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

effects between exporters of the same product from the same country can help exporters survive ininternational markets. This implies that when more firms export the same product to the same destinationfrom the same country, the survival ability of a new entrant increases. Such findings can have usefulimplications for policies devised by export-promotion agencies.2. Factors that explain Burundi’s unsatisfactory export performanceSeveral recent studies have attempted to identify the main constraints to Burundi’s exportexpansion and diversification. These constraints range from barriers that affect trade and transactioncosts, and supply-side issues that limit production capacities, to weaknesses of the business andregulatory environment, and capacity issues. Several sector-specific constraints are listed below: The main obstacles to Burundi’s coffee exports are inadequate standards, the absence of reliabletraceability and differentiation systems that limit access to specialty markets, and lack ofmarketing strategies for coffee distribution. The fishing sector faces numerous constraints ranging from weak institutional capacity of allactors in the sector, degradation of shipping equipment resulting from fishermen’s lack of accessto finance, to noncompliance with sanitary standards by unloading, drying, and smokingfacilities, and inadequate management of fishing resources that limit fish exports. While horticulture seems to have the potential to contribute to the diversification of Burundi’sexport base with specialty products 67 , a number of constraints such as the lack of marketknowledge, insufficient knowledge of international norms and standards, the lack of storagefacilities, especially cold chains for perishable products and limited availability of air transport,unorganized producers, or the lack of extension services for producers hamper the developmentof the sector. And finally, despite considerable mineral resources, the mining sector remains dominated bysome 20,000 artisanal producers, with no industrial-scale production and performs below itspotential.Cross-cutting issues that limit Burundi’s production capacities and trade performance relate tothe limited availability of essential backbone services and skills. For example, the financial sector issmall and not well developed, and access to finance is a major obstacle for companies in the both formaland informal sectors. The limited availability of skilled workers and the low labor productivity of laboris another explanatory factor for Burundi’s poor export performance.Burundi exhibits this poor trade performance despite implementing a number of trade policyreforms aimed at export diversification – including reforms recommended in the 2004 DTIS.Several factors can explain this outcome.First, the focus of Burundi’s export diversification strategy seems to be mainly on devising proactivepolicies that promote trade and encouraging the exports of certain winners (selected products and/orfirms), while less emphasis is placed on creating an overall enabling framework for trade. Forexample, the targeted support provided to selected non-traditional exports such as essential oils,PVC tube production, cut flowers, and several fruits and vegetables as part of the EIF Window IIprojects had very limited results. In fact, several of the targeted exporters have gone out of businesswithin a short period after receiving support from the EIF because numerous regulatory obstacles,supply-side constraints, and channels to reduce transaction costs have remained unaddressed in theexport diversification strategy.67 The following foodstuffs have been identified as specialty products with export potential: pineapple, avocado,passion fruit, small bananas, papaya, mango, maracuja, cherimoya, green peas, baby vegetables, leafy greens,selected roots and tubers, macadamia, flowers and plants.58 / 153