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2008-2011 - Burundi - Country St

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					       AFRICAN DEVELOPMENT BANK GROUP




                  BURUNDI


        2008-2011 COUNTRY STRATEGY PAPER




COUNTRY AND REGIONAL DEPARTMENT – EAST A (OREA)

                SEPTEMBER 2008
                                TABLE OF CONTENTS

I.     INTRODUCTION                                            1


II.    CONTEXT AND PROSPECTS                                   1

2.1    Political, social and economic context                  1

2.2    Strategic options                                       9

       2.2.1 Country strategic framework                       9
       2.2.2 Challenges and weaknesses                         10
       2.2.3 Strengths and opportunities                       11

2.3    Developments in aid coordination and AfDB positioning   12


III.   BANK GROUP STRATEGY                                     16

3.1    Rationale for Bank interventions                        16
3.2    Deliverables and targets                                18
3.3    Monitoring and evaluation                               19
3.4    Risks and mitigation measures                           19


IV.    CONCLUSION                                              21


       ANNEXES
                                      i

                      LIST OF ABBREVIATIONS

       ADF     African Development Fund
     AFCR      African Food Crisis Response
      AfDB     African Development Bank
    BINUB      United Nations Integrated Office in Burundi
       CAS     Country Assistance Strategy (World Bank)
       CEM     Country Economic Memorandum
    CEPGL      Economic Community for the Countries of the Great Lakes
     CFAA      Country Financial Accountability Assessment
     CLOP      Commission on Land and Other Properties
     CNCA      National Committee on Aid Coordination
CNDD-FDD       National Council of the Defense of Democracy-Forces for the Defense of Democracy
 COMESA        Common Market for Eastern and Southern Africa
      CPIA     Country Policy and Institutional Assessment
       CPIP    Country Procurement Issue Paper
       CPR     Country Portfolio Review
        CSP    Country Strategy Paper
     DBSL      Development Budget Support Lending
      DFID     Department for International Development (United Kingdom)
       DPG     Development Partner Coordination Group
       DRC     Democratic Republic of Congo
       DRR     Demobilization, Reinsertion and Reintegration
       DSA     Debt Sustainability Assessment
       EAC     East African Community
          EC   European Commission
    ECCAS      Economic Community of Central African States
        EIU    Economist Intelligence Unit
       EPA     Economic Partnership Agreement (with the European Union)
       ESW     Economic and Sector Work
          EU   European Union
        FBu    Burundi Franc
        FSF    Fragile States Facility
          FY   Fiscal Year
       GDP     Gross Domestic Product
        GNI    Gross National Income
       GOB     Government of Burundi
       GTZ     German Agency for Technical Cooperation
      HIPC     Heavily Indebted Poor Countries (Initiative)
 HIV/AIDS      Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome
       IDPs    Internally Displaced Persons
      IFAD     International Fund for Agricultural Development
         IFC   International Finance Corporation
        IMF    International Monetary Fund
        ISN    Interim Strategy Note
  ISTEEBU      Institute of Statistics and Economics
     MDGs      Millennium Development Goals
     MDRI      Multilateral Debt Relief Initiative
     MDRP      Multicountry Demobilization and Reintegration Programme for the Great Lakes
    MEFCD      Ministry of Economics, Finance and Development Cooperation
                                           ii

            MOU     Memorandum of Understanding
         MRIEAC     Ministry for Regional Integration and East African Community
           MTEF     Medium Term Expenditure Framework
     NBI-NELSAP     Nile Basin Initiative-Nile Equatorial Lakes Subsidiary Action Programme
            NGO     Non-Governmental Organization
             NPV    Net Present Value
            ODA     Official Development Assistance
PALIPEHUTU-FNL      Party for the Liberation of the Hutu People- National Liberation Front
             PBA    Performance Based Allocation
             PBC    Peace Building Commission
             PCG    Partners Coordination Group
           PEFA     Public Expenditure Financial Assessment
        PEMFAR      Public Expenditure Management and Financial Accountability Review
             PER    Public Expenditure Review
             PFM    Public Financial Management
           PHRD     Policy and Human Resources Development (Japan Trust Fund)
              PIU   Project Implementation Unit
           PRGF     Poverty Reduction and Growth Facility
            PRSP    Poverty Reduction Strategy Paper
             PSD    Private Sector Development
           RMCs     Regional Member Countries
             SME    Small and medium enterprise
             SOE    State-Owned Enterprise
       SP/REFES     Permanent Secretary for Economic and Social Reforms
             SSA    Sub-Saharan Africa
          SWAP      Sector-Wide Approach
               TA   Technical Assistance
              UA    Unit of Account
              UN    United Nations
           UNDP     United Nations Development Programme
         UNHCR      United Nations High Commission for Refugees
         UNICEF     United Nations Children’s Fund
          USAID     United States Agency for International Development
            VAT     Value Added Tax
I.         INTRODUCTION                                             division within the ruling CNDD-FDD party
                                                                    resulted in it losing its parliamentary
1.1     The last CSP for Burundi covered                            majority, which triggered a political crisis
the period 2005 to 2007. This CSP is for the                        and, thereby, paralyzed parliament and the
period 2008 to 2011. It assesses the                                Government’s       legislative  programme.
country’s development prospects and                                 Following an agreement between the major
challenges, the Government’s strategic                              political parties, a broad coalition cabinet
options, and the role that the Bank could                           took office in November 2007. In early
play, in collaboration with the Government                          2008, the legislative programme stalled once
and other development partners, in helping                          again in the National Assembly. In order to
the country realize its development goals. In                       unblock the National Assembly, the
particular, (a) what results are to be achieved                     President supported the expulsion, in June
and how to deliver them, (b) how the                                2008, of 22 members of the ruling party by
balance between knowledge and lending                               the Constitutional Court and had them
will be addressed, and (c) how to work                              replaced. This decision has not fallen
closely with development partners.                                  favorably with other political parties.
                                                                    Underlying the disagreements is a struggle
1.2     The CSP for 2005-2007 aimed at                              between the political parties to position
supporting the Government’s strategy to                             themselves before the general elections
stabilize the economy as the peace process                          scheduled for 2010.
evolved, and to prevent further deterioration
of living standards. As a result, the CSP had                       Figure 1: Political context
two pillars: (i) improving living conditions                                                 Political Stability
of rural populations1 and (ii) strengthening
economic governance2. This CSP (2008-11)
builds directly on both pillars. It also tries to
focus the Bank’s interventions on ensuring
that a sustainable peace process is
consolidated; by providing returning
refugees, reintegrated militants and others
                                                                       Political Rights                              Civil Liberty
with income generating activities, whilst at
the     same     time    developing        basic                                  Burundi       Sub Sahara         Highest Africa
infrastructure.
                                                                    Source: AfDB Statistics Department, African Economic Outlook
                                                                    2008 and the World Bank Governance Indicators
II.        CONTEXT AND PROSPECTS
2.1      Political, social and economic context                     2.1.1.2 In terms of security, progress has
                                                                    also been mixed. The Government and the
2.1.1      Political context
                                                                    last remaining rebel group, the Palipehutu-
                                                                    FNL, signed a joint statement on 26 May
2.1.1.1 Burundi made a successful transition
                                                                    2008 to end all hostilities and resume
to a multi-party political system between
                                                                    negotiations; in order to implement the 2006
2000 and 2005. Political progress since 2005
                                                                    cease-fire agreement. This paved the way
has, however, been mixed. In 2007 internal
                                                                    for the recent return of the Palipehutu-FNL
1
                                                                    leadership, who are pressing strongly for
  Rehabilitation of water infrastructure and interventions in the
agricultural sector were priority areas.                            their movement to be: (i) registered as an
2
  Support for economic reform through strengthening the             official political party, and (ii) integrated
macroeconomic framework and budgetary discipline, and
promoting good governance, were priority areas.                     into the government/military. The situation
                                                                     2

remains fragile (Figure 1), but political                                Burundi now exhibits the characteristics of a
commitment to the peace process and                                      poor nation as manifested by low national
reforms has managed to keep the transition                               income and human development. Burundi
towards peace on track. In this regard,                                  ranks 167 out of 177 countries in the
notwithstanding occasional political tension,                            2007/2008 Human Development Index of
the political situation is generally stable.                             the UNDP.

2.1.1.3 The demobilisation of former                                     2.1.2.2 Similar to other post-conflict
militants has made notable progress under                                situations, Burundi has to deal with the
the       National      Commission         on                            resettlement and reintegration of thousands
Demobilisation,        Reinsertion        and                            of returned refugees and about 150,000
Reintegration (DRR). It is estimated that                                internally    displaced     persons    (IDPs)
about 23,000 ex-combatants are already                                   distributed among 160 camps in the country.
demobilized out of an estimated 70,000.                                  Since 2001, 450,000 persons were
Mobilising sufficient resources to strengthen                            repatriated from Tanzania, and it is
and sustain the demobilisation and                                       estimated that the remaining 100,000
reinsertion programme is challenging. In                                 refugees in Tanzania will be progressively
fact, the reinsertion programme has yet to                               repatriated until early 2009. Some of these
meet the long term needs, in terms of                                    returning refugees and IDPs depend on food
subsistence allowance, for a large number of                             aid from the UNHCR and other agencies,
demobilised combatants.                                                  and most live in the direst of circumstances.

2.1.2      Social context                                                2.1.2.3 As experience in post conflict socio-
Poverty, social inclusion and gender/equity                              economic recovery indicates, dealing with
                                                                         refugees and IDPs requires concerted action
2.1.2.1 The conflict in Burundi has                                      by the Government, the donors, relief
exacerbated the poverty situation3. Those                                agencies and NGOs. The core of the
below the poverty threshold increased from                               problem is the extreme scarcity of land, due
35% in 1993 to 67% in 2006. Combined                                     in large part to the enormous population
with the following indicators, these give an                             pressure on increasingly fragmented
insight into the quality of life and significant                         landholdings. Burundi has one of the highest
challenges ahead for Burundi4:                                           population densities in Africa, with over 300
•    Life expectancy of 49.6 years (compared                             inhabitants per square kilometer. The
     to a developing country average of 65.4)                            Government has set up the Commission on
                                                                         Land and Other Properties (CLOP) to try
•    Child mortality of 169 per 1000                                     and ease the resettlements, solve disputes
     (compared to 81 per 1000 for developing                             and help restore property to the rightful
     countries)                                                          owners. The CLOP is, however, struggling
•    Adult illiteracy 44% (27% in developing                             to deliver, which complicates the efforts of
     countries)                                                          socio-economic recovery and reintegration,
                                                                         as well as long-term growth and poverty
•    Daily calorie supply per capita of 1,682                            reduction. To solve the land problem,
     (compared to 2,675 for developing                                   Burundi needs to (i) restore land to returnees
     countries)                                                          or offer commensurate compensation and,
                                                                         through a process of land reform, (ii)
3
  See Annex 2 for key development indicators.                            address the issue of security of tenure.
4
  All figures are for 2007, except for daily calorie supply, which
refers to 2004 numbers.
                                                                      3

2.1.2.4 The return of refugees and                                          The huge rise in demand strained the
resettlement of IDPs is also happening in an                                Government’s ability to deliver these
environment of high unemployment and an                                     services adequately given the existing
economy dependent largely on agriculture                                    infrastructure,    materials     and    human
and, especially, coffee. There are no definite                              resources. In the still unstable socio-political
figures on the level of unemployment, but it                                environment described above, gender
has been estimated amongst the youth (ages                                  disparities have not improved, especially
15-30 according to the government’s official                                access to secondary and higher education,
definition) that 60% are unemployed or                                      and with respect to control over resources
underemployed.       In    addition,    over-                               for income generation (see Box 2).
dependence on agriculture has significant
vulnerabilities, such as in 2005 when a                                     2.1.2.6 Although Burundi has made limited
severe drought adversely affected the sector.                               progress in achieving the MDGs, it is on
Recent increases in food prices (see Box 1)                                 track to achieve three of the seven goals by
have worsened these vulnerabilities. To                                     2015 (see composite indices in Figure 2).
address the food crisis, the Bank has made                                  These include achieving ‘universal primary
available UA2m for budget support from the                                  education’ (goal 2) and ‘gender equality and
surplus account of the African Food Crisis                                  the empowerment of women’ (goal 3),
Response (AFCR).                                                            within which the target of ‘participation of
                                                                            women in parliament’ is already met.
2.1.2.5 At the start of the 2005/2006 school                                Respectable progress has also been made in
year, Government implemented free primary                                   ‘combating HIV/AIDS, malaria and other
education and in 2006 eliminated fees for                                   diseases’ (goal 6); with a low HIV
health care services for children under five                                prevalence of 4.8% in 2007.
and for pregnant women during childbirth.

