Report No. 7594-BUR Burkina Faso Economic Memorandum (In Two Volumes) Volume 11 Annex 1: The Industrial Sector Annex II: Statistical Tables December 5, 1989 Africa Regional Office Sahelian Department FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherw.ise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency units CFA Franc (CFAF) Parity: 50 CFAF - 1 French franc AVERAGE EXCHANGE RATE Year CFAF per dollar 1980 211.3 1981 271.7 1982 328.6 1983 381.1 1984 437.0 1985 449.3 1986 346.3 1987 300.5 1988 297.9 The fiscal year follows the calendar year L - Symbols used: . not applicable figure not available ... negligible - nil - When a growth rate is presented for a period defined by an initial year and an end year, it is calculated by using the initial year indicated as the base year; for example, 1982-87 signifies that the base year is 1982. FOR OFFICIAL USE ONLY ANNEX I THE INDUSTRIAL SECTOR Table of Contents Page No. I. DESCRIPTION OF THE INDUSTRIAL SECTOR 1 II. INCENTIVES, REGULATION, AND CONSTRAINTS 10 A. Manufacturing Industries 10 B. Sectors Associated with Industry 25 III. PROSPECTS AND RECOMMENDATIONS 28 Tables: Section 8 of the Statistical Annex This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ANNEX I THE INDUSTRIAL SECTOR I. DESCRIPTION OF THE INDUSTRIAL SECTOR Industrial Policy since 1983 1. Industrialization has been a priority goal of the Government since 1983. After enjoying substantial growth in 1960-75 (when the number of industries increased threefold), industry suffered a sharp recession triggered by the oil shocks and persistent drought. 2. In 1983, in response to this situation, the CNR defined the major goals of the industrial sector within the framework of a planned and inward-looking economy in which State capitalism would play a growing role: (a) to support agriculture by contributing to modernization (production of agricultural inputs and equipment) and increasing the value added of its products (development of agroindustry); (b) to ensure optimum use of the country's nonagricultural resources (ores, other minerals, raw materials, etc.) for both domestic consumption and export; (c) to meet the basic needs of the population by guiding production toward essential, mass-consumption goods. 3. From 1983 to 1987, the resolve to implement a dynamic industrial policy was reflected chiefly in the following action: (a) preparation of a set of regulations governing industrial companies (Investment Code, price controls, social regulations, etc.); (b) reorganization, restructuring and rehabilitation of many industrial companies; (c) creation of a number of mixed-capital companies. Despite the cost of this policy to the State and the errors made in certain areas, the measures taken had the merit of sustaining and even developing a basic industrial fabric the essential core of which would probably not otherwise have survived the recession experienced up to 1984. 4. Since October 15, 1987, an overview of the policy followed during the first four years of the revolution has revealed shortcomings in a number of the legislative documents and measures currently in effect. In the industrial sphere, the consequences of this include a crisis of confidence between the Government and the private sector with repercussions on the volume of investment and a fall in output of some industries. In order to stimulate industrial development, the main objective of which is to foster integration of the - 2 - country's economic activities, the Popular Front has redefined the guiding principles of its industrial policy, namely: (a) channeling of domestic and external resources towards productive activities; (b) rehabilitation of existing production capacities which are underused or unused; (c) strengthening of the state industrial sector Sy rationalizing its management, creating productivity and quality incentives and participating in the capital of private companies; (d) restoring of the confidence of external and domestic private investors and establishment of incentives to investment in predefined priority sectors; (e) development of small and medium-sized industrial and semi-industrial operations financed essentially out of domestic resources; (f) promotion of consumption of domestic products. 5. Measures proposed for implementation relate mainly to: (a) revision of the Investment Code; (b) development of support services for promoters; Cc) development of training and information agencies; (d) revision of the industrial price-setting system; Ce) review of salary scales and systems for wage-earners; (f) granting of greater management autonomy to public enterprises. 6. In mining, the major policy guidelines are: (a) intensification of mining exploration activities; (b) organization and supervision of artisanal gold production and actions to combat clandestine operations in order to increase foreign exchange receipts and domestic economic financing capacity; (c) exploitation of mining resources for which in-depth studies have already been made. - 3 - Importance of the industrial sector to the economy 7. The industrial sector -- extractive industries, manufacturing, energy and water, and construction and public works -- at present contribute about 20 percent of GDP at current prices (see Table 2.7 of the Statistical Appendix). Its share grew over 1970-76 then fell sharply in 1977-82; it has been rising again since 1985. 8. Manufacturing's share of GDP reached its peak (13.8 percent) in 1973 and its low point (10.6 percent) in 1985. The extractiv' industries, formerly of negligible importance, have contributed a growing share of GDP since 1985 with the beginning of mining activities at the Poura deposit at the end of 1984 and the development of artisanal gold production. The figures presented vary greatly from one source to another due to the difficulty of recording unofficial gold production, and should therefore be treated with caution. 9. The construction subsector, which suffered a setback in 1985 largely as a result of disincentive measures instituted in 1983-84, seems to have gathered momentum again as of 1986, accounting for nearly 6 percent of GDP in 1987. Here again, however, the figures have to be interpreted with caution because of both the diffJculty of recording the very active informal sector in construction, and the changes in methodology for calculating the national accounts after 1985. 10. The investment situation is as follows: (a) Investment dropped off in 1983 and 1984 in the modern formal sector. It recovered sharply in 1985 as a consequence of the backlog built up. Since 1986, it has leveled off, for both the economy as a whole and the modern industrial enterprises, though as a smaller share of GDP than in 1982. (b) The share of manufacturing in total investment is very small: a peak of 5.4 percent in 1982, a 1-w of 2.7 percent in 1983 and a seeming stabilization at around 3 percent since 1984. The current level of investment in manufacturing industries does not seem to be compatible with industrial growth goals, and very substantial incentive efforts are called for. Ini the economy as a whole, the industrial sector is the area in which the modern sector is most highly developed (Table 1 of the Main Report). The Modern Industrial Sector 11. The modorn sector is defined by INSD as the set of enterprises subject to profit tax. For the purposes of our analysis we shall distinguish: (a) the extractive industries; (b) the manufacturing industries, comprising: - food (including beverages and tobacco); - 4 - - textiles, clothing and leather; wood (sawmills, carpentry, wood manufactures); - paper (printing, publishing); - chemicals; - metal manufactures, machinery and equipment; (c) energy and water; (d) construction and public works. The modern industrial sector, broadly defined, has been counted at 195 enterprises (Table 8.2 of the Statistical Appendix). 12. The manufacturing subsector is c}aracterized by a marked concentration of production and labor in the largest enterprises and low density of the SME network -- indicating a very low level of industrial integration (Table 8.3 of the Statistical Annex). It can be seen that, although the INSD census statistics include small, barely industrial enterprises (for example, small bakeries), ten enterprises account for about 80 percent of the turnover and value added of the modern manufacturing subsector and nine of these for two thirds of the sector's permanent labor force. 