should be made
better known in Burkina and that technical assistance should be made available. This could
help to ensure that the liberalization efforts already made by Burkina are not
jeopardized.
Note to editors
The reports by the WTO Secretariat
and the Government of Burkina Faso will be discussed by the WTO Trade Policy Review Body
(TPRB) on 18 and 20 November 1998. The WTO's TPRB conducts a collective evaluation of
the full range of trade policies and practices of each WTO Member at regular periodic
intervals and monitors the trends and developments that may have an impact on the global
trading system. The Secretariat's report covers all aspects of Burkina Faso's trade
policy, including domestic laws and regulations, the institutional framework, trade
policies by measure and by sector. Since the WTO came into force, the "new
areas" of services trade and trade-related aspects of intellectual property rights
are also covered.
The summary observations in the
Secretariat's report and extracts from the Government's report are attached. The full text
of these reports are available from the WTO Secretariat on request (telephone No. 41 22
739 5019). They are also available for journalists in the Newsroom of the WTO Website
(www.wto.org). Together with the report of the TPRB's discussion and the Chairman's
summing up, these two reports constitute the full review of Burkina Faso's trade policy,
which will be published in due course and will be available from the WTO Secretariat,
Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following
reports have been completed: Argentina (1992),
Australia (1989, 1994 and 1998), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia
(1993), Botswana (1998), Brazil (1992 and 1996), Cameroon (1995), Canada (1990, 1992, 1994
and 1996), Chile (1991 and 1997), Colombia (1990 and 1996), Costa Rica (1995), Côte
d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996),
Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 and 1997),
Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990 and 1994), Hungary (1991 and
1998), Iceland (1994), India (1993 and 1998), Indonesia (1991 and 1994), Israel (1994),
Jamaica (1998), Japan (1990, 1992, 1995 and 1998), Kenya (1993), Korea, Rep. of (1992 and
1996), Lesotho (1998), Macau (1994), Malaysia (1993 and 1997), Mauritius (1995), Mexico
(1993 and 1997), Morocco (1989 and 1996), Namibia (1998), New Zealand (1990 and 1996),
Nigeria (1991 and 1998), Norway (1991 and 1996), Pakistan (1995), Paraguay (1997), Peru
(1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore
(1992 and 1996), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993
and 1998), Sri Lanka (1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991
and 1996), Thailand (1991 and 1995), Tunisia (1994), Turkey (1994 and 1998), the United
States (1989, 1992, 1994 and 1996), Uganda (1995), Uruguay (1992), Venezuela (1996),
Zambia (1996) and Zimbabwe (1994).
The
Secretariats report: summary Back to top
TRADE POLICY REVIEW BODY: BURKINA
FASO
Report by the Secretariat Summary Observations
The economic
environment
Burkina Faso is a least-developed
country (LDC) in West Africa and has been independent since 5 August 1960. In the late
1960s, Burkina embarked upon an interventionist Marxist-Leninist type of economic policy
based on national control of the economy and a large measure of State participation
through State enterprises operating in priority sectors. The persistent drought that
affected Burkina Faso in the 1970s, the second oil crisis in 1979-1980 and large wage
increases in the 1980s added to Burkina Faso's "natural" (particularly
financial) problems as a land-locked least-developed country and highlighted the
limitations of its economic policy.
In order to overcome the crisis, in
1983 the Government took a number of budgetary measures (reducing Government spending and
increasing revenue), as well as trade measures (in particular, more protection for the
industrial sector). Some of these measures foreshadowed the reorientation of the country's
economic policy, but they did not suffice and in 1991 Burkina Faso undertook its first
structural adjustment programme with the support of the International Monetary Fund. This
programme reflected the Government's determination to abandon State intervention, and its
objectives were to open up the economy and increase participation by the private sector.
It comprised inter alia an adjustment plan for the transport sector and another for
agriculture and livestock farming; reforms were also undertaken in the financial sector,
and in the social field, including health and education.
