2 · Web viewOur analysis does indeed suggest that periods where both economic and political liberalization prevailed have experienced both more robust and steadier growth. Burkina

Analyzing Growth in Burkina Faso over

the Last Four Decades

Chapter 20 of volume 2

Kimseyinga Savadogo

UFR Sciences économiques et de gestion, University of Ouagadougou, Burkina Faso

Siaka Coulibaly

World Bank, Ouagadougou, Burkina Faso

Coleen A. McCracken

Washington State University, Pullman, Washington, USA.

Burkina Faso Chapter 20

Contents

1. Introduction.....................................................................................................................1

2. Growth experience..........................................................................................................3

2.1 Pre-independence background and transition to independence................................3

2.2 Periodization.............................................................................................................6

3. Aggregate growth analysis.............................................................................................7

3.1 The growth record.....................................................................................................7

3.2 Explaining growth....................................................................................................9

3.3 Structural transformation of the economy..............................................................14

4. Evidence on markets, agents, and political economy...................................................15

4.1 Markets...................................................................................................................15

4.1.1 Cereals markets................................................................................................16

4.1.2 Financial markets.............................................................................................21

4.1.3 Labor markets..................................................................................................28

5. Agents...........................................................................................................................31

5.1 Farm households.....................................................................................................31

5.2 Manufacturing firms...............................................................................................43

6. Political economy.........................................................................................................51

6.1 Political economy to 1990......................................................................................53

6.2 Political economy in the most recent period...........................................................59

6.2.1 Trade liberalization..........................................................................................64

6.2.2 Exchange rate policy........................................................................................66

6.2.3 Budgetary policy..............................................................................................66


7. Conclusion....................................................................................................................68


List of Tables

Table 1: Basic economic and environmental indicators, 1960-97

Table 2: Set-up of the cereal markets, 1960-2002

Table 3: Indicators of savings and credit, banking system, 1960-97

Table 4: Indicators of performance of the formal financial sector, 1973-1996

Table 5: Sectoral destination of bank credit, Burkina Faso, 1985-97

Table 6: Microfinance data, Burkina Faso, 1993-95

Burkina Faso Chapter 20 page 1

1. Introduction

This paper is an account of the growth history of Burkina over the past forty years. The

paper draws on recent advances in the literature by combining conventional (factor

accumulation) and non-conventional (institutions and interactions among actors)

determinants in understanding how growth has proceeded, and the alternative path it

could have followed had the key non-conventional factors operated differently. Our

analysis does indeed suggest that periods where both economic and political

liberalization prevailed have experienced both more robust and steadier growth.

Burkina has conventionally been described as a poor, landlocked country with

few natural resources, and therefore as lacking significant prospects for growth. Indeed,

the country is mostly situated in the semi-arid zone of the Sahel, 1000 km away from the

nearest seaport; and apart from low scale gold mining, has not been blessed by the

abundance of minerals as in some countries. Like a self-fulfilling prophecy, the country

has evolved along the path of mere subsistence for the greater part of its history since

independence from France in 1960. Policies have tended to conform to the notion of a

low-resource country, borrowing little from abroad and pursuing a balanced, low-level

budget throughout the first two decades following independence.

However, the 1990s and beyond have introduced a break from the traditional low-

level equilibrium economic performance. A new vision has emerged, and is being

reinforced, which considers market forces as the prime channel and the private sector as

the key shaper of change and economic growth. This new vision is therefore marked by

an increased liberalization of the economy that has affected trade and prices,


macroeconomic policies, the exchange rate, and the major sectors such as agriculture and

livestock.

To capture and interpret changes over time, we define three periods of analysis –

(a) 1960-82; (b) 1983-91, and (c) 1991-2002 – on the basis of major policy breaks. One

trait of each of the periods of analysis is the frequency of political shocks in the form of

strikes, banning of political activity, political arrests, attempted coups, and ultimately,

successful coups ousting the leaders. Macroeconomic performance also varied over these

three periods. The growth of real GDP per capita was both low and erratic during the first

period, with the growth rate averaging less than 1 percent per year during the immediate

post independence years. Growth during the second period was briefly stronger (2.18

percent over 1985-89), but the short length of that sub-period (5 years) limits robust

conclusions. Growth during the third period became stronger after the devaluation of the

currency in 1994, typically averaging 3 percent over 1998-2002.

This paper introduces new dimensions in analyzing Burkina’s economic

performance. Taking a political economy approach, the paper attempts to draw lessons

from the analysis of the interactions between micro agents, markets, and politics in

explaining growth outcomes. Previous studies of Burkina’s economic performance are

not only limited in number but also in scope of the investigation. Zagré (1994) is one of

the few accounts of Burkina’s economic performance in a historical perspective.

However, this account concentrates on event-type history rather than taking an analytical

view as in the present paper. Savadogo and Wetta (1992) analyzed the economic

performance of Burkina under the revolutionary years, stressing the adjusting nature of

the regime. However, this paper did not cover the entire spectrum of Burkina’s economic


history. One major work on economic performance and the factors that inhibit growth in

Burkina was carried out by the Ministry of Finance and a World Bank team (Burkina

Faso/World Bank 2001). This study clearly highlighted the main sectors to concentrate

on and the policies needed to promote growth in Burkina. A limitation of this study is the

lack of any consideration for what role interaction among different stakeholders could

have on policy choices and economic outcomes.

This paper first provides an overview of initial pre-independence conditions in

Burkina and a quantitative analysis of macro growth using regression and growth

accounting methods. We then analyze how adequate policies and environment can foster

growth, by relating sources of changes to markets performance, agents’ behavior and the

political economy interactions among actors. The third section concludes by stressing the

contribution of this case study to an overall understanding of the growth process in

Africa.

2. Growth experience

2.1 Pre-independence background and transition to independence

We look at key elements during colonial rule that had an impact on Burkina’s policy

options and performance after independence. Burkina’s population was estimated at 3.6

million in 1960 (the year of independence); its total land area was 274,000 km2. Eight

pre-independence conditions played a key role in shaping the future developments of the

country.


a. The colonial hesitation on the fate of the country. The land that is now known

as Burkina Faso was conquered by the French in 1896. The land became an official

French colony under the name Upper Volta in 1919. This colony was to have a very short

life, as in 1932 it was dismantled and shared between the French Sudan (Mali), Côte

d’Ivoire and Niger. In 1947, under pressure from nationalists, the colonial power was

forced to restore Upper Volta to its pre-1932 borders. This game of creation, deletion and

recreation is conventionally attributed to the country’s qualification as a non-

economically viable entity, partly due to the lack of readily exploitable natural resources.

Moreover, the country probably did not offer any particular strategic position within the

French African empire.

b. A weak natural resource base. Unlike many other colonies, no known major

mineral was discovered in the colony. Likewise, there was no major watercourse or

forest. Agriculture was mainly subsistence oriented; there was no major cash crop.

c. A country treated as a backyard for cheap labor. The French viewed the

Burkinabe as a hard working and dedicated labor force and exploited this resource in

building the infrastructure (railway, major roads) and agricultural foundations in

neighboring countries, in particular Côte d’Ivoire. For a long time, the country was

commonly to be referred to as ‘The land of people—Terre des Hommes’. Forced labor

was the main form of this labor input. Part of the nationalist struggle sought the abolition

of this forced labor, which occurred in 1948.

d. An infrastructure network essentially linking the country to the coastal

countries. During the colonial period, the major infrastructure construction was the

railroad linking Abidjan (Côte d’Ivoire) to Ouagadougou. The construction started in


1904 and ended in 1954. Because the country was split between three other colonies, its

three regions were considered as remote from the centers of decision (the headquarters of

the three colonies) and as a consequence received little budget allocation for roads

(Chambre de Commerce 1961).

e. A low level of school infrastructure and education output. In 1960, there were

384 primary schools (of which 113 private) for a total of 1196 classrooms, which catered

to 55,598 schoolchildren (30 percent female). There were only 11 secondary schools with

a student population of 2300, 8 technical schools housing 625 students (Chambre de

Commerce 1961).

f. A scarce supply of well educated leaders. Due to a lack of educational

infrastructure, the group that assumed power was not necessarily well qualified to lead.

g. A lack of powerful professional interest groups, such as the cocoa, coffee or tea

planters groups in other countries.

h. Dismal economic conditions at independence. At independence, the country

was characterized by severe economic and social deficits. Total GDP was estimated at F

CFA 34 billion, the equivalent of $40 per capita, which was, at the time, the lowest in

French speaking Africa. The production sector was dominated by hand tool farmers who

made up 95 percent of the population. The number of salary and wage earners was

estimated at 25,000, the entire stock of the educated labor force in the country. Among

the existing 40 manufacturing firms, three employed more than 100 workers. Because of

these poor economic opportunities, many Burkinabè sought employment abroad: an

estimated 400,000 Burkinabe worked in plantations in Côte d’Ivoire and Ghana.


2.2 Periodization

In the rest of the paper, we use a combination of political and economic facts to define

three periods during which the main drivers of growth are likely to have significantly

differed:

Period 1: 1960-1982

Period 2: 1983-1990

Period 3: 1991-2002

The first period is characterized by political instability of which the key features were

three coups (1966, 1980, 1982), and state interventionism throughout. The ruling class

that came to power in 1960 was characterized by a lack of vision, abuse of power and

resource mismanagement. This led to the 1966 coup. One particularity of this coup was

that it was started by a popular uprising, rather than the army, which demanded the

departure of the president. The new regime at first enjoyed cooperation from labor

unions and political parties on an agreed upon agenda to restore the economic

fundamentals after which power transfer to a civilian rule was to take place. However,

power corrupts, and the regime was eventually overcome by a temptation to maintain its

grip on power and tried to establish a one-party system. The emerging gaps between the

major players led to a military takeover in November 1980. The new regime however

failed to bring about the needed changes and instead became corrupt. This together with

the existence of an ideological divide within the Army (leftist young officers vs.

conservative older officers) led to a takeover by the young officers in November 1982.


The dominant economic paradigm during this entire first period was centered on state

interventionism, in the absence of a dynamic private sector.

The second period was characterized by a socialist type regime, which was

instituted following a radical coup in August 1983. One major characteristic of the

regime was the exertion of state power in most activities. Economic development was to

be achieved through popular adhesion and self-reliance. State capitalism was the

economic ideology. This regime embarked on profound reforms that eventually led to

population fatigue on one hand, while on the other hand abuse of power by the

instruments (CDRs) led to popular mistrust. The outcome was a bloody coup in October

1987 during which the charismatic leader, Thomas Sankara, was killed: despite his death,

however, the revolutionary mood continued until 1990.

The third period was marked by the advent of political liberalization with the

adoption of a new constitution in June 1991. This era saw the organization of multiple

elections (head of state, parliamentarians, local governance, each twice). The counterpart

of this political democratization, on the economic side, was the adoption of an orthodox

World Bank/IMF adjustment program.

3. Aggregate growth analysis

3.1 The growth record

Macroeconomic performance varied over the three periods defined above, going from

low and erratic to higher and more robust rates (Table 1). The growth of real GDP per

capita was both low and erratic over the half-decades of the 1960-82 period. Right after


independence, the growth rate averaged less than one percent per year. The first few

years following the first coup (1965-69) were characterized by a relatively more robust

growth, but this was quickly followed by slackening over the 1970-74 period. Growth

picked up again following the drought year of 1973, but slackened one half decade later

to a near stagnation. These ups and downs are the outcomes of political and

environmental instability. Thus, the 1970-74 period includes both the 1973 drought and

the 1970 ‘coup d’Etat de Palais,’ during which military rule was hardened and the

civilian role declined. The 1980-84 period was both one of severe drought (1984) and

three coups (1980, 1982 and 1983). The policy discontinuity created by such frequent

political upheavals and the ensuing impossibility of accumulating policy knowledge are

key factors of poor economic performance. These instabilities also affect investment by

creating an uncertain and risky environment.

**Insert Table 1 about here**

Growth during the second period was stronger, but the short length of the period

(5 years) limits robust conclusions. Some of the policies carried out during this period

had positive impacts on growth, including the fertilizer subsidies to cotton farmers, the

accelerated settlement in the zones formerly affected by river blindness, and the urban

housing policies. (These results are against a background of depressed private

investment.)


The third period can be decomposed into the pre-devaluation (1991-94) and post-

devaluation sub-periods. Growth was significantly stronger during the second sub-period.

The first sub-period represents the beginning of liberalization and can be seen as a

learning period as well as a period where the state was to adhere to the new philosophy.

The devaluation unleashed economic forces kept in check by the overvalued exchange

rate. The main examples of success are livestock and cotton.

3.2 Explaining growth

To formally investigate the factors that explained growth, we use growth accounting

results from Sacerdoti et al (1998) adapted to Burkina Faso (Burkina Faso/World Bank

2001) to assess the role of physical and human capital in growth. The study was designed

with the objective to test the impact of human capital on growth in selected countries of

sub-Saharan Africa using data from 1970 to 1996. The following equation was estimated

for Burkina, with a star indicating 10% significance:

ygr = 0.456 + 0.322* kgr + 0.033 hgr (1)

where the dependent variable is the growth of real GDP per worker, kgr is the growth rate

of physical capital per worker and hgr is the growth rate of the stock of human capital.

