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Poverty reduction strategy: Burkina Faso’s perseverance with PRSP process bodes well for the future

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 2002
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Burkina Faso is a poor, landlocked sub-Saharan African country with limited resources, high vulnerability to external shocks, and immense social needs. During most of the 1980s, it followed a development strategy based on central planning and pervasive controls that resulted in large macroeconomic imbalances and a stagnant economy. In 1991, the country reversed direction, adopting a series of reforms supported by the IMF and the World Bank to stabilize the economy, institute market principles, and boost growth. After moving away from central planning, Burkina Faso began to see improvements in its economy (see table, page 47). The 1994 devaluation of the CFA franc—the common currency of the West African Monetary Union—was also a boon to the region and helped Burkina Faso regain international competitiveness.

Burkina Faso’s production of cottonseed (cotton represents about 60 percent of the country’s total exports) more than doubled between 1995 and 2000, improving its current account. In addition, over the past five years, the country’s public finances have improved as a result of reforms of the tax and customs administrations that broadened the tax base and reinforced tax collection. On January 1, 1999, the authorities widened the civil service wage scale and introduced a merit-based promotion system. At the same time, they increased the allocations for health care and education and implemented a public investment program.

Together, the devaluation and the reforms sparked growth in Burkina Faso—real GDP picked up in 1994 and has averaged 5.5 percent a year since then. Inflation also improved, registering less than 3 percent between 1997 and 2001 because of increased production of cereals and other essential foodstuffs. Clearly, however, the country faces enormous development challenges. Its continued vulnerability to external shocks was demonstrated in 2000, when GDP growth fell to 2.2 percent because of poor weather conditions in the country and higher petroleum prices. The incidence of poverty remains high, with 45 percent of the population—a level almost unchanged since 1990—living below the poverty line. In 2000, Burkina Faso’s real per capita GDP was about $340. Despite higher production of cotton, the recent negative outlook for international cotton prices means that Burkina Faso should improve efficiency by further liberalizing its cotton industry.

On the social front, the country has taken steps to promote essential services—basic education and health care, clean drinking water, nutrition, hygiene, and sanitation—but still needs to do much more. Despite the authorities’ emphasis on education, less than half of school-age children are attending school, impeding the road to universal education. In terms of health, Burkina Faso is one of the most disadvantaged countries in the world. Life expectancy is 54 years, and more than one-third of all children suffer from malnutrition. Compounding these difficulties, Burkina Faso is one of the countries in West Africa most severely affected by the HIV/AIDS epidemic, with a seroprevalence rate of 7 percent in its population of about 12 million, which is growing at 2.8 percent a year.

The PRSP process has opened the door to considerable analysis and debate about the country’s growth prospects.

Preparing a PRSP

Burdened by these and other disadvantages, including debt equal to about 65 percent of GDP in 2000, Burkina Faso was declared eligible for debt relief under the IMF–World Bank Heavily Indebted Poor Countries (HIPC) Initiative. As part of the HIPC process and to address their primary challenge of improving living conditions and social indicators, the authorities prepared and implemented a PRSP in April 2000. Their first step was to establish an interministerial committee to review existing poverty reduction programs, identify data gaps, clarify macroeconomic and sectoral links to poverty trends, and discuss the process for formulating the strategy. Government representatives, civil servants, media representatives, civil society groups, and donors were all invited to contribute to discussions and decisions. The PRSP received broad political support and was approved by both chambers of the country’s parliament and the economic committee of the Economic and Social Council. The IMF and the World Bank endorsed the paper in July 2000, and the country has since begun receiving interim relief of about $25 million a year and could become eligible for more debt relief this spring.

Burkina Faso is one of the few West African countries to have conducted two major and consistent surveys—in 1994 and 1998—that can be used to analyze poverty trends over a five-year period. Based on these surveys, the government issued poverty profiles in 1996 and 2000 that have made it possible to measure poverty outcomes and clarify the nature of poverty and its determinants. The government’s resulting monitoring and evaluation system is appropriate, and its medium- and long-term goals for reducing poverty are well defined. The goals are based on a range of outcome indicators for monitoring progress and ensuring that policies in the priority sectors—education, health, rural development, and water—are well designed and effectively implemented (see chart, page 48).

The PRSP process has opened the door to considerable analysis and debate about the country’s growth prospects. In 1999, the government commissioned a comprehensive analysis of economic competitiveness and long-term sources of growth in Burkina Faso, which was published in 2001. The study identified four major impediments to growth: poor health and inadequate education, low labor productivity, and high unemployment; poor economic infrastructure, high input costs, and a small private sector; weak institutional capacity; and outflow of labor to neighboring countries. The authorities decided that focusing on health care and education would be the most sustainable way to increase productivity in rural areas, ensure continued economic growth, and fight poverty. They chose to address the other constraints sequentially in sectoral reform programs to be supported by the donor community. The PRSP also focuses on achieving a stable macroeconomic environment and sustainable growth policies, improving governance, and fighting corruption. It has the following goals:

Macroeconomic stability. The aim is to achieve real GDP growth averaging 7 percent a year; inflation of less than 3 percent; and a current account deficit in the balance of payments, excluding grants, of about 13 percent of GDP. These targets are expected to allow per capita income to increase by at least 3 percent a year and to lead to improved living conditions and the development of human resources. The authorities understand that achieving such goals would imply not only pushing forward with ongoing reforms but also emphasizing programs designed to enhance growth and improve competitiveness.