                                          Box 1: The impact of the food crisis5
   Burundi is one of the 14 most vulnerable Sub-Saharan African countries to the recent international food and
   fuel price increases. The increased cost of food and fuel imports in 2008 has had an overall cost for Burundi's
   balance of payments of at least 4.3% of GDP (about US$50m). Although Burundi does not import relatively
   as much food as other countries6, the increased cost of fuel imports has had a major direct impact on local
   food prices, which increased by over 30% since May 2007. In addition, crop production per capita decreased
   from 120kg in 1996 to less than 40kg in 2008. Further price increases and food scarcity are expected given the
   drought currently taking place in several areas of the country.
   It is estimated that more than 70% of the population are in an insecure food situation. During the first quarter
   of 2008 food aid was distributed to about 17% of the population. The most vulnerable people are the rural
   landless, the displaced, the repatriates, the widows and the child headed households. The most vulnerable
   areas are the East (Makamba, Urbana, Ruyigi and Cankuzo provinces) and the Central West (Bujumbura
   Rural and Bubanza provinces).
   The higher import prices have had a direct, first-round cost of US$17m to the Government Budget; for
   example: (i) reducing taxes on imported diesel, which is mainly consumed by the poor and (ii) releasing the
   retroactive salary increase for 2007. This has been financed by a tighter implementation of fiscal policy (e.g.
   increasing taxes on gasoline imports) and by increased donor support. A social safety net and agricultural
   support programmes still need to be put in place. These would include cash-for-work schemes, provision of
   agricultural inputs and repairs to irrigation infrastructure.




   5
       This section draws on consultations with the IMF resident representative in Bujumbura.
   6
       Cereal imports only account for 15% of the sum of domestic cereal production and imports.
                                                                                                        4



                                                                       Box 2: Gender issues
                          The Burundi Gender Profile (World Bank, 2004) illustrates that overall the country is performing below the
                          SSA average. Burundi, however, shows progress in the empowerment of women in government, as
                          approximately one-third of the seats in national parliament are held by women. The Government of Burundi
                          (GOB) is also undertaking several efforts to address gender inequality and gender-based violence, as
                          formulated in the Gender Action Plan. In June 2008, the GOB also committed itself to the Goma Declaration
                          on Eradicating Sexual Violence and Ending Impunity in the Great Lakes Region. There is also a positive
                          trend in gender parity in primary education. Nevertheless, serious challenges remain, including: (i) the share
                          of women in the labour force is 35%, which is below the 42% average for Sub-Sahara Africa (World Bank,
                          2004); (ii) implementation and enforcement of new legislation; (iii) tackling gender-based violence; (iv)
                          addressing early marriages; and (v) dealing with low education completion rates of women. Women’s
                          inclusion and gender issues are sensitive in a post-conflict environment, which can be exacerbated by donors
                          who often focus on employment of demobilized male soldiers. This can institutionalize gender inequality (see
                          Zuckerman and Greenberg, 2004).

                   The indices show that limited progress has                                               materials. According to World Bank
                   been made in four of the seven goals. The                                                estimates, on average 9% of forests were
                   status of ‘eradicating extreme hunger and                                                disappearing each year during 1990 to 2000 –
                   poverty’ (goal 1) lags the most, with a dismal                                           signifying one of the highest rates of
                   13% of the target achieved by 2007.                                                      deforestation in the world. This has
                   ‘Reducing child mortality’ (goal 4) and                                                  contributed to the massive decline in forest
                   ‘improving maternal health’ (goal 5) are also                                            area from 11.3% in 1990 to 5.9% in 20057.
                   unlikely to be achieved – evidencing the low                                             These environmental problems result from
                   level of healthcare available in the country.                                            natural factors, population growth, the impact
                   While some progress has been made on                                                     of war (and substantial movements of the
                   ‘ensuring environmental sustainability’ (goal                                            population), economic and social activities
                   7), the target is unlikely to be met.                                                    and, especially, traditional methods of
                                                                                                            agriculture.
                   Figure 2: Status of MDG targets for Burundi (2007)
                   - where 1 is the goal target                                                             2.1.2.8 In an attempt to address these
                                                                                                            problems, the Government enacted the
                    Overall Status
Environmental Sustainability (G7)
                                                                                                            National Environmental Protection Act in
          Combat HIV/ AIDS (G6)                                                                             1993 to ensure the effective protection of the
   Improve maternal health (G5)                                                                             environment. The policies pursued under the
      Reduce child mortality (G4)                                                                           Act include: (i) sensitisation about the
              Gender Equality (G3)
                                                                                                            dangers of various types of environmental
         Primary Education (G2)
         Poverty eradication (G1)
                                                                                                            degradation and the loss of biodiversity, (ii)
                                     0   0.1   0.2   0.3   0.4   0.5   0.6   0.7    0.8   0.9       1
                                                                                                            strengthening local capacities for increased
                                                                                                            participation in effective, community-focused
     Africa       Burundi: Goals likely to be achieved     Burundi: Goals unlikely to be achieved
                                                                                                            and managed applications of appropriate
                   Source: AfDB Statistics Department                                                       technology and (iii) legal instruments –
                                                                                                            including legislation and environment impact
                   Environment and climate change                                                           assessments. Implementation of this Act has
                                                                                                            been hampered by the displacement of
                   2.1.2.7 Burundi is confronted by a number of
                                                                                                            persons, temporary resettlement camps,
                   environmental problems including land
                                                                                                            massive return of refugees, insufficient
                   degradation, excessive deforestation (e.g.
                                                                                                            funding levels that do not match
                   extensive use of timber for energy generation)
                   and the uncontrolled exploitation of raw                                                 7
                                                                                                                World Bank, 2008
                                                                                        5

environmental priorities and, importantly,                                                  require      increasing                  resilience             and
weak institutional capacity.                                                                diversification.

2.1.3     Economic context                                                                  Figure 4: GDP by sector
                                                                                                           Industry w ithout m anufacturing 8%
Growth and growth drivers

2.1.3.1 Following a decade of economic
decline, the economy registered positive
growth in 2001 (2.1%) following the return of                                                            Manu. 14%
                                                                                                                                     Agric. 35%
relative peace. In recent years performance
has improved partly thanks to a forceful
recovery of coffee production and favourable
weather, when GDP growth was 5.1% (2006)                                                                             Services 43%
and 3.6% (2007 estimated) (see Figure 3).

Figure 3: Macroeconomic trends

  15
                                                                                 180        Source: AfDB Statistics Department, African Economic Outlook
                                                                                            2008
  10                                                                             130

                                                                                 80
   5                                                                                        Macroeconomic management
                                                                                 30
   0
                                                                                 -20
                                                                                            2.1.3.2 Government is trying hard to balance
   -5                                                                            -70
                                                                                            the fiscal restraint required by lenders (e.g.
                                                                                 -120
  -10                                                                                       relying mainly on grants and highly
                                                                                 -170
  -15                                                                                       concessional loans) with spending on
                                                                                 -220
                                                                                            measures called for in the PRSP (including
  -20                                                                            -270
        2003        2004       2005       2006        2007    2008p      2009p              civil service and military pay). Although the
               Burundi : Current Account Balance (% GDP) (left scale)                       Government relies heavily on donor funding,
               Burundi : Inflation (%) (left scale)
               Burundi : Gross international reserves (US$ mn) (right scale)
                                                                                            continuing domestic strife has meant that
               Burundi : GDP Growth (%) (left scale)                                        donor support has not risen significantly in
Source: AfDB Statistics Department, African Economic Outlook                                line with the growing needs for post-conflict
2008                                                                                        reconstruction and recovery. In 2006 and
                                                                                            2007, budget support from donors accounted
Agriculture still accounts for 35% of GDP                                                   for 30% and 20%, respectively, of the total
(see Figure 4) and 94% of employment.                                                       budget8. Government revenue (excluding
Coffee and other agricultural exports                                                       grants) for the 2001 to 2006 period averaged
accounted for 70% of export revenues in                                                     about 20% of GDP, whereas public
2006. Growth in construction, trade and                                                     expenditure was 38.4% of GDP in 2006 (from
manufacturing is expected to drive real                                                     27.2% of GDP in 2001). As noted in EIU
expected GDP growth of 6% in 2008.                                                          Country Report9, “improvements in public
However, GDP growth rates of 8% over the                                                    expenditure management, increased domestic
next four years will be required for Burundi to                                             revenue on the back of economic growth and
reach its pre-war (1993) level of GDP per                                                   firmer donor inflows are forecast to contain
capita by 2012. In addition, as the economy                                                 the fiscal deficit at 6.2% of GDP in 2008 and
remains highly vulnerable to climatic changes
and external shocks, the future growth will                                                 8
                                                                                              Compared to levels of close to 40% for Uganda, Tanzania and
                                                                                            Rwanda in the past decade.
                                                                                            9
                                                                                              Economist Intelligence Unit, 2008
                                                   6

5.3% in 2009.” Most of the current focus of            the IMF, indicating a certain level of
monetary reform is on improving the working            macroeconomic stability.
of the central bank, the Banque de la
République du Burundi. Inflation has                   Figure 5: Governance
fluctuated over the last three years from
                                                                                Government
13.4% in 2005 to 2.8% in 2006 and rising                                        Effectiveness
again to 13.5% in 2007 (see Figure 3). The                                        3.0
                                                                                  2.5
rise in inflation in 2007 was the result of an                                    2.0
expansionary fiscal policy, higher oil prices, a                                  1.5
                                                                                  1.0
depreciating exchange rate and food supply                                        0.5
                                                                                                               Voice and
shortages. The IMF concluded their Article               Rule of Law              0.0
                                                                                                              Accountability
IV consultation with Burundi in July 2008
and agreed on a new three-year poverty
reduction and growth facility (PRGF) for
US$75.6m. Although structural reforms
(privatization and coffee-sector liberalization)                            Corruption Perception

have been slow, the IMF felt that most fiscal
                                                              Burundi        Sub Sahara             Highest Africa
and monetary reforms have progressed well.
                                                       Source: AfDB Statistics Department using data from the WDI, WB,
                                                       2008
2.1.3.3 Burundi reached the HIPC decision
point in August 2005, after the adoption of the        2.1.3.5 The decade of civil war severely
interim PRSP and the design of an economic             lowered the quality of public financial
reform programme. The debt stock is                    management (PFM). Several fiduciary studies
expected to fall substantially when Burundi            and reviews have been undertaken, including
reaches the HIPC completion point (expected            a: (i) Country Financial Accountability
in 2009), which will happen when a number              Assessment (2004), (ii) Country Procurement
of agreed measures are completed. According            Issue Paper (2004), and (iii) Public
to the World Bank, debt relief to Burundi              Expenditure Management and Financial
under the enhanced HIPC initiative will be             Accountability Review (2008). These have
approximately US$826m in net present value             indicated significant progress in improving
(NPV) terms, equivalent to 91.5% of the NPV            PFM and reducing fiduciary risk. Key reform
of Burundi's debt after traditional debt relief.       achievements include: (i) the introduction of
However, even with HIPC relief and MDRI,               an    Integrated    Financial    Management
Burundi is likely to continue to face a high           Information System (2006); (ii) the creation
risk of debt distress due to low levels of             of a national Audit Court and associated
exports.                                               regulations (2004); (iii) actions to improve
                                                       budget execution (including procurement
Governance                                             reforms); and (iv) a draft Budget Framework
2.1.3.4 Although Figure 5 seems to suggest             Law.
that Burundi has a long way to go in terms of
governance, the coalition Government is                2.1.3.6 Despite recent reforms aimed at
gradually    implementing      reforms     to          modernizing      the    public   expenditure
consolidate peace and achieve sustainable              management system and improving budget
pro-poor growth. Considerable and well                 execution, major weaknesses still affect the
coordinated donor budget support (US$513m              quality and transparency of Burundi’s PFM
in 2008) is being implemented, and the                 system. The Government has, with the
country recently finalized a new PRGF with             assistance    of     development    partners,
                                                       elaborated a continued ambitious reform
                                                                                          7

   programme and shows strong commitment to                                                   each of the twelve pillars of competitiveness
   implementing it. In order to continue curbing                                              considered).
   fiduciary risk, the reform progress must be
   sustained.                                                                                 Table 1: Global Competitiveness Index 2007-2008
                                                                                                                                                  Rank
   Business environment & competitiveness                                                                                                         (131)
                                                                                              Global Competitiveness Index 2007-2008 (out of 131)  130
   2.1.3.7 Burundi’s business environment is far                                              Global Competitiveness Index 2006-2007 (out of 128)  127
   from competitive (Figure 6). The country                                                   Basic requirements                                           129
   ranks almost last (174 out of 178 countries)                                               1st pillar: Institutions                                     117
   on the World Bank’s 2008 Ease of Doing                                                     2nd pillar: Infrastructure                                   129
                                                                                              3rd pillar: Macroeconomic stability                          121
   Business report – compared to Kenya at 72,
                                                                                              4th pillar: Health and primary education                     127
   Uganda at 118, Tanzania at 130 and Rwanda                                                  Efficiency enhancers                                         131
   at 150.                                                                                    5th pillar: Higher education and training                    130
                                                                                              6th pillar: Goods market efficiency                          129
   Figure 6: Ease of doing business (rank)                                                    7th pillar: Labour market efficiency                         93
                                                                                              8th pillar: Financial market sophistication                  131
                                  Ease of doing business                                      9th pillar: Technological readiness                          131
             Closing a business                            Starting a business                10th pillar: Market size                                     127
                                                                                              Innovation enhancers                                         130
     Enforcing contracts                                          Dealing with licenses       11th pillar: Business sophistication                         130
                                                                                              12th pillar: Innovation                                      126
                                                                                              Source: AfDB Statistics Department using data from the WEF (2008)
Trading across borders                                                Employing workers