The reforms have made it possible to
simplify the customs tariff, eliminate specific import duties and reference prices, and
remove some non-tariff barriers (prior and special authorization for exports and imports,
quotas, licences, price controls and monopolies) for a large number of products. Prior
import declarations, however, have been introduced. In parallel with the various reform
measures, the devaluation of the franc of the Communauté financière africaine (African
Financial Community), which went from CFAF 50 to CFAF 100 to the French franc, has boosted
the international competitiveness of some Burkina products and the growth of real GDP
since 1994. For example, cattle exports to other countries in the subregion, especially in
the franc zone, have increased sharply. As a result of better world prices as well as
producer prices, cotton exports have also risen. Inflation has been kept in check, but
performance in the area of government finance and the current balance, as well as in the
industrial field, has been less successful.
Agriculture accounts for almost
40 per cent of Burkina's real GDP and over half of its export earnings: cotton
is the main export product and supplies 40 per cent of these earnings. Burkina Faso also
has mineral (gold, ferrous and non-ferrous ores) as well as energy resources although to
date only small quantities have been discovered. Gold accounts for around 10 per cent of
export earnings. The manufacturing sector is not highly developed and consists of around
60 plants which mainly manufacture food products and textiles, principally for the
domestic market. Trading activities predominate in the services sector, which provides
over 40 per cent of real GDP. The dynamic informal sector accounts for around 25 per cent
of GDP and 80 per cent of non-agricultural employment.
Exports are affected by fluctuations in
world prices (mainly for cotton, livestock products and gold) and vagaries of climate
(cotton and livestock products). Exports cover only about half of imports, resulting in a
chronic trade deficit. There is also a chronic deficit in the services balance caused by
large outgoings for freight and insurance services as well as interest on the external
debt, exacerbated by the devaluation of the CFA franc. The current account thus
suffers from a structural deficit.
Burkina Faso's main trading partners
are France and Côte d'Ivoire; Switzerland and Indonesia have also been important outlets
for Burkina's products in recent years. Burkina Faso exports cotton principally to
Switzerland, Mauritius and Indonesia, gold to France, hides and skins to Spain and Italy,
and live animals to countries in the West African subregion, specifically
Côte d'Ivoire and Ghana. Heavy equipment is imported from developed countries
(especially France). Petroleum products are generally imported from Nigeria and Côte
d'Ivoire. Burkina's imports from Côte d'Ivoire also include cement, fruit, food and
chemical products, paper board and salt.
Institutional
framework
Under the 1991 Constitution
(revised in 1997) Burkina Faso is a multiparty democracy. The President of the Republic is
elected by universal suffrage for a renewable term of seven years. As the holder of
executive power, he defines the broad outlines of State policy and appoints the prime
minister. Upon the latter's proposal, he also appoints the other Members of the
Government. The Government drafts and implements policies. Parliament comprises two
houses, the National Assembly, which adopts legislation, and the House of Representatives,
which plays an advisory role. An Economic and Social Council expresses an opinion on draft
legislation, orders and decrees transmitted to it. It may also, on its own initiative,
draw to the attention of the President of the Republic any reforms which it believes would
promote Burkina's economic and social development.
Since 1991, Burkina Faso has
implemented many institutional and regulatory reforms with the aim of creating a more
favourable business environment for the development of economic and financial activities.
The application of the provisions in the Treaty on the Organization for Harmonization of
Business Law (OHADA) should lead to a revision of some of the laws and regulations
governing trade and investment in Burkina Faso. In addition, the implementation of the
WAEMU Treaty should strengthen these provisions and bring them more into line with
Burkina's commitments under the WTO Agreements.
A new Investment Code entered into
force in 1995 and was amended in 1997. Its objective is to promote productive investment
to assist Burkina Faso's economic and social development. It guarantees domestic and
foreign enterprises the same rights and obligations and gives foreign natural or legal
persons the freedom to transfer capital and wages. Enterprises wishing to take advantage
of these provisions must, however, keep their accounting books in Burkina Faso, give first
preference for jobs to Burkina citizens, utilize services by domestic enterprises as a
priority, and protect the environment. Like the Investment Code, the new Mining Code in
force since 1997 gives the same advantages to nationals and foreigners wishing to invest
in the mining sector in Burkina Faso. Within the framework of the WAEMU, a community
Investment Code is expected to be introduced in 1998. In principle, this should lead to
the elimination of duty and tax exemptions on imports of capital goods, which are subject
to low rates of duty under the Common External Tariff (CET).