Education. The 10-year basic education program is intended to increase the gross primary enrollment ratio from 41 percent in 2000 to 70 percent in 2010. This ambitious but realistic program supported by 19 donors will generate the same increase in the enrollment ratio that was achieved during the previous 40 years. In addition, in the context of the HIPC Initiative, the government intends to increase the share of education in the budget from 21.6 percent in 2000 to 26 percent in 2010, with 60 percent devoted to basic education.

Health. The government’s strategy in the health sector has been articulated in the PRSP as follows: focusing first on health problems afflicting the poor; reducing financial barriers to poor people’s access to services; and involving communities in the planning, management, and implementation of local health activities. The PRSP action plan outlines appropriate incremental financing for the campaign against HIV/AIDS, including cost-effective preventive interventions and greater emphasis on treatment and counseling. Burkina Faso’s new HIV/AIDS strategy is increasingly based on a multisectoral, decentralized approach, with a strengthened partnership with civil society.

Rural development. In the medium term, the rural strategy is to increase cotton production while diversifying the export base, ensuring broad access to income-generating activities, enhancing food security, and preserving the environment. For 2000–03, the action plan focuses on rural roads and research, credit, and extension services directed at small farmers and rural enterprises.

After one year, results are mixed

In September 2001, with wide participation from civil society and donors, the authorities issued the first annual PRSP progress report, which was endorsed by the IMF and the World Bank Executive Boards in late November 2001. Despite the unforeseen external constraints it faced, Burkina Faso persevered with its poverty reduction program, promoted an environment conducive to growth, and ensured the effective implementation of priority actions listed in its PRSP. The government also maintained social spending at the levels committed to in the PRSP and met most of the social targets while developing an action plan to improve the tracking and reporting of the uses of poverty-reducing expenditures. In view of the fragility of the economy, the authorities have realized that the growth target presented in the PRSP (an average of 7 percent real GDP growth for the period 2000–04) might be difficult to achieve. It was thus revised downward to 6 percent in the first progress report, although the poverty reduction objectives were preserved.

In the area of primary education, performance continues to be mixed. The authorities have realized that they must redouble their efforts to increase school attendance—of girls in particular—in the poorest provinces; improve the effectiveness and efficiency of spending, including by improving priorities for project selection and costing; and improve the quality of education and strengthen management and supervision.

Burkina Faso has fared better in its health goals, either meeting or exceeding most targets. Immunization coverage rates were raised, supplies of essential drugs were ensured, and the staffing of primary health facilities was improved. The government has taken an important step forward by eliminating fees for preventive treatment. Moreover, it has fostered greater involvement by village health committees in determining priorities, formulating strategies, and overseeing resources from cost recovery. However, use of health care services remains low, with no discernible improvement in the past year. Efforts are needed to improve the performance of primary health care facilities by reducing staff turnover. Finally, the recent establishment of the National Council on HIV/AIDS/sexually transmitted diseases in the president’s office is expected to enhance the program’s visibility, strengthen national leadership, and improve coordination.

In the rural sector, the government increased its efforts to provide clean drinking water and encouraged people to diversify their sources of income. The lack of road infrastructure affects access to local markets and is one of the major obstacles to rural development. The government therefore focused on extending rural roads, supporting agricultural activity through a comprehensive program involving the construction of 6,000 kilometers of roads by 2004. As part of the poverty reduction strategy, an additional program supported by HIPC resources was undertaken in 2000 to build 266 kilometers of rural roads in four provinces at a total cost of CFAF 1.8 billion. With an allocation of approximately CFAF 2 billion in 2001 HIPC Initiative resources, the program was extended to nine provinces for the building of 387 kilometers of roads. The government took important steps in the fight against corruption by publishing tenders on government contracts, initiating the revision of the general regulation of procurement, and creating a high authority to lead the fight against corruption.

Social outlays rising with debt relief

(billion CFA francs)

Note:– –Equals expenditure level without HIPC Initiative resources.

1 Including HIPC Initiative, 2000–2001.

Data: Burkinabe authorities, and IMF estimates.

The government’s efforts to foster ownership of and political support for the PRSP have been impressive. By disseminating the document in French and national languages, it has greatly strengthened the participatory process designed to obtain feedback for revising the strategy and fostering ownership.

All in all, Burkina Faso is an excellent example of a country that wholeheartedly adopted the PRSP process in a broad participatory way. Despite the mixed results of the PRSP’s first year, the authorities have shown determination to stay on track, even in the face of difficult external factors. Their strong will to persevere and learn from the experience of their first year bodes well for their progress in coming years.

Laura Wallace

Editor-in-Chief

Sheila Meehan

Senior Editor

Elisa Diehl

Assistant Editor

Natalie Hairfield

Assistant Editor

Lijun Li

Editorial Assistant

Maureen Burke

Editorial Assistant

Philip Torsani

Art Editor/Graphic Artist

Jack Federici

Graphic Artist

Prakash Loungani

Contributing Editor

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