(DTIS) Update, Volume 1 â Main report - Enhanced Integrated ...

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communities (RECs). Importantly, membership in the COMESA gives Burundi access to a large marketof 19 countries totaling over 400 million people. Burundi joined the organization’s Free TradeAgreement in 2004 and subsequently took part in the creation of the COMESA Customs Union (CU) inJune 2009, which should be fully implemented by all member states by mid-2012.Burundi’s bilateral trade relationsBurundi benefits from preferential access to the European market, but preferences are currentlynot used due to the concentrated structure of Burundi’s exports to Europe. Burundi benefits from afavorable preference regime under the Everything But Arms (EBA) initiative, which grants duty-freequota-free market access to all products originating from LDCs (except arms). These preferences do notcurrently constitute an advantage, because Burundi’s exports to the EU (essentially non-roasted coffeeand tea) already enter duty-free under MFN treatment. The EBA could however offer an interestingpreferential margin if Burundi managed to diversify its export portfolio in manufactures or processedprimary products, provided that Burundian exporters comply with the scheme’s complex rules of origin.The EAC is currently negotiating an Economic Partnership Agreement (EPA) with the EuropeanUnion, which will determine the framework of Burundi’s relation with its most important tradepartner. As planned by the Cottonou Agreement, unilateral preferences were due to be replaced afterJanuary 2008 by reciprocal liberalization under EPAs. So far, only an “interim” EPA was adopted in2007. Negotiations for a comprehensive EPA have been organized since then, but several issues, suchhas MFN treatment, export duties, rules of origin and trade in services, have proven contentious, due tothe concerns expressed by EAC countries about a potential reduction of their policy spaces. After a 14-month break, EU and EAC agreed in late 2011 to resume the formal negotiation process, which is nowexpected to be concluded in 2012.Burundi became eligible to benefit from the United States’ African Growth and Opportunity Act(AGOA) in 2006. This program grants beneficiary countries duty-free quota-free market access to theUnited States, and is deemed very favorable due to flexible rules of origin. Unlike many Sub-SaharanAfrican countries however, Burundi has not been able to seize this opportunity to date due to the fact thatcoffee, virtually the only Burundian product exported to the US, already benefits from duty-free entryunder MFN treatment. In 2008, the EAC signed a Trade and Investment Framework Agreement (TIFA)with the United States. This general agreement expresses the parties’ willingness to promote an openenvironment for trade and investment (notably on matters such as good governance, NTBs andprotection of intellectual property rights), in order to expand and diversify trade in goods and servicesbetween the EAC and the US.Emerging markets in Asia or in the Middle East and North Africa have a modest role in Burundi’strade. While strong cooperation exists between Burundi and China, and to a lesser extent India, thesehave hardly resulted in increased trade or investment flows so far, although the share of China inBurundi’s imports has risen over the last decade. However, relations with non-traditional partners couldevolve in the framework of the EAC. Countries such as Turkey, Brazil, South Africa, India and Chinahave all appointed representatives to the EAC in recent years and have expressed their willingness tostrengthen their economic ties with East African countries. While these efforts seem to have moretargeted Kenya, Tanzania and Uganda so far, Burundi could try to benefit from these new relations in thefuture.While efforts to reduce tariffs have largely been met with success, less progress has been achievedwith nontariff measures (NTMs) and non-tariff barriers (NTBs). Although the elimination ofburdensome NTMs and the removal of NTBs were considered high priority issues in the 2004 <strong>DTIS</strong>,numerous barriers such as lengthy customs formalities and discriminating administrative procedures thathave a negative impact on trade continue to hinder regional integration, including Burundi’s imports and28 / 153
exports. Burundi stands out as a heavy user of NTMs - about 70% of products imported into Burundi arecovered by five or more NTM types (Figure 1.10) suggesting that economic operators face multipleregulations that can be cumbersome.100806040200Figure 1.10: Number of different measure typesimposed by product5 and more4 types of NTMs3 types of NTMs2 types of NTMs1 type of NTMsSource: Cadot and Gourdon (2011), based on World Bank/UNCTAD data.Addressing burdensome Non-Tariff Measures (NTMs) and removing Non-Tariff Barriers (NTBs)remain essential issues on Burundi’s trade agenda. Burundi has started this process both at thenational and regional level – it has been involved for several years in the EAC agenda aiming at theidentification and removal of the most detrimental NTMs, with support from the World Bank andTradeMark East Africa, but more needs to be done (see chapter 4). In the coming years, Burundi’sexports would benefit from the removal of NTBs in other EAC countries. Progress on this agenda inBurundi, including the identification of the political economy factors that can explain the persistence ofsome NTBs, will also be critical to allow concrete benefits of the regional integration process tomaterialize.2.2 Despite privatization and investment promotion efforts, a poor incentive frameworkcontinues to limit Burundi’s ability to attract domestic and foreign investmentsThe privatization of key