The regression results show that the coefficient of kgr is significant at 10 percent, while

the coefficient of hgr is non-significant.


Using the above equation as a yardstick, the contribution of physical capital to per

capita GDP growth is 0.32, close to the Collins-Bosworth benchmark of 0.35. This is ten

times the contribution of human capital, at identical growth rates. Given the difference in

the coefficients, physical capital appears to have contributed to growth more than human

capital over the period 1960-97.

Human capital.

The negligible contribution of human capital may be associated with random

measurement error in the growth of human capital (which tends to bias the coefficient

towards zero) and/or with a tendency to systematically overestimate human capital

accumulation. This low contribution can also be associated with the possibility that

human capital is badly misallocated, e.g. it is concentrated in the civil service and state

enterprise sector where productivity is very low.

Other than these statistical and selection problems, alternative hypotheses are

relevant. One notes that while in the newly industrialized economies and in the developed

world, human capital has played an important role in economic progress, such is not the

case for most of SSA including Burkina. The stock of human capital proxied by the

number of years of education is particularly low for Burkina. A randomly selected

individual from the active population had 0.18 years of primary schooling in 1970, and

0.39 years in 1997 (Burkina Faso/World Bank 2001). By aggregating the different levels

of education, the total stock of education was estimated at 0.45 years in 1997, meaning

that the average active individual had less than 6 months of schooling. This compares

with 3 years in Ghana and in Cameroon, and 0.76 years in Mali (Sacerdoti et al. 1998).


At such low levels, it may not be surprising that the impact of the human capital variable

on growth is insignificant both economically and statistically.

Other components of human capital did not fare better. First, poverty is a

pervasive problem. Data show that up to 50 percent of the Burkina population live below

the national poverty line defined at $75 per year (based on the 1995 exchange rate). The

observed income growth of 0.8 percent over 1975-1996 and 3 percent over 1995-98

(Burkina Faso/World Bank 2001) is not enough to curb this trend. Second, the health

status of the population is a major preoccupation. Life expectancy at birth is estimated at

46 years, and progress seems to be eroded by the advent of AIDS.

Physical capital.

Although more significant than than the role of human capital, the role of physical capital

in the case of Burkina is limited by two factors.

First is the problem of low capital productivity. When relating the rate of

investment to the rate of growth of real GDP (5 percent), it is apparent that capital is

characterized by a fairly low productivity. The estimated incremental capital output ratio

(ICOR which is the amount of capital needed to produce one additional unit of output)

remains high with a value of 5 in 1997, although decreasing from 7 in 1994. The implied

average productivity of capital (20 percent in 1997) is quite low and cannot generate

growth levels that can push the economy up rapidly. For example, the fast growing

Asian or Latin American economies (Thailand, Korea, Malaysia, or Chile) have attained

much lower capital-output ratios of the order of 3.5 to 4 needed to reach two-digit growth


figures. This low productivity of investment can be explained, in part, by a large public

component deemed to have lower productivity. Public investment grew progressively

from 22 percent of gross domestic investment in 1990 to 43 percent in 1997. Public

investment is largely foreign aid-dependent, and evidence suggests that concessional

resources are not managed with the same rigor as private funds (e.g. Savadogo 1999).

Second is a problem of insufficient capital accumulation. Data show that the rate

of investment has increased over time, from 9 percent in the 1960s to 25 percent in the

mid nineties. This effort to invest ranks higher than in many Sub-Saharan African

countries. However, this effort is well below that recorded in the fast growing Asian

countries, mostly because of large differences in domestic saving rates. In the Burkina

case, most of the public component of investment is financed through foreign aid. In fact,

aid financed 60 to 80 percent of gross domestic investment over the eighties and nineties

(Savadogo 1999). Available figures suggest that the gross domestic saving rates have

ranged between 1 percent in the sixties and seventies and 9 percent of GDP in the

nineties. These rates are depressingly low compared to rates of 33-36 percent in Thailand

and Korea, which, combined with higher factor productivity have spurred double-digit

growth in these countries over the last three decades as opposed to the near stagnation in

Sub-Saharan Africa. Agents’ behaviour and institutional factors are major determinants

in explaining the macro figures. As noted, the performance of investment is largely due to

foreign intervention (foreign aid). Indeed, over 70 percent of public investment (which is

43 percent of total investment) is financed by foreign sources (Burkina Faso/World Bank

2001). One may wonder whether higher domestic saving rates under such circumstances

would have translated into higher investment rates. The answer depends on the


substitutability between domestic and foreign originated funds, for which little evidence

is available for Burkina.

Total factor productivity.

The growth of total factor productivity (TFP) was estimated at –0.20 over the 1970-97

period (Burkina Faso/World Bank 2001). Countries such as Kenya or Mauritius have

experienced TFP increases of close to 2. In other words, holding everything constant,

Burkina missed the opportunity to add an extra 2 points to its observed growth rate, had

the country taken the appropriate steps to achieve a better allocation of factors of

production. Several factors combine to explain the negative TFP growth. These factors

prevent efficiency gains at the firm level and also act negatively on the accumulation of

physical inputs. The first is the lack of financial depth, indicated by the monetary ratios,

which has not improved significantly over time. In the sixties, the ratio of M2 to GDP

was 6.9 percent, increasing to 14 percent in the eighties and then 20 percent in the

nineties. This low financial depth is the consequence of a weakly functioning credit

system as total credit has evolved only slowly over time partially due to policy.

A second group of factors include inappropriate fiscal policy, the fixed exchange

rate regime with the ensuing frequent overvaluation of the currency, a legal and

regulatory environment not conducive to business development (Collier and Gunning

1997), and pervasive state interventionism characterized by the dominance of monopolies

and oligopolies in the production sector (Burkina Faso/World Bank 2001). Likewise, the

predominance of foreign concessional resources in public investment may limit the

search for innovative management.


3.3 Structural transformation of the economy.

The data in Table 1 suggests superficial changes in the sectoral decomposition of GDP:

services have become predominant over time. Agriculture declined from 43 percent over

the 1970-74 half-decade to 33 percent over 1990-1997, industry decreased from 33 to 27

percent while the services increased from 25 to 41 percent. However, there appears to

have been no significant qualitative transformation of the economy. An estimated two-

thirds of GDP is from the informal sector (including agriculture), which is characterized

by low productivity due to the low skill level of labor and the low use of productive

technologies (Burkina Faso/World Bank 2001). Agriculture employs 80-85 percent of the

active population, yet makes up only a third of GDP, implying very low average labor

productivity in that sector. The available data suggest that labor productivity in

agriculture was 15 to 27 times lower than in the non-agricultural sector over the 1970-90

period (Burkina Faso/World Bank 2001). Weak agriculture together with the stagnation

or regression of industry is a key sign of the lack of a qualitative structural transformation

of the economy over time, probably the result of severe structural and institutional factors

that impeded the formation of a formal modern sector. One potential explanatory factor

of the weak industry is the predominance of parastatal monopolies or oligopolies,

characterized by rent seeking behavior as well as little incentive to cut cost or enhance

productivity.


4. Evidence on markets, agents, and political economy

We now use evidence on markets, agents and political economy to explain and interpret

the aggregative outcomes analyzed above.

4.1 Markets

The market is where supply and demand meet and interact to yield outcomes for the

different agents. When markets function correctly and generate meaningful price signals,

they become an efficient mechanism for allocating resources. A market cannot function

well without the appropriate institutional and legal foundations, which lay the ground for

the enforcement of property rights and contracts. A well functioning market also requires

good infrastructure (roads, communications) and a reliable and readily available

information system based on prices and quantities. When some of the above components

are missing, markets are unlikely to allocate resources efficiently in a way that promotes

growth.

We examine the impact of two categories of markets: products and factors. For

product markets, we concentrate on agriculture, and within agriculture on cereals. Cereals

are staple foods and also important domestic trade components through urban rural

interchanges. On the factor side, we address two important markets. First, we analyze the

financial market, where we distinguish the formal official market from the informal.

Access to financial services such as credit, plays a role in productivity gains and in

consumption smoothing for rural households. Second, we address the labor market,

where we separate the formal from the informal labor market, and concentrate on labor


legislation and the implied rigidities that limit surplus labor absorption. We also look at

the role of migrant labor on the equilibrium of the domestic labor market.

4.1.1 Cereals markets

It is increasingly clear that African product markets are constrained by a variety of

transactions costs, promoting long term over spot trade relationships (Fafchamps 1999,

cited in Oyejide 2000). Within Burkina Faso, there have been significant evolutions in

the functioning of markets over the three sub-periods of analysis, as shown in Table 2.


The first period (1960-82) has been characterized by the government's hesitation

on the appropriate marketing system, private, public or mixed, to handle staple food

products. Mistrust of the private system has, at times, led to the involvement of the state

itself in commercialization as an attempt to substitute for or control the private sector. At

other times, the private sector was authorized to play a larger role.

The second period (1983-90) was marked by an even more profound involvement

of the state in cereals marketing. The different forms of control included the imposition

of trade licenses, the request for traders to be institutionally affiliated, the spatial

restriction of trade, and sanctions.

During the third period (1991-2002), the institutional environment of trade

underwent profound changes. The government adopted its first structural adjustment


program with the IMF and the World Bank. The state progressively withdrew from direct

interventions in markets and the handling of products. Its role became limited to

regulating the overall system, and to providing information on prices to the various

private actors. An important development was the institution of the market information

system (SIM).

Structure of cereals markets.

Market structure has evolved over time since independence. Two types of actors, private

and public have, at one time or another, been active in cereal markets. During the first

period of analysis, three setups have prevailed based on the combination of private and

public actors. During the first ten years after independence (1960-70), cereal trade was

free, entirely carried out by the private sector. State intervention in the form of the

handling of food aid started following the drought period of the mid-seventies. Thus,

from 1970-74, OFNACER (the Cereal Office) handled food aid while regular trade was

carried out by private traders. Over the 1974-78 period, private trade became illegal, and

the state exerted a bilateral monopoly on cereal trade through the ORDs (Rural

Development Organisms) and OFNACER. Finally, private traders were once again

allowed to operate over the 1978-82 period, and a dual commercialisation system

prevailed during this four year-period. During this first period, the number of private

traders was limited, in particular in some of the remote regions (the East). Most traders

were also concentrated in the then major cities (Chambre de Commerce 1961).

The major actors operating during the second period of analysis are OFNACER

and private traders (Sherman et al. 1987). Due to the severe 1973 and 1984 droughts,


long distance trade (between surplus and deficit regions) became significant during the

second period.

During the third period, the number of private traders had significantly increased

(Bassolé 2000). The resulting increased competition pushed up producer prices, in

particular in surplus areas. Long distance trade was facilitated given the information on

prices made available to traders by the market information system (SIM). Traders

however still faced many structural constraints including weak access to credit

(particularly from banks), pervasive taxation, and weak road infrastructure inflating

operating costs.

Conduct and performance of cereals markets.

As Burkina moved from official trading to a purely private system during the period of

analysis, there was a notable improvement in market performance. Performance refers to

the outcome emerging from market functioning, and includes the level of prices paid by

consumers and its time/space variations, the level of margins pocketed by traders, and the

volumes of trade. During the first period, the total volume of cereals traded (sorghum,

millet and maize) was estimated at 15 percent of total production, i.e. about 155,000 MT

every year.

The two-tiered structure of the market has likely depressed prices received by the

producer, defeating the primary purpose of OFNACER to support farm prices. First,

OFNACER used private traders as intermediaries to buy the grain from the producers,

due to insufficient manpower or trucks. The procurement price from these traders was the


official producer price, plus an allocation for transport cost (Sherman et al. 1987). This

suggests that the traders were forced to procure grain at much less than the official

producer price. Second, OFNACER also handled food aid, resold at the ongoing

OFNACER price for domestic cereals (except for lower quality food aid that was sold

with a discount). In this way, foreign grain contributed to displace national production,

and with large quantities flowing in, the official handling of cereal trade has likely

depressed prices and negatively affected the producers. Hence, the existence of an official

market may have benefited consumers and hurt producers, creating disincentives to

produce beyond subsistence needs.

During the second period, the negative impacts of the official marketing system

persisted and were reinforced by the heavier involvement of the state. As already

mentioned above, producers were the main losers in this system, while large traders,

urban consumers and cereal banks were among the winners (Sherman et al. 1987). Five

factors contributed to the negative impacts on market performance. First, the

management of food aid continued to exert downward pressure on domestic producer

prices, being an addition to local production and thus shifting the supply curve to the

right at given demand conditions. Second, OFNACER set official prices both for

consumers and producers, but this policy did not guarantee that the official producer price

reflected production conditions. In fact, this price was generally lower than what private

traders offered, leading to a parallel market where traders would procure grain from

OFNACER's stocks, which was intended for consumers, and resell it at the prevailing

market price to consumers. Third, OFNACER's buying price set a ceiling reference price

to private traders, who would impose the low price to small producers in deficit zones


when supply and demand conditions obviously warranted a higher price. Fourth, the pan-

territorial pricing mode of OFNACER took away from the market system one of its key

roles of moving goods from regions of excess supply to regions of excess demand.