13. Manufacturing is also characterized by substantial state participation: the 117 enterprises surveyed in the modern manufacturing sector include: (a) 14 mixed-capital conrpanies (to which must be added SONACEB, cardboard boxes; SOBEMA, household articles; CIMAT, cement; SICOMAF, matches; and SONACAB, tiles: currently being set up); (b) two public enterprises of an industrial or commercial nature (EPIC): SINAC, footwear; and CNEA, agricultural equipment; (c) several "private" enterprises in which the State has a minority shareholding (BRAKINA, beer; and SAP, tires). In terms of equity capital, turnover, value added and employment, the State's participation in the manufacturing sector is concentrated essentially in the country's five most important enterprises, with the exception of breweries (Table I below): Table 1: State Capital Share, Turnover, Value Added and Employment of the Five Largest Industrial Enterprises Govt share Turnover Value Added Permanent of capital 1986 1986 Employees Branch (Z) (Billion CFAF) (Billion CFAF) (1985 or 1986) SOFITEX Cotton 66 22.9 8.3 (1985) 820 SOSUCO Sugar 89 8.5 5.1 1,930 SHSB-CITEC Oil 83 7.1 2.0 315 FASO FANI Textiles 62 6.4 2.3 829 GMB Flour 76 5.0 0.8 101 TOTAL 49.9 18.5 3,995 14. For the modern manufacturing sector as a whole, these five enterprises by themselves account for about 55 percent of turnover, 58 rprcent of value added (32 percent of manufacturing value added including the informal sector) and 49 percent of permanent employment. 15. In related sectors, the State's role varies wiidely: (a) Extractive industries: these are dominated by the State, which controls 60 percent of the capital of SOREMIB (gold at Poura), 100 percent of that of BUMIGEB (which is an EPIC) and also the new mixed-capital enterprises established, or to be established, to work gold (SMG, SOMICOB). (b) Energy and water: SONABEL and ONEA are 100-percent public capital EPICs; only SOBUGAZ is a private company. (c) Construction: this subsector is essentially private. The State's presence is represented chiefly by: - ONBAH (agricultural engineering dams and works), which is an EPIC; - CIMAT (cement and materials), which is a mixed-capital company. There is no State-owned construction and public works enterprise; government works are executed on force account or contracted to the private sector. 16. Industrial activ'uy is highly concentrated geographically: Table 2: Geographical Distribution of Modern Industrial Enterprises (Numbers of enterprises) Manufacturing Construction Total Province of Ouagadougou (Kadiogo) 74 60 134 Province of Bobo-Dioulasso (Houet) 26 9 35 Province of Banfora (Como4) 6 - 6 Province of Koudougou (Brulkiemd6) 4 - 4 Other 7 2 9 Total 117 71 188 Source: INSD, Burkina Faso Enterprises Data File, 1988. Some 70 percent of modern manufacturing and construction enterprises are located in Kadiogo, 20 percent in the province of Houet, and the remaining 10 percent in the rest of the country. However, this distribution is based on the location of the enterprises' registered offices and not of their industrial plants. Thus, for example: - SOFITEX operates several plants concentrated in the southwest of the country; - SOBBRA operates two plants (at Ouagadougou and Koudougou); - BRAKINA operates two plants (at Bobo-Dioulasso and Ouagadougou); - SOREMIB has its head office at Ouagadougou, but its operating plant at Poura; - SONABEL and ONEA have facilities in various parts of the country. 17. With the excention of SOFITEX (cotton) and SOREMIB (gold), which export almost their entire production, Burkina's industry is geared essentially to import substitution, focussing on the domestic market. A few enterprises (SHSB, SAP, and others) export a small part of their production, a-ostly to neighboring countries. Branches of IndustrX 18. Extractive industries. With the exception of COVEMI (quarries), the'. comprise mining industries. Prospecting in Burkina Faso has led Lu . discovery of numerous mineral deposits: - Perkoa (5 million tons of 17.8 percent zinc); - Tambao (17 million tons of 51.5 percent manganese); - Tin-Hrassen (6 million tons of 25.0 percent phosphates); - Kiere (manganese). 19. Except for exploration and prospecting, mining activity is currently limited to gold production: (a) industrial of gold production since 1984 at Poura by SOREMIB (a mixed-capital company in which the Government holds a 60 percent share): - annual production of 2.0-2.5 tons of fine gold; - expected life on the order of at least six years; - 1987 turnover CFAF 11.3 billion. (b) establishment of two new mixed-capital companies: - Societe des Mines de Guiro (SMG); - Societe Miniere Cordo-Burkinab4 (SOMICOB). The combined production target for these two companies is 1 ton of fine gold per year. representing an aggregate annual turnover of CFAF 4-5 billion. (c) Artisanal and semi-industrial production (gold panning). Since 1987, the Comptoir Burkinabh des Metaux Precieux (CBMP) has had a monopoly on gold purchasing and marketing (export) in Burkina. The CBMP aims to progressively reduce production and marketing of gold through unofficial channels (1-4 tons of gold a year) by pursuing an active awareness campaign and establishing operations on the gold-panning sites. The uncertainties concerning the estimation of "unofficial" gold production make the official figures on this point very unreliable. 20. The purchase price paid for gold by the CBMP is as follows: - 97.4 percent of the world market pr.'ce for companies, including SOREMIB, that sell refined gold; - CFAF 3,075/g for artisanal gold: the margin obtained has to cover the mining tax, smelting and refining costs, insurance -8- and export taxes (the world price is currently fairly stable and over CFAF 4,000/g). Gold sales by the CBMP currently generate receipts of CFAF 12-14 billion a year. entirely from exports. There is a need to study whether setting an official gold purchase price for artisanal gold (CFAF 3,075/g) is a better way to encourage production and sale to the CBMP than decontrolling this price or gearing it permanently to the world market price. Allowing free play of competition with the other potential buyers might well mop up the production currently marketed clandestinely. 21. The mining projects envisaged in the medium and long term include exploiting the Tambao manganese deposit (which depends on completion of the railway), the Perkoa zinc deposit and the Kiero manganese deposit (creation of the mixed-capital company COMIKI is in the project stage). Concerning the Perkoa zinc deposit, exploration and feasibility studies are under way with World Bank financing. The outlook for economic exploitation of this deposit appears to be favorable, provided that the railway to the coast (RAN) is rehabilitated. On the other hand, working of the Tambao manganese deposit would not be viable at current and projected world prices. 22. Food industries. It is in this branch that the traditional sector is strongest, contributing equally with the modern sector to value added. Traditional food industries account for nearly 70 percent of value added in traditional sector manufacturing. Among the 40 modern-sector enterprises counted in the food industries category, 29 are baker!es. However, this category is dominated by six large enterprises: _ SOStUCO (cane sugar; a mixed-capital company); i - SOBBRA (brewery); - GMB (flour; a mixed-capital company); - BRAKINA (brewery); - MABUCIG (cigarettes); - SHSB-Citec (edible oil; a mixed-capital company). These six enterprises account for more than 90 percent of the modern sector's turnover in food industries, nearly 89 percent of its permanent :mployment and 83 percent of its value added (43 percent of total food industries value added). The other major modern-sector enterprises are SAVANA (fruit juice, jams; a mixed-capital company), COBU (confectionery), COFA (confectionery; a mixed- capital company) and BURKINAPAT (pastas). 