Burkina Faso

Economic Overview

Burkina Faso, a landlocked country in the heart of the Sahel, is facing profound economic and humanitarian challenges driven by a severe and deteriorating security crisis. Once a promising producer of cotton and gold, the country's economy is now heavily constrained by political instability, displacement of populations, and the disruption of agricultural activities. The 2025-2026 outlook is highly uncertain and entirely dependent on the evolution of the security situation and the capacity of the transitional authorities to restore stability.

GDP Size & Growth Trajectory

The security crisis has had a severe impact on economic growth. After a period of stronger growth, real GDP growth slowed to an estimated 4.3% in 2023. The World Bank projects growth to slow further to 3.8% in 2025, reflecting the heavy toll of the security situation on agriculture and private investment. Economic activity is increasingly concentrated in urban areas that are relatively secure, while vast rural areas are cut off.

Sector Composition

• Agriculture: This is the backbone of the economy, contributing around 20% of GDP but employing over 80% of the population. The country is a major producer of cotton, which has historically been a key export. However, insecurity has severely disrupted farming, leading to a significant drop in production and exacerbating food insecurity.
• Industry: The industrial sector contributes about 20% of GDP, dominated by gold mining. Gold has become the country's main export, but the sector is also facing challenges from insecurity, with many artisanal and some industrial mines forced to close in conflict-affected regions.
• Services: The services sector accounts for roughly 40% of GDP, led by trade and telecommunications. This sector has shown some resilience but is hampered by the overall weak economic environment.

Inflation Trends

Inflation has been high and volatile, driven by supply chain disruptions and severe food shortages caused by the security crisis. While global price pressures have eased, domestic food inflation remains a major concern, severely impacting the livelihoods of the population.

Fiscal & Monetary Policy Stance

• Monetary Policy: As a member of the West African Economic and Monetary Union (WAEMU), monetary policy is managed by the BCEAO. The regional central bank has maintained a tight policy stance to combat inflation.
• Fiscal Policy: The government is facing immense fiscal pressure. A large and growing share of the budget is being allocated to security and defense spending to combat the insurgency. This, combined with a weak revenue base, is leading to large fiscal deficits and crowding out essential spending on social services and development.

Debt Sustainability Indicators

Public debt has been rising, and the country is considered to be at high risk of debt distress. The limited fiscal space and high security spending needs constrain the government's ability to service its debt and invest in growth-enhancing projects.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

The domestic market is severely constrained by the ongoing crisis.

Population Size and Demographics

Burkina Faso has a population of over 23 million people. It is one of the world's youngest countries, with a median age of around 17 years. However, this demographic potential is overshadowed by a severe humanitarian crisis, with over 2 million people internally displaced due to the conflict.

Urbanization and Consumer Hubs

The capital city, Ouagadougou, and the second-largest city, Bobo-Dioulasso, are the main urban centers and are relatively insulated from the worst of the insecurity, concentrating most of the country's formal economic activity.

Business Environment

The business environment is extremely challenging due to political instability and the security crisis.

Ease of Doing Business & Regulatory Reforms

While the country is a member of the OHADA legal framework, the ongoing crisis has made the operating environment highly unpredictable. Investor confidence is very low, and most foreign companies have scaled back their operations or put investment plans on hold.

Political Stability & Governance

Burkina Faso is currently in a state of extreme political fragility.

Political Environment

The country has experienced two military coups in recent years and is currently run by a transitional military government. The government's primary focus is on the security response to the jihadist insurgency that controls large swathes of the country's territory. The political situation is volatile, and a clear timeline for a return to constitutional order remains uncertain.

Infrastructure Readiness

Infrastructure is limited and has been further degraded by the ongoing conflict.

Transport and Logistics

As a landlocked country, Burkina Faso relies on transport corridors through neighboring countries like Côte d'Ivoire, Ghana, and Togo to access seaports. These trade routes are frequently targeted by armed groups, making transport and logistics extremely difficult and expensive.

Energy Sector

The country has limited energy resources and is reliant on imported electricity and fossil fuels. Access to electricity is low, particularly in rural areas. There is significant potential for solar energy, but the security situation makes large-scale project development nearly impossible at present.

Sector-Specific Opportunities

Given the severe security and political risks, investment opportunities are very limited and largely confined to humanitarian and security-related sectors. In a hypothetical post-conflict scenario, the following sectors would have significant potential:

1. Agriculture

Revitalizing the cotton sector and improving food security through investment in modern farming techniques and irrigation would be a top priority.

2. Mining

The country has significant gold deposits. A return to stability would allow for the reopening of mines and new exploration.

3. Renewable Energy

Developing the country's excellent solar energy potential to increase energy access and reduce reliance on imports would be a major opportunity.