Indeed with this regulation, the cereal market lost one of its dynamic components. Fifth

and last, OFNACER could not succeed in the contradictory mission of supporting farm

prices and keeping down consumer prices.

During the last period, markets became both better integrated and more efficient.

According to recent data (Bassolé 2000), traders and cereal producers were all vying to

take advantage of the liberalized market conditions. Producers appeared to act more

aggressively rather than play the passive end of the exchange system. This is particularly

true in the surplus zones, where producers have learned to take advantage of time

variation in prices and how to choose clients. They have been aided by non-governmental

organizations that try to disseminate new management ideas, in particular the notions of

arbitrage and market power, whereby farmers can be empowered by banding together

against traders. Consequently, farmers in surplus zones have benefited from higher

prices during this liberalization period. The liberalization did not significantly modify

traders' behaviour regarding stockpiling. In a liberalized system, assuming that

speculative traders are involved in temporal price arbitrage, it would be expected that

stocks would accumulate at harvest waiting for the lean season to be resold at higher

margins. Such behaviour does not seem to be implied by available data. This is because

inventory accumulation is financially costly and traders (wholesalers) usually lack the

rolling funds to accumulate. Another factor that limits speculation is the possibility that

the state food security agency, SONAGESS (a mutation of OFNACER during the


liberalization period), releases its stocks during the lean season, thus depressing prices

and annihilating any speculative expectation. Spatial integration of markets improved

following liberalization, as reflected by lower price differences between markets.

Typically, spatial gross margins varied between 9 and 13 percent, which are not

excessive. Formal tests of cointegration confirm that prices were more consistent with

each other during the period of liberalized trade than the previous period. These tests also

indicate that the correlation between prices is more temporally stable than was the case

prior to the liberalization of trade (Bassolé 2000).

4.1.2 Financial markets

Sustained growth cannot be achieved without the support of a developed and effective

financial system. A sound financial system is in particular essential for the emergence

and development of small and medium-size enterprises, often shown to be the most

dynamic and competitive units in developing countries (Burkina Faso/World Bank 2001).

The financial system in Burkina is comprised of two major components, the formal and

informal subsystems. Broadly, this division corresponds to an urban-rural divide. In

general, the informal financial system is a response to the inadequacy of the formal

system, at least for some segments of the population (Oyejide 2000). The formal system

includes the commercial banks and other modern financial institutions under the

supervision of the Central Bank (BCEAO). This component is the primary channel of

funds and caters to the needs of the modern sector commerce and manufacturing

enterprises. The informal component includes the more or less formalized decentralized

microfinance system and the purely informal sector of rotating credit or tontines and


individual loan givers. We analyze the cotton credit system as a separate market given the

particular role of cotton in the economy.

Structure of financial markets.

The defining characteristic of the financial market in Burkina is the predominance of the

modern financial system, as in all other UEMOA (Union Economique et Monetaire

Ouest-Afrique) countries where the formal banking system channels 96 percent of money

deposits. The modern financial market in Burkina is characterized by its oligopolistic

nature, although the number of banks significantly increased during the last period (from

4 to 7). Next to this commercial banking system, the microfinance system caters to the

needs of most small farmers and the urban small-scale informal sector. The microfinance

system has both a vertical and a horizontal structure. Horizontally, there are three types of

institutions: (1) savings and loans cooperatives (Coopec); (2) credit institutions, which do

not require upfront deposits in order to receive credit; and (3) organizations for which

credit is an accessory component. Coopecs constitute 78 percent of the geographic

coverage of the loan activities. The vertical structure of the Coopec system has, at its

base, the Caisse populaire (urban areas) or Caisse villageoise (village level). These

Caisses aggregate on a geographic basis into Unions, which in turn aggregate into

Federations at the national level. The total number of Caisses increased from 342 in 1993

to 778 in 1995 (BIT/BCEAO1997).


Performance of the formal financial market.

During the first period, the indicators of performance of the banking system were weak.

The financial depth (M2/GDP) was estimated at 9 percent at the start of the period,

increasing to 16 percent in the later part of the period (Table 3). The indicator of long

term savings measured by the ratio of time deposits to the money supply was only 6

percent over 1960-74, increasing to 18 percent over 1975-79. The averages for UEMOA

were 14 percent and 20 percent for the two sub-periods (BCEAO, 2000). These low

savings ratios placed a major constraint on the medium and long-term credit needs of the

economy. To explain the low saving ratios, one notes that for Burkina, the real deposit

rates were negative throughout most of the seventies (-2 percent in 1973, worsening to -

24 percent in 1977, and on average -2.38 over 1970-82), largely due to the inflationary

pressure that followed both the food and the oil crises (Table 4 and Burkina Faso/World

Bank 2001, p.124). Likewise, negative real deposit rates were observed for the other

union members (BCEAO, 2000). Econometric tests suggested a positive but marginally

significant relation between the real interest rate and savings for Burkina, confirming the

presence of financial repression throughout the seventies (BCEAO 2000, p. 68). The low

interest rate in addition to other factors such as risk, must have also played a role in the

observed capital flight, cumulating in 1982 to 222 billion CFA F for Burkina (Table 4)

and 4812 billion for Côte d'Ivoire (BCEAO 2000, p.73). Given this constraint in the

supply of long-term savings, there was a predominance of short-term credit. Thus, the

modern banking system did not meet the needs of long-term investors.

In the second period, the state intervened heavily in the banking arena. The

overall performance of the banking system remained weak, as the financial depth of the


system remained low, the ratio of M2 to GDP averaging 19 percent during the 1980-89

period (Table 3). Real interest rates, a product of domestic inflation rates and regional

UMOA (Union Monetaire Ouest- Africaine) policies, remained negative during the first

years of the period (1982-83) but became positive from 1984 to 1990 (Table 4). It is to be

noted that UMOA had adopted a policy of low nominal rates throughout the 1970s to

1983 in order to stimulate investment to protect infant industries. The consequence of this

policy was to provoke capital flight during the ensuing period, i.e. our second period of

analysis. Capital flight was estimated at 60 billion CFA F or 11 percent of GDP in 1985,

and a cumulated total of about 210 billion from 1982 to 1990 (Table 4).

**Insert Tables 3 and 4 about here**

The third period is marked by intense activity in the area of modern finance. On

one hand, the reform undertaken at the end of the previous period played out at the

beginning of the third period. On the other hand, vigorous measures, including the

devaluation of the currency in 1994 and the overall liberalization of the system, were

adopted. These measures included the the restructuring of the banking system in the spirit

of structural adjustment policies. Non-performing operations initiated by the banks

during the previous periods were “cleaned” during the current period.

The under-performance of the banking system in the beginning of the third

period, was a result of the adverse policies adopted in the previous periods. During the

first three years (1990-93) the total credit to the economy decreased by an average 10


percent (Table 3). However, credit increased by 19 percent between 1994 and 1997, due

to the new policies in the wake of the devaluation of the CFA F in 1994. Short term credit

continued to dominate the banking system, as medium and long term credit was only 30

percent of total credit between 1994 and 1997 and displayed both instability and a

relative decrease compared to the previous period. While short and medium-term credit

mainly financed manufacturing firms, wholesale trade and construction, long-term credit

mainly went to the insurance and real estate sector (Table 5). In 1994 and 1997, this

sector absorbed three quarters of total long term credit to the economy. As can be noted,

the primary sector, which employed most people and contributed to more than one third

of GDP, received little medium and long term credit, suggesting that risk avoidance was

instrumental in the allocation of credit.


Performance of the microfinance market.

During the first and second period, the microfinance sector remained unstructured, as the

government did not initiate steps to provide a legal or institutional framework to regulate

the sector. The system was essentially a deposit-loan system whereby only depositors

were entitled to credit. During the last period, the monetary union (UEMOA) introduced

a legal code regulating the system, the PARMEC law (Projet d’Appui à la

Réglementation sur les Mutuelles d’Épargne et de Crédit). This law sought to provide


guarantees for depositors, enhance the security of the operations, and introduce prudential

laws. In Burkina, this led to stabilization of the savings and loans institutions.

The data suggest that elements of moral hazard were minimized in the system, as

the repayment rates averaged 97 percent in 1995. In 1995, the total volume of credit

given by these institutions was 3.9 billion FCFA to 160,000 beneficiaries, i.e. an average

of 25,000 FCFA per transaction (Table 6). Meanwhile, the average deposit was 27,000

CFA F in 1993 and 43,400 in 1995. Data for UEMOA countries show that the median

borrowing interest rates vary between 15 and 18 percent (BIT/BCEAO 1997). However,

the presence in the microfinance sector of subsidized initiatives lending at zero or low

interest rates continued to generate severe distortions in their sector.


Performance of the cotton credit system.

Cotton farmers faced an effective financial market managed by the cotton development

company SOFITEX. The cotton credit system is developed around the concept of group

loans from SOFITEX to farmers, in a triangular setup. SOFITEX itself received loans

from BCEAO to finance the importation of inputs (NPK and urea), and these inputs were

loaned to farmers, with the selling of cotton by the latter serving as collateral.

The second period saw the emergence and the development of the so-called

farmers’s bank, CNCA. CNCA was a central piece of the credit system targeting farmers,

especially cotton farmers. Credit policy was characterized by a high level of subsidization


during most part of the period. Farmers paid only 40 percent of the fertilizer price in

1981, but the subsidy was progressively phased out until its elimination in 1987 under

pressure from the World Bank (Savadogo and Wetta 1992). The financing of cotton

production significantly increased during this revolutionary period.

One major development during the period was the breakdown of the group-based

credit system. This breakdown was due to a strong element of moral hazard inherent in

this large group system. Typically, while the village farmers group was collectively

responsible for the input credit, individual farmers received inputs according to needs

expressed months earlier. However, there was no mechanism for ensuring that the

quantities of NPK and urea received were ultimately used on cotton. In fact, part of these

inputs could be even sold for fast cash. As a result, increasing numbers of individuals

defaulted within the group, putting the burden on the good producers. As this scenario

repeated, the whole group eventually defaulted, and as the rates of group default

increased, the credit system became unsustainable and needed revamping. This occurred

during the next period of analysis, when Cotton Producers Groups (GPCs) were formed

in lieu of the traditional village grouping.

Before the breakdown of the system, performance was spectacular. The

combination of incentive output price policies, coupled with the fertilizer subsidy policy,

boosted cotton production dramatically between 1983 and 1988, from 79,000 MT to

176,000 MT (World Bank Economic memorandum, 1989). During this period, Burkina

became one of the major cotton growers in the region.

The third period started with the cleanup in the group lending system, which led

to a better performing credit system. The cleanup included the adoption of a peer


monitoring type mechanism, where the group size was both smaller and cotton oriented,

and the members were selected based on mutual trust. The GPC system is pyramidal,

with village GPCs aggregating at the department, provincial and national levels. The

UNPC-B is now the labor union equivalent of cotton producers, participating both in

price setting as well as taking shares in the cotton parastatal. The default rate has

decreased in a substantial way following the new measures.

Cotton production increased tremendously between the beginning and the end of

the period (2002): production increased fourfold, from a trough of 119,000 MT in 1992

when the system experienced its most severe problems, to about 400,000 MT. One of the

major drivers of this change was the increase in yields from less than a ton per ha to 1.3

MT per ha due to the improved credit scheme and more favorable pricing, through an

improved input (fertilizer) management.

4.1.3 Labor markets

Understanding the functioning of the labor market is important in explaining

unemployment. An efficient labor market should lead to low unemployment. Segmented

labor markets or sticky wages are often the causes of unemployment.

The labor market in Burkina is usually analyzed by reference to its dualistic nature:

formal vs. informal or rural vs. urban. Here we contrast the formal and informal segments

of the urban labor market.


The formal urban labor market.

This market includes public and private components. Both public and private markets

have been characterized by wage rigidity throughout the period of analysis. Both markets

are also characterized by a state of chronic disequilibrium, as supply of labor always

exceeds demand. Wage rigidity is one cause of this disequilibrium. Labor laws are also a

cause for disequilibrium. In particular, laws that tend to overprotect workers prevent

firing as a labor adjustment mechanism. Employers are thus reluctant to hire under such

conditions.

The formal labor market was inadequate in resource allocation in the first period.

