Written by: US Commercial Services
After more than a decade of civil war, Burundi is liberalizing trade policies intended to encourage economic reconstruction and development. The Investment Code enacted in September 2008 encourages foreign direct investment and provides tax deferrals for new investors. Tax and customs reforms were completed in July 2009 to enable Burundi to comply with the EAC’s customs union; this included the introduction of an EAC-compatible value-added tax and harmonized customs procedures. Please see Chapter Five for full details. International financial institutions such as the World Bank, the International Monetary Fund and the African Development Bank are funding infrastructure projects designed to increase Burundi’s capacity to transport goods internally and to neighboring countries, as well as to supply more electricity and water to consumers. In 2010, the government created the Investment Promotion Authority to facilitate investment and aid investors in meeting the regulatory and legal requirements for operating in Burundi. In 2012, Burundi continued to institute economic reform and encourage foreign investment in the areas of registering a business, construction permits, registering property, and trading across borders. With the new reforms, it now takes less than one day to establish an enterprise and creation fees have been also reduced. The country improved its rank in the World Bank’s 2013 “Doing Business” report by ten positions coming in at 159 out of 185 countries.
Good prospects for investment are:
- Agribusiness and Food Processing – The World Bank is assisting with the privatization of the coffee sector, Burundi’s largest export earner. In 2008, Burundi began direct sales to foreign coffee buyers on a limited scale, and Burundian coffee
- has been consistently praised in specialty coffee markets for its excellent quality. Several washing stations won the Presidential award at the 2012 Cup of Excellence recognizing their coffee as world class. Thirteen coffee washing stations were acquired by a Swiss company in late 2009, but the privatization of more coffee washing stations was suspended in anticipation of the summer 2010 elections. In November 2011, the government announced an international tender to privatize the remaining coffee washing stations as well as two dry mills. Other potential growth opportunities exist in the local production of fruit juices, canned foods and dairy products. USAID is funding a number of projects to develop agribusinesses (e.g., dairies) that could take advantage of these opportunities in the future. In addition, USAID and the Netherlands launched a “business incubator” in 2010 designed to stimulate the local private sector. While these activities are still in the early stages, they may result in potential investment platforms in the long-term.
- Telecommunications and Information Technologies -The state-owned telecommunication company ONATEL’s assets are being evaluated for potential privatization. Several new private service providers have recently entered the market. Please see “Telecommunications” in Chapter Four for a full discussion of this topic. Internet services are increasingly in demand for both business and personal use, and the number of cybercafés in the capital is growing. A fiber optic backbone linking Burundi to Tanzania and Rwanda is scheduled to be completed in 2013 potentially bringing new business opportunities in the information technology sector.
- Energy – Burundi’s dependence on an outmoded, unreliable system of hydroelectric production and distribution is a major impediment to economic development. In 2008, Burundi signed an agreement with the World Bank for a five-year, $50 million project to expand electrical capacity through the rehabilitation of existing hydropower and the construction of a new hydroelectric dam. Additionally, in 2012 the European Union signed an agreement with the EAC to construct a interconnector between Rwanda and Burundi to link the two power grids and help facilitate distribution within the region. The project will take approximately three years to complete. Three hydroelectric projects with a total capacity of about 80 MW are still at the feasibility study stage and they are projected to be operational in 2017-2018 assuming necessary funds are available.
- Mining – A comprehensive survey of Burundi’s mineral resources conducted in the 1980s confirmed the existence of large nickel deposits near the country’s northern border with Tanzania. Although large, commercial-scale mining has not yet begun, a number of foreign investors are interested in working in this region. (Note: Most mining concessions are currently in the hands of Canadian, Burundian and South African firms.)
- Although there is a long list of different public enterprises set to be privatized, two companies are most likely to be privatized during the year 2013. One is Air Burundi, the national carrier, where the government intends to sell 70 to 90% of the total shares. The second is Sosumo, a sugar company owned 99% by the government and where it intends to sell 25 to 30% of its shares. Discussions to determine the terms of sale of government shares in the two companies are well advanced.
Excerpt from Doing Business in Burundi: 2013 Country Commercial Guide for U.S. Companies
