Burkina Faso ECONOMIC UPDATE Special Chapter Energy for Economic Growth April 2025 1 © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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NW, Washington, DC 20433, USA; fax: 202-522- Nothing herein shall constitute or be construed or 2625; e-mail: pubrights@worldbank.org. considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of Publication design and layout by Studio Nane. Cover which are specifically reserved. photo credit: Roger 2 TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS 6 ACKNOWLEDGEMENTS 7 EXECUTIVE SUMMARY 8 1 . ECONOMIC AND POVERTY DEVELOPMENTS AND OUTLOOK 11 1.1 Recent Economic and Poverty Developments 12 1.2 Spotlight: Recent Developments in Gold Mining 20 1.3 Economic and Poverty Outlook 22 2 . POWERING ECONOMIC GROWTH 25 2.1 Background and Sector Overview 25 2.2 Recent Developments and Challenges in the Energy Sector 29 2.3 Transforming the Electricity Sector for Inclusive Growth 32 3 . ANNEX 35 3.1 Selected Economic, Fiscal, and Poverty Indicators 35 3.2 Recent Resource Mobilization and Expenditure Reforms 36 3.3 Analysis of the 2025 Budget 37 4 . REFERENCES 40 3 TABLE OF BOXES, FIGURES, AND TABLES Box 1.1 What brings the 2024 Mining Code? 21 Box 1.2 Government commitments to improve the business environment and a new 24 assessment tool Box 2.1 Sustainable Development Goal (SDG) 7 26 Figure 1.1 The security situation slightly improved as expressed by lower fatalities and 12 incidents Figure 1.2 Having reached a peak, security and defense spending started to trend downward 12 Figure 1.3 Agriculture and services were driving GDP growth in 2024 13 Figure 1.4 Consumption and gross fixed capital formation were the main demand-side 13 growth drivers in 2024 Figure 1.5 Mining remains crucial to Burkina Faso’s growth, contributing 17 percent of GDP 13 Figure 1.6 The rise in the gold price helped Burkina Faso when facing a drop in gold 13 production Figure 1.7 Inflation rose in 2024 to its pre-2022 levels, driven by food prices 14 Figure 1.8 After serving as both regional extremes, inflation now moderated to the WAEMU 14 mean Figure 1.9 Monetary poverty is decreasing for the first time since the Covid-19 pandemic 15 Figure 1.10 The poorest regions in 2021/22 have seen continuing insecurity 15 Figure 1.11 The unemployment rate decreased in 2024 but remains higher for urban 16 populations and women Figure 1.12 In 2024, the unemployment rate was particularly high for women in Ouagadougou 16 and Bobo-Dioulasso Figure 1.13 Overall employment remains concentrated in the agricultural sector 16 Figure 1.14 The job market faces multilevel challenges 16 Figure 1.15 As grants further decline, tax revenue steps up to fill the gap 17 Figure 1.16 Capital expenditure and wages remain the largest expenditure items 17 Figure 1.17 The fiscal deficit narrowed as current spending decreased and tax revenue 18 increased Figure 1.18 The current account balance improved, as gold prices soared 18 Figure 1.19 Debt to GDP increased in 2024 but is expected to gradually decline in the 18 medium term Figure 1.20 Financing costs remain elevated on the WAEMU regional bond market 18 Figure 1.21 Capital adequacy declined below the regulatory level 19 Figure 1.22 Non-performing loans show an increasing trend 19 Figure 1.23 The State’s participation in the banking sector has increased 20 Figure 1.24 Gold mining in Burkina Faso 20 Figure 2.1 In the past, the expansion of electricity access has been very volatile and too 25 slow to reach universal access any time soon Figure 2.2 The distribution network has gradually expanded with increased generation 26 capacity Figure 2.3 Imports from Ghana have seen a fast rise since 2018, while SONABEL’s thermal 29 production has declined 4 TABLE OF BOXES, FIGURES, AND TABLES Figure 2.4 In West Africa, the cost of electricity is correlated with the share of liquid fuels 30 in the generation mix Figure A.1 Defense and security spending has peaked in 2023 and continues to trend 38 downward Figure A.2 Health spending has been on an increasing trend 39 Figure A.3 Education spending is increasing in nominal terms but stagnating as a share of 39 GDP Table E.1 Policy options to strengthen macro-fiscal sustainability and the power sector 10 Table 2.1 Thermal power plants in Burkina Faso as of January 2025 27 Table 2.2 Solar power plants in Burkina Faso as of January 2025 28 Table 2.3 Hydropower plants in Burkina Faso as of January 2025 28 Table A.1 Selected Economic, Fiscal, and Poverty Indicators, Burkina Faso, 2022-2027 35 Table A.2 Comparison of Burkina Faso’s 2025 initial budget (LFI) with the 2024 adjusted 37 budget (LFR) 5 ABBREVIATIONS AND ACRONYMS ABER Agence Burkinabè d’Électrification Rurale (Burkinabè Agency for Rural Electrification) Armed Conflict Location & Event Data ACLED Agence Nationale des Énergies Renouvelables et de l’Efficacité Énergétique ANEREE (National Agency for Renewable Energies and Energy Efficiency) ARSE Autorité de Régulation du Secteur de l’Energie (Regulatory Authority for the Electricity Sector BCEAO Banque Centrale des États de l’Afrique de l’Ouest (Central Bank of West African States) CCIA Climate Change Institutional Assessment CFAF Franc de la communauté financière en Afrique (Franc of the Financial Community of Africa) DDO Distillate diesel oil GDP Gross Domestic Product GWh Gigawatt-hour (=1,000 MWh) HFO Heavy fuel oil INSD National Institute of Statistics and Demography IDP Internally displaced persons IMF International Monetary Fund IPP Independent Power Producer kWh Kilowatt-hour LFI Loi de Finances Initiale (Initial Budget Law) LFR Loi de Finances Rectificative (Revised Budget Law) MW Megawatt MWp Megawatt-peak ND-GAIN Notre Dame Global Adaptation Initiative NPL Non-performing loans PIREF Programme d’Inclusion et de Résilience Energétique du Faso (Faso Energy Inclusion Program) pp Percentage Points PV Photovoltaic SDG Sustainable Development Goal SIGASPE Système Intégré de Gestion Administrative et Salariale du Personnel de l’Etat (Integrated System for Administrative and Payroll Management of State Personnel) SONABEL Société Nationale d’Électricité du Burkina Faso (National Electricity Company) Société SONABHY Nationale Burkinabé d’Hydrocarbures (National Hydrocarbon Company) TWh Terawatt-hour (=1,000 GWh) UNICEF United Nations International Children’s Emergency Fund WAEMU West African Economic and Monetary Union WFP World Food Programme 6 ACKNOWLEDGEMENTS The Burkina Faso Economic Update is a World Bank report series produced once a year that assesses recent economic and social developments and prospects in the country. The Economic Update also provides an in-depth examination of a selected policy issue, outlining its current challenges and potential going forward. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged in Burkina Faso’s evolving economy. The report was prepared by a World Bank team led by Daniel Pajank (Senior Economist). The team included: Ibrahim Nana, Aminata Ouedraogo, Elizabeth Foster, Yannik Strittmatter, and Sekou Kone, with the support of Jala Emad Youssef. Louis Akakpo, Mahaman Sani and Michael O. Engman prepared the box on the business environment. Fatima Tenin Dicko contributed to the financial sector analysis. The special chapter on energy was written by Adwoa Asantewaa, Regina Nesiama Miller, and Daron Bedrosyan, with contributions from Bassem Abou Nehme and Arnaud Ligan, under the overall supervision of Kwawu Mensah Gaba (Practice Manager for Energy). The team is grateful to the peer reviewers Smriti Seth, Nicholas David Elms, Papa Mamadou Fall, and Fulbert Tchana Tchana for their guidance and comments. The team thanks Micky Ananth, Etsehiwot (Biya) Albert, Theresa Bampoe, and Catherine Compaoré for their administrative support. External and media relations are managed by Lionel Yaro. The report was prepared under the overall supervision of Clara De Sousa (Division Director for Burkina Faso, Chad, Mali and Niger), Hamoud Abdel Wedoud Kamil (Country Manager for Burkina Faso), and Hans Anand Beck (Practice Manager for Economic Policy). For questions about this report please email inana@worldbank.org and dpajank@worldbank.org. For information about the World Bank and its activities in Burkina Faso, please visit: https://www. worldbank.org/en/country/burkinafaso. 7 EXECUTIVE SUMMARY This 2025 Economic Update for Burkina Faso contains two chapters. The first chapter presents the economic and poverty developments observed in the country in 2024 as well as the outlook from 2025 to 2027.1 The second chapter analyzes the power sector in Burkina Faso and provides recommendations on how to achieve energy policy targets. ECONOMIC AND POVERTY DEVELOPMENTS AND 3.5 pp, compared to a 1.6 pp decline in urban areas. OUTLOOK Strong growth in services increased incomes in urban areas, but high food price inflation (6.3 percent GDP growth is estimated to have increased from in 2024) is particularly challenging for poor urban 3.0 percent in 2023 to 4.9 percent in 2024, driven households, while poor rural households can rely on by services and agriculture. The services sector their own food production and are less vulnerable remained the key growth driver, contributing 3.1 to these market shocks (and may in some limited percentage points (pp) to overall GDP growth, due cases benefit from higher prices for their products). to strong growth in public administration and other Poverty remains significantly higher in rural areas, at community or personal services, which account for 22 29.5 percent compared to 5.5 percent in urban areas. percent of the economy. Services sector growth was supported by incremental security improvements, The fiscal deficit as a share of GDP is estimated which spurred retail, trade, and repair services. to have improved from 6.5 percent in 2023 to 5.6 Agriculture contributed 1.9 pp to overall GDP growth, percent in 2024, driven by lower wage bill and supported by favorable weather, improved land subsidies, alongside robust revenue mobilization. access, and more effective government support. The improvement in the fiscal deficit was mainly due In contrast, the secondary sector subtracted 0.5 to lower expenditure on public wages (-0.4 pp) due pp, due to a drop in gold production caused by the to the implementation of reforms, and lower energy closure of some mines and reduced output in other subsidies (-0.3 pp) as international oil prices remained mines due to remaining insecurity. relatively stable. As a result, expenditures declined by 0.9 pp of GDP. Additionally, the government has been Inflation increased from 0.7 percent in 2023 to putting a focus on domestic revenue mobilization. 4.2 percent in 2024, due to increased food and The fiscal deficit is predominantly financed through energy cost, amid supply constraints and market domestic borrowing in the regional market, where uncertainties. Key inflation drivers were insecurity Burkina Faso has faced a significant surge in interest and logistical constraints affecting cereal supply, rates exceeding 9 percent for 12-month bills. coupled with price speculation due to the late start of the rainy season. Inflation remained above the Growth is projected to gradually rise from 4.3 regional WAEMU inflation rate that fell to 3.6 percent percent in 2025 to 5.0 percent by 2027, assuming in 2024, above the target band of 1-3 percent. sustained security improvements, average climate conditions, and a stable policy environment. The Despite the higher inflation, strong growth in tertiary sector is expected to stay resilient, while agriculture and services led the projected extreme agriculture will depend on weather conditions. poverty rate to fall by 3.0 pp to 23.2 percent. The secondary sector should rebound, driven by Poverty reduction was broad-based but more extractives and industry, contingent on improved pronounced in rural areas, where it decreased by energy availability. This recovery is likely to translate 1 This report contains data and analysis through March 2025. 8 into higher exports and a current account deficit The country’s untapped solar energy potential reduction. The government remains committed to is over 95 GW,3 about 129 times the country’s fiscal consolidation, but expenditure needs will stay installed capacity of 738.5 MW, but regulatory and high. Public debt as a share of GDP is projected to security barriers hamper private investment. Solar slowly trend downward and inflation to align with the photovoltaic (PV) with battery storage is the least WAEMU target band from 2025 onwards. Growth cost generation solution in Burkina Faso in a diversified projections and expected lower inflation should energy portfolio. Solar PV capacity has reached 225.9 contribute to continuing poverty reductions of about MW-peak by 2024, yet further expansion is needed 1 pp per year, with limited decrease in the number of to meet rising demand. Strengthening public- poor. private partnerships in generation, transmission, and distribution, and off-grid access expansion will be ENERGY FOR ECONOMIC GROWTH critical in harnessing the country’s energy potential. This should be complemented with extensive Affordable, reliable and sustainable energy will be investment in transmission capacity to facilitate critical for agriculture productivity, reliable service renewable energy integration and reduce reliance on delivery and efficient mining, all of which are key costly thermal generation. for economic growth in Burkina Faso. The electricity subsector is particularly pervasive, with major Government subsidies directly provided to the implications for key macroeconomic indicators such power sector strain public finances while failing to as government spending, inflation and fiscal deficits. make electricity affordable. Total energy subsidies Subsequently, access to affordable, reliable and were estimated at 4.9 percent of GDP in 2022, before sustainable electricity will be a critical prerequisite falling to 1.5 percent of GDP in 2023 amid higher fuel for inclusive and equitable growth. However, pump prices and a decline in international oil prices. key challenges relating to low access rates, high Despite subsidies, electricity prices remain high, electricity supply costs, inadequate investments, and affecting business competitiveness. Redirecting capacity constraints need to be addressed to ensure these subsidies from fossil fuels to renewable energy the effectiveness of the electricity sub-sector as a development and targeted social support programs catalyst of growth and job creation. would improve both energy security and fiscal sustainability. Only 26 percent of households in Burkina Faso have access to electricity in 2023—half of the Sub- Major investments and reforms are needed across Saharan Africa average of 52 percent.2 Rural access all segments of the electricity supply industry remains critically low at 7.0 percent, making universal to address the challenges. Key challenges in the access to electricity unlikely before 2072 at the energy sector include regulatory gaps, dilapidated current pace of expansion. The sector struggles with infrastructure, and lack of funding to expand and inadequate generation and transmission capacity, modernize the grid. Sector policies and reforms high production costs, and inefficient subsidies. could prioritize increasing access rates, private Electricity generation costs in Burkina Faso remain sector participation, solar PV development, grid among the highest in the region, at US$0.22 per improvements, lowering generation costs, and more kilowatt hour (kWh), compared to the West African efficient pricing. Urgent reforms and investments average of US$0.18 per kWh, while the full cost of are needed to enhance private sector participation, service is US$0.26 per kWh. The reliance on imported improve regulation, and expand renewable energy fuel and outdated infrastructure exacerbates financial solutions. Implementing cost-reflective pricing, pressures. expanding regional electricity trade, and competitively procuring solar PV projects could significantly lower generation costs. 