Burundi’s economic reform too slow for its impoverished citizens

The central African nation of Burundi may be winning plaudits for its economic reforms and relative peace after nearly two decades of civil war, but shop owners like Niyonzima Alimasi have little to cheer.

Monday, November 05, 2012

The central African nation of Burundi may be winning plaudits for its economic reforms and relative peace after nearly two decades of civil war, but shop owners like Niyonzima Alimasi have little to cheer."Purchasing power is low,” said Alimasi, 31, who runs a hardware shop on a crowded street in the capital Bujumbura, nestled on the shores of Lake Tanganyika."Business is very shaky. There are few buyers,” he said, standing in his shop crammed with tins of paint, door locks and nails imported from China.The tiny country targets economic growth of around 4 per cent this year, supported by booming exports of tea and coffee, but high oil prices, drought and lower aid assistance have eroded the Burundi franc’s value against the dollar by nearly half in the past three years, driving up consumer prices and causing widespread hardship for its citizens.Inflation soared to 25 per cent in April this year, forcing the government to remove taxes on essential imported commodities such as beans, rice and potatoes, after surging prices prompted many in the capital to stay away from work in protest. Inflation remains high at just above 14 per cent.The central African nation of Burundi may be winning plaudits for its economic reforms and relative peace after nearly two decades of civil war, but shopowners like Niyonzima Alimasi have little to cheer."Purchasing power is low,” said Alimasi, 31, who runs a hardware shop on a crowded street in the capital Bujumbura, nestled on the shores of Lake Tanganyika."Business is very shaky. There are few buyers,” he said, standing in his shop crammed with tins of paint, door locks and nails imported from China.The tiny country targets economic growth of around 4 percent this year, supported by booming exports of tea and coffee, but high oil prices, drought and lower aid assistance have eroded the Burundi franc’s value against the dollar by nearly half in the past three years, driving up consumer prices and causing widespread hardship for its citizens.Inflation soared to 25 percent in April this year, forcing the government to remove taxes on essential imported commodities such as beans, rice and potatoes, after surging prices prompted many in the capital to stay away from work in protest. Inflation remains high at just above 14 percent.Still, further reform is badly needed. Shopkeepers said it takes up to two months to clear a container from the port due to red tape, exposing traders to costs that are compounded by the Burundi franc’s rapid depreciation against the dollar."The biggest bottleneck is energy,” Finance Minister Tabu Abdallah told Reuters in Bujumbura.The country produces only 32 megawatts of electricity a year, and imports 20 MW from neighbouring Congo but that is still not enough, leading to frequent power blackouts. There are plans to generate an extra 100 MW of electricity an n ually in five years.Only Kiriri, the leafy, affluent Bujumbura suburb where President Pierre Nkurunziza, foreign diplomats and other top officials live, is guaranteed power supply at all times, residents said.More electricity could help Burundi plug its trade gap by enabling it to exploit nickel reserves near its border with Tanzania. The government estimates it could produce 50,000 tonnes of nickel a year for 150 years.It says the economy needs sustained growth of 5-7 percent annually to lift the country out of poverty.Agencies