                                                                                              2.1.3.8 In collaboration with the World Bank,
              Paying taxes                                     Registering property           the Government undertook an Investment
                 Protecting investors                Getting credit                           Climate Assessment, soon to be followed up
                                                                                              with an action plan for improving the business
                   Burundi              Sub Sahara               Highest Africa               environment. Burundi is also in the process of
   Source: AfDB Statistics Department: using data from Doing Business
   Databases, WB, 2008
                                                                                              revising its 1987 Investment Code, which will
                                                                                              ultimately be compatible with the EAC model
   There are problems in all areas, most                                                      investment code. In order to improve
   significantly: closing a business, licensing,                                              competitiveness, and as part of the new
   access to credit and trading across borders.                                               Investment Code, an Investment and Export
   The latter is partly linked to the poor quality                                            Promotion Agency is to be set up. This
   of infrastructure in neighbouring countries                                                Agency is one step in the right direction;
   and the resultant increased costs. According                                               however, Burundi has a number of other
   to the IMF, the average cost per container for                                             critical factors affecting competitiveness:
   exports/imports      is   US$2,147/US$3,705                                                (a) Low human capital and largely inflexible
   compared to US$1,660/US$1,986 for the                                                      labour market regulations. After almost a
   region. In addition, discussions with the                                                  decade of civil war, there is an urgent need to
   private sector in March 2008 revealed that                                                 upgrade and extend general and technical
   property registration, contracts legislation and                                           education and vocational training. This is
   suitable infrastructure all pose significant                                               compounded by a dearth of adequate health
   challenges to doing business. Similarly, the                                               facilities and a high number of Burundians
   World Economic Forum’s 2008 Global                                                         facing food vulnerability (see Box 1). In
   Competitiveness Report ranks Burundi 130th                                                 addition, the labour market operates under
   out of 131 economies (see Table 1) on global                                               restrictive employment regulations (including
   competitiveness (rating it near the bottom in
                                                                       8

hiring and dismissing of workers10) that deter                             nearest seaport, regional integration is key to
potential investors, hinder employment                                     achieve higher competitiveness. Burundi thus
creation and constrain productivity growth.                                accords high priority to regional projects and
                                                                           is part of an initiative to showcase the East
(b) Infrastructure is inadequate and in some                               African region as an attractive destination for
instances absent. In order to access markets                               investment. In addition to easing the high
of both inputs and outputs, transport                                      transport costs and improving access to goods
infrastructure is critical for a country where                             and services, regional integration will also
90% of people live in rural areas. Currently,                              provide a larger market for Burundi’s exports
89% of the road network is unpaved and,                                    and, most significantly, help attract foreign
thus, barely accessible during the two rainy                               investment to boost mineral exploration and
seasons. Energy is a critical constraint to                                mining activities. In this regard, Burundi is a
competitiveness.      Developing     electricity                           member of the Common Market for Eastern
generation and distribution could foster                                   and Southern Africa (COMESA), the
agricultural processing and increased value-                               Economic Community of Central African
addition. Currently the country relies on fuel-                            States (ECCAS), the Economic Community
based generators (in 2005/06 the actual                                    for the Countries of the Great Lakes (CEPGL)
capacity was about 20MW, while demand                                      and, most recently, the East African
was peaking at 42MW), whereas with the                                     Community (EAC).
abundance of water resources there is a
potential capacity of 250MW11.                                             2.1.3.10 Since Burundi became a full member
                                                                           of the EAC in July 2007, the Government has
(c) Access to credit, especially in agriculture
                                                                           initiated bold steps to comply with the EAC
and rural areas, is a major impediment to
                                                                           Treaty and prepare for the country’s full
business and competitiveness. Provision of
                                                                           integration into the EA Customs Union by the
credit to the private sector seems to be
                                                                           target of July 2009. Burundi is now a member
unevenly distributed across various sectors. In
                                                                           of the East African Court of Justice, the East
order to rectify this, the Government plans to
                                                                           African Legislative Assembly and has applied
move ahead with reforms in the banking
                                                                           for membership to the East African
sector, to promote microfinance and develop a
                                                                           Development Bank. The EAC’s three-band
range of financial intermediaries that can
                                                                           tariff structure12 will likely be phased in over
meet the demands of a broader spectrum of
                                                                           a period of three years, and, as an EAC
clients.
                                                                           member, Burundi is moving towards an
                                                                           Economic Partnership Agreement (EPA) with
Regional integration and trade
                                                                           the EU. This first stage of accession to the EA
2.1.3.9 Burundi was a relatively closed                                    Customs Union is, however, likely to be
economy until the 1990s, when several non-                                 delayed to the end of 2009, further delaying
tariff trade barriers were abolished. The                                  full accession to beyond 2011. Key reasons
import tariff structure was revised in 2003,                               for delay are the lack of a clear timetable and,
cutting the maximum tariff from 100% to                                    significant strategy and capacity constraints.
eventually 30%. While Burundi gets                                         A Ministry for Regional Integration and East
preferential market access under the EUs                                   African Community (MRIEAC) has been
“Everything but Arms” initiative, it faces                                 established, but, with only four full-time staff
significant    non-tariff  barriers.   Being                               members, is severely under-staffed. Further
landlocked, and with long distances to the                                 constraints are the lack of clarity regarding

10                                                                         12
   As noted in World Bank, 2008a “dismissals are very costly for the          0% for raw materials, capital goods, agricultural inputs, certain
employer – 26 weeks of salary for each year worked in the job…”            medicines and medical equipment; 10% for intermediate goods and
11
   Numbers taken from World Bank, 2008a                                    other essential industrial inputs; and 25% for finished goods.
                                                                         9

fiscal reform, in particular the introduction of                             run a large current account deficit, which was
VAT and the establishment of a Customs                                       estimated at 11.6% (US$101m) of GDP
Management Agency through the adoption of                                    (including grants) in 2007.
a Customs Management Act. Progress on
customs reforms, such as (i) adoption of the                                 2.2        Strategic options
common external tariff, (ii) elimination of                                  2.2.1      Country strategic framework
internal tariffs from other EAC members and
(iii) harmonization of valuation and customs                                 2.2.1.1 Burundi’s Poverty Reduction Strategy
procedures, has also been slow. The EACs                                     Paper (PRSP), Cadre Stratégique de
decision making is by full consensus and,                                    Croissance et de Luttre contre la Pauvreté,
thus, lack of input from Burundi could slow                                  was finalised in September 2006, after two
the whole region’s preparations for the                                      years of extensive consultations. The PRSP
common market.                                                               built on the Interim PRSP which was
                                                                             completed in November of 2003. The PRSP
2.1.3.11 In the context of economic                                          has four principal strategic axes14:
integration, the Government is keen to boost                                 (i) Improving governance and security. The
its infrastructure links and connectivity with                               governance        priorities    include:      (a)
its neighbours in East Africa. For example,                                  strengthening the rule of law and justice, and
there are plans to construct a road corridor                                 the democratic culture, (b) promoting
from Ruhwa (Burundi) all the way to Gisenyi                                  efficient public administration, (c) pursuing
(Rwanda) and up to the border with DRC                                       decentralisation, (d) establishing a transparent
(financed by the Bank). Other potential                                      public finance management system, and (e)
opportunities might include: (i) extending the                               tackling corruption. The security priorities
railway from Isaka (Tanzania) to Gitega and                                  include: (a) negotiating a comprehensive and
Musongati, and (ii) developing the proposed                                  permanent       ceasefire,     (b)      pursuing
Kigali-Bujumbura oil pipeline13. In view of                                  demobilization, disarmament, and integration
the challenges posed by the high cost of                                     programmes, (c) professionalizing the defence
energy supply, Burundi has also instituted a                                 and security forces, and (d) disarming the
roadmap for energy exploitation through                                      civilian population and preventing the
investment in hydropower dams and                                            proliferation of small arms.
interconnection with the power grids of
neighbouring Uganda, Tanzania and Rwanda.                                    (ii) Promoting sustainable and equitable
This will ease the biggest challenge facing the                              economic growth. Priorities include: (a)
development of a mining sector in Burundi,                                   strategic actions to revitalize sectors with
which is the country’s shortage of energy.                                   growth potential (e.g. food and export crops),
                                                                             (b) reviving the private sector, (c) diversifying
2.1.3.12 Burundi has a narrow range of                                       employment and income opportunities for
exports (US$50m in 2007), including largely                                  rural communities, notably through micro
coffee (60%) and tea (10%); whereas imports                                  credit and the promotion of highly labour-
(US$295m in 2007) were mainly fuel and                                       intensive works, (d) rehabilitating and
capital goods. The share of exports to GDP                                   modernizing       transport,     energy,      and
between 2001 and 2006 was on average 6.3%                                    telecommunications       infrastructures     (i.e.
of GDP, whilst that of imports to GDP                                        essential for increasing competitiveness of the
increased from 16.4% in 2001 to 31.5% in                                     Burundi economy), and (e) restoring
2006. As a result, the country has consistently                              macroeconomic equilibrium.

13                                                                           14
   There is a suggestion that the Libyan investor in the Kenya-                 The Joint Staff Advisory Note (JSAN) of the Burundi PRSP (IMF,
Uganda oil pipeline extend the facility all the way to Kigali and then       2007a) concurred with the strategic priorities that emerged from the
to Bujumbura.                                                                broad based participatory process.
                                                  10

(iii) Developing human capital. Priority               regulations, (ii) inadequate and, in some
actions targeting the health and education             instances, absent infrastructure, and (iii) very
sectors, water supply and sanitation, urban            limited access to credit, especially in
planning, and decent housing for all have              agriculture and rural areas. Burundi’s entry
been identified. In addition, actions to care          into the EAC provides a great opportunity;
for, and reinsert, disaster victims are                however, the immediate challenge is to: (i)
important, especially to help communities in           develop policies, institutions and capacity to
dire circumstances resume normal lives.                enable Burundi to fulfill its commitments to
                                                       the EAC, and (ii) overcome the constraints to
(iv) Combating HIV/AIDS. Through bringing
                                                       competitiveness and derive the maximum
about a sharp reduction in the spread of
                                                       benefits from membership.
HIV/AIDS, by promoting prevention and
treating the sick from families infected and
affected by HIV/AIDS.                                  The economy is too dependent on one sector
                                                       (agriculture), which creates significant
                                                       vulnerabilities. The challenge is to diversify
2.2.1.2 The Government has already
                                                       away from the reliance on agriculture, and the
developed a programme of priority actions to
                                                       dominant crop (coffee), into other crops,
implement the PRSP over the period 2007-
                                                       increasing value-addition and other sectors.
2010. An economic reform programme
                                                       Currently, agricultural productivity is also one
supported by the Bank, the IMF and World
                                                       of the lowest in the region and this further
Bank to stabilize the economy, revive
                                                       enhances vulnerability in the face of rising
economic activity and align expenditures with
                                                       food and fuel prices. Finally, land reform and
social priorities is being implemented.
                                                       the tensions over land ownership from
Government has announced reforms of the
                                                       increasing numbers of returning refugees,
marketing of cash crops (coffee, tea, and
                                                       give further impetus to Burundi’s need to
cotton) and public enterprises, but progress
                                                       diversify.
has so far been slow and limited. The
Government has also taken steps to deepen
                                                       The peace process is very fragile. This is the
Burundi’s integration into the regional
                                                       fundamental challenge faced, and which
community, recognizing the importance of
                                                       could undo many of the gains made since the
regional integration for export diversification
                                                       signing of the peace accords and the
and economic growth. According to
                                                       formation of the coalition government. The
consultations undertaken in March 2008 with
                                                       2006 ceasefire agreement with the Palipehutu-
officials in Burundi, a long-term vision,
                                                       FNL needs to be implemented. Finding
Burundi 2025, is currently in the early stages
                                                       sufficient resources to maintain the
of preparation.
                                                       demobilisation and reintegration programme
                                                       continues to be challenging. In addition, there
2.2.2   Challenges and weaknesses
                                                       are      insufficient   new       employment
                                                       opportunities for the youth, which is
2.2.2.1 Burundi is faced with a significant
                                                       problematic in a country like Burundi, where
number of weaknesses and, as a result,
                                                       three out of five people are younger than
challenges. These can be grouped into four
                                                       twenty15.
main areas:
The general environment for business and               The coalition government is not working
entrepreneurship is extremely poor. As noted           effectively. Over the past year there have been
earlier, some of the key constraints to                a number of disturbances in the Government
competitiveness include: (i) very poor human
capital and largely inflexible labour market
                                                       15
                                                            World Bank, 2008a
                                                                    11

