Washington — The World Bank Board of Executive Directors today approved an International Development Association (IDA*) US$70 million grant to Burkina Faso aimed at promoting growth and competitiveness and reducing the vulnerabilities related to both the Malian and global financial crises.
The Second Grant for Growth, Competitiveness, and Reduced Vulnerability will catalyze private sector growth and employment, strengthen resiliency, reduce vulnerability, and improve governance and public resource management in the country.
The new grant, which will support the Government's efforts, seeks to:
Support the growth of the private sector, which creates jobs, by helping the Government set up an input fund for the production of cotton and improved competitiveness in this sector, as well as for improved production of the other cash crops;
Improve governance and public resource management by providing a framework for greater transparency in the mining sector;
Strengthen resilience and reduce vulnerability through improved transfers of funds to decentralized communities, increased access to microfinance by women, better monitoring of food security, and greater food distribution at reduced prices, or even at no cost, in the poor and vulnerable areas and to Malian refugees.
The World Bank notes that the cotton, grain, and mining sectors have been major drivers of the country's economic growth over the past five years. Robust reforms during the 2000s facilitated a significant increase in foreign direct investment (FDI) in the mining sector. In addition, Burkina Faso was declared "EITI Compliant" on February 27, 2013 by the Oslo-based Executive Board of the Extractive Industries Transparency Initiative (EITI). This means that Burkina Faso now has a process in place to ensure regular disclosure of mining revenues and that the data is available and accessible to the public to foster an understanding of the mining sector's contribution to the country's development.
External budgetary assistance is needed in 2013 to support the economic growth program outlined in the SCADD (Strategy for Accelerated Growth and Sustainable Development); help the country mitigate the effects of the global financial crisis; and, in particular, address the food insecurity problem affecting the Malian refugees.
"Our objective is to assist the Government of Burkina Faso in its efforts to achieve sustainable and sustained growth. The funds will support the private sector, the true engine of growth, while helping to improve the cotton sector's competitiveness, particularly by establishing an input fund for production," noted Mercy M. Tembon, the World Bank's Country Manager in Ouagadougou.
The World Bank commended Burkina Faso for its sound macroeconomic management following a good rainy season and an increase in commodity export prices, which led to the return to sustained economic growth of close to 8 percent in 2012.
The grant that was approved today is the second in a four-year programmatic series of growth and competitiveness budget support operations to Burkina Faso for the 2012â€’2014 period.
Future programs are expected to be aligned with the Government's budget cycle. The proposed series of operations supports the Government's implementation of the SCADD for Burkina Faso. The first two IDA financings account for over 30 percent of general budget support provided to Burkina Faso by development partners in 2012 and 2013.
Burkina Faso posted an average real economic growth rate of over 5 percent per year between 1995 and 2012 and GNI per capita increased from US$360 in 2005 to US$447 in 2012. The country's macroeconomic and fiscal stability has contributed to steady improvement in several economic and social indicators. Economic growth rebounded in 2012, following a slowdown in 2011 to 4.2 percent caused by low rainfall and the global financial crisis. There is a renewed sense of optimism in the medium term with an economic growth rate of 7.5 percent in 2013 owing to the strong recovery of cotton and gold exports currently benefiting from favorable prices. Despite the Government's efforts to support the social sectors, however, human development in Burkina Faso faces a number of challenges.
This development policy grant is the second of a series of four operations and will be disbursed in a single tranche.
This project is financed by the World Bank's International Development Association (IDA), which was established in 1960 and helps the world's poorest countries by providing grants and zero-interest credits for programs that boost economic growth, reduce inequalities, and improve people's lives. IDA is one of the largest sources of assistance for the world's 81 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.5 billion people living on less than $2 a day. Since 1960, IDA has supported development work in 108 countries. Annual commitments have increased steadily and averaged around $15 billion over the past three years, with about 50 percent of commitments going to Africa.