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Burkina Faso Economic Update Summary (April 2025)

Core Content

This report provides an economic and poverty update for Burkina Faso for 2024 and outlook for 2025–2027, alongside a special chapter on energy for economic growth. It outlines key developments, challenges, and policy recommendations for the country's economic sectors, particularly the power sector, which plays a critical role in driving growth and reducing poverty.

Main Economic and Poverty Developments

• GDP Growth: Increased from 3.0% in 2023 to 4.9% in 2024, driven by services and agriculture.
  • The services sector contributed 3.1 pp to GDP growth, mainly due to growth in public administration and community/personal services (22% of GDP).
  • Agriculture contributed 1.9 pp, supported by favorable weather, expanded cultivated areas, and improved government support.
• Secondary Sector: Contracted 2.8% due to reduced gold production, with the Boungou mine closure and ongoing insecurity affecting output.
  • The sector subtracted 0.5 pp from GDP growth.
• Inflation: Rose from 0.7% in 2023 to 4.2% in 2024, exceeding the WAEMU target band (1–3%).
  • Driven by food and energy price increases, supply constraints, and market uncertainties.
  • Inflation moderated to the WAEMU average of 3.6% in 2024.
• Poverty Reduction: Extreme poverty rate fell by 3.0 pp to 23.2%, with more significant reductions in rural areas (3.5 pp) compared to urban (1.6 pp).
  • Rural poverty remains higher at 29.5% versus 5.5% in urban areas.
• Fiscal Deficit: Improved from 6.5% of GDP in 2023 to 5.6% in 2024, due to lower public wage expenditure and energy subsidies, and increased revenue mobilization.
  • Expenditure declined by 0.9 pp of GDP.
  • The deficit is mainly financed through domestic borrowing, with interest rates exceeding 9% for 12-month bills.

Economic Outlook (2025–2027)

• Growth Projection: Expected to rise gradually from 4.3% in 2025 to 5.0% by 2027, assuming continued security improvements, stable climate conditions, and consistent policy environment.
• Sector Outlook:
  • The tertiary sector is expected to remain resilient.
  • Agriculture will depend on favorable weather.
  • The secondary sector is anticipated to rebound due to improved energy availability, driven by extractives and industry.
• Inflation: Projected to align with the WAEMU target band from 2025 onwards.
• Poverty Reduction: Continued at about 1 pp per year, with limited reduction in the number of poor.

Key Challenges

• Security Issues: Remain a major threat to economic growth, particularly in the mining and agricultural sectors.
  • In 2024, ACLED recorded 7,500 security-related deaths, a 11.5% decrease from 2023.
  • The crisis displaced over two million people, affecting schools, health centers, and supply chains.
• Energy Sector:
  • Only 26% of households have access to electricity, far below the Sub-Saharan Africa average of 52%.
  • Rural access is critically low at 7.0%, making universal access unlikely before 2072.
  • Electricity generation costs remain high at $0.22 per kWh, compared to the West African average of $0.18 per kWh.
  • Reliance on imported fuel and outdated infrastructure exacerbates financial pressures.
• Climate Vulnerability:
  • Burkina Faso ranks 162nd out of 187 on the 2025 ND-GAIN vulnerability index.
  • The country is among the least prepared to leverage investments for climate adaptation.
  • Estimated investment needed for climate adaptation by 2030 is about $2.8 billion.

Policy Recommendations

Short-Term (1 Year)

• Enhance Revenue Mobilization and Tax Efficiency:
  • Improve digital tax administration and cross-checking of taxpayer information.
  • Broaden the tax base by introducing new taxes (e.g., eco-taxes) and expanding existing ones (e.g., motorbikes, board member allowances).
• Improve Government Spending Efficiency:
  • Optimize asset management (real estate, vehicles, utilities) to generate savings for strategic reinvestment.
  • Control the wage bill via biometric enrollment and regular payroll audits.
• Reduce Financing Costs and Diversify Funding Sources:
  • Strengthen relationships with traditional and new development partners to secure concessional financing.
• Improve Power Sector Regulation and Institutional Capacity:
  • Develop a roadmap for increased private sector participation through public-private partnerships.
  • Update the 2022–2040 energy sector masterplan and adopt a Multi-Tier Framework for energy access measurement.
  • Implement a sector cost reduction strategy and enhance ARSE's role as an independent regulator.
  • Strengthen technical capacity for power system planning at SONABEL and the Ministry of Energy.

Medium-Term (2–5 Years)

• Enhance Revenue Mobilization and Tax Efficiency:
  • Continue expanding digital platforms for tax reporting and payments.
  • Implement annual tax expenditure reports and recommendations for rationalization.
• Diversify Concessional Funding Sources:
  • Implement reforms identified in the 2025 Country Climate Institutional Assessment (CCIA) to mobilize climate finance.
• Promote Financial Sector Resilience:
  • Enable the banking sector to rebuild capital buffers and improve risk management and transparency.
  • Limit state influence to ensure a level playing field.
• Improve Financial Sustainability of Power Sector SOEs:
  • Implement a tariff reform to recover full cost of service while providing targeted support to poor consumers.
  • Leverage regional infrastructures to access cheaper power sources and develop alternative generation methods.
• Develop Solar Energy Resources with Storage:
  • Increase energy storage and transmission grid investments.
  • Clarify licensing procedures for renewable energy development.
  • Use competitive bidding for new generation capacity, including solar PV and battery storage.
  • Implement net metering for auto producers to channel surplus energy into the grid.

Key Information

• Gold Mining: A major contributor to GDP (17%) and exports (83%), but insecurity and policy changes have affected production.
• Energy Access: Low, with only 26% of households connected in 2023; rural access is particularly limited.
• Subsidies: Energy subsidies were 4.9% of GDP in 2022, falling to 1.5% in 2023, but still pose a challenge to fiscal sustainability.
• Infrastructure: Weak generation and transmission capacity, outdated infrastructure, and limited investment in alternative energy sources hinder growth.
• Fiscal Sustainability: Requires continued efforts in revenue mobilization, expenditure control, and financial sector reforms.

Conclusion

Burkina Faso faces significant challenges in security, climate change, and energy access, which impact economic growth and poverty reduction. The government must continue to prioritize fiscal consolidation, improve energy infrastructure, and enhance the efficiency of public spending to achieve sustainable and inclusive growth. Strengthening the energy sector through public-private partnerships and renewable energy development is essential for long-term economic resilience.