2 IEA; IRENA; UNSD; World Bank; WHO (2025). Tracking SDG 7: The Energy Progress Report 2024. 3 IRENA (2023). Renewables Readiness Assessment: Burkina Faso. Abu Dhabi: International Renewable Energy Agency. 9 TABLE E.1 POLICY OPTIONS TO STRENGTHEN MACRO-FISCAL SUSTAINABILITY AND THE POWER SECTOR Policy Objectives Policy Options Feasible to implement in the short-term (1 year) Enhance revenue • Enhance digital tax administration to improve operational efficiency and minimize mobilization and tax revenue leakage. efficiency • Improve digital cross-checking of taxpayer information between institutions. • Broaden the tax base by introducing new taxes (incl. eco-taxes) and expanding the scope of existing ones, such as those on motorbikes, board member allowances, gambling, e-commerce, and cement production. Improve government • Optimize government spending by improving management of government assets spending efficiency such as real estate, motor vehicles, and utility consumption, generating savings for reinvestment in strategic areas. • Control the wage bill through biometric enrollment of civil servants and regular audits of government payrolls to ensure accuracy and efficiency. • Implement measures to monitor staff presence and ensure the accuracy of payroll records. Reduce the cost of • Strengthen relationships with both traditional and new development partners to financing and diversify maximize the availability of concessional financing. concessional funding • Implement a clear plan to address public debt challenges with a focus on avoiding sources arrears and improving the profile of public debt. Improve power sector • Adopt a roadmap for enabling more private sector participation in the power sector, regulation, policies, and including through a public-private partnership framework. institutional capacity • Update the 2022-2040 energy sector masterplan to serve as the primary guide for sector development, including a  national electrification strategy that covers grid, mini-grid and off-grid development. • Adopt a sector cost reduction strategy and enhance the role of ARSE as an independent sector regulator. • Strengthen local technical capacity for power system planning at both SONABEL and the ministry in charge of energy, and revitalize the division in charge of power systems planning within the ministry to work in collaboration with SONABEL and ABER. Important to implement in the medium term (2 to 5 years)4 Enhance revenue • Continue expanding digital platforms to improve efficiency and ease of tax reporting mobilization and tax and payments. efficiency • Continue producing an annual tax assessment expenditure report, and implement its recommendations to rationalize tax expenditures. Diversify concessional • Implement reforms as identified in the 2025 Country Climate Institutional funding sources Assessment (CCIA) to help mobilize climate finance. Promote resilience of the • Enable the banking sector to rebuild capital buffers, ensure proper risk management financial sector practices, and transparency in financial reporting. • Limit state-influence in the banking sector to ensure a level playing field. Improve power sector • Adopt a methodology for measuring electricity access across all tiers and with an regulation, policies, and emphasis on a Multi-Tier Framework for measuring energy access. institutional capacity Improve the financial • Implement a tariff reform to recover the full cost of service, while providing targeted sustainability of power support to poor consumer groups. sector SOEs • Strategically leverage regional infrastructures to access cheaper power sources from neighboring countries and develop alternative electricity generation methods that reduce the price per kWh. Develop solar energy • Increase energy storage capacity and investments in transmission grid capacity to resources with energy facilitate renewable energy evacuation. storage • Clarify licensing procedures for renewable energy development. • Adopt the use of competitive bidding for new generation capacity including solar PV and battery capacity. • Implement net metering for auto producers to channel surplus energy into the grid. 4 For a set of medium to long term policy options to stimulate economic growth, see Pajank, D., K. Abalo, and J. Porte (2023). Country Economic Memorandum for Burkina Faso: Making Growth More Efficient, Sustainable, and Inclusive. Washington, DC: World Bank Group. 10 CHAPTER 1 ECONOMIC AND POVERTY DEVELOPMENTS AND OUTLOOK The vulnerability to climate and security Burkina Faso’s acute vulnerability to climate change challenges continues to pose significant risks and strong dependence on rainfall, exacerbated by a for two key sectors of the country’s economy: substantial financing gap for adaptation, threatens agriculture and mining. its sustainable economic growth and resilience. The country ranks 162nd out of 187 on the 2025 ND-GAIN While the tertiary sector remains the key contributor country vulnerability index and 32nd among those to GDP growth, vulnerabilities in the primary and least ready to leverage investments and convert secondary sectors lead to volatile growth. The them to adaptation actions.6 Climate shocks, such tertiary sector, which accounts for about 48 percent as droughts, floods and intensified desertification, of GDP in 2024 has historically been a main growth have severe economic consequences, affecting driver. However, the economy is also dependent on agriculture, which employs about 60 percent of the the agricultural sector (18 percent of GDP in 2024), workforce. These impacts are widespread and felt by which is exposed to climate-related risks as recently both rural and urban households. For Burkina Faso to evidenced by droughts5 and the delayed 2024 adapt to worsening impacts of climate change, the agricultural campaign. Since 2015, gold mining has country would require an estimated investment of emerged as a new growth engine, representing more about US$2.8 billion by 2030.7 than 17 percent of GDP and 83 percent of exports in 2024 (Figure 1.5). However, insecurity continues Security challenges remain significant, with to hinder production from reaching its full potential, regional geopolitical tensions exacerbating the as evidenced by the decline in mining output from situation. In 2024, ACLED recorded about 7,500 2022 to 2024 (Spotlight: Recent Developments in security-related deaths in Burkina Faso, 1,000 less Gold Mining). than in 2023.8 The crisis has displaced more than two million citizens, forcing the closure of health centers Economic growth also depends on the availability of and schools, and disrupting supply routes.9 Regional energy to boost agricultural productivity, support tensions have exacerbated the domestic security mining operations, and ensure reliable service challenges, particularly following the formation of delivery. In agriculture, energy supports irrigation, the Alliance of Sahel States by Burkina Faso, Mali, and mechanization, and improved storage, leading to Niger in September 2023, who collectively exited higher yields and greater food security. The secondary the Economic Community of West African States sector depends heavily on the availability of energy in 2024. The domestic political situation remains infrastructure to achieve higher productivity levels. unchanged since the latest coup d’etat in September Reliable energy is also crucial for the services sector, 2022, and elections were delayed to 2029. powering businesses, healthcare, education, and ICT, and ensuring service quality and growth. Access to The security situation slightly improved in 2024, affordable, reliable, and sustainable energy is essential with reduced incidents and casualties, reflecting for inclusive, long-term growth, and challenges such increased government budget allocation for as low generation capacity, weak infrastructure, and security and defense. In 2024, fatalities decreased financial constraints need be addressed. by 11.5 percent, and incidents dropped by 26.1 percent, suggesting a small but positive shift (Figure 1.1). This reflects the government’s increased 5 World Bank (2023). Burkina Faso Economic Update April 2023 - Special Chapter: Building Financial Resilience to Climate Risks. Washington, D.C.: World Bank Group. 6 ND-GAIN (2025). ND-GAIN Country Index. Notre Dame Global Adaptation Initiative. 7 World Bank Group. (2022). Sahel Country Climate and Development Report (CCDR). Washington, D.C.: World Bank Group. 8 ACLED (2025). Armed Conflict Location & Event Data Project (ACLED). 9 UNHCR (2025). Burkina Faso Country Profile. 11 efforts to strengthen security forces and responses, Burkina Faso remains resilient, and the government including through larger budget allocations in recent continues to face the complex stabilization task years (Figure 1.2). Despite these improvements, the while balancing limited budgetary resources. overall security context remains challenging, with the country still grappling with ongoing insecurity threats. FIGURE 1.1 FIGURE 1.2 THE SECURITY SITUATION SLIGHTLY IMPROVED AS HAVING REACHED A PEAK, SECURITY AND DEFENSE EXPRESSED BY LOWER FATALITIES AND INCIDENTS SPENDING STARTED TO TREND DOWNWARD Fatalities and incidents, Burkina Faso, 2018-2024 Defense and security spending (CFAF million and % of total spending), Burkina Faso, 2016-2025 10,000 1,000 35 % 8,000 800 30 % 25 % 6,000 600 20 % 4,000 400 15 % 2,000 200 5% 0 0 0% 2018 2019 2020 2021 2022 2023 2024 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Fatalities Incidents Security Ministry Defense Ministry Total (% RHS) Source: Armed Conflict Location and Event Data Source: Government of Burkina Faso; World Bank Staff estimates 1.1 Recent Economic and Poverty Developments The expansion of services and agriculture due to In contrast, the secondary sector benefited only incremental security improvements, paired with a partially from security improvements, contracting rise in consumption, led to accelerated real GDP 2.8 percent as gold production decreased. The growth of 4.9 percent in 2024. secondary sector subtracted 0.5 pp from GDP growth, due to a drop in gold production caused by The real GDP growth rate is estimated to have the closure of the Boungou mine in 2023, prior to increased from 3.0 percent in 2023 to 4.9 percent its acquisition by the government in August 2024, in 2024, driven by services and agriculture. The and reduced output in other mines amid continued services sector remained the key growth driver, security concerns and related cost pressures (Figure adding 3.1 percentage points (pp) to overall GDP 1.6). Manufacturing activities also shrank, likely due to growth, due to strong growth in public administration disruptions in supply chains, higher production costs, and other community or personal services, which and unreliable access to electricity, which remains a account for 22 percent of the economy, and security major constraint for industrial expansion. The energy improvements, which spurred retail, trade, and repair deficit, exacerbated by infrastructure challenges and services (Figure 1.3). Agriculture contributed 1.9 pp to limited investment in alternative energy sources, overall GDP growth, supported by favorable weather, continues to hinder the sector’s ability to recover and expanded cultivated areas, rapid lowland development grow. boosting rice production, and improved land access in some conflict-affected areas due to an improvement On the demand side, GDP growth in 2024 was in security conditions. The government also provided primarily driven by household and government more effective support, including the timely provision consumption. Private consumption remains the main of improved seeds, fertilizers, and free plowing growth contributor in 2024, adding 3.9 pp to overall services. GDP growth, compared to 1.9 pp from government consumption (Figure 1.4). This strong performance 12 was mainly supported by improvements in the security with the ongoing presidential initiatives. In contrast, situation and a favorable agricultural season. Private net exports weighed on growth, subtracting 3.4 pp, investment contributed 1.7 pp to growth, against due to a decline in gold production and rising imports 1.0 pp for public investment, reflecting increased of capital, consumer goods, and services. spending in the mining and agriculture sectors, in line FIGURE 1.3 FIGURE 1.4 AGRICULTURE AND SERVICES WERE DRIVING GDP CONSUMPTION AND GROSS FIXED CAPITAL GROWTH IN 2024 FORMATION WERE THE MAIN DEMAND-SIDE GROWTH DRIVERS IN 2024 Contribution to GDP growth (pp), Burkina Faso, 2022-2027 Contribution to GDP growth (pp), Burkina Faso, 2022-2027 6 8 4 6 4 2 2 0 0 -2 -2 -4 -4 2022 2023 2024e 2025p 2026p 2027p 2022 2023 2024e 2025p 2026p 2027p Agriculture Industry Net exports Change in Inventories Services Net Taxes on Production Gross Fixed Capital Formation Government Consumption Real GDP Growth Private Consumption Real GDP Growth Source: Government of Burkina Faso; World Bank Staff estimates Source: Government of Burkina Faso; World Bank Staff estimates FIGURE 1.5 FIGURE 1.6 MINING REMAINS CRUCIAL