AFRICAN DEVELOPMENT BANK GROUP REPUBLIC …...This report presents a strategy for the Bank Group's...

AFRICAN DEVELOPMENT BANK GROUP

REPUBLIC OF BURUNDI

Country Strategy Paper 2019-2023

(CSP 2019-2023)

Management

Gabriel NEGATU Director General RDGE

Yero BALDEH Director RDTS

Ferdinand BAKOUP Lead Economist ECCE

Stefan MULLER Lead Country Programme

Coordinator

RDVP

Daniel NDOYE Country Manager COBI

Marcellin NDONG-NTAH Lead Economist ECCE

Drafting Team

Abdoulaye KONATE, Principal Country Economist ECCE

Abdoulaye M. TANDINA Country Programme Officer COBI

John NDIKUMWAMI Transport Engineer COBI

Rakia BEN GHANEM Transport Specialist COBI

Mamadou DIOMANDE Financial Management Specialist RDGE

Souweye MAIGA Procurement Specialist RDGE

Maimouna DIOP LY Health and Social Protection

Specialist

AHHD

Gilberte DOGBEVI-FALY Financial and Operations Analyst RDTS

Jean Claude NSABIMANA Social Development Specialist COBI

Moussa KONE Principal Energy Specialist RDGE

Abdelmajid JEMAI Energy Specialist (Consultant) COBI

Hamadi LAM Agricultural Specialist (Consultant) AHAI

Cyrille EKOUMOU Environmental Specialist PEGC2

Serge RABIER Gender Specialist AHGC0

Christelle S. HAZOUME Technical Assistance Officer PINS

Peer Reviewers

Toussaint HOUENINVO Principal Country Economist ECCE

Tankien DAYO Principal Country Economist ECCE

Hercule YAMUREMYE Principal Operations Officer COCF

AFRICAN DEVELOPMENT BANK GROUP

REPUBLIC OF BURUNDI

Country Strategy Paper 2019-2023

(CSP 2019-2023)

COUNTRY ECONOMICS DEPARTMENT - ECCE

EAST AFRICA REGIONAL DEVELOPMENT AND BUSINESS DELIVERY OFFICE – RDGE

June 2019

Translated document

TABLE OF CONTENTS

CURRENCY EQUIVALENTS .................................................................................................................................. i

ABBREVIATIONS AND ACRONYMS ................................................................................................................... ii

map OF BURUNDI ............................................................................................................................................ iii

EXECUTIVE SUMMARY .................................................................................................................................... iv

1 INTRODUCTION........................................................................................................................................ 1

2 NATIONAL CONTEXT AND OUTLOOK........................................................................................................ 1

2.1 POLITICAL AND SECURITY CONTEXT ................................................................................................................ 1

2.2 ECONOMIC CONTEXT ................................................................................................................................... 2

2.3 SECTOR CONTEXT ....................................................................................................................................... 6

2.4 SOCIAL CONTEXT AND CROSSCUTTING THEMES ................................................................................................ 7

3 STRATEGIC OPTIONS, PORTFOLIO PERFORMANCE AND LESSONS ............................................................ 8

3.1 COUNTRY STRATEGY FRAMEWORK ................................................................................................................ 8

3.2 AID COORDINATION AND HARMONISATION .................................................................................................... 9

3.3 WEAKNESSES AND OPPORTUNITIES.............................................................................................................. 10

3.4 COUNTRY PORTFOLIO PERFORMANCE REVIEW ............................................................................................... 11

3.5 LESSONS FROM THE CSP 2012-2018 COMPLETION REPORT AND THE CPPR 2018 ............................................. 12

4 BANK GROUP STRATEGY 2019-2023....................................................................................................... 12

4.1 RATIONALE .............................................................................................................................................. 12

4.2 CSP OBJECTIVES AND STRATEGIC PILLARS ..................................................................................................... 13

4.3 EXPECTED OUTCOMES AND TARGETS ........................................................................................................... 17

4.4 INDICATIVE OPERATIONAL PROGRAMME (IOP) AND KNOWLEDGE MANAGEMENT ............................................... 16

4.5 CSP FINANCING ....................................................................................................................................... 18

4.6 CSP MONITORING AND EVALUATION........................................................................................................... 18

4.7 COUNTRY DIALOGUE ................................................................................................................................. 18

4.8 RISKS AND MITIGATION MEASURES ............................................................................................................. 18

5 CONCLUSION AND RECOMMENDATIONS ............................................................................................... 20

6 ANNEXES....................................................................................................................................................

ANNEX 1: CSP OUTCOMES FRAMEWORK ..................................................................................................................... I

ANNEX 2: INDICATIVE PROGRAMME - LOANS AND NON-LENDING OPERATIONS .............................................................. VIII

ANNEX 3: ALIGNMENT OF PIPELINE AND HIGH-5 PROJECTS ........................................................................................... IX

ANNEX 4: TECHNICAL AND FINANCIAL PARTNERS (TFP) INTERVENTION MATRIX ................................................................ X

ANNEX 5: MACROECONOMIC INDICATORS .................................................................................................................. XI

ANNEX 6: IMPLEMENTATION OF THE CPIP 2018 ........................................................................................................ XII

ANNEX 7: KEY PERFORMANCE INDICATORS FOR THE CURRENT PORTFOLIO ...................................................................... XV

ANNEX 8: ONGOING PORTFOLIO (29 MARCH 2019) ................................................................................................. XVI

ANNEX 9: CPIA RATINGS 2013-2016 ................................................................................................................... XVII

ANNEX 10: ANNEX ON THE MACROECONOMIC FRAMEWORK ..................................................................................... XVIII

ANNEX 11: CODE RECOMMENDATIONS ON THE CSP 2012-2018 COMPLETION REPORT ................................................ XIX

ANNEX 12: SUMMARY OF EXCHANGES OF VIEWS WITH STAKEHOLDERS .......................................................................... XX

ANNEX 13: ALIGNMENT OF DSP PILLARS TO PND 2018-2026 AND THE HIGH 5S ........................................................ XXIII

ANNEX 14: FIDUCIARY RISK ASSESSMENT ............................................................................................................... XXIV

ANNEX 15: COUNTRY RISK ASSESSMENT .............................................................................................................. XXVIII

ANNEX 16: CLIMATE CHANGE AND GREEN GROWTH IN BURUNDI ............................................................................... XXXI

ANNEX 17 - NON-SOVEREIGN OPERATIONS IN BURUNDI .................................................................................... XXXIV

ANNEX 18 - 2018 CRFA'S MAIN RESULTS ……………………………………………………………..…………………………………XXXV

ANNEX 19 - RISK MITIGATION MEASURES ….......................………………………………………………………………..XXXVI

Figures and boxes

Figure 1 – Political Context 2017 ............................................................................................................................ 2

Figure 2 - Growth rate of real GDP (%) …………………………………………………………………………...3

Figure 3 - Fiscal balance (% of GDP) …………………………………………………………………………………………………………………. 4 Figure 4 - External current balance (% of GDP) …………………………………………………………………. 5

Figure 5 - Breakdown of Active Portfolio by Sector ............................................................................................. 11

Figure 6 - Breakdown of Active Portfolio by High 5s........................................................................................... 11

Box 1 - Country Resilience and Fragility Assessment (CRFA) .............................................................................. 8

Box 2 – Pillar 1 and CRFA .................................................................................................................................... 14

Box 3 – Pillar 2 and CRFA .................................................................................................................................... 13

Box 4 –Selectivity Criteria .................................................................................................................................... 17

i

CURRENCY EQUIVALENTS

FISCAL YEAR

1 July – 30 June

MONETARY EQUIVALENTS OF THE UNIT OF ACCOUNT

(April 2019)

Currency = Burundian Franc (BIF) UA 1 = BIF 2,537.77

EUR 1 = BIF 2,053.79

USD 1 = 1,828.03

WEIGHTS AND MEASURES

1 metric tonne = 2,204 pounds 1 kilogramme (kg) = 2.200 pounds 1 metre (m) = 3.28 feet 1 millimetre (mm) = 0.03937 inch 1 kilometre (km) = 0.62 mile 1 hectare (ha) = 2.471 acres

ii

ABBREVIATIONS AND ACRONYMS

ADF African Development Fund

BIF Burundian Franc

BRB Bank of the Republic of Burundi

CNARED National Council for the Respect of the Arusha Peace and Reconciliation Agreement for Burundi and the Restoration of the Rule of Law

CNCA National Aid Coordination Committee

CNDD-FDD National Council for the Defence of Democracy - Democracy Defence Forces

COBI Burundi Country Office

CODE Committee on Operations and Development Effectiveness

COMESA Common Market for Eastern and Southern Africa

CPIA Country Policy and Institutional Assessment

CPPIP Country Portfolio Performance Improvement Plan

CPPR Country Portfolio Performance Review

CRS CSP Results Monitoring Framework

CSP Country Strategy Paper

CRFA Country Resilence and Fragility Assessment

DSA Debt Sustainability Analysis

EAC East African Community

EC European Commission

ECCAS Economic Community of Central African States

ECF Extended Credit Facility

ECGLC Economic Community of the Great Lakes Countries

ECVMB Household Living Conditions Survey

FSF Fragile States Facility

GBS General Budget Support

GDP Gross Domestic Product

GPRSF Growth and Poverty Reduction Strategy Framework

HDI Human Development Index

IDEV Independent Development Evaluation (IDEV) Department of the Bank

IMF International Monetary Fund

ISTEEBU Institute of Statistics and Economic Studies of Burundi

LTA Lake Tanganyika Authority

MDGs Millennium Development Goals

MFPDE Ministry of Finance and Promotion of Economic Development

MTR Mid-Term Review

NBI Nile Basin Initiative

OECD Organisation for Economic Cooperation and Development

PAR Project-at-Risk

PCG Partners’ Coordination Group

PEFA Public Expenditure and Financial Accountability

PND National Development Plan

PPP Potentially Problematic Project

RDGE East Africa Regional Development and Business Delivery Office

RISP Regional Integration Strategy Paper

TFP Technical and Financial Partners

TSF Transition Support Facility

UA Unit of Account

WDR World Development Report

iii

MAP OF BURUNDI

Administrative Map of Burundi

This map was drawn by the staff of the African Development Bank exclusively for the use of readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank Group and its members any judgement concerning the legal status of a territory or any approval or acceptance of its borders.

iv

EXECUTIVE SUMMARY

1. This report presents a strategy for the Bank Group's intervention in Burundi for the period 2019-2023. This Country Strategy Paper (CSP) is intended to support Burundi in implementing its National Development Plan (PND) 2018-2027, adopted in August 2018. CSP 2019-2023 is based on the combined completion report of CSP 2012-2016, extended in December 2018, and the Country Portfolio Performance Review (CPPR), which was presented to the Committee on Operations and Development Effectiveness (CODE) on 13 May 2019. It takes into account the drivers of the country's fragility to support it towards greater resilience. The CSP is aligned with: (i) the country's strategic vision (PND 2018-2027); (ii) the Bank's High 5s and its Ten-Year Strategy 2013-2022; (iii) the Bank's Strategy for Addressing Fragility and Building Resilience in Africa over the 2014-2019 period; (iv) the Eastern Africa Regional Integration Strategy Paper (RISP) (2018-2022); (v) the Second Climate Change Action Plan of the African Development Bank Group (2016-2020); (vi) the Jobs for Youth in Africa Strategy (2016-2025); and (vii) the Strategy for Agricultural Transformation in Africa (2016-2025).

2. Burundi continues to be marked by situations of fragility resulting from its conflict-ridden socio-political history. It is characterised by a low score on the human development index, weak institutional capacity and various forms of social inequality, an inadequate infrastructure network and high vulnerability to external shocks. These factors, aggravated by the socio-political crisis that the country experienced in 2015, have prevented the country from achieving its full potential, particularly agricultural, mining and hydro-ecological. At the political level, facilitation efforts under the auspices of the East African Community have been ongoing since 2016 through inter-Burundian dialogue sessions. However, these initiatives have not yet resulted in major progress on substantive issues.

3. The crisis has led to a decline in activity in the main productive sectors. Real GDP growth was estimated

at -0.2% in 2017, compared with an average of 4.6% between 2010 and 2014. The year 2018 was marked by

a slight economic recovery with a real GDP growth rate estimated at 1.4%. Therefore, the country faces

many challenges that it must address in order to lay the groundwork for sustained economic growth that

creates jobs and helps to improve the people’s living conditions over the long haul. Part of the international

community that has condemned human rights violations has decided to suspend direct support to the

Government, leading to a reduction in external aid. On the social context, food insecurity continues to be a

problem and the phenomenon of poverty seems to be gaining momentum.

4. To address the major challenges that it continues to face, the Government of Burundi in August 2018 prepared a National Development Plan for Burundi for the decade 2018-2027. The aim of the PND was, among others, to generate multiplier and lasting effects on improving economic growth and average per capita income, and to foster poverty reduction, development of human capital, environmental sustainability and social equity. The PND is built on eleven (11) pillars and its Priority Action Plan (PAP) comprises five strategic thrusts, estimated to cost BIF 20,385 billion over the period 2018-2027 (around USD 11.1 billions)

5. As at end-March 2019, the Bank's active portfolio in Burundi comprised 16 public sector operations,

totalling about UA 247.56 million. Operations are concentrated in the following sectors: transport (60.6%),

energy (32.9%), agriculture (4.8%), multi-sector (1.2%) and social (0.4%). The portfolio performance

analysis shows a disbursement rate of around 34.3%, for an overall average age of about three (3.8) years.

Some 10% of the national projects portfolio was posted on the dashboard due to the slow rate of procurement

and disbursements as at 28 March 2019, compared with 22% of the portfolio as at 31 December 2018.

Concerning the multinational portfolio, three of the six projects were posted.

6. Drawing lessons from CSP 2012-2018 implementation and taking into account the Bank's High 5s,

Burundi’s National Development Plan (PND) 2018-2027, the country context and consultations with the

Government and stakeholders, the proposed strategic objective for CSP 2019-2023 is to support the

Government in addressing the drivers of fragility and building resilience in Burundi. Two pillars have been

identified to achieve these objectives: (i) support agricultural development and transformation; and (ii)

v

improve transport and energy infrastructure. They have been approved by CODE on 13 May 2019 together

with the CSP 2012-2018 Completion Report. The first pillar has three operational objectives: (i) promote

agricultural entrepreneurship for young people and women with a view to their empowerment; (ii) support

agricultural development hubs and increase private investment for processing; and (iii) build institutional

and climate change adaptation capacity. The second pillar has two operational objectives: (i) help close the

infrastructure gap in the transport and energy sectors to foster inclusion; and (ii) promote equitable access to

basic infrastructure to foster social inclusion.

7. The Bank will strive throughout the implementation of CSP 2019-2023 to: (i) support governance

improvement, and climate change and gender mainstreaming in CSP focal sectors - agriculture, transport and

energy -; and (iii) promote private sector involvement in these focal sectors.

8. The resources that can be mobilised to finance the 2019-2023 strategy could reach UA 148 million,

drawn mainly from ADF-14 and ADF 15: (i) UA 52 million for a performance-based allocation; (ii) UA 43

million under the Transition Support Facility; (iii) UA 39 million that can be mobilised at the regional level;

and (iv) UA 14 million in non-sovereign resources. The Bank will also continue its efforts to mobilise co-

financing from other technical and financial partners. In particular, it will use the co-financing partnership

agreements signed with various partners, and will strive to mobilise other sources of financing, including the

Nigeria Trust Fund, the Global Environment Facility (GEF) Trust Fund, the Global Agriculture and Food

Security Programme (GAFSP) Trust Fund and climate funds. An estimated UA 70 million in co-financing

is expected to be added to the Bank’s resources.

9. The Bank identified the main risks in the country based on a thorough analysis of the current

political and security context, and then identified mitigation measures: the instability of the political situation

constitutes a significant risk for CSP implementation. In particular, the security situation could be tested in

2019 and in 2020, in view of the timing of the presidential elections. The Bank will join forces with the

authorities and the international community to limit that risk.

10. Burundi has good opportunities to succeed in its strategy to transform its economy by 2027. The

reforms envisaged must be supported by dialogue with development actors, including technical and financial

partners, with a view to restoring the groundwork for economic growth and improving governance and the

business climate. The potential offered by the agriculture and mining sectors and the ongoing investment in

agricultural, transport and energy infrastructure would help to diversify sources of growth and improve

people’s living conditions. The Bank should continue to provide financial and technical support to Burundi

under CSP 2019-2023 to help it achieve that objective. Therefore, the Board of Directors is requested to

review and approve the Bank Group's Country Strategy Paper (CSP) 2019-2023 for Burundi.

1

1 INTRODUCTION

11. This report lays out a strategy for the Bank Group’s intervention in Burundi for the period 2019-2023. It is presented with a view to supporting Burundi in implementing its National Development Plan (PND) 2018-2027, adopted in August 2018, which calls for development based on further transformation of economic, demographic and social structures. This includes generating multiplier and lasting effects on improvement of economic growth and average per capita income, and fostering the satisfaction of basic needs, poverty reduction, development of human capital, social equity and environmental sustainability, including the promotion of development resilient to the adverse effects of climate change.

12. CSP 2019-2023 is based on the combined completion report of CSP 2012-2016 (extended to December 2018), and the Country Portfolio Performance Review (CPPR), which was presented to the Committee on Operations and Development Effectiveness (CODE) on 13 May 2019. It takes into account the drivers of the country's fragility to support Burundi in enhancing its resilience. The CSP is aligned with: (i) The National Development Plan (PND 2018-2027); (ii) the Bank’s High 5s and its Ten-Year Strategy 2013-2022; (iii) the Bank's Strategy for Addressing Fragility and Building Resilience in Africa over the 2014-2019 period; (iv) the Eastern Africa Regional Integration Strategy Paper (RISP) (2018-2022); (v) the second climate change action plan of the African Development Bank Group (2016-2020); (vi) the Jobs for Youth in Africa strategy (2016-2025); and (vii) the Strategy for Agricultural Transformation in Africa (2016-2025). As the Bank’s main programming tool in Burundi for the period 2019-2023, the CSP provides an opportunity for the Bank to strengthen its short- and medium-term cooperation with Burundi, support the Government in addressing the drivers of fragility and build resilience in Burundi, through agricultural development and transformation and the improvement of agriculture and infrastructure (energy and transport).

13. In addition to this introduction, this report contains an analysis of the country context (section 2) and the country's strategic thrusts for the period 2018-2027, a presentation of lessons from the 2018 review of the portfolio of Bank-financed projects (section 3), the Bank's strategic thrusts for the period 2019-2023 (section 4) and the recommendations submitted for Board approval (section 5).

2 NATIONAL CONTEXT AND OUTLOOK

2.1 Political and Security Context

14. The political context is marked by challenges related to the episodes of instability that the country has experienced, as indicated by the Country Resilience and Fragility Assessment (CRFA)1 conducted by the Bank on Burundi in 2018. The political environment has gradually stabilised since the socio-political crisis of 2015. However, the political climate remains tense. Efforts to calm the situation must continue in order to consolidate the socio-political dialogue.