Public entities and the modern segment of the private sector were the primary sources of

demand for formal labor. Wages were regulated and rigid because of labor legislation and

union actions. Because the government embarked on the so-called "voltaisation of

cadres" (the country was then known as Upper Volta), the supply of qualified labor fell

short of the demand. Very few Burkinabè graduated from the University or high school at

the time. This led to salary levels sometimes uncorrelated with worker productivity. This

situation changed under the Garango management, which effectively reduced both

nominal and real salary rates. The Labor Unions that played a major role in the downfall

of the first president of the republic in 1966, initially went along with the freezing of

salaries but soon went on strike for salary increases following restructuration of the

finances.

The subsequent periods did not appear to face an overall shortage of well-

educated workers. Instead, they were characterized, if anything, by an excess supply of

skilled labor. For instance, only about 20 percent of all applicants for public positions


were hired during the third period. Meanwhile, however, the formal labor market did not

appear to channel workers very efficiently to sectors with excess demand; for example,

there is evidence that public entities in the education and health sectors experienced

staffing shortages.

The urban informal labor market.

The informal urban market became an issue only toward the end of the first period as a

consequence of the increased urbanization. During the second period, new developments

occurred. The informal market attracts workers that usually do not have any other

employment choice, in the formal private or public segments of the market. The

predominance of self- and family-related employment operating outside of labor

regulations made the market and wages flexible. During the third period, the informal

labor market was the major source of employment in urban areas. It gained impetus

during this period because of accelerated urbanization partly due to increased rural to

urban migration and the retrenchment of parastatal workers. Development occurred in

many areas, including the informal food industry (prepared food sold on streets), general

commerce, the beverage industry, arts and crafts, metal work, commerce of imported

second hand products (clothing, shoes), motor repair services, and fruit and vegetables

commerce. An estimated 87 percent of the urban workforce was operating in the informal

sector during the 1990s.

Liberalization has also generated various activities in trade and transport. The

lifting of the state monopoly on urban and inter-urban transportation has generated a

proliferation of private transportation companies. Lifting the monopoly on the


importation of cars, mopeds and bicycles has spurred the importation of such items by

numerous actors. The observed increase in the share of the services in GDP to over 40

percent is an illustration of these new developments.

5. Agents

Agents' behavior is primarily conditioned on self interest. But in most SSA countries, the

surrounding infrastructure, policy and institutional settings are heavy constraints on

economic actors (Collier and Gunning 1997). In Burkina, rural farm-households are the

key agents in growth, making up 80 percent of the labor force. Manufacturing firms,

although not particularly dynamic in Burkina’s experience, are channels through which

rapid innovation could occur. This section will look at these two types of agents and

document their contribution to growth or stagnation through their interaction with the

prevailing economic environment.

5.1 Farm households

Agriculture makes up one third of GDP and therefore one percentage point of growth in

the agriculture sector adds roughly 0.33 percentage points to overall GDP growth. Farm

households, who are the major agricultural producers, play a key role in explaining

growth in Burkina. We sub-classify farm-households into food crops farmers and cotton

farmers. More than half of farms (52 percent) operate on 3 ha or less and 76 percent on 5

ha or less (DSAP/MARA 1994). Farmers rain-feed crops, and irrigation is minimal,


comprising 17,000 ha out of a total potential of 160,000 ha. Small farmers predominate,

cultivating an average of 0.4 ha per active farmer.

The environment faced by farm households.

We characterize farm households on the basis of soil, climate, demography, land issues,

agricultural policies and neighborhood. Burkina has a short growing season. During the

first period of analysis, rainfall varied from 1,300 mm in the southwest to 500 mm in the

northeast, and is distributed over 83 days in the southwest, 69 days in the center and 42

days in the northeast. As a consequence, wide fluctuations of cereal yield (of up to 50%)

are recorded from one year to the next. Intense evaporation tends to compound the

insufficient and irregular rainfall, and also increases the cost of irrigation (Ediafric 1971).

The natural conditions did not change in any significant way during the second or third

periods. Soils continue to suffer from many problems, including crusting, low organic

matter content and lack of phosphorous and nitrogen; moreover, the continuous

cultivation caused by the increasing population and the absence of a proper restitution of

nutrients leads to soil mining and further deterioration. The traditional bush-fallow

system, which was successful in restoring soil fertility, is gradually disappearing, in

particular in the highly populated Central Plateau (Sanders et al. 1996).

Population is concentrated on the least fertile soils, up to 80 persons per square

km on the Central Plateau, which houses half of the population, but is comprised of only

about one quarter of total land area. Over the entire period of analysis, population was

characterized by a high dependency ratio estimated at 48 percent during the first period

(Ediafric 1971), increasing to above 50 percent during subsequent periods. This high


dependency ratio worked against growth by emphasizing consumption over investment.

In 1968, consumption accounted for 84 percent of GDP, or 76.9 billion CFA F out of

90.9 billion and capital accumulation was only 6.7 billion, or 7 percent of GDP (Ediafric

1971, p. 31). This proportion did not become more favourable in subsequent periods.

Land reclamation: the onchocerciasis program.

River blindness control was one of the principal development priorities that emerged

from the 1968-73 drought (McMillan and Savadogo 1996). By controlling the vector of

transmission of the disease, the onchocerciasis program freed land area that became

available for cropping. The second period of analysis was marked by the accelerated

resettlement of farmers from the Central plateau to these areas newly freed from

onchocerciasis. This expanded resettlement contributed to broadening the production

space by putting fertile land to use, and was accompanied by an accelerated adoption of

improved technologies (see McMillan, Nana and Savadogo 1993). A total of 47,400

square kilometers were made available for farming.

Agricultural policies.

Early on, the basic elements related to agricultural development were controlled by the

government. The official orientation was based on a firm tenet as to the role of

agriculture and the appropriate sequences towards development: the first priority was to

produce enough staple foods to cover national needs; and effort was thereafter to be

placed on export crops to raise farm income (Chambre de Commerce 1961, p. 32). Early


on, the authorities pinpointed the need to secure water by building small dams on as

many sites as possible. Also, soil conservation work was seen as essential. The role of

agricultural research in the production of improved varieties and the introduction of

better cultivation practices was recognized. Early results of agronomic trials showed

large prospects for groundnuts, with a value cost ratio—(VCR or the ratio of net earnings

over the cost of additional inputs) reaching 7.2. For sorghum, highest VCRs ran around

2.0, and for cotton well below 2, the minimum norm usually considered as necessary for

adoption. There was general optimism in policy circles that doubling the production over

a short time horizon was feasible given the existing technologies, as long as they were

fully adopted by farmers (Chambre de Commerce 1961, p.39). To back its vision, the

government allocated around 20 percent of total budget to agriculture from 1976 to 1982,

of which 5-6 percent was allocated to equipment (Lecaillon and Morrisson 1985).

Government also initiated actions targeted to specific crops. Until 1970, the state’s

role in food crop intervention was limited to setting a producer price floor and a

consumer price ceiling but the government had no mechanism to enforce its official

producer price; market forces regulated prices. In 1970, OFNACER was created to

stabilize consumer prices in order to protect the consumer against what was deemed as

traders’ exploitive behaviour. From 1970/71 to 1972/74, OFNACER handled only 1

percent of total trade of local production (i.e. 2,000 MT per year); OFNACER mainly

handled imported cereals under title food aid or other concessional imports. In 1974,

ORDs were granted monopsony rights to purchase from farmers, and OFNACER

monopoly rights to sell to consumers. ORDs could buy only half of anticipated purchases


in 1975/76, and their involvement in trade lasted until 1978. In 1978, the monopoly right

of OFNACER was relinquished.

For cotton, development started in the early 1950s when the French textile

company, CFDT, settled in the then Upper Volta. Ten years later, the quantity exported

was multiplied by 20, increasing from 123 MT in 1951-52 to 2,769 MT in 1960-61.

Agricultural policy over the 1983-90 period was rather aggressive, in particular

during the revolutionary period of 1983-89. Specifically, the efforts to improve water and

soil conservation in the northern drought prone regions were intensified, via the channel

of village level organizations (Savadogo and Wetta 1992). Official producer prices for

both the cash crops, especially cotton, and the food crops were raised above the free

market price. For cotton, the government succeeded in realigning producer price on the

international price, an outcome not achieved in the past or in the subsequent periods.1 The

government also embarked on a natural resource protection and regeneration through the

two slogans “A chaque village, un bosquet” (To each village a forest wood) and the

“Trois Luttes” or “Three Struggles”, against (1) bush fires; (2) the over cutting of trees;

and (3) stray animals. These “Trois Luttes” and the reforestation effort were effective at

making the population aware of environmental degradation and leading them to restore

vegetation in some areas.

The third period represents a major departure from the two previous ones.

Agriculture then operated under a liberalized environment. Despite this liberalization,

government policy in the cash crop sector (cotton) was characterized by the monopoly of

1 Producers received only 35 percent of the FOB price for cotton in the 1990s (Burkina Faso/World Bank, 2001, p. 78). In comparison with other countries, Burkina is the least performing in terms of transmission of the increases in international prices to domestic producers.


the parastatal, SOFITEX, and poor transmission of world price increases to cotton

producers, with the latter receiving only 35 percent of the world price (Burkina

Faso/World Bank 2001). During this period, agricultural research and extension

performed poorly, with the exception of cotton research. In fact, the state withdrew from

many extension activities. The Centres Régionaux de Promotion Agro-pastorale (CRPA),

which were the state relay for extension at the regional level, were closed as part of the

paradigm ‘less state is better’. The emergence of private practices, including private

veterinarians and private extension agents, was supposed to fill the vacuum left by this

withdrawal. This recent period is also characterized by the rising importance of rural

professional organizations (OPA) as vehicles for collective action bargaining, to carry out

some of the activities previously held by government.2 Recently, the government initiated

the creation of SOPROFA, a private firm with state equity share, to promote food crop

production and trade. SOPROFA has introduced the idea of contract farming for many

crops, including rice, tomato, and sesame. This new development closely parallels the

cotton market organization.3

In a global assessment, government policy was deemed to have had a negative

impact on agriculture during the early years (from 1960 to 1973). From 1973 to 1982,

policy became more favorable, with an increase in real price levels, an increase in the

investment rate in agriculture, and greater financial depth in rural areas (Lecaillon and

Morrisson 1985).

2 Currently, there are a number of national level farmers organizations that act as farmers’ agents in global negotiation, including the Fédération Nationale des Organisations Paysannes (FENOP, created in 1994) for all farmers, the UNPC-B for cotton producers.3 SOPROFA was unfortunately short lived. The firm went under due partly to a high element of moral hazard present in the contractual arrangements (producers often chose to sell on the open market when prices were higher than the agreed upon prices with SOPROFA).


Burkina Faso’s neighbors.

The end of the first period (from the end of the sixties) was characterized by the

beginning of what became to be known as the Ivorian miracle. The mid sixties to the

early eighties also marked Ghana’s period of economic crisis. These two coastal

neighbors are key to Burkina's economic performance. The oil crisis of 1973 affected

manufacturing in the first period as well. During the second period, the Ivorian miracle

continued, helping the Burkina economy through increased remittances.

A conceptual framework for analyzing farm household behavior.

In looking at farm households’ behavior, we will mainly be interested behavior related to

productivity gains. Growth in the agricultural sector is the product of area expansion and

productivity gains. Given that, over time, land expansion is bound to face constraints due

to population pressure, productivity gains are the most dynamic sources of growth.

Rural farmers operate in a high-risk environment. Rainfall appears as the most pervasive

risk in the arid areas of the country (center to north), but can affect most parts of the

country. Farmers face many other types of risks including natural disasters such as

flooding, locust invasion, and other predator invasions, as well as price volatility, which

may include large harvest time price collapses. Field data does indeed suggest sizable

levels of production/income risk in Burkina. For example, Reardon et al (1992) report a

coefficient of variation of crop income of 67% for the Sahelian and 52% for the Sudanese

zones.


One consequence of climate variability and other sources of risk is that innovation

is slow to occur. In particular, soil fertility management such as the use of fertilizer

becomes less profitable than it could be in the absence of risk. Interviews with farmers in

field surveys show that a substantive investment in fertilizer in the central-northern part

of the country can be wiped out due to just two or three missing rains towards the end of

the growing season.

Faced with these risks, the alternatives for farmers are few. Insurance is precluded

because of high geographic covariance of risk, high moral hazard, and high geographic

dispersion of production, i.e. a given area accounts for only a very small part of total

production in most part of the country with some possible exceptions for the cotton

zones. Credit is limited due to a lack of collateral: land has little value and livestock is an

uncertain stock, as it can be either stolen or exterminated by disease. In addition, credit is

limited by the paucity of lending institutions more or less suited to the type of situation.

Starting mostly in the second period of analysis, there has been emergence of rural

savings and loans institutions and this so-called decentralized financing system may be

the proper response to the geographic dispersion and risk associated with rural farming.

Because of the failure of these common mechanisms to combat risk, farmers rely on

agent-level mechanisms, diversification and asset accumulation for consumption

smoothing, and on society based insurance arrangements.

Income diversification in rural areas is an important phenomenon in Burkina.