Burkina Faso became a Member of the WTO
on 3 June 1995, although the GATT had been applied de facto since Burkina Faso became
independent in 1960. In the Uruguay Round, Burkina Faso undertook several commitments in
the form of binding of import duties and modes of supply of certain services. It grants
all its trading partners at least most-favoured-nation treatment (MFN). It has benefited
inter alia from the special and differential treatment granted to least-developed
countries, notably in the form of exemptions or delayed implementation of certain
provisions, and it should benefit in particular from the strengthening of rules and
disciplines in the multilateral trading system in sectors such as agriculture, including
livestock, which are important for the country. Burkina hopes that the integrated
programme launched by the WTO and other organizations at the High-Level Meeting held in
Geneva in October 1997 will go beyond the technical assistance objectives therein:
Burkina's main concern is to increase and diversify production so as to be able to take
better advantage of the opportunities available as well as those which should result from
the continued liberalization at the multilateral level.
Burkina Faso is a founder member of the
West African Economic and Monetary Union (WAEMU). This organization's aim is to create an
economic union through the convergence of macroeconomic and sectoral policies and the
harmonization of member countries' fiscal legislation; monetary integration, with a common
central bank, the Central Bank of the West African States (BCEAO) and currency (the
African Financial Community franc (CFAF)) has already been achieved. The structure of the
CET has already been defined and implementation should start in July 1998, ending in
January 2000, by which date the customs union should be completed. Burkina is a
member of the Economic Community of West African States (ECOWAS) whose Treaty also
envisages the creation of a customs union; however, the timetable for establishing the
union has not been respected. Burkina Faso signed the Fourth Lomé Convention and receives
aid from the European Union (EU). It is a beneficiary of the Stabilization System for
Export Earnings (STABEX); a large number of its exports to the EU enjoy non-reciprocal
preferential treatment in the form of exemption from import duty. Burkina's products also
enjoy (non-reciprocal) preferential access to markets in developed countries outside the
European Union under the Generalized System of Preferences.
Burkina has signed bilateral trade
agreements with the Democratic People's Republic of Korea, Cuba, India and Tunisia. It has
also signed an investment agreement with Germany and begun negotiations on similar
agreements with Belgium, Canada, China, Malaysia and the Netherlands. As at May 1998,
Burkina Faso had not been involved in any dispute settlement proceedings under the GATT,
the WTO or any other trade agreement signed by it.
Trade policy
features
Trade policy
instruments and their impact
Burkina Faso's trade policy is
essentially based on duties and taxes. It adopted the Harmonized System Nomenclature on 15
February 1992. The trade reforms carried out under the structural adjustment programmes
have simplified the structure of import duties. Nevertheless, Burkina's import duties are
among the highest in the WAEMU. They consist of a uniform customs duty of 5 per cent, a
fiscal import duty of zero, 4 or 26 per cent, a statistical tax (TS) of 4 per cent, and a
special intervention tax (TSI) of 2 per cent; the customs service considers the latter two
taxes to be payment for services rendered. The simple arithmetic average of import duties
(i.e. all the above-mentioned duties and taxes) is 31.1 per cent, with a minimum of 6 per
cent (for products only subject to the TS and the TSI) and a maximum of 37 per cent. There
is only a narrow dispersion of import duties and they show a generally negative escalation
from semi-finished to finished products. Products of the mining industry, wood products,
transport equipment, scientific equipment and non-electrical machinery are taxed the
least. For other products, the rate of import duty is near or at the maximum level.
In addition to import duties and taxes,
a Community Solidarity Levy of 0.5 per cent is imposed on behalf of the WAEMU and a
community levy of 0.5 per cent for the ECOWAS on imports from non-member countries of
these two organizations. An additional tax of 7.5 per cent is imposed on imported sugar
under a safeguard scheme set up by Burkina in March 1998. Value added tax (VAT) of 18 per
cent and excise duty are also imposed on domestic products and imports: the tax on
tobacco, cigars and cigarettes produced locally is 13 per cent and on imports 95 per cent,
thus giving Burkina enterprises manufacturing these goods additional protection of 112
points. Export duties and taxes were imposed until 1991, but they have nearly all been
abolished. The only export tax still in effect in Burkina is the special contribution to
the livestock sector (CSE), which applies both to exports and to domestic sales of
livestock products.
