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Burundi remains a very modest regional player in terms of services exports. Governemnt servicesdominate Burundi’s services exports (Table 6.2). This category includes transactions in both goods andservices by international organizations, embassies, or military units and their staff in the host countries(corresponding to mode 2 for services) 98 . In Burundi’s case, this seems to correspond to the increasedpresence of donors since 2005. The rest of services exports (i.e. “commercial services”) consist of travelservices (i.e. the purchase of goods and services in Burundi by non-residents), transport, financial andother business services. These exports of commercial services have fluctuated between 2 and 7 USDmillions annually over the last decade, and represent a much lower share of GDP than in partner EACcountries (Figure 6.1b). Furthermore, Table 6.2 shows that – as opposed to most EAC countries whereboth traditional (e.g. distribution, real estate, hotels and restaurants) and non-traditional (e.g.communication, financial and business services) services sectors now have a significant weight in theeconomy - Burundi has so far not managed to develop strong and diverisifed services sectors.Table 6.2: Services exports in Burundi and the EAC(USD millions and % of total) Burundi Kenya Rwanda 99 Tanzania UgandaCommercial services, of which: 7.3 (9%) 2,920 (79 %) 250 (73%) 2,047 (98%) 984 (75%)Transport 0.7 (1%) 1,563 (43%) 54 (16%) 446 (21%) 47 (4%)Travel 1.8 (2%) 800 (22%) 175 (51%) 1,255 (60%) 730 (56%)Communications .. 360 (10%) 0.4 (0%) 39 (2%) 30 (2%)Construction .. .. 7 (2%) .. ..Insurance 1 (1%) 32 (1%) 1 (0%) 36 (2%) 12 (1%)Financial services 0.6 (1%) 110 (3%) 1 (0%) 10 (1%) 22 (2%)Computer and information .. 0.4 (0%) .. 5 (0%) 39 (3%)Royalties and licence fees .. 54 (1.5%) 0.1 (0%) .. 4 (0%)Other business services 3.2 (4%) .. 12 (4%) 257 (12%) 100 (8%)Personal, cultural andrecreational services.. 2 (0%) 0.2 (0%) 1 (0%) ..Government services 72.2 (91%) 756 (21%) 92 (27%) 44 (2%) 327 (25%)Commercial services CAGR(2001-2010)Source: UnctadStat, based on IMF BOP statistics15.2% 100 16.7% 25.4% 15.1% 19%Most services sectors remain underdeveloped in Burundi. An overview of basic performanceindicators for several backbone services reveals that the gap between Burundi and its EAC neighbors islarge (Table 6.3 below). For example, Burundi is characterized by a lower number of individuals andfirms with lines of credit or loans from financial institutions, a lower number of fixed and mobile phonesubscribers and a low professional density (suggesting the availability of professionals to providebusiness services is problematic in Burundi). This translates into an important competitive disadvantagegiven that services are essential inputs for most economic activities.98 See the IMF’s Balance of Payment Manual, paragraph 266 (www.imf.org/external/np/sta/bop/bopman.pdf).99 2009 data are used for Rwanda (latest year available with disaggregated services data).100 Burundi’s commercial services exports have been highly volatile in recent years, and the CAGR is only 0.7% if2009 is the end year considered.116 / 153
A striking feature of Burundi’s services trade policy is its relatively high level of openness. A recentWorld Bank survey of applied trade policies in five services sectors - financial services (banking andinsurance), telecommunications, retail distribution, transport and professional services in over 80countries shows that Burundi’s overall restrictiveness index of applied services polices (explicit marketaccess and national treatment barriers plus selected discriminatory regulatory measures) is well belowthe EAC average (Figure 6.2). In fact, the results of the survey suggest that Burundi is completely openin telecommunication and retail services (Figure 6.3).KenyaTanzaniaUgandaFigure 6.2: Service traderestrictiveness index, Burundi andcomparatorsFigure 6.3: Breakdown of Burundi'sservices trade restrictiveness by typeof service403020100RwandaBurundi0 10 20 30 40Source: World Bank (2012), Services TradeRestrictions DatabaseSource: World Bank (2012), Services TradeRestrictions Database. Note: the sectoral scores areaverages across subsectors and modes of supply.Reducing or eliminating explicit trade barriers is only one part of the story. How can we reconcileBurundi’s poor services performance with its relatively liberal services trade policy? Such results clearlyshow that to improve the performance of services sectors trade reform needs to be integrated into anopen and transparent process of regulatory reform, in which decisions on the nature and pace of reformare informed by careful analysis and an understanding of good practices. For example, it is important toensure that the regulatory frameworks in place do not restrict directly or indirectly competition in servicemarkets and slow down their expansion in spite of the extensive liberalization measures. An equallyimportant problem is the absence of regulation, which can create a legal vacuum that actually constrainsbusiness growth and allows many opportunities for unfair competition and corruption.A key challenge of services reforms relate to the coordination of regulatory reform withliberalization. Indeed, coordinating regulatory reform with liberalization of trade in services is the mainrecurring challenge raised by Burundian officials in several services talks. Liberalizing services trade istypically more complex than liberalizing goods trade and can require considerable technical capacity.The ability to implement such a reform process is constrained by limited capacity within government andthe private sector.This chapter provides practical advice to the Government of Burundi regarding reform in twoservices sectors. These two sectors – financial and business (professional) services – were selected inconsultation with the Government of the Republic of Burundi. Both sectors are important for Burundi’sgrowth and export diversification, and are priority sectors in the EAC and COMESA servicesnegotiations. The analysis presents a diagnostics regarding the level of development and the availabilityof financial and professional services and services providers in Burundi. The analysis identifies whichpolicies explain the underdevelopment of financial and professional services in Burundi and the117 / 153