15. Progress in the inter-Burundian dialogue initiated under the auspices of the East African Community has been relatively modest. According to the report submitted by the Facilitator2 of inter-burundian dialoge, to the EAC Mediator on 19 November 2018, the various

1 The Country Resilience and Fragility Assessment (CRFA) was designed in 2016 to provide a new quantitative

tool in assessing capacities and pressures in regional member countries. It complements the Country Policy and

Institutional Assessment (CPIA), with a more holistic focus on resilience and fragility factors, including regional

impacts, the environment, policy / governance, and security. Resilience capacities are measured through seven

dimensions, namely: policy inclusivity, security, justice, economic and social inclusion, social cohesion and

climate and environmental impacts. The exercise was conducted on Burundi in 2018 and the results indicate that

the country's capacities in the seven dimensions are not strong enough compared to the relatively high "pressure"

noted. 2 The mediation for a way out of crisis was given by the heads of state of the sub-region to the Ugandan President

(in June 2015) and former Tanzanian President, Benjamin Mkapa (in March 2016), to relaunch the inter-Burundian

dialogue

2

sessions of the inter-Burundian dialogue did not lead to major progress on issues such as the status and implementation of the Arusha Peace and Reconciliation Agreement, the security situation, the political and democratic space, and the state of the economy. While noting the efforts of various stakeholders and the adoption of a roadmap for the organisation of presidential elections in 2020, the authors of the report indicate that players in the dialogue seemed entrenched in their positions. At their February 2019 summit, the EAC Heads of State took note of the report, but postponed the discussion on issues related to the situation in Burundi. However, on the security front, the United Nations Security Council issued a statement on 22 August 2018 in which it noted that the security situation in Burundi had improved overall.

16. The issue of human rights in the country is a point of disagreement between the international community and the Government. The CFRA shows that freedom of expression and civil society empowerment are relatively limited in Burundi, as illustrated by its 159th position out of 180 countries on the 2019 Reporters Without Borders (RWB) ranking. On 28 September 2018, based on the report of its Commission of Inquiry on Burundi published on 5 September 2018, the United Nations Human Rights Council condemned “in the strongest terms all acts of violence committed in Burundi by all parties or individuals”. The Government rejected the report. In February 2019, the Government decided to close the United Nations human rights office in Burundi, asserting that the national mechanisms and arrangements were sufficient to uphold human rights. Owing to these developments, certain technical and financial partners have firmed up their position of not providing direct support to Burundi’s budget, opting instead for direct support to communities, in particular through NGOs. It should also be noted that in September 2018, the Government decided to suspend the activities of NGOs in the country for three months, beginning 1 October 2018, to cause them to come into compliance with the provisions of the law governing NGOs in Burundi and in particular with a provision concerning local staffing quotas. That helped to deepen the disagreements with technical and financial partners. However, by January 2019, more than 80% of the NGOs concerned had resumed their activities, after the government decided that they had complied with its requirements.

17. The holding of presidential elections in 2020 is an important issue in the political context. Although they had expressed their reservations about the revision of the Constitution, international organisations welcomed the President’s decision not to seek another term of office. They welcomed the Government’s acceptance in February 2019 of the request for official recognition of a new opposition party (the National Congress for Freedom). The United Nations has encouraged the Government to continue in this direction in the run-up to the 2020 presidential elections, while urging it to be more inclusive, particularly in the context of the adoption of a new electoral code.

18. In terms of democratic governance (see figure 1), Burundi is one of the 12 African countries where the situation deteriorated between 2007 and 2016 (-6.5 points), according to the Mo Ibrahim Index of African Governance (2018), which shows modest progress between 2016 and 2018 (Burundi rose one spot from the 44th to the 43rd position out of 54 countries between 2017 and 2018). According to the Index, Burundi will need to make greater efforts in the areas of security, rule of law, participation and human rights.

2.2 Economic Context

19. Burundi is a small landlocked country with a limited

productive base. The economy is undiversified and is based mainly on agriculture. The

country’s export base is quite small and is dominated by primary products (coffee and tea

account for about 70% of export revenue). The agricultural sector is dominated by small farms

-2,5 -2,0 -1,5 -1,0 -0,5 0,0

Stabilité politique

Etat de droit

Ecoute et responsabilité

Source: AfDB Statistics Department

(2018 WEF Data)

Score -4.0 (Worst) to 2.5 (Best)

Afrique Afrique Centrale BurundiCentral Africa

Figure 1 – Political context 2017

Voice and

Accountability

Rule of Law

Political Stability

3

and employs more than 80% of the workforce, the majority of whom are women. Agriculture

is dependent on rainfall and climate. Between 1971 and 2015 the country experienced a period

of climatic variability that led to a contraction of agricultural production, as well episods of

political crisis that seriously affected non-agricultural production. During the years of violent

political crises (1972, 1993-1995, 2000 and 2003), economic activity declined in both rural and

urban areas and these shocks brought more vulnerability in the country, with the contribution

of the primary sector declining over time. Between 2000 and 2006, agriculture accounted for

about 45.8% of GDP with, however, growth in the ups and downs. Since 2007, the tertiary

sector has been driving the economy following a sharp increase of nearly 20%. In 2018, the

primary sector accounted for 40.7% of GDP against 44.58% for the tertiary sector and 14.97%

for the secondary sector.

20. Burundi has been badly affected by the 2015 crisis. This has been confirmed by the

Country resilience and fragility assessment exercise conducted in Burundi in 2018 (see Box 1).

In addition, the Country Policy and Institutional Assessment (CPIA) for 2018 confirms

Burundi's weak institutional capacity, with an overall score of 3.1 against 3.2 in 2016. This is

noticeable in economic management (fiscal policy and monetary policy), sector policies (the

financial sector in particular) and governance. On the contrary, in terms of trade policy and

regional integration, progress is encouraging (see Annex 9). Because of political turmoil, real

GDP growth had fallen sharply to -0.3% in

2015 from 4.2% in 2014 and 4.5% in 2013 (see

Figure 2). It has been on the ups and downs

since (1.7% in 2016, -0.2 in 2017 and 1.4% in

2018). The crisis had led to a decrease in

activities in the secondary sector (-18.1% in

2015), which could not be offset by the 5.6%

rise in the tertiary sector. On the demand side,

the deterioration in relations with the

community of technical and financial partners

led to a decrease in financial support to the public sector (-41% in 2017 compared to 2014),

dragging down public investment (-18% in 2015 and -12% in 2016). The slight economic

recovery in 2018, is due to the good coffee and tea production, the recovery in the secondary

sector (+7.4%) owing to the good performance of agri-food and manufacturing activities, and

a recovery in the tertiary sector (+3.2%). The recovery is expected to continue in 2019 and

2020, albeit only modestly, with projections of 0.4% and 1.2% in 2019 and 2020, respectively,

assuming that the political situation does not deteriorate any further with the presidential

elections scheduled for 2020. The economic recovery could then be driven by an increase in

coffee and tea exports, and a slight uptick in public investment.

21. Budgetary indicators have deteriorated with the crisis, despite increased efforts in domestic resource mobilisation (see Annex 10). Between 2012 and 2015, budgetary policy was marked by real efforts to control public spending in the face of falling domestic revenue and budget support (see figure 3). Unfortunately, the decline in economic activity in 2015 led to a sharp downturn in the value of Government revenue. At the same time, the Government’s response to the deteriorating security situation resulted in a higher-than-expected level of current expenditure. The budget balance actually deteriorated (-7.7% of GDP in 2015 compared to -3.8% in 2014 and -1.8% in 2013). Although the fiscal deficit contracted in 2016 and 2017 thanks to the progresses in improving domestic resource mobilisation, it remains high (estimated at 6.5% of GDP in 2017 and 8.8% of GDP in 2018). Public finance management is

-2

0

2

4

6

8

2011 2012 2013 2014 2015 2016 2017 2018 2019Burundi Afrique Centrale Afrique

Figure 2 – Taux de croissance du PIB réel (%)

-10

-8

-6

-4

-2

0


Figure 3 – Solde budgétaire (% du PIB) Figure 4 – Fiscal balance (% of GDP)

4

constrained by the sharp decrease in external financing of the budget. Given the continuing uncertainties concerning external financing, the budget deficit is expected to remain at 8.8% of GDP in 2019 and could rise to 10.3% of GDP in 2020.

22. The risk of over-indebtedness remains high. Based on the most recent debt sustainability analysis done by the IMF in March 2015, the risk of over-indebtedness for Burundi remains high. This risk is noticeable through the ratio of the net present value of the external debt to exports estimated at 152% in 2015 compared to the reference of 100%. However, it had decreased compared to 2012 (187%) thanks to the budgetary reforms put in place and the increase in exports observed between 2009-2014. Burundi's public debt represented nearly 50% of GDP in 2016 (including about 17% of external debt) compared to 36% in 2012. The estimates of the Central Bank of Burundi3 (BRB) indicate an increase in debt in 2017 (nearly 50% of GDP) driven by domestic debt. Between June 2015 and June 2018, the outstanding public debt rose sharply year-on-year by +54%, due to a 79% increase in domestic debt and a +15% jump in external debt. The rise in State debt to the entire banking system alone represented 90% of the stock of domestic debt at the end of December 2018.4 The share of external debt as a percentage of GDP has been declining since 2011 (24% compared to 15.3 in 2017 and 14.9% in 2018) 5. According to the Bank's data (ECST), debt service is estimated at USD 70 million against USD 5 million in 2011. They could exceed USD 100 million by 2020. With regard to the sustainability framework of the Bank, the status of Burundi is "red" in 2019; which reinforces the country's risk of high debt levels. Therefore, all Bank financing under ADF-14 is in the form of grants. 23. The deterioration of public finances since 2015 has affected the Central Bank’s performance, due to the extensive use of statutory advances to finance the budget deficit. Official foreign exchange reserves were down by almost 8% between 2014 and 2018, from 3.5 months in 2014 to 3.2 months in 2018. As a result, the official exchange rate of the currency depreciated by about 15% over the period. In 2018, the Central Bank of Burundi continued to implement the relatively expansionary monetary policy that has prevailed since the onset of the socio-political crisis in 2015. Thus, it has continued to facilitate the refinancing of commercial banks to support productive investments, especially in view of the decline in bank liquidity. The official exchange rate was around BIF 1808 to USD 1 in December 2018, compared to BIF 1617 for the same period in 2015, down 12%. Nevertheless, the parallel market is exerting increasing pressure on the exchange rate: USD 1 for BIF 2710 in October 2018 and USD 1 for BIF 2780 in January 2019. The inflation rate, which exceeded 10% in 2017 (14.6%), fell sharply in 2018 (-2.6%). It could increase in 2019 and 2020 owing especially to the election period.

24. Burundi’s external position remains fragile due to its huge trade deficit and the low level of foreign investment. Between 2011 and 2018, the current account deficit remained above 10% with a record of 14.5% of GDP in 2015 (see Figure 4). The country’s export base remains poorly diversified and is built essentially around coffee and tea, which account for more than 80% of exports. For their part, imports largely comprise manufactured goods, reflecting weakness of the national industry. In 2016 and 2018, the good performance of coffee exports combined with a decline in imports of goods and services led to a two-year consecutive reduction in the current account deficit (11.6% of GDP in 2017 and 10.4% of GDP in 2018). This decrease is expected to continue in 2019 with forecasts of 9.4% of GDP.

3 Burundi has no program with the IMF since 2016. The last debt sustainability analysis dates from 2015. 4 Source: Bank of the Republic of Burundi (BRB Central Bank). 5 Source : Bank of the Republic of Burundi (BRB Central Bank).

-20

-15

-10

-5

0

5


Figure 5 – External current balance (% of GDP)

5

25. In terms of regional integration, Burundi has made significant strides towards the establishment of a common market as part of the East African Community (EAC). The measures taken include the establishment of a common external tariff, harmonisation of immigration and labour laws, removal of non-tariff barriers and finalisation of the Protocol on Good Governance. Burundi also signed the Agreement for the Continental Free Trade Area in March 2018. Therefore, the country must tackle the challenge related notably to its landlocked status, in order to take advantage of the opportunities offered by integration in the East African region and the rest of the continent. The country's score on the Africa Visa Openness Index6 (0.113 on a scale of 0 à 1) also requires further efforts on its part to facilitate the movement of people and trade with the outside world. Strengthening the road network (80% of the trade in goods) and developing the transport by lake are a priority for the country (Lake Tanganyika).

26. In terms of overall governance, the situation remains worrying, although progress in public finance management puts the country in the average risk category. Regarding corruption, the 2018 Corruption Perception Index, which measures countries in terms of the least corrupt, ranks Burundi 170th out of 180 countries (compared to 157th in 2017). However, on public finance management, the country has made progress since the 2009 and 2012 PEFAs, and the country risk is deemed average as indicated in the country risk assessment in Annex 15. Although the challenges remain significant, real progress has been achieved in reducing the stock of payment arrears on expenditures, reducing extra-budgetary funding, consolidating accounts into a single State account, predicting cash flow and improving the oversight capacity of the General State Inspectorate. On the fiduciary front, based on the analysis of the legislative and regulatory framework, the institutional framework, procurement practices and the integrity and transparency of the procurement system, the overall risk entailed in the use of this procurement system for Bank-financed projects is deemed substantial (see Annex 14).

27. Overall, the business environment in Burundi has been deteriorating in recent years, despite the progress in facilitating business creation. Between 2012 and 2018, the country slipped 12 spots in the Doing Business ranking7. In the 2019 ranking, Burundi went from 164th place in 2017 to 168th in 2018. In this ranking, the country slipped in several aspects, including getting electricity (lost one spot at 183rd), registering property (lost two spots at 97th), obtaining credit (lost one spot at 177th), trading across borders which lost five spots and enforcing contracts which lost up to eight spots (at 158th). Although the overall rating was unfavourable, there were some positive aspects: (i) in terms of starting a business, Burundi currently ranks 17th, thanks in particular to the reduction in the cost of registering a business; (ii) with regard to dealing with construction permits, the country rose from 168th to 162nd following the improved transparency of building permit processing.

28. Burundi’s private sector is underdeveloped. The private sector is dominated by informal sector micro-enterprises oriented primarily towards the local market. Its development is faced with: (i) poor access to finance ; (ii) a crucial lack of foreign exchange in the country; (iii) poor national transport infrastructure; (iv) the weakness of the energy sector; and (v) difficulty in obtaining certification for agri-food products. The share of private investment in GDP remains low (barely 15%), and is below the average for countries of the East African Community. In terms of competitiveness, the Global Competitiveness Report 2018 ranks Burundi 125th out of 135 countries, with a score of 3.21 over 7, and points out that factors such as market size, access to technology, acquisition of technical skills and development of the financial sector are among the major obstacles to the competitiveness of Burundian businesses.

29. The banking sector is the main component of the financial sector, which also comprises insurance companies, microfinance and social welfare institutions. On average, over the past five years, the banking sector (banking and financial institutions) has held 84.4% of total assets, ahead of microfinance institutions and insurance companies which accounted for

6 According to the 2018 report, the country's score is 0.113 on a scale of 0 to 1 (with 1 being the most open country), ranking

it 46th out of 54 countries.

7 World Bank Group (2018), Doing Business

6

11.4% and 4.3%, respectively. Banking sector credit to the economy represented 14.7% of GDP in 2017. Credit is concentrated in the trade and equipment sectors, which attract more than 61.1% of the whole. Credit is generally short-term (53.5% of the total). The banking market is dominated by three banks of systemic importance, which share 63.7% of sector assets, 60.7% of the credit portfolio and 66.2% of deposits. The low savings mobilisation capacity explains why only 9% of the deposits are for a two-year period or longer. The lending rate charged by the banks was 15.7% in 2018, compared with a credit rate of nearly 5.5%. As regards the stability of the financial system, the level of non-performing loans was relatively high at 14.5% in 2017, compared with the benchmark of 5%. In 2018, a law was passed aimed at laying the groundwork for the integration of the financial sector within the East African Community (EAC) and enhancing the efficiency and resource mobilisation capacity of the financial sector. The Bank will support the Government in setting up this secondary capital market.

2.3 Sectoral Context

30. Burundi is facing major economic and social development difficulties largely related to poor economic infrastructure.

31. Burundi's agricultural sector is an essential source of growth (40.7% of the GDP

in 2018, more than 80% of the workforce and about 70% of export revenue), but it is faced with significant constraints. The constraints are agronomic, technological and institutional. Agronomic constraints relate to: (i) low soil fertility that limits productivity; (ii) low input use; (iii) land fragmentation; (iv) inadequate supervision of the agricultural sector; (v) poor water management, processing and product conservation problems, and low agricultural mechanisation. Technological constraints include: (i) inadequate technological innovations; (ii) insufficient water resource management techniques for irrigation; (iii) insufficient technology for the processing and conservation of agricultural products, and the inadequate rural electrification. Socio-economic constraints comprise: (i) land issues and demographic pressure that make access to land difficult; and (ii) poor access to agricultural credit and inputs. Institutional constraints include: (i) difficulty in carrying out structural reforms and inadequate involvement of the private sector in financing the sector. With respect to agri-food valorisation, processing capacity is limited by various factors, including: lack of power supply, lack of product certification, technical weaknesses relating to processing procedures, and low storage capacity.

32. The energy infrastructure development level is inadequate. The energy access rate is limited (around 58.5% in the city, 1.2% in the rural areas en 2016) due to the inadequate development of energy infrastructure. Transmission and distribution networks are obsolete, with losses (estimated at 32.1% in 2016). Energy production is insufficient, leading to significant load shedding. The peak demand in 2016 was 53 MW for an energy output of 287.4 GWh. The total installed power capacity is 62.85 MW, half of which is thermal diesel. Electricity is still expensive in Burundi at an average rate of USD 0.20/kWh. The main challenges in Burundi's power sector relate to universal access to modern energy services, energy efficiency and sustainable development.

33. The transport sector has gained strength as shown by the steady improvement in the

transport composite index of the African Infrastructure Development Index (AIDI)8. Government's efforts in this regard received strong support from the Bank. However, there are still challenges that must be addressed to increase and diversify transport, namely: (i) reducing transport costs, which in Burundi - as in most landlocked African countries- represent between 15 to 20% of import costs (that is, three to four times higher than in most developed countries); and (ii) improving the transportation of people and goods, which is a key challenge for any development in the country as well as in the major cities, including Bujumbura.

Burundi ranks 3rd in the EAC in 2019 and 20th in the continent in the transport composite index of the Africa

Infrastructure Development Index (AIDI)

7

2.4 Social Context and Crosscutting Themes

34. Burundi is confronted with significant and persistent drivers of fragility as indicated by the results of the 2018 CFRA. The 2015 crisis severely affected Burundi's economic management and business environment. This situation, coupled with decreased access to public services, does not allow for social autonomy. The high poverty rates among the population and the lack of economic opportunities continue to generate relatively strong pressure against economic and social inclusion. The community labour introduced by the Government is one of the initiatives that could help improve access to basic services through a participatory approach.