Under the Uruguay Round, Burkina Faso
bound customs duties applicable to agricultural products (like other Member countries of
the WTO) and to products in Chapters 45, 46, 47 and 49 of the Harmonized System at a
ceiling rate of 100 per cent. Other duties and charges on imports of these products were
bound at 50 per cent. The tariffs bound thus cover a relatively limited number of
products; they also give Burkina Faso considerable room for manoeuvre due to the wide gap
between the rates of duty bound and those applied. With the implementation of the CET, the
WAEMU Commission intends to renegotiate the tariff concessions of all its member
countries, including the concessions that appear in old schedules of products which were
bound at a time when these countries were colonies.
In 1995, the number of products subject
to technical standards was lowered from 40 to 10. Burkina has also dismantled most of the
quantitative restrictions on imports. The prohibitions still in place are for reasons of
security, health or compliance with international agreements signed by Burkina Faso.
Imports whose f.o.b. value is CFAF 500,000 or more are subject to a Prior Import
Declaration (DPI) under the Import Verification Programme. Imports whose f.o.b. value
exceeds CFAF 3 million are subject to preshipment inspection by the Société générale
de surveillance (SGS). With the exception of the provisions in trade agreements it has
signed, Burkina Faso does not have any comprehensive legislation on rules of origin. It
does not have any domestic legislation either on anti-dumping, countervailing or safeguard
measures.
Burkina's authorities have made the
promotion of exports one of the key elements of their trade policy. This strategy has been
implemented by the adoption of a new Investment Code (amended in 1997) which confers many
investment and operational advantages on exporting companies. These benefits are in the
form of total exemption from customs duties and taxes and internal taxation; the
operational benefits are permanent. The permanent reduction of 50 per cent of
industrial and commercial profits tax given to these companies during the operational
phase rises to 75 per cent if they use local raw materials accounting for at least 80 per
cent of all the raw materials directly used in manufacturing. The establishment of free
zones is also envisaged. In addition, VAT on exports is zero-rated with a view to possible
reimbursement of the VAT paid on inputs and production factors used to manufacture
exports. Exports of raw sheep and goat hides and skins are, however, banned and exports of
shea nuts and cereals are subject to special authorization.
Following the devaluation of the CFA
franc in 1994, the prices of a large number of products were liberalized in Burkina Faso:
under the new law on competition, the prices of goods and services are free and are
determined solely by market forces. Nevertheless, the prices of petroleum products,
essential generic medicines, tobacco, cotton (producer price), school materials, and
public utility tariffs (water, electricity, telecommunications) are still regulated. There
have been delays in implementing the programme on restructuring State enterprises. Among
the enterprises which enjoy a monopoly or have exclusive rights in their particular fields
of activity are those which Burkina Faso considers "strategic". There are 15 of
these, and they are present in most sectors.
In Burkina Faso, intellectual property
rights are protected through the Bangui Agreement on Industrial Property signed by around
15 African countries (the African Intellectual Property Organization (AIPO) was set up
under this Agreement) and by the 1983 Copyright Order together with its implementing
texts. Work is in hand at the AIPO to bring the provisions of the Bangui Agreement into
line with the obligations of WTO Members under the Agreement on Trade-Related Aspects of
Intellectual Property Rights. In Burkina Faso, counterfeiting mainly affects manufactured
products, including medicines, and has developed significantly following the devaluation
of the CFA franc. Despite the existence of legislation, the measures taken to combat
counterfeiting are limited. Counterfeit goods can only be held at the border if the
right-holder concerned makes a complaint. The inadequacy of the means used to combat fraud
and counterfeiting and of the cooperation among the various services involved
(particularly the police and customs services) is one of the problems faced in
implementing the relevant provisions in Burkina. An action programme has been drawn up to
improve the protection of copyright.