TO BURKINA FASO’S THE RISE IN THE GOLD PRICE HELPED BURKINA GROWTH, CONTRIBUTING 17 PERCENT OF GDP FASO WHEN FACING A DROP IN GOLD PRODUCTION Mining as share of GDP (%), Burkina Faso, 2015-2024 Evolution of gold prices and production (US$/oz. and t), Burkina Faso, 2018-2024 20 70 2,500 15 60 2,000 10 50 1,500 5 40 0 30 1,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024e 2018 2019 2020 2021 2022 2023 2024e Mining Share Gold Production (tons) Gold Price ($/oz. RHS) Source: Government of Burkina Faso, INSD, and World Bank Staff estimates Source: Government of Burkina Faso, INSD, and World Bank Staff estimates 13 Inflation increased to 4.2 percent in 2024, driven annual average inflation has returned to pre-2022 by rising food prices, given insecurity-related levels (Figure 1.7). supply constraints and market disruptions, paired with irregular rainfall. While WAEMU regional inflation stabilized at 3.5 percent in 2024, significant country differences Headline inflation averaged 4.2 percent in 2024 highlight ongoing inflationary pressures, particularly as food and energy costs surged amid supply through food prices. WAEMU’s average inflation rate constraints and market uncertainties. In 2024, stood at 3.5 percent in 2024, down from the 7.4 average headline inflation was 3.3 pp higher than in percent peak in 2022 and similar to 3.7 percent in 2023 2023, when prices had stabilized following a very (Figure 1.8). This indicates overall stabilization as the sharp rise in 2022.10 The low inflation stemmed BCEAO policy rate remained unchanged throughout from input prices, especially energy and fertilizer, 2024. Niger (8.6 percent) and Burkina Faso recorded stabilizing after their sharp increases in 2022. In 2024, the highest inflation rates. Since inflation in Burkina food prices were the largest contributor to inflation, Faso is predominantly driven by domestic food with an annual average increase of 6.2 percent, supply, the inflation trajectory hinges on dynamics in compared to a decline of 1.4 percent in 2023. This this sector rather than the BCEAO policy rate path. surge was mainly due to security and logistical Foreign exchange reserves, estimated at 3.3 months constraints affecting cereal supply, coupled with of import cover at end-2024, remained unchanged price speculation due to irregular rainfall. As a result, compared to a year prior. FIGURE 1.7 FIGURE 1.8 INFLATION ROSE IN 2024 TO ITS PRE-2022 LEVELS, AFTER SERVING AS BOTH REGIONAL EXTREMES, DRIVEN BY FOOD PRICES INFLATION NOW MODERATED TO THE WAEMU MEAN Contribution to inflation (%), Burkina Faso, 2017-2024 Inflation (%), Burkina Faso and WAEMU, 2018-2024 16 15 12 10 8 5 4 0 0 -4 -5 2017 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022 2023 2024 Burkina Faso Other Food Energy WAEMU range WAEMU mean Transport Headline Source: Government of Burkina Faso, INSD, and World Bank Staff estimates Source: Government of Burkina Faso, INSD, BCEAO, and World Bank Staff estimates Monetary poverty is projected to have declined broad-based but more pronounced in rural areas, for the first time since the Covid-19 pandemic, where it decreased by 3.5 pp compared to a 1.6 pp but significant challenges to household welfare decline in urban areas. Strong growth in services remain. increased incomes in urban areas, but high food price inflation is particularly challenging for poor Despite the higher inflation, strong growth in urban households. Poor rural households can rely on agriculture and services led the projected extreme their own food production and are less vulnerable poverty rate to fall by 3.0 pp to 23.2 percent. This to these market shocks (and may in some limited is the first year a reduction in poverty is projected cases benefit from higher prices for their products). since the Covid-19 pandemic. Poverty reduction was Poverty remains significantly higher in rural areas, at 10 World Bank (2024). Burkina Faso Economic Update April 2024 - Special Chapter: Maintaining Reform Momentum on Social Assistance. Washington, D.C.: World Bank Group. 14 29.5 percent compared to 5.5 percent in urban areas it very likely that regional inequality is increasing (Figure 1.9). (Figure 1.10). Another source of regional disparity not fully captured in national trends are climate shocks. Although poverty has fallen nationally, certain Some areas experienced floods in April/May, while regions remain of particular concern due to conflict other areas were impacted by a late start to the and climate shocks. The regions of Sahel, Boucle rainy season or lower than average rainfall. These de Mouhoum and Est had some of the highest rates negatively impacted areas may have experienced an of poverty in 2021 and have also seen some of the increase in poverty, counter to national trends. highest rates of conflict in recent years, making FIGURE 1.9 FIGURE 1.10 MONETARY POVERTY IS DECREASING FOR THE THE POOREST REGIONS IN 2021/22 HAVE SEEN FIRST TIME SINCE THE COVID-19 PANDEMIC CONTINUING INSECURITY Poverty rates (% of population), Burkina Faso, 2020-2024 Poverty rate (%) in 2021/22 and number of Fatalities in 2024, Burkina Faso 40 30 20 10 0 2020 2021 2022 2023 2024 Poverty Fatalities Rural National Urban 20 40 60 0 500 1,000 1,500 Source: INSD (EHCVM 2021/22), World Bank staff estimates Source: INSD (EHCVM 2021/22), ACLED, World Bank staff estimates Despite the fall in monetary poverty, severe The labor market in Burkina Faso is characterized challenges to the well-being of the population by high levels of informality and low job quality, include a significant IDP population, food insecurity, highlighting persistent challenges in achieving and closures of education and health facilities. The decent employment. government reports that a significant number of internally displaced persons (IDPs) have returned, In 2024, 69.0 percent of the working age population but over 300,000 new IDPs were registered between were engaged in an income-generating activity, January and November 2024. A significant number with disparities by gender and location. Individuals of IDPs remain trapped in enclaves inaccessible to aged 16 and above (working age) represent 52.6 humanitarian aid.11 UNICEF estimates 6.3 million percent of the population. Among women, 55 people in need of humanitarian assistance, and the percent fall within this age group, compared to 50 WFP estimates 2.7 million facing acute food insecurity percent of men. The share of the employed working during the annual lean season. Over 5,000 schools population reached 69.0 percent in 2024. The overall remained closed, and a third of health facilities are unemployment rate declined from 4.3 percent of closed or operating at a minimal level,12 hindering the labor force13 in 2023 to 3.5 percent in 2024 human capital formation. (Figure 1.11 and Figure 1.12). However, the low overall unemployment rate conceals significant structural challenges within the labor market. 11 UNICEF (2025). Burkina Faso Humanitarian Situation Report No. 10. 12 Cluster Santé Burkina Faso (2024). Bulletin No. 11 (Novembre 2024). Ouagadougou: Burkina Faso. 13 The labor force comprises the working-age population that is either employed (performed a paid work for at least two hours during the last seven days before the survey) or unemployed during a specified reference period. 15 FIGURE 1.11 FIGURE 1.12 THE UNEMPLOYMENT RATE DECREASED IN 2024 IN 2024, THE UNEMPLOYMENT RATE WAS BUT REMAINS HIGHER FOR URBAN POPULATIONS PARTICULARLY HIGH FOR WOMEN IN AND WOMEN OUAGADOUGOU AND BOBO-DIOULASSO Unemployment rate (% of the labor force) by area and gender, Unemployment rate (% of the labor force) by region and Burkina Faso, 2023-2024 gender, Burkina Faso, 2024 National National Rural Rural Areas Urban Other urban Female Bobo-Dioulasso Gender Male Ouagadougou 0 2 4 6 8 10 0 5 10 15 2024 2023 Overall Female Male Source: National biannual employment survey, INSD, 2023 and 2024 Source: National biannual employment survey, INSD, 2024 Job quality remains a concern, with 93.5 percent (91.2 percent). Additionally, 61.1 percent of workers of jobs classified as informal—predominantly are self-employed, and family workers make up concentrated in the agricultural sector (Figure 22.0 percent. The persistence of high informality 1.13). Informality is prominent in all sectors, led by highlights the prevalence of low-quality jobs and agriculture (98.7 percent), commerce (92.7 percent), the labor market’s limited capacity to provide more and industry (92.6 percent), and followed by other decent employment opportunities in the formal services (65.8 percent). Informality is more prevalent sector. among women (95.8 percent) compared to men FIGURE 1.13 FIGURE 1.14 OVERALL EMPLOYMENT REMAINS CONCENTRATED THE JOB MARKET FACES MULTILEVEL CHALLENGES IN THE AGRICULTURAL SECTOR Share of employed people by sector (% of total employed), Job quality indicators (% of total employed) by gender, Burkina Faso, 2024 Burkina Faso, 2024 Employees 10.2 without medical coverage Vulnerable employment rate 13.8 Workers with monthly salary below the minimum wage Precarious employment rate 58.5 Rate of multiple 17.6 job holding Share of occasional or seasonal workers 0 20 40 60 80 100 Agriculture Industry Trade/Retail Other Services National Female Male Source: National biannual employment survey, INSD, 2024 Source: National biannual employment survey, INSD, 2024 16 The labor market in Burkina Faso faces persistent in personnel spending and subsidies (Figure 1.17). challenges related to under-employment and Despite an 11.3 percent nominal increase in 2024, job quality (Figure 1.14). Almost all workers lack total expenditure declined by 0.9 pp of GDP, reaching health coverage. Vulnerable employment—self- 27.0 percent of GDP in 2024. This was driven by the employment and workers contributing to family decrease in current expenditure from 17.1 percent of business—remains widespread, affecting 83.0 GDP in 2023 to 16.3 percent of GDP in 2024, due to percent of workers, especially in rural areas and a 0.4 pp reduction in wages and compensation and a among women. Further, 56.5 percent of workers earn 0.3 pp drop in current transfers, particularly subsidies below the minimum wage—a situation more severe (Figure 1.16). The reduction in public spending, for women and rural residents—and 55.1 percent combined with efforts to boost domestic revenue, of jobs are precarious as they are lacking formally improved the fiscal deficit by 0.9 pp of GDP in 2024. written contracts. Youth (15–24) are particularly vulnerable, with 13.8 percent not in education, Robust revenue performance underpinned the fiscal employment, or training. These figures highlight that consolidation, maintaining total revenue and grants decent employment remains out of reach for a large at 21.4 percent of GDP in 2024, unchanged from share of the working-age population. 2023. With a decline in grants, strong tax revenue growth helped stabilize overall revenues. In nominal The twin deficits shrunk, driven by decreased terms, total revenues and grants increased by 14.7 spending on the wage bill and subsidies, strong percent in 2024, supported by higher tax collection domestic revenue mobilization, and surging gold on domestic goods and services and dividends from prices that boosted total exports. the state-owned hydrocarbon enterprise SONABHY (Figure 1.15). See Annex 3.2 for more details on Expenditure-based fiscal consolidation continued, the government’s recent revenue mobilization and with the deficit declining from 6.5 percent of GDP expenditure reforms that have helped ensure fiscal in 2023 to 5.6 percent in 2024, primarily due to cuts sustainability amid lower donor grants. FIGURE 1.15 FIGURE 1.16 AS GRANTS FURTHER DECLINE, TAX REVENUE CAPITAL EXPENDITURE AND WAGES REMAIN THE STEPS UP TO FILL THE GAP LARGEST EXPENDITURE ITEMS Total revenue and grants (% of total), Burkina Faso, 2022-2027 Total expenditure (% of total), Burkina Faso, 2022-2027 100 100 80 80 60 60 40 40 20 20 0 0 2022 2023 2024e 2025p 2026p 2027p 2022 2023 2024e 2025p 2026p 2027p Grants Taxes on International Trade Capital Expenditures Goods and Services Non-tax Revenues Taxes on Goods and Services Current Tranfers Wages and Salaries Other Taxes Direct Taxes Interest Payments Source: Government of Burkina Faso; World Bank staff estimates Source: Government of Burkina Faso; World Bank staff estimates The current account deficit is estimated to have from a 22.9 percent jump in the average annual gold narrowed from 8.0 percent of GDP in 2023 to 6.4 price while gold output declined in volume terms. At percent in 2024 as gold prices increased. Total the same time, imports grew by 20.6 percent, due export value soared by 22.8 percent in 2024 and to higher demand for oil and equipment. Both the reached a new record high (Figure 1.18). This was internal (fiscal) and the external (current account) predominantly driven by gold exports (accounting deficit were primarily financed by bond issuances in for 80 percent of total exports), which benefited the regional market. 17 FIGURE 1.17 FIGURE 1.18 THE FISCAL DEFICIT NARROWED AS CURRENT THE CURRENT ACCOUNT BALANCE IMPROVED, AS SPENDING DECREASED AND TAX REVENUE GOLD PRICES SOARED INCREASED Fiscal balance (% of GDP), Burkina Faso, 2022-2027 Current account balance (% GDP), Burkina Faso, 2022-2027 40 0 40 30 20 -5 20 0 -10 10 -20 0 -15 -40 2022 2023 2024e 2025p 2026p 2027p 2022 2023 2024e 2025p 2026p 2027p Total Revenues and Grants Primary Balance Exports Current Account Balance Total Expenditures Fiscal Balance Imports Primary and Secondary Income Source: Government of Burkina Faso; World Bank staff estimates Source: Government of Burkina Faso; World Bank staff estimates The still elevated fiscal deficit translated into external financing, including budget support (Figure a slight increase in public debt, with high debt- 1.19). The financing gap was filled with domestic rollover of regional borrowing and contingent borrowing, which led the stock of CFAF-denominated liabilities as downside risks. debt to rise from 29.1 percent to 30.5 percent. The continued shift from external to domestic debt amid The debt-to-GDP ratio is estimated to have risen elevated yields (Figure 1.20) has led to rising debt slightly from 54.0 percent in 2023 to 54.9 percent service costs, with 86.7 percent of total interest in 2024, driven by higher borrowing in the regional payments in 2024 linked to regional market debt. market amid higher interest rates. External debt as Gross debt service is estimated at 7.3 percent of a share of GDP declined from 24.9 percent to 24.4 GDP in 2024.14 percent, reflecting lower availability of concessional FIGURE 1.19 FIGURE 1.20 DEBT TO GDP INCREASED IN 2024 BUT IS EXPECTED FINANCING COSTS REMAIN ELEVATED ON THE TO GRADUALLY DECLINE IN THE MEDIUM TERM WAEMU REGIONAL BOND MARKET Public debt stock (% of GDP), Average yield, 36 months T-Bond, Burkina Faso and WAEMU Burkina Faso, 2022-2027 countries, 2018-2025 12.5 Russia’s ECOWAS exit 60 invasion of announcement Ukraine 10.0 40 7.5 20 0 5.0 2022 2023 2024e 2025p 2026p 2027p External Debt 2.5 Domestic Debt 2018 2020 2022 2024 Total Public Debt Burkina Faso Other WAEMU countries Source: Government of Burkina Faso; World Bank and IMF staff estimates Source: UMOA-Titres; World Bank staff estimates 14 For the latest figures on Burkina Faso’s public debt, see the forthcoming Joint World Bank-IMF Debt Sustainability Analysis. 