and ruling CNDD-FDD party, which has                                     business     regulation    performance     has
paralyzed       parliament,    stalled      the                          improved. Policies for social inclusion/equity
Government’s legislative programme, and                                  have performed better with improvements in
significantly halted policy formulation and                              gender and human resources. Public sector
implementation. In addition, there is a                                  management is, however, of significant
struggle between the political parties to                                concern, as the CPIA rating for each indicator
position themselves before the general                                   has either stagnated or deteriorated. Of
elections scheduled for 2010. All of this adds                           particular alarm is the deterioration in the
up to a situation where the Government is not                            rating (a full point fall to 2.5 out of 6) for
performing and delivering sufficiently                                   transparency, accountability and corruption in
quickly. In addition, the public service is                              the public sector.
currently overstaffed16 and, therefore,
constitutes a drain on Government revenues.
                                                                         2.2.3   Strengths and opportunities
The challenge is to reduce the public service,
whilst at the same time keeping the required                             2.2.3.1 Agriculture is the key sector in the
representation from different political parties                          Burundi economy and there is still significant
and absorbing former militants that are being                            room for growth, diversification, increasing
demobilised.                                                             productivity and reducing vulnerability.
                                                                         Investments in irrigation and machinery,
 Box 3: Key development weaknesses & challenges                          training in modern techniques, and better
• Very fragile peace process                                             access to micro-finance/credit are critical to
• General       environment      for  business      and                  reducing vulnerability in agriculture (e.g.
   entrepreneurship is extremely poor
                                                                         from drought) and improving competitiveness
• Insufficient employment opportunities, especially
   for the high numbers of young people                                  of the sector. There is also room for greater
• Dependence of economy on one sector                                    value generation in the processing of
   (agriculture) and one crop (coffee), which creates                    agricultural products. Land reform is still a
   significant vulnerabilities                                           critical challenge to overcome if agriculture is
• Lack of policy, institutional capacity and resources                   to move forward strongly. The coffee sector
   for Burundi to fulfill its commitments to the EAC
                                                                         remains an important driver of growth, with
• Critical shortage of resources to maintain the
   demobilisation and reintegration programme                            significant impact on rural employment and
• Ineffective functioning         of   the     coalition                 incomes, and export levels. The stock of
   government, which is stalling the legislative                         coffee trees is aged and there is little recourse
   programme, and significantly halting policy                           to modern inputs. The Government has
   formulation and implementation                                        implemented some reforms in this sector (e.g.
• Public service is overstaffed and a significant drain
                                                                         liberalising trade and prices) to realise more
   on Government revenue
                                                                         of the potential, however, actions are needed
                                                                         to ensure that farmers are receiving fair value
2.2.2.2 Burundi’s CPIA performance has been
                                                                         and provided incentives to maintain the land
less than satisfactory over the last 3 years (see
                                                                         and produce high quality coffee.
Table 6 and Figure 8 in Annex 3). The
country has made progress in several areas
                                                                         2.2.3.2 There is large potential for growth of
including      macroeconomic       and     fiscal
                                                                         private sector activity in the economy. The
management, though the debt performance
                                                                         private sector has already made important
has remained stagnant. Regarding structural
                                                                         investments in construction (mainly housing),
policies, there was a notable deterioration in
                                                                         trade    (including     transportation)    and
regional integration and trade, though
                                                                         manufacturing. There are, however, still
16
   To ensure greater clarity on the numbers employed in the civil
                                                                         opportunities for the private sector to extract
service and, with likely support from the World Bank, the                more value out of the agricultural sector and
Government aims to do a census of the public service.
                                                   12

further diversify economic activities. Burundi          Government is action focused, (ii) coordinate
also has considerable untapped potential in a           donor position, and (iii) uncover areas of
number of other areas, including: (i)                   disagreement and overlap. Table 7 in Annex 4
significant energy generating (hydro)                   shows the agreement reached for different
potential; (ii) grossly undeveloped mining              sector leads. In addition, to support better
potential; mainly in nickel, gold, vanadium,            coordination, donors now need to contact the
copper-cobalt; and (iii) once the security              CNCA if they want to be included in a sector
situation    has     sufficiently    stabilised,        group.
potentially tapping into the international
tourism market, which is already attracted to           2.3.1.2 Table 8 in Annex 4 gives, under the
broader East Africa.                                    four strategic axes of the PRSP, an
                                                        approximate idea of donor interventions from
2.2.3.3 In December 2006, Burundi became a              2008 to 2011, and the position of Bank
member of the East African Community                    interventions relative to other donors.
(EAC), a region of 120m people. This is a               Importantly, the Bank’s assistance equates to
great opportunity in terms of regional                  about 7.3% of overall assistance (with the
integration, trade and economic development.            majority of this (70%) going to infrastructure
Open borders and better infrastructure will             and regional integration) and complements
certainly alleviate Burundi’s handicap of               other development partners in two of the four
being landlocked. There are currently a                 axes.
number of regional projects (including road
and rail) under various stages of preparation,          2.3.1.3 The IMF concluded their Article IV
to connect Burundi to the sea. The                      consultation with Burundi in July 2008 and
Government also feels that Burundi can form             agreed on a new three-year poverty reduction
a link between the Anglophone East and the              and growth facility (PRGF) for US$75.6m.
Francophone West.                                       The PRGF will seek to consolidate economic
                                                        stability, further reduce poverty, help the
2.3 Developments in aid coordination and                authorities implement the PRSP, and support
AfDB positioning                                        efforts to secure further HIPC and MDRI debt
                                                        relief. The World Bank Board approved their
2.3.1   Aid coordination and harmonization
                                                        Country Assistance Strategy (CAS), for the
2.3.1.1 With the return of relative peace, the          period 2008-2012, on August 5 2008. This
number of donors in Burundi has increased.              CAS follows on from the third Interim
During the first donor roundtable held in               Strategy Note (ISN), which was adopted in
Bujumbura in May 2007, $656m was pledged                May 2005. As can be seen in Table 8, the
(including $175m for budget support) for                World Bank is directly supporting three of the
support to Burundi’s reconstruction. The                four pillars of the PRSP, with more than half
Government      established     a      National         of their allocation going to promoting
Committee on Aid Coordination (CNCA) in                 sustainable and equitable economic growth.
late 2005 to coordinate and monitor donor
assistance, but capacity problems have                  2.3.2   AfDB’s positioning
hampered its effectiveness. A Development
                                                        2.3.2.1 The Bank Group portfolio in Burundi
Partner Coordination Group (DPG), with the
                                                        currently comprises seven ongoing operations
CNCA as its secretariat, was also created in
                                                        for a total commitment value of UA56.6m (of
May 2007 to promote donor alignment with
                                                        which UA17.5m or 30.9% has been
the PRSP. Recently (July, 2008), the donors
                                                        disbursed). See Table 2 for a breakdown per
met to decide who would be sector leaders.
                                                        sector and Table 3 for the trends in portfolio
The role of the sector leader is to: (i) ensure
                                                        performance.
                                                      13

                                                           report, will be undertaken for the 2008-2011
2.3.2.2 Table 2 investigates implementation                CSP; and (ii) a CPR will be undertaken at
progress and shows that only the                           least every 2 years. This will ensure that mid-
rehabilitation and extension of water                      term corrections are made and that the
infrastructure project is currently potentially            following CSP is well informed from the
problematic. Although the situation has                    experiences of the 2008-11 CSP, particularly
improved marginally, with an increase in                   with regards to what the Bank is doing well.
overall performance score (Table 3) from 2.0               In addition, underperforming projects can be
(2004) to 2.2 (September 2008), there is still a           restructured and project components/sub-
strong need for improvement (see Box 4 on                  components that are no longer relevant
steps to improve portfolio performance).                   cancelled; ultimately Bank’s and Borrowers
Project implementation has been slower than                resources can be used more effectively
anticipated due to weak capacity in ministries             elsewhere.
and continuing insecurity, which have
increased overall implementation costs and                 2.3.3.2      Some        general       lessons/
delayed the attainment of development                      recommendations can, however, be drawn.
benefits. On the Bank side, lack of field                  The new CSP needs to be sensitive to the
presence in Burundi has meant that the                     post-conflict and unstable environment in
benefits of close dialogue have not                        Burundi. Burundi has significant immediate
materialized – especially with respect to                  needs and the interventions of the Bank need
procurement and project supervision, and                   to be well coordinated with those of the
better timing and coordination of Bank                     World Bank, DFID and other donors. To
missions. To alleviate this, the co-location of            support rapid socio-economic recovery,
a Bank staff member in Bujumbura,                          interventions need to show results with
potentially in the offices of one of our donor             perceptible impacts on the population in the
partners is being considered.                              short and medium-term. Projects need to be
                                                           prepared and made effective quickly, while
2.3.3 Lessons learnt                                       ensuring high quality at entry, to ensure rapid
                                                           and effective implementation. Due to a lack
2.3.3.1 It is difficult to extract specific lessons
                                                           of Government capacity and systems, these
of experience, as there was no completion
                                                           would require a large amount of Bank support
report for the CSP of 2005-2007, and neither
                                                           for the preparation, execution and monitoring
was there a country portfolio review (CPR)
                                                           of project implementation. This would also
during the same period. From this, however,
                                                           require that projects incorporate capacity
one can quite quickly draw important lessons:
                                                           building for project execution and results
(i) both a mid-term re-examination of the CSP
                                                           monitoring.
priorities, as well as a CSP completion
                                                                                    14

  Table 2: Overview of current portfolio by sector17
       Sector             Name                           Age (yrs)             Net          Disb.     Allocation        2008 Rating*
                                                           since           commitment       (%)       by sector
                                                                                                                    IP score    DO score
                                                         approval            (UA m)                      (%)
       Natural         Aménagement des
       Resources and   Bassins Versants            2.5              9.0         24.5 15.9      2.58                                2.75
       Environment     (PABV)
       Water Supply    Projet de
       and Sanitation  Réhabilitation et           2.7             12.0          3.8 21.2      1.83                                3.00
                       d’Extension
   Power               Projet de
                       Réhabilitation et
                                                   1.2              7.3          2.3 12.9      2.17                                2.00
                       d’Extension
                       Infrastructures Elec.
   Social              Projet
                       Multisectoriel de           3.7              9.8         49.6 17.3      2.85                                3.00
                       Réinsertion
   Transport           Kirundo-Gasenyi
                                                   1.9             14.9         53.9 26.3      2.00                                2.00
                       Road
   Multi-sector        Projet
                       Renforcement                4.1              2.1         68.5           2.14                                2.00
                       Capacités Institut.
                       Programme d'appui                                              6.4
                       aux structures de
                                                   3.7              1.5         20.6           2.07                                2.00
                       gouvernance
                       (PASG)
  Note: Implementation Progress (IP) and Development Objectives (DO) ratings: 3 = highly satisfactory; 2 =                        satisfactory; 1 =
  unsatisfactory; 0 = highly unsatisfactory; * 2008 rating or last mission rating.




  Table 3: Trends in Portfolio Performance
                                                                                          Evolution       Internal Comparison    External Comparison
                            Performance Indicators                                                         ADB        ADB        ADB          WB
                                                                                         2004   2008
                                                                                                          Burundi    Overallº   Burundi     Burundi
                  o     Project Cycle from Identification to Effectiveness (days)         n/a   697         697        480       697          n/a
                  o     Age (years)                                                      12.5    2.8        2.8         4.2       2.8         3.0
Implementation    o     Disbursement Rate (%)                                             n/a   30.9        30.9       25.0      30.9        45.0
  & Impact        o     Average Project Size (US$ M)                                      8.3   12.9        12.9       18.4      12.9        36.3
                  o     Projects’ Overall Evaluation (Rating 0-3 scale)                   2.0    2.2        2.2         n/a       2.2         n/a
                  o     Projects at Risk – PAR (%)                                       66.6   14.3        14.3       45.0      14.3        22.2
                  o     % Support relying on RMCs PFM and Proc. Systems                  100    100         100         n/a      100          100
                  o     % Aid provided as Programme-based Approaches                       0      0          0          n/a        0           0
Harmonization
                  o     Number of Co Financed Projects (%)                                33     14          14         n/a       14           0
& Alignment
                  o     Leader of Donor Working Groups in the Field                        0      0          0          n/a        0           3
                  o     Total nr. of active ESW                                            0      0          0          20         0           11
  Note: Best available information (September 2008); n/a: not available; ºBased on information from the 2007 APPR.




