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Covid-19 / Burkina Faso: all scenarios predict a bad time for the economy

From March 09 to June 5, 2020, Burkina Faso has recorded a total of 889 confirmed cases of covid-19, 53 deaths and 772 recovered. These figures, according to some specialists, show a certain control of the situation for the moment, because the country having reached its peak of contamination since April 21 according to the spokesman of the government, Remis Fulgence Dandjinou.

As a reminder, from March 26, the president of Burkina Faso, Roch Marc Christian Kaboré declared a state of disease alert throughout the national territory. The government had quickly taken many radical measures such as a curfew, the closure of land and air borders, the quarantine of the affected cities, the stop of public transport, the temporary closure of restaurants and other public places like some markets.

Economic impact assessment

However, even if the health crisis seems to be under control, its economic consequences are to be feared. In his address to the nation on April 2, the president of Burkina Faso said that “the expected consequences of this pandemic on our economy are: the reduction of the growth rate from 6.3% to 2% in 2020; the fall in public revenue, estimated at 306 billion FCFA, or a budget deficit of 5%; the general slowdown in economic activities, all sectors combined, resulting in State cash flow tensions”.

For Professor Idrissa Ouédraogo, Teacher-researcher and President of Forge Afrique, two scenarios are to be feared concerning the effects of the pandemic on the Burkinabe economy. The first, which is optimistic, assumes that the epidemic is only brought under control after 3 months while global demand for Burkina Faso exports contracts by 10%. The second scenario, which is pessimistic, assumes that the epidemic extends over 6 months with a 20% drop in global demand for Burkinabe exports. The Covid-19 crisis could result in a significant drop in the growth rate of 1.38% in the pessimistic scenario against a forecast growth of 6.5%. The pessimistic scenario forecasts an economic recession with a rate of -1.75% representing a loss of national wealth ranging from 345 billion to 645 billion FCFA.

At the sectoral level, Professor Ouédraogo emphasizes that the industrial and service sectors could be the most affected without forgetting the agricultural sector. Also, in general, sectoral productions could experience a significant drop which ranges from -3% to -13% depending on the sector and the scenario.

In an address to the National Assembly, the minister in charge of trade, Harouna Kaboré underlines that “the consequences on public finances and the economy will be enormous. The slowdown in economic activity will exacerbate short-term State cash flow pressures and affect its ability to cope with urgent spending”.

The minister said that the speed of the spread of the virus in several cities and regions of Burkina Faso has led to quarantine measures and the closure of large consumption centers, “which has worsened the economic health of the already fragile country”.

In addition, Prof. Idrissa Ouédraogo, affirms that “the fall in economic activity will lead to a fall in public revenues. This could lead to a larger public deficit reaching -4.53% of GDP and -6.12% GDP respectively according to the optimistic and pessimistic scenarios”.  Consideration should also be given to the higher cost of living, linked to the rise in prices, especially agricultural prices, and the decline in employment, he added. According to the economist, in terms of international trade, a contraction in sectoral exports is expected, which can range from -6% for mining products (gold), to -16% for income agricultural products (Cotton). Regarding the latter, from 02 to 03 May, 70 tons of 108 tons of available mangoes were shipped from Bobo Dioulasso to Frankfurt. Producers of potatoes, tomatoes, onions are still in the turmoil of losses.

This pandemic, according to Professor Ouédraogo, “has shown that our economy is very fragile, and that we are very dependent on the outside”. According to the teacher-researcher, “we have a production system that is unable to withstand a shock regardless of its origin. If the right measures are not taken in time, these consequences can worsen dramatically. We must think about a global strategy that is structuring and endogenous. If we want to revive our economy, we must go in that direction. This strategy will be based on the internal capacities of the country and on the actual needs of economic agents”.

The affected owners of the restaurants, bars and clubs are growing impatient

Restaurant owner in Ouagadougou, Ms. Bazié born Lompo Djamilatou employs 22 people. “We had two months of total closure here at the restaurant. It’s true that the government authorized take-out, but we preferred to close it down. We just reopened on May 15th. It was a heavy blow for our employees who lived only on the restaurant income. They saw their income drop since we had no more activities. And since we couldn’t cut their wages completely either, their income was cut in half by me particularly. It felt like the employees were suffering a lot. During the two months, it was not easy at all not only for the employees and but also for me”, she explains.

And to continue: “Before covid-19, I could serve 100 to 150 dishes per day and then you find yourself at zero dishes per day, the comparison is quickly made. Currently we have reopened, but with the curfew from 9 p.m., we are not doing well. People have not only lost the habit of eating out but are afraid. They prefer to eat at home, and from 8:30 p.m. everyone is running to go home. Currently, I am at with 50 dishes a day”.

Today, Ms. Bazié delivers meals to her clients with whom she is in contact. “Since we reopened, that’s what is working. We deliver more meals to workplaces”, she says.

At the head of a start-up, Mr. Sam offers IT solutions to bars, restaurants, hotels, etc. Since the health crisis, his income has dropped. “Several times, we have had discussions with the employees to see if we can make half-salary payment. It was not accepted. You had to do gymnastics to be able to keep them until the end of the crisis. We have made the decision at the administrative level to bear these costs while waiting for the situation to improve”.

To date, even if there is a relative fall in fuel price internationally causing a review of prices at the national level, obviously all economic sectors are affected.

The President of Burkina Faso, Roch Marc Christian Kaboré, during his address to the Nation, on April 2, 2020, announced a plethora of social measures and economic revival. The traders and owners of bars and clubs are getting impatient. The taxi union has already announced an increase in transport going from 300 FCFA to 500 FCFA.

Monitoring of the implementation of these measures, which is expected especially from the informal sector. The lifting of the curfew, the opening of places of worship as well as markets, restaurants and clubs, in spite of the respect of the protective measures, raise fears of a resurgence of the disease.

*Produced with the support of the Sahel Program of IMS, funded by DANIDA.

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