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

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A key challenge of services reforms relates to putting in place an adequate regulatory frameworkthat supports the effective implementation of existing engagements. Decisions on the nature and paceof reform need to be informed by careful analysis and an understanding of good practices. A nationalregulatory assessment mechanism covering all services sectors should be put in place. Regulatorycooperation at the regional level has the potential to accelerate services reforms. For example, infinancial services, regional integration can contribute to the strengthening of supervisory capacities ofsector regulators. In professional services, regional agreements on the mutual recognition of professionalqualification can help with the development of adequate curricula for various professions, and provideguidance for employers, mentors and trainees regarding the practical experience requirements forprofessionals.I.3. Trade financeAccess to trade finance remains a challenge for most Burundian operators. Difficult access toworking capital at competitive terms, high cost of trade finance and failure to tap potential externalfinancial sources were recurrent problems cited by managers who exported non-traditional goods toEuropean markets. Moreover, lack of trade finance was identified as a main factor contributing to theirexit from the market. Increased participation in global and regional trade finance programs should bepursued by banks.II. Supply-side constraintsSeveral broad and cross-cutting issues, such as the limited availability of essential backboneservices and of skills, limit Burundi’s production capacities and trade performances. These factorsgo a long way towards explaining the persisting weakness of the Burundian private sector, which is forthe most part informal. According to the PRSP II, the formal private sector is made up of around 3,000firms, most of which are SMEs lacking the capacities and resources to expand their activities and startexporting.II.1. Limited access to key backbone servicesThe main constraints cited by managers of formally registered firms are access to electricity, limitedaccess to and high cost of financing. Findings from a survey of the urban informal sector indicate that thelack of infrastructure, restricted access to finance, insufficient and volatile demand, and the lack ofprofessional and technical skills are among the main constraints. Thus, addressing these constraints, forexample by improving the reliability of electricity supply or making financial channels available andaffordable to producers, including to smallholders and associations, is necessary for private sectordevelopment in general, and for the development of export activities in particular.II.2. Skills issuesSkills shortages and skills mismatches are among the top supply-side constraints in both the formal andthe informal sectors, and constitute a major challenge for diversification into non-traditional, highervalueexports. Concerning horticultural products for example, this constraint could be mitigated bydeveloping vocational training to strengthen human capital in a variety of activities related to production,processing and transport, and by facilitating access to business development services to promote theestablishment of efficient managerial and operational frameworks for production and exports processes.8 / 153
II.3. Unorganized (agricultural) associationsSupport for making (agricultural) associations more efficient could be considered. As illustrated by thesurvey of farmers in the horticulture sector presented in Chapter 3, coordination is currently limited. Theemergence of more and better-organized producer associations could enable efficiency gains withregards to access to inputs and extension services, or to the transport of products to local markets orshipping points for regional/international markets. This could follow the example of the coffee sector,where producer associations have become increasingly active, and where the recently established interprofessionalorganization (InterCafé) facilitates coordination along the value chain. The Government iscommitted to stepping up its support to agricultural development, and the Council of Ministers adoptedin May 2011a draft law on agricultural cooperative based on several EAC examples including Rwandaand Tanzania. If effectively implemented, this law can create a modern framework that encourages theemergence of cooperatives, which can contribute to productivity improvements and exportdiversification.III. Incentive framework for trade and investmentIII.1. Legal reform and business environmentRecent legislative instruments such as the revised Investment Code, the new Commercial Code, theCode for Public-Private companies and several laws on bankruptcy and competition have beenelaborated, but several codes and laws still need application texts in order to be implemented. Also, inmany cases these new legislative acts would need to be updated to reflect the changes related toBurundi’s EAC membership. Reform efforts should focus on the implementation of these legal acts.Moreover, Burundi’s business environment remains poor, despite a significant improvement in thecountry’s 2012 “ease of doing business” indicator. A continuation of the Doing Business reform isessential.III.2. Public-private dialogueThe public-private dialogue has been historically very weak in Burundi. Limited consultation andcooperation with the private sector has tended to result in poorly informed public sector decision-makingthat often fails to foresee the impact of decisions on the private sector. Furthermore, many private sectoractors are not informed of beneficial reforms – such as the provisions of the new Investment Code - anddo not understand how they might benefit from the new arrangements. Likewise, most economicoperators lack a sound understanding of the regional integration process underway and its regulatoryimplications.Despite a recent recognition regarding the private sector’s role as a necessary engine of tradeexpansion, investment and growth, more needs to be done to strengthen the public-privatedialogue. Private sector representatives were consulted in the preparation of both the first and secondPRSPs. In order to make the dialogue on investment climate and trade-related issues more systematic, a2008 presidential decree established a public-private consultation framework with a general assembly,technical groups and permanent secretariat. Actions to strengthen the private sector could include worktoward a climate of trust between public administrations and private actors, and ensuring theeffectiveness of the public-private dialogue mechanism, which only started recently its activities.9 / 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: Dar es Salaam (Tanzania) and Mombas
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 and 28: scope for both automatic and discre
Page 29 and 30: exports. Burundi stands out as a he
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
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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
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sales of specialty coffee by cooper
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long distances, given the high cost
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The over exploitation of land is of
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logistics chain. Other types of fac
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CHAPTER 4 - Non-tariff Measures: Th
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Figure 4.1: Coverage and frequency
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Some of the most heavily regulated
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2.2 Severity: the impact of NTMsWhi
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In spite of efforts to improve the
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standards, which kindly share the m
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According to a testimony gathered i
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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
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3. Size of ShipmentsThe small avera
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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
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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
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ICG. 2012. Burundi: A Deepening Cor
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World Bank. 2010c. Reform and Regio
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