History

Burkina Faso, or Upper Volta as it was then called, became independent in 1960. The region had been part of the great Mossi empire until the French colonised it at the end of the 19^th century. The country was redefined several times under French colonial rule and it was only after the Second World War that Mossi pressure for separate territorial status resulted in Upper Volta becoming a separate country.

Today its population of 11.5 million is made up of over 60 ethnic groups, with the Mossi comprising roughly half the inhabitants. The country lies at the heart of the Sahel, and most of its people are concentrated in the south and centre of the country. This gives rise to annual migrations of hundreds of thousands of people to Cote d’Ivoire and Ghana for seasonal agricultural work. Over the centuries the Mossi have defended their religious beliefs against attempts by Muslims from the north west to convert them to Islam, and approximately 40% of the population still adhere to indigenous faiths. Of the remainder, 50% are Muslim, and 10% Christian 

Political Background

The early years of independence were dominated by military regimes, notably that of General Lamizana, who overthrew the first elected government in 1966, and ruled until 1980. A further period of coups and constitutional upheavals followed, and in 1983 a group of young radical officers came to power under the leadership of Thomas Sankara. Sankara changed the name of the country to Burkina Faso, “land of dignity”, and discarded the orthodox pro-capitalist stance of his predecessors.  He implemented socialist policies, denouncing imperialism, concentrating on improvements to the health and education services, and slashing government privileges and salaries. He was also one of the few African leaders who was outspoken about the debt crisis. He was assassinated in a 1987 coup staged by his adviser, Captain Blaise Campaoré.

Campaoré reversed the radical measures taken by his predecessor.  Nominal constitutional democracy was established in 1991, but Burkina Faso remained a one-party state in all but name. In 1997 he had the law changed so that he could be ‘President-for-life.’  Municipal, legislative and presidential elections were held in 1995, 1997 and 1998 respectively but these elections simply confirmed Campaoré and his party in office. Politically motivated murders have continued to take place, notably the murder of an investigative journalist named Norbert Zongo in 1998, whose assassination led to street protests and a general strike.  His death led to an independent commission of inquiry, which found that Zongo had been murdered for “purely political reasons” and recommended that judicial proceedings be initiated against six named suspects, only one person has been arrested, and the investigations have been marred by gross irregularities.  Political tension remains high.

Burkina Faso’s external relations have been complicated by Campaoré’s inconsistent attitude towards the strife in Liberia, and by strained interactions with Mali and Niger over Tuareg unrest in the region.

Human development indicators

Burkina Faso remains one of the poorest countries in the world. It is ranked 171 out of 174 on the UNDP 1999 Human Development Index, and 45% of the population live below the poverty line (an increase from 44.5% in 1992). In 1999, the GDP per capita (PPP US$) was $965, compared with France $22,897. Human development indicators are very low: 77% of the adult population are illiterate, and the net primary school enrolment is 33%. Life expectancy is 45 years, the under-five mortality rate is 210 per 1,000 live births, and the infant mortality rate is 105 per 1,000 live births. There are three doctors per 100,000 people, and 6.44% of the adult population are living with HIV/AIDS.

Economy

The country has a very low rainfall, no coastal access and few natural resources. Most of the population (90%) are involved in subsistence agriculture and nomadic stock keeping.  Recent droughts have severely affected these activities.  Overgrazing, soil degradation and deforestation present an increasing problem.

Exports include cotton, animal products and gold. Despite the social hardship involved, the devaluation of the African franc in 1994 improved this sector of the economy, but world prices for cotton have fallen by about 30% over the past two years and are now at only one third of their 1995 levels.

Burkina Faso embarked on a structural adjustment policy with the IMF in 1991.

Burkina Faso and the HIPC Process

The latest

Burkina Faso reached Completion Point under HIPC in April 2002. At that point, it became the only country to receive any ‘topping up’ under the initiative. Because of the deteriorating global economic environment and the impact that this was having on its exports, Burkina Faso’s creditors considered that it would need further relief to bring its debts down to a sustainable level according to the HIPC criteria. It was therefore given additional debt relief of $129 million in net present value terms, over and above the amount committed at Decision Point.

Despite this topping up, however, according to the MDG debt sustainability analysis, Burkina Faso cannot afford to make any debt service payments at all, and will need substantial increases in external aid if it is to meet the MDGs.

Moreover, as with many other HIPCs, Burkina Faso is highly dependant on cotton export revenues. The conditions required to reach Completion Point include the liberalisation and privatisation of the cotton market. Therefore, the state is no longer a majority stakeholder in SOFITEX, the country’s main cotton producer. While there may be a rationale for these policies at a national level, when we look at the international market for cotton the policies seem more questionable. The United States spends more than $3 billion per year to subsidise its cotton farmers, so that they can dump cheap products on the international market. As a result, it will cost Burkina Faso’s cotton farmers - who still handpick their cotton - ‘about a dime more than the prevailing global price to get a kilo of cotton to the international markets‘. ¹

¹The Long Reach of Cotton, 5 August 2003, New York Times.