23. Textile industries (including clothing and leather). This category, which comprises nine enterprises, is totally dominated by the modern sector (90 percent of value added of the category). The main enterprises are: - SOFITEX (73 percent of turnover and 38 percent of permanent employment in modern-sector textiles; about 72 percent of total textiles value added). This state-controlled enterprise exports more than 95 percent of its production (cotton). - FASO FANI (20.5 percent of turnover and 46 percent of permanent employment in modern-sector textiles; about 20 percent of total textiles value added). This enterprise, also state-controlled, manufactures yarns and woven and printed fabrics from cotton produced by SOFITEX. These products are sold almost entirely on the domestic market. The other significant textile enterprises include BATA (footwear), SINAC (footwear; a mixed-capital company) and SBMC (leather tanning; a mixed- capital company). 24. Wood industry. This category, which consists essentially of sawmills and carpentry shops (14 enterprises counted), is of negligible importance in the modern manufacturing sector as a whole. 25. Paper industries. This category consists essentially of print shops, and is also of negligible importance within the manufacturing sector (13 enterprises). The major enterprise is the Imprimerie Nationale, an EPIC, which employs 30 percent of the personnel and accounts for 20 percent of the turnover in the modern sector of this category. 26. Chemical industries. This category, in which the modern sector consists of some 15 highly diversified enterprises, is dominated by two companies -- SAP (tires and inner tubes) and SOFAPIL (electric batteries) -- which together account for about 60 percent of the activity in this category. The other major enterp.ises include SOPAL (alcohol; a mixed-capital company), FASOPLAST (plastic bags and fabrics; a mixed-capital company) and SIBAM (weapons and ammunition; a mixed-capital company). 27. Metal industries. This category comprises numerous small and medium enterprises (a total of 26 counted), of which the main ones are: - CBTM (household articles and metal roofing materials); - SIFA (bicycles, mopeds; a mixed-capital company); - SAMFA (bicycles, mopeds). These three enterprises account for more than 70 percent of the turnover and 40 percent of the personnel employed in this category. Also included is CNEA (agricultural equipment), which is an EPIC. 28. Electricity, water. Ras. The enterprises in this category are: - SONABEL (electricity generation and distribution; an EPIC); - ONEA (water and sanitation; an EPIC); - SOBUGAZ (oxygen and acetylene). SONABEL and ONEA account for 98 percent of this category's activity. Electric power represents less than 5 percent of total energy consumption in Burkina Faso, with nearly two thirds if the electricity consumed by industry. 29. Construction and public works. This category is totally dominated by the private sector, Burkinab6 and foreign. There are a great many enterprises in both the modern sector (71 counted) and the traditional sector. The dominant - 10 - enterprise is KANAZOE, which accounts for 25 percent of modern-sector turnover. In this category, where competition is very keen, the bulk of turnover is currently earned from government contracts (private demand remains very depressed) for civil engineering projects (KANAZOE, SATOM), building construction (SEG) or agricultural engineering works (SERAGRI, ONBAH, FORAFRIQUE). CIMAT (a mixed-capital company) has been set up to operate a clinker-crushing plant currently under study. The Informal Sector 1/ 30. Burkina Faso has a very active informal sector. Despite the almost total lack of supporting institutions, the informal sector and small-scale enterprises play an important role in expansion of the country's industrial fabric and in employment creation. A study made in Ou-gadougou in 1986 found that the informal sector provides at least three fousths of all jobs. Its activities range from small-scale manufacturing (brewing of dolo or millet beer, manufacture of clothing, carpentry, metalwork and shoemaking) to artisanal services (bWrycle and moped repair; auto, radio and refrigerator repair; auto electrical sy3tems), and includes artisanal construction (bricklaying, plumbing and painting), jewelry making, small business and transport. In terms of employment, dolo brewing is by far the largest provider of jobs in the informal sector (36 percent), followed by clothing and construction (18 percent each), carpentry (15 percent) and bicycle and moped repair (13 percent). II. INCENTIVES. REGULATION AND CONSTRAINTS A. Manufacturing Industries Production 31. Capacity utilization varies greatly among industrial entities: some operate at 100 percent of capacity (COFA, BURKINAPAT), others at 100 percent for part of their production range and 50 percent for the rest (FASO FANI, SBMC, FASOPLAST, SIFA) and yet others well below capacity for their entire production (SAP, BRAKINA, SOBBRA, CBTM). Despite the great efforts made by the Government since the beginning of the 19809 to rehabilitate and restructure industrial enterprises in distress, there is still evidence of general underutilization of the country's industrial production capacity. This situation is due to one or more of the following factors, depending on the case: - the size of certain industrial investments was greatly overblown (for example, breweries); - the domestic market is narrow and often difficult to access (low level of urban development, difficult communications, low purchasing power); l/ According to our definition the "informal, sector covers artisanal activities and small enterprises, not to be confused with clandestine or 'unofficial" activities such as smuggling. - 11 - - the domestic market is segmented: a distinction must be made in particular between the "modern' urban market and the "traditional" rural market which tends to be seasonal; - except for SOFITEY cotton, export potential is limited given the present competitiveness of the economy; - competition from imported products is often very strong, despite tariff protection. 32. Some enterprises that use local inputs for their production encounter or have encountered quality problems (breweries. SAP). These quality problems are particularly crucial for enterprises whose products are manufactured under licenses they are subject to strict controls by the licensing companies to ensure that the product meets the norms of the standard international product. If a product deviates too greatly from these norms the license may be withdrawn. 33. Industrial production in Burkina Faso is relatively diversified, and the industries are largely independent of each other: there is a very low degree of industrial integration and, consequently, minimal intersectoral synergy. Market Share, Competition. Imports. Exports, Marketing 34. Market Share. Most of the enterprises are unique in their sector and enjoy a de facto monopoly position in terms of domestic production. However, local competition is developing in some sectors (brewing, confectionery, bicycles, roofing materials). These developments appear to be motivated less by the desire to "do better at less cost' than by an ambition to capture the market of the initial enterprise which was set up, by using concessions granted by the Government to the new company just when those enjoyed by the initial enterprise are about to expire (as in the cases of BRAKINA/SOBBRA and SIFA/SAMFA). 