18 The financial sector has been facing some percent in the first half of 2024. However, the sector’s emerging challenges, which can be expressed capital adequacy ratio declined from 14.3 percent by declining capital adequacy and rising non- in December 2023 to 9.4 percent in June 2024 performing loans. (Figure 1.21). Additionally, the upward trend in non- performing loans (NPLs), which began in December Burkina Faso’s banking sector reveals additional 2022, persisted. With no significant increase in risks, as capital adequacy and asset quality have provisions, the coverage of NPLs has continued to deteriorated. Credit activity has shown positive erode, reaching its lowest level since 2015 (Figure trends, with the average growth in credit to the 1.22). These developments coincide with an increased private sector rising from 8.2 percent in 2023 to 10 state presence in the banking sector. FIGURE 1.21 FIGURE 1.22 CAPITAL ADEQUACY DECLINED BELOW THE NON-PERFORMING LOANS SHOW AN INCREASING REGULATORY LEVEL TREND Capital Adequacy Ratio (%), Burkina Faso, 2019-2024 Non-performing Loans (NPLs), Burkina Faso, 2019-2024 16 10 100 14 8 80 12 6 60 10 8 4 40 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 Jun 24 Burkina Faso WAEMU NPLs/Total Loans (%, LHS) Provisions/NPLs (%, RHS) Source: Government of Burkina Faso, BCEAO Banking Commission, World Source: Government of Burkina Faso, BCEAO Banking Commission, World Bank staff estimates Bank staff estimates Two fully state-owned banks entered Burkina Faso’s mandate of centralizing public funds and facilitating banking sector, which may enhance customer the treasury’s operations. Moreover, it competes with options but could potentially crowd out private commercial banks in saving and deposit operations, banks. The Postal Bank (Banque Postale), inaugurated while BCEAO’s licensing regulations prohibit it in October 2024, aims to bolster financial inclusion from engaging in credit activities. According to the through a wide range of services. The Treasury BCEAO, both institutions are fully state-owned, Deposit Bank (Banque des Dépôts du Trésor), joining others in the sector with high levels of state established in August 2024, has the distinct public ownership (Figure 1.23). 19 FIGURE 1.23 THE STATE’S PARTICIPATION IN THE BANKING SECTOR HAS INCREASED Share capital by bank and capital ownership (CFAF billion), Burkina Faso, end of 2023 Coris Bank International Business Bank Bank of Africa United Bank for Africa Banque Commerciale du Bukina Banque Sahelo-Saharienne Banque Postale Banque Agricole du Faso Ecobank Societe Generale Banque Atlantique Wendkuni Bank International Banque de l’Union Vista Bank CBAO, Groupe Attjariwafa Bank * Orabank Côte d’Ivoire * 0 5 10 15 20 25 30 35 Government of Burkina Faso Private (Burkina Faso) Private (International) Source: BCEAO Banking Commission, World Bank staff estimates Note: * banks with only branches in the country 1.2 Spotlight: Recent Developments in Gold Mining The gold sector is omnipresent in the country, around 11 percent) companies own most of the with 9 out of the 13 regions hosting industrial industrial gold production. While in 2021 all mines gold mines (Figure 1.24). Following the 2015 were owned by international companies, four mines Mining Code, permits for industrial mining activities were recently acquired by Burkinabé and Malian increased. This came at the expense of the entities. The reasons for this are case-specific, but widespread artisanal mining sector, representing included legal disputes, which led to the takeover only 10 percent of all permits in 2022 compared to by the government in two cases, and divestment 90 percent in 2014. Canadian (35 percent), UK (23 plans of international companies. percent), as well as Russian and Australian (both FIGURE 1.24 GOLD MINING IN BURKINA FASO Mine location sized by annual production volume (2023 or latest available) Essakane Production volume (t) 3 Karma 6 Bissa Taparko 9 Samtenga Owner nationality Mana Boungou Australia Bombore Sanbrado Burkina Faso Yasamoko Canada Youga Mali Hounde Wahgnion Russia Turkey UK Source: Chambre des Mines; INSD; Mining companies’ websites; World Bank staff estimates 20 The mining sector assumes an integral part of the The government has expanded its interventions in country’s economy but has been struggling since the gold sector to curb the financing of terrorism its peak in 2021 due to insecurity and operational and enhance government revenue. The 2015 Mining challenges. In 2024, the mining sector accounted Code provided the legal framework for a decade. As a for 17 percent of GDP, 18 percent of government reaction to security challenges, considerable levels of revenues, and 83 percent of exports. After record informality, and illicit financial flows, the government output of 66.9 tons of gold in 2021, production decided to prohibit the export of gold from artisanal has been declining every year. Due to insecurity, and semi-mechanized mines in February 2024. Soon operations at multiple mines were constrained or thereafter followed the adoption of a new mining suspended. In the first half of 2023, nine mines had code in July 2024, which seeks to boost government their operations suspended mainly due to insecurity, revenues and enhance the local content of the according to the ministry in charge of mines. Insecurity industry. Key changes include an increase of the free not only directly impacts the operation of mines carried interest in gold mines by the government from but also raises operating costs and diminishes the 10 to 15 percent, the abolishment of preferential tax investment willingness of international companies. rates, and the flexibility of receiving dividends in-kind (Box 1.1). BOX 1.1 WHAT BRINGS THE 2024 MINING CODE? Fiscal Changes • The free carried interest of the State in a mining company will increase from 10 to 15 percent.15 In addition to its 15 percent free carried interest in a mining company, the State has a paid subscription right of at least an additional 30 percent for itself and/or the national private sector. This allows the State to obtain a significant stake in the mining operation, potentially up to 45 percent or more if it exercises its subscription right fully. State dividends maintain their status of preferred dividends (Article 66). • The State will be able to choose to receive its dividends in-kind, i.e., gold, rather than cash. The dividends are distributed to the State before any other allocation of the distributable profit, and the State has the right to recover them by any means (Article 67). • Mining companies will contribute to the establishment of the national gold reserve. The terms of their contribution are being determined by regulatory means (Article 4). • The Local Development Mining Fund is modified to a Mining Development Fund. The modified fund has the explicit objective to support communal development projects, and the Patriotic Support Fund (Article 29). The Mining Development Fund is to be funded by (a) 1 percent of the monthly turnover, excluding taxes, or the value of the products extracted during the month by the holders of mining operation permits and the holders of industrial quarry substance operation permits; and (b) the proportional royalties collected and received by the State, related to the value of the products extracted and/or sold. • Preferential tax rates will be abolished, and the general corporate tax rate of 27.5 percent will apply. Selected 7-year tax incentives are shortened to 2 years (Article 170).16 • Penalties are introduced. They are added as extra percentage points (pp) to the proportional royalty levied for overproduction in a given year. Their magnitude depends on the extent of overproduction, with the penalties ranging from 6 to 24 pp (Article 214). Business Changes • Mining companies will need to offer access to shares to Burkinabe investors, regardless of existing shareholding (Article 10). • The various tax exemptions for mining companies in construction will be reduced to two years. They may not be renewed (Article 76). • The duration of mining permits is reduced. The reduction is from 20 to 10 years for large and from 10 to 5 years for small mines (Article 72). • The current exclusion of industrial exploitation permits from constituting collateral will be removed. Operating permits for large and small mines will be considered transferable, transmissible, and indivisible real property rights that may be used as a mortgage (Article 71). 15 This will align the mining code of Burkina Faso with Art. 35 of the updated WAEMU community mining code, while most other WAEMU countries have not increased their free carried interest so far. 16 Removal of exemption from the minimum flat-rate levy; the business license contribution; the Employer’s Apprenticeship Tax; and the Tax on Mortmain Property. 21 Legal Changes • Officials of the mining administration will gain the status of judicial police officers. This is meant to ensure higher levels of security (Article 192). • Only legal entities, not natural persons, will be able to receive research permits (Article 39f). • Neither public officials nor agents of state-owned companies may hold a mining title. This includes public officials at both the national and local level (Article 39f). • Outlook for the creation of a national structure for security of mining sites and activities (Article 148). Complementary to the Mining Code, the legislative assembly also adopted a local content law. It aims to enhance local engagement in mining operations through, inter alia, preferential selection of domestic subcontractors, encouragement of using domestic financial institutions, and the requirement to create a capacity building plan to foster local human capital. 1.3 Economic and Poverty Outlook Growth is projected to rise from 4.3 percent in exports. Baseline assumptions do not include the 2025 to 5.0 percent in 2027, driven by services implementation of significant reforms or industrial and agriculture, and recovering mining output policies aimed at diversifying the export base. amid slowly improving security conditions. Inflation is expected to decline and reach 2.0 With agriculture growth returning to historical percent by 2027, driven by improved security, and average, GDP growth is projected at 4.3 percent in gradually improving agricultural output growth. 2025, before rising to 5.0 percent by 2027, assuming continued improvements in security conditions. Inflation is projected to decline from 4.2 percent The growth rate is expected to be 0.6 pp lower in in 2024 to 3.0 percent in 2025 and then to stay 2025 compared to 2024, reflecting a projected within the WAEMU target band of 1-3 percent. The slowdown in agricultural performance, which had projected downward trend is driven domestically by benefited from unusually favorable rainfall in 2024. improved security conditions and average climate Over the medium term, gradually improving security conditions, which allows farmers to return to their conditions are expected to persist, supporting lands, boosting agricultural output and, leading agricultural output and enabling a modest recovery to lower food prices, which still accounts for in the mining sector, particularly gold production. The about 50 percent of the consumer price index.17 A services sector is also projected to remain robust, projected decline in commodity prices will reinforce driven by both the public and private sectors. These disinflationary pressures. For example, oil prices dynamics are expected to support a gradual growth are expected to decrease in 2025 and 2026 due acceleration, reaching 5.0 percent by 2027. to expanded production amid stagnating global demand. The combined domestic and external The current account deficit is projected to narrow factors are forecast to maintain lower inflation in the from 6.4 percent of GDP in 2024 to 5.8 percent of coming years. GDP in 2025, and gradually decline to 4.9 percent of GDP by 2027, driven by higher gold exports. The regional inflation rate is expected to align with Gold production is projected at 56 tons in 2025, the WAEMU target band from 2025 onwards, while 64 tons in 2026, and 65 tons in 2027, translating regional reserves are projected to rise to 5.1 months into higher exports and a reduction in the current of imports in 2025. The rise in foreign exchange account deficit. While cotton exports declined reserves is supported by recovering exports and due to a delayed growing season and lower global lower Euro Area interest rates. Burkina Faso’s capital prices, average weather conditions and a projected account balance is projected to improve only recovery of cotton prices will help boost cotton slightly, due to limited donor support. The financial 17 Inflation projections in this report are based on the 2014 consumer price basket. Starting in January 2025, inflation will be calculated using a new basket based on 2023 data and updated expenditure weights from the 2021/22 household survey (EHCVM). The most significant changes are observed in food (29.0 percent share in the new basket, down by 21.1 pp), hotels and restaurants (18.1 percent, up by 11.0 pp), and transport (13.4 percent, up by 4.0 pp). 