Burkina Faso was one of the first to qualify for assistance under the original HIPC initiative, reaching decision point in September 1997. In July 2000, the IMF agreed that the requirements for reaching completion point under this first initiative had been achieved and that the country would qualify for assistance under the enhanced HIPC framework.

On April 12th, Burkina Faso became the fifth country to reach Completion Point under the enhanced HIPC initiative. At this point, Burkina Faso’s creditors decided to provide an additional $129m, over and above what had been committed at Decision Point, due to the worsened global environment.

Jubilee Research welcomed the move by Burkina Faso’s Creditors to provide her with additional relief at Completion Point in light of the worsened global environment.

However, we still have a number of concerns.

• Effectively, bilateral creditors are subsidising the multilateral creditors that have failed to provide sufficient relief.  The IMF included additional bilateral contributions promised by creditors such as the UK and Germany when calculating the additional relief to be provided. This goes against the ‘burden sharing’ approach under the HIPC initiative. We are deeply concerned that the World Bank and the IMF are making highly optimistic projections of export and revenue growth at Completion Point rather than assessing it rigorously and then leaving bilateral creditors to deal with this problem.

• We remain concerned about the levels of new debt which Burkina Faso is taking on.  It is expected that Burkina Faso will need to borrow significantly more over the next decade.  The means that Burkina Faso’s total debt, even with the additional relief provided, will remain at between 180% and 190% of her exports until 2015 – the IMF’s ‘sustainability threshold’ is 150%. 

• Burkina Faso has some of the worst Human Development Indicators in the world.  We have estimated that to reach the Millennium Development Goals, Burkina Faso must spend $583.1m per year on education, health, clean water supplies, etc.  This is about three times the amount Burkina Faso will spend on social expenditures in 2002! Jubilee Research believes that Burkina Faso will need substantial increases in aid over and above the debt relief, as well as further debt relief, is these goals are to be met and human capital within Burkina Faso be developed to an extent that will make the country economically and socially sustainable.

• The IMF’s projections are highly optimistic.  In order to achieve the average growth rate of 5.5% between 2001-2010 (it was 2.9% between 1990 and 2000), the Completion Point documents that Burkina Faso must undertake various reforms, including further expansion of the cotton crop, diversifying the economy, developing transportation and road networks and developing human capital.  The IMF reckons this massive public works programme can be funded through a projected increase in savings (from 14.2% to 20% between 2001 and 2005) and an improvement in tax collecting, whilst simultaneously reducing the fiscal deficit from 6% of GDP in 2002 to less than 1% of GDP by 2016.  Jubilee Research thinks this is unlikely.

• Jubilee Research is also concerned at the levels of exports predicted by the IMF.  The IMF predicts an optimistic rise in Burkina Faso’s exports of 5.5% but does not provide much information as to what Burkina Faso will export.  It predicts that by 2020 cotton will make up a much smaller share - only 37% - of the country’s increased total exports and gold only 2.7%; the two products accounted for nearly 60% of the country’s exports in 2001.  Burkina Faso’s other major exports – sugar, leather and seeds – will need significant support to increase at the necessary rates.   As commodity prices collapse worldwide and domestic agricultural products are becoming increasingly protected in western markets, the predicted increases in income from exports appears highly optimistic.

• Some of Burkina Faso’s problems were caused by a series of unpredictable and less predictable disasters – plagues of insects, socio-political problems in neighbouring countries affecting their imports, the failure of the cereal crop, the global economic down-turn and – like many of the HIPC countries – falling commodity prices.  Jubilee Research accepts that the IMF could not have predicted all of these factors; however, we are critical that the original decision point document was not so much a realistic projection as a ‘best possible scenario’.  As we have made clear, this criticism is still true of the completion point document.

For a full analysis of Burkina Faso’s deal at Completion Point, see ‘Jubilee Research Analysis of Burkina Faso’s Completion Point deal’.

Millennium Development Goals Sustainability Analysis

We use a ‘human development’ definition of debt sustainability. Under this approach, debts are only considered ‘sustainable’ when the debt service burden leaves the HIPCs with sufficient funds to meet their human rights obligations under the internationally agreed Millennium Development Goals (MDGs).

This definition of debt sustainability has gained wide acceptance - not only in the non-governmental community, but also in the United Nations, amongst African governments, HIPC Finance Ministers, and even creditor governments. The Irish Government has formally come out in favour of an MDG-based DSA for poor countries. The latest Human Development Report produced by the United Nations Development Programme (UNDP), for example, argues that ‘debt servicing capacity should be assessed relative to the country’s needs for achieving the Goals.’ For many countries this will require full debt cancellation. The HIPC debt-export measure of debt sustainability has little to do with the needs of poor people.’

Therefore we present some calculations.  For full details on the calculations and the methodology behind it please see the “Real Progress Report on HIPC” published in September 2003.

Notes:
[1] Does not include debt service on new debt - $2.5 million (8% of total debt service due after HIPC)
[2] Data is taken from Burkina Faso at a Glance, http://www.worldbank.org/extdr/regions.htm

Unless otherwise indicated, all data is from Burkina Faso's Decision Point Document, June 2000; and the HD Report 2001.