35. Only a few industrial enterprises cover 100 percent of the local market for their products (breweries, SOFAPIL, etc.). Most of them cover only part of the market (ranging from 10 to 60 percent). Many of them were recently established or rehabilitated, and are expanding rapidly, raising their expectations of covering the whole of the domestic market in the medium term. All the enterprises visited expected a more or less rapid increase in their sales and market shares in the medium term. 36. Competition. Since domestic competition is weak in most cases, the major constraint on conquest of the domestic market is competition from imports. Generally speaking, every local enterprise threatened by foreign competition enjoys protection granted by the Government, tailored to its ability to compete and to serve the domestic market. The main advantages enjoyed by foreign competition are, generally speakings - better product quality or simply a better image; - 12 - - for some products, a cost well below that of the local product (real cost, taking into account exchange rate effects, or cost reduced by dumping. Despite government protection, extending inter alia to control -- or even prohibition -- and taxation of imports, foreign competition remains lively due to its quality advantages and deficiencies in customs administration (lack of resources to control all border points, underbilling practices, falsification of declaration nomenclature). 37. Manufacture under license is generally regarded as one of the best ways to combat foreign competition. It is feasible only with certain products, is attractive only for products with very well-known brand names, and in most cases involves the Government since the trademark owner will agree to set up in the country only in return for adequate concessions to offset lost export earnings. This formula gives the local enterprise a trademark monopoly -- or even a product monopoly where the trade mark is so well known that it practically identifies the product -- while raising the share of local value-added without necessarily implying a final cost above that of the same product imported. However, it involves the risk of collusion and abuse of dominant position ien a national monopoly is granted to a multinational enterprise. There are quite a few enterprises manufacturing under license in Burkina Faso, including breweries, MABUCIG, SIFA, SOFAPIL, etc. 38. Within the region, the sharpest competition comes from products from the Cote d'Ivoire, which usually enjoy the benefits of the Taxe de Cooperation R6gionale (TCR). Some enterprises do not complain of this competition (CBTM, SOFAPIL, breweries), but these belong to multinational groups that are also established in Cote d'Ivoire and tacitly organize sharing of the regional market and non-competition among their various regional entities. Without presupposing the results of an in-depth study of problems related to the TCR, we presume it cou'd reduce competitiveness by allowing finished products to enter the country bearing less taxes than the inputs required to manufacture them in Burkina Faso. 39. Imports. All imports are subject to prior authorization by the Ministry of Iireign Trade, mainly for statistical purposes. However, to protect certain domestic activities, the Government has imposed stricter import controls on certain products. Three systems are in force: (a) special import permit: this is granted after consultation with local industry, when the industry has declared that it is unable to supply the product in question under normal conditions (for example: tomatoes/SAVANA, non-medicinal soaps/SOFIB, fats used in soap manufacture/SHSB, CITEC); (b) linking of imports: all imports of these products are subject to a special import permits, as well as to prior procurement from local industry of a quantity of products proportional in value to the amount of the imports requested (for example: tires, compulsory purchase of 75 percent from SAP against 25 percent imported; - 13 - (c) total prohibition (for example: R 20 batteries in order to protect SOFAPIL). 40. The Government also intervenes in importation through the selection of approved importers, who alone have the right to import. It should be noted, however, that the many weaknesses of customs control can eliminate, to a certain extent, the desired effects of import controls. 41. Exports. As already stated, except for SOFITEX, Burkina's industrial enterprises export very little. They mainly seek to conquer the domestic market, on which they all enjoy more or less strong protection. Quite apart from this protection, and from the fact that for most enterprises the actual potential for development on the domestic market does not at present justify an aggressive export policy, there are undeniable constraints on export development: (a) Burkinabe industry bears higner costs -- wages and social benefits, energy, transport and depreciation -- than its competitors. (b) The Burkinabb market, limited by low average per capita purchasing power, is too small for local industry to achieve the same economies of scale as its major competitors (Cote d'Ivoire). (c) Membership in the CEAO is perceived as more of an obstacle than an advantage. The Regional Cooperation Tax (TCR) seems to favor particularly the highly competitive imports from Cote d'Ivoire. Burkina's exports counterpart is poorly developed because relatively few Burkinab6 enterprises have obtained admission to the TCR system. In addition, there is a lack of standardization of tax systems within the CEAO, reflected particularly in the application by some countries of ancillary domestic taxes on imported products that cancel out any advantage conferred by admission to the TCR. Moreover, whereas institutionally the TCR ought to replace all the import duties and taxes charged by each member country, in COte d'Ivoire and Niger it replaces only the fiscal entry duty. (d) The Burkinab6 customs tariffs generally impose a series of export taxes (ranging from 9 to 11 percent) which constitute an additional constraint. 42. The combination of these factors makes exporting very difficult, even to neighboring countries (particularly coastal countries): when BurkinabA enterprises envisage exporting, it is usually in the form of timid feelers toward other landlocked markets, such as Niger and Mali. 43. MarketinR. Industrial enterprises are not permitted to engage in distribution and retail sale of their products. They have to entrust their distribution to local wholesaler-distributors whom they select themselves on the basis of various criteria (particularly their financial situation). - 14 - However, the margin allowed to distributors of local products under price regulations (see paras. 46-51), is not large enough to motivate them. They consequently neglect promotion of local industrial products in favor of more remunerative imported products, and do not satisfactorily perform the after-sales service role incumbent on them. Moreover, they do not always possess the skills in modern commercial promotion desired by the manufacturers. The latter are experimenting with various legal formulas through which they can take responsibility for promotion of their products themselves, instead of -- or in association with -- their distributors, without being able legally to replace them. This usually takes the form of joint efforts in field training, sales assistance, supplies, and logistic resources. 44. A number of enterprises benefit from of captive clientele, for example: - FASO FANI (military and academic uniforms. etc.); - SAP (tires, inner tubes for SIFA and SAMFA); - FASOPLAST (packaging for its shareholders); - SBMC (tanned leather for SBCP). This situation, indicative of the beginnings of industrial integration (though it is generally due not to free choice among competitors but to a requirement imposed by the Investment Code), does not spur the supplying enterprises to ainy great efforts to promote the sale or improve the quality of their products. 45. The enterprises often suffer from problems of brand image due to: (i) prejudice on the part of consumers in general who a priori find imported products more attractive; (ii) the quality of local products, often inferior to that of imported products (at least in terms of quality/price ratio); or, (iii) a bad reputation earned when the company first started up (as in the case of SAP tires). The substantial protection these enterprises enjoy does nothing to stimulate them to make the necessary efforts to advertise their products and improve their quality. Price Controls 46. Anxious to protect the purchasing power of both local consumers and domestic industry, the Government has instituted a system of administered prices that applies to all primary products -- imported or produced locally -- and to all locally manufactured products intended for the domestic market. Export prices are not controlled. 