35. Overall, the 2018 Country Resilience and Fragility Assessment (CRFA) suggests low capacity and average pressures for Burundi. In all seven aspects of the CRFA, the manifestation of pressure exceeds the country's capacity: (i) the areas of political inclusion, security and justice are characterised by strong pressures (particularly for political inclusion), with weak justice and security capabilities; and (ii) the areas of social cohesion, economic and social inclusion and externalities are characterised by low capacity (especially as regards justice) and low pressures (for economic inclusion and social cohesion). To mitigate the drivers of fragility and build resilience in Burundi, it is imperative: (i) that efforts be pursued in the short term to improve the political and security situation as well as overall country governance; and (ii) that interventions be accelerated and sustained in order to strengthen the country's economic base and create income-generating opportunities for the poorest segments. It is against this backdrop that PND 2018-2027 was developed. The ambition is to consolidate the resilience of Burundi’s economy and address the constraints impeding the transformation of the economy into that of an emerging country.

36. The majority of the Burundian

population lives in poverty, especially in rural areas9. Nearly two out of three Burundians are unable to meet their basic food and non-food needs on a daily basis (data from the ECMVB-2013/2014 Household Living Conditions Survey). Estimates from the Burundian Institute of Statistics and the United Nations indicate that the phenomenon worsened in 2017 with the poverty rate reaching almost 66% from 64.6% in 2013. Burundi ranks 185th out of

189 countries according to the 201810 edition of the UNDP Human Development Index, with a human development index of 0.404. Food security is a major challenge. In 2016, Burundi ranked last in the Global Food Security Index, with nearly one in two households suffering from food insecurity. More than half of children (six out of ten) were stunted in 2017. Health indicators are also low: (i) life expectancy, which was 57 years in 2014, dropped to 52.6 in 2017; (ii) the under-five mortality rate is 42,511 per 1000 live births; (iii) the incidence of malaria is 156.2 per 1,000 people at risk and that of tuberculosis is 114per 100,000 people; (iv) HIV prevalence stands at 1.1%.

37. Burundi has a high unemployment rate, particularly among young people. In the strict ILO sense, Burundi has a 79% unemployment rate (ECVMB-2013/2014). However, more

9 The last ECMVB household living conditions survey was conducted in 2013/2014 with results made public in 2016. Currently, no further

surveys are planned due to lack of funding 10 UNDP, Human Development Report 2018 11 Childmortality, 2017

Box 1- Country Resilience and Fragility

Assessment

Pressure drivers of fragility : (i) Land fragmentation

and land conflicts often generate conflicts with a high

potential for instability; (ii) Youth unemployment (low

youth empowerment rates and lack of a strategy for

enabling to them to gain access to employment) is a

threat to the country's security balance; (iii) Low

institutional capacity resulting in difficulties in

implementing economic policies; (iv) High production

costs and low skills of the labour force, lack of

financing and the business environment undermine the

development of the private sector; (v) regional

disparities in the availability of infrastructure create

spatial inequities; (vi) The predominance of

subsistence agriculture and low agricultural

productivity make it impossible to ensure food

security; and (vii) Cross-border effects (presence of

Burundian refugees in neighbouring countries and of

foreign refugees on Burundian soil) are a constant

source of threat to the country’s political stability.

Box 1 – Pillar 1 and Box 2- Pressure Drivers of

Fragility

(i) Land fragmentation and land conflicts often

generate conflicts with a high potential for instability;

(ii) Youth unemployment (low youth empowerment

rates and lack of a strategy for enabling to them to gain

access to employment) is a threat to the country's

security balance; (iii) Low institutional capacity

resulting in difficulties in implementing economic

policies; (iv) High production costs and low skills of

the labour force, lack of financing and the business

environment undermine the development of the private

sector; (v) regional disparities in the availability of

infrastructure create spatial inequities; (iv) The

predominance of subsistence agriculture and low

agricultural productivity make it impossible to ensure

food security; and (v) Cross-border effects (presence

8

than 40% of those who claim to be employed are actually underemployment because of the duration of their work. With a rate estimated at 65% in December 2017, youth unemployment is a cause for concern. The phenomenon may be due, among other causes, to the limited development of the private sector, the difficulty faced by young entrepreneurs in gaining access to finance, the poor performance of the education system, the persistent mismatch between skills and labour market needs owing to the lack of an appropriate policy for the development of technical and vocational education. Initiatives in support of job creation for young people (project incubators, setting up young people in livestock and agricultural projects, in particular) have been launched by the authorities in recent years, but are poorly coordinated and inadequate, given the magnitude of the needs.

38. Burundi has made progress in women’s empowerment with the implementation of

the National Gender Policy adopted in 2004, but there are still challenges to be addressed. The CFRA notes the improvement achieved with the introduction of quotas for women in the Constitution (at least 30%). That paved the way for women’s entry into the Senate and the National Assembly, where they make up 42% and 36.4% of the members, respectively, according to the latest estimates of the Inter-Parliamentary Union. However, the quota has not been achieved at the local level and is not applied to technical positions. At the institutional level, the existence of the Ministry of Social Affairs, Human Rights and Gender, which established a National Gender Equality Policy in 2012 with its four-year Action Plan, and the designation of Sector Units in the various ministries, represent a major institutional breakthrough. Despite this progress, gender inequalities remain significant in Burundi. The country is ranked 108th on the gender inequality index. Women’s participation rate in Burundi is high in low-skilled jobs (mostly in agriculture) and in the informal sector. This problem needs to be addressed if economic parity is to become a driver for growth and integration. Access to resources and factors of production, especially land, is one of the main sources of inequality. This situation is difficult to change due, among others, to the law on inheritance and land tenure that is still governed by customary law whereby divorced women, single mothers and widows have no right to property. Women continue to be among the main victims of conflicts, and mechanisms for providing care to victims and fighting sexual and gender-based violence are extremely limited, although provided for by law.

39. The country is increasingly vulnerable to climate change and the degradation of the natural environment (see Annex 17). The 2018 CFRA indicates that Burundi’s policies for the protection and sustainable use of natural resources is relatively weak. The implementation of policies and conventions on climate change is slow. In addition, pressures related to access to food remain relatively high. Climatic events such as El Niño and La Nina continue to have a negative impact on agricultural production and food security. Natural disaster risks are real and when compounded by political and security crises, they become the grounds for population displacements (70% of internal displacements are due to natural disasters). Challenges related to the environment and natural resource management comprise: (i) population growth; (ii) land conflicts; (iii) conservation of biodiversity; (iv) use of biodegradable material; (v) protection of the waters of the tributaries of Lake Tanganyika; (vi) protection and rational use of land; and (vii) management of chemicals and other wastes. The challenges of climate change include: (i) climate resilience and management capacity; (ii) forest exploitation and protection of natural ecosystems; (iii) greenhouse gas (GHG) mitigation and sequestration capacity; (iv) research/development and technology transfer capacity; (v) gender mainstreaming in the fight against climate change; and (vi) the reliability of weather forecasts. Faced with these challenges, the Government is working to mainstream climate change issues into the development programmes.

3 STRATEGIC OPTIONS, PORTFOLIO PERFORMANCE AND LESSONS

3.1 Country Strategy Framework

40. To address the challenges it continues to face, and as a follow-up to the 2012-2016 Poverty Reduction Strategy, the Government of Burundi in August 2018 prepared a National

9

Development Plan for Burundi for the decade 2018-2027 (Burundi PND 2018-2027). The PND is designed to be part of a development approach based on a new drive for the transformation of economic, demographic and social structures. The PND was intended, among others, to generate multiplier and lasting effects to improve economic growth and average per capita income, address the basic needs of the people, reduce poverty, develop human capital, and foster environmental sustainability and social equity.

41. The PND is structured around 11 thematics: (i) modernise agriculture; (ii) increase energy production; (iii) improve knowledge based on technology and expertise; (iv) develop the natural resources sector; (v) diversify and promote a competitive and healthy economy; (vi) create an enabling environment for industrialisation; (vii) develop human capital; (viii) strengthen transport, trade and ICT infrastructure; (ix) promote tourism; (x) public-private partnerships; and (xi) regional integration and international cooperation. Based on the challenges identified at sector level and the community consultations that were held, a Priority Action Plan (PAP) was developed. It identifies five strategic thrusts and puts the total cost of the PND at FBU 20,385 billion (around USD 11.1 billions) over the 2018-2027 period. Thus: (i) 76.6% of the resources will be allocated to the development of growth sectors for the structural transformation of the economy; (ii) 17.6% to human capital; (iii) 2.9% to the environment, climate change and land-use planning; (iv) 2.1% to governance, security and the protection of national sovereignty; and (v) 0.8% to the mobilisation of innovative resources.

42. The challenges facing the Government in the PND implementation include: (i) initiating the development of the main national sector strategies in line with the major objectives set; (ii) adopting measures to mobilise the external financing required for the implementation of programmes; iii) to put in place an adequate mechanism for monitoring/evaluation mechanism of the PND; and iv) not to be challenged and substantially revised in the aftermath of the 2020 presidential elections. Addressing these challenges is extremely important, given the ambitious nature of the PND economic growth forecasts (an average growth of 10.7% of GDP over the period and a GDP per capita expected to reach USD 810 by 2027, compared with USD 274 in 2017) and considering that these projections are based on ambitiuous assumptions (GDP growth of 10.7% over the period and increase of the GDP per capita from 274$ in 2017 to 810$ en 202712).

3.2 Aid Coordination and Harmonisation

43. The formal mechanism for consultation and dialogue between the Government and the various development partners is barely functional in Burundi. The mechanism comprised: (i) a strategic forum chaired by the Minister of Finance, which was supposed to meet monthly; and (ii) a political forum that was supposed to be held quarterly and chaired by the Second Vice-President of the Republic. The management of the period following the events of 2015 was not conducive to the continuation of dialogue between the Government and the technical and financial partners within the partnership framework defined, even though bilateral dialogue was maintained. Moreover, it is worth noting that a number of Government-headed consultation frameworks are operating, especially in the health sector. In contrast, in the area of structural reforms for instance, the deficit in coordination worsened with the January 2016 interruption of the reform programme supported by the IMF Extended Credit Facility (ECF) 13. In 2018, the technical and financial partners relaunched a consultation and internal coordination framework. They set up a mechanism comprising a three-tier coordination framework bringing together: (i) heads of diplomatic missions and heads of agencies; (ii) heads of cooperation; and (iii) sector groups.

12 Data and objectives of the PND. 13 In 2018, the dialogue between the Government and the IMF on the re-engagement in the country was initiated.

The Bank attended the technical mission carried out by the Fund's. The discussions are ongoing without a clear

visibility on the terms of re-engagement. At this stage, the issue under discussion is the consultations the Article

IV the IMF's Status.

10

44. For its part, the Bank is playing an active role in facilitating dialogue and aid coordination mechanisms. It did not suspend its operations in Burundi despite the socio-political crisis of 2015. It assumes the role of leader of TFPs in the transport sector where it is a key player for road financing and regional integration. Moreover, given that the Bank maintains effective dialogue at bilateral level with other partners to address the numerous challenges and mobilise resources for project co-financing, it is well placed to play an advocacy role in the country. As far as financial support is concerned, the Bank is among Burundi’s three main development partners in terms of aid volume (along with the World Bank and the European Union).

3.3 Weaknesses and Opportunities

3.3.1 Challenges and Weaknesses

45. The main challenges are akin to the drivers of fragility (see previous section). The episodes of political instability experienced by Burundi were not conducive to laying the groundwork for sustained economic growth. The major constraints identified as hindering the structural transformation of the economy may be summarised as follows: (i) low agricultural productivity; (ii) high vulnerability to external shocks; (iii) inadequate power supply; (iv) rapid population growth; (v) space management; (vi) insufficient and weak quality of transport infrastructure; (vii) low human capital; (viii) inadequate ICT infrastructure; and (x) failure to mainstream climate change into all social and economic development sectors.

3.3.2 Strengths and Opportunities

46. Despite these constraints, Burundi has several advantages/opportunities which, if

properly harnessed, could have a real impact on growth and job creation:

The agricultural sector has considerable advantages: (i) the availability of a hard-working agricultural workforce; (ii) the possibility of having several crop cycles per year, given the rainfall patterns; (iii) the existence of varied ecosystems, allowing for a widely diversified agricultural system (food and cash crops, and the development of plant, animal and fisheries production value chains); (iv) the availability of 120,000 ha of marshland, irrigable plains (Mosso and Imbo), a large network of rivers, and abundant rainfall for at least 6 months a year (which can be enhanced by adopting appropriate irrigation techniques).

The country’s mining potential is huge with significant reserves of minerals such as nickel, coltan, vanadium, phosphate and limestone. Burundi has the world’s second-largest nickel reserve, accounting for 6% of the global reserve estimated at nearly 200 million tonnes. However, all this mining potential remains under-exploited.

Lake Tanganyika offers the country significant opportunities: This lake serves about 10 ports. The development of port activities could make Burundi an inter-regional trade hub. The renovation of the Bujumbura Port will increase trade, especially the transit of goods to and from various countries of the sub-region (Rwanda, Tanzania, DRC, Zambia, etc.), thereby reducing transport costs,

The exploitable hydropower potential is 1,300 Megawatts: Currently, less than 40 MW are actually exploited.

The country is characterised by up to five ecological zones (the Imbo plain, the Mumirwa western escarpment, the Congo Nile crest, the central plateau and the Moso lowlands (in the east). These ecological zones offer a series of protected areas and biodiversity-rich aquatic environments that could positively affect the development of a healthy natural environment, natural resource conservation and management, and climate change mitigation.

11

3.4 Country Portfolio Performance Review

3.4.1 Composition

47. The Bank’s active portfolio in Burundi as at end-March 2019 comprised 16 public sector operations, totalling approximately UA 247.56 million (see Annex 8). The focal sectors of operation are: transport (60.6%), energy (32.9%), agriculture (4.8%), multisector (1.2%), social sector (0.4%). This situation reflects the strategic choices defined by the Bank's assistance strategy for the country for the period 2012-2016, which was extended to 2018, and focused on governance and infrastructure improvement (figures 5 and 6).

3.4.2 Analysis of Performance Indicators

48. The portfolio performance analysis shows a relatively satisfactory disbursement rate of around 34.3%, for an overall average age of about three (3.8) years. The decrease in the disbursement rate in 2018 and the first quarter of 2019 was due to the fact that a number of projects, such as PABVARC and two road projects (RN5 and RN13), were closed in 2018, while the portfolio was rejuvenated with the entry of two new projects in November and December 2018 for which funding has yet to be disbursed.

49. As at 29 March 2019, none of the current projects was deemed at risk. However, 10% of the national project portfolio (the Jiji Mulembwe Hydropower Project) appeared on the dashboard due to the slow procurement and disbursements rate as at 28 March 2019, compared with 22% of the portfolio as at 31 December 2018. Concerning the multinational public portfolio, three of the six projects were flagged. These are: (i) BURUNDI-DRC NELSAP Interconnection; (ii) RUSUMO-BURUNDI Regional Project; and (iii) RIZIZI III. These multinational projects mainly comprise energy sector projects characterised by slow implementation and low disbursement rates. In addition to the lack of national capacity in the sector, the multinational nature of these operations call for constant consultation between various stakeholders to ensure progress in implementing the activities programmed. Furthermore, since a number of these operations are implemented under a public-private partnership arrangement, they take more time to design. To improve the monitoring and status of energy sector projects, the Bank's Country Office in Burundi has been strengthened with an energy specialist. Thus, the Bank is giving itself additional resources to support capacity building for the public corporation in charge of energy (REGIDESO). As a result, significant progress has been made, especially with the acceptance of the use of English law by the three countries (Rwanda, DRC and Burundi), which resolves the main point hindering the RIZIZI III Project, and the release of the first disbursement for the Jiji Mulembwe Hydropower Project.

50. The Bank will continue its efforts to consolidate the Burundi portfolio, in light of Presidential Directive No. 02/2015 Concerning the Design, Implementation and Cancellation of Bank Group Sovereign Operations. The dialogue on performance will be strengthened, especially with the implementation of the Country Portfolio Performance Improvement Plan (CPPIP) 2018 (see Annex 6), formally approved by the Government and the Bank. A focus will be put on technical assistance in the energy sector to strengthen skills and mastery of procedures for faster implementation of ongoing programs. Capacity building will also focus on the

Feed Africa, 4,8% Light up

and power Africa , 23,1%

Industrialise Africa; 9,4%

Integrate Africa, 42,4%

Improve the Quality

of Life in

Africa, 20,3%

Figure 5 – Breakdown of the Active Portfolio by Sector Figure 6 - Breakdown of the Active Portfolio by the High 5s

4,8%

32,9%

60,6%

0,4%

1,2%

Répartition portefeuille public /secteur

Agriculture Energie Transport

Social Multisecteur

Energy

Multisector

12

management of regional operations that are the bulk of the portfolio, and the coordination among states will be improved.

3.5 Lessons from the CSP 2012-2018 Completion Report and the CPPR 2018

51. Although part of the implementation period of CSP 2012-2018 was affected by the political crisis, this strategy enabled the achievement of outcomes aligned with the original objectives14. Lessons from implementing CSP 2012-2018 helped to shape several aspects of CSP 2019-2023.

The need to multiply the sources of CSP funding: Given that ADF and TSF

allocations are low compared to the country’s needs, the Bank will continue to

mobilise additional sources of financing to leverage resources, especially

through the private sector window, trust funds and co-financing;

The need to address fragility issues in order to build the country's resilience:

The Bank should better address fragility issues as part of its new assistance

strategy with a view to building resilience in Burundi (better integrating the

fragility diagnostic in Burundi);

The need to support the development of the private sector in Burundi: Given

the magnitude of unemployment, especially among young people and women,

the Bank will need to strengthen dialogue with the private sector (identification

of ways to support its development);

The need for the Government to focus its efforts on the development and/or

updating of national sector policies in order to operationalise and effectively

implement the National Development Plan 2018-2027 (the lack of updated

sector strategies and frameworks for coordination with technical and financial

partners was one of the weaknesses that characterised the CSP implementation);

and

The need to integrate lessons from the 2018 portfolio review into the

preparation of future Bank operations: These include, for the Bank: (i)

ensuring that the project baseline study is of very good quality; (ii) ensuring the

mastery of national procedures and those of the Bank by project teams; (iii)

building implementation capacity in the energy sector; and (iv) holding regular

meetings with the Government to monitor the portfolio improvement action

plan.

4 BANK GROUP STRATEGY 2019-2023

4.1 Rationale

52. Despite the progress achieved in stabilising the country since the 2015 crisis, Burundi continues to face huge development challenges. The constraints were presented in the section on the economic context and drivers of fragility. However, there are opportunities and real potential in Burundi that could be leveraged to build the country’s overall resilience.