22 account balance is projected to decline due to by end-2027, provided the government continues reduced direct investment and some divestment in to implement reforms to reduce current expenditure the mining sector related to the implementation of and strengthen domestic resource mobilization. the new mining code. The exit from the Economic In 2025, total revenue (incl. grants) is projected to Community of West African States is expected to rise by 19.4 percent to 21.3 percent of GDP, while have minimal economic or price impacts. expenditure is expected to increase by 5.5 percent to 25.9 percent of GDP, resulting in a fiscal deficit of Despite a projected decline in poverty rates, the 4.7 percent of GDP. The strategy focuses on reducing number of poor will remain high, with long-term the public wage bill, limiting transfers to state-owned progress hinging on security, financial stability, enterprises, and enhancing tax collection, including and climate resilience. fewer exemptions for mining and other sectors. Poverty is expected to decrease only slowly over The public debt-to-GDP ratio is expected to trend the next several years, with the number of poor slowly downwards to reach 52.7 percent by 2027, remaining elevated at above 5.5 million. Poverty driven by stronger GDP growth and a lower fiscal rates are expected to continue to drop slowly, by deficit. The shift from external to domestic debt is about 1 percentage point per year. This is enough to expected to continue through 2027. External debt decrease the number of poor, but only barely and the is expected to drop to 22.0 percent of GDP in 2027, number is expected to remain elevated at above 5.5 while domestic debt is expected to rise to 30.7 million. Poverty reduction is expected to be driven percent of GDP over the same period. Gross debt by strong growth in services and moderate inflation. service is projected to peak at 8.9 percent of GDP Maintaining inflation within the WAEMU band is vital, in 2025 before declining thereafter. Burkina Faso is as high food prices quickly erode the purchasing expected to remain at moderate risk of external and power of poor urban households, while failing to overall public debt distress if the government adheres benefit rural households due to small surpluses and to the consolidation path in the IMF supported seasonality. (Prices rise only after households have program. However, liquidity risks due to reliance on sold any surplus following the harvest.) short-term borrowing, coupled with strong reliance on gold revenues and persistent insecurity remain. Long-term poverty reduction will depend on a stable security situation, sound financial management, Downside risks include security reversals, climate and favorable climatic conditions. An improving shocks, debt roll-over and financial challenges, security situation will continue to allow IDPs to while investment climate reforms, especially in return and resume economic activities, including energy, could boost growth. agricultural production. Adequate infrastructure and jobs must be provided in urban areas as well, The growth outlook remains subject to uncertainty to support IDPs who chose not to return and those around security, climate and economic challenges, who migrate to urban areas for economic reasons. and geopolitical tensions. Despite some Burkina Faso is always vulnerable to climate risk, as it improvement, security risks and geopolitical threats is heavily reliant on rainfed agriculture. Thus droughts, still pose challenges. The economy remains highly floods, or atypical timing of the rainy season could dependent on agriculture, making it vulnerable to all lead to increased poverty. Besides, an additional climate shocks, disrupting production and food risk factor is the potential withdrawal of WFP food security. The banking sector faces mounting assistance in Burkina Faso along with other countries pressures due to declining capital adequacy and due to funding shortfalls, which could exacerbate rising non-performing loans, which could constrain food insecurity and compound long-term harm to credit availability and dampen future growth. children and vulnerable populations. Additionally, debt roll-over risks and global economic uncertainties may strain financial stability. These Continued fiscal consolidation efforts are expected challenges, if not addressed, could affect economic to stabilize public debt through enhanced resilience and hinder long-term growth prospects. revenue mobilization and current expenditure rationalization. The government is expected to The outlook is also subject to shifts in international remain committed under the IMF Program to trade policy and global trade tensions, which gradually reduce the fiscal deficit and approach the could mainly indirectly affect Burkina Faso’s WAEMU target of 3 percent of GDP in the medium growth outlook through gold and oil prices. Recent term. The deficit could approach the WAEMU target developments, such as the renewed focus on tariffs in 23 international trade policy, have increased uncertainty business environment could provide an additional in global markets. In this context, gold has further boost. Executive Summary Table E.1 offers policy gained prominence as a preferred security asset, options to enhance revenue mobilization and tax leading to upward pressure on its price. In addition, efficiency, improve government spending efficiency, global uncertainty is expected to slow down global and reduce the cost of financing and diversify demand, putting downward pressure on oil prices. concessional funding sources in the short and Given Burkina Faso’s large gold exports and reliance medium term. Further policy options are available on oil imports, these dynamics are expected to to promote resilience of the financial sector in the strengthen the country’s external position and fiscal medium term. Additionally, the implementation revenues. of the government commitments to improve the business environment could support economic Policy options are available to improve the growth over the long term, and interventions could economic and poverty outlook, and the be further informed by an upcoming new analysis government’s commitment to strengthening the (Box 1.2). BOX 1.2 GOVERNMENT COMMITMENTS TO IMPROVE THE BUSINESS ENVIRONMENT AND A NEW ASSESSMENT TOOL The public-private sector dialogue in Burkina Faso aims to improve the business enabling environment and increase the attractiveness of the country to domestic and foreign investors. The dialogue is organized around a high-level steering committee, chaired by the Prime Minister, a secretariat anchored in the ministry in charge of the private sector, regional committees, and a national technical committee. During the public-private consultations in November 2024 in Bobo-Dioulasso, the government made several commitments vis-à-vis the private sector, including the following: • Arrears clearance. Making additional efforts to mobilize resources necessary to clear domestic arrears to private companies that have accumulated in recent years. • Access to land. Facilitating access to land for private investment projects, particularly by mobilizing and securing land in industrial zones. • Digitalization. Strengthening the digitalization of administrative procedures to reduce delays, particularly through the ongoing simplification and automation of technical approvals in the construction sector. • Linking fields to markets. Reducing the persistence of purchases at the field through a law on the warranty system to structure agricultural value chains, protect producers, and encourage the storage and marketing of products. • Processing of livestock. Restructuring old slaughterhouses and constructing eight new ones to compensate for the lack of processing units in the livestock-meat sector. To support countries in evaluating their business and investment climate, the World Bank Group has launched a new tool: Business Ready or B-READY and its first flagship report. B-READY replaces and improves upon the Doing Business project. The inaugural B-READY report was launched in October 2024, for fifty country pilots,18 introducing a new analytical framework that benchmarks economies based on three pillars: regulatory framework, public services, and operational efficiency. The report provides a comprehensive dataset and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. Burkina Faso is among the 58 countries that are currently being assessed in a second phase. The next B-READY report is scheduled to be published around September 2025. 18 World Bank Group (2024). Business Ready (B-READY) 2024. Washington D.C.: World Bank Group. 24 CHAPTER 2 POWERING ECONOMIC GROWTH This chapter examines the electricity sector of around three main sections: section 1 provides an Burkina Faso by assessing historical trends, recent overview and background of the electricity sector in developments, and opportunities in the sector. It Burkina Faso, section 2 presents the key challenges evaluates key issues and their underlying factors, in the sector, and section 3 offers policy options to offering some policy options. The chapter is organized achieve energy policy targets. 2.1 Background and Sector Overview The electricity sector of Burkina Faso is dominated sector participation in all segments of the electricity by public sector actors and characterized by supply industry. The law requires the transmission limited generation capacity and low access rates. segment to be managed exclusively by SONABEL but allows for private sector investment. The ministry The electricity sector is vertically integrated with in charge of energy is responsible for setting sector private participation in the generation segment. strategy, planning, and policy formulation. The sector The national power utility SONABEL is the national regulator ARSE provides regulatory oversight over agency that the mandate for power generation, sector operations. ABER is responsible for rural transmission, distribution and imports. However, electrification while ANEREEE is responsible for the energy law 014-2017/AN allows for private promoting renewable energy and energy efficiency. FIGURE 2.1 IN THE PAST, THE EXPANSION OF ELECTRICITY ACCESS HAS BEEN VERY VOLATILE AND TOO SLOW TO REACH UNIVERSAL ACCESS ANY TIME SOON Rate of electricity expansion (%), Burkina Faso, 2012-2022 Electricity access projection (%), Burkina Faso, 2012-2072 30 100 20 80 10 60 0 40 -10 20 -20 0 2012 2016 2020 2024 2028 2032 2036 2040 2044 2048 2052 2056 2060 2064 2068 2072 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: IEA, IRENA, UNSD, World Bank, WHO (2025); World Bank staff estimates 25 Burkina Faso has one of the lowest electricity from 68.6 percent in 2018 to 87.0 percent in 2023. access rates in Sub-Saharan Africa and WAEMU.19 Rural areas lag behind, with access rates increasing As of the end of 2023, approximately 26.3 percent20 from 3.2 percent in 2018 to 7.0 percent in 2023.21 On of households had access to electricity (compared average, the annual rate of access expansion over the to the Sub-Saharan Africa average of 51.5 percent), last decade is 3.3 percent. At this rate, Burkina Faso is up from 21.3 percent in 2018 Most of these gains projected to achieve universal access not earlier than occurred in urban areas, where access rates rose 2072 (Figure 2.1). Significant investments are required to meet increasing power demand through domestic production by both public and private sectors and achieve SDG 7 (Box 2.1). BOX 2.1 SUSTAINABLE DEVELOPMENT GOAL (SDG) 7 SDG 7 is to “ensure access to affordable, reliable, sustainable and modern energy for all.” It has five main elements:22 • SDG 7.1: Universal access to modern energy by 2030 aims to ensure universal access to affordable, reliable and modern energy services. • SDG 7.2: Increase global percentage of renewable energy by 2030 aims to increase substantially the share of renewable energy in the global energy mix. • SDG 7.3: Double the improvement in energy efficiency by 2030 aims to double the global rate of improvement in energy efficiency. • SDG 7.4: Promote access to research, technology and investments in clean energy by 2030 aims to enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology. • SDG 7.5: Expand and upgrade energy services for developing countries by 2030 aims at expanding infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries, in particular least developed countries, small island developing states and landlocked developing countries, in accordance with their respective programs of support. Investments in the electricity sector have lagged Independent Power Producers (IPPs) notably the levels needed to achieve SDG 7, which calls to contributed to this growth. Investments in networks ensure access to affordable, reliable, sustainable were lower as the investment burden falls solely on and modern energy for all. By the end of 2024, the SONABEL. The transmission lines remained at 1 373 net installed generation capacity was 738.5 megawatt km from 2020 to 2022, with 129 km added in 2023 (MW), including thermal plants (478.1 MW), solar then 103 km in 2024 Distribution lines performed photovoltaic (PV) (225.9 MWp), and hydropower better, doubling from 12,074 km in 2020 to 24,297 (34.6 MW). This represents a 156.5 percent increase km in 2023 puis 24938 km en 2024 (Figure 2.2). from 2014 to 2024 (from 287.9 MW to 738.5 MW). 19 Access tariffs for electricity in 2022 in WAEMU countries are estimated as follows: Benin -56.5 percent, Burkina Faso -19.0 percent, Ivory Coast - 70.4 percent, Guinea-Bissau - 36.9 percent, Mali 53.0 percent, Niger 19.5 percent, Senegal 68.0 percent, Togo 57.2 percent. 20 Ratio of the resident population of electrified localities to the total population of the country multiplied by 100 as reported by the Ministry of Energy, Mines, and Quarries. 21 IEA, IRENA, UNSD, World Bank, WHO (2025). 22 United Nations (2024). The 2024 Sustainable Development Goals Report. New York: United Nations. 