47. The system of administered prices for domestic manufactures remained as described below until recently, when several changes were introduced (para. 47): (a) When a product is introduced, the manufacturer works out its anticipated production costs item by item, prepares an application for price approval documenting that price, then applies the legal margins set by the Ministry of Trade to that price to determine the proposed wholesale and retail selling prices that the administration is being asked to approve; - 15 - (b) The documented application is submitted to the Ministry of Trade's Directorate General of Prices; (c) Following discussions, negotiations and any necessary verification with the manufacturer, a reference price structure is adopted consisting of the itemized production costs and the authorized margins at the various marketing stages (from factory gate to retail price). The price so determined is the maximum price applicable nationwide; it is set for six months or a year; (d) With each change in production costs of his product, the manufacturer is entitled to submit a new request for price approval to the Directorate General of Prices. Even if only one item in the production costs is involved, the entire procedure must be repeated. 48. In the unanimous opinion of the manufacturers and more generally of all economic operators, the system of administered prices in force until recently (para. 47) constituted the greatest handicap on Burkinabe industry, in terms of both procedures and underlying principles. The main complaints against the system were as follows: (a) In practice, enterprises find the approval procedure both cumbersome and restrictive (the work and time needed to put the application together place a considerable burden on many of them, particularly those with highly diversified product ines). (b) The slowness of the procedure made it impossible to keep abreast of real changes in production costs through time. The accounting data used to assess the administered price necessarily related to the fiscal year prior to the application date. And because processing took so long -- up to several months between application and approval -- the administered price was often already out of date when it went into effect. (c) The revenue lost between application and approval could create fatal losses or cash-flow problems for an enterprise. Some enterprises can be authorized to launch a product on the market at an unapproved price (pretesting) with a posteriori approval. but this authority is granted to only a very small number of enterprises. It should be made general practice. (d) The method of calculating administered prices, introduced primarily in order to control -- and limit -- the retail prices of current consumer goods, can have the opposite effect. It is based on the passing-on of total production costs to the selling price. This robs the enterprise of all direct incentive to improve its productivity, reduce its - 16 - financial costs or limit its amortization chaiges per unit produced by increasing production. Under the current system, in which an enterprise is allowed a fixed margin over cost, it can increase its margin by inflating production cost in its application for price approval. In some cases (particularly among companies within the same group), an enterprise could arrange to be overbilled for some of its inputs, making a hidden transfer of profit to its supplier and also raising its margin by increasing its cost calculation. In a free market such practices are limited by competition. Where industries are highly protected and/or enjoy a de facto quasi-monopoly, only smuggled imports can generate competition; this can in fact be a healthy solution. (e) The authorized distribution margins are generally greater on imports than on similar local products. Distributors therefore tend to shun domestic products and focus their marketing, advertising and distribution efforts on imported products. Most manufacturers, legally prohibited from distributing their products themselves, complain that this puts them at a serious disadvantage. 2/ (f) Finally, no system of administered prices can really work unless it is supported by effective price control. However, except for certain specific, easily controllable products, price control appears to be ineffective. The controls are too numerous and are applied essentially in the cities, although the population is overwhelmingly rural. 49. The authorities are aware of the shortcomings and negative impacts of the system of administered prices, and propose to review it. Pending the 2/ Attention is drawn to the specific case of SOFAPIL, which seems to have found an innovative solution to these distribution problems. It has persuaded its distributors to take a 75-percent share in its capital. Through close association with its wholesale distributors in field activities (assisted sales tours, stock management, point- of-sale advertising, market information), and through profit-sharing, SOFAPIL has secured their dynamic and effective collaboration. This case deserves special mention because: it employs a formuls whereby the distributors' loss of revenue on local products -- due to lower authorized marketing margins than imported products -- is offset by a high return on invested capital (essential to the success of a financial package of this kind); it affords an example of recycling financial resources from the trading sector to the modern industrial sector, rather than to the modern or traditional trading sector. - 17 - results of this review, they decided in December 1988, to authorize enterprises to: - impose the prices for which they have requested approval if the administration has not ruled on the application within 60 days of its receipt; - adjust their prices, after notifying the administration, if a change in one or more components of production costs justifies an increase in selling price of less than 5 percent, with a limit of only one such adjustment a year. 50. These measures significantly streamline the price control system and should greatly facilitate the enterprises' operations. However, they could well aggravate the negativp impact of the system on productivity and the competitiveness of products in terms of price and quality by leading enterprises to raise their prices systematically by 5 percent a year even if their production costs do not justify this. It would be highly advisable to move quickly from a system of a priori control to one of a posteriori control, and eventually toward a system of price regulation through domestic competition and competition from imported products with appropriate tarif protection. 51. The Government in addition controls certain products through the Caisse de Stabilisation des Prix des Produits Agricoles (CSPPA) for farm-gate products and the Caisse Generale de Perequation (CGP) for major consumption products. The CSPPA's function is in part to stabilize farmers' revenue and farm-gate prices. The CGP was set up in 1978 in response to wide fluctuations in the prices of staple products. It has three functions: to regulate the market and avoid scarcity and shortages; to stabilize prices; and to participate in the capital of certain companies. It regulates 11 products: petroleum products, cement, edible oil, wheat flour, wheat, concrete reinforcing rods, sheet metal, hulled rice, paddy rice and sugar. The industrial sector is affected by its actions concerning sugar, edible oil and wheat flour (agroir-dustries) and the construction sector by interventions relating to cement, sheet metal and reinforcing roda. But the entire Burkinabe economy is affected by its actions regarding petroleum products, for which SONABHY has been granted an import monopoly. The margin collected by the CGP on imported petroleum products is apparently its main source of financing, and is very large, given current world petroleum prices. If the price trend continues, as experts generally expect it to do, the current margin could be reduced to the benefit of the economy in general and industry in particular. Taxation 52. Generally speaking, in view of the high protection they enjoy, especially with respect to imports, the enterprises do not list taxation as a major handicap. Some of them (COFA, SAP, SOFAPIL) complain that it is too high (SOFAPIL estimates its tax rate at 33 percent of turnover). However, this opinion has to be weighed against the fact that the system of price controls allows manufacturers to pass this tax burden on to the consumer via their selling prices. Nonetheless, in view of the low purchasing power of the average consumer, the tax burden can be regarded as a significant constraint on consumption. Moreover, manufacturers perceive the tax burden less as a handicap - 18 - in and of itself than as a comparative disadvantage in relation to merchants whose activities very largely escape taxation. 