53. The CSP drew on outcomes and lessons from implementing CSP 2012-2018, the

diagnostic of the drivers of fragility and a dialogue and consultation process involving the authorities, civil society, the private sector and development partners. Missions were fielded and dialogue sessions held in November and December 2018 and in May 2019 (the dialogue workshop). The CSP preparation is also based on the conclusions of the mission of the AfDB Executive Directors to Burundi in February 2019 and their discussions with senior officials. Thanks to these consultations, an agreement was reached with stakeholders on the need to strengthen the opening up of the country internally and externally, the need to introduce reforms that would transform the country’s agriculture into one that is market-oriented, and the need to improve the quality and availability of services in the power sector. Discussions also

14 Cf. CSP 2012-2018 Completion Report and the 2018 Portfolio Performance Review considered by CODE on 7 May 2019

13

underscored the importance of developing the private sector to enable it to serve as a driver of inclusive and job-creating growth. Access to finance and technical assistance for the private sector were also identified as support areas to be considered by the Bank (see Annex 12 on consultations).

4.2 CSP Objectives and Strategic Pillars

54. Based on these considerations (analysis of the PND 2018-2027 and the in-depth discussions with the Government and development actors), the Bank’s comparative advantage, the outcomes of the CSP 2012-2018 and CFRA implementation, the proposed strategic thrust of the new CSP for Burundi is to support the Government in addressing drivers of fragility and building resilience in Burundi. This strategic objective is in line with the Bank's Strategy for Addressing Fragility and Building Resilience. CSP 2019-2023 will support measures aimed at removing impediments to the development of the country's potential, in an effort to achieve inclusive growth and build economic resilience, while ensuring the transition to a green economy. It is aligned with the Bank's High 5s and Ten-Year Strategy 2013-2022

4.2.1 Intervention Pillars Proposed for the 2019-2023 Period

55. To achieve this general objective, two complementary and mutually reinforcing pillars are proposed.

56. Pillar 1 relates to agricultural

development and transformation. Its objective is to

modernize agriculture with a view to diversifying

production and improving the income of rural

populations. Under this pillar, the Bank will help to

improve the living conditions and the resilience of

rural communities, through an integrated land

management approach involving the optimal use of

natural resources adapted to the increasing

population pressure. The agricultural sector is a

significant driver for poverty reduction and job

creation in Burundi. This pillar is part of the

“Economic and Social Inclusion” dimension of the

CRFA 2018 because it addresses issues of extreme

poverty and contributes to capacity building in the

direction of creating economic opportunities (see

Box 2)

57. This will involve: (i) improving the standard of living of the populations in the

targetted zones; (ii) developing the entrepreneurial skills of young people and women with a

view to their empowerment; (iii) supporting agricultural development hubs (agropoles) and

increasing private investment in processing; (iv) developing lands subject to management

resilient to climate changes. The Bank will lay special emphasis on supporting the Government

in creating an agro-industrial processing area in Burundi aimed at encouraging the

establishment of processing plants in areas of high agricultural production (for processing

commodities and minimising post-harvest losses). Efforts will also be made to support the

development of technical and research capacity in agri-food processing and food fortification

through the introduction of a university training course (the establishment of a centre of

excellence in nutrition sciences will help to reduce malnutrition). Agricultural transformation

as part of implementing the Technology for African Agricultural Transformation (TAAT)

programme, will target communities that are not only economically, socially and

environmentally weak as well as vulnerable to the adverse effects of climate change, but also

have agricultural and fish-farming potential that, if sustainably exploited, could help improve

food and nutrition security, increase the income of vulnerable small producers and mitigate the

impact of poverty on rural households.

Pillar 1 has been defined in relation to the

CRFA to:

(i) Contribute to the reduction of the

relatively high pressure the country is

experiencing due to extreme poverty and

lack of economic opportunities: increased

agricultural production, effects on the

income of the beneficiary population, job

creation, etc.;

(ii) Build capacity (currently below average)

in economic and social inclusion:

agricultural productivity, industrial

processing areas, etc.; and

(iii) Build capacity (currently extremely low)

in social cohesion while reducing pressure:

land management.

Box 2 – Pillar 1 and CFRA

14

58. Pillar 2 concerns the improvement of transport and energy infrastructure. It aims to remove the bottlenecks restricting the productive sectors and hindering access to domestic, regional and international markets. It takes into consideration the CRFA’s diagnostic to build capacity for economic and social inclusion and social cohesion (see Box 3). The transport sector is a significant driver for strengthening regional integration and trade in East Africa, and the current state of the energy sector is a major constraint to the reduction of input costs, the processing of primary commodities and the achievement of the people’s welfare. Therefore, this pillar will: (i) contribute, as a factor of inclusion, to bridging the infrastructure gap in the transport and energy sectors; and (ii) promote equitable access to basic infrastructure. In the transport sector, the Bank will support the development of multimodal transport (roads and ports) to enable Burundi to take advantage of its geographic position. It will continue operations to open up agricultural production areas and create closer links between production areas and outlets (lake transport will be prioritised by rehabilitating the Bujumbura Port).

59. In the energy sector, the Bank will focus on the construction, rehabilitation and/or extension of energy infrastructure as a prerequisite for the sustainable structural transformation of the Burundian economy. Better access to energy services by households and businesses (including in the agricultural and agro-industrial sectors) is a factor in reducing production costs. This will encourage agro-processing and agribusiness. The Bank will continue to strengthen its interventions to facilitate access to energy for the poorest people and resolve structural problems in the energy sector by prioritising green energy and supporting off-grid solutions. It will also focus on capacity building to accelerate the implementation of projects in this sector. The Bank will support private sector involvement for greater participation in sector investments, as well as ensure greater synergy with other development partners for the conduct of joint operations at both the national and regional level. The Bank will strengthen its activities aimed at accelerating regional interconnection projects with a view to establishing a regional electricity market.

4.2.2 Crosscutting Areas

60. To maximise the impact of implementing these two pillars, the Bank will strive throughout the implementation of CSP 2019-2023 to: (i) support the improvement of governance and build capacity; (ii) mainstream climate change and gender in CSP focal sectors; and (iii) promote private sector involvement in these focal sectors (see Annex 17).

61. In terms of capacity building, the Bank’s action will be at the macroeconomic and institutional levels and in the key sectors of the national program, taking into account the challenges noted above. Actions and areas of focus will include public financial management, especially internal and external resource mobilization, debt analysis and public policy management, financial sector regulation, etc. The Bank will foster knowledge exchange among peers though high-level seminars, training coupled with internships enabling beneficiaries to develop the necessary skills than can be transferred to others The capacities for diagnosis, development and implementation of policies and reforms will be strengthened at the central and decentralized levels (provision of tools, knowledge and good practices for real transformation).Stakeholder capacity building for participation in regional operations is also critical, given that regional energy projects require coordination with several countries in key areas. Bank operations will include technical assistance to address the challenges of low human capital in Burundi. In the energy sector, for instance, the Bank's technical assistance will help to identify current skills gaps, develop appropriate training programmes, and provide the skills needed to grow the sector. It will support capacity-building initiatives for actors through hands-on training programmes for technicians, on-the-job training for engineers, and training and

Pillar 2 builds on the CRFA to:

(i) Build capacity (currently below average)

in economic and social inclusion: transport,

energy, internal and external access,

reduction of input costs; and

(ii) Build social cohesion capacity (now

extremely weak), while reducing pressure:

private sector development, improved access

to electricity services.

Box 3 – Pillar 2 and CFRA

15

certification programmes for electricians. The Bank will also explore opportunities for capacity building in the mining sector, including through the Bank’s Natural Resources.

62. Private sector developmentand job creation. Under Pillar 1, the Bank will support agricultural entrepreneurship particularly by strengthening human capital for all segments of agricultural value chains and providing support funds for agricultural initiatives. Under Pillar 2, and particularly with regard to energy, the Bank will focus on strengthening the electricity value chain and technical assistance activities that can forge ties with local SMEs for the construction and maintenance of facilities that require semi-skilled and unskilled labour. Three areas of intervention will be prioritised, given their income-generating and job-creation potential: (i) rehabilitation of the existing network and production facilities; (ii) extension of the transmission and distribution network to increase electricity access for businesses and individuals in under-served areas of the country; and (iii) support for off-grid development (rural electrification) to help private sector enterprises to invest in technologies that would reduce their reliance on the domestic power supply. The Bank will also consider the possibility of providing the African Legal Support Facility with technical and financial assistance in connection with the conclusion of PPP contracts, particularly in the energy and mining sectors.

63. Governance: The successful implementation of development programmes hinges on the stabilisation of the overall macroeconomic framework. Unfortunately, it was not possible to consolidate the progress achieved in this area between 2012 and 2014 because of the 2015 crisis. Thus, in general terms and in the absence of budget support operations, the Bank will provide targeted institutional support required to strengthen the public financial management institutional framework, and particularly mobilise and secure domestic fiscal revenue. The improvement of sector governance will be included in the two pillars: energy sector management, streamlining public spending in the three focal sectors, results-based management (implementation of medium-term programming tools for financing the agriculture, energy and transport sectors); (ii) advisory support informed by policy briefs aimed at improving economic governance and (iii) support for reforms aimed at improving the overall business environment.

64. Gender: Gender mainstreaming will remain a priority in all Bank operations. High

female representation will be ensured in: (i) the selection of beneficiaries of agricultural projects

such as members of agricultural groups and cooperatives, (ii) the recruitment for jobs on

road/port and energy projects; and (iii) the selection of beneficiaries of private sector support

funding.

16

4.2.3 Selectivity

65. The strategic thrusts take into

account the need to generate the greatest

possible impact through the interventions.

Therefore, the Bank worked with the

Government during the consultations to

remain within limited areas of intervention, in

the spirit of complementarity with other

technical and financial partners, all with a

view to having a real impact.

4.2.4 Alignment

66. The proposed pillars are aligned

with the Bank's High 5s, namely "Light up and

Power Africa", "Integrate Africa", "Feed

Africa", "Industrialise Africa", and "Improve

the quality of life for the people of Africa"

"(See Annex 13). They are in line with the

Bank's East Africa Regional Integration

Strategy for 2018-2023, and the Strategy for

Addressing Fragility and Building Resilience

for the 2015-2019 period. They are also

aligned with the Jobs for Youth in Africa Strategy (2016-2025) and the Strategy for Agricultural

Transformation in Africa (2016-2025). Moreover, the pillars are based on the vision laid out in

the country's National Development Plan.

4.2.5 Complementarity with other PTFs

67. The Bank's interventions will continue to be complementary with those of other TFPs through periodic consultations and discussions at various stages of the Bank's project cycle. The PTF intervention matrix in Annex 4 reflects good division of labour and coverage of all sectors. Therefore, the Bank's operations complement those of TFPs in other resilience-building areas, where the partners do not have comparative advantage, particularly in the areas of political governance, justice and security. The Bank will continue to play a leading role in donor coordination, especially as concerns infrastructure development and the strengthening of regional integration, and to support the revival of the framework for dialogue between the Government and TFPs.

4.3 Expected Outcomes and Targets

68. The main CSP outcomes and targets are developed according to the two pillars, and will be achieved through new operations as well as those already in progress. Annex 1 presents the expected outputs and outcomes of each pillar.

4.3.1 Pillar I: Support Agricultural Development and Transformation

69. The objective of this pillar in this pillar is to modernize agriculture with a view to

diversifying production and improving the incomes of rural populations. This will reduce

inequalities and mitigate the factors of fragility through improved income (rural populations,

young people and women in particular).

70. Regarding the improvement of the standard of living of the populations, the targeted

results include: (i) the reduction of the poverty rate from 61% to 55% by 2023; (ii) the increase

of the productivity of maize and cassava by 1 to 2.5 t / ha and 4.5 to 12 / ha and (iii) the reduction

of the rate of chronic malnutrition from 55% to 40%. As part of the promotion of agricultural

entrepreneurship of young people and women, the interventions aim to create 5,000 jobs,

Box 4 – Selectivity Criteria

The definition of the intervention pillars of the new

CSP was based on various selectivity criteria,

including:

Alignment: The need for interventions to be aligned

with both the country's development priorities (PND

and sector strategies) and the Bank's priorities;

Available and mobilisable resources: Consideration

of country resource allocations (performance-based

allocations, TSF), trust funds, resources meant for

the private sector, possibilities of co-financing with

other partners;

Complementarity: The need not to duplicate existing

interventions (which are funded either by other

partners or by the Government) and to maximise the

impact of past or ongoing interventions;

The Bank’s comparative advantage: The need to rely

on the resources and expertise of the Bank in the

choice of areas of intervention, based on its

experience at the continental level and its recognised

positioning in Burundi;

Impact of interventions: The need to take resource

availability into account when deciding the number

and size of operations to maximise their impact.

17

including 4,000 directly in the agricultural sector. Concerning the development of agricultural

hubs and the increasing of private investments in processing, the targeted results are: (i) the

transformation of the agricultural sector through the structuring of agricultural hubs to enable

them to serve as industrial plantations with surplus that can be used by the agri-food industry;

and; (ii) attracting private investment trough capacity building for stakeholders to boost their

ability to attract private investors and negotiate concessions and Public Private Partenerships

(PPP) contracts. Regarding institutional capacity building and adaptation to climate change, it

is expected, among others: (i) the management of 60,000 ha of land resilient to climate change;

(ii) the improvement of climate forecasts for rapid alert; (iii) popularization of improved

techniques for wood utilization and renewable energies.

4.3.2 Pillar 2: Improvement of Transport and Energy Infrastructure

71. The objective of this pillar is to remove the bottlenecks restricting the productive sectors and hindering access to domestic, regional and international markets.

72. With respect to support for the development of multimodal transport in Burundi, the expected outcomes comprise: (i) increasing in regional trade from 26% to 35%; improving trade between the South, Southeast and the rest of the country; (ii) positionning Burundi at the center of regional trade between South, North and East Africa; (iii) increasing trade between two fertile agricultural areas (eastern Burundi and western Tanzania); (iv) easing of the traffic between the centre of the country and the Mosso agricultural production areas to the south and the east; (v) lowering the transportation and supply costs for the country's sugar company; (vi) improving access to tourist sites in Rutana (Karera Falls, Germans Cliffs) and Burundi provinces (Source of the Nile); (iv) to lower the costs of evacuation and supply of the country's sugar company,; (v) improve accessibility to tourist areas in the Rutana (Kareraa Falls, Germans' Rift) and Burundi (Nile Source) provinces; and (vi) improving access to the Musonganti (nickel, iron, copper, cobalt and platinum) and Mukanda (vanadium) mining areas. 73. In an effort to help address the structural problems in the energy sector and increase access to energy for the poorest, the Bank will accelerate the implementation of major ongoing energy sector projects in its portfolio, in line with the new Energy Partnership for Africa, comprising: the Burundi-Rwanda Power Grid Interconnection Project that is being implemented as part of the Nile Equatorial Lakes Subsidiary Action Programme (NELSAP), the Jiji and Mulembwe Hydropower Plant Development Project, the Regional Rusumo Falls Hydropower Project, and the Ruzizi III Regional Hydropower Plant Project. The outcomes expected by 2023 are: (i) improving of the electricity coverage rate from 10% to 14.9%; (ii) increasing the energy production by 74.7 MW; and (iii) decreasing the electricity cost (generation and transmission) from USD 0.20 to USD 0.10.

4.4 Indicative Operational Programme (IOP) and Knowledge Management

74. The Bank's indicative operational programme (IOP) for CSP 2019-2023 (see Annex 2) was guided by consultations with the Government and other stakeholders based on: (i) activities that are required to address the drivers of fragility and build the resilience; and (ii) available and mobilisable resources. Ten (10) operations are planned for the 2019-2023 period: (i) three operations will focus on supporting agricultural transformation; (ii) three will be implemented in the energy sector; and (iii) three will enable the improvement of the transport sector. In addition to being considered under both pillars, crosscutting themes such as governance, capacity building and gender will be supported by operations funded mainly from TSF Pillar III.

75. Non-lending activities will focus on providing strategic advice to ensure complementarity with the lending programme, thereby strengthening the Bank's position as a knowledge-generating and development institution. These activities will include: (i) the preparation of policy briefs intended to inform dialogue with and support the Government in taking concrete policy action in the focus areas; and (ii) the conduct of economic and sector work aimed at deepening the Bank's knowledge of the country and throwing more light on investment operations envisaged in the provisional operational programme.

18

4.5 CSP Financing

76. The mobilisable resources for financing the 2019-2023 strategy could reach UA 148 million, drawn mainly from ADF-14 and ADF-15: (i) UA 52 million for a performance-based allocation; (ii) UA 43 million under the Transition Support Facility; (iii) UA 39 million mobilisable at the regional level; and (iv) UA 14 million in non-sovereign resources. The Bank will also continue its efforts to mobilise co-financing from other technical and financial partners (estimated at about UA 70 million). It will use the co-financing partnership agreements signed with various partners such as the European Union, the World Bank, the Japan International Cooperation Agency (JICA) and the International Fund for Agricultural Development (IFAD), and will strive to seek funding from other sources, including the Nigeria Trust Fund, the Global Environment Facility (GEF) Trust Fund, the Global Agriculture and Food Security Programme (GAFSP) Trust Fund and climate funds.

4.6 CSP Monitoring and Evaluation

77. The results-based logical framework will serve as a basis for the monitoring and evaluation of outcomes. It is based on the PND national monitoring system. Annual portfolio performance reviews (APPRs) will be used to assess the progress achieved in implementing the operations. A mid-term review will be conducted in 2021 to assess progress towards achieving the CSP outcomes, and to propose necessary adjustments. The completion report will be prepared at the end of the strategy period in 2023. Burundi's statistical system contains inadequacies as regards the indicators needed to monitor key sectors of the PND and the High 5s. Support will be provided to build its capacity (update of the National Statistics Development Strategy).

4.7 Country Dialogue

78. The Bank's physical presence through the strengthening of the team at the Burundi Country Office (COBI) will facilitate permanent effective dialogue and close portfolio monitoring. The country dialogue will focus on: (i) mitigating drivers of fragility and building the country's resilience; (ii) developing the private sector as a driver of growth and factor for alleviating unemployment; (iii) mobilising domestic resources and external assistance, notably through improved dialogue with TFPs; (iv) regional integration; (v) women's empowerment; and (vi) youth employment, which will be a key focus. While remaining within its remit, the Bank may consider the use of Pillar 3 of the Transition15 Support Facility for initiatives that are part of the strengthening of the social and political dialogue. The dissemination of CRFA could also be an additional tool for analyzing and diagnosing the context, in particular socio-political. At the operational level, the dialogue will focus mainly on issues related to project implementation and portfolio quality improvement, in line with the principles set out in Presidential Directive 02/2015. To ensure the success of this dialogue, the strengthening of the Burundi Country Office should continue with the recruitment of sector experts and assistants for project implementation.