sectors was initiated in the 2000s. The State has traditionally played a majorrole in the Burundian economy, but numerous ill-managed public firms have constituted both a drain onpublic finance (causing an inefficient allocation of Government resources) and an obstacle to privateactivity, due to the poor quality of the services rendered. One prerequisite for increased investment andtrade is therefore the divestiture of the State from the productive sector and basic services (energy,transport, communication, financial services). The 1996 privatization law, which constituted the legalframework for initial privatization efforts in the 1990s, was revised in 2002 22 . The InterministerialPrivatization Committee (CIP) and State Enterprise Service (SCEP) have since then given a newdynamic to the privatization and restructuring program, with support from the World Bank’s PAGE andFinancial and Private Sector Development Project 23 .The divestiture agenda has registered limited progress to date. Despite the authorities’ commitment,results have so far been modest: privatizations mostly focused on small firms and the State remains the22 Loi n°1/07 du 10 septembre 2002 portant Révision de la Loi sur l’Organisation de la Privatisation desEntreprises Publiques (Accessible at www.scep.bi/images/stories/scep/privatisation.pdf)23 See the PAGE website on public enterprises reform and privatization: http://page.bi/spip.php?article3829 / 153
Page 1 and 2: Republic of Burundi / Enhanced Inte
Page 3 and 4: Currency equivalent(Exchange rate a
Page 5 and 6: Executive summaryThe Government of
Page 7 and 8: Dar es Salaam (Tanzania) and Mombas
Page 9 and 10: II.3. Unorganized (agricultural) as
Page 11 and 12: making. Efforts to improve official
Page 13 and 14: Identified constraintregulatory fra
Page 15 and 16: Identified constraintProposed Actio
Page 17 and 18: (% GDP)50%40%30%20%10%Figure 1.2: e
Page 19 and 20: Burundi’s very narrow export base
Page 21 and 22: elatively well diversified - in 200
Page 23 and 24: ExportsImports(%)Share2001/03Share2
Page 25 and 26: Table 1.4 : Burundi’s trade in se
Page 27: scope for both automatic and discre
Page 31 and 32: this, the Government has elaborated
Page 33 and 34: 4,000Figure 1.11a: cost to export (
Page 35 and 36: The improvement of Burundi’s Doin
Page 37 and 38: Mainstreaming of trade into nationa
Page 39 and 40: constraints are required to impleme
Page 41 and 42: CHAPTER 2 - Regional integration: o
Page 43 and 44: 4.3 percent to SSA as a whole. Most
Page 45 and 46: likely to facilitate deeper integra
Page 47 and 48: collection remain destination-based
Page 49 and 50: To-date, the approach to eliminateN
Page 51 and 52: Figure 2.5: Improvements in doing b
Page 53 and 54: Public awareness and stakeholders s
Page 55 and 56: CHAPTER 3 - Export diversificationT
Page 57 and 58: products, Figure 3.3 shows that Bur
Page 59 and 60: Second, measures that encourage the
Page 61 and 62: Figure 3.5: Burundian coffee value
Page 63 and 64: 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
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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
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CHAPTER 5 - Strengthening Trade Fac
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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
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logistics services on the other. Ty
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Table 5.3: Characteristics of Clear
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The Central Corridor is potentially
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Air connectivity, while limited in
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Kigoma and Bujumbura lake ports. Th
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In its Strategic Plan 2011-2015, th
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increase reliability would therefor
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8. RecommendationsThe foregoing sho
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Cooperation at the regional level a
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(BIF billion) (%)1. Primary sector
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A striking feature of Burundi’s s
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Business servicesNumber of accounta
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At the same time there exist severa
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Under the capacity building compone
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MadagascarCameroonSenegalKenyaMalaw
Page 127 and 128:
Explaining the Segmentation of Mark
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. Adequate regulations that ensure
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The pace of integration is largely
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take time to overcome, are likely t
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and to domestic travel spending, as
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the attractiveness of the sector fo
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4. The challenges facing tourism in
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supply, hospitals), and in large-sc
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durable improvements in terms of st
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- the introduction of a single EAC
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Box 7.4: Examples of regional conse
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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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