53. Besides the problems caused by the wide disparity between tax systems applied to enterprises as a result of case-by-case granting of preferential treatment, the major problem is that of the turnover tax (TCA). The TCA is charged as a percentage of turnover (at 7, 18 or 25 percent of value, inclusive of all taxes, depending on the product or activity). It is included in the selling price, collected by the seller on each commercial transaction, and paid over to the Government at the end of each month. Except in the case of industries allowed under the Investment Code to deduct the TCA on their raw materials and energy purchases from that on the value of their finished product, the general rule makes the TCA a cascading tax that imposes a heavy burden on the consumer since it is paid several times on the same commodity (as many times as there have been commercial transactions of the product and its various inputs). 54. Because of this, the TCA tax burden is in reality much greater than the nominal rates applied at the final consumption stage. It is borne entirely by the final consumer since it is included in the calculation of the administered price. The harm the TCA does to manufacturers is essentially indirect in that it reduces consumption by sapping consumer purchasing power. The TCA militates against optimum utilization of production capacity and better absorption of fixed costs by Burkinabe industry, and does not promote vertical integration. The tax authorities are aware of these problems and it has already been decided in principle that a VAT system will be established in the medium term that will have the advantage also of being consistent with the rules in force in most of the CEAO countries. However, its successful implementation will necessitate training, setting up suitable accounting systems in enterprises and sound organization of tax administration, all of which will take time. 55. Industrial enterprises, like merchants, make a compulsory contribution to the Caisse Autonome d'Investissements (CAI). They have no major complaints about the principles under which the CAI operates, though they do find it unfair to base this parafiscal contribution on turnover (with a graduated rate of 0- 2 percent) instead of operating profit. The CAI is aware of this and recognizes that its only justification is the need to generate for itself a minimum volume of resources. 56. The purpose of the CAI is to raise resources to be recycled into fixed investments by existing or new enterprises. On condition that they carry out such investments within two years, the enterprises can recover their contributions and obtain loans at subsidized interest rates (the CAI constitutes a guarantee fund and a subsidy fund). Contributions not reinvested within that period are :onverted into a long-term loan to the Government (20 years at 4 percent interest). From its establishment until September 30, 1987, the CAI collected CFAF 4.433 billion (at a recovery rate of 89 percent) for total commitments (from 1986 onward) of CFAF 3.006 billion (contribution refunds CFAF 1.068 billion, loans CFAF 1.938 billion). 57. The criticisms leveled at the CAI are that contributions based on turnover instead of net profit add to the difficulties of loss-making enterprises; the eligibility criteria for CAI investments do not always match - 19 - the contributors' needs; and the Government sometimes uses CAI resources for projects that do not meet CAI criteria (rehabilitation projects, railroad construction, etc.). 58. The CAI does, however, offer certain advantages over other domestic financial institutions. It is allowed to take greater risks than the banks in applying the Government's investment policy and it is the only financial institution to have set up operational guarantee and subsidy funds out of its own resources. 59. The CAI complains of the very small number of projects offered for financing, and is actively studying the creation of new instruments and ways of improving its management and developing new services. Without denying the positive aspects of the CAI and its potential as an institution designed to encourage enterprises to reinvest, it would be advisable to examine whether other investment systems might be more effective. Tnvestment Programs 60. Regardless of their financial situation, the enterprises visited all have investment projects under preparation or implementation. These projects are well defined and costed out (the investments programmed between 1986 and 1990 vary, depending on the enterprise, from CFAP 400 million to CFAF.2 billion). They generally involve expansion of capacity, diversification, modernization or rationalization of management. Every enterprise envisages a net expansion of activity in the short and medium term. It should be noted that all enterprises, regardless of their age (well-established, rehabilitated, recently created), appear to have experienced continuous growth since 1985 or 1986. The Financing Problem 61. The existing enterprises generally finance their investments out of their own equity or shareholder contributions (capital increases or shareholder loans). They also frequently turn to the CAI (return of contributions and low-interest loans) and to external financing (CCCE, RfW. EIB, etc.). Borrowing from local banks seems to be a last resort and is generally perceived as a difficult operation, even for enterprises operating at 100/percent of capacity and able a priori to expand their market shares without difficulty. 62. Medium and long-term lending to industry by local banks is in fact very rare, for reasons to do both with the investors and with the banks. Investment promoters -- mostly merchants -- have drawn lessons from the many failures recorded in the KOSSODO industrial zone: resources generated by commercial activity have ceased to be recycled into industry. Thus, the scarcity of loan applications for new industrial projects is explained by: (a) past failures; (b) the scarcity of industrial know-how; (c) the better financial return on commercial activities; and - 20 - (d) the dearth of viable industrial projects due to the small market and existing competition (for example from COte d'Ivoire). This dearth of industrial projects to be financed is confirmed by the CAI and the BFCI, and borne out by the lack of utilization of many lines of credit offered at preferential rates (of the CCCE type). The barnks' lack of enthusiasm toward the few applications presented to them is due to: (a) their insufficient long-term resources; (b) the poor quality of ptojects presented to them by promoters, and the absence of units within the banks able to assist promoters in preparing loan applications; (c) the low contributions by the investors out of their own funds; (d) the difficulty in obtaining guarantees. Procurement 63. The major procurement problem is Burkina's landlocked location, which exposes the enterprises to incremental transportation costs, very long supplying times, and a variety of hazards due to, for example, delays in clearing the Abidjan port or the RAN's diverse operating problems, as well as the need to supervise handling and transit operations from a distance or else appoint someone on the spot. Because of these difficulties, most enterprises stress that management of imported raw material and input stocks is vitally important since the slightest shortfall can halt production for months (the lag between ordering and delivery is currently six months). The enterprises visited did not mention any quantitative constraints -- quantity limitation, shortages or nonavailability -- due to full or partial restrictions on imports of products they need. 64. Domestically, electric power is the main procuirement problem, in terms not only of availability but also of quality, reliability and cost: (a) the cost of electricity is very high (at least 50 percent higher than in Cote d'Ivoire), and in some industries is a major constraint on export competitiveness. This situation could improve in the medium term with planned interconnections to the Ghanaian and Ivoirian grids. (b) the numerous irregularities in the frequency cause damage to many pieces of equipment; (c) unforeseen power cuts reduce earnings, disorganize production and often cause substantial product and input Losses. 