4.8 Risks and Mitigation Measures

79. The Bank identified the main risks in the country based on a thorough analysis of the current political and security context, and identified mitigation measures (See Annex 19). The instability of the political situation constitutes a significant risk for implementing the CSP. In particular, the security situation could be tested in 2019 and in 2020, in view of the timing of the presidential elections. The Bank will join forces with the authorities and the international community to limit that risk. However, in accordance with its policy, the Bank will have to reconsider the terms and conditions of its intervention in the country in the event of a significant deterioration of the security situation. Given the planning of presidential elections in 2020, the

15 The Bank has in prospect to support a stronger involvement of the diaspora in the country's development and

youth employment (jointly with the IOM),

19

mid-term review of the DSP scheduled for 2021 will be the main tool to make any adjustments that may be necessary due to the implications of the results of the presidential elections (changes in priorities in particular)

5 CONCLUSION AND RECOMMENDATIONS

80. Burundi has real opportunities to succeed in its strategy to transform its economy by

2027. The reforms envisaged must be supported by dialogue with development actors, with a

view to restoring the groundwork for economic growth and improving governance and the

business climate. Continued investment in agricultural, transport and energy infrastructure

would help to diversify sources of growth, build the country’s resilience and improve the

people's livelihoods. The collaboration between the Bank and Burundi was fruitful during the

CSP 2012-2018 implementation period. The Bank's strategy for 2019-2023 is aligned with the

Government's key strategic and operational priorities.

81. Recommendations: In view of the foregoing, the Bank's Boards of Directors are

requested to consider and approve the AfDB Group’s Country Strategy Paper (CSP) 2019-2023,

the strategic pillars of which are: (i) agricultural development and transformation; and (ii)

improvement of transport and energy infrastructure.

I

Annex 1: CSP Resuls Framework

Country

Development

Objectives (PND)

Obstacles to

Achieving the

Country’s

Development

Final Indicators (end-2023) Midterm Indicators (end-2021) African Development

Bank Group

Interventions over the

CSP Period

Final Outcomes Final Outputs Midterm Outcomes Midterm Outputs

Pillar 1 - Agricultural Development and Transformation Support

Improve the living

standards of the

project area population

Low agricultural

product production,

storage and processing

capacity

Increased average

productivity of rice and

sorghum (T/ha <2 and

0.8 to <10 and 2)

100 agri-food

processing units

established and

supported

Increased average

productivity of rice and

sorghum (T/ha <2 and

0.8 to <5 and 1.2)

40 agri-food

processing units

established and

supported

Project to Intensify

Agricultural

Production and Reduce

Vulnerability in

Burundi

Bugesera Region

Agricultural

Transformation

Support Project

Increased average

productivity of maize

and cassava T/ha (<1

and 4.5 to <2.5 and 12)

10 stores and

warehouses

constructed

Increased average

productivity of maize

and cassava T/ha (<1

and 4.5 to <1.5 and 7)

5 stores and

warehouses

constructed

1,000,000 producers

with access to

improved advice,

technologies and seeds

400,000 producers with

access to improved

advice, technologies

and seeds

Agricultural land area

with water

infrastructure (2,500

ha)

Agricultural land area

with water

infrastructure (1000

ha)

Increased average

production of market

garden crops T/Ha (<2

to 10)

30 km of post harvest

tracks built

Increased average

production of market

garden crops T/Ha (<2

to 10)

13 km of post-harvest

tracks built

Low income of the

project area population

Reduction of the

poverty rate from 61%

to 55% in the project

area

6,777 jobs created in

the sectors (40%

women)

Reduction of the

poverty rate from 61%

to 58% in the project

area

3,000 jobs created in

the sectors (40%

women)

All interventions in the

agricultural, transport,

energy and private

sector development

Increase in

revenue/year and per

market vegetable farm

M/W (90,000/171,000

to

1,905,000/2,175,000)

Increase in

revenue/year and per

market vegetable farm

M/W (90,000/171,000

to 100,000/350,000)

II

Low competence in

malnutrition

management and food

diversification

Reduction of the

chronic malnutrition

rate from 55% to 40%

100 Master's degrees in

nutrition and food

security

Reduction of the

chronic malnutrition

rate from 55% to 50%


nutrition and food

security

Centre of Excellence in

Nutrition Project

Increase by 30% of

FOSA staff trained in

nutrition

Increase by 15% of

FOSA staff trained in

nutrition

40 agri-food businesses

that have adopted

quality standards

20 agri-food businesses

adopt quality standards

High level of

household

vulnerability in project

areas

Reduction of food

insecurity from 12% to

5% in the project area

1,500 vulnerable

households benefiting

from social security

support

Reduction of food

insecurity from 12% to

11% in the project area

500 vulnerable

households benefit

from social security

support


Agricultural


Vulnerability in

Burundi

Bugesera Region

Agricultural

Transformation

Support Project

7,000 vulnerable

households benefit

from agricultural

inputs in the project

area

2000 vulnerable

households benefit

from agricultural

inputs in the project

area

50 women's FOs

reinforced in

processing

20 Women's FOs

reinforced in

processing

Promote the

agricultural

entrepreneurship of

young people and

women with a view to

their empowerment

Entrepreneurial skills

development and

product certification

Certification according

to defined norms and

standards of 20% of

food processing

products

BBIN upgrade for


Certification according

to defined norms and

standards of 5% of

food processing

products

BBIN upgrade for


Centre of Excellence in

Nutrition Project

Youth and Women

Entrepreneurship

Support Project

Certification of

products from food

processing

Skills of 40

certification experts

enhanced

Certification of

products from food

processing

Skills of 20

certification experts

reinforced


food technology


food technology

Cretaion of 5,000 jobs

(including 4,000 in the

agricultural sector and

1,000 in other trades)

1,000 youths trained to

improve the

employability of young

people (40% women)

Creation of 2,000 jobs

in (1,500 in the

agricultural sector and

500 in other trades)

100 youths trained to

improve the

employability of young

people (40% women)

III

300 young

entrepreneurs benefit

from activity launch

kits (40% women)

100 young

entrepreneurs benefit

from activity launch

kits (40% women)

Support agricultural

development poles and

the improvement of

the input supply

system.

Identification and

technical assistance for

feasibility studies on

the establishment of

agricultural

development hubs

Identification of 3

agricultural

development hubs

One (1) feasibility

study for the

establishment of the

three agricultural

hubs

Contribution to better

mainstreaming of

climate change

Increased growth of

the country's

vulnerability to

climate change

Resilient climate

management applied

for 60,000 ha of land

Resilient climate

management applied



Agricultural


Vulnerability in

Burundi

Bugesera Region

Agricultural

Transformation

Support Project

Pillar 2 - Improvement of Transport and Energy Infrastructure.

Improvement of the

movement of goods

and services by land

(port and road)

Over-pricing of goods

and factors of

production

Increase in inter-

regional trade from

26% to 35%

Rehabilitation of

Bujumbura ports

(Burundi) at 100%

NS NS Multinational Project

for the Rehabilitation

of Bujumbura and

Mpulungu Ports Decrease of

transportation costs by

40% -25%

Rehabilitation of

Bujumbura ports

(Burundi) at 100%

NS NS

Improvement of living

conditions of the urban

population of

Bujumbura

Municipality (poverty

rate from 25% -20%)

Rehabilitation of

Bujumbura ports

(Burundi) at 100%

NS NS

Increased income for

informal traders around

the port by 20%

Grouping of traders

into cooperatives or

women's associations

NS NS

IV

Contribution to

providing internal and

external access

Improvement of

regional integration

Burundi-Tanzania

Cankuzo-Gahuma (RN

13 phase III) /

Murusagamba -

Nyakahura

Multinational Road

asphalted -RN3

Rumonge-Gitaza and

Bujumbura City

Bypass

Multinational Burundi-

Tanzania: Cankuzo-

Gahuma (RN 13 Phase

III) / Murusagamba-

Nyakahura Road

Development and

Asphalting Project

RN3 Rumonge-Gitaza

and Bujumbura City

Bypass (80%)

Cankuzo-Gahuma (RN

13 phase III) /

Murusagamba-

Nyakahura and RN3-

Rumonge-Gitaza Road

Development and

Asphalting Project

Improvement of trade

between the South-

South-eastern regions

and the rest of the

country (SOSUMO

and agricultural

products)

Rehabilitation of the

Gitega -Rutana-

Bukemba Road (RN

18) at 50%

Reduction of the travel

time in the project area

Improvement of the

access to socio-

economic

infrastructure

The Gitega -Rutana-

Bukemba Road (RN

18) rehabilitated

Rehabilitation of the

Gitega -Rutana-

Bukemba Road (RN

18) at 50%

The Gitega -Rutana-

Bukemba Road

rehabilitated (RN 18)

at 50%

Gitega -Rutana-

Bukemba Road

Rehabilitation Project

(RN 18)

Contribute to bridging

the infrastructure gap

in the energy sector

Low access to

electricity

Improvement of

electricity access rate,

from 10 to 14.9%

Additional number of

connections to the

power grid (273,844)

Improvement of

electricity access rate

from 10 to 12.7%

Additional number of

connections to the

power grid (119,275)

Burundi and Rwanda

power Grids

Interconnection Project

under NELSAP:

Financing: ADF =

UAM 2.51; TAF =

UAM 3.17; EU =

EURM 15

- Jiji and Mulembwe

Hydropower Project.

- Rusumo Falls

Regional Hydropower

Project - Transmission

Energy production is

in deficit

Increase of the energy

production by 74.7

MW

3 hydropower plants

built

Increase of the energy

production by 26.7

MW

One (1) hydropower

plant built

Old or non-existent

electrical installations

Electrical installations

built

Electrical installations

built

Additional HT line

(239.2 km)

Additional HT line

(160 km)

Additional MV line (10

km)

Additional MV line (0

km)

Additional LV line

(207.7 km)

Additional LV line (0

km)

V

High price of

electricity

Reducction of the cost

of electricity from

USD 20 to 14 cents

3 hydropower plants

built

Reducction of the cost

of electricity from

USD 20 to 19 cents

3 hydropower plants

built

line component. -

Ruzizi III Regional

Hydropower Project.

- NELSAP Burundi-

DRC Interconnection

New projects:

- Energy Access

Programme Phase I..

- Energy Access

Programme Phase II.

Crosscutting Areas

Promote private sector

involvement in these

focal sectors

Weak regulatory

framework and

incentives for private

sector involvement

Establishment of a

regulatory framework

to encourage private

sector investment in

the energy and

agriculture sectors

Resource Mobilisation

and Business Climate

Improvement Support

Project

Support the

development of the

export promotion

strategy

Support the

development of the

export promotion

strategy

Traning of 10 officers

in PPP

Training of 10 IPA

officers in

monitoring/evaluation

and investor support

Contribution to better

mainstreaming of

climate change

Increased growth of

the country's

vulnerability to

climate change

Resilient climate

management applied


Resilient climate

management applied



Agricultural


Vulnerability in

Burundi

Bugesera Region

Agricultural

Transformation

Support Project

Developpment of

30/20 ha of hilly pilot

area for M/W

Developpment of

30/20 ha of hilly pilot

area for M/W

Reduction of gender

inequalities

Improved

employability of girls

Girls constitute 40% of

young people trained in

industrial technologies

and entrepreneurship


youth trained in

industrial technologies

and entrepreneurship


Agricultural


VI


young engineers

integrated in the road

and port works control

and supervision

missions


young engineers

integrated in the road

and port works control

and supervision

missions

Vulnerability in

Burundi

Bugesera Region

Agricultural

Transformation

Support Project

Youth and Women

Entrepreneurship

Support Project

Project to Reduce

Youth Unemployment

through Capacity

Building and Diaspora

Engagement


youths given micro-

enterprise start up kits


young people who

have received micro-

enterprise start up kits

Support governance

enhancement in the

CSP focal sectors -

agriculture, transport

and energy

Decrease in the tax

burden

Increase in the tax

burden rate from

13.7% to 15%

Operationalisation of

the standardised

invoice

Increase in the tax

burden rate from

13.7% to 14.2%

15 officers trained in

specialised audits, 10

in tax tools and

regulations, 80 in

customs regulatory

tools, 15 in inquiry and

investigation

techniques

Burundian Revenue

Agency Capacity

Building Support

Project - Resource

Mobilisation and

Business Climate

Improvement Support

Project

30 officers trained in

specialised audits, 15

in tax tools and

regulations, 150 in

customs regulatory

tools, 30 in inquiry and

investigation

techniques

Ineffective public

expenditure and weak

policy planning,

programming and

monitoring/evaluation

skills especially in the

focal sectors

Improvement of the

public expenditure

effectiveness

2 public expenditure

reviews in the energy

sector

Improvement of the

public expenditure

effectiveness

One (1) public

expenditure review in

the energy sector


reviews in the transport

sector

One (1) public


the transport sector


reviews in the

agriculture sector

One (1) public


the agriculture sector

VII

Adoption of the

Performance

management

3 sector strategies

developed

2 monitoring and

evaluation mechanisms

available

30 BSE officers trained

in monitoring and

evaluation

Operationalisation of

the PND

Document to support

operationalisation of

the PND in the three

focal sectors available

30 BSE officers trained

in monitoring and

evaluation

Resource Mobilisation

and Business Climate

Improvement Support

Project

- Development

Strategy Preparation

Support Project

VIII

Annex 2: Indicative Programme

Indicative Operational Programme – Grants (UA Million)

Year Projects Bank

Financing

Source Co-financing

Pillar 1: Agricultural Development and Transformation Support

2019 Centre of Excellence in Nutrition Project 6 TAF

2019 Project to Intensify Agricultural Production and Reduce

Vulnerability

7 ADF IFAD (USDM 20)

2020 Project to Support the Promotion of Youth and Women’s Entrepreneurship and Micro-enterprises

15 ADF

Pillar II: Improvement of Transport and Energy Infrastructure

2019 Rehabilitation of Bujumbura (Burundi) and Mpulungu

(Zambia) Ports

15 TAF grant (UAM 6)

+RO (UAM 9)

EU (EURM 12)

JICA (USDM 28)

2020 Kirasa hydropower plant project 14 Non-sovereign loan Sponsor Kira and

commercial banks

2021 Energy Access Programme - Phase I. 10 TAF GEF (UAM 3)

2021 Multinational Burundi-Tanzania: Cankuzo-Gahuma (RN 13 Phase III) / Murusagamba-Nyakahura Road Development

and Asphalting Project

50 ADF grant (UAM 5) +RO (UAM 30)

2022 Gitega -Rutana-Bukemba Road (RN 18) Rehabilitation 15 ADF Co-financing UAM 25

2023 Energy Access Programme - Phase II. 15 TAF

Crosscutting domains

2019 Support project on improving resource mobilisation and business climate

1 TAF

Analytical work

2019 2020 2021 2022 2023

Policy

Paper

Lifting of

constraints on

the private

sector in

Burundi

Financing of the

National

Development

Plan 2018-2027

The issue of

road

maintenance in

Burundi

Transformation

of the

agriculture

sector: towards

the

establishment of

agropoles

Strategic

planning in the

transport sector

Performance

management in

the transport,

energy and

agriculture

sectors

Strategic

planning in the

transport sector

Economic

and sector

work

Economic

report on

Burundi (with

focus on the

energy,

transport and

agriculture

sectors)

Multimodal

transport and

trade facilitation

Public

expenditure

review in the

agriculture

sector

Public

expenditure

review in the

transport sector

Public

expenditure

review in the

energy sector

IX

Annex 3: Alignment of Pipeline and High-5 Projects

Centre of Excellence in Nutrition Project

Resource Mobilisation and Business Climate Improvement

Support Project

Electricity Access Scale-Up: Programme III

Rehabilitation of the Gitega -Rutana-Bukemba Road (RN

18)

Multinational Burundi-Tanzania: Cankuzo-Gahuma (RN

13 Phase III) / Murusagamba-Nyakahura Road

Development and Asphalting Project

Scaling Up Energy Access 1 - On-grid and Off-grid

Kirasa Hydropower Plant Project

Project to Support the Promotion of Youth and Women’s

Entrepreneurship and Micro-enterprises

Rehabilitation of Bujumbura (Burundi) and Mpulungu

(Zambia) Ports

Light up and

Power Africa

Light up Africa

Integrate Africa

Integrate Africa

Feed Africa

Improve the

Quality of Life

for the People

of Africa

https://www.afdb.org/en/the-high-5/light-up-and-power-africa-–-a-new-deal-on-energy-for-africa/












https://www.afdb.org/en/the-high-5/integrate-africa/


https://www.afdb.org/en/the-high-5/feed-africa/

https://www.afdb.org/en/the-high-5/improve-the-quality-of-life-for-the-people-of-africa/

X

Annex 4: Technical and Financial Partners (TFP) Intervention Matrix

Health

Education

and

Vocational

Training

Nutrition

Agriculture,

Livestock,

Fisheries,

Food

security

Land IssuesWater and

sanitationEnergy Transport

Private

Sector

Development

Local

Governance Justice

Institutional

Development

Public

FinancesGender

Environment

- Risk of

Natural

disasters

1 France 1 1

2 Belgium 1 1 1 1

3 Switzerland 1 1 1 1

4 Great Britain 1 1

5 Japan 1 1

6 Norway 1

7 Germany 1 1 1 1 1 1 1

8 The Netherlands 1 1 1 1 1 1 1

9 The United States 1 1 1 1 1 1

10 European Union

11 Canada

12 UNDP

13 WFP

14 FAO

15 UNICEF

16 UNFPA

17 UNHCR

18 IFAD

19 WHO

20 UN Women

21 UNESCO

22 UNCDF

23 IOM

24 UNAIDS

25 Global Fund

26 World Bank

27 China

28 Arab Fund

29 UNIDO

30 Trade Mark

31 BADEA

32 OPEC

33 Kuwait Fund

34 Saudi Fund

35 AfDB

XI

Annex 5: Macroeconomic Indicators

Indicators Unit 2000 2013 2014 2015 2016 2017 (e) 2018 (p)

National Accounts

GNI at Current Prices Million US $ 880 2,930 3,137 3,130 3,235 ... ...

GNI per Capita US$ 130 280 290 280 280 ... ...

GDP at Current Prices Million US $ 709 2,452 2,706 2,814 2,874 3,053 3,406

GDP at 2000 Constant prices Million US $ 709 1,127 1,174 1,170 1,191 1,188 1,205

Real GDP Growth Rate % -0.9 4.9 4.2 -0.3 1.7 -0.2 1.4

Real per Capita GDP Growth Rate % -3.0 1.5 0.9 -3.6 -1.6 -3.4 -1.8

Gross Domestic Investment % GDP 7.5 14.3 15.2 11.7 9.6 10.0 11.7

Public Investment % GDP 6.4 5.2 4.9 3.3 3.1 3.4 3.7

Private Investment % GDP 1.2 9.1 10.3 8.5 6.5 6.6 8.1

Gross National Savings % GDP -4.2 -4.3 -3.4 -6.7 -4.1 -5.7 -7.2

Prices and Money

Inflation (CPI) % 24.3 7.9 4.4 5.6 5.5 14.5 15.4

Exchange Rate (Annual Average) local currency/US$ 720.7 1,555.1 1,546.7 1,571.9 1,654.6 1,735.2 1,820.5

Monetary Growth (M2) % 34.8 11.1 14.6 5.5 1.5 10.6 ...