ICRISAT’s studies over 1981-85 suggest that 26 to 57 percent of total household income

originates from non-farm sources in three agro-climatic zones of Burkina (Reardon,

Delgado and Matlon 1992). Recent studies by the University of Ouagadougou and


JIRCAS (Japan International Research Center for Agricultural Sciences) over the period

1999-2000 suggest that non-farm income is 22-40 percent of total household income

(Zahonogo 2002).

Social networks also play an important role in responding to risk. In Burkina,

transfers of income from urban or the exterior to rural areas are important, comprising up

to 22 percent of household income in the drought prone zones of Burkina (Zahonogo

2002). Asset accumulation for consumption smoothing in the form of livestock or in

other forms are also reported in field studies.

The risk management or response mechanisms put into place may have

detrimental impacts on growth. To much diversification can lower mean income and

therefore, saving, as the household forgoes the gains to specialization in order to reduce

risk. Consumption smoothing can limit growth by keeping assets in a high liquidity form.

Of utmost importance to farm productivity gains is the issue of technology. The

determinants of adoption of new technology have been traditionally thought to be

dependent on the individual. Recent findings (see Collier and Gunning 1997) suggest that

adoption is less determined by factor endowments or extension devices than by

information access through social learning mechanisms. Social learning also enhances the

capacity for collective action, thus promoting collective infrastructure such as schools

and roads.


Farm households’ investment behavior and output performance.

Given their goals and the environment they face, farm households make choices in the

areas of agricultural intensification, labor saving investment and soil conservation. We

summarize the outcomes of these choices, as well as the related impact on productivity.

Intensification technology: Fertilizer.

The total utilization of fertilizer in Burkina over the first period was depressingly low. In

1970, only 3270 MT of NPK were used on 129,000 ha farmed or 25 kg per ha, and most

of that in the cotton zone. Only 5 percent of all farms used fertilizers (Ediafric 1971, p.

36). Low use of fertilizer is frequently related to risk aversion regarding returns, and lack

of information on the appropriate type of fertilizer and its application rates. The second

period witnessed important changes in fertilizer use, in particular for cotton. Total

fertilizer consumption increased by 70 percent between 1980 and 1986, and this increase

was mostly due to cotton, which absorbs 60 percent of total consumption. Per ha

utilization of fertilizer on cotton was estimated at 25 kg. It was estimated that 35 percent

of total fertilizer consumption in the country went to cereals, but the rate per ha was very

dismal at 5 kg. Some of the fertilizer used on cereals was a spillover effect of cotton

operation. To supplement mineral fertilizer, farmers resorted to compost and manure and

the use of this technology picked up during this period. During the third period and

following the devaluation (1994), the price of fertilizer increased, the consumption of

fertilizer declined at first before picking up, in particular due to the restructuring of the

credit system in the cotton sector. Despite efforts, the adoption of fertilizer by food crop


producers remained low at an average 9 kg per ha, against 50 kg for all developing

countries and more than 100 kg for Asian countries.

Equipment (animal traction).

Animal traction was slow to enter the farm technology package in Burkina and adoption

rates are still very low. In 1970, there were only 2,280 pairs of draft oxen concentrated in

two areas, the Yatenga province and the cotton zone of Volta Noire (actual Mouhoun)4.

There were 8,100 donkeys and donkey equipments. With the number of farms estimated

at 530,000 (Ediafric, p. 36), the equipment rate was 2 percent in either donkey or oxen

traction. During the second and third periods, there was an improvement in the equipment

rate, which ranged from 20 to 25 percent. However, little progress has been recorded

from the second to the third period. Currently, no more than 27 percent of farmers have a

plow and a pair of draft animals (Burkina Faso, CSLP 2003).

Soil conservation and water retention techniques.

Towards the end of the first period (1979-82) farmers in the drought prone zones were

introduced to water conservation devices and started to adopt water retention techniques

such as dikes, tied ridging and zai. These technologies gained widespread adoption

during the second period (see Sanders et al. 1996). According to agronomic trials,

combining the various water retention and fertilizer technologies could substantially

boost yields (Sanders et al. 1996).

4 The regional differences are significant. Animal traction programs started early on in the Yatenga region, where less than 8 percent of farms had equipment in 1965. By 1973, the rate increased to 13 percent and to 20 percent by 1980 (Dugué, 1985, p.33).


Output and productivity changes.

Throughout the period of analysis, there have been significant gains in crop productivity.

These gains have been much more pronounced for cotton than for cereals. Cotton yield

increased from 154 kg/ha in 1960-63 to 532 kg in 1971-75 and to 920 kg/ha in 1980-82.

Yield exceeded a ton per ha in 1989, before decreasing during the first years of the 1990s.

Following devaluation and the restructuring of the sector, yields of cotton reached a ton

per ha since the 1999-2000 agricultural season (IMF June 2003). Gains for sorghum and

millet are smaller but also on the rise: 440 kg/ha in the early sixties to 850 kg/ha during

the 1990s and beyond. From the late 1960s to the early 1980s, yields averaged 550-600

kg/ha. During the second period of analysis, the yield of sorghum increased by 40

percent from 1980-82 to 1985-87, and that of millet by 32 percent (World Bank 1989).

Whether these gains are the results of technology change or weather remains a question.

Gains in labor productivity during the 1960-82 period were minimal. With 1970

as base year (=100), production per active worker was 113 in 1982, but with important

swings (98 in 1977, 92 in 1980). There was, therefore, no trend in labor productivity over

the first period of analysis, an indicator of the sluggishness of the agricultural sector in

spite of the official image of agriculture as the engine of growth (Lecaillon and Morrisson

1985). Gamsore (2001) estimated the apparent productivity of labor by dividing the gross

margin of production by the number of active population. For the period 1980-94, he

found an average growth of 4.4 percent per year. There appears to be some gains in

productivity over time (compared to the base period), but the levels are still rather low

(35,000 FCFA per worker in 1994, i.e. about 100 US$ at the prevailing exchange rate).


Why did farmers fail to invest in animal traction, or to adopt high yielding inputs

such as fertilizers or new varieties? What did not work? Markets? Extension? Or farmer's

information and knowledge? Did profitability matter at that point? These factors may

have all concurred to the lack of innovation. But other possible explanations include the

mere fact that farmers may have not thought that these investments were needed given

their mode of operating. In the early sixties and prior to the drought, shifting cultivation

was still feasible in many places, and was cheaper than investing in fertilizer, at least

based on private calculation. One observed that the drought and some accompanying

policies triggered adoption of animal traction in the Yatenga region, which had more

problems in terms of soil fertility and water. Another likely explanation of these dismal

levels is that in the sixties, fertilizer was a new technology and lack of utilization was not

solely related to the economic considerations of profit maximization or risk minimization.

Rather, lack of knowledge and lack of local innovators to imitate may have been

determinant factors at this stage.

5.2 Manufacturing firms

Research on manufacturing firms in the African setting has established a few hypotheses

regarding the operation of these firms. Five environmental conditions of firms

particularly limit growth.

First, most firms operate without external finance. Although the relationship

between credit and investment is not firmly established, fragmentary results suggest that

for firms that lack internal funds, lack of credit restricts investment (Collier and Gunning

1997).


Second, firms, like rural farm households, operate in a high-risk environment. As

a member of the CFA franc zone, firms in Burkina were spared with the uncertainty

related to a volatile exchange rate that firms in non-CFA countries faced. Rather, the

irreversibility of investment compounds risk. Investment is highly illiquid, while risk

stemming from changing investment climate puts a high premium on liquidity.

Third, firms face an environment marked by restrictions on international trade

resulting in a lack of openness. Aggregate-level analysis has identified lack of openness

as a key cause for slow growth (Collier and Gunning 1997).

Fourth, firms face a severe lack of social capital. Establishing parallels between

countries in the developed world, Fukuyama (1995) showed that social capital, as

indicated by the level of trust between individuals in a society, was closely related to firm

size. In countries with higher levels of social capital (US, Japan, Germany) firms tended

to be larger in size than in countries with lower level of social capital (France, Italy,

Korea)5. In the case of Burkina, the low level of social capital tends to produce numerous

small-scale firms operating in isolation.

Fifth and lastly, firms face inadequate public services and poor infrastructure.

This increases operating costs and hampers competitiveness (Burkina Faso/World Bank

2001).

5 Fukuyama defines social capital as trust between individuals. In countries with large levels of social capital, contract enforcement without having to resort to courts is high. In Japan, Germany and the United States where social capital was high, powerful and large-scale organizations had developed spontaneously primarily out of the private sector. The high level of social capital in these three countries stemmed from different sources. In Japan, it was the family structure and the nature of Japan’s feudalism. In Germany, it was the survival of traditional communal organizations like the guilds. In the United States, it was the sectarian Protestant heritage (pp. 150-51). In countries such as China, Italy, France and Korea, family and the state played a lead role in economic development and voluntary association was weak. Trust in these societies was mostly related to family kinship, and these cultures tended to produce small-scale economic organizations (p. 62-63).


The environment facing manufacturing firms.

A key feature of the manufacturing sector in Burkina was the heavy involvement of the

state during the first three decades following independence. Liberalization of the sector is

underway as part of the structural adjustment policies initiated at the beginning of the

1990s.

Equity control.

The industries operating during the early period of analysis are characterized by the

pervasiveness of the state. In 1976, the state controlled 45.6 percent of the capital shares

of the main enterprises, against 11.6 percent for the national private and 42.7 percent for

foreign investors. The public sector continued to play an important role into the second

period, with the state as a major actor in the five most important firms (SOFITEX,

SOSUCO, SHSB-CITEC, FASO FANI, GMB, respectively for cotton, sugar, oil, textiles

and flour). These five firms accounted for 58 percent of value added of the industrial

sector and 32 percent of value added of the manufacturing sector. As the state embarked

on liberalization policies, all these firms have been partially or totally privatized (CITEC,

GMB, SOSUCO, SOFITEX) or closed down (FASO FANI). During the third period, the

manufacturing sector has become the realm of the private sector: the state remained

involved only in public utilities (telephone, electricity, water, hydrocarbons)6.

Policy.

6 Liberalization in these companies is underway.


The general orientation of industrial policy during the post independence period was

based on import substitution. During this period, the state also espoused the concept of

strategic sectors, the same concept that prevailed in some European countries during

reconstruction following the Second World War.7 The state heavily intervened in these

strategic sectors and this led to the establishment of state monopolies. Another principle

that prevailed during the period is the so-called “voltaisation”8 of enterprises and capital,

which was materialized through the investment code and the conventions for business

establishment. To carry out its missions, the government created two industrial zones to

attract national investors, one in Ouagadougou (Kossodo zone) and the other in Bobo-

Dioulasso (Industrial zone). The incentives provided were tax holidays (exonerations)

resulting from either the investment code or from a special convention to establish the

business. To benefit from a special convention, firms had to operate in defined priority

sectors, be of importance for the development objectives of the country and contribute to

the realization of the development plan (Ediafric 1971, p. 124). Four criteria defined

importance: an initial investment of at least 100 million FCFA, the use of local raw

materials, the creation of 50 permanent jobs for nationals, and the hiring of national

cadres. Conventions could not last more than 25 years. Investors were required to

reinvest at least 20 percent of profits in the country. Investors benefited from special

advantages defined by the convention, including the lock-in of favorable fiscal treatment.

The problem with conventions is that they carried an element of moral hazard: At the end

7 The concept of strategic positions originated from Lenin and made its way to the socialist parties in the rest of Europe; since the middle of the 1930s, the Labor party in Great Britain adopted this concept, leading to their policy of nationalization of key sectors (Petroleum, telecommunications). The same wave for the role of the state rippled through the rest of Europe: France, Germany, and Italy (see Yergin and Stanislaw, 2000).8 Burkina was known as Upper Volta then. Voltaisation was a move to give priority to Voltaics when hiring or giving authorization for enterprise creation.


of the period, the firm could mutate into another firm to benefit from another special

convention.

During the second period, the most significant policy element that determined or

undermined firm behavior was the pricing system. The state had set a price control

mechanism, which was extremely time consuming and limited competitiveness with an

embedded equity goal. The homologation system allowed product price fixing based on

the different cost items estimated by the producer. Before being authorised to market a

new product, a manufacturer was required to go through an administrative process

through which ceiling prices at the wholesale and retail levels were set (Zagré, 1994).

Operators found this system constraining and inefficient. It was slow to operate and a

change in the cost of production could not be immediately incorporated in the pricing

system, as the procedure could take several months. One major drawback of the system

was that operators had no incentive to cut costs as they were assured of a positive margin

regardless of cost. Another drawback was that the system tended to encourage imports as

imported products usually carried higher margins than locally produced goods. A third

drawback was the regulation prevented industrial units from directly marketing their own

products. In the setup, industrialists had to work in tandem with distributors who had

incentives in selling similar imported products associated with higher margins.