26 FIGURE 2.2 THE DISTRIBUTION NETWORK GRADUALLY EXPANDED WITH INCREASED GENERATION CAPACITY Length of transmission and distribution lines (km), Installed generation capacity (MW), Burkina Faso, 2013-2023 Burkina Faso, 2013-2023 30,000 600 25,000 500 20,000 400 15,000 300 10,000 200 5,000 100 0 0 2013 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Independent Power Producers (IPP) Distribution Lines Transmission Lines National Power Utility SONABEL Source: SONABEL Annual Reports; World Bank staff estimates There are 13 thermal power plants in Burkina Faso of all thermal power plants in the country. Bobo 2, with a combined nominal capacity of 396 MW (Table located in Bobo-Dioulasso, is the largest thermal 2.1). The largest plants are Kossodo and Komsilga, power plant both in nominal capacity (68 MW) and both located in Ouagadougou, with a nominal available capacity (57 MW) outside the capital. The capacity of 117 MW and 94 MW, respectively. They five largest thermal power plants in Burkina Faso can have also the largest available capacity at 92 MW and use both heavy fuel oil (HFO) and distillate diesel 80 MW, respectively. These two plants account for oil (DDO), while other much smaller plants only use over half of the total nominal and available capacity DDO. TABLE 2.1 THERMAL POWER PLANTS IN BURKINA FASO AS OF JANUARY 2025 Name of Plant Nominal Capacity (MW) Exploitable Capacity (MW) Available Capacity (MW) Fuel Kossodo 116.9 101.1 92.1 HFO & DDO Komsilga 93.6 79.5 79.5 HFO & DDO Bobo 2 68.0 57.0 57.0 HFO & DDO FIESS 50.0 50.0 50.0 HFO & DDO Ouaga II 35.1 23.3 14.3 HFO & DDO Fada 9.0 8.4 8.5 DDO Ouaga I 5.4 5.0 5.0 DDO Ouahigouya 5.2 3.7 2.7 DDO Dédougou 4.7 3.6 3.6 DDO Dori 4.4 3.0 1.8 DDO Gaoua 2.4 1.9 0.9 DDO Diapaga 1.0 0.7 0.7 DDO Gayéri 0.3 0.3 0.3 DDO Total 395.9 337.4 316.3 Source: SONABEL; World Bank staff estimates There are 9 solar power plants in Burkina Faso with French IPP Africa Ren, with funding from European a total installed capacity of 226 megawatt-peak financial institutions, led by the Dutch FMO. It was (MWp) (Table 2.2). The largest solar power plants commissioned in December 2023 and operates with are Ouaga Nord-Ouest, Kodéni Solar, and Zagtouli 1, a 25-year power purchase agreement signed with with an installed capacity of 42, 38, and 34 MWp, SONABEL. The other two plants are both located respectively. This is about half of the installed solar in Ouagadougou and owned by SONABEL. Their power capacity in the country. The Kodéni plant, construction was funded by the state. based in Hauts-Bassins, was developed by the 27 TABLE 2.2 SOLAR POWER PLANTS IN BURKINA FASO AS OF JANUARY 2025 Name of Plant Installed Capacity (MWp) Ownership Financing Commissioning Ouaga Nord-Ouest 42 SONABEL Public 2024 Kodéni Solar 38 IPP (Afrique Ren) Africa Ren, FMO 2023 Zagtouli 1 34 SONABEL Public 2017 Nagréongo, SPES 30 IPP (AXIAN/AEC GreenYellow/Axian, FMO 2022 previously GreenYellow) Pâ 30 IPP (Urbasolar) Urbasolar, EAIF 2023 Zina Solaire 26 IPP (AMEA) AMEA, IFC, EAIF 2024 Zano 24 IPP (Qair) Qair, FMO 2023 Ziga 1 SONABEL Public 2018 Gaoua 1 SONABEL Public 2024 Total 226 Source: SONABEL; World Bank staff estimates There are 5 hydropower power plants in Burkina far from the border with Ghana, was commissioned Faso with a total installed capacity of 35 MW (Table already in 1992. The Kompienga plant, based on the 2.3). The largest hydropower power plants are Bagré Koulpélogo River close to the border with Togo, and Kompienga, with an installed capacity of 17 and is the oldest hydropower plant in the country, 14 MW, respectively. This is almost 90 percent of commissioned in 1990. All hydropower plants were the installed hydropower capacity in the country. financed by the state and are operated by SONABEL. The Bagré plant, based on the White Volta River not TABLE 2.3 HYDROPOWER PLANTS IN BURKINA FASO AS OF JANUARY 2025 Name of Plant Installed Capacity (MWp) Exploitable Power (MW) Financing Commissioning Year Bagré 16.7 13.0 Public 1992 Kompienga 14.3 11.1 Public 1990 Samendeni 2.6 2.6 Public 2024 Tourni 1.5 1.5 Public 1996 Niofila 0.5 0.5 Public 1996 Total 34.6 26.1 Source: SONABEL; World Bank staff estimates Since 2018, SONABEL’s power generation has Burkina Faso has long been an importer of decreased, with IPPs and imports filling the gaps. electricity, maintaining a commendable reputation Inadequate investments and lack of maintenance of for consistently meeting its contractual payment existing infrastructures led to a decline in electricity obligations. Over the years, the country has relied on production from 1,095 GWh in 2013 to 943 GWh imports for approximately half of its electricity needs in 2024 due to reduced thermal production (Figure from Ghana, Côte d’Ivoire, and Togo. Even during 2.3). During this period, supply gaps have been met periods of financial strain in the sector, Burkina Faso with production by IPPs and, more importantly, has upheld its commitment to settling its power power imports. Consequently, SONABEL’s share import bills. As of 2024 imported power constituted of wholesale supply fell from 58 percent in 2013 49 percent (1,357 GWh) of the total electricity to 34 percent in 2023. The 2022-2040 electricity supply, an increase from 42 percent (532 GWh) in master plan projects annual demand growth at 9.6 2013. Ghana remains the primary source of these percent (reference scenario). Major investments imports, providing around 80 percent of Burkina in generation and in networks are needed to meet Faso’s electricity imports. Since 2024, technical projected demand growth and support universal challenges have affected the reliability of electricity access and economic growth. imports from Ghana. 28 FIGURE 2.3 IMPORTS FROM GHANA HAVE SEEN A FAST RISE SINCE 2018, WHILE SONABEL’S THERMAL PRODUCTION HAS DECLINED Electricity supply by source at higher disaggregation (TWh), Electricity supply by source (share in %), Burkina Faso, 2014-2023 Burkina Faso, 2013-2023 2.5 100 2.0 80 1.5 60 1.0 40 0.5 20 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2013 2015 2017 2019 2021 2023 Imports from Ghana Solar Production - SONABEL Imports from Côte d’Ivoire Hydropower Production - SONABEL Imports Independent Power Producers (IPPs) AGGREKO - IPP Thermal Production - SONABEL SONABEL Source: SONABEL Annual Reports 2013-2023; World Bank staff estimates 2.2 Recent Developments and Challenges in the Energy Sector While recent years have shown progress in interruptions in the electricity supply and outages independent power production, the reliance on that affect the provision of essential services such heavy fuel oil for power generation leads to high as food supply and healthcare services. Therefore, and volatile generation costs. security risk analysis should be a key element to consider in the design and location of future electrical Despite the challenging political context, significant facilities. progress has been made in the Burkinabé electricity sector in partnership with the private sector. In the Burkina Faso, being landlocked, faces high last decade, seven IPPs have entered the electricity imported fuel costs, leading to expensive electricity sector. Currently, Burkina Faso has about 228.0 generation. The country lacks domestic fossil fuel MWp of installed solar capacity and has a pipeline resources and refining capacity, making it reliant on of projects to reach 1 GWp by 2030. The location in international fuel markets. Fuel costs significantly the Sahel provides for abundant solar potential that impact the trade balance. Data from West African can be harnessed for power generation. With high- countries show a strong and positive correlation quality solar radiation, the country could develop between electricity costs and the share of liquid about 100 GW of solar generation capacity with fuels in the generation mix (Figure 2.4). With HFO battery storage support and the necessary grid accounting for 84 percent of installed capacity, infrastructures, almost 200 times the current peak Burkina Faso’s average generation cost is amongst demand of 558 MW. the highest in the region at US$0.22 per kWh, compared to the regional average of US$0.18 per The security situation in Burkina Faso has impacted kWh. The average end-user tariff of US$0.22 kWh the functioning of electrical infrastructure in recent fails to cover the total cost of service of US$0.26 per years. Power plants, transformers, and key lines have kWh,23 with more than 40 percent attributable to fuel been vandalized during security incidents, leading to costs.24 23 SONABEL (2024). Rapport d’activités 2023. Ouagadougou, Burkina Faso. 24 Electricity tariffs range from US$0.22 for social tariffs above 100 kWh of consumption to US$0.26 for peak residential consumption. SONABEL (2023). Grille tarifaire applicable à partir du 1er octobre 2023. Ouagadougou, Burkina Faso. 29 FIGURE 2.4 SHARES OF LIQUID FUEL IN POWER GENERATION AND ITS RELATION TO COST Liquid fuel in energy generation and service costs, Generation capacity (GW) and energy generation 2022, West Africa (TWh), 2022, biggest five countries of West Africa and remaining aggregate Total : 4.5 GW Total : 12.7 4.5 12 Other 45 4.0 Cabo Chad Other Ghana Cost of service (US$c/kWh) 40 Sierra Verde 10 3.5 Leone Mauritania Gabon 35 Benin 3.0 8 Burkina Faso 30 Burkina Faso Liberia Mauritania 2.5 Burkina Faso Togo Mali Mali 25 Senegal 6 Mali Congo 2.0 The Benin Gambia 20 Guinea 1.5 Ghana Cameroon 4 15 Niger Ghana Côte d'Ivoire 1.0 10 2 Senegal 0 20 40 60 80 100 0.5 Senegal Share of liquid fuel in energy generation mix (%) 0 0 Generation Capacity Energy Generation (GW) (TWh) Generation capacity (GW), 2022, West Africa Mauritania (260GW) Mali (460 GW) Niger Senegal (256 GW) (1169 GW) Burkina Faso Guinea (393 GW) (305 GW) Nigeria Côte d’Ivoire Ghana (100 GW) (890 GW) Sierra Leone (75 GW) Liberia (60 GW) Benin (342 GW) Togo (36 GW) Source: World Bank (2024). Accelerating Liquid Fuel Reduction in West Africa. Topical Paper. World Bank staff estimates 30 The performance of SONABEL is highly dependent The government has established a new energy on the subsidies it receives from the government. sector vision emphasizing reliable, domestic generation sources to ensure stable electricity Electricity prices are subsidized by the government supply for major urban areas. Plans include adding to enhance affordability. The national petroleum 300-425MW of bi-fuel thermal capacity by 2027 company SONABHY sells fuel for power generation alongside enhanced grid coverage. This approach to SONABEL at a capped price, with the government will strengthen system redundancy while expanding covering the cost difference to market prices through transmission infrastructure. SONABEL will maintain budget allocations. Payment delays often cause regional electricity trade through interconnections arrears among sector actors. Annual fiscal transfers as required. This strategic shift responds to technical to the power sector have been large, limiting funds and contractual challenges with electricity-exporting for critical spending on health, education, and social countries that have disrupted supply commitments. protection. In 2022, when international oil prices Thermal generation contracting is currently underway peaked, total energy subsidies were estimated at based on unsolicited proposals received. 4.9 percent of GDP, before falling to 1.5 percent of GDP in 2023 amid higher fuel pump prices and a Significant infrastructure and regulatory gaps decline in international oil prices.25 Despite subsidies, persist, which deter private sector investments electricity prices remain high, affecting business and hinder the development of renewable energy competitiveness. resources. The financial performance of SONABEL has The private sector is anticipated to play a pivotal improved in recent years, although it remains role in the development of solar resources. The dependent on fuel subsidies. Technically and promotion of renewable energy is codified in Law commercially, SONABEL is currently a well- 014-2017/AN, while Law 032-2021/AN establishes performing utility. It maintains a relatively low loss the legal framework for public-private partnerships. rate of 11.4 percent and a high collection rate of 92.1 Decree 2 0 1 7 - 1 0 1 2 / P R E S / P M / M C I A / M I N E F I D percent. Since the clearance of accrued arrears and specifies the conditions for granting licenses for the revision of fuel prices for generation, significant power generation, the requirement of competitively improvements have been noted, including net profits procurement, and the legal requirement to align since 2016 following recurring losses between 2011 procurement with the least-cost plan. However, and 2015. However, this performance is contingent this law is frequently bypassed during periods of upon the continuous support SONABEL receives emergency when generation capacity must be from the government in the form of subsidized fuel acquired expeditiously. Additionally, Decree 2024- for power generation. 0977/PRES/PM/MEMC/MEFP/MDICAPME allows industries to produce their own renewable energy Energy security concerns have oriented energy and inject/sell any excess production into the grid. policy towards greater energy independence through domestic production. The 2017 Electricity Law establishes the legal basis for private participation in the electricity sector, Declines in power imports have raised energy but it requires specific decrees and texts to be fully security concerns. During certain months in 2024, effective. Law 014-2017/AN defines the general Ghana, which is the largest source of power imports regulation of the energy sector and provides its for Burkina Faso, reduced its export volumes to the implementing decrees. However, the necessary texts country. This created an estimated supply deficit of to operationalize these laws have not been adopted. about 260 MW, which became more evident during Currently, the electricity law allows private sector the heat season when temperatures can reach 46 participation in power generation, but texts to open degrees Celsius. This contributed to a higher incidence the distribution segment to private sector actors were of power outages in the country. This disruption in only formalized in 2024.26 Consequently, there is now supply by the longstanding trade partner has raised a legal basis for private sector involvement in access some concerns about the reliability of power imports expansion. The required texts to operationalize the and has potentially influenced policy direction sector regulator have not been created, limiting its towards reduced reliance on imported power. functions to an advisory role. 25 IMF (2024). Country Report Nr. 24/249. Washington D.C.: IMF. 26 Arrêté 2024-127/MEMC/MATDS/MUAFH on the creation, attribution, composition, organization, and functioning of a technical commission to review requests for generation and distribution concessions, adopted in March 2024. 