Money and Quasi Money as % of GDP % 24.6 30.7 32.0 32.0 30.2 29.9 ...

Government Finance

Total Revenue and Grants % GDP 22.3 26.6 19.8 16.7 15.9 20.4 20.2

Total Expenditure and Net Lending % GDP 24.7 28.5 23.6 24.4 23.0 26.9 29.0

Overall Deficit (-) / Surplus (+) % GDP -2.3 -1.8 -3.8 -7.7 -7.1 -6.5 -8.8

External Sector

Exports Volume Growth (Goods) % 4.7 -19.8 23.1 5.6 14.8 -4.8 1.8

Imports Volume Growth (Goods) % 1.7 -0.5 10.3 -35.9 -2.2 -1.9 5.1

Terms of Trade Growth % -22.0 -9.6 25.4 -42.7 28.0 -2.8 -7.2

Current Account Balance Million US $ -61 -254 -394 -374 -355 -354 -353

Current Account Balance % GDP -8.6 -10.4 -14.5 -13.3 -12.3 -11.6 -10.4

External Reserves months of imports 2.9 3.6 3.5 1.7 1.7 2.9 3.1

Debt and Financial Flows

Debt Service % exports 70.1 14.5 14.4 20.7 22.4 27.5 36.7

External Debt % GDP 126.3 21.0 18.9 18.2 16.7 25.9 35.2

Net Total Financial Flows Million US $ 79 589 539 260 734 ... ...

Net Official Development Assistance Million US $ 93 559 515 367 742 ... ...

Net Foreign Direct Investment Million US $ 12 7 47 7 0 ... ...

Source : AfDB Statistics Department; IMF: World Economic Outlook,April 2018 and International Financial Statistics, April 2018;

AfDB Statistics Department: Development Data Portal Database, April 2018. United Nations: OECD, Reporting System Division.

Notes: … Data Not Available ( e ) Estimations ( p ) Projections Last Update: May 2018

BurundiSelected Macroeconomic Indicators

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

%

Real GDP Growth Rate, 2006-2018

0

5

10

15

20

25

30

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Inflation (CPI),

2006-2018

-18.0

-16.0

-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2,006

2,007

2,008

2,009

2,010

2,011

2,012

2,013

2,014

2,015

2,016

2,017

2,018

Current Account Balance as % of GDP,

2006-2018

XII

Annex 6: Implementation of the CPIP 2018

Key

Issues/Challenges/

Constraints Actions Considered Outcomes Indicators Responsibility Target/Timelines

Implementation

Progress

Quality at Entry

Poor quality at

entry of projects

Systematically update technical studies before approval by the AfDB Board of Directors

Good quality studies available on time

100% of projects are executed according to expected costs

GoB AfDB

Continued

Dec 2019 for IOP projects 2019

Partially

New projects take the quality of technical studies into account.

Significant delays

in starting projects

Working sessions to discuss the content of documents

Ownership of the content of documents (appraisal report, etc.) by the national party

Effective involvement of the national technical team

GoB/ AfDB

Continued

Partially

The Bank team conducts consultations in ministries involved in projects to establish inventories and needs in preparation of projects

Acceleration of project implementation procedures

Projects are executed according to initial schedules

Implementation deadlines shortened very significantly (less than three months)

GoB/ AfDB

50% in 2019,

Continued

Achieved

Projects approved between November 2018 and March 2019 were signed on average less than 3 months after approval

project implementation

Mastery of

procedures/

gradual reduction

of procurement

deadlines

Training and

appropriate

coaching of project

teams at the launch

of projects

(Tanzania-Burundi

Road, TAAT and

Biomedical Centre);

and

once a year at fiduciary clinics (SNFI1, SNFI2, COBI, RDGE)

Improved skills

3-day

training/coaching

session for

management teams

in charge of new

operations

At least 80% of

PIU members have

received training

Number of fiduciary clinics

GoB/ AfDB

Continued

Achieved

Training sessions are organised regularly for staff of project implementation units.

Not Achieved

Fiduciary clinics not yet organised

Avoid setting up parallel execution units for new projects by entrusting their management to existing administrative structures and open key positions to competition

Effective management units

PIU experts are efficient

GoB/ AfDB

Continued

Partially

AfDB-financed projects are executed only by autonomous project implementation units. Key positions are not open to competition

Poor performance

of PIUs Initiate performance contracts for project managers in general, and project finance managers in particular

High performance of management units

Project managers evaluated

GoB 50% in Nov. 2020

Continued

Achieved

Project managers sign performance contracts. Annual assessments are planned

XIII

disbursement performance

Disbursement

delays

Payment of bills outstanding for more than 3 months

All disbursement requests are paid in less than 15 days

Requests are processed quickly

Number of bills outstanding for more than 3 months

PIUs/AfDB

AfDB

Continued

Partially

Improve the quality of requests; mastery of AfDB rules and procedures through training and working sessions

PIUs are trained by the Bank on AfDB disbursement procedures

Meetings at the COBI Office and by VC with the FIFC are organised

Number of projects disbursing more than eight months after approval (last 12 months)

AfDB/PIUs

Continued

Partially

A disbursement expert at the Country Office

Disbursement requests are processed promptly

% of DPs going through the AfDB Office

AfDB/PIUs June 2020

Partially

No disbursement expert at the Country Office, but a mechanism has been put in place and all Disbursement Requests go through the AfDB Office

Financial Management

Financial management does not respect rules and good practices / preparation and timely submission of audit reports

Delay in

submission of

audit reports

within deadlines

Share experiences with successful projects in this domain

Projects submitting audit reports within the deadline

Number of projects

submitting audit

reports late

(current year)

participating in

sharing of

experiences

PIUs/AfDB June 2020 Not achieved

Absence of

procedures

manual at project

start up

Make the procedures manual available at project launch

Procedures manual validated before launch

Percentage of new projects with a

procedures manual available

PIUs/AfDB 50% in June 2020

Continued

Not achieved

Delay in

transmitting the

audit report

Recruit auditors on

time, in accordance

with the rules to

avoid rejection.

Prepare the project closure audit report

Auditor recruited according to PPM

% of projects submitting closing audit reports on time (9 months after disbursement deadline)

Audit report submitted latest 30 June N + 1

PIUs/AfDB 100% in Dec 2019

Continued Not achieved

Monitoring and coordination

Lack of an

effective project

monitoring and

evaluation system

Organise portfolio monitoring meetings with PIUs and AfDB

Better coordination between different project stakeholders.

At least one portfolio coordination and monitoring meeting is organised quarterly

PIU/MFBCD/ AfDB

Continued

Partially

An AfDB portfolio review meeting was held in November 2018 and another on 28 February 2019.

Regular supervision of projects by AfDB

Decrease in implementation delays

Number of supervisions per project in the calendar year

AfDB/GoB Continued Partially

Regular transmission of a physical and financial progress

More effective monitoring of operations progress by MFBP.

A quarterly progress report is sent regularly by the PIUs to MFBP.

PIU 45 days after the quarter

Partially

XIV

report of projects to MFBP

The complexity of

regional energy

operations delays

their

implementation

Strengthen consultation by PIUs of regional projects

Take into account the regional dimension of projects

At least 2 annual meetings organised

GoB/ AfDB

Continued

Partially

Meetings between PIUs of regional projects are organised as needed

Provide technical assistance in project management to REGIDESO

Provide the Country Office with an energy expert

Decrease in implementation delays for energy projects

An energy expert

available

AfDB Continued

Partially

An energy specialist (consultant) has been recruited and is based at the AfDB Country Office.

Project

implementation

weaknesses

Follow-up of recommendations of the Bank’s Internal Audit from 5 to 24 November 2018

Project management has improved

Number and

percentage of

recommendations

implemented

PIU/ GoB/ AfDB

100% in June 2020

Continued

Partially

Reimbursement

and/or rationale of

special account

balances for closed

projects

Review the audit submitted by AfDB in September 2018, provide the available justifications and refund unjustified balances

Projects are well closed Number of closed

projects that did

not justify or

refund account

balances

PIU/ GoB/ AfDB

March 2020

Continued

Partially

Systematically reimburse special account balances after project closure

Projects are well closed Not achieved

Lack of some key

skills at the Bank's

office in Burundi /

reaction time

Hold regular meetings between Nairobi-based project teams and project managers by video conference

Meetings were held during field missions by Nairobi-based experts

Number of

meetings by VC

between the AfDB

and Government

AfDB/PIUs Dec. 2019

Continued Partially

Experts to be placed in the Office: energy, agriculture, procurement and disbursement

Strengthen close dialogue with PIUs and the Government

Number of new

experts AfDB

Dec 2020

Continued

Partially

Two consultants, an energy and a transport expert, have been assigned to the Office

Insufficiency/delay

in payment of the

counterpart

contribution

Properly analyse the feasibility of the counterpart contribution and the effective involvement of the national budget department during preparation

Reminder of annual commitments before the finalisation of the Finance Law

Counterpart funds are registered in the FL

Percentage of projects facing difficulties in paying the counterpart contribution

100% of counterpart funds are disbursed on time

PIU/AfDB

60% in Dec 2020

Continued Not achieved

XV

Annex 7: Key Performance Indicators for the Current Portfolio

Table 1 - Key Portfolio Performance Indicators

2012 2013 2016 2017 2018

Number of projects 14 19 15 17 17

Managed in the field (%) 14 26 47 59 76

Total commitments (UAM) 245 240 265.3 263.64 305.287

Projects at risk (%) 9 11 0 0 0

Commitments at risk (%) 9 5 0 0 0

Problematic projects (#) 0 1 2 5 1

Disbursement rate (%) 36.5 44.0 41.9 54.10 45.2

Average age of projects (year) 3.5 3.0 3.5 4.4 4.1

Deadline of first disbursement

(month) 16.2 2 21.4

9.3 17.2

Portfolio performance 3.40 3.46 3.70 3.50 3.40

Implementation progress (IP) 3.28 3.30 3.80 3.50 3.40

Development objective (DO) 3.74 3.77 3.60 3.50 3.30

XVI

Annex 8: Ongoing Portfolio (29 March 2019)

PROJECT NAME Approval Date Completion

Date Grant

Amount (UA) Disbursement

Rate

1 2 3 4 5

1 Project to Support the Development Strategy Preparation Process

17/05/2017 30/09/2020 877,000 40.40%

2 Youth and Women's Socio-economic Reintegration Support Project - PARSEJF

25/05/2016 31/12/2020 770,000 35.93%

3 Youth and Women's Socio-economic Reintegration Support Project - PARSEJF (CIRGL)

25/05/2016 31/12/2020 380,000 32.73%

4 OBR Capacity Building Support Project 02/01/2019 31/12/2021 1,000,000 0%

5 RN-3: MUGINA-MABANDA-NYANZA-LAC Road Development and Asphalting Project

27/06/2012 31/12/2019 27,500,000 83.53%

6 RMUNGE-GITEZA AND KABINGO-KASULU-MANYOVU Road Rehabilitation Project

22/11/2018 31/12/2024 47,250,000 0.00%

7 RN-15: GITEGA-NYANGUNGU-NGOZI Development and Asphalting Project Phase II

29/06/2011 31/12/2019 10,000,000 41.34%

29/06/2011 31/12/2019 32,000,000 98.65%

8 RN-18: NYAKARARO-MWARO -GITEGA KIBUMBU-GITEGA (MWEYA) Phase II

01/02/2017 31/12/2020 9,720,000 15.41%

01/02/2017 31/12/2020 4,080,000 16.01%

9 RN-18: NYAKARARO-MWARO-GITEGA Road Development and Asphalting Project Phase I

24/09/2014 30/06/2019 19,420,000 86.70%

10 Support Project for Agricultural Transformation in the Bugesera Natural Region

15/12/2017 30/06/2023 12,000,000 2.80%

11 Project to Support the Supply of Cooking Energy and Environmental Restoration in Four Refugee Camps

02/05/2018 30/06/2019 1,000,000 51.07%

12 JIJI-MULEMBWE Hydropower Project 23/06/2014 31/12/2019 14,340,000 0.00%

13 NELSAP Interconnection Project - BURUNDI (KAMANYOLA Power Transmission Line (DRC) - BUJUMBURA

27/11/2008 31/12/2025 15,150,000 30.20%

14 RUZIZI III Hydropower Project (BURUNDI) 16/12/2015 30/12/2021 19,290,000 0.00%

15 RUSUMO Regional Hydropower Project - BURUNDI

27/11/2013 31/08/2021 16,700,000 1.37%

21/11/2013 31/08/2021 10,810,215 7.29%

16 Burundi and Rwanda Power Grids Interconnection Project under NELSAP

14/12/2018 30/06/2025 2,510,000 0.00%

14/12/2018 30/06/2025 3,170,000 0.00%

Total (16 Operations) 246,967,215

PP = Problematic Project

Non-PP = Non-Problematic Project

PPP = Potentially Problematic Project Non PPP = Non-Potentially Problematic Project

XVII

Annex 9: CPIA Ratings 2013-2016

2013 2014 2015 2016

Economic management (Cluster A) 3.5 3.5 3.2 2.8

Budget policy 3.5 3.5 3.0 2.5

Monetary policy 3.5 3.5 3.0 2.5

Debt policy 3.5 3.5 3.5 3.5

Structural policies (Cluster B) 3.4 3.4 3.4 3.3

Finance sector development 4.0 3.0 3.0 2.8

Trade policy 3.0 4.0 4.0 4.0

Regulation of the business environment 3.3 3.3 3.2 3.2

Inclusion/social equity (Cluster C) 3.4 3.4 3.4 3.4

Gender equality 3.2 3.3 3.2 3.2

Equity in the use of public resources 3.5 3.5 3.3 3.2

Strengthening human resources 4.0 3.8 3.8 3.8

Social protection and labour 3.0 3.0 3.1 3.1

Environmental policies and regulation 3.5 3.5 3.5 3.5

Governance (Cluster D) 3.3 3.1 3.0 2.9

Property rights and governance based on the

rule of law

3.3 3.1 2.9 2.9

Quality of public administration 4.0 3.6 3.4 3.3

Quality of budgetary and financial management 3.8 2.6 2.5 2.4

Effectiveness of revenue mobilisation 2.6 3.8 3.5 3.5

Transparency, accountability and corruption in

the public sector

2.7 2.5 2.7 2.7

Infrastructure and regional integration

(Cluster E)

3.6 3.6 3.6 3.6

Infrastructure development 3.6 3.6 3.5 3.5

Regional integration 3.5 3.5 3.8 3.8

Overall CPIA 3.44 3.41 3.30 3.21

XVIII

Annex 10: Annex on the Macroeconomic Framework

-5

0

5

10

2011 2012 2013 2014 2015 2016 2017 2018 2019

Chart 2: Real GDP growth rate (%)

Burundi Afrique Centrale Afrique

14,8

35,9

0,0

-8,3

36,5

25,7

2,1

37,7

11,3

-20,0-10,0 0,0 10,0 20,0 30,0 40,0

Croissance annuelle desexportations (%)

Aide par habitant ($ EU)

IDE en % de la FBCF

Chart 8: Main growth drivers, 2016

Afrique Afrique Centrale Burundi

-10

-5

0

2011 2012 2013 2014 2015 2016 2017 2018 2019

Chart 5: Budget balance

(% of GDP)


0

10

20

30

2011 2012 2013 2014 2015 2016 2017 2018 2019

Chart 3: Consumer price index, inflation (average) (%)


0

10

20

30

2011 2012 2013 2014 2015 2016 2017 2018 2019

Chart 4: Revenue and grants (% of GDP)

Burundi: dons (% du PIB)

Burundi: Total revenue (dons exclus) en % du PIB

-20

-10

0

10

2011 2012 2013 2014 2015 2016 2017 2018 2019

Chart 6: Current account balance

(% of GDP)


40,7

0,311,8

0,8 3,2

17,5

4,6 5,4 7,4 3,2

0,010,020,030,040,050,0

Agricu

lture,…

Min

es et…

Man

ufactu

res

Electricité,…

Co

nstru

ction

Co

mm

erce…

Transp

ort,…

Finan

ce,…

Ad

min

istrati…

Au

tres services

Chart 7: GDP by sector (%), 2016

XIX

Annex 11: CODE Recommendations on the CSP 2012-2018 Completion Report

(Takeaways from the Team)

The Committee on Operations and Development Effectiveness (CODE), which reviewed the

CSP 2012-2018 completion report for Burundi as well as the proposed pillars for CSP 2019-

2023, met at Bank Headquarters in Abidjan on 13 May 2019. This meeting was presided by

Ms. CUDRE-MAUROUX, the CODE Chairperson.

1. CODE members noted the CSP 2012-2018 Completion Report and the Proposed Pillars

for CSP 2019-2023

2. CODE members expressed support for the two pillars proposed for the new CSP,

namely: (i) support for agricultural development and transformation; and (ii)

development of transport and energy infrastructure.

3. CODE members agreed to the preparation of a full CSP for Burundi for 2019-2023

because the country has to date fulfilled the required criteria in this regard. However,

they recommended that depending on the evolution of the country’s socio-economic

situation (including presidential elections planned for 2020), the CSP team may need to

adjust the strategy during the mid-term review planned for 2021.

4. CODE members recommended that special emphasis be laid on the analysis of socio-

political and economic contexts, taking into account fragility in the new CSP. Outcomes

of the "Country Resilience and Fragility Assessment (CRFA)" carried out in December

2018 should be fully integrated into the analysis and should guide the new strategy and

operations.

5. CODE members recommended that Pillar I of the new CSP should integrate the TAAT

initiative and that crosscutting themes (governance, private sector development, and

gender equality) be explicitly reflected in the new CSP.

6. CODE members recommended that the new CSP highlight the Bank’s role in political

dialogue.

7. CODE members instructed the Bank to encourage the IMF’s re-engagement in the

country.

XX

Annex 12: Summary of Exchanges of Views with Stakeholders

1. Following the mission conducted as part of the CSP 2012-2016 update in March 2018,

a Bank mission visited Bujumbura from 5 to 9 November 2018 with the following objectives:

(i) collect information necessary for the preparation of the combined Country Strategy Paper

2012-2016 (CSP 2012-2016) completion report extended to December 2018; (ii) review the

2018 performance portfolio; and (ii) prepare the Bank's Intervention Strategy in Burundi 2019-

2023.

2. The mission held a political dialogue session with the Government of Burundi on 18

December 2018 with the objective to validate the technical working sessions held between 5

and 9 November with central and local public administrative authorities, Burundi’s private

sector and technical and financial partners involved in Burundi. The policy session was chaired

by the Minister of Finance (Governor of the Bank) with the participation of ministers in charge

of transport, energy and agriculture.

3. All the mission outcomes reached during technical discussions were validated by the

ministerial session of 18 December 2018. The policy session covered the following areas: (i)

Burundi’s economic context and National Development Plan for 2018-2027; (ii) outcomes of

the implementation of CSP 2012-2018; (iii) the performance of Bank-financed portfolio

projects in Burundi; (iv) strategic orientations of the Bank's CSP 2019-2023.