  17
    There is one regional problematic project, namely ‘Site Planning of Lake Tanganyika’, that was signed, but without disbursements for more
  than 2 years. Cancellation is pending as DRC did not meet all criteria for disbursement. Burundi met all requirements.
                                                         15



                                   Box 4: Improving portfolio performance
Portfolio performance discussions were held with task managers, PIUs, Government departments and other
development partners during CSP preparation. From these discussions a portfolio improvement review was
finalised, and concluded that a number of steps need to be taken to improve project implementation and
portfolio performance:
•         Adopt a readiness filter for future projects. The designation of key staff by project appraisal, the
     readiness of the project implementation plan and the value of a baseline study, before project
     implementation, with appropriate indicators for monitoring and evaluation, were mentioned by the
     government, project staff and task-managers, as important for the performance of future projects.
•         Encourage timely provision of counterpart funding. The Government of Burundi should be
     encouraged to closely monitor the situation and to strive towards paying their contributions in a timely
     manner.
•         Strengthen implementation capacity. Stronger emphasis should be put on technical, financial and
     managerial capacity building. Project management and staff should be selected with care and should be
     able to devote more of their time to project follow-up to improve project performance.
•         Increase the average size of operations to reduce transaction costs. The current national portfolio of
     the African Development Bank in Burundi comprises of 7 on-going projects with an average net
     commitment of UA8.09m. Transaction costs could be considerably reduced by increasing the average
     project size.
•         Increase selectivity and concentrate on sectors with higher implementation track record. The Bank
     Group portfolio currently comprises seven operations in six sectors.
•         Increase monitoring and evaluation. Regular monitoring and evaluation are key to project
     performance and a baseline study, before project implementation, would ensure appropriate indicators for
     tracking project performance. The planned co-location of a staff member in Bujumbura will improve
     project preparation, implementation and follow-up. The Bank will also increase supervision missions
     from HQ, improve supervision quality (e.g. applying the right skills mix) and enhance the role of the
     Rwanda field office.
•         Encourage communication and information flow between all involved parties. More specifically
     between the PIUs, the line Ministries, and the Bank at all stages of the project implementation process.
     This will prevent repeating certain procedures, reduce response times and reduce the corresponding
     delays.
•         Enhance transparency, accountability and greater ownership of projects. Procedures and
     responsibilities should be clear to the entire project personnel. Staff should also be held accountable for
     their actions. To increase ownership and empower communities, beneficiaries should be more involved
     and, for example, contribute a reasonable percentage of the project cost.

2.3.3.3 As already noted, the post-conflict                    the Bank undertook joint-consultations with
status of Burundi and the need for rapid and                   the World Bank in March 2008. Since then,
effective action requires that donors and                      joint meetings (virtual) have been held and
relief agencies work in close collaboration                    agreements reached to collaborate in a
and coordinate their actions. Donor                            number of areas. Co-financing of analytical
harmonization       and    alignment      can                  work has been agreed, as well as co-project
substantially      enhance       development                   supervision in order to improve the
effectiveness. Since the Bank does not                         execution and monitoring of projects. The
currently have an office in Burundi,                           Bank has also agreed on a co-financing
maintaining close cooperation and contacts                     arrangement with the Arab Fund for a road
with other donors is not only important for                    project between Burundi and Rwanda.
the Bank’s work in the country, but requires                   Budget support operations are going to be
special efforts on the part of the Bank. As                    prepared and implemented in collaboration
part of the preparatory work for this CSP,                     with other partners. There are efforts to
                                                  16

convene monthly meetings amongst donors                (ii) a greater role for the private sector in
and to set up a website that tracks donor              generating economic growth and (iii) more
assistance against the PRSP goals. The                 effective, accountable, and inclusive state
Bank, through greater involvement of the               institutions to improve the delivery of basic
Rwanda field office, will support these                services. In this regard, we propose the
developments and other efforts to harmonise            following pillars:
donor support.
                                                       (1) Support to effective government by
                                                       improving economic governance and the
2.3.3.4 Finally, Burundi’s development path            functioning of key public sector institutions.
hinges tightly on a regional solution. Firstly,        Priorities under this pillar would include
maintenance of peace and security within               public financial management (PFM)
Burundi is dependent to a large extent on the          reforms, governance/structural reforms to
security situation outside of the country.             facilitate private sector development and
Secondly, Burundi needs to leverage the                developing policies for regional integration.
opportunities provided by its membership of            Furthermore, targeted capacity building in
the EAC – including regional projects                  public sector institutions is critical to
(especially infrastructure) that result from           enhance policy analysis, implementation,
broader collaboration. Access to the sea is            PRSP monitoring and overall governance. In
an important consideration for the                     particular, the Bank will work closely with
Government and the private sector.                     the Ministry of Economics, Finance and
                                                       Development        Cooperation    (MEFCD).
III.    BANK GROUP STRATEGY                            Within this Ministry are the Vice-ministry of
3.1    Rationale for Bank interventions                Planning, under which fall the Institute of
                                                       Statistics and Economics (ISTEEBU) and
3.1.1 The new CSP for Burundi is timely in
                                                       the CNCA. The PRSP Secretariat and the
several respects: it coincides with the Bank’s
                                                       Ministry for Integration are other critical
ADF XI cycle and with the preparation by
                                                       institutions to growth and development in
certain development partners of their
                                                       Burundi, and in determining the role
country strategies. This provides a good
                                                       Burundi will play in the EAC and other
opportunity for exchange of ideas and
                                                       regional initiatives. In order to enhance
harmonization of support. Alignment with
                                                       gender equality in governance, this pillar
the national development strategy, in this
                                                       will also support the on-going efforts of
case the PRSP, subject to Bank Group
                                                       mainstreaming women’s involvement and
resources and comparative advantage, is the
                                                       empowerment within government structures.
key guiding principle for the CSP. The
                                                       This pillar is a direct continuation of the
choice of pillars derives from consultations
                                                       second pillar of the CSP for 2005-07 and
with the Government, development partners
                                                       supports the first and, to some extent, the
and other stakeholders (Box 5).
                                                       third axes of the PRSP.
3.1.2 Burundi faces the significant challenge          (2) Increase employment opportunities
of consolidating peace and security and                through developing infrastructure and
strengthening overall governance, whilst at            targeted interventions in the agricultural
the same time reconstructing and                       sector. This pillar is critical to ensuring that
rehabilitating the economy, and becoming               a sustainable peace process is consolidated
an active member of the regional                       by providing idle people with income
community. To achieve this, the country                generating activities, whilst at the same time
needs: (i) rapid socio-economic recovery,              developing basic infrastructure on which the
                                                           17

economy and society can function.                                environment improves and institutions are
Demobilised militants are given a                                strengthened, the potential for private sector
subsistence allowance for a few months and,                      operations may materialise. In the public
together with returning refugees and IDPs,                       works programmes and through support to
all need further support in finding jobs and                     the agricultural sector and infrastructure
earning a living. In the immediate and short                     development, emphasis will be given to
to medium term, a priority under this pillar                     creating        sufficient       employment
are labour intensive public works                                opportunities for women, in order to achieve
programmes aimed at absorbing unskilled                          gender parity in the labour market and to
IDPs and ex-militants, whilst at the same                        stimulate women’s contribution to economic
time improving transport (e.g. roads)                            growth. This pillar is targeted at
infrastructure internally and in connecting                      consolidating peace and stability, and aligns
Burundi to neighbouring countries. In the                        with the first, second and third axes of the
longer term, more sustainable employment                         PRSP.
opportunities need to be created: (i) in the
agricultural sector – where targeted support                     3.1.3 Figure 7 shows the expected
is needed to revitalise the industry and                         contribution of the pillars in achieving
improve productivity; and (ii) through                           certain of Burundi’s development goals, as
broader infrastructure development (e.g.                         specified by the strategic axes of the PRSP.
roads and energy) – where, as the political

                                            Box 5: Country Dialogue
The Bank Group met with senior policy makers, line ministries and other Government officials, the Central
Bank, the project implementing units, private sector representatives, academics and research institutes,
journalists, NGOs and donor partners to explore the priorities crucial for Burundi’s development. The July
and September 2008 dialogue missions built on joint consultations with the World Bank, during their CAS
consultations in March 2008, and earlier Bank staff visits. These provided the Country Team with a number of
perspectives that have been taken into account in shaping the strategic thrust of the CSP. The following are
the key priority areas for continued attention going forward:
Portfolio performance. With only 31% of the existing portfolio of UA56.6m disbursed, the need for improved
project implementation was a central focus of the consultation. A key sentiment expressed by the Government
and others was the need for Bank staff to design projects better (at entry) and, to be more responsive to
requests. Assurances were given to this effect. On its part, the Government committed to improve oversight of
the portfolio, using the Japan Grant (PHRD US$334,425) to strengthen its capacity to monitor results (see
Section 3.2.1.2).
Infrastructure. Infrastructure accounts for about 60% of the current portfolio and about 66% of the indicative
pipeline, including energy and roads. The Government expressed its strong commitment to regional
infrastructure projects and firmed up its cost share for the Burundi-Rwanda Road and the NBI-NELSAP
Interconnection Regional Energy Projects. The Government sees rural electrification as key and indicated that
it would use its own resources to prepare the ‘Projet de Construction des microcentrales hydroélectrique’. It
strongly urged the Bank to top-up the remaining balance (see Table 5) of Burundi’s PBA (UA1m) with co-
financing resources to ensure that this project is delivered as soon as possible.
Agriculture. Direct interventions in the agricultural sector, as well as indirect interventions (e.g. infrastructure
development – feeder roads, irrigation), are critical. The challenges posed by land ownership disputes, and
potential land reforms, need to be monitored during the implementation of agricultural projects and safeguards
considered in project design.
Institutional strengthening. The Bank is encouraged to continue support for capacity building and institutional
strengthening. Together with broader impacts, this will also help support Bank interventions and better
portfolio performance.
Figure 7: CSP contribution to Burundi development goals

                   Pillar 1: Effective government           Pillar 2: Increase employment opportunities
              Action 1: Improve economic governance           Action 1: Infrastructure development:
              - PFM reforms                                   internally and to link with the region
              - Policies for regional integration &           - Labour intensive public works programmes
              improved access to an enlarged market           - Roads
                                                              - Energy
              Action 2: Improve functioning of key public
                                                              Action 2: Agriculture sector interventions
              sector institutions
                                                              - Irrigation
              - Ministry of Finance, Economics and
                                                              - Land and water management
              Development Coordination
                                                              - Extension services
              - Ministry for Integration




                 Improve governance             Promote sustainable and              Improve security
                                               equitable economic growth



3.1.4 There are certain synergies between                        4) will be done in conjunction with the
the pillars that will reduce the development                    Government and other donors. The Bank,
constraints identified earlier. Pillar 1                        together with the World Bank, is planning to
supports effective government, which will                       do a Country Economic Memorandum
improve the functioning of the coalition                        (CEM) for Burundi, starting in 2009. Key
Government. At the same time, Pillar 2 will                     themes of focus for the Bank are regional
create immediate employment opportunities                       integration and infrastructure. Burundi is in
for demobilized militants, returning refugees                   critical need of an Infrastructure Action Plan
and others without employment. Together                         to guide priority areas for investments in
these Pillars will lessen the fragility of the                  roads, rail, energy and the likely role that the
peace process. Furthermore, Pillar 1 aims to                    Bujumbura port could play. Importantly, the
improve the environment for private sector                      action plan would need to highlight
activity and better the platform for regional                   priorities taking into account the twin
integration. This will support diversification                  challenges of economic growth and poverty
of the economy and drive employment                             reduction against the backdrop of increasing
creation down the line; this in combination                     regional interconnectivity.
with Pillar 2’s efforts to create more
sustainable      employment       and     less                  3.2.1.2 Grant and other sources of funding
vulnerabilities in the agricultural sector. In                  will be sought to finance the proposed non-
addition, the improved space for private                        lending programme. In addition, funds will
sector activity and the infrastructure created                  be requested from the targeted support
under Pillar 2 will enhance competitiveness,                    window, of the FSF (see Annex 6), to
and support processing and further value                        support this proposed knowledge building
generation of agricultural produce.                             and management. The Bank has already
                                                                secured the sum of US$334,425 for Burundi
3.2     Deliverables and targets                                under the Japanese Policy and Human
                                                                Resources Development Grant. This grant
3.2.1 Analytical work/institutional support
                                                                will be used to (i) strengthen the capacity of
3.2.1.1 Analytical work, policy advisory                        MEFCD to monitor ODA portfolio
services and institutional support (see Table                   performance and results, and (ii) prepare
                                                  19

demand driven policy notes in close                    support programme (see Table 5 and Annex
collaboration with local research institutes.          6) and much from the analytical and
                                                       institutional support programme (Table 4)
3.2.2         Lending                                  will contribute directly to ‘effective
3.2.2.1 The lending programme will be                  government’.
financed by: (i) the Performance Based
Allocation (PBA) under ADF-XI of                       3.3    Monitoring and evaluation
UA33.4m; (ii) the Fragile States Facility              3.3.1 Annex 1 shows the CSP results-
(FSF) – from which Burundi qualifies (see              based framework, which is based on
Annex 6) for UA46.1m from the                          Burundi’s PRSP. The main objectives and
supplemental support window; and (iii) the             priority areas of Bank support are
African Food Crisis Response (AFCR) of                 summarized under each of the CSP pillars.
UA2m. Table 5 shows how the PBA, FSF                   The log frame will be used to track
and AFCR funds will be distributed across              performance and results achieved. It should
projects. The indicative programme is more             be noted that the PRSP’s results and policy
selective and the average project size is              matrix is not fully developed, lacking
bigger (there are 6 projects in 5 sectors18 for        baseline and target indicators for a number
an average commitment of UA13.58m, as                  of sectors. The Bank will work closely with
opposed to 7 projects in 6 sectors19 for an            other development partners in assisting the
average commitment of UA8.09m in the                   Government to strengthen its monitoring
current portfolio). As indicated in the                capacity and further refine the indicators for
lessons from the portfolio review (Box 4),             effective tracking of performance. A mid-
this will help to reduce transaction costs,            term review will be undertaken in the first
whilst also targeting the Banks interventions          quarter of 2010 to assess progress towards
more selectively. Annex 5 shows both the               the CSP objectives. A CSP completion
alignment of current projects and the                  report will be prepared in 2011.
indicative programme to the CSP (2008-11)
pillars. Two observations:                             3.4    Risks and mitigation measures
(a) Given the impact of projects in the                3.4.1 The resumption of violent conflict in
current portfolio will be apparent during this         Burundi is the most significant risk to
CSP (2008-11) period, there seems to be a              implementing the Bank’s strategy, and
‘good fit’ between the current portfolio and           which could severely limit its impact. The
the new CSP pillars. Figure 9 in Annex 5               consolidation of peace is critical and needs
shows that there will be significant impact in         to be given highest priority. Recent fighting
‘creating employment’ and some impact on               between Government forces and the
‘effective government’.                                Palipehutu-FNL has threatened the ceasefire
                                                       agreement. The best way, however, that the
(b) The indicative programme (Figure 10 in
                                                       Bank can encourage and support the peace
Annex 5) contributes strongly to Pillar 2
                                                       process is through Pillar 2 of the new CSP –
(‘employment creation’). In addition, the
                                                       by     trying    to    create     employment
needs of ‘regional integration’ are fairly well
                                                       opportunities for ex-militants and IDPs
attended to (shaded black circles). Although
                                                       through public works programmes and in the
Pillar 1 seems less well covered, it is
                                                       agricultural sector. Increased integration in
important to keep in mind that the budget
                                                       East Africa, will also act as an agent of
                                                       restraint.
18
     Including regional projects.
19
     Not including regional projects.
                                                                               20

