Beyond political violence in Burundi: an economy in crisis

  • Jean-Benoit Falisse
Posted:
18 September, 2015

Burundi may have slipped from the world’s attention, but the crisis that erupted last May when President Nkurunziza announced that he would seek a third term is far from being resolved. Most commentators have, rightfully, discussed the political aspects of the crisis, including whether Mr Nkurunziza’s third mandate is constitutional, the lack of coherence of the political opposition, the political violence and assassinations, and the mounting tensions with Rwanda. Often overlooked, however, is the economy, which is central to understanding both the backdrop to, and developments in, the most severe crisis Burundi has experienced since the end of the 1993-2005 civil war. While acknowledging the crucial political dimension of the crisis, in this short piece I focus on the economic situation and its consequences.

With a GDP per capita of US$ 267 (2013, US$ 600 ppp), the 10.16 million Burundians (2013) are among the poorest people in the world. Their country ranked 180 out of 186 in the last Human Development Index. A total of 89% of the active population depends on farming a territory as densely populated as Belgium (2008 census). Coffee, once the proud main export of Burundi, was controversially privatised in 2008 and has been declining for twenty years. Tea and cotton, the other traditional exports, are also in poor shape.

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The country has few mineral resources. It has been expecting a lot, so far in vain, from a potentially important nickel deposit. The hopes in gold, which is mined artisanally and had become Burundi’s main export by 2012, collapsed with the recent crash in international prices (Global Witness also reported that part of Burundian gold could be smuggled from the DR Congo).

The apparently decent 4-4.5% growth in Burundi’s GDP in the past years is dwarfed by population growth above 3%. Even before the crisis, reports indicated that the conditions of living were deteriorating for most people. Burundi was, and still is, the hungriest nation on earth. With the political crisis, things have deteriorated even further.

When violent unrest exploded in Bujumbura, the city, where 70% of the economic activity of the country is focussed, was paralysed for months. Trade with regional and local markets was heavily disrupted and is still not back to normal as security forces control displacements of people in and out the capital city. The government recently estimated that the insurrection cost at least US$ 32.7 million in material damage.

At least 190,000 people have left the country since April, among them investors, business people, and parts of the middle class. Most of them still have not returned. The Burundian diaspora (mostly from Canada, USA, France, and Belgium), a habitual and most-welcomed source of cash in the summer, did not spend their holidays on the beaches of Bujumbura this year.

Perhaps more important for the economy, Western donors are in the process of cutting their support to Burundi, whose budget is 49% aid-reliant. The government has already had to use its own money to organise the elections no partner wanted to support (reportedly diverting malaria and education funds), and it seems clear that the 2015 budget is now totally off-track. Hypothetical fresh support from Russia or China is unlikely to be enough to balance the budget. Inflation only rose by a bit less than 1% since May, but official tax revenues for May-June (July-August data are not available) are about 30% lower than expected, and 23% less than last year.

Mr Nkurunziza, who was controversially re-elected in August, is now facing an economic crisis that could destabilise him in at least three different ways:

Firstly, the first long serving Hutu president has built his popularity on generous social policies including the abolition of health-care user fees for children below five and pregnant women, free primary education, and a national fertilizer subsidy programme. These social services are particularly aid-dependant and are now in grave danger.

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Secondly, if the reported current disruption of wage payment continues, Nkurunziza may alienate a small but influential middle-class of civil servants as well as the police and military that is still mostly loyal to him.

Thirdly, benefits from politically appointed positions are becoming potentially less interesting as the economy contracts, making it harder to buy loyalty and buy off opponents and potentially exacerbating corruption, which is already a key reason for discontent with the regime.

Nkurunziza’s current strategy, in a fashion not dissimilar to his predecessor president Buyoya, is to blame the insurgents and Western countries for the economic difficulties. This may reinforce him, but probably only for a short while.

In the meantime, Burundians are being pushed towards even more intolerable levels of poverty. The locking of the political space and the volatility of the situation is likely to continue to scare off economic actors and international partners and fuel the mismanagement of public services. In the current context, few have any interest or incentive to look beyond the very short term. The economic and social costs of protracted fragility are huge, even in an already impoverished nation.

The safest route to restoring stability and developing the Burundian economy is to (re-)build strong and inclusive institutions that citizens and international partners – including the diaspora who has an important potential for economic development – can trust. In the past years, the boundaries between the state and party apparatus have blurred, at the expense of ordinary citizens. Abuses used to be vocally denounced by the independent media, but most of them were shut down after the failed May coup attempt.

Calls for a national unity government, which the president says it has responded to by including a few not-too-virulent opposition parties in his government, are missing the point if they only lead to redistributing rents between a slightly larger or different elite group. Burundi needs a social and economic vision that rests on economic and political institutions that are genuinely accountable and directed to the people, and that everybody, including the poorest and non-party members, can rely on.

Jean-Benoit Falisse is a doctoral student at ODID.

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