Policies by
sector
The reforms undertaken by Burkina
Faso in 1991 have affected sectors of activity in different ways. In the mining sector,
they have been underpinned by the adoption of a more liberal Mining Code that is more
attractive to private investment. The marketing of products of the mining industry has
been liberalized and non-tariff barriers abolished; the mining sector is the sector in
which tariff protection is lowest.
As occurred in the mining sector, the
devaluation of the CFA franc has helped to accelerate agricultural reform, the
competitiveness of certain local products being strengthened by the new parity. Sugar
remains protected by several measures, including a special safeguard clause not announced
by Burkina (Article 5 of the WTO Agreement on Agriculture). A State company, la Société
sucrière de la Comoé, has a monopoly of sugar imports and is the only producer in the
country. Sugar is also subject to technical barriers in the form of standards, together
with some other products: preserved foodstuffs of animal origin, wheat flour, edible
vegetable oils, milk, rice, cold curing vulcanizing glues, pesticides, insecticides and
by-products; type R6 or R20 saline electric batteries, and tyres and inner tubes. In
addition, import duties on agricultural products remain relatively high. The ban on
exports of raw sheep and goat hides and skins, State intervention in production and
particularly in the marketing of certain products, especially cotton, and the special
authorizations required for the export of shea nuts and cereals all raise doubts
concerning their relevance to the objectives of diversification and promotion of exports
on the one hand and improving the living conditions of the rural population on the other.
The manufacturing sector enjoys the
greatest tariff protection, just in front of agriculture. The structure of import duties
is not, however, favourable to development of Burkina's manufacturing sector, which
explains the use of exemptions, even on an ad hoc basis. In addition to the structure
of import duties, the high cost of certain inputs due to the price of energy (including
electricity and fuel) and transport hinder the international competitiveness of
manufactured goods produced locally. The devaluation of the CFA franc did not manage to
redress this situation, which is compounded by the remnants of the import substitution
strategy: for a long time, this strategy was underpinned by State intervention through
State-owned enterprises, some of which are still active and provide basic services such as
telecommunications. A large percentage of the so-called strategic enterprises are active
in the services sector. The delays in carrying out the privatization programmes also
explain the strong presence of State companies in this sector. In addition, Burkina's
commitments under the General Agreement on Trade and Services are restricted to certain
aspects of the supply of services and do not cover services unilaterally liberalized by
Burkina under the structural adjustment programmes.
Trade
policies and foreign trading partners
The trade reforms under way in
Burkina Faso are part of the structural adjustment programmes launched in 1991. Although
liberalizing reforms have been carried out in the import sector, a great deal remains to
be done to promote exports, which are the heart of the country's major economic objective,
namely, export-based sustainable economic growth. Some measures in force in Burkina Faso,
especially in the area of trade policy, conflict with this objective as formulated.
Burkina's land-locked situation already constitutes a natural barrier to international
trade. In addition to being land-locked and having an inadequate communications network
with the outside, the high cost of transport is also the result of landing and handling
fees at Ouagadougou airport and the State monopoly of supply and even in certain cases
distribution of energy. These factors work to hamper the international competitiveness of
Burkina's exports.
In the agricultural sector, the
objective of diversifying and promoting exports conflicts with measures aimed at the
valorization of certain products and food self-sufficiency. For example, raw sheep and
goat hides and skins cannot be exported, even though domestic industries do not have the
capacity needed to process all those produced. Likewise, the special authorization
required for the export of shea nuts and cereals for reasons of food self-sufficiency
(even if that is not the official reason) make Burkina's participation in international
trade in these goods unstable, even if only potentially. Consequently, these
authorizations do not help to guarantee market shares for the development of such exports.
Neither do they encourage Burkina's producers who, if local prices were more profitable,
would not feel the need to export their goods, particularly in view of Burkina's
landlocked situation.
