Historical Background: Burundi has endured a turbulent history over the last half-century, marked by colonial legacy, ethnic tensions, and political upheaval. Since independence from Belgium in 1962, the country has been caught in a cycle of conflict, particularly between the majority Hutu and minority Tutsi ethnic groups. The assassination of the first democratically elected president in 1993 sparked a devastating civil war that lasted until 2005, deeply affecting the social and economic fabric of the nation.
Economic Overview: Burundi is highly dependent on agriculture, with most of its population engaged in subsistence farming. The country has a variety of natural resources like nickel, uranium, rare earth oxides, and arable land, yet it remains one of the world’s least developed countries. Chronic malnutrition, poverty, high population growth, and a young median age underscore the development challenges. With a significant portion of the population under 25, Burundi faces the dual pressure of providing education and employment to its burgeoning youth demographic.
Economic Barriers to Development:
- Agricultural Vulnerability: Burundi’s economy is highly dependent on agriculture, particularly coffee, which accounts for over 80% of export revenues. Fluctuations in global coffee prices have direct implications on the nation’s economic stability.
- Limited Industrialization: With agriculture comprising almost half of GDP and industry at only 16.4%, there is little economic diversification, making growth susceptible to agricultural shocks.
- Natural Resource Management: Despite its mineral wealth, including nickel and gold, exploration and development are limited due to a lack of capital and skilled labour.
- Infrastructure and Access to Markets: Inadequate infrastructure restricts access to markets and increases the cost of trade. Landlocked geography compounds transportation difficulties, impeding export growth.
Social and Political Barriers:
- Population Demands: A high population growth and birth rate contribute to land scarcity, over-farming, and environmental degradation. The median age is young, at approximately 17 years, implying a need for more jobs and educational resources.
- Health and Nutrition: Burundi struggles with widespread malnutrition, with a high under-five mortality rate and low life expectancy at around 61 years, hindering a productive workforce.
- Human Capital Development: Low literacy rate and educational attainment restrict skilled labor force development. High infant mortality and maternal death rates impact the workforce’s growth and health.
- Governance and Stability: Persistent political instability, governance issues, and corruption negatively impact foreign investment and economic confidence.
Key Economic Indicators:
Current Account Analysis: As a low-income, aid-dependent economy with an official exchange rate Real GDP of $3.036 billion, Burundi faces a persistent trade deficit. Imports significantly exceed exports, reflecting an imbalance in trade and an economy that struggles to generate sufficient foreign exchange through its limited industrial and service sectors. Its major exports are gold, coffee, tea, wheat, and some rare earth metals.
Current State and Government Initiatives: In recent years, Burundi has sought to strengthen its economic stability by enhancing governance and pursuing infrastructure projects. Efforts to develop its mining sector are underway, aiming to capitalize on untapped mineral resources. The government has engaged in regional partnerships to mitigate the constraints of being landlocked and improve trade access.
Questions for Students
Q1. Define the term ‘GDP at purchasing power parity’.
Q2. Define the term ‘Human Capital’.
Q3. Calculate the GNI for Burundi in 2021.
Q4. Real GDP in 2021 was US$2.78 billion. Calculate the Real GDP for Burundi in 2020 given the information in the table.
Q5. Using a PPC diagram, explain one barrier to Burundi’s economic development.
Q6. Using an AD/AS diagram explain how the eruption of civil conflict could affect real GDP growth in Burundi.
Q7. Using an AD/AS diagram explain how government investment in infrastructure projects could affect long run economic growth in Burundi.
Q8. Using an appropriate diagram, explain how improved trade access could benefit domestic exporters of coffee and tea.
Q9. Using information from the text/data and your knowledge of economics, evaluate the major challenges to achieving economic development in Burundi and suggest possible solutions to overcome them.