A second policy component during the second period that shaped the performance

of the sector was protection. Quantitative restrictions were imposed on imports with the

need to obtain import licenses (API/ASI). The fiscal set up also provided protection for

domestic firms but was substantially complex. There was differential tax treatment for

each firm, multiplying the cases for tax officers. The fiscal and quantitative protection


mechanisms had drawbacks in terms of incentives to innovate as well as in promotion of

corruption, cheating and black marketeering behavior. The turnover tax (TCA), which

was entirely passed on to consumers, was levied on sales and constituted a severe tax on

consumption. It limited the competitiveness of products with respect to products not

subject to TCA. For example, because the informal sector escaped taxation, firms in the

formal sector complained of unfair competition.

The policies in the second period did not address the absence of a well-suited

credit system to fuel the manufacturing sector. The credit system within the UMOA was

sector based, and the manufacturing sector has declined over time. For Burkina, total

short-term credit to manufacturing declined from 23 percent of total short-term credit in

1985 to 11 percent in 1997. Meanwhile, share of long-term credit declined from 72

percent in 1985 to almost nil in 1997 (See Table 5).

External events conditioned the future performance of the manufacturing sector in

the third period. First, the advent of the customs union within UEMOA led to a UEMOA-

wide liberalization of trade and protection against the rest of the world. Second, the

advent of WTO and the whole spectrum of globalization threatens the fragile

manufacturing landscape. Thirdly, the Ivorian crisis of September 2002 disrupted the

planned system of supplies and product export channels.

The business environment also changed significantly during this period. The

adoption of the OHADA treaties regarding judicial environment of businesses within

West Africa are intended to promote a safe investment climate through a more reliable

judiciary system. Concomitantly, the government has also embarked on an internal

judicial reform to create transparencies and strengthen the rule of the law (the creation of


a conciliation chamber, the creation of a commerce registry, hiring of magistrates,

training of lawyers in commercial law). The government also undertook a process of

revision of the administrative red tape related to business creation as well as the

simplification of customs and fiscal systems (including the replacement of the complex

turnover tax by the value added tax in 1993, the passage of 12 classes of customs tariffs

to 4 and the associated reduction of the average tax rate).

The power of the state in manufacturing was significantly reduced during this

third period, following the liberalization policies. Most state-owned firms were either

privatized or closed down following the budget reorientation process through which all

subsidies to firms were to be discontinued. As such, the role of the state became

essentially one of regulation. This period also saw the suppression of the trade and price

control mechanism, a paramount feature of the preceding period.

The major operating constraint facing manufacturing firms during the period

continued to be the high cost of the main inputs, electric power, telecommunication, and

transport, which contributed to the lack of competitiveness of most units. The high cost of

the main input was at least in part due to the presence of government monopolies on

electric power, hydrocarbons, water and telecommunications. Although the

telecommunication sector has recently been liberalized, with the installation of private

cellular phone companies, substantial reductions in costs to the consumer have been slow

to materialize.

Responses of manufacturing firms.


During the first period, data is not available to understand firms’ behavior in response to

the prevailing environment. The state was the major economic actor, and intervened

through its plans. The first Plan (1967-70) anticipated a total investment of 33 billion

FCFA, of which 35 percent was in infrastructure build-up, 29 percent in rural

development, 18 percent in industry, 14 percent in the social sector, and the remainder in

research and information (Ediafri 1971, p.168). About 60 percent of what was planned

was effectively achieved by 1970. In the modern sector (industry), the government

concentrated on agro-processing, investing 2.26 billion over three years. During the

second period, the policies initiated by the government were intended to create a dynamic

industrial sector, using local resources. However, the perverse measures that the stated

policy entailed were detrimental to achieving goals. We observe a drop in investment in

the modern sector in 1983 and 1984, followed by an upturn in 1985. Investment has

stabilized since 1986 (World Bank 1989, Vol. 2). The share of manufacturing in

investment remained low, with a maximum of 5.4 per cent in 1982 and a minimum of 2.3

percent in 1983. One major feature of the third period is the emergence of external

factors, including the UEMOA treaty of a customs union and the increased globalization

of the world economy. As a consequence of the UEMOA treaty, manufacturing firms

were subject to an increased competition from firms within the union. However, many

manufacturing firms were operating below capacity during this period, or were under-

utilizing existing raw materials. For example, the leather manufacturing firm was not able

to absorb a significant part of the hides available. Most agro-industries operated at 10-40

percent below installed capacity, probably as a consequence of the many constraints they

faced.


Performance can be measured by the following. Competition forced a number of

firms out of business: Burkinapat, SINAC, FASO FANI, respectively in pasta, shoes, and

textiles areas. Some firms that emerged as regional powers following liberalization:

SIFA, MABUCIG, BURKINA et SHELL, AIR BURKINA, respectively in motorcycles,

tobacco, petroleum and air transportation. The hotel industry also thrived following

opening up. New firms also appeared given the new environment: FILSA (thread

making), hotels, inter-urban transportation companies.

6. Political economy

Given the many upheavals that occurred in the country, understanding the political

economy is instrumental in understanding the growth process in Burkina. The country

was characterized by instability from independence in 1960 until the advent of the

democratic rule in 1991. Following each change in regime, new rules of the games were

established, thus depriving the country of the required continuity in policymaking and

implementation. One trait of each of the periods of analysis is the frequency of political

shocks in the form of strikes, bans on political activity, political arrests, attempted coups,

and ultimately, successful coups. The different stakeholders (ruling class, unions,

students, civil society) have been actively involved in these changes, motivated by

personal interest. The ruling actors, at all times have elected to bend the rules to stay in

power: As we will see, examples include the rule of exclusion during the Yaméogo era;

the attempt to establish a one-party system under Lamizana; the attempt to deny any role

for traditional labor unions and political parties under the CNR; threats possibly leading

to physical elimination of opponents; civil society organizations often driven by self-


interest (financed from abroad); political parties emerging to tap resources made

available, not to seek power; leaders of professional association of farmers pursuing

self-, not group-interest; the latter used by the power in place to guarantee clientele. The

frequent changes have brought leaders to power that were either unqualified or lacked the

vision or desire to change society quickly based on ideology.

The impact of this troubled history on economic performance seems to be

important. Subsequent events show a positive correlation between political and economic

liberalization on one hand and economic performance on the other. Indeed, the third

period enjoyed both political and economic reform and experienced more robust and

steadier economic growth than in previous periods.

This section attempts to document the above ideas by showing the policy choices

made during each period and their impacts on market performance and agents’

investment choices. The analysis uses the following simple framework. Different interest

groups (political parties, governments, parliament, civil society organizations (labor

unions, professional groups, NGOs, human rights organizations, students)) develop

political preferences, which will only translate into effective policy choices if the interest

group is organized and undertakes some form of collective action. The likelihood of

success of any collective action is related to how close the interest group is to the political

power. While interest groups can shape policy outcomes, it is also true that policy

decisions can promote some interest group formation and development. The analysis of

the interactions between policy outcomes and interest groups may offer explainations for

why policies persist when changes are demanded by the majority of a country’s

population. The following section will use this framework to provide a political economic


explanation of policy choices in Burkina. We identify the main lines of change in the

central political process. We then attempt to explain the forces that are behind these

changes, and how these changes are related to major economic choices during each

period.

6.1 Political economy to 1990

The first period is marked by several social and political conflicts leading to a military

takeover of power three times, in 1966, 1980 and 1982. In each of these three major

events, the key players were labor unions, political parties, high school students (for the

first coup), bureaucrats and the military. Most of the conflicts leading to the changes

developed around the state apparatus and the budget. The first regime, led by Maurice

Yaméogo, was characterized by resource mismanagement and “political gaming of divide

and rule,” without a particular fundamental development orientation for the country. The

end of the regime was characterized by a budget deficit, and a recession9. The regime was

overthrown in January 1966 following a civil uprising and Général Sangoulé Aboubakar

Lamizana was brought to power. The new regime embarked on a financial recovery

program (Programme de Redressement financier de la Haute Volta, by Général

Garango), which produced a balanced budget four years later, but at the expense of

investment in the social sectors (education and health). The taste of power led the regime

to deviate from its originally intended path of establishing a civilian-led democratic rule

following recovery. This clinging to power ultimately led to the second coup in

9 In 1962, expenditure (8.4 billion CFA F) exceeded revenue by 2.2 billion CFA F. In 1965 the gap narrowed to -0.31 billion CFA F out of a total outlay of 8.8 billion (Zagré, 1994, p.57). Brought into proportion, these gaps were unsustainable.


November 1980, when Colonel Saye Zerbo took power. Zerbo’s regime was short-lived,

and was followed by another brief intermediate regime in November of 1982 (CSP)

before the revolutionary regime took over in 1983.

During the Yaméogo era, the budget was used as a tool to reward the political

elite (see Zagré, 1994). Thus, ministers and other cabinet members gained excessive

advantages in light of the surrounding poverty of the rest of the citizens, including other

civil servants. The excessive living standard of the ruling elite was copied from that of

the colonial masters and exceeded any justifiable level. This breach between the ruling

elite and the population was the seed that would eventually lead to the toppling of the

government in 1966. The high demand on the budget to finance irrational spending led to

another irrational decision: to cut salaries and benefits as well as spending on education.

The unions successfully converged to oppose these cuts. Because the elite were small in

size, there was no organized force to defend the regime.

As in this first regime, the budget was to be the center of discord during the

Lamizana years. To curb the fiscal imbalances created during the Yaméogo era, there

were drastic budgetary measures, such as the reduction of salaries, during the first ten

years of the regime. Although initially agreed to by the labor unions, these measures

became unsustainable and the labor unions and political parties demanded democratic

elections; and these demands led to the discontinuation of the stringent measures on

wages, as a bargain against the changes that were demanded. The interests of private

producer groups had little leverage over policy in this period. Most businesses, in fact,

were state owned. Livestock was the main export product, but the lack of a coalition

prevented any impact on policy by herders or exporters.


Given the absence of well established interest groups, the dynamics of changes in

Burkina were embedded in the political elite itself. Conflicts within the army eventually

led to the next series of coups (those of 1980 and 1982, and also 1983 and 1987).

The entire 1960-82 period was dominated by political and ideological debate,

which heavily taxed development efforts. Three coups over a period of 22 years did not

leave room for a vision: each coup led to more than a year of dysfunction of the key

services to produce the necessary civil discontent that would eventually lead to military

action. Although the freedom of speech and organization that characterized most of the

post 1966 period undoubtedly favored the emergence of strong political and labor

organizations, these strengths have been negatively exploited, ultimately promoting

instability rather than developmen.

In addition, policies prevented the emergence of interest groups. Hence, there was

no strong coalition to defend the different regimes that came to power. The existing

groups did not influence the ongoing policies. Whether these policies were beneficial to

these groups was not obvious; for example, the tight budget policy was not profitable to

labor or any other organization. Certainly policies were not conducive to long- run

growth. The dismal size of the budget10, coupled with negative real interest rates, did not

allow for the build up of infrastructure or the development of human capital. The

interventionism of the state has also led to market distortion, and was not conducive to

private sector development. In fact, the small size of the private sector during the period

and the belief that the state had to play a major role in economic development led to the

creation of parastatals (not only in the utilities, but also in commercial and industrial 10 Total government spending was 8.71 billion CFA F in 1966 and 9.75 billion in 1970, meaning a slow annual growth rate of 2.4 percent during the first 5 years of the Garango management (Zagré, 1994, Table 9).


activities). The intervention of the state through parastatals (OFNACER, ORDs) hindered

the functioning of cereal markets and negatively affected the decision-making of rural

households in terms of productivity enhancing investments, particularly during the sub-

period 1960-73. From 1973 to 1982, policy became more favorable, with an increase in

real price levels, an increase in the investment rate in agriculture, and a higher financial

depth in rural areas (Lecaillon and Morrisson 1985).

As in the preceding period, the 1983-90 period was fraught with instability, with

two coups in 1983 and 1987. On August 4, 1983, Captain Thomas Sankara, a charismatic

young military leader, toppled Commandant Jean-Baptiste Ouédraogo and instated the

Conseil National de la Révolution (CNR). The CNR came loaded with a project of

society and represented a major departure from the previous regimes demonstrated by

their emphasis on development. Through the Political Orientation Speech (DOP) on

October 2, 1983, the CNR announced that the type of society it intended to build was free

from outside influence and geared toward social development and equity. However, the

type of actions needed to achieve this goal involved deep structural changes in politics,

economic and social policy, and resource reallocation, that eventually led to civil unrest

and the tragic end of this political venture with the death of its leader. Captain Blaise

Compaoré assumed power on 15 October 1987 with the Front Populaire (FP). The FP

first attempted to continue the revolutionary mood, but facing increasing financial

imbalances and economic difficulties, was forced to bow to the Bretton Woods

institutions for a renewal of economic policy. The ensuing commitment to orthodox

structural adjustment plan marked the end of heavy state involvement in the economy of

Burkina Faso.