4. With regard to Burundi’s economic context and the National Development Plan

2018-2027:

The session discussed Burundi’s slight economic recovery observed in 2018; the

mission welcomed the Government's ongoing economic stabilisation efforts in

the context of heavy external financing constraints; it encouraged the authorities

to pursue an open policy with the community of technical and financial partners,

particularly with regard to financing the National Development Plan, which has

ambitious objectives involving the deep structural transformation of Burundi’s

economy.

The discussions noted and welcomed some progress made with regard to

Burundi’s resilience capacity, given that the economy has faced numerous

constraints since the 2015 crisis. However, they recognised that the current

difficulties could only be overcome in a context of expanding the sources of

economic financing.

The ministerial session underscored the need for further private sector

development to better impact job creation especially for young people in

Burundi. In this regard, it recommended Bank support to enhance private sector

access to investment financing. It acknowledged that the Bank's interventions in

CSP 2012-2018 continue to contribute to reducing factors of production costs

(through transport infrastructure, making the country accessible internally and

externally, and improving the energy supply). However, it recommended more

direct involvement to support the private sector.

5. With Regard to the CSP 2012-2018 implementation outcomes:

Overall, discussions highlighted the positive outcomes achieved in

implementing CSP 2012-2018: (i) in terms of strengthening governance (Pillar

XXI

1), the session noted the major economic reforms carried out between 2012 and

2014 through budget support operations funded by the Bank (PARE-V, PARGE

and PRECA), in addition to the stabilisation of the economic situation at the

time; (ii) with regard to infrastructure improvement, the ministerial session

highlighted Burundi’s progress in opening up rural areas to link production areas

to consumption areas, and ensuring access to basic services such as markets,

thanks to the Bank’s support.

6. Regarding the performance of the portfolio of projects financed by the Bank in

Burundi:

Portfolio of Bank projects - The session recognised the problem of delays in

implementing Bank-financed projects in Burundi and recommended that

mechanisms be established to remedy the weaknesses observed. It highlighted

the Government’s establishment of a monitoring sheet for projects financed by

technical and financial partners in general. The actions should include the

restoration of monthly meetings between the Bank and project monitoring

structures, reduction/simplification of procedures and the introduction of some

degree of flexibility in project management since the agricultural cycle is

strongly dependent on seasons in Burundi. For the transport sector, the session

noted with satisfaction the existence of a framework for dialogue and functional

exchanges that significantly contribute to solutions for improving road project

disbursements. In the energy sector, the session acknowledged that the

disbursement rates were very low, while noting that longer or shorter approval

procedures may affect project performance;

7. Regarding strategic orientations of the Bank's CSP 2019-2023:

The ministerial session endorsed the technical discussions on the strategic

directions for the new CSP 2019-203. It underscored the dimension of selectivity

owing to Burundi's current resource allocation levels, and validated the proposal

that CSP 2019-2023 be structured around two main pillars which, when

implemented should: (i) strengthen economic resilience; and (ii) develop

infrastructure to support economic recovery. It should be noted that working

sessions with technical and financial partners had highlighted the synergies and

complementarities that could be developed in these two key areas. Hence:

Under the pillar on build resilience, it was decided that the Bank should

provide support to improve the income of rural people, especially the youth

and women, through a stronger presence in the following areas: (i)

agriculture (support agricultural transformation by targeting fragile,

socially and environmentally disadvantaged communities, and implement

the Technology for African Agricultural Transformation programme in

Burundi); and (ii) private sector development to enable the embryonic

private sector to play a greater role in stimulating distributive economic

growth in the country, and create internal dynamics to absorb the large

number of young unemployed graduates in the country with particular

focus on reducing women's unemployment.

In the area of infrastructure development, the ministerial session decided

to target two sectors, although it regretted not taking into account the water

and sanitation sector. They are: (i) transport, through the continuation of

operations undertaken to make the country accessible and create closer

connections between production areas and markets (maritime transport

XXII

will be particularly highlighted through the rehabilitation of Bujumbura

Port) in order to contribute to lowering transaction costs in the country;

and (ii) energy, to respond to PND 2018-2027 that emphasizes the

construction, rehabilitation and/or extension of energy infrastructure as a

prerequisite for the sustainable structural transformation of Burundi’s

economy. Therefore, the Bank should continue to strengthen its

involvement by prioritising green energy.

XXIII

Annex 13: Alignment of DSP Pillars to PND 2018-2026 and the High 5s

Light up Africa

Natural

resources

Public-

Private

Partnerships

Agriculture

Human capital

Increase in energy

production

Industrialization

Diversification and

competitive economy

Technology

and know-

how

Transport, trade and ICT

infrastructure

Tourism

Regional integration and

international Cooperation

PND

2018-2027

Pillar 1 – Support

Agricultural

Development and

Transformation Support

Support agricultural development hubs

and increase private investment for

transformation

Promote youth and women’s

agricultural entrepreneurship with a

view to their empowerment

Build institutional capacity to adapt

to climate change.

Contribute to bridging the infrastructure

gap in the transport and energy sectors

as a factor of inclusion Pillar 2 - Improve

Transport and Energy

Infrastructure

Promote equitable

access to basic

infrastructure. Integrate Africa

Feed Africa

Improve the Quality

of Life for the People

of Africa

Improve the Quality

of Life for the People

of Africa












https://www.afdb.org/en/the-high-5/feed-africa/



XXIV

Annex 14: Fiduciary Risk Assessment

Legislative and Regulatory Framework

The legislative and regulatory framework for procurement comprises Law No. 1/01 of 4

February 2008 on the Public Procurement Code (CMP) of Burundi amended by Law No. 1/04

of 29 January 2018, decrees on the establishment, organisation and functioning of the Public

Procurement Regulatory Authority (ARMP), the National Directorate of Public Procurement

Control (DNCMP) and Public Procurement Management Units (CGMP) as well as ordinances

setting thresholds for the award, control and publication of procurement. The CMP scope covers

all procurement by Contracting Authorities and all types of public procurement without waiver,

except for secret contracts that are incompatible with any form of competition or advertising,

or where fundamental interests of national security require such secrecy. To date, most public

procurement legislation is available on the ARMP website, which is the Public Procurement

Portal.

Overall, arrangements for the preparation, award and execution of contracts are broadly in line

with international standards and best procurement practices. Procurement by bid invitation is

the default procurement method. The use of other procurement methods must be justified by

the Contracting Authority and previously authorised by the DNCMP. Contract splitting is

prohibited and directly negotiated contracts and amendments are subject to strict controls. In

addition, bidders may appeal to the ARMP Dispute Resolution Commission (CRD) if they feel

aggrieved during the procurement process.

However, in practice, it is also important to mention the extremely negative assessment of the

June 2011 World Bank Public Expenditure Review. The review finds that public investment is

hampered by inadequate selection, poor public procurement and lack of reporting and other

instruments to monitor project implementation. Among the factors that impede the procurement

process, it cites the overestimation of costs of certain goods and services, the inconsistency of

these estimates, corruption and fraud. It is not certain that these practices have ended or

improved positively.

Institutional Framework and Management Capabilities

The institutional framework provides for the separation of the functions of procurement, ex-

ante control and regulation of public procurement. However, the institutional framework faces

risks that may affect its viability. These include: (i) the ARMP lacks financial autonomy to

ensure its proper functioning; (ii) internal control is weak at the level of the Contracting

Authorities (problem of the independence of CGMPs); (iii) DNCMP control is weak; (iv) the

ARMP, DNCMP and CGMPs lack sufficient qualified human resources; and (v) there is a lack

of strategy to build the capacity of various stakeholders involved in public procurement.

Decree No. 100/119 of 7 July 2008 on the Establishment, Organisation and Functioning of the

Public Procurement Regulatory Authority ARMP confers on the latter the status of an

Independent Administrative Authority, with a legal personality and administrative and financial

autonomy. ARMP consists of four bodies, namely the Regulatory Board, the Dispute

Resolution Committee (CRD), the Disciplinary Commission and the General Directorate. The

Regulatory Council of the ARMP is designed as a tripartite body with equal representation

(Public Sector, Civil Society and Private Sector). Instead of financial and management

autonomy, the ARMP receives only budgetary subsidies from the State, which are otherwise

XXV

insufficient to meet the operational needs necessary for carrying out its missions. Financial and

human resource constraints significantly limit the institution's ambitions.

ARMP statistics on the award, execution and control of public contracts is not exhaustive

because the contracting authorities do not communicate documents, data and statistics on time

to update the public procurement information system. Lastly, it should be noted that annual

external audits of public procurement are not carried out on time (inadequate financial

resources).

The National Directorate for Controlling Public Procurement (DNCMP) should play a

fundamental role in the proper management of the procurement system through ex-ante and ex

post controls. In practice, the DNCMP has little material, human and financial resources to

control the execution of services rendered. In addition, this Directorate faces major skills

problems caused by frequent staff departures and lack of qualified human resources. Besides,

all contracts that are initially verified by the DNCMP are not systematically published on the

public procurement website, in violation of the CMP. Moreover, convincing reasons are not

given for the use of directly negotiated contracts, and the DNCMP is obliged to accept requests

by the Contracting Authorities, sometimes due to prevailing circumstances (urgency for

example). Reliable information on contract award and compliance outside the information

compiled by the DNCMP is scarce, but this information has not been subject to external control.

The lack of a manual for archiving and filing procurement and contract monitoring documents

is also noted.

The ex-post control exercised by the DNCMP is used to check conformity of procurement

procedures for contracts awarded below the a priori control thresholds. In 2016, the ex-post

audit involved seven (7) Contracting Authorities for contracts under thresholds awarded during

the 2013 and 2014 financial years. It was noted among other things that: (i) all 7 Contracting

Authorities awarded numerous very high value contracts, sometimes exceeding the annual

budget allocated to each Contracting Authority; (ii) all the Contracting Authorities controlled

do not strictly comply with the public procurement law especially with respect to compliance

with regulatory thresholds; (iii) most Contracting Authorities practised market fragmentation

or fractioning, which is prohibited by law; (iv) the procurement of sub-threshold contracts

lacked transparency for the Contracting Authorities controlled.

The Public Procurement Management Units (CGMP) are in charge of planning, preparing

bidding documents (DAO) and conducting the procurement procedure at the level of the

Contracting Authorities. Under the law, the CGMP must be updated every year, but this is not

systematic. It should be underscored that some Contracting Authorities appoint or renew their

CGMPs but the appointment instruments are not transmitted to the ARMP. At the level of

Contracting Authorities, the independence of CGMPs carries a risk because significant powers

are entrusted on the Public Procurement Officer (PRMP), which is not offset by any internal

control body within the Contracting Authority. The PRMP chairs the CGMP, proposes the

appointment of CGMP members to the minister and appoints members to the bid

opening/evaluation and contract award committees.

In view of the Public Expenditure Review and Financial Accountability Report (PEFA 2012),

there has been a general improvement in the procurement system with indicator PI-19 "Call for

competition, optimal use of resources and control of public procurement” rated C + in 2012,

against D + in 2009. However, much remains to be done in terms of transparency and capacity

building to improve the effectiveness of the government’s procurement management

XXVI

framework (ARMP, DNCMP, CGMP). It should be noted that updating public procurement

information remains problematic at the level of the ARMP portal.

Procurement Operations and Market Practises

To enhance the efficiency of the procurement process, the CMP provides various stakeholders

with deadlines for implementing various stages of the procurement process: from the

preparation of bidding documents to the signing of contracts.

In addition, Contracting Authorities are required to develop provisional procurement plans

(PPMs) based on their annual programme of activities and allocated budget.

Although the law requires the publication of contract award notices, it should be noted that this

requirement is not currently being met as only letters are sent to unsuccessful bidders.

It is also worth noting that some bidders are heavily involved in donor markets, but much less

(or not at all) in public procurement financed from the State budget because the public

procurement environment is often discouraging for honest potential professional bidders. There

is indeed a perception of insufficient transparency and integrity during the following stages:

BD preparation and provision; receipt of bids (rejection of bids with distinguishing marks);

opening (rejection of bids not properly initialled); assessment (few specific skills per contract);

low guarantee of payment on time, which entails risks for the bidders. As such, bidders tend to

overstate the costs because they are likely to be paid with a huge delay. The public procurement

system is likely to attract only bidders who are well positioned to engage in a circuit of contacts

to be paid on time. This does not contribute to a climate of integrity and healthy competition

(see Assessment Study of the Institutional and Organisational Capacity of ARMP, DNCMP and

CGMPs of Sector Ministries and Capacity Building Plans - CTB).

ARMP (through its Regulatory Board) should engage in partnership with the private sector,

through the establishment of constructive dialogue with potential bidders to work together to

improve the public procurement system, and more specifically, to obtain best value for money.

Integrity and Transparency of the Procurement System

Legal provisions, including those relating to institutions responsible for combating prohibited

practices (bribery, fraud, conflict of interest and unethical behaviour) in public procurement,

and those defining responsibilities, accountability and penalties applicable to prohibited

practices were reviewed. It appears that: (i) the CMP provides the ethical rules applicable to

public authorities, candidates and bidders as well as the attendant specific sanctions (without

prejudice to other criminal sanctions); and (ii) in addition, Burundi has set up a legal and

institutional framework to fight corruption that overall is close to international standards.

The Government has: (i) developed a national strategy of good governance and the fight against

corruption for 2011-2015; (ii) enacted specific laws (Law No. 1/12 of 18 April 2006 against

corruption, Law No. 1/27 of 3 August 2006 establishing an anti-corruption brigade with the

mission to moralise public life, deter and repress corruption and related offences; Law No. 1/36

of 13/12 2006 establishing the anti-corruption court within the judiciary). In addition, actors in

the procurement chain are required to observe standards of ethics and transparency, under pain

of sanctions and expulsions when found guilty of acts of fraud and corruption.

In principle, this framework should deter fraud and corruption practises overall. However, the

level of corruption remains quite alarming as shown by Transparency International’s corruption

XXVII

perception index (CPI). Hence, the CMP provides for specific sanctions (without prejudice to

other criminal sanctions) for public authorities and officials who fail to comply with CMP

provisions and bidders guilty of acts of fraud and corruption. It is noted that as part of its actions,

the ARMP Disciplinary Commission has sanctioned structures for violating the public

procurement law and published the list of sanctioned entities on the public procurement website.

The existing complaint system has been reviewed to ensure that it provides for specific

conditions that take into account the requirements of impartiality, independence and due

process. Procurement decisions are published on the public procurement portal.

Public procurement audits are not conducted regularly due to inadequate financial resources.

Audits for the 2011, 2012 and 2013 financial years have already been carried out and were

mainly financed by external resources. However, there is a significant delay in conducting

external audits. For example, it was expected that the public procurement compliance audit

mission for FY 2017 take place in 2018, but to date the report has not yet been published.

Conclusions

Based on the elements noted above concerning Burundi’s national public procurement system,

the overall risk for its use in Bank-financed projects is considered substantial. Pending the

implementation of reform actions to correct these weaknesses, measures recommended to

mitigate the risks that might result are: (i) ensure the financial autonomy of the ARMP in

accordance with Law No. 1/01 of 4 February 2008 concerning the CMP amended by law No.

1/04 of 29 January 2018 to enable it to properly carry out its missions ; (ii) significantly build

DNCMP's capacity (financial, material and human) to enable it to fully fulfil its duties and

responsibilities; (iii) build the capacity of CGMPs and make the appropriate arrangements to

ensure the independence of CGMPs from the Public Procurement Officer (PRMP); (v) ensure

good publicity and ownership of the legal framework governing procurement with public

contract actors; (vi) systematically perform internal and ex-post control of procurement

operations in accordance with regulations; (vii) secure financing for public procurement audit

operations; and (viii) build the capacity of bidders involved in public procurement

(administration, private sector and civil society) through a targeted training programme.

XXVIII

Annex 15: Country Risk Assessment

I. Introduction

The fiduciary risk assessment of Burundi's Public Financial Management (PFM) system was

conducted as part of the mid-term review of the Country Strategy Paper for Burundi by the Bank's

Fiduciary Services Department. This assessment is made in accordance with the Financial Management

Policy for operations financed by the African Development Bank Group and the Directive on the

Promotion of the Use of National PFM Systems of February 2014. This report on Burundi’s Fiduciary

Risk Assessment focuses on three main points: (i) introduction; (ii) executive summary; and (iii)

assessment outcome.

II. Executive Summary.

2.1 The objective of the fiduciary risk assessment is to respond to the Bank's commitment under

the Paris Declaration to maximise the use of national public financial management systems for the

financial management of Bank-financed projects and programmes. It is also to evaluate the current

financial management system in Burundi and determine its adequacy in producing exhaustive and

reliable financial information in real time on the management of projects and programmes financed by

development partners, including the Bank, and to identify capacity-building needs for the gradual use

of the national PFM system.

2.2 The assessment took into account the PEFA assessment for 2012 and information collected

as a result of assessments carried out at the Directorate of the Budget, Directorate of the Treasury,

General Inspectorate of Finance, General State Inspectorate, Court of Auditors and Anti-Corruption

Brigade.

III. Assessment Outcome

Regarding the management of public finances, the mission notes an improvement in the

management of public finances in Burundi since the 2009 and 2012 PEFAs, including: (i) a new budget

nomenclature; (ii) a reduction of the stock of payment arrears on expenditures; (iii) the actual reduction

of extra-budgetary funds by the closure of bank accounts, the reduction in the number of funds and the

establishment of management systems for administrative public enterprises; (iv) a precise and respected

budget preparation timetable and expenditure ceilings contained in the framework letter approved by

the Council of Ministers before their dissemination; (v) clear and exhaustive tax and customs obligations

with the adoption of customs regulations of the Community of West African States and the adoption of

a very simple law on value added tax; (v) shorter deadlines for the repayment of revenue to the Treasury

and the frequency of bank reconciliations; (vi) a change in the predictability of cash flows, reliability

and frequency of periodic information provided; (vii) investment expenditure that anticipates the

execution of externally financed project expenditure; (viii) the establishment of a single treasury account

and the provision of reliable information by ministries on expenditure commitment ceilings at least one

quarter in advance; (ix) significant progress in the consolidation of account balances into a single State

account; (x) the control capacity and audit scope of the General State Inspectorate (IGE) were strongly

enhanced; and (xi) significant progress in establishing an Anti-Corruption Commission.

Overall country risk is medium given some weaknesses noted, including: (i) the difficulty of

tracking the stock of payment arrears on expenditure; (ii) the lack of budgets and accounts monitoring

in municipalities by the Ministry of Finance; (iii) the absence of auditing for services and works by the

Directorate General of the Budget; (iv) the absence from the Directorate of the Treasury of a

nomenclature of supporting documentation, a manual of updated accounting procedures and an updated

chart of accounts; (v) the Court of Auditors, which is insufficiently staffed, lacks a permanent file and

working files; (vi) the absence of an opinion of the Court of Auditors on State accounts; (vii) the delay

in auditing the Budget Act by the Court of Auditors; the last audit concerns the 2015 Budget Act; (viii)

the absence of a procedures manual, formalised reports and working files at the General Inspectorate of

XXIX

Finance; and (ix) the limited competence of the Anti-Corruption Brigade because it is not authorised to

interrogate ministers.

