As Burundi grapples with a political crisis that has lasted
almost two years now, a shortage of foreign currency is still a major
concern for investors in the country.
Burundi imports almost 80 per cent of the manufactured goods it needs, hence the high demand of foreign currency.
“We
can no longer pay our suppliers so they have stopped sending us goods.
Although we have enough local currency, we obviously can’t use it to pay
for imports,” said one Bujumbura businessman who imports construction
materials.
Since August last year, traders have faced a
shortage of foreign currency, a situation that has been blamed for a
rise in inflation over several months now.
The central bank has continued to loosen its monetary policy in efforts to plug the widening fiscal deficit.
A
black market is flourishing, with the exchange rate almost doubling the
official rate. The dollar exchanges at Bif2,930 on the black market,
against the official rate of Bif1,737.
Negative economic growth
The World Bank 2016 Report indicates that economic growth remains negative due to the fragile political environment.
Private
consumption likely weakened following a contraction in food production
due to climate shocks, a longer than expected lean season and forced
migration.
Positive developments in the real estate
sector included private investment growing in recent months as the
consumer agro-industries and the cement industry found new domestic and
external markets.
Meanwhile, Kenya and Tanzania have
stepped up support for Burundi through trade exhibitions. Tanzania, for
the first time, joined Kenya for a trade fair that ended two weeks ago.
“We
are showing togetherness as East Africans and as Burundi looks to
strengthen its relations with other East African countries,” said
Burundi first vice president, Gaston Sindimwo.
Kenya
exports more products to its EAC partner states than to any other part
of the world. However, Tanzania and Kenya’s share of manufactured goods
and services in Burundi have reduced since 2015.
As a
consequence, the Tanzania-Kenya trade exhibition was designed to
rekindle interest and offer opportunities for investments and
partnerships between the countries.
Major Kenyan
companies have already invested in Burundi including Kenya Commercial
Bank, Jubilee Insurance, Safintra, Kobil and some universities.
The
inflation rate in Burundi has remained moderate at six per cent, which
is below the eight per cent convergence level agreed within the EAC’s
regional integration arrangement.
Available estimates from the central bank, suggest that public debt is expected to exceed 45 per cent of gross domestic product.
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