      3.4.2 Poor governance and weak                                                   this regard, Pillar 1 of the CSP, and the
      implementation capacity is a further risk to                                     proposed analytical work and institutional
      the Bank’s strategy, and especially to the                                       support, will help to reduce this risk. In
      implementation and monitoring of projects.                                       addition, the Bank plans for in-country
      Responsibilities between ministries need to                                      presence to facilitate project implementation
      be clarified to ensure better coordination                                       progress and results monitoring, and to
      across Government departments. Improved                                          understand the nuances of a complex and
      governance remains a priority and, in                                            changing operating environment.
      particular, PFM needs critical attention. In

      Table 4: Indicative non-lending programme (analytical work/institutional support) for 2008-11
                                                         2008
           1   Portfolio Improvement Review (completed during CSP preparation mission)
                                                         2009
           2   Country Portfolio Review
           3   Regional Integration (with DFID)
           4   Support to the Ministry of Finance, Economics and Development Coordination
           5   Fiduciary Risk Assessment (with DFID)
                                                         2010
           6   CSP mid-term review (1st quarter)
           7   Country Economic Memorandum (with World Bank)
           8   Public Expenditure Review (PER) update (with World Bank)
                                                         2011
        9      Public Expenditure Review (PER) update (with World Bank)
       10      CSP completion report
       11      Country Portfolio Review
       12      New CSP (2012-2015)


      Table 5: Indicative lending programme for Burundi (2008-11)
                                   Project title                                            Region/Area           Board      Indicative      PBA       FSF         AFCR
                                                                                              covered                         amount
                                                                           Governance
1   Réformes Economiques et Gouvernance (PAREII)                                                  n/a              2008           14            -       12          2
                                                                 Agriculture
2   Multinational: Projet de Développement Agricole du Bugesera                 Kirundo                            2009            5            5       -           -
                                                               Road transport
3   Projet Routier Gitega-Ngozi                                               Gitega/Ngozi                         2009           30           -        30          -
4   Multinational: Routier Mugina-Bujumbura-Ruhwa-Ntendezi-Gisenyi          Bubanza/Cibitoke                       2008          16.5         16.5       -          -
                                                            Employment creation
5   Projet National de Création d’Emplois (Pavage de la Ville de Ngozi)          Ngozi                             2009           10          5.9       4.1         -
                                                                   Energy
6   Multinational: NBI-NELSAP Energy Interconnection20                          National                           2008            6           6        -           -
                                                                                                                                              33.4     46.1         2




      20
        Burundi will contribute UA5m from the PBA to NBI-NELSAP. The balance will be used for the ‘Projet de Construction des microcentrales
      hydroélectriques’. This project is a priority for Government, who will initially use the Budget to finance the feasibility study and, thereafter, with the
      support of the Bank, seek to mobilise additional funds for project execution.
3.4.3 Political instability and a lack of internal   regard, the proposed regional infrastructure
political dialogue, in the run-up to elections in    projects are important. In addition, the
2010, is a major risk to the peace process and       functioning of the EAC is critical to ensure
legitimacy for these polls. In addition, this        that economic growth and development
instability, and frequent changes in the             happens as part of a sustained integrated future
positions of Government officials, is a              for East Africa.
challenge to the operation and reform
programme of the Government. This might              IV. CONCLUSION
have a significant impact on the
implementation of Bank projects. Once again,         4.1 This CSP contains a programme of lending
Pillar 1 of the CSP, and the proposed                and non-lending that will support Burundi’s
analytical work and institutional support, in        growth and poverty reduction. The Country
conjunction with increased Bank in-country           Team worked closely with the Government in
presence, will help in managing this risk.           developing      the    proposed     areas     of
                                                     interventions. The team also benefited from
3.4.4 Agriculture, and especially the coffee         close collaboration with other stakeholders and
sector, remains the mainstay of the Burundi          development partners in Burundi, including
economy and the source of livelihood for the         joint consultations with the World Bank. As
bulk of the population. Given the importance         part of this process, the Bank signed the joint
of this sector and the vulnerability of Burundi      collaboration     agreement     between      the
to rising food and fuel prices, there is a strong    Government and development partners on
need to diversify, increase productivity and         Budget Support.
improve the contribution of agriculture to the
incomes of farmers and growth of the                 4.2 The Bank Group’s CSP for 2008 to 2011
economy. However, with the increasing                further reaffirms our continuing support to
numbers of returning refugees land tenure            ensure that the policy reform efforts are
reform is currently ongoing and its impact on        sustained and rewarded. The CSP focuses on
the country’s most important sector is still         two strategic pillars: (i) support to effective
unknown. In addition, necessary reforms in the       government and (ii) creating employment
coffee sector have stalled. These are both           opportunities. As indicated, Burundi faces a
challenges to the Bank’s strategy in                 number of challenges, and political and
agriculture. One mitigating factor is that the       economic risks. Consolidating peace and
Netherlands      and    Swiss      Development       security, and persisting with the policy reforms
Cooperation are already assisting the Burundi        are vital. The Board is requested to endorse
government and CLOP with the development             Burundi’s eligibility to qualify for FSF
of a programme to secure land rights.                funding, and give due consideration and
                                                     approval of this Country Strategy Paper.
3.4.5 Finally, Burundi is both landlocked and
located in a difficult ‘neighbourhood’ where
events in neighbouring countries could easily
spill over; thereby threatening the peace and
economic prospects of the country, and posing
a significant threat to the Bank’s strategy.
Burundi’s growth and development prospects
will rely heavily on trade and access to a sea
port and, as a result, having alternative routes
to the sea are important (e.g. Burundi-
Mombasa and Burundi-Dar es Salaam). In this
                                                                         22
                                          ANNEX 1 – Burundi CSP (2008-2011) Monitoring and Results Framework

 Strategic     Constraints to achieving        Final Outcome             Final Output Indicators       Midterm Outcome           Key Actions and Mid-       ADB Interventions
 Objectives     the desired outcomes          Indicators (2011)                  (2011)                Indicators (2009)        term Output Indicators        Ongoing and
  (CSLP)                                                                                                                                (2009)               proposed in the
                                                                                                                                                                  CSP

                                                                       PILLAR I - Effective government

                                                 Improve economic governance and functioning of key public institutions
Strengthened   • Inefficient public        • More efficient and         • Macroeconomic             • Annual budget             • Decree on the budget      Ongoing:
economic         finance management           transparent public          framework produced           prepared in                call circular, budget     • Economic
governance     • Weak public                  financial management        7 months before the          conformity with the        ceilings and calendar        Reforms Support
and more         procurement system        • Annual budget                beginning of the fiscal      Organic Budget Law         implemented                  (PARE I)
transparent    • Lack of transparency         prepared in                 year                         as adopted in 2008       • The quarterly cash plan   • Institutional
management       in the management of         conformity with the       • Rolling quarterly cash    • Agree with donors for       introduced                   Support (PRC I)
of Public        public resources             Public Finance              plan operationalised        a calendar of budget      • Operational manuals       Pipeline:
Finances                                      Organic Law               • Training programme          support disbursement        for procurement           • Support economic
                                           • Improved cash                for use of                • Public sector wide          agencies developed           reforms (PARE
                                             management and               procurement manuals         action plan for           • Roles of audit and           II: budget
                                             strengthened internal        introduced                  procurement                 control institutions         support)
                                             and external controls      • Financial control           developed                   clarified. ‘Loi des       Non lending:
                                             of budget execution, in      systems in line with      • 70% of public               reglements’ 2008          • Public
                                             the framework of the         EAC requirements            accountants are audited     submitted to                 Expenditure
                                             ‘cadre de partenariat’       and ‘Loi des                and a system for            Parliament                   Reviews (with
                                             for budget support           reglements” presented       follow-up actions on                                     World Bank)
                                           • Improved procurement         to parliament no later      recommendation of                                     • Fiduciary Risk
                                             practices through            than 8 months from          ‘Cour des Comptes’                                       Assessment (with
                                             implementation of a          the end of the fiscal       (external audit)                                         DFID)
                                                                                                      established
                                             procurement action           year                                                                              • Country
                                             plan                                                                                                              Economic
                                                                                                                                                               Memorandum
                                                                                                                                                               (with World
                                                                                                                                                               Bank)
                                                                                                                                                            • Procurement
                                                                                                                                                               capacity building
                                                                                          23
 Strategic      Constraints to achieving           Final Outcome            Final Output Indicators         Midterm Outcome             Key Actions and Mid-      ADB Interventions
 Objectives      the desired outcomes             Indicators (2011)                 (2011)                  Indicators (2009)          term Output Indicators       Ongoing and
  (CSLP)                                                                                                                                       (2009)              proposed in the
                                                                                                                                                                        CSP
Benefits of     • Lack of capacity in the     • Strategic positioning of    • Reforms for alignment to   • Roadmap for regional        • The Ministry for
economic           Ministry for Regional         the country vis-à-vis         EAC (harmonization           integration in the EAC       Regional Integration
integration        Integration and East          regional economic             of customs, budget,          elaborated (that defines     and East African
realised           African Community             groupings decided             investment rules and         priorities and               Community is staffed
                                              • Strategy for regional          regulations, etc) being      sequencing)                  and operational
                • Lack of a clear strategy                                     implemented
                   towards integration           integration being                                       • Strategy highlighting       • Regional integration
                                                 implemented                                                synergies between            study to feed into the
                • Accession to EAC is                                                                       various regional
                  perceived as a real short                                                                                              roadmap for
                                                                                                            groupings (EAC,              integration
                  term challenge due to                                                                     CEPGL, COMESA
                  the country’s lack of                                                                     etc.) developed
                  preparation.