31 The location in the Sahel provides for abundant transmission infrastructure investments were planned solar potential that can be harnessed for power with the Millenium Challenge Cooperation, with pre- generation. With high-quality solar radiation, the feasibility studies completed for key lines. However, country plans to develop about 1 GW of solar implementation was halted due to the coups d’etat generation capacity with battery storage support in 2022. SONABEL has updated these studies and by 2030, almost twice the current peak demand is seeking financing to develop priority lines as part of 571 MW. Public-private partnerships can help of the Faso Energy Inclusion and Resilience Program harness these resources, but effective private sector (PIREF). The program includes grid reinforcement participation is hindered by missing elements such as for Ouagadougou, Bobo Dioulasso and other areas, cost-reflective tariffs, sub-optimal sector planning, requiring an investment of CFAF 465 billion (US$778 and regulatory gaps relating to third party access, million). grid codes, licensing, and procurement processes. Additionally, security challenges increase borrowing Load shedding has major impacts on ecosystems, costs and the overall cost of doing business. businesses, and households. In Ghana, for example, it has been estimated that load shedding, known as Limited transmission capacity affects the "dumsor" in Ghana, cost the economy approximately development of renewable energy. Key hindrances 1 percent of its GDP and more than US$2 million in to addressing the development of renewable energy daily losses for businesses. A study conducted during resources are significant infrastructure and regulatory the Dumsor Crisis found that households are willing gaps. Despite its monopoly position in power to pay more, equivalent to 7 percent of their income transmission, SONABEL lacks the necessary funds to for reliable electricity supply.27 extend, rehabilitate, and upgrade the grid. Significant 2.3 Transforming the Electricity Sector for Inclusive Growth Access to affordable, reliable and secure electricity developed. Local cooperatives are also present in supply at scale is essential for achieving inclusive mini-grid development in various locations. A clear growth in Burkina Faso. Electricity is pivotal for framework for mini-grid development, including industrial development, firm productivity, job creation, licensing, market incentives, grid access, and economic transformation, market integration, and tariffs, is needed. A sector reform roadmap could human capital development. Populations lacking be developed and championed at the highest access to electricity will consequently not benefit government level to guide the reform process. from associated growth opportunities. To transform Additionally, a national electrification strategy could the sector and guarantee sustainable supply for provide the policy direction and the vision on private all, it is crucial to address key challenges, including sector participation, regional integration, financial sector reforms and institutional capacity, low access sustainability of the sector, subsidies, and renewable rates, high generation costs, limited private sector energy targets aligned with socioeconomic goals. participation, the development of solar energy resources, and regional power trade. The 2022-2040 sector masterplan could serve as the primary guide for sector development. This Deeper sector reforms to enable more private masterplan could outline comprehensive sector sector participation in the electricity sector and development strategies, including generation capacity an updated sector plan will be a useful guide for enhancements, access expansion, renewable energy sector development. development, grid reinforcements and rehabilitation, and power imports. An update of the master plan is The electricity sector could be further reformed underway to reflect sector changes and set targets to enable private sector participation across for universal access using a clear measurement all segments. The necessary regulatory texts to framework. This could be complemented by an operationalize the electricity law and ensure more investment plan that identifies financing sources participation of private sector actors could be for the proposed investments, encompassing 27 Amoah, A.; Ferrini, S., and M. Schaafsma (2019). Electricity outages in Ghana: Are contingent valuation estimates valid? Energy Policy Vol. 135. 32 concessional financing, debt, equity, levies, funds, Burkina Faso should leverage all available and budget allocations, and opportunities for private technologies in grid, mini-grid, and off-grid to capital involvement in these investments. It would accelerate the pace of electricity access in the also be appropriate to review tariff strategies to country. enable viable private sector investments in the off- grid sector. At the same time, however, exceptions A comprehensive least-cost electrification strategy in the law that allow bypassing the masterplan for that addresses the diverse needs of various developing generation projects must be narrowed. consumer groups would provide valuable guidance for expanding access, building on the existing Regulatory autonomy and clarity are essential to National Rural Electrification Strategy. Electricity encourage private sector involvement in the sector. access solutions may include grid, mini-grid, and off- It is important to develop the necessary texts to grid options, tailored to the heterogenous needs of more operationalize ARSE as a regulatory agency the targeted beneficiaries. This tiered approach to and clarify its regulatory mandate to ensure efficient access expansion allows for the optimal and equitable pricing for private sector investors. It is recommended use of available resources, ensuring timely provision that an institutional and organizational audit of ARSE of basic energy services for all. be carried out to determine which divisions will be created to take on specific regulatory responsibilities, There is a need for a consistent tracking and and appropriate technical capabilities can be measurement framework for electricity access developed to fulfill these key responsibilities related that captures all technological solutions. Current to tariff setting and application, renewable energy definitions and measurements of electricity access development and private sector participation. in Burkina Faso do not fully capture all levels of access, impacting electrification planning and The institutional and technical capacity of sector tracking. A tiered measurement approach to stakeholders could be strengthened in system electricity access can facilitate strategic rollout planning, technical and economic regulation, programs accommodating various consumer needs. monitoring and enforcement. This method would optimize resource allocation for access expansion through tailored solutions Institutional and technical capacity in policy based on consumption levels and developmental formulation, power system planning, and monitoring needs. The Multi-Tier Framework exemplifies such a could be enhanced. Establishing a dedicated comprehensive approach and could be adopted for planning division within the ministry in charge of these purposes. energy and developing the technical capacity of staff responsible for power system planning would be Competitively procured solar PV with battery beneficial. This planning division should have access storage is often the least cost option for reduced to independent tools and platforms that enable generation costs and capacity expansion in a them to autonomously update existing masterplans. diversified energy mix. These plans could cover generation, transmission, and distribution segments and be updated regularly. The private sector can play a significant role in Additionally, these plans could be harmonized with Burkina Faso’s electricity sector in the coming off-grid sector strategies to ensure cohesive sector decades. To effectively leverage private capital, both development. financial and technical, it is important to establish a clear and transparent framework for public-private Local technical capacity could be strengthened partnerships. This could include well-defined rules at SONABEL and other sector agencies to ensure on handling unsolicited proposals, licensing, permits, sustainable management of the sector. This grid access, and power dispatch. A further ingredient enhancement may include a human resource plan that could be put in place is a solid legal foundation for that identifies staffing requirements and training private sector participation in the electricity industry, programs, as well as opportunities such as internships, accompanied by a robust regulatory framework to part time jobs for students, batch recruitment of junior guide the relationship between the private and public engineers and other specialists, and professional sectors. education grants for selected staff. Further, building capacity in smart-grid management, maintaining renewable infrastructures, and establishing a modern dispatch center for efficient network management will be crucial for the sector’s sustainable operations. 33 Grid-connected, rooftop or modular solar PV SONABHY selling fuel to SONABEL below market generation plants with batteries represent the least- prices. This makes thermal power production cost option for domestic capacity expansion. In artificially cheaper than the market cost, and also Burkina Faso, solar PV with battery storage provides the exposes the economy to shocks resulting from least-cost generation solution in a diversified energy the impact of geopolitical externalities that affect mix and could be procured competitively through fair the price of petroleum products. These operating and transparent process. This procurement process subsidies could instead be reallocated to combating could be piloted and adopted for future acquisitions. energy poverty and ensuring adequate capacity Transmission capacity planning could consider through the development of local energy resources. solar PV and energy storage development plans to ensure effective evacuation of distributed energy Additional thermal capacity of around 300MW resources. In the medium to long term, net metering to 425 MW is planned by SONABEL as part of of private solar PV installations (both residential and the emergency program. This should increase commercial) may permit the sale of surplus energy fuel subsidies for electricity generation to a level into the grid during daylight hours and improve equivalent to around 2 percent of GDP. As these energy storage capacity for planned solar projects. subsidies are generalized, all consumers benefit from these subsidized prices. However, wealthier An energy subsidy reform effort could focus households benefit disproportionately from these on cost efficiency and efficient pricing, while subsidies, as they consume more electricity. protecting poor and vulnerable populations. Continued and strengthened participation in the Currently, electricity prices do not fully reflect the regional electricity market could be advantageous cost of electricity service without subsidies. The for Burkina Faso. current price of electricity supply does not account for the complete costs of generation, transmission, World Bank staff calculations show that Burkina distribution, retail, imports, and storage where Faso could substantially benefit from deeper applicable. The average end-user tariff of US$0.22 participation in the West African power market. per kWh fails to cover the total cost of service of Full participation in regional trade has the potential US$0.26 per kWh. As access to electricity expands, to halve the installed power generation capacity the subsidy burden increases on the public budget. requirements in Burkina Faso, while simultaneously To safeguard the sustainability of public finances, it is increasing generation capacity to reach self- important to better align energy prices with their true sufficiency. Regional trade could unlock estimated costs and reform inefficient energy subsidies. At the cumulative investment savings of about US$600 same time, targeted subsidies can be used to protect million by 2030. This trade engagement is projected poor and vulnerable populations, either through to lower generation costs by US$140 million annually, direct transfers provided through social safety nets which is equivalent to about 0.6 percent of 2024 or indirectly through social tariffs. GDP. This could also lead to a 25 percent reduction in the cost of service by 2030, facilitating a more rapid A cost reduction strategy could serve as a principal convergence of prices and costs. Additionally, the component of tariff reforms. Lowering generation country could become a key transit point, potentially costs is essential for sustainably closing price-cost earning wheeling revenues. margins. In the short to medium term, competitive procurement of fuel for power generation could Burkina Faso’s continued investment in transnational ensure fuel purchase at the lowest market prices. infrastructures would be important for power trade In the medium term, fuel switching to cheaper and energy security. Power system planning should alternatives such as gas could be considered within be done in line with the regional framework to unleash a cost-benefit framework that accounts for the regional and sub-regional power trade opportunities necessary capital expenditures for gas imports. to complement national efforts and ensure least-cost development and energy security. Ultimately, these Subsidies for HFO could be redirected to support cumulative efforts can pave the way for a sustainable, universal access goals and the development of equitable, and economically viable energy future for solar PV technology. The subsidies provided by Burkina Faso. the government to SONABEL are in the form of 34 ANNEX 3.1 Selected Economic, Fiscal, and Poverty Indicators TABLE A.1 SELECTED ECONOMIC, FISCAL, AND POVERTY INDICATORS, BURKINA FASO, 2022-2027 2022 2023 2024e 2025p 2026p 2027p Annual percentage change, unless otherwise indicated National Accounts GDP at constant prices 1.5 3.0 4.9 4.3 4.7 5.0 Private consumption 4.4 5.0 5.8 4.4 6.1 6.3 Public consumption 5.2 4.5 11.5 5.4 2.6 3.7 Investment 4.2 8.9 8.7 4.8 2.8 2.3 Exports of goods and services -2.8 -2.2 -3.1 2.0 2.6 2.7 Imports of goods and services 8.2 9.0 7.5 4.2 3.5 3.3 Agriculture 5.5 1.1 11.0 2.9 3.9 4.4 Industry -8.0 2.2 -2.8 3.0 2.4 2.3 Services 4.2 4.6 6.6 5.5 6.1 6.5 Inflation GDP deflator 5.8 2.7 9.6 5.3 3.1 3.1 Consumer prices (average) 14.1 0.7 4.2 3.0 2.5 2.5 External Sector Exports fob -10.6 1.6 22.8 10.8 3.5 4.1 Imports fob 9.6 9.8 20.6 4.6 4.0 3.6 Terms of trade -7.1 3.4 12.9 8.2 0.4 1.0 Percent of GDP, unless otherwise indicated Current account balance -7.2 -8.0 -6.4 -5.8 -5.3 -4.9 Foreign direct investment 3.4 1.9 1.2 1.1 1.0 0.9 Fiscal Accounts Overall fiscal balance -10.3 -6.5 -5.6 -4.7 -3.9 -3.6 Primary fiscal balance -8.3 -4.2 -3.6 -2.7 -1.7 -1.3 Total revenues and grants 20.9 21.4 21.4 21.3 21.4 21.3 Tax Revenues 16.8 17.2 16.8 17.5 17.3 16.9 Taxes on goods and services 8.1 9.1 8.9 8.7 8.4 8.0 Direct taxes 6.1 5.8 5.7 6.5 6.6 6.7 Taxes on international trade 2.4 2.3 2.2 2.2 2.2 2.3 Non-tax revenues 2.0 2.3 2.3 2.0 1.8 1.7 Grants 2.2 