One major characteristic of the CNR was the exertion of state power in most activities

by the substitution of new groups for the traditional interest groups. Thus, CDRs were

created within all institutions, such as in ministries, markets, the university, state

enterprises, youth and women organizations, and countered the power of traditional

unions within these structures. During the period, labor unions were forced to operate

underground. Because CDRs were not endowed with an operating budget, they

eventually seized the control over the resources of institutions that they belonged to.

Policies attempted to define an interest group for farmers: the creation of the UNPB. This

had lasting effects, as even later the group continued to operate through events such as

the “Journée Nationale du Paysan” or Peasant’s Day, with the participation of the head of

state. The CDR system gave rise to an organized political party in the next period, the

ODP/MT (which became CDP later). The ODP/MT was to dominate the whole political

scene in the subsequent periods.

The CNR also utilized the budget to forge the allegiance of the intellectual middle

class, by investing in real estate in the construction of medium standing houses in the

cities and headquarters of provinces. The state embarked on massive zoning of the cities

to provide construction lots to the population. Despite these actions, this middle class did

not organize into an interest group to defend the policies intended to benefit them. It is

likely that conflicting policies, some favorable and others not, as well as the cost

associated with collective action and the inherent free riding tendency, played a role in

preventing the formation of such coalitions.

Actions of the revolutionary regime undermined investment. Denial of private

property was central to the CNR’s dialogue. Private businesses were considered as


exploiters of the people and attempts were made to transfer property rights to the

population. Examples of this can be seen through the control of commerce of cereals by

the CDRs and the suspension of rent payment for one year, 1984. The reaction of the

economic actors that were affected by these measures was to suspend investment or to

engage in capital flight, estimated at over 70 billion FCFA (Zagré 1994, p. 173). A good

example of this reaction occurred in real estate. A tax on rent was levied, and landlords

were requested to transfer a whole year of rent to the state, generating 3 billion FCFA

revenue. These actions were detrimental to further construction work during the

revolutionary years. Consequences were not limited to domestic actors, as donors also

reacted. Typically, donors were assimilated with imperialistic and domineering forces,

and this led to cutbacks in official development assistance, in particular from multilateral

donors.

In summation, government policy has been favorable to the agricultural sector

and, to some extent, to the social sectors (health and education). However, the stated

choice of state capitalism has hindered the emergence of a dynamic private sector. This

was to act as a deadweight on the orthodox adjustment policy during the next period.

6.2 Political economy in the most recent period

The third period is marked by two important changes in the political and economic areas.

On the political and institutional side, the non-democratic regimes gave way to a

democratic regime in 1991. A new Constitution was adopted by referendum in June

1991, followed by presidential and then parliamentary elections. Municipal elections

were organized four years later. Recent major developments include the latest


parliamentary elections (2002) that resulted in a substantial increase in the presence of

the opposition representatives in parliament. This is expected to create a better balance in

decision making by government. The period has seen the reemergence of the labor and

students unions, and the constitution of civil society movements such as a human rights

movement, anti-corruption movement, consumers’ league and federations of NGOs.

There was also the emergence of new communication media through new FM radio

stations, newspapers, and private television stations that contributed to the increase in

awareness of the population and probably a better control of public action.

The road to these political and institutional changes has been a long one, and

shortcomings have contributed to limit the effectiveness of the economic reforms. We

follow two threads to analyze the different changes. The first centers around state led

processes, and the second around civil society led processes. The shortcomings related to

state led processes are classified into six issues that relate to two major weaknesses: weak

capacity and an insufficient democratic culture.

The issue of term limits and the shifting of power.

The new constitution (June 1991) provided for the limitation of the number of

presidential terms to 2, thus raising hopes of a power shift. This hope was soon proved

illusionary when the ruling party-dominated parliament voted an amendment to the

constitution’s now famous article 37 to provide for an unlimited number of terms for the

president. Although this amendment was later relinquished, it had already affected the

overall political climate as the opposition became suspicious of the ruling party’s

willingness to play by the rule of genuine democracy.


The issue of a successful parliamentary democracy.

The first (1992) and second (1997) assembly elections led to a landslide victory of the

dominant party, the CDP (Congrès pour la Démocracie et le Progrès), defeating the role

of parliament as a tribune of contradictory debate11. However, with the modification of

the ballot system following a long fight between the opposition and the power, the latest

parliamentary elections (2002) has produced a more balanced parliament where the

opposition parties grabbed almost half of the seats. Despite these positive changes, one

problem remains: the cost associated with parliamentary democracy. The cost of the

assembly, and the tendency of members to use their legislative power to self-attribute

some privileges (loans for vehicles, grants for ‘constituency loyalty strengthening’,

among others) creates a wedge between the National Assembly and the common people.

The issue of an independent, efficient and credible judicial system.

The difficulties of the judicial system in the era of democratization are related to the

problem of transition from a system highly dominated by the executive (during the

revolutionary and post revolutionary era) to a modern, independent system. During a

first phase of the transition, the executive exerted control over the new judiciary system

(1991-1997). A second phase saw the creation of four independent courts (Constitutional

Council, the Audit Court, the State Council, and the Court of Appeal) with the objective

to insulate the judicial system from the political sphere and to make the new system more

11 The second parliamentary elections held in 1997 confirmed the dominance of CDP, with 91 percent of elected deputies (101 out of a total of 111) (IDEA, 1998).


efficient and effective in handling cases. All this entailed additional costs in terms of

manpower and infrastructure build-up, and thus raises the issue of budget sustainability.

The cost of the latest plan of action issued by the Ministry of Justice (in 2002) was

estimated at 21 billion FCFA over 6 years (World Bank 2002).

The issue of decentralization.

Decentralization has become a major theme of development in Burkina. A law passed in

1998 (the TOD, or Textes d’Orientation de la Décentralisation) regulates the creation of

rural communes, with the objective to accelerate rural development. The major

challenges are: (i) generating resources locally; (ii) the budget burden for the central

government stemming from the need to transfer resources (both financial and human) to

collectivities; (iii) the need to build up bodies of local capacities to assume day-to-day

policy formulation and implementation; (iv) the risks associated with the process in the

form of possible decentralized corruption.

The issue of political tolerance and democratic culture.

One of the major challenges facing an emerging democracy is how to build up a

democratic culture among all the players (the government, the ruling party, the opposition

parties, civil society, trade unions, the press). The democratization process in Burkina has

often been marked by political violence and threats. The December 1998 assassination of

the journalist Norbert Zongo, which led to a sustained turmoil during the following 4

years, illustrates this problem.


Instability and lack of unity within the opposition parties.

In 1992 there were 67 political parties in Burkina (IDEA 1998), most of which are in

opposition with the ruling party. One major weakness of the opposition parties is their

instability, in the sense that they lack a well defined line of ideology, often leading to

fusion within the majority in power. Likewise, coalitions of opposition parties often

failed due to divergent individual interests. Finally, many parties are highly dependent on

single individuals (their leaders).

The organizations of civil society became a major component of the socio-political

scene of Burkina during this period. Various organizations mushroomed following the

democratization process and the official recognition of the right of such organizations to

operate. In fact, creating an organization has become a trade for many individuals in the

country. We look at three types of civil society organizations: human rights, professional

associations and students.

Human rights organizations are usually financed from abroad. These organizations

often identify themselves as a counter-weight to government abuse of political rights of

individuals. As such, their achievement is positively related to their ability to prove

government wrong-doing. This creates a permanent conflict between these types of

organizations and government.

Recently, international development assistance attempted to bypass government for

some of their interventions, arguing that governments had failed in managing funds and

reaching the needy. This has given rise to the emergence of many associations or NGOs


who capture part of these international resources, as they appear to be closer to the

beneficiaries. Unfortunately, most of these organizations lack transparency. Some leaders

tend to embezzle part of the resources for their own use. International aid thus becomes a

source of riches for some people, based on an assumed government failure.

Student organizations have become highly vocal since the advent of democracy.

Like in many African countries, conflicts opposing the ruling government that invovle

students disrupt the functioning of the school systems. In Burkina, the school system is

generally satisfactory despite the numerous crises, and a major challenge of the

government is to prevent a setback in the education system through mishandling of the

process. The challenge is compounded by the evidence that student organizations are

often under the influence of political parties and civil organizations that use them as tools

for achieving political goals.

On the economic side, this third period is marked by several structural changes

that fundamentally reshaped the economy. First, the economy was liberalized, a shift

which included the suppression of price and market control, fiscal reform, and tariff

reduction and simplification. Second, formerly stated-owned enterprises were privatized,

which entailed the privatization or liquidation of 44 firms (World Bank, 2002). Finally,

the public sector was reformed to create a more effective and efficient administration,

which entailed a reshuffling and restructuring of the administration, decentralization of

policy making and implementation, and expenditure control. These structural changes

were carried out within the framework of a Bank-led structural adjustment program from

1991 to 2000. Since 2000, a paradigm shift occurred, with Burkina embarking on the so-

called Poverty Reduction Strategy approach, with the adoption of the Cadre Stratégique


de Lutte contre la Pauvreté (CSLP). The CSLP is the current framework for growth

oriented and poverty reduction policy formulation. Parallel to these internal

developments, the international environment was also undergoing modifications, with the

advent of the WTO and the acceleration of monetary and economic integration in the sub-

region (UEMOA).

Our goal is to document how the different actors have influenced policy making

and implementation in three areas: trade liberalization, the exchange rate and the state

budget. We also show the consequences of the choices on agents’ and markets’ behaviour

and performance as well as the overall implication on economic progress. To do this, we

use the interplay between the various actors in the three areas.

6.2.1 Trade liberalization.

We note three groups of actors that have had conflicting interests.

Importers of common consumer goods.

Following the suppression of the import authorization, the liberalization of all trade

spurred the development of a commercial class all over the streets of the main cities.

While liberalization was supposed to benefit consumers, all gains seem to have been

captured by the traders involved in the business as prices did not significantly go down.

Although data are lacking, it is plausible that the resulting increase in profits has

contributed to economic expansion through reinvestment.12

12 More recent facts in 2004 and 2005 point to substantial decrease in prices of some imported goods, such as motorcycles following liberalization of the import market. The traditional Japanese or French markets


Manufacturing firms.

Most manufacturing firms produced for import substitution. As a consequence,

liberalization worked against their interest, and there was some opposition. It was

common to hear such phrases as ‘liberalization is tantamount to the death of Burkinabè

enterprise’. However, with privatization that accompanied liberalization, some of the

units fought to survive by improving their management such as SIFA for motorcycles,

CITEC for oils and soap, SOSUCO for sugar, BRAKINA for drinks, and Air Burkina

while other units closed such as SINAC, for shoes).

State monopolies.

Some important state monopolies were key revenue sources for government (CGP for

rice and wheat flour, SOFITEX for cotton, SONABHY for petroleum products). The

liberalization in these monopolies has been (or still is) confronted with resistance from

both the managers of these units and government officials. These delays have

macroeconomic consequences due to maintenance of the high costs associated with the

monopoly structure.

6.2.2 Exchange rate policy.

have given place to imports from Southeast Asia and China of motorcycles costing half the price or less. Although lower quality is associated with these new products, consumers value financial accessibility above the need for frequent replacement.


The devaluation of 1994 created losers and winners. Winners are exporters of livestock,

fruits and vegetables, and cotton. Losers are urban wage earners (consumers), who earn

their revenues from local sources and spend part of it on imported products. Overall, the

devaluation is thought to have had positive impacts through increased competitiveness

resulting in a more robust and steadier growth rate. As seen in previous periods, the

growth of interest groups is slow to materialize in Burkina. The winners from the 1994

devaluation do not seem to have established a coalition to demand further policies that

promote export growth.

6.2.3 Budgetary policy.

During the current period, the budget became a center of expression of various interests.

Bureaucrats, politicians, and business people each see the budget as a pie from which the

largest piece ought to be taken. The behavior of bureaucrats in this period is, to say the

least, provocative for the rest of the population. Having access to privileges, they do not

hesitate to use state means to purchase luxury cars and SUVs, which create envy in the

common worker. The consequences are loss of morale and decreased productivity in

public sector activity. Politicians use the budget to entertain electoral clientele. This is

done especially in the area of project implementation. There seems to be a positive

correlation between the density of budget-financed projects in a region and the presence

of an influential person in the government from that region in all periods, but particularly

the third period. The consequence of this behavior is that the regional distribution of

investment lacks economic rationality.


In summation, the 1990s and early 2000s have witnessed several new dimensions

in tackling the development problem. Economic liberalization has brought about

qualitative changes in several areas. For example, liberalization has led to the

acknowledgement of the paramount role of the private sector in the development process.

As a consequence, liberalization and privatization led to the emergence of new activities

in several sectors (trade, with the emergence of numerous retail traders of imported

goods; private, inter-urban transport; inter-regional trade, hotels and tourism,

handicrafts). With democratization, new types of actors have developed in the political

arena. Political parties, civil society organizations, and students organizations that were

silent during the previous periods have become empowered overnight. This had profound

implications as regards the management of the whole system. Communication between

all stakeholders is essential in such a new complexity but appears to have been lacking so

far.