Capacity        • Weak institutional          • SWAPs (sector               • Report on performance      • Sector strategies and       • Training for sector
building in        capacity constraining         strategies) available in      in implementation of         CSLP progress reports         ministries’ staff on
public sector      service delivery              priority sectors              CSLP satisfies DP’s          are based on a more           strategic planning
                                                 (transport, energy, and       needs (for                   comprehensive set of
                • Limited capacity for                                                                                                 • TA to the MEFCD to
                                                 water and sanitation)         performance                  SMART indicators
                   planning,                     with accompanying                                          from 2009 onwards             improve planning
                   implementation and                                          assessment)                                                function and
                                                 simplified MTEFs for
                   monitoring and                transport and energy       • All ministries have                                         SP/REFES to ensure
                   evaluation of policies                                      validated strategic                                        improved monitoring
                                              • Sector strategies and
                                                                               (action) plans                                             and evaluation of
                                                 PRSP progress
                                                                                                                                          CSLP
                                                 reporting are based on
                                                 more comprehensive                                                                    • Introduce MTEFs in
                                                 set of SMART                                                                              pilot ministries
                                                 indicators from 2009                                                                      (transport and
                                                 onwards                                                                                   agriculture)
                                                                                         24
 Strategic      Constraints to achieving          Final Outcome           Final Output Indicators          Midterm Outcome            Key Actions and Mid-      ADB Interventions
 Objectives      the desired outcomes            Indicators (2011)                (2011)                   Indicators (2009)         term Output Indicators       Ongoing and
  (CSLP)                                                                                                                                     (2009)              proposed in the
                                                                                                                                                                      CSP

                                                                PILLAR II - Increase employment opportunities

                                                                           Infrastructure development
Increased       • Limited reinsertion of      • Number of people          • National strategy for the   • Number of people           • Pavement of Ngozi        Ongoing:
employment          demobilized                  employed in labour        use of labour intensive       employed in labour            roads started             • Burundi-Rwanda
opportunities       combatants and               intensive public work     approach in public works      intensive public work                                     (Kirundo-
through             returning refugees, due      schemes amounting to      elaborated                    schemes amounting to                                      Gasenyi) road
public works        to lack of productive        145,200 man-month                                       125,000 man-month                                       • Electricity
programmes          activities                   from 109,470 in 2007                                    from 109,470 in 2007                                      Rehabilitation and
                • Lack of employment                                                                                                                               extension project
                   opportunities for youth                                                                                                                       • Burundi-Rwanda-
                   and active population                                                                                                                           Tanzania Railway
                                                                                                                                                                   study
Adequate        • Poor quality of existing    • Improved transport        • National Road Fund          • At least 1050 Km of        • Increased Fuel Levy      Pipeline:
road network       transport network            intra and inter country     Revenues increase              roads in good               for road maintenance     • National
                                                with 1361.5 km of           from US$3.7 million            condition                   from 6 Cents in 2007        employment
                                                national roads in good      in 2007 to US$ 5                                           to 8 Cents by end-2009      creation
                                                condition from 887 km       million in 2009                                                                        programme
                                                in 2007                   • The Burundi-                                                                         • Gitega-Ngozi
                                              • Financial structuring       Rwanda-Tanzania                                                                        road project
                                                of Burundi-Rwanda-          railway study                                                                        • Burundi-Rwanda
                                                Tanzania railway link       finalized                                                                              road
                                                finalised                                                                                                        • Burundi-Rwanda-
                                                                                                                                                                   Tanzania railway
                                                                                                                                                                   study
                                                                                                                                                                 • NBI-NELSAP
Increase        • Inadequate supply of and    • Access to electricity     • The country is              • The number of power        • Implementation of an        interconnection
electricity        access to energy             increases from less         connected to Rwanda            cuts (delestage) is         interconnection             project
supply                                          than 2% to more than        and DRC –Uganda                reduced in Bujumbura        between the Nile basin    • Microcentrales
                                                5% in 2011                  and Kenya through              from 2009 onwards           countries initiated
                                                                            the NBI- NELSAP             • Action plan to build       • Study undertaken by
                                                                            interconnection                priority microcentrales     government on
                                                                                                                                       microcentrales
                                                                                        25
 Strategic        Constraints to achieving       Final Outcome           Final Output Indicators        Midterm Outcome            Key Actions and Mid-       ADB Interventions
 Objectives        the desired outcomes         Indicators (2011)                (2011)                 Indicators (2009)         term Output Indicators        Ongoing and
  (CSLP)                                                                                                                                  (2009)               proposed in the
                                                                                                                                                                    CSP
                                                                    Agriculture: integrated rural development
Enhance rural     • Low agricultural and     • Tons of agricultural      • At least 15% increase in   • Tons of agricultural      • Start the management of   Ongoing:
productivity         livestock production     production (cereals) up     Farmland protected from      production (cereals) up      water infrastructures     • Aménagement
and                  and productivity         from 1.1 million in 2007    soil erosion                 from 1.1 million in 2007   • Define needs of farmers    des bassins versants
agricultural                                  to 1.5 million             • At least 30% of farmers     to 1.25 million in 2009                                 (PABV)
diversification   • Weak incentives for                                                                                             in Bugesera region for
                     production of export    • Agriculture exports        in Bugesera region          • Agriculture exports         inputs and extension      Pipeline :
                     crops                    increase in value from      receiving credit inputs      increase in value from       services                  • Bugesera
                                              US$ 54 million (2006) to    and/or benefiting from       US$ 54 million (2006)                                     integrated rural
                  • Poor access to                                        closer supervision                                                                     development
                     agricultural inputs      US$ 120 million                                          to US$ 85 million in
                                                                                                       2009                                                      project
                  • Increased land and
                      wetlands degradation
                                                                         26
                                 ANNEX 2 – Comparative socio-economic indicators

                                                                                          Developing      Developed
                                                        Year      Burundi      Africa
                                                                                           Countries      Countries
Basic Indicators
                                                                                                                                           GNI per capita US $
Area ( '000 Km²)                                                         28     30 307         80 976         54 658
Total Population (millions)                               2007           8.5     963.7         5 448.2        1 223.0    1200
Urban Population (% of Total)                             2007         10.2       39.8            43.5           74.2    1000
                                                                                                                          800
Population Density (per Km²)                              2007        305.7       31.8            65.7           23.0     600
GNI per Capita (US $)                                     2006          100      1 071           2 000        36 487      400
Labor Force Participation - Total (%)                     2005         51.5       42.3            45.6           54.6     200
Labor Force Participation - Female (%)                    2005         48.6       41.1            39.7           44.9       0




                                                                                                                                   2001

                                                                                                                                            2002

                                                                                                                                                     2003

                                                                                                                                                             2004

                                                                                                                                                                       2005

                                                                                                                                                                                 2006
Gender -Related Development Index Value                   2005        0.409      0.486           0.694          0.911
Human Develop. Index (Rank among 174 countries)           2005          167        n.a.            n.a.           n.a.          Burundi            Africa
Popul. Living Below $ 1 a Day (% of Population)           2006         36.2       34.3              …              …

Demographic Indicators
Population Growth Rate - Total (%)                         2007         4.0        2.3             1.4            0.3
Population Growth Rate - Urban (%)                         2007         7.1        3.5             2.6            0.5
                                                                                                                                        Population Growth Rate (%)
Population < 15 years (%)                                  2007        44.4       41.0            30.2           16.7
Population >= 65 years (%)                                 2007         2.4        3.5             5.6           16.4    4.5
Dependency Ratio (%)                                       2007        89.9       80.1            56.0           47.7    4.0
Sex Ratio (per 100 female)                                 2007        95.9       99.3           103.2           94.3    3.5
                                                                                                                         3.0
Female Population 15-49 years (% of total population)      2007        23.8       24.2            24.5           31.4
                                                                                                                         2.5
Life Expectancy at Birth - Total (years)                   2007        49.6       54.2            65.4           76.5    2.0
Life Expectancy at Birth - Female (years)                  2007        51.0       55.3            67.2           80.2    1.5
Crude Birth Rate (per 1,000)                               2007        47.1       36.1            22.4           11.1    1.0
Crude Death Rate (per 1,000)                               2007        15.6       13.2             8.3           10.4    0.5
                                                                                                                         0.0
Infant Mortality Rate (per 1,000)                          2007        99.4       85.3            57.3            7.4




                                                                                                                                2002


                                                                                                                                           2003


                                                                                                                                                     2004


                                                                                                                                                               2005


                                                                                                                                                                          2006


                                                                                                                                                                                        2007
Child Mortality Rate (per 1,000)                           2007       169.0      130.2            80.8            8.9
Total Fertility Rate (per woman)                           2007         6.8        4.7             2.8            1.6                                Burundi
                                                                                                                                                     Africa
Maternal Mortality Rate (per 100,000)                      2005       480.0      723.6            450               8
Women Using Contraception (%)                           2002-06        19.7       26.6            61.0           75.0
Health & Nutrition Indicators
Physicians (per 100,000 people)                            2005          6.5      39.6           78.0          287.0
Nurses (per 100,000 people)                                2005        75.9      120.4           98.0          782.0              Life Expectancy at Birth (years)

Births attended by Trained Health Personnel (%)            2005        34.0       50.4           59.0           99.0
Access to Safe Water (% of Population)                     2006        71.0       62.3           80.0          100.0     71
Access to Health Services (% of Population)                2004        80.0       61.7           80.0          100.0     61
                                                                                                                         51
Access to Sanitation (% of Population)                  2002-06        36.0       45.8           50.0          100.0     41
                                                                                                                         31
Percent. of Adults (aged 15-49) Living with HIV/AIDS       2005          3.3        4.7            1.3            0.3    21
Incidence of Tuberculosis (per 100,000)                    2005       333.7      300.7          275.0           18.0     11
                                                                                                                          1
Child Immunization Against Tuberculosis (%)                2006        84.0       83.7           85.0           93.0
                                                                                                                                2002


                                                                                                                                           2003


                                                                                                                                                     2004


                                                                                                                                                             2005


                                                                                                                                                                         2006


                                                                                                                                                                                    2007
Child Immunization Against Measles (%)                     2006        75.0       75.4           78.0           93.2
Underweight Children (% of children under 5 years)      2003-06        68.0       28.6           27.0             0.1
                                                                                                                                                   Burundi
Daily Calorie Supply per Capita                            2004       1 682      2 436          2 675          3 285                               Africa
Public Expenditure on Health (as % of GDP)                 2005          1.0        2.4            1.8            6.3
Education Indicators
Gross Enrolment Ratio (%)
   Primary School        - Total                          2006        103.2       96.4           91.0          102.3
   Primary School        - Female                         2006         98.4       92.1          105.0          102.0                        Infant Mortality Rate
                                                                                                                                                 ( Per 1000 )
   Secondary School - Total                               2006         14.3       44.5           88.0           99.5
   Secondary School - Female                              2005         11.0       41.8           45.8          100.8     120
Primary School Female Teaching Staff (% of Total)         2005         55.5       47.5           51.0           82.0     100
Adult Illiteracy Rate - Total (%)                         2007         43.9       33.3           26.6            1.2      80
Adult Illiteracy Rate - Male (%)                          2007         38.6       25.6           19.0            0.8      60
Adult Illiteracy Rate - Female (%)                        2007         48.9       40.8           34.2            1.6
                                                                                                                          40
Percentage of GDP Spent on Education                      2006          5.1        4.5            3.9            5.9
                                                                                                                          20
Environmental Indicators                                                                                                   0
Land Use (Arable Land as % of Total Land Area)          2005-07        30.0        6.0             9.9           11.6
                                                                                                                                 2002


                                                                                                                                            2003


                                                                                                                                                     2004


                                                                                                                                                               2005


                                                                                                                                                                         2006


                                                                                                                                                                                    2007




Annual Rate of Deforestation (%)                        2000-07         9.0        0.7             0.4           -0.2
Annual Rate of Reforestation (%)                        2000-07        19.0       10.9              …              …                         Burundi                  Africa
Per Capita CO2 Emissions (metric tons)                  2005-07          …         1.0             1.9           12.3

Sources: ADB Statistics Department Databases; World Bank: World Development Indicators;                                                   Updated: July 2008
UNAIDS; UNSD; WHO; UNICEF; WRI; UNDP; Country Reports
                                                                                                                                           27


                                                                                                                ANNEX 3 – CPIA ratings

Table 6: Burundi CPIA Ratings 2005-2007

             A. Economic Management                         B. Structural Policies                                   C. Policies for Social Inclusion/Equity                             D. Public Sector Management and Institutions

               1           2           3           4                5                6                7               8                9               10            11          12          13             14            15            16
                                                                                                                                                                                                                                                  Overall
Year         Macro       Fiscal       Debt       Region        Fin. Sector       Business        Gender          Equity              Human           Social      Environmt.     Prop.     Budget          Rev           Public      Corruption    Rating
                                                  Int./                         Reg. Frame       Equal.       Pub. Resource         Resources      Protection                   Rights    Manag.       Mobilization     Admin       Pub. Sector
                                                 Trade



2007          4.0         4.0         3.0         3.0              3.0               3.0          3.5                3.0               3.5            3.0            3.0         2.5        2.5            3.0            3.0           2.5        3.29

2006          4.0         4.0         3.0         3.5              3.0               2.5          3.5                3.0               3.0            3.0            2.5         2.5        3.0            3.0            3.0           2.5        3.12

2005          3.5         3.5         3.0         3.0              3.0               3.0          3.0                3.0               3.0            3.0            3.0         3.0        3.0            3.0            3.0           3.5        3.11



Rating: Countries are rated on a scale of 1 to 6 on each of the 16 criteria in the four clusters; 6 being “highly satisfactory” and 1 “highly unsatisfactory”. The average rating for the criteria is the
CPIA rating.