65. Finally, mention must be made of problems suffered by certain enterprises due to the requirement that they obtain particular products from - 21 - local enterprises such as SOSUCO, FASOPLAST, SAP, etc. These problems essentially concern price and quality: local products often cost much more than imported products (e.g. sugar), and their use often impairs the quality of the end product and its conformity with international standards. While it is right and proper to promote the development of local raw materials and industrial integration, here again there is a need for a certain degree of flexibility and competition in order to stimulate producers to make local materials and products more competitive. Employment 66. The enterprises visited, most of which are headed by Burkinabe professionals, generally possess dynamic and competent management with true entrepreneurial spirit. Their managers are able and eager to manage well and are determined to see their enterprise grow. This applies to the private sector as well as to mixed-capital enterprises and the public sector, whose managers are appointed by the Government. 67. Occupational skill levels, generally acquired on the job, appear to be on the whole satisfactory. Workers' ability to master imported technologies seems to be higher than is geneLally found in neighboring countries. Even if the technologies are not very sophisticated, the fact remains that, contrary to what is usually found in comparable countries, upkeep and maintenance bf industrial plant and equipment are generally well understood, and recourse to foreign technical assistance is relatively rare or even exceptional. 68. Legally, any enterprise wishing to recr.iit has to apply to the Office National de Promotion de l'Emploi (ONPE) and undertake the following procedure: (a) the employer sends the job description(s) to ONPE; (b) ONPE selects the candidates likely to be suitable (among job-seekers registered with ONPE or through the media); (c) the employer organizes the selection test, or at least the technical part of it; (d) the selection test obligatorily includes an ideology test designed and evaluated by the Comites de la Revolution (CRs, formerly CDRs); this test counts for 50 percent in evaluating the candidates; (e) the enterprise is required to hire the candidate(s) that score highest on the test (i.e. possibly candidates who lack technical competence but passed the ideology test). 69. In practice, mainly because of a lack of financial resources, ONPE places less than nalf the workers in the country. It covers only the four principal cities and operates mainly in the formal sector of the economy. Recruitment by the enterprises according to correct procedures is indeed verified, either directly by ONPE officials or indirectly through certain procedures (for example, the requirement that any enterprise bidding on a public contract produce a certificate from ONPE). - 22 - 70. Dismissals are the concern not of the ONPE but of the Labor Directorate. Moreover, in the case of industrial enterprises -- private or public -- any application for authority to dismiss for economic reasons must be endorsed by the Ministry of Economic Promotion following presentation of a restructuring or rehabilitation plan. In practice, while the Administration does not oppose dismissals for manifestly serious transgressions, dismissals for other reasons (personal, economic, etc.) are always very difficult or even impossible. The enterprises are pressured to retain staff; they can try to reduce its cost by negotiating cuts in production and/or wages with labor representatives. Some collective dismissals have received tle Administration's approval, but mostly these have formed part of a broad-based and logical restructuring or rehabilitatior plan. Moreover, the fact that public enterprises are implicitly entrusted by the Government with a social function, one aspect of which is job creation, causes some of them to hold on to excess employees. In the modern sector, the combination of these various factors results in almost universal overstaffing and lack of meaningful planning for short-term recruitment. 71. Labor is very strongly represented within the enterprises by unions and/or CRs who sit on the boards of directors of the public and mixed-capital companies. The power of these representatives depends on the status of the enterprise -- public or private -- and the degree of social consensus obtained by its management. The power of the CRs has beyond doubt diminished substantially since October 15, 1987. The enterprises have reacted very favorably to the loosening of this constraint, which was intended to impose choices which were in line with' the Government's ideology and major political orientations. On the whole, in 1988 the directors of enterprises with whom we met felt that the labor representatives do not overly interfere in management except in matters that concern them directly, such as wages. 72. The combination of de facto rigidity in employment regulation and the substantial power conferred on the labor representatives by law is very detrimental to enterprises: the resulting overstaffing has a very negative impact on the productivity, rate of return and self-financing capacity of some enterprises (such as SAP and FASO FANI'. Moreover, a legal, social and regulatory framework of this kind is a major constraint on the establishment of new enterprises in Burkina. With no decisive comparative advantages over its neighbors, except for the quality of its labor force, Burkina cannct hope to attract investors if it nullifies this asset by an arsenal of more restrictive social legislation. Finally, in the domestic arena, such social regulation can ultimately have the opposite effect to the one sought: fear of incurring heavy personnel costs that cannot be trimmed in case of recession leads employers to limit recruitment in periods of growth and, if necessary, resort to creating insecure and temporary jobs. '3. Wages and salaries in Burkina Faso are governed by various legal it.jtruments: (a) Civil service salaries are set by the Ministry of Public Service. - 23 - (b) In the other sectors of the economy, regardless of the status of the enterprise (private or mixed-capital company), wages and salaries are governed by: - sectoral Collective Agreements (trade, banks, ancillary transport facilities, general engineering, construction and public works); - an interoccupational Collective Agreement; - decrees setting minimum wages, by occupational categories, for types of activity not governed by Collective Agreements. These texts lay down minimum wage levels, but employers may pay higher salaries. 