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Burkina Faso Economic Update Summary (April 2025)

Core Content

The 2025 Economic Update for Burkina Faso outlines recent economic and poverty developments, as well as the outlook for 2025–2027. It also presents a special chapter on energy and its role in economic growth, with detailed policy recommendations to strengthen the power sector and macro-fiscal sustainability.

Main Economic and Poverty Developments

• GDP Growth: Increased from 3.0% in 2023 to 4.9% in 2024, driven by growth in the services and agriculture sectors.
  • Services sector: Contributed 3.1 percentage points (pp) to GDP growth, supported by public administration and community/personal services (22% of GDP).
  • Agriculture sector: Contributed 1.9 pp to GDP growth, due to favorable weather, expanded cultivated areas, and improved government support.
• Secondary sector: Subtracted 0.5 pp from GDP growth due to a decline in gold production (17% of GDP), affected by mine closures and ongoing insecurity.
• Inflation: Rose from 0.7% in 2023 to 4.2% in 2024, driven by food and energy costs, supply constraints, and price speculation.
  • Inflation remained above the WAEMU target band (1–3%) and the regional average (3.6%).
• Poverty Reduction: Projected extreme poverty rate fell by 3.0 pp to 23.2% in 2024.
  • Rural areas: Poverty decreased by 3.5 pp, while urban areas saw a 1.6 pp decline.
  • Urban poor: Suffer from high food price inflation (6.3% in 2024), while rural poor benefit from self-sufficiency in food production.
• Fiscal Deficit: Improved from 6.5% of GDP in 2023 to 5.6% in 2024.
  • Reductions in public wage expenditure (-0.4 pp) and energy subsidies (-0.3 pp).
  • Expenditures declined by 0.9 pp of GDP.
• Public Debt: Increased in 2024 but is expected to gradually decline in the medium term.
• Interest Rates: Remain high on the WAEMU bond market, with 12-month bills exceeding 9%.

Economic Outlook (2025–2027)

• Growth Projection: Expected to rise gradually from 4.3% in 2025 to 5.0% in 2027.
  • Tertiary sector: Expected to remain resilient.
  • Agriculture: Dependent on weather conditions.
  • Secondary sector: Likely to rebound with improved energy availability and security.
• Current Account: Expected to improve due to gold price increases.
• Poverty Reduction: Projected to continue at a rate of about 1 pp per year, with a limited decrease in the number of poor.

Energy for Economic Growth

Sector Overview

• Electricity access: Only 26% of households had access in 2023, well below the Sub-Saharan Africa average of 52%.
  • Rural access: Remains critically low at 7.0%.
  • Universal access: Unlikely before 2072 at current expansion rates.
• Generation costs: Among the highest in the region at US$0.22 per kWh, compared to the regional average of US$0.18 per kWh.
  • Full cost of service: US$0.26 per kWh.
• Fuel dependence: Reliance on imported fuel and outdated infrastructure exacerbates financial pressures.
• Solar potential: Exceeds 95 GW, 129 times the current installed capacity of 738.5 MW.
  • Solar PV with battery storage: The least-cost generation solution.
• Energy subsidies: Estimated at 4.9% of GDP in 2022, declining to 1.5% in 2023.
  • Despite subsidies, electricity prices remain high, affecting business competitiveness.

Key Challenges

• Low access rates to electricity.
• High supply costs and inefficient subsidies.
• Inadequate generation and transmission capacity.
• Weak infrastructure and limited investment in energy development.
• Security issues affecting mining and other sectors.
• Climate vulnerability and financing gaps for adaptation.
• Financial sector challenges: High non-performing loans, capital adequacy below regulatory levels, and high financing costs.

Policy Recommendations

Short-term (1 year)

• Enhance revenue mobilization and tax efficiency:
  • Improve digital tax administration.
  • Expand tax base with new taxes (e.g., eco-taxes, on motorbikes, board member allowances, etc.).
• Improve government spending efficiency:
  • Optimize asset management (real estate, vehicles, utilities).
  • Control wage bill through biometric enrollment and regular payroll audits.
• Reduce financing costs and diversify concessional funding:
  • Strengthen relationships with traditional and new development partners.
  • Implement a clear plan to manage public debt and avoid arrears.
• Improve power sector regulation and institutional capacity:
  • Adopt a public-private partnership (PPP) framework.
  • Update the 2022–2040 energy sector masterplan.
  • Enhance the role of ARSE as an independent regulator.
  • Strengthen technical capacity at SONABEL and the Ministry of Energy.
• Develop solar energy with storage:
  • Increase energy storage and transmission capacity.
  • Clarify licensing procedures for renewable energy.
  • Use competitive bidding for new generation capacity.
  • Implement net metering for auto producers.

Medium-term (2–5 years)

• Continue digital tax platforms and annual tax assessment reports.
• Diversify concessional funding sources through climate finance reforms.
• Promote financial sector resilience:
  • Rebuild capital buffers.
  • Improve risk management and financial reporting transparency.
• Improve energy sector regulation:
  • Adopt a multi-tier framework for measuring electricity access.
• Improve financial sustainability of SOEs:
  • Implement tariff reform to recover full cost of service.
  • Provide targeted support to poor consumer groups.
• Leverage regional infrastructure to access cheaper power and develop alternative generation methods.

Key Figures and Data

• Figure 1.1: Security situation slightly improved with lower fatalities and incidents.
• Figure 1.2: Security and defense spending peaked in 2023 and is trending downward.
• Figure 1.3: Services and agriculture drove GDP growth in 2024.
• Figure 1.4: Consumption and capital formation were main demand-side growth drivers.
• Figure 1.5: Mining contributes 17% of GDP.
• Figure 1.6: Gold price rise offset production decline.
• Figure 1.7: Inflation rose to pre-2022 levels.
• Figure 1.8: Inflation moderated to WAEMU average.
• Figure 1.9: Monetary poverty decreased for the first time since the pandemic.
• Figure 1.10: Poorer regions still face insecurity.
• Figure 1.11: Unemployment decreased in 2024 but remains higher in urban areas and among women.
• Figure 1.12: High unemployment among women in Ouagadougou and Bobo-Dioulasso.
• Figure 1.13: Employment remains concentrated in agriculture.
• Figure 1.14: Job market faces multilevel challenges.
• Figure 1.15: Tax revenue increased as grants declined.
• Figure 1.16: Capital expenditure and wages are largest expenditure items.
• Figure 1.17: Fiscal deficit narrowed due to lower spending and higher tax revenue.
• Figure 1.18: Current account improved due to higher gold prices.
• Figure 1.19: Debt-to-GDP increased in 2024 but is expected to decline.
• Figure 1.20: Financing costs remain high on the WAEMU bond market.
• Figure 1.21: Capital adequacy declined below regulatory levels.
• Figure 1.22: Non-performing loans are increasing.
• Figure 1.23: State participation in the banking sector has increased.
• Figure 1.24: Gold mining in Burkina Faso.
• Figure 2.1: Electricity access expansion is slow and volatile.
• Figure 2.2: Distribution network expanded with increased generation capacity.
• Figure 2.3: Imports from Ghana rose, while SONABEL's thermal production declined.
• Figure 2.4: Electricity cost correlates with the share of liquid fuels in the generation mix.

Conclusion

Burkina Faso's economic growth is supported by improvements in security and the services and agriculture sectors. However, the country faces significant challenges in energy access, affordability, and sustainability, as well as climate and security vulnerabilities. A comprehensive policy approach, including reforms in the energy sector and fiscal management, is essential for long-term growth and poverty reduction.