The economy of Burkina Faso demonstrated resilience in 2023, with a growth rate of 3.2% despite ongoing security challenges. Inflation decreased to 0.7%, attributed to declining local product prices. This marked an improvement from the previous year’s sluggish economic performance, where GDP growth was at 1.8%. The successful agricultural season contributed to the downward trend in inflation, which turned negative from May to October 2023.
However, the security crisis continues to affect both economic growth and political stability. Following two coups d’état in 2022, security-related deaths doubled to 8,494 in 2023. Insecurity has also disrupted industrial mining for gold, a significant sector that accounts for 77% of exports, 16% of GDP, and 22% of government revenues.
Poverty levels are expected to remain stable due to low inflation rates, although the humanitarian situation remains critical. Inflation surged to a record high of 14.1% in 2022 but fell significantly by the end of 2023. Poverty increased by 1.8 percentage points between 2018/19 and 2021/22, reaching 43.2%, and has remained relatively constant since then. The country faces severe humanitarian challenges with approximately two million internally displaced persons and an estimated 2.3 million individuals experiencing severe food insecurity as of December 2023.
The economic outlook is uncertain due to regional dynamics and risks related to insecurity, political instability, climatic shocks, and terms of trade shocks.
Government spending on social assistance represents around 2.6% of GDP and theoretically could significantly reduce the poverty gap if targeted effectively towards the poor. Social assistance expenditure has risen from 0.3% of GDP in 2005 and now exceeds the average for sub-Saharan countries. However, inefficiencies within the system have hampered its impact; more than half of all beneficiaries are non-poor.
In response to these challenges, the government suspended interventions involving monetary transfers in 2023 despite their progressive nature.
The report suggests several policy options to strengthen macro-fiscal sustainability and improve social assistance: enhancing revenue mobilization efficiency, improving public expenditure efficiency, and mitigating economic impacts from ECOWAS withdrawal. Improving poverty-targeting measures and increasing the efficiency of social assistance spending are highlighted as complementary strategies.
Positively, inflation is expected to remain low assuming an orderly ECOWAS withdrawal. Ongoing reforms such as further deployment and use of the social registry and operationalizing national social assistance programs can help reduce poverty more effectively.