As a result of all these changes, the economy has experienced a new, more robust

growth performance than during previous periods. The growth of per capita income has

settled above 2 percent annually since the devaluation of the currency in 1994. These

results have materialized in the context of political disturbances and sub-optimal

economic choices. Had these conditions been more favorable, the growth rate would have

been likely much higher and more robust.

7. Conclusion

This paper has provided an account of the growth process in Burkina from a historical

perspective. The paper has shown that both relevant policy choices and an incentive


oriented business environment were important factors of growth. In particular, when

market-oriented policies prevailed, together with political liberalization and stability, as

has been the case since the second half of the 1990s, growth rates have been stronger and

more stable. Why the country has waited so long before engaging on this growth path has

been shown to be related to several factors including ideology (socialist vs. capitalist

regimes), and the struggle for control of state power for control over resources.

The Burkina case study illustrates the major tenet that beyond natural resource

endowment, policies and commitment are important factors of economic performance.

Thus, even during the short-lived revolution years (1983-89), government commitment to

rural development has translated into unprecedented growth of the agricultural sector.

Likewise, the opening up of the economy, the political and judiciary systems during the

recent democratization era has seen more robust growth rates. These growth rates have

tended to become even stronger as the level of trust in the new orientations for a free

market economy increased.

However, the economy still faces a major weakness related to the slow rate of

structural transformation. Although agriculture remains the major sector of the economy,

productivity is low. Over time, services have tended to become the major contributor to

GDP. But the service sector is often de-linked from the productive basis of the domestic

economy. The manufacturing sector faces a near stagnation. The future fate of the

economy in Burkina will highly rest on the synergetic relations that will be established

between the agricultural sector and manufacturing, the engine of economic

transformation. As long as the industrial sector is not capable of assuring the

transformation of goods supplied by agriculture, the latter will continue to face its


cyclical problems of over production, price collapse and farmers’ reluctance to increase

productivity enhancing investment. As a last powerful anecdote, cereal production in

Burkina sharply increased from 2 to 3.5 million metric tons between 2002 and 2003. The

immediate result was the collapse of farm price levels, to less than a fifth of their levels in

previous years. This yoyo-type economy is doomed to operate at a near-subsistence

mode.


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Table 1: Basic economic and environmental indicators, 1960-97

1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-97Population at start period, 1000s 4,630 5,103 5,633 6,202 6,962 7,881 8,880 Age dependence ratioa 81.67 84.90 92.07 98.41 100.75 100.99 99.65

Growth of real per cap. GDP 0.84 1.64 0.60 1.76 0.16 2.18 0.88

GDP structure Agriculture's share 41.42 36.82 33.01 31.99 33.47 Industry's share 33.29 32.79 28.88 29.13 26.59 Services' share 25.29 30.39 38.11 38.88 39.95 Manufacturing's share 25.24 25.21 24.57 22.28 20.17

Ratio of investment to GDP 10.00 9.61 19.99 22.62 17.71 21.66 21.79

Money Ratio of M2 to GDP 6.90 8.05 11.72 13.77 14.48 20.44

Trade and exchange rate Change in terms of trade 0.02 -4.20 -6.19 10.62 6.96 -0.73 Std Dev of Change in terms trade 3.76 16.39 20.21 11.45 5.43 7.36 Ratio of trade to GDP 21.19 20.53 29.33 39.38 42.43 40.23 39.48 Overvaluation index 213.95 199.93 181.47 217.86 170.30 152.82 127.27

Aid dependence Ratio of aid to GDP 0.68 2.60 6.14 7.35 8.72 8.50 13.57

Climate Proportion of dry yearsb 0.00 0.20 0.80 0.60 1.00 1.00 0.71

Instability Number of coups half dec 0 1 0 0 3 1 0 Number regional conflictsc 0 0 1 0 0 1 0Source. Growth Project data.a. Ratio of population not 15-65 to population 15-65.b. Calculated as the mean of a dummy indicating years in which total rainfall was more than 1 standard deviation below the country mean for 1940-69.c. From the authors.


Table 2: Set-up of the cereal markets, 1960-2002Period Actors

1960-1970

1970-74

1974-78

1978-82

1984-88

1991-2002

Free trade. Absence of State intervention

State intervention: OFNACER handles food aidPrivate traders handle regular trade

Private trade illegal. State monopoly/monopsony on the cereal market: -OFNACER vested with monopoly rights on cereal sale to consumers -ORDs vested with monopoly rights on cereal purchase from producers, but use services of private traders to do the buying due to staff shortage

Dual market system: Private and public actors coexist -Monopoly rights of ORDs relinquished

-Private traders allowed to operate, but needed official licenses

Dual market system with many restrictions-Private trade allowed under licensing, with severe controls from CDRs-Private traders were to forced to organize into a cooperative-like structure known as

GIE-Faso Koodo (groupement d'intérêt économique)-Cereal trade between regions within the country subject to restrictions

Liberalized marketsSource: Constructed from Bassole (2000) and Lecaillon and Morrisson (1985).


Table 3: Indicators of savings and credit, banking system, 1960-1997

1960-74 1975-79 1980-89 1990-93 1994-97Financial ratios M2/GDP (%) 9.2 16.53 18.75 21.65 24 Checking deposits/M2 31 41 35 26 28 Time deposits/M2 6 18 26 33 24Growth of total credit* (%) 20.15 28.68 9.81 -10.14 19.46Structure of credit** Short term (%) 48 58 62 61 70 Medium & long term (%) 52 42 38 39 30Source: BCEAO (2000), Tables 10.6, 10.28 and 10.29.* The period divisions for the first two periods are 1966-74 and 1975-79. The growthfigures are the between periods growth rates of average total credit per period.** The divisions for the first two periods are: 1960-75 and 1976-79.


Table 4: Indicators of performance of the formal financial sector, 1973-1996

YearReal loan rate (%)

Real deposit rate (%)

Cumulatedcapital flight(billion CFAF)

Annual capitalflight, % of GDP

1973 -- -2 -2.45 0.211974 -- -3 -2.29 0.111975 -- -13 14.99 11.151976 -- 14 29.58 8.121977 -18 -24 74.34 20.931978 4 -2 112.39 14.861979 -3 -9 123.25 3.791980 2 -6 139.27 5.111981 7 -1 165.9 7.171982 4 -4 222.21 12.691983 6 -1 269.64 10.111984 10 2 285.38 3.211985 8 0.3 346.12 10.891986 16 9 328.05 -3.011987 16 8 354.44 4.341988 10 1 373.59 2.871989 15 7 345.81 -41990 17 8 374.74 4.121991 14 5 430.24 7.151992 19 10 467.68 4.811993 -- 5.9 529.57 7.771994 -- -19.77 -- --1995 -- -1.18 -- --1996 -- -3.66 -- --

Source: BCEAO (2000), Tables 10.22, 10.25 and 10.26.


Table 5: Sectoral destination of bank credit, Burkina Faso, 1985-1997

Short term credit Medium term credit Long term creditSectors 1985 1990 1994 1997 1985 1990 1994 1997 1985 1990 1994 1997Agr., forestry, fishing 2 6 3 5 2 6 2 3 0 6 0 0Mining 6 1 0 0 4 1 4 0 0 4 0 0Manufacturing 23 15 20 11 4 15 23 19 72 23 7 0Elec, gas, water 0 0 0 0 1 0 0 0 1 0 0 0Construction 9 11 14 14 1 11 6 1 0 3 0 0Wholesale commerce 49 54 30 38 5 54 29 14 0 32 0 2Mass transportation 2 3 2 2 2 3 2 33 9 3 8 0Insurance and real estate 0 0 1 1 76 0 1 9 5 2 73 81Public services 10 9 31 30 5 9 32 20 12 26 11 17Total 100 100 100 100 100 100 100 100 100 100 100 100Source: BCEAO (2000), Tables 10.30 to 10.32.


Table 6: Microfinance data, Burkina Faso, 1993-1995

1993 1994 1995Number of savings and loan institutions 342 572 778Number of members 79 038 110 350 155 951Mean deposit (CFAF per member) 27 374 40 049 43 399Total amount of loans (billion CFA F) 2.003 3.89Number of beneficiaries (persons) 160 050Percentage of population served (%) 9.5Repayment rate (%) 97.3Source:BIT/BCEAO (1997), Tables 9, 10, 21, 29, 36, 41.


List of Acronyms

API Autorisation Préalable d’ImportationASI Autorisation Spéciale d’ImportationAVV Autorité de l'amenagement des Vallées des VoltasBACB Banque pour l'Agriculture et le Commerce du BurkinaBALIB Banque Arabe Libyenne (now BCB)BCB Banque Commerciale du BurkinaBCEAO Banque Centrale des Etats de l'Afrique de l'OuestBFCI Banque pour le Financement du Commerce et de l'IndustrieBIB Banque Internationale du BurkinaBICIA-B Banque Internationale pour le Commerce, l'Industrie et l'Artisanat du BurkinaBIT Bureau International du TravailBND Banque Nationale de DéveloppementBOA Bank of AfricaCAI Caisse Autonome d'InvestissementCDP Congrès pour la Démocratie et le ProgrèsCDR Comité de Défense de la RévolutionCFDT Compagnie Française des Fibres TextilesCITEC Comptoir des Industries Textiles et Cotonnières CMRPN Comité Militaire de Redressement pour le Progrès NationalCNCA Caisse Nationale de Crédit Agricole (now BACB)CNDI Caisse Nationale des Dépots et des Investissements)CNR Conseil National de la RévolutionCRPA Centres Régionaux de Promotion AgropastoraleCSLP Cadre Stratégique de Lutte contre la PauvretéCSP Conseil de Salut du PeupleCSPPA Caisse de Stabilisation des Prix des Produits AgricolesCSV Centrale Syndicale Voltaïque (now CGTB)DOP Discours d'Orientation PolitiqueFASO FANI Textile Company (ex Voltex)FENOP Fédération Nationale des Organisations PaysannesFP Front PopulaireGDP Gross Domestic ProductGIE Groupement d’Intérêt EconomiqueGMB Grands Moulins du BurkinaGPC Groupement des Producteurs de CotonICRISAT International Crops Research Institute for the Semi Arid TropicsIVOLCI Industrie Voltaïque du Cycle (now SIFA)JIRCAS Japan International Research Center for Agricultural SciencesMABUCIG Manufacture Burkinabé de CigarettesMLN Mouvement de Libération NationaleNGO Non Governmental OrganizationOCP Onchocerciasis Control ProgramODP/MT Organisation pour la Démocratie Populaire / Mouvement du TravailOFNACER Office national des CéréalesOHADA Organisation pour l’Harmonisation du Droit des Affaires en AfriqueONATEL Office National des TélécommunicationsONEA Office National des EauxOPA Organisation Professionnelle agricole


OPT Office des Postes et TélécommunicationsORD Iorganismes Régionaux de DéveloppementOVSL Organisation Voltaïque des Syndicats LibresPAI Parti Africain de l'IndépendancePARMEC Projet d'Appui à la Réglémentation sur les Mutuelles d'Epargne et de CréditPQDP Plan Quinquennal de Développement PopulairePRA Parti de Regroupement AfricainPRSP Poverty Reduction Strategy PaperSAP Société Africaine de PneumatiquesSGBB Société Générale des Banques BurkinaSIFA Société Industrielle du FasoSIM Système d’Information sur les MarchésSME Small and Medium EnterpriseSNP Service National PopulaireSOBBRA Société Burkinabè des BrasseriesSOBCA Société Burkinabè de Crédit AutomobileSOFITEX Société des Fibres et TextilesSONABEL Société Nationale d'Électricité du BurkinaSONABHY Société Nationale Burkinabè des HydrocarburesSONAGESS Société Nationale de Gestion des Stocks de SécuritéSOPROFA Société de Promotion et de Financement de l'AgricultureSOSUCO Société Sucrière de la ComoéSOVOLCOM Société Voltaïque de Commercialisation (became Faso Yaar, now defunct)TCA Taxe sur le Chiffre d’AffairesUDV-RDA Union Démocratique Voltaïque-Rassemblement Démocratique AfricainUE European UnionUEMOA Union Economique et Monétaire Ouest AfricaineUFB Union des Femmes du BurkinaUMOA Union Monétaire Ouest AfricaineUNAB Union des Anciens du BurkinaUNJB Union Nationale des Jeunes du BurkinaUNPB Union Nationale des Paysans du BurkinaUNPC-B Union Nationale des Producteurs de Coton du BurkinaUREBA Union Révolutionnaire des BanquesUSTV Union syndicale des Travailleurs VoltaïquesVOLBRICERAM Voltaïque de Briqueterie et de CéramiqueVOLTELEC Société Voltaïque d'Électricité (now SONABEL)WTO World Trade Organization

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2 · Web viewOur analysis does indeed suggest that periods where both economic and political liberalization prevailed have experienced both more robust and steadier growth. Burkina