1.6 1.2 1.2 1.2 1.1 Total expenditures 31.2 27.9 27.0 25.9 25.2 24.9 Current expenditures 20.6 17.1 16.3 15.5 15.0 14.8 Wages and compensation 8.4 8.7 8.3 8.1 8.0 7.6 Goods and services 1.8 1.7 2.2 2.2 2.1 2.2 Interest payments 1.9 2.3 2.0 2.0 2.2 2.3 Current transfers 8.5 4.4 4.1 4.0 3.7 3.4 Capital expenditures 10.7 10.9 10.8 10.5 10.2 10.0 Debt Public and publicly guaranteed debt 56.4 54.0 54.9 54.4 53.7 52.7 External government debt 25.1 24.9 24.4 23.4 22.5 22.0 Domestic government debt 31.3 29.1 30.5 31.0 31.2 30.7 Poverty International poverty rate ($2.15 in 2017 PPP) 26.4 26.2 23.2 21.4 19.8 19.1 LMIC poverty rate ($3.65 in 2017 PPP) 62.5 61.3 58.0 55.7 54.3 52.8 UMIC poverty rate ($6.85 in 2017 PPP) 88.9 88.2 86.5 85.0 84.0 83.1 Memorandum Items GDP per capita (change in percent) -0.8 0.7 2.5 2.0 2.5 2.8 Nominal GDP (CFAF, trillion) 12.0 12.7 14.6 16.0 17.3 18.6 Nominal GDP (USS, billion) 19.2 20.9 24.2 26.7 29.0 31.2 Source: Government of Burkina Faso and World Bank staff estimates as of April 10, 2025. Note: LMIC refers to lower middle-income countries and UMIC to upper middle-income countries. PPP stands for Purchasing Power Parity 35 3.2 Recent Resource Mobilization and Expenditure Reforms Domestic revenue mobilization has benefited associations, and foundations; (c) the taxation of from the implementation of tax administration income from benefits paid by non-resident debtors and policy reforms, which were complemented in Burkina Faso to salaried persons in the public and with reforms on the expenditure side. The reforms private sectors; (d) the financial statements visa; (e) have resulted in a trajectory of fiscal consolidation the obligation to withhold value-added-tax (VAT) during a period of large spending pressures due to at source; (f) the increase in the taxation rates on the difficult security situation. Numerous initiatives beverages; (g) the abolition of exemptions from have been implemented in recent years to improve customs duties on fixed and mobile telephones; and the efficiency of tax administration, with a particular (h) the increase in the rate of the withholding tax on focus on modernization and digitalization. In gambling gains. addition, tax policy changes are implemented to broaden the tax base and improve the tax yield. These The 2024 Budget added further measures: (a) the revenue mobilization reforms are complemented by introduction of a tax on cement production and expenditure rationalization and efficiency measures. imports, which replaces the previous VAT structure; (b) the introduction of the tax rate of 40 percent on Digitalization of tax administration beer with a strength of 8°; (c) the application of a specific tax on telecommunications companies and The electronic tax declaration module eSINTAX companies transferring money by cell phone; and (d) was launched in 2018. It encompasses the entire a special contribution on the consumption of certain tax system. This platform is designed to simplify the products, services and corporate profits. process for taxpayers, enabling them to report their income and remit taxes more efficiently. By early The 2025 Budget introduced the following new 2023, it had registered a total of 15,837 firms. measures: (a) the application of VAT to sales and services provided through e-commerce platforms; The digitization of the National Land Registry has (b) the expansion of the scope of the tax on demonstrated significant success. As of June 30, gambling; (c) the increase of the stamp duty on 2024, 312,096 cadastral entries have been digitized, receipts for cash deposits made in a bank, financial 82,417 owners identified and entered in eCadastre, institution, or with a securities broker for CFAF 50- and 234,628 parcels assessed. The number of 100; (d) the establishment of a fee of CFAF 15,000 cadastral references digitized in eCadastre exceeded for all exemption certificates and attestations; (e) the the 2024 target by 56 percent, while the number of obligation to formally register private law contracts parcels evaluated surpassed the target by 17 percent, between companies for real estate work; and (f) the indicating substantial progress. introduction of certified electronic invoicing for large companies. The eDouanes platform was launched in 2023. It aims to facilitate the electronic payment of customs The government also started to produce an annual duties and taxes. economic and social impact assessment of tax expenditures. The first report already provides Systematic cross-checking of information on recommendations for tax expenditure rationalization. taxpayer returns was introduced. This concerns the Future reports will examine different tax expenditures tax administration bodies DGI and DGD and is based to identify opportunities for rationalizing tax on the taxpayer’s unique identifier. expenditures to improve revenues, while considering social and economic objectives of the provided Broadening the tax base and improving the tax exemptions. yield Expenditure rationalization and efficiency The 2024 Budget introduced several new measures: (a) the taxation of two- and three-wheeled vehicles; Expenditure reforms have been undertaken to (b) the taxation of allowances for members of optimize the administration’s current expenses, with the boards of directors of public establishments, a view to generating savings that would be allocated 36 to investment. Major measures include the following: an estimated gain of CFAF 8 billion for 20,000 agents (a) improved management of the government’s real controlled. In 2025, the government is implementing estate assets through the optimal management of the following measures: (a) continued efforts to administrative leases and the inclusion of real estate control staff numbers through the continuation and strategy guidelines in all construction projects; (b) consolidation of the biometric enrollment of civil optimized the management of the government’s servants registered with SIGASPE; (b) completion of motor vehicle fleet; and (c) continued efficiency the SIGASPE audit in order to assess the operational gains in electricity, water, and telephone use through status of the application’s various modules and the the termination of meters and telephone lines that are accuracy of the statements and reports it generates, inactive or used by government-related businesses, with a view to streamlining the administrative and and the adjustment of electricity consumption salary management of government personnel; (c) capacities for the government. set up of an annual inspection of the payroll file in order to verify the actual service rendered and Several reforms have been implemented to better the regularity of remuneration components; and control the public wage bill. The biometric enrollment (d) development of a module for the automated of civil servants and a presence control operation were monitoring of government employees. implemented in several ministries in 2023, resulting in 3.3 Analysis of the 2025 Budget The 2025 Budget, adopted by Parliament, projects the projected reduction in total expenditures as a a 3.9 percent nominal increase in revenues and share of GDP is more significant, from 25.9 to 22.9 a 2.5 percent nominal decrease in expenditures percent, largely due to a 2.1 percent of GDP decrease compared to the revised 2024 Budget (Table A.2). in capital spending. As a share of total expenditure, Tax revenues are expected to rise mainly due to a capital spending is projected to decrease from 38.0 25.9 percent increase in taxes on goods and services, to 34.0 percent, with the largest cuts observed in which aims to offset a decline in non-tax revenues, defense and security. Human capital expenditure, mostly from business and estate income. Despite allocated to education and health ministries in 2025 the nominal increase, total revenues and grants as a increased by 8.7 and 11.4 percent, respectively share of GDP are projected to drop slightly from 21.1 compared to the previous year. percent in 2024 to 19.9 percent in 2025. Meanwhile, TABLE A.2 COMPARISON OF BURKINA FASO’S 2025 INITIAL BUDGET (LFI) WITH THE 2024 ADJUSTED BUDGET (LFR) 2024 LFR 2025 LFI Change CFAF bn % of GDP CFAF bn % of GDP Relative (%) pp of GDP Total Revenues and Grants 3,031 21.1 3,150 19.9 3.9 -1.2 Tax revenue 2,429 16.9 2,684 17.0 10.5 0.1 Non-tax revenue 421 2.9 276 1.8 -34.3 -1.2 Grants 180 1.3 188 1.2 4.6 -0.1 Expenditures 3,706 25.9 3,612 22.9 -2.5 -3.0 Current expenditures 2,311 16.1 2,403 15.2 4.0 -0.9 Wages and compensation 1,202 8.4 1,275 8.1 6.0 -0.3 Goods and services 224 1.6 240 1.5 7.2 0.0 Interest payments 293 2.0 344 2.2 17.5 0.1 Capital expenditures 1,395 9.7 1,209 7.7 -13.3 -2.1 Externally financed 385 2.7 413 2.6 7.3 -0.1 Domestically financed 1,000 7.0 782 4.9 -21.9 -2.0 Overall Fiscal Balance (incl. Grants) -676 -4.7 -463 -2.9 -31.5 1.8 Primary balance -383 -2.7 -119 -0.8 -69.0 1.9 Source: Government of Burkina Faso; World Bank staff estimates 37 Trends in security and defense spending In the 2025 budget, the allocation to defense and security has decreased by 10.1 percent compared Following the continued increase of fatal violence, to the initial 2024 budget, falling to 20.4 percent defense and security quickly became the sector of total spending. The 2025 defense and security with the largest budget allocations. The rise of budget amounts to CFAF 736.4 billion or 4.7 percent fatal violence by almost 80 percent between 2021 of projected GDP, down by 1.1 pp compared to and 2022 was echoed by a similar increase (+78.9 2024. There are significant changes across budget percent) in the budget allocation to defense and items. Current expenditure is up 17.0 percent, now security, reaching 22 percent of public spending and accounting for 70 percent of total defense and 6.1 percent of GDP in 2023 (Figure A.1). This marked security expenditure, as goods and services (+19.9 the peak of total defense and security spending, percent) and personnel spending (+18.3 percent) which is distributed across several administrative are budgeted to increase substantially. In contrast, entities, comprising of the National Security Council, capital expenditure is budgeted to decrease by 42.0 the Ministry of Defense, and the ministry in charge percent, reducing to CFAF 220.2 billion. of security. (Between 2022 and 2024, the Ministry of Security was combined with the Ministry for Territorial Administration.) FIGURE A.1 DEFENSE AND SECURITY SPENDING HAS PEAKED IN 2023 AND CONTINUES TO TREND DOWNWARD Budgeted defense and security spending, Budgeted defense and security spending (LFI), Burkina Faso, 2020-2025 Burkina Faso, 2024-2025, CFAF billion 24 7 2024 2025 Change % 20 6 Current Expenditure 423.0 494.8 17.0 16 5 Personnel spending 354.2 419.0 18.3 4 Goods and services 34.7 41.6 19.9 12 34.2 34.3 0.3 3 Current transfers 8 2 Capital Expenditures 379.4 220.2 -42.0 4 1 0 0 Total 819.5 736.4 -10.1 2020 2021 2022 2023 2024 2025 -1.4 % of total spending 21.7 20.4 % of GDP 5.7 4.7 -1.1 % of Total Spending (LHS) % of GDP (RHS) Source: Government of Burkina Faso World Bank staff estimates Note: LFI = initial budget law Trends in health spending budget items. Capital expenditure is budgeted to increase by 50.9 percent, reaching CFAF 156.4 billion, In 2025, the budget allocated to the ministry in equivalent to 40.2 percent of total spending by the charge of health has increased by 11.4 percent ministry. In contrast, current expenditure is budgeted compared to the adjusted 2024 budget, reaching to decrease by 5.2 percent, driven by a decrease in 10.8 percent of total spending. (Figure A.2) The personnel spending by 29.1 percent, which outweighs 2025 budget allocation to the ministry of health increases in current transfers (+35.1 percent) and amounts to CFAF 388.9 billion or 2.5 percent of goods and services (+24.3 percent). projected GDP There are significant changes across 38 FIGURE A.2 HEALTH SPENDING HAS BEEN ON AN INCREASING TREND Budgeted spending of ministry in charge of health, Budget of ministry in charge of health, Burkina Faso, 2023-2027 Burkina Faso, 2024-2025, CFAF billion 12 3 2024 LFR 2025 LFI Change % 8 2 Current Expenditure 245.4 232.5 -5.2 Personnel spending 150.2 106.5 -29.1 Goods and services 23.5 29.2 24.3 4 1 Current transfers 71.6 96.8 35.1 Capital Expenditures 103.6 156.4 50.9 0 0 2023 2024 2025 2026 2027 Total 11.4 349.0 388.9 LFI LFR LFI (2025 LFI) (2025 LFI) 1.4 % of total spending 9.4 10.8 % of GDP 2.4 2.5 0.0 % of Total Spending (LHS) % of GDP (RHS) Note: Figures only include the Ministère de la Santé; 2026 and 2027 are preliminary; LFI = initial budget law; LFR = revised budget law. Source: Government of Burkina Faso; World Bank staff estimates Trends in education spending and Ministère de l’Enseignement Sécondaire, de la Formation Professionnelle et Technique (28.2 The budget allocated to the two education percent). The latter was established in August 2024 ministries has increased by 8.7 percent, reaching to resume responsibility for secondary education 18.1 percent of total spending for 2025, up almost and vocational training. The 2025 budget allocated 2 pp from 2024 (Figure A.3). The 2025 budget for to the two ministries is CFAF 653.1 billion or about 4.1 primary and secondary education (administrative percent of projected GDP, virtually unchanged from classification) is composed of Ministère de 2024. There are increases across current expenditure l’Enseignement de Base, de l’Alphabétisation et de items, with personnel spending accounting for most la Promotion des Langues Nationales (71.8 percent) of the increase. FIGURE A.3 EDUCATION SPENDING IS INCREASING IN NOMINAL TERMS BUT STAGNATING AS A SHARE OF GDP Budget of ministries of primary and secondary education, Budget of ministries of primary and secondary education, Burkina Faso, 2023-2027 Burkina Faso, 2024-2025, CFAF billion 20 5% 2024 LFR 2025 LFI Change % 16 4% Current Expenditure 570.0 623.7 9.4 12 3% Personnel spending 472.3 515.9 9.3 Goods and services 47.2 49.5 4.9 8 2% Current transfers 50.4 58.2 15.6 4 1% Capital Expenditures 30.8 29.4 -4.5 0 0% 2023 2024 2025 2026 2027 Total 600.8 653.1 8.7 LFI LFR LFI (2025 LFI) (2025 LFI) % of total spending 1.9 16.2 18.1 % of GDP 4.2 4.1 -0.1 % of Total Spending (LHS) % of GDP (RHS) Note: Figures include Ministère de l’Enseignement de Base, de l’Alphabétisation et de la Promotion des Langues Nationales and Ministère de l’Enseignement Sécondaire, de la Formation Professionnelle et Technique; 2026 and 2027 are preliminary; LFI = initial budget law; LFR = revised budget law. 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