The additional costs due to high import
duties will be reduced when the CET enters into force. It should help to lessen nominal
tariff protection and eliminate distortions due to exemptions, which are sometimes of an
ad hoc nature and do not act as any kind of incentive to investors, particularly foreign
investors. Lastly, Burkina's imposition of technical standards for around a dozen products
and of a safeguard clause for sugar (for the time being), even though it did not reserve
this right under Article 5 of the Agreement on Agriculture, show that the contents of the
WTO Agreements should be made better known in Burkina and that technical assistance should
be made available to ensure that they are respected. This could help to ensure that the
liberalization efforts already made by Burkina Faso are not jeopardized, especially
following the entry into force of the WAEMU arrangements, which should increase
competition by products from neighbouring countries.
Government
report Back to top
TRADE POLICY REVIEW BODY: BURKINA
FASO
Report by the Government
Introduction
Burkina Faso has an area of 274,200
km2. It is one of the least-developed countries on the African continent.
Currently estimated at around 10.5 million, its population is increasing at a rapid 2.8
per cent per year. The result is that more than half of the Burkina population is now
under 20 years of age.
The country has limited natural
resources and is exposed to the vagaries of the Sahelian climate, which means insufficient
and uneven rainfall. It is also land-locked. Its economic infrastructure is
under-developed and many remote regions are virtually isolated during the rainy season.
Another major handicap is the lack of energy resources. The country's principal local
resource remains its flora, the over-exploitation of which is currently threatening the
environment. Other energy sources are of foreign origin (hydrocarbons) and are available
at very high prices.
Burkina Faso nevertheless has some
assets that offer hope of overcoming under-development and launching a process of
sustainable growth. The first is doubtless its human resources, often reputed to be
disciplined and hard-working. The second is political stability and relative social peace
achieved by a Government which, since 1987, has instituted sweeping political and
structural reforms constantly guided by the quest for consensus. With the adoption of the
Constitution of 2 June 1991, Burkina Faso became a pluralist democracy.
Trade policy
and practice
General trade
policy objectives
Since 1991, Burkina Faso has
carried out a series of economic reforms designed to end Government involvement in the
competitive sectors and liberalize the economy. The private sector is now recognized as
the engine of economic growth, which must remain above 5 per cent per annum if Burkina
Faso is effectively to launch sustainable development. The Burkina Government strategy of
private sector development is intended to create a competitive and productive economy
driven by that sector.
The Government's general objectives in
this regard are:
? To liberalize trade;
? to improve the regulatory framework
for the creation and exercise of private enterprise by both nationals and foreign
investors;
? to enable business to develop within
a dependable legal framework in line with international standards;
? to put in place measures for rapid
adaptation to the rules of the West African Economic and Monetary Union (WAEMU) and the
WTO;
? to facilitate speedy adjustment to
economic trends by making employment laws more flexible;
? to enhance the productivity and
efficiency of private-sector support institutions, especially those run directly by the
State;
? to combat fraud and corruption;
? to institute permanent and fruitful
dialogue with the private sector;
? to reduce the cost and/or improve the
quality of Government-run public services;
? to provide better conditions of
corporate financing in general and for small- and medium-sized enterprises in particular;
? to lighten the tax burden on the
formal sector;
? to ease customs duties on inputs;
? to strive to provide enterprises with
more modern and efficient services;
? to foment the technical upgrading of
the local workforce;
? to step up the creation and
restoration of serviced industrial zones;
? to continue to develop serviced zones
for different activities;
? to encourage the reduction of some
transport costs;
? to improve the efficiency and
fluidity of Burkina Fasos roadways.
General description of the import
and export regime
The importation, exportation or
re-exportation of non-prohibited goods is free. The following legal instruments govern the
general import and export regime: Ordinance No. 91-069 of 25 November 1991 and its
Implementing Decree No. 94-014 of 25 November 1991 and Law No. 15/94 of 5 May 1994 on
competition and consumption. This Law institutes an autonomous advisory body, the National
Competition and Consumption Commission (CNCC), which oversees the functioning of the rules
of competition in the economy and ensures consumer protection. It authorizes the Minister
for Trade to regulate prices provisionally under the conditions established by decree or
dictated by crisis or emergency situations that may interfere with the free play of market
mechanisms.
Imports
Import licensing has been
eliminated as part of the measures taken under the structural adjustment programme. For
health reasons, however, the importation of some products is banned, an example being
asbestos-based products.