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Republic of Burundi / Enhanced Inte
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Currency equivalent(Exchange rate a
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Executive summaryThe Government of
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Dar es Salaam (Tanzania) and Mombas
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II.3. Unorganized (agricultural) as
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making. Efforts to improve official
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Identified constraintregulatory fra
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Identified constraintProposed Actio
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(% GDP)50%40%30%20%10%Figure 1.2: e
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Burundi’s very narrow export base
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elatively well diversified - in 200
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ExportsImports(%)Share2001/03Share2
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Table 1.4 : Burundi’s trade in se
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scope for both automatic and discre
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exports. Burundi stands out as a he
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this, the Government has elaborated
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4,000Figure 1.11a: cost to export (
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The improvement of Burundi’s Doin
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Mainstreaming of trade into nationa
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constraints are required to impleme
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CHAPTER 2 - Regional integration: o
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4.3 percent to SSA as a whole. Most
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likely to facilitate deeper integra
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collection remain destination-based
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To-date, the approach to eliminateN
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Figure 2.5: Improvements in doing b
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Public awareness and stakeholders s
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CHAPTER 3 - Export diversificationT
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products, Figure 3.3 shows that Bur
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Second, measures that encourage the
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Figure 3.5: Burundian coffee value
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ii. Addressing supply-side constrai
Page 65 and 66: sales of specialty coffee by cooper
Page 67 and 68: long distances, given the high cost
Page 69 and 70: The over exploitation of land is of
Page 71 and 72: logistics chain. Other types of fac
Page 73 and 74: CHAPTER 4 - Non-tariff Measures: Th
Page 75 and 76: Figure 4.1: Coverage and frequency
Page 77 and 78: Some of the most heavily regulated
Page 79 and 80: 2.2 Severity: the impact of NTMsWhi
Page 81 and 82: In spite of efforts to improve the
Page 83 and 84: standards, which kindly share the m
Page 85 and 86: According to a testimony gathered i
Page 87 and 88: public sectors would have more clou
Page 89 and 90: CHAPTER 5 - Strengthening Trade Fac
Page 91 and 92: ii. designing a program of action o
Page 93 and 94: 3. Size of ShipmentsThe small avera
Page 95 and 96: makes it possible for the coffee to
Page 97 and 98: logistics services on the other. Ty
Page 99 and 100: Table 5.3: Characteristics of Clear
Page 101 and 102: The Central Corridor is potentially
Page 103 and 104: Air connectivity, while limited in
Page 105 and 106: Kigoma and Bujumbura lake ports. Th
Page 107 and 108: In its Strategic Plan 2011-2015, th
Page 109 and 110: increase reliability would therefor
Page 111 and 112: 8. RecommendationsThe foregoing sho
Page 113 and 114: Cooperation at the regional level a
Page 115: (BIF billion) (%)1. Primary sector
Page 119 and 120: Business servicesNumber of accounta
Page 121 and 122: At the same time there exist severa
Page 123 and 124: Under the capacity building compone
Page 125 and 126: MadagascarCameroonSenegalKenyaMalaw
Page 127 and 128: Explaining the Segmentation of Mark
Page 129 and 130: . Adequate regulations that ensure
Page 131 and 132: The pace of integration is largely
Page 133 and 134: take time to overcome, are likely t
Page 135 and 136: and to domestic travel spending, as
Page 137 and 138: the attractiveness of the sector fo
Page 139 and 140: 4. The challenges facing tourism in
Page 141 and 142: supply, hospitals), and in large-sc
Page 143 and 144: durable improvements in terms of st
Page 145 and 146: - the introduction of a single EAC
Page 147 and 148: Box 7.4: Examples of regional conse
Page 149 and 150: cultural and social sustainability
Page 151 and 152: ICG. 2012. Burundi: A Deepening Cor
Page 153: World Bank. 2010c. Reform and Regio
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