The Government of Burundi needs to correct the weaknesses listed above to make the systems

satisfactorily compliant with the Paris Declaration.

Detailed Risk Assessment

FACTORS RATINGS INITIAL

RISK

MITIGATION

MEASURES

RESIDUAL

RISKS

Budget

Credibility of the budget 2.5 Average Average

Difficulty of tracking the stock of

payment arrears on expenditure

Track the stock of

payment arrears on

expenditure.

Completeness and transparency 2.5

Average

Average

Budgets and accounts of

municipalities are not monitored by

the Ministry of Finance.

Forward the budgets

and accounts of

municipalities to the

Ministry of Finance.

Budgeting based on national policies 2.7 Weak Weak

Predictability and control of budget

execution

2.5 Average Average

The Directorate General of Budget

does not audit services and works

carried out

Get the Directorate

General of Budget to

audit services and

works carried out.

Accounting, recording of information

and financial reports

2.5 Average Average

The Directorate of Public Treasury

does not have a nomenclature of

supporting documents and an

accounting procedures manual

There is now a Single Treasury

Account, which facilitates

reconciliations

Have a nomenclature

of supporting

documents and manual

of accounting

procedures prepared.

.

Internal audit 2.5 Average Average

Reports are regularly prepared for the

majority of government entities

Central, but the managers track major

issues with delay

Accelerate follow-up

of major issues in the

report.

External audit 0.75 Substantial Substantial

The Court of Auditors has insufficient

staff, does not have a permanent file

and working files. It certifies the

accounts of the State and draws up a

report on the budget execution.

However, it does not provide an

opinion. Moreover, there is a delay in

auditing the Budget Act by the Court

of Auditors. The last audit is on the

2015 Budget Act

Strengthen the staff.

Establish a permanent

file and working files.

Provide an opinion in

the report. Join

INTOSAI.

Accelerate the audit of

the Budget Acts

The mission also notes that the Court

of Auditors is not affiliated to the

International Organisation of Supreme

Audit Institutions (INTOSAI).

Public contracts 2.5 Average Average

XXX

For procurement methods that involve

competition. The administration does

not systematically make available to

the public all the information relevant

to the award of public contracts.

For procurement

methods that involve

competition.

Systematically make

available to the public

all information relevant

to public procurement.

Fight corruption 2.5 Average Average

Jurisdiction is limited because it is

not authorised to interrogate

ministers.

Expand jurisdiction by

allowing interrogation

of ministers.

Average Rating: 2.32: Average

Weak: 2.5 to 3 Average: 1.5 to 2.5 Substantial: 0 to 1.5

XXXI

Annex 16: Climate Change and Green Growth in Burundi

Burundi is a landlocked country in the heart of the Great Lakes region of Africa and lies between

meridian 29 °00’ - 30°25 East and parallel 2°20° - 4°25’ South. It covers an area of 27834 km²

and belongs to two major river basins: the Nile Basin with an area of 13,800 km² and the Congo

River Basin with an area of 14,034 km². The current structure of economic production,

dominated by subsistence agriculture, makes the economy highly vulnerable and fragile

because it is dependent on vagaries of the weather. Burundi's electricity consumption of 25

kWh/inhabitant/year accounts for only 4% of the energy balance.

In 2015, the forest area was estimated at 1,542.2 km², or 5.5% of the national territory.

However, the country is experiencing a dizzying deforestation rate when compared to the

national area covered by forests. Although the forested area accounted for about 11.3% of the

national territory in 1990, it represented only 6.7% in 2010, and dropped to barely 5.5% in

2015, at the current rate of 64.54 km² of annual loss of forest cover (i.e. above 2% on annual

average). The high demographic pressure on land for agriculture, the absence or lack of access

to fuel wood substitutes, recurrent bush fires in some parts of the country, limited reforestation,

etc. are all factors that contribute to the continued depletion of this resource. The deficit in the

consumption of wood products in relation to sustainable production is about 4.3 million tonnes

per year. Although the government reforestation programme helped to increase the forest cover

rate from 6.7% 2010 to 12% in 2015, the intensive use of firewood as the main energy source

remains a major concern (the deforestation rate was estimated at 2% per year in 2017). This is

attributable to the fact that the household electrification rate does not exceed 5% compared to

16% in sub-Saharan Africa.

Burundi has abundant water resources thanks to relatively good rainfall, a good network of

rivers and the retention of water by marshes and lakes, particularly Lake Tanganyika: 31,900

million m³ of rainfall and 8,170 m³/year (259m³/s) brought by rivers. The country has significant

potential for irrigable land in marshes, plains and hills but less than 10% of the land is irrigated.

The use of irrigation could enhance crop intensification, increase yields and reduce losses

caused by irregular rainfall. With regard to groundwater, Burundi has more than 6,600 litres

per second of the resource (574,000 m3/d solely from springs). Groundwater resources vary by

natural region. The Imbo, Mosso and Bugesera natural regions have the weakest sources, with

98.3%, 96.6% and 100% of their respective areas falling under the category below 0.3 l/s*km².

The average specific resources are 0.05, 0.08 and 0.11 l/s*km² for these three natural regions.

In contrast, the Mugamba, Mumirwa and Bututsi natural regions have the most abundant water

resources, at respectively 86.6% and 61.9% of their area. They have specific flows above 0.3

l/s*km².).

Burundi’s topography comes with a climate variation depending on the altitude, hence a broad

geo-climatic diversity. The climate of Burundi is humid tropical influenced by the altitude that

varies between 773 m and 2670 m. It is characterised by an alternating rainy season that usually

extends from October to May and a dry season that runs from June to September. Overall,

precipitation increases with altitude. The minimum rainfall is about 500 mm observable in the

Rusizi Plain, while maximum precipitation reaches 2,200 mm in high altitude regions. The

average rainfall for Burundi is 1,274 mm. The greatest number of rainy days is observable in

April (16 to 26) (Sinarinzi, 2005). Average annual air temperature decreases as the altitude

increases. The highest annual average is 24.1° C (Imbo Plain) while the lowest is 15.6° C

(Rwegura). The mean monthly maximum temperatures are highest at the end of the dry season

(September-October) while the mean monthly minimum temperatures are lowest during the dry

season. The country has relatively diversified geomorphological features and is divided into 5

agro-ecological zones: (i) the western plain corresponding to the Imbo natural region that

XXXII

occupies 7% of the country’s land area; (ii) the western Mumirwa escarpment that covers 10%

of the country's area. The annual rainfall ranges from 1,100 to 1,800 mm, and temperatures

vary between 23 and 17° C depending on the altitude; (iii) the Congo-Nile ridge, which includes

the Mugamba and Bututsi natural regions with about 15% of the country's area and

characterised by annual rainfall between 1,500 and 2,000 mm, and an equatorial mountain

climate with average annual temperatures of 12 to 16° C; and (iv) the central plateau

encompassing the Buyenzi natural areas.

In Burundi, climate disruption is manifested by exceptional rainfall and prolonged drought. In

the case of exceptional rainfall, erosion increases, the rivers carry fertile alluvium, raising

riverbeds by a few centimetres. In turn, this floods the plains and marshes, and pollutes the

water. Land loss is very high in the Mumirwa region and at the origin of the pollution of Lake

Tanganyika. These losses are estimated at 100 tonnes/ha/year. The effects of rainfall deficit are

the causes of the water deficit in some parts of the country, particularly in the Bugesera and

Kumoso depressions, and in the Imbo Nord plain. During long periods of drought, cases of bush

fires increase, non-irrigated lowlands dry out and are degraded. Thus, aridity obliges agri-

pastoralists to invade marsh ecosystems in search of wet lands.

The simulation of climate change within the 2000-2050 timeframe has shown an increase in

rainfall ranging from 3 to 10%, while rainfall amounts from May to October will decrease by 4

to 15%. The analysis of average temperature change showed a temperature increase of 0.4º C

every 10 years to reach 1.9º C in 2050, corresponding to the high emission of greenhouse gases.

In the same vein, studies carried out as part of the first national communication on climate

change and climate change parameters in Burundi by 2050 based on the general circulation

model, show that the average annual temperature will rise by 1° C to 3° C. Rainfall will increase

by + or - 10% and the rainfall regime will be disturbed to the point of having only two major

seasons of six months each: a rainy season from November to April and a dry season. These

climate changes will engender several risks related to the following phenomena: (i) change of

seasons; (ii) flooding of swamps and wetlands; (iii) land degradation and loss of soil fertility;

(iv) scarcity of groundwater resources; (v) occurrence of extreme climatic events (hail, violent

showers, strong winds, etc.); (vi) changes in the vegetative cycles of cultivated plants and other

woodlands; and (vii) other phenomena.

Although environmental management in Burundi is governed by legal texts, some of which are

older than the Ministry of Environment, these texts are seldom or never implemented. The

application of these texts is incumbent on various ministries, depending on the sector

(MEEATU, MINEAGRIE, MININTER, etc.). They are listed below: the Land Code (Decree-

Law No. 1/008 of 1 September 1986 on the Land Code); Decree-Law No. 1/032 of 30 June

1993 on the Production and Marketing of Plant Seeds in Burundi; Decree-Law No. 1/033 of 30

June 1993 on the Protection of Plants in Burundi; Law No. 1/010 of 30 June 2000 on the

Environment Code in Burundi; Decree-Law No. 1/6 of 3 March 1980 on the Establishment of

National Parks and Nature Reserves; Law No. 1/02 of 25 March 1985 on the Forest Code;

Decree-Law No. 1/41 of 26 November 1992 on the Institution and Organization of the Public

Water Domain. The recent merger of the Ministry of Water, Environment, Regional and Urban

Planning (MEEATU) and the Ministry of Agriculture and Livestock (MINEAGRIE) to become

the Ministry of Environment, Agriculture and Livestock (MINEAGRIE) attests to the

importance that the government attaches to an interdependent vision of natural resource

management as critical to the fight against food insecurity.

In terms of forward and strategic management of climate change, the country has a significant

arsenal, including: (i) the plan to combat land degradation (2013); (ii) the action plan to build

national capacity on risk reduction and emergency preparedness and response (2013-2016); (iii)

the national climate change adaptation action plan (PANA) (March 2013); (iv) national policy

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on climate change (2013); (v) nationally determined contribution (CPDN) (2015); (vi) national

communication on climate change adaptation and prediction of extreme weather events (2014-

2018); and (vii) proposal to prepare for REDD (2014).

Moreover, although the green economy is not yet a reality in practice, Burundi's resolve to move

towards the green economy is enshrined in the country’s Vision 2025 and in its objective on

low-carbon photovoltaic development mentioned in the CDN. Besides, Burundi’s National

Development Plan 2018-2027 provides that its operationalisation will be translated into sector

policies based on the most relevant development issues with a real potential for catalytic effects

involving an in-depth approach to sustainable development, by strengthening environmental

governance and integrating the green and blue economy perspective into development policies.

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Annex 17 - Non-Sovereign Operations in Burundi

1. Technical Assistance (TA) to Support Agricultural Development

Agriculture is the mainstay of Burundi’s economy and practically employs the entire rural

labour force. Burundi has several factors to its advantage for the development of a more

efficient agricultural sector: favourable climate and geographic conditions for agricultural

production, and a strong and growing domestic demand for agri-food products.

The major constraints to the sector identified are as follows:

- lack of reliable statistics and information systems;

- access to financing;

- problematic land management for private investment although many

government initiatives have been initiated;

- weak infrastructure and transport services that hinder links between the various

actors in the chain;

- embryonic sanitary and phytosanitary system;

- significant soil degradation due to deforestation and expansion of cultivation to

marginal areas.

These constraints have a negative impact on the development of agri-food chains.

The input segment remains largely underdeveloped and informal (individual producers and

cooperatives). Moreover, the supply of agricultural equipment is virtually non-existent.

Overall, Burundi imports a lot more agricultural products than it exports. Smallholders produce

the majority of staple food crops (fresh fruits and vegetables, rice, maize, sorghum and wheat,

as well as cassava and sweet potatoes). Thus, they provide the largest share of production in the

country.

The packaging and transformation segment is not well developed. Processing of agricultural

products remains artisanal and is carried out by individual producers, cooperatives or women's

associations.

Distribution and marketing channels are generally not coordinated, and Burundi's agricultural

research and development sector has been severely disrupted by years of conflict.

In the current context of fragility, improving Burundi's competitiveness in agri-food value

chains must, in the short and medium term, focus on national and regional markets and on

improving livelihoods through food security and increased income for the population. For the

promotion of youth and women's agricultural entrepreneurship and support for agricultural

development poles, private sector development operations can focus on the following areas of

intervention:

- upgrading processes for sustainable intensification of agriculture:

improving inputs and soil quality (land preparation, private irrigation projects,

improvement of production methods on sloping-valley lands);

- upgrading basic crop processing capacity to reduce post-harvest losses;

- upgrading storage, processing and packaging capacity in the food products

sector.

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Only a long-term strategy can help to achieve the objective of diversification of agri-food

exports. This will require the consolidation of essential infrastructure and basic services

(transport, value chain coordination framework, suitable human capital, quality standards,

access to credit and reduction of market distortions resulting from subsidy programmes).

The Bank's technical assistance (TA) needs to help address human capital challenges for all

segments of agricultural value chains. It must take into account the fragmentation of production

at national level to reach a significant number of actors. Low literacy rates will also be taken

into account to ensure effective impact of capacity building actions.

TA will be targeted at young people in the sector, including entrepreneurship initiatives. It will

take into consideration the need to match skills to real private sector needs. Furthermore, the

TA will seek to create links between researchers, educational programmes and the private

sector, through the establishment of incentive and common frameworks.

2. Technical Assistance for the Improvement of Energy Infrastructure

Burundi has significant potential for energy production. Several large rivers along its borders

and all over the country offer opportunities for hydropower generation, while clear skies allow

for the efficient use of solar energy. Ninety percent (90%) of the country's energy needs are

currently covered by the burning of biomass, mainly wood, for cooking and heat, which

contributes to deforestation and health problems.

Since the end of the crisis, Burundi is unable to meet domestic demand and uses energy imports

to fill the gap. In addition, owing to stronger economic growth in recent years, energy demand

will exert additional pressure on the country's energy supply, particularly for upgrading agri-

food value chains.

The main objectives for upgrading the energy value chain in Burundi today are to increase

production, transmission and distribution capacity in order to increase access to electricity and

facilitate access to a more reliable power source for industrial growth.

The Bank's private sector operations will aim at responding to domestic energy demand and

focus on strengthening the electricity value chain, which comprises five major segments: fuel

supply, power generation, transmission, distribution and the final consumer.

Burundi's power generation is dominated by hydropower. As a result, power supply is

dependent on seasonal rainfall; drought years are characterised by significant shortages, while

high rainfall contributes to increased supply. Off-grid electricity generation currently includes

various energy sources - small hydropower plants (some are not operational), diesel generators

and solar panels used by various private and public sector players.

Burundi's transmission network relies on outdated technology and lacks maintenance. In

addition, the network is concentrated in the country’s northwestern and central areas and around

Bujumbura, leaving a large part of the country abandoned. Electricity is distributed mainly in

the country’s urban areas, with only 2% of rural households connected to the grid; rural

electrification is almost non-existent.

Several constraints hinder the improvement of power supply in the country: weak ministerial

capacity, operational inefficiencies resulting from REGIDESO’s structure (lack of autonomy

from the government, mismatch between rates and costs associated to the company structure),

access to finance and limited information systems.

In the current context of fragility, three areas of intervention are prioritised because of their

feasibility and potential to contribute to improving people's livelihoods, job creation and private

sector participation:

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- rehabilitation of existing generation network and facilities, including the

renovation of existing hydropower plants and the national grid to improve

generation capacity and reduce transmission and distribution losses (process

upgrading by integration of more sophisticated technologies or processes);

- expansion of the transmission and distribution network to increase access to

electricity for businesses and individuals in under-served areas of the country,

facilitate interconnection with other countries and improve ROI for production

from power plants (upgrading processes);

- support off-grid development for rural electrification and help private sector

companies and other actors invest in technologies that reduce reliance on

domestic supply, freeing up resources for other users (upgrade processes and

develop renewable energies).

In this context, technical assistance activities could create links with local MSMEs for the

construction and maintenance of facilities that require semi-skilled and unskilled labour.

The Bank's technical assistance (TA) will also help to address human capital challenges in the

electricity value chain. The sector faces a number of significant challenges. These include

weaknesses in human resource management practices, dysfunctional promotion policies within

REGIDESO, a geographic gap between the demand and supply of labour, gaps in the formal

education system and the lack of reliable labour market data.

Technical and vocational schools lack adequate facilities, equipment and teaching staff. As a

result, they re-orientate teaching towards the provision of theoretical knowledge at the expense

of practical training. Hiring in rural areas is difficult and requires the establishment of regional

education and training centres. In addition, pressures will be exerted on the existing workforce

with the arrival of new technologies such as prepaid meters and computer systems for

monitoring transmission and distribution networks of the power grid.

TA will help to identify current skills gaps, develop appropriate training programmes, and

provide the skills needed to grow the sector. Based on this needs assessment, a recruitment

strategy can be developed.

TA will also aim to support stakeholder capacity building through hands-on training

programmes for technicians, on-the-job training for engineers, and training and certification

programmes for electricians.

Stakeholder capacity building for participation in regional operations is also critical, since

regional energy projects require coordination with several countries in key areas. The ability of

public actors to attract private investors, negotiate concessions and PPP contracts will also be

supported.

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Annexe 18 – Burundi : 2018 CRFA’s Main Results.

CRFA Dimension Scores

Capacity Pressure

Inclusive Politics 3.62 5.63

Security 2.34 4.68

Justice 1.92 5.56

Economic & Social Inclusiveness 2.82 3.33

Social Cohesion 2.03 3.34

Externalities/Regional Spillover Effects 2.97 2.70

Climate/Environmental Impacts 3.19 3.79

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Annex 19 – Riskmitigations measures

Risks Assessment Mitigation Measures

Political instability and the risks posed by the 2020 elections.

High Efforts by the international community to restore inter-Burundian dialogue could help mitigate these risks.

Weak institutional and human capacity could adversely affect programme implementation.

Moderate

The Bank should intensify its capacity-building efforts and support Burundi through technical assistance. This assistance will focus on strengthening project monitoring and evaluation capacity, and technical capacity in sectors of Bank involvement.

Poor knowledge and/or ignorance of "climate vulnerability hotspots" could be a risk for the performance of the portfolio.

Moderate Support appropriate institutions in defining adaptation and mitigation priorities across socio-economic sectors, and promote the mainstreaming of climate change into Bank investments.

The lingering effects of the crisis could be a risk for the performance of the portfolio, especially the new operations.

Moderate

New operations will be systematically subject to economic and political analysis to identify "special measures" for the successful implementation of projects. Portfolio performance in Burundi has remained comparable to the Bank average despite the crisis. The Bank will keep up its close monitoring efforts.

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