Decree No. 98-118/PRES/PM/MEF of 31
March 1998 instituted a 1 per cent levy of the f.o.b. value of goods subject to prior
import declarations to cover the cost of the import verification programme.
Exports
The export of Burkina products
merely requires authorization from the Business Promotion Centre. For statistical
purposes, cereal exports are subject to an export declaration (Notice to Exporters No.
96-002/MCIA of 1 March 1996). Shea nuts are also subject to special authorization for the
same reasons. The export of raw goat or sheep skins is prohibited (Notice to Exporters
No. 95-453/MICM/SG/DGRS of 7 July 1995). This provisional measure is fully consistent
with the aims of the policy to promote and valorize livestock by-products and with that of
supporting the initial stages of the privatization process.
Implementation
of trade policy
Trade policy
measures implemented in Burkina Faso
Customs duties
Since 1991, Burkina has been
steadfastly following a policy of economic liberalization that culminated in a major
customs tariffs reform in 1992, with the enactment of Law No. 12/92/ADP of 22 December
1992.
Under this Law, imported goods are
divided into three categories, the first containing essential and special goods, the
second, intermediate goods (raw materials and capital goods), and the third, all other
products (not falling into the two preceding categories).
This classification was based on
product affinity and their degree of processing, and was mindful of the need to promote
domestic production units, safeguard domestic industry and prevent certain products from
increasing the tax burden.
Under the new tariff, import duties and
charges include:
? Customs duty (DD): 5 per cent, flat
rate;
? Fiscal Import Duty (DFI): 0 per cent,
first category;
? Statistical Fee (STAT): 4 per cent,
flat rate; 4 per cent, second category;
? Community Solidarity Levy (PCS): 1
per cent, flat rate; 26 per cent, third category;
? Value Added Tax (VAT): 18 per cent
for the second and third categories; 0 per cent for the first category;
? Special Intervention Tax (TSI): 1 per
cent.
Since 1 January 1993, tax has been
applied ad valorem across the board to import and export products. Pursuant to
Regulation No. 02/97/CM/UEMOA of 28 November 1997 adopting the Common External Tariff
(CET), the DFI rates were modified by Ordinance No. 98-001/PRES of 9 July 1998. The
new rates are 0 per cent, 5 per cent and 20 per cent for categories I, II and III
respectively. The TSI has been scrapped. Excise taxes under the customs tariff schedule
remain in force (VAT, taxes on soft drinks, coffee, tea and tobacco). The STAT has also
been retained at 4 per cent. The DFI is three-tiered and varies according to product
classification.
The documents required for customs
formalities are the importer's card, the purchase invoice, the invoice showing the
insurance premium, the certificate of origin, the customs valuation certificate and, if
necessary, the phytosanitary certificate.
Customs
valuation and preshipment inspection
The prevailing customs valuation
method is based on the transaction value of the goods. The customs valuation principles
that presently apply in Burkina Faso are based on Article 22 of the Customs Code. A system
of compulsory preshipment inspection of goods has been in operation since 1992.
Accordingly, all imports must comply with the formalities of the inspection company, which
are:
? Preparing an import application for
any invoice in excess of CFAF 3 million (maritime transport);
? having the goods checked before
loading;
? producing the definitive invoice
after inspection;
? obtaining a customs valuation
certificate that must be submitted to the customs authorities when the goods are being
cleared.
In the event of undervaluation, the
inspection company rejects the values shown on the invoice and makes the necessary
adjustment in the light of the information available to it in the country of importation
or based on the value of similar products. Any adjustments are mentioned on the customs
valuation certificate.
Ongoing
trade liberalization under the customs adjustment programme
Between 1966 and 1990, the Burkina
economy was tightly regulated under an economic strategy that relied on the public sector
for investment and growth. The hoped-for results did not materialize. Since 1991, Burkina
Faso has been implementing an economic liberalization programme with IMF and World Bank
support. The Government's objective in that framework has been to foster an environment
favourable to private initiative. Accordingly, steps were taken such as the elimination of
import licensing, the removal of import and export restrictions and the realignment of
laws and regulations to suit the new and highly liberal economic environment.