Figure 8: Burundi CPI Trend 2005-2007

       4.5


       4.0


       3.5


       3.0


       2.5


       2.0

                     1            2          3          4           5           6          7              8      9             10            11       12        13         14      15         16
                                                                         2007                  2006               2005
                                                                                                           28


                                                                                             ANNEX 4 - Donors

         Table 7: Lead donors in different sectors
              Sector                                                                 Lead
              Security                                                               Netherlands
              Justice and Rule of Law                                                DFID
              Governance                                                             European Commission
              Agriculture and Rural Development                                      World Bank (IFAD may co-lead)
              Economic Infrastructure                                                European Commission (World Bank may co-lead)
              Private sector development and competitiveness                         USAID
              Education                                                              France/AFD
              Health                                                                 DFID
              Water and Sanitation                                                   Germany (GTZ, KfW, DED)
              Reinsertion and reintegration of vulnerable groups                     UNDP
              HIV/AIDS                                                               World Bank
              Macroeconomics and finance                                             World Bank (EC may co-lead)

         Table 8: Planned donor interventions relative to the four strategic pillars of the PRSP
                   Improving governance and security                        Promoting sustainable and equitable economic growth            Developing human capital
                                                                                                                                                                                        Combating
    €m          Governance/Financial Demobilisation and            Agriculture, livestock,   Business environment Infrastructure & regional Education, health and water                                   Total     %
                                                                                                                                                                                        HIV/AIDS
                    management          reintegration            fisheries and fish farming     (private sector)          integration
AfDB                   12.5                  10.4                            15.6                                             89.4                                                                      127.9  7.3%
Belgium                30.1                   4.4                            21.5                     2.5                     5.3                       59.8                                            123.6  7.0%
DFID                   10.2            *regional fund                                                               *broader regional work              20.0                          *incl. in health   30.2  1.7%
EC                     120.0                                                 97.0                                            124.0                      33.0                                            374.0 21.3%
France                  2.0                   3.0                                                                                                       12.0                                             17.0  1.0%
Germany                                                                                                                                                 35.6                                             35.6  2.0%
IFAD                                                                         44.2                                                                                                                        44.2  2.5%
Netherlands              0.6                                                  6.0                     11.3                    7.0                                                                        24.9  1.4%
Other                  145.9                    19.2                        127.4                     14.1                   207.4                     190.7                                16.0        720.6 40.9%
USAID                    0.2                     1.0                         17.3                                                                        9.3                                16.0         43.8  2.5%
World Bank              67.2                     6.4                         32.0                     10.2                    86.4                      16.0                                            218.2 12.4%
Total                  388.7                    44.4                        360.9                     38.1                   519.5                     376.4                                32.0       1760.0 100.0%
%                      22.1%                    2.5%                       20.5%                     2.2%                    29.5%                    21.4%                                1.8%        100.0%
         Source: World Bank following the Joint Consultations
         Notes: (i) Exchange rates used: UA1 = €1.04, £1 = €1.27, US$1 = €0.64; (ii) Generally, this covers the period 2007/08 to 2011/12. For some figures it is just the 2008/09 period; (iii) AfDB projects in
         Agriculture and Infrastructure include the country component of regional projects; (iv) DFID section was updated further from conversations with DFID
                                                                                                                                 29


                                                                                                                         ANNEX 5

Figure 9: Alignment of current portfolio to the CSP 2008-11 strategy (pillars)

                                                                         5

                                                                                                Natural resources (PABV)



                                                                         4
                Pillar 2: Employment creation




                                                                                                                                                            Social (Reinsertion)


                                                                         3




                                                                                                                    Transport (Kirundo-Gasenyi Road)
                                                                         2
                                                                                                                Power (Infrastructures)
                                                                                                                                                                                                        Multi-sector (PASG)
                                                                                                                                                                      Multi-sector (Institutions)

                                                                         1



                                                                                                           Water Supply/Sanitation (Rehabilitation)
                                                                         0
      -1                                                                      0                          1                          2                             3                                 4                         5

                                                                                                                                    Pillar 1: Effective government

                                                                         -1




Figure 10: Alignment of indicative lending programme to the CSP 2008-11 strategy (pillars)

                                                                          5                                                                      Projects that contribute towards Burundi's integration into the region
                                                                                          Reintegration: Employment creation

                                                                                                 Transport: Mugina-Bujumbura-Ruhwa-Ntendezi-Gisenyi Road




                                                                                                                   Agriculture: Bugesera
                                         Pillar 2: Employment creation




                                                                                      Transport: Gitega to Ngozi Road




                                                                                          Energy: NBI-NELSAP
                                                                                                                                                      Eco. reforms and Gov (PAREII)




           -1                                                                     0                       1                        2                          3                               4                           5


                                                                                                                           Pillar 1: Effective government




Notes: (i) Scale 0 (no direct alignment with pillar) to 5 (total direct alignment); (ii) Size of bubble represents net
commitment; (iii) Shaded black circles are projects that contribute directly towards Burundi's integration into the region
                                                       30


                       ANNEX 6 – Burundi meets the criteria for FSF funds

Supplemental Support Window. The proposed operational activities in Burundi are in line with
the ADF XI operational priorities. Moreover, the tables below illustrate that Burundi is meeting
the two-stage criteria and should, therefore, be eligible to receive supplemental support from the
Fragile States Facility (FSF).

Analysis of First Stage Criteria for Burundi – Supplemental Support Window
Commitment to    (i)       The Arusha Peace and Reconciliation Agreement was signed in 2000 by the main
 Consolidate               political parties. However, the two most important belligerents, namely the
  Peace and                PALIPEHUTU-FNL and the CNDD-FDD were not included. The latter entered into
   Security                government through the Pretoria Protocol signed on 3 October 2003. On 26 May
                           2008, the government signed a ceasefire agreement with the PALIPEHUTU-FNL.
                 (ii)      A democratically elected government came to power in September 2005 and was
                           last reshuffled in November 2007. The next elections are expected in 2010.
                 (iii)     The demobilisation process and reintegration programmes are on-going. It is
                           estimated that about 23,000 ex-combatants are already demobilised out of an
                           estimated 70,000.
Unmet Social     (i)       Real GDP per capita declined by 30.46% between 1990 and 2008 (IMF, 2008).
& Economic       (ii)      Burundi ranks in the bottom quintile of the UN Human Development Index
  Needs                    (2007/2008) with a HDI of 0.413 and a ranking of 167 out of 177 countries.
                 (iii)     According to the latest UN statistics, the number of AIDS orphans in Burundi
                           doubled from 60,000 (2000) to 120,000 (2007).

Analysis of Second Stage Criteria for Burundi – Supplemental Support Window
  Improving      (i)       After finalising the first PRGF arrangement (2004-08), the IMF recently (July
Macroeconomic              2008) agreed to a successor PRGF (2008-11) with Burundi. Under the first PRGF,
Conditions and             Burundi made steady though uneven progress in their reform programme. The
  Pursuit of               successor PRGF will help to further consolidate macroeconomic stability.
 Sound Debt      (ii)      The government is determined to balance spending on civil and military service,
    Policy                 plus all measures called for in the PRSP. Recent improvements in public
                           expenditure management, increased domestic revenue and higher donor inflows are
                           forecast to contain the fiscal deficit at 6.2% of GDP in 2008 and 5.3% in 2009. The
                           Government of Burundi also committed to introduce value-added tax (VAT) by
                           mid-2009.
                 (iii)     In 2004, Burundi benefited from arrears clearance under the Post-Conflict Country
                           Framework of the Bank.
                 (iv)      Burundi reached the HIPC decision point in 2005 and the debt stock is expected to
                           fall substantially upon reaching the HIPC completion point (expected in 2009).
                 (v)       The IMF and World Bank recently (December, 2007) carried out a debt
                           sustainability assessment (DSA) for Burundi. The DSA has detailed and up to date
                           information on Burundi’s debt situation, which builds on information provided by
                           the Burundi authorities (MEFCD and Banque de la République du Burundi).
   Sound         (i)       The government, supported by donors, has been undertaking key actions to improve
  Financial                financial management practices. In 2005, it adopted a unified functional and
 Management                economic classification of budgetary expenditure, as well as a double entry
  Practices                accounting system. In 2006, it introduced an integrated Financial Management
                           Information System, which allows for the monitoring of external assistance and
                           government expenditure flows.
                 (ii)      Burundi has undertaken several key studies including a CFAA (2004), CPIP (2004)
                           and PEMFAR (2008). A PEFA is planned for 2009. These have indicated
                           significant progress in improving PFM and reducing fiduciary risk. Ongoing efforts
                           to strengthen the PFM system include: (a) reform of the legal framework for the
                           budget, (b) strengthening budget preparation and implementation, (c) strengthening
                           and modernising the procurement system, (d) increasing fiscal space for priority
                           expenditures, and (e) civil service reform.
                 (iii)     A Special Anti-Corruption Brigade has been established recently, together with an
                           independent observatory (OLUCOME) for the fight against corruption and
                           economic embezzlement.
                                                    31


 Transparency   (i)     Since 2004 several key reforms have been undertaken to improve budget
   of Public            preparation, execution, and external and internal controls. A new legal framework,
   Accounts             in line with international standards, has been adopted for budget preparation and
                        execution, whilst a new procurement law is being implemented. The preparation of
                        the budget now follows a specific calendar and a budget framework letter, with
                        budget ceilings per Ministry, was used to prepare the 2009 budget. Budget
                        implementation has been improved through the implementation of an IT based
                        budget system (SIGEFI). The Auditor General’s office is regularly producing
                        reports and managed to submit to parliament the budget execution law, for 2006
                        and 2007, within 12 months after the budget year end. The Auditor General’s office
                        is also producing ad-hoc reports and has provided comments on the proposed 2007
                        and 2008 budgets.
                (ii)    In order to strengthen jurisdictional control over public financial management, an
                        Audit Court was created in 2004. Progress has been made in exercising external
                        oversight of government accounts and, in close collaboration with the Belgian
                        Audit Court, a capacity strengthening programme initiated.

Targeted support window. Given that Burundi is a post-conflict country with critical needs to
strengthen human capacity, the country requests support from the targeted support window in
three areas: (i) from the secondment programme to obtain two highly qualified professionals, with
hands-on fragile state experience, to provide assistance to the MEFCD; (ii) to support the
analytical work listed in Table 4; and (iii) to provide service delivery through non-sovereigns
(e.g. employ professional services to build capacity/fill the gap in projects. The Bugesera project,
for example, is an integrated area development project with a number of components. The
implementing unit would require the capacity to ensure that such varied tasks as power supply,
extension services and irrigation are implemented effectively).

Rationale for using FSF funds for budget support. The Bank has been cautious up to now in
providing budget support to Burundi. The timing during this CSP (2008-11) is, however,
propitious to provide budget support to help Burundi further strengthen its systems. Budget
support is an efficient way to support the Government’s on-going post-conflict programme,
which includes PFM reforms designed to strengthen national systems, particularly procurement
and financial management. These will help enhance transparency and improve Burundi’s CPIA
ratings. Burundi satisfies the conditions for budget support as set out in the Bank policy on
Development Budget Support Lending (DBSL) and its policy on fragile states. The IMF’s recent
review indicates that progress is being made and emphasised the need for continued budget
support. The EC, World Bank, Norway and Netherlands are already supporting the PFM reforms
through budget support. DFID plans to carry out a fiduciary risk assessment as a prelude to
providing budget support and has agreed to partner with the Bank in carrying out the assessment.
Also, budget support provides a vehicle through which to transmit the UA2m provided by the
Bank for the food crisis.

Safeguard measures will be put in place to ensure that budget support is implemented
successfully. These include continued dialogue and monitoring of the budget support operation
through the Partnership Framework that the Bank signed with Government and other
development partners in September 2008. The Bank will continue to align with the programmes
funded by other donors, including the IMF’s PRGF. A condition prior to disbursement will be
satisfactory progress on the IMF programme. The Bank will actively support both the PEFA
assessment and scheduled Public Expenditure Reviews with others. Institutional capacity
strengthening will be targeted through current Bank institutional support projects and future work
(see Section 3.2.1); and through technical assistance financed by other donors (World Bank, IMF,
EC, DFID, Netherlands, Belgium and France).
                                           32


                                ANNEX 7 - References

African Development Bank Statistics Department

African Development Bank & OECD African Economic Outlook

Economist Intelligence Unit, 2008. Country Report Burundi August 2008.

IMF, 2007. Burundi: Poverty Reduction Strategy Paper. IMF Country Report No. 07/46,
February 2007.

IMF, 2007a. Burundi: Poverty Reduction Strategy Paper – Joint Staff Advisory Note.
IMF Country Report No. 07/109, March 2007.

IMF, 2008. Staff Report for the 2008 Article IV Consultation and Request for Three-Year
Arrangement Under the Poverty Reduction and Growth Facility. IMF Country Report
No. 08/282, August 2007.

International Crisis Group, 2006. Burundi: Democracy and Peace at Risk. Africa Report
No. 120, 30 November 2006.

International Crisis Group, 2008. Burundi: Restarting Political Dialogue. Africa Briefing
No. 53, Nairobi/Brussels, 19 August 2008.

Lemarchand, R., 2006. Burundi’s Endangered Transition. FAST (Swiss Peace) Country
Risk Profile Burundi, October 2006.

Matsaert, F. and Njagu, J., 2008. Rapid Assessment Mission of Burundi’s progress on
EAC Accession, March 2008. Accessed from the DFID country office in Bujumbura, July
2008.

World Bank, 2004. Africa Country Gender Database.

World Bank, 2008. World Development Indicators 2008.

World Bank, 2008a. Breaking the cycle – a strategy for conflict sensitive rural growth in
Burundi. Report No. 40138 – BI, January 2008.

World Bank, 2008b. Country Assistance Strategy for Burundi. Report No. 44193 – BI,
July 2008.

Zuckerman, E. and Greenberg, M.E., 2004. The Gender Dimensions of Post-Conflict
Reconstruction.
           33


ANNEX 8 – Map of Burundi

				
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