Economic
reform programme
Trade policy is but one component
of a broader policy encompassing investment, transportation, tourism, financial services,
and a legal and regulatory framework for fostering and developing business and employment.
These elements are all interrelated and interdependent insofar as they help to ensure the
prosperity of the population as well as sustainable economic growth.
During the 1980s, low national income
and economic under-development had prompted the Government authorities to embark on a
voluntaristic development policy characterized by increased public investment in both
infrastructure and the production sector. Household savings and corporate profits were too
low to generate sufficient resources to meet investment needs. That explained the public
sector share of over half of total gross fixed capital formation.
Yet these endeavours were not enough to
offset the effects of a very high rate of population increase (almost 3 per cent per
annum) and the structural weaknesses stemming specifically from insufficient savings and a
chronic trade deficit (average rate of coverage of imports by exports being 35 per cent).
The various adjustment programmes launched since 1991 in conjunction with the IMF and
World Bank have been designed to stabilize the economy and restore conditions for
sustainable growth and to improve the management of public finances.
To boost the population's earnings and
accelerate the development of human resources and production potential, the Government
used a letter of intent to set out a policy strategy for sustainable human development.
The principal objectives of this policy for the 1998-2000 period may be summed up as
follows:
? Ensuring average real GDP growth of
at least 5.5 per cent between 1998 and 2000;
? containing annual inflation at 3 per
cent per annum;
? reducing the external deficit on
current account, excluding grants, to 10 per cent of GDP by 2000;
? stabilizing public sector investment
at around 13 per cent of GDP in the 1990-2000 period and the component financed by
domestic budgetary resources at 2.7 per cent of GDP for the same period;
? improving social infrastructure and
increasing life expectancy from the current 48 years to 57 years by 2005;
? fomenting the private sector by
reinforcing the legal system so as to provide an atmosphere of greater security for
private sector activity;
? strengthening the role of women in
the development process;
? continuing to overhaul the banking
system;
? developing and diversifying export
potential;
? completing the liberalization of the
export and import sectors;
? pressing ahead with the programme of
reform of public enterprises;
? conducting an exhaustive survey of
Government holdings in enterprises and a strategic analysis of the Government's portfolio;
? opening the telecommunications sector
to competition and putting in place a strategy for the partial privatization of ONATEL;
? pursuing regional economic
integration;
? completing Burkina Faso's integration
into the multilateral trading system managed under the WTO agreements.
To these ends, the Government has
undertaken to promote investment and domestic saving while redirecting investment towards
priority sectors.
Between 1998 and 2000, export value is
expected to increase by an annual average of 19 per cent and volume by 13 per cent, mainly
owing to a steady increase in cotton output. In parallel, the external debt roll-back
under the initiative to assist poor debt-ridden countries will restore the debt service /
export ratio to a sustainable level. With the support of partners, the triennial
investment programme will be pursued within the terms of the macroeconomic framework of
reforms between 1998 and 2000, designed to enhance the Government's capacity to manage and
rationalize its expenditure.
Conclusion Back
to top
This trade policy report shows that
Burkina Faso is pursuing its economic liberalization programme unflinchingly. In that
context and in order to create a more business-friendly institutional climate, the ongoing
reforms within WAEMU, OHADA and the WTO will continue and the relevant adjustments will be
made for their implementation in Burkina Faso.
Actions for the coming three years will
cover:
? The drafting of a Community
Investment Code;
? the effective harmonization of
Government finance statistics;
? the application of the West African
Accounting System (SYSCOA) and the Treaty of the Organization for the Harmonization of
Business Law in Africa (OHADA);
? the application of the Common
External Tariff;
? multilateral surveillance and the
accompanying penalties;
? implementation of the actions under
the integrated ITC/UNCTAD/WTO programme;
? the inauguration of a Centre for
Business Formalities (single window) is almost a reality, aimed at bringing the public and
private sectors closer together;
? streamlining administrative
procedures, improving the Institutional Code, adapting laws and regulations to the new,
highly liberal economic environment all have a single purpose: to foster a climate in
which a liberal economy will thrive;
? the sound management of a liberal
economy calls for more entrenched democracy, better governance and the furtherance of
structural reforms. |