74. Comparison of the official wage scales (authorized minima) for Burkina Faso and its main competitor, COte d'Ivoire, shows that: (a) Minimum wages are higher by about 50 percent in COte d'Ivoire than in Burkina Faso for both unskilled and skilled workers. (b) There is a similar disparity in salaries of foremen, technicians and their equivalents, engineers, and managers and their equivalents, greatly narrowed however by a compulsory indemnity in Burkina Faso on the o-ier of 40 percent of base salary. The real minimum income discrepancy between the two countries for these job categories is therefore only 10 percent. However, in practice there is marked flattening of the wage scales for these categories in Burkina Faso, whereas they can reach much higher levels in C6te d'Ivoire. Therefore, in practice, the real discrepancies for these categories are much greater than those indicated by the two countries' salary scales. Employee and employer social contributions are much higher in Burkina Faso than in COte d'Ivoire: employer - 18.5 percent in Burkina Faso, against 9.9 to 12.9 percent ir COte d'Ivoire; employee - 4.5 percent against 1.6 percent. The weight of social contributions is thus 23 percent in Burkina Faso, against 11.5 to 14.5 percent in COte d'Ivoire. However, this situation is tempered by the fact that, contrary to what happens in C6te d'Ivoire, these rates apply in Burkina Faso to salaries with an upper limit of CFAF 200,000/month (which in any event applies to the vast majority of wages paid, since the wage differential is much lower in Burkina Faso than in COte d'Ivoire). 75. An identical comparison with Niger shows that despite small differences between the two countries according to the parameters applied, the overall level of wages is more or less the same. In contrast, it is apparently slightly lower in Togo and Benin. 76. Domestically, it seems a priori that, compared with the public service, wages for skilled and unskilled workers are ab,ut 30 percent higher in the mixed-capital companies and -- despite apprecia:.le differences between - 24 - enterprises -- about 50 percent higher in the private sector. The latter apparently finds it easier to pay salaries above the legal minima in order to motivate its personnel than the public and parapublic sectors. 77. The enterprises criticize the lack of a national policy and permanent facilities for vocational training through which their employees could acquire new skills and improve their technical competence. Because of their capacity to motivate their personnel strongly, some enterprises undertake this training themselves but, regardless of their willingness, are not necessarily qualified to perform such a function, which is a matter for specialists. Investment Incentives 78. Almost all industrial enterprises are eligible for protection and berefits of various kinds under Establishment Agreements or the Investment Code. The benefits most commonly granted are: (a) total or partial exemption from import duties on investment-related equipment and on inputs (raw materials or consumables); (b) total or partial exemption from the industrial and commercial profit tax (BIC); (c) exemption from the turnover tax (TCA); (d) stabilization of the total tax bill (import duties, BIC) at reduced rates for long periods (up to 25 years); (e) protection against import competition such as specific taxation of imported products (for example, taxes on imported beverages and cigarette3), import quotas (or even total embargo), prior allocationi of a fixed market share (MABUCIG) or an exclusivity guarantee. 79. Without judging the justification for such protection, we must stress at the outset that these advantages are granted case by case to enterprises starting out, without any overall picture of the coherence of the many forms of protection accorded to the various enterprises. The system consequently creates great disparities (nature and duration of the concessions, effective rate of protection, and so on) and thereby substantial distortions in the economy. These distortions are tolerable only because the industrial sector is currently very poorly integrated and most activities are isolated from each other. Yet their elimination is essential to the success of a true policy of national industrialization aimed at maximum integration of the industrial sector and of the economy in general. 80. The granting of these preferential, heterogeneous, case-by-case concessions poses problems not only while they are in effect but also when they expire. Because the protection period is too long and the concessions are not gradually lifted, but, rather, continue unchanged until they expire, an enterprise that has become accustomed to its particular preferential treatment is not always able to adapt suddenly to life under ordinary law for which it has - 25 - not prepared itself (voluntarily or otherwise). Most of the enterprises then renegotiate new concessions or the prolongation of old ones with the Government under the implicit threat of totally shutting down. Should the negotiations fail, if the enterprise winds up its activity because it is no longer profitable, a new promoter could be eligible for the predecessor's benefits under the Investment Code. A preferential syster of this kind, intended to encourage enterprises to invest in the country and eventually operate there under ordinary law, can involve the Government in a costly vicious circle without any compensating 'industrializing" effect. It attracts investments that earn a satisfactory return over the protection period, thanks to the costs and revenue losses borne by the Government, but are abandoned by their promoters when the protection period expires. 81. It should also be noted that problems can arise for an enterprise already established in the country when a new competing enterprise sets up there and qualifies for concessions granted to new enterprises. When the concessions enjoyed by the first enterprise expire, the new competitor finds itself in a privileged position which contradicts the rules of competition. This situation, which is found in the cases of BRAKINA/SOBBRA and SIFA/SAMFA, can cause serious problems for the first enterprise and compel the Government to prolong the concessions granted to it. Steps should therefore be taken to ensure that the system of incentives for new investment does not create difficulties for existing enterprises engaging in the same type of activity. 82. Aside from these case-by-case concessions, there is provision under ordinary law for: (a) 75-percent exemption from the fiscal import duty applicable to industrial inputs. Many industries enjoy this exemption, which considerably increases their rate of effective protection; (b) 5-year exemption from the profit tax (BIC) for new industrial plants; (c) a cap of 15 percent on import duties on equipment imported for expansion of an industrial unit; (d) the possibility of temporary admission for imported inputs used in the manufacture of products intended for export. B. Sectors Associated with Industry 83. The following comments do not claim to be exhaustive, since the mission was able to visit only one or two enterprises in the sectors mentioned, but to shed some light on the nature of those sectors' problems. - 26 - Eneray (SONABEL) 84. Electricity accounts for only 5 percent of the total energy consumed in Burkina Faso but is the major source of energy for the modern industrial sector. The chief problems faced by SONABEL are as follows: (a) the age of the plant and the resulting heavy maintenance costs; (b) the excessively high cost of managing a large number of isolated power stations; (c) the excessively high cost of petroleum products, which account for 60 percent of variable costs (making one question the wisdom of the margin collected by CGP) despite the total tax exemption on raw materials, equipment and fuel granted by the Government; (d) the very low rate of electrification nation-wide (2 percent), which means that fixed costs cannot be amortized over a broad market; .e) the many debts outstanding from state-owned enterprises. The net result of these various factors is a very high cost per kilowatt hour (50 percent higher than in COte dllvoire) and problems of quality and reliability (power cuts, frequency variations). 85. The authorities have adopted the following development strategy to deal with these shortcomings: (a) to reduce costs: - development of other forms of energy, particularly hydroelectricity (Kompienga, Bagre and Noubiel dams); - importation of cheaper energy fLom foreign suppliers (connection of the Burkinabe grid to those of COte d'Ivoire and Ghana); - a short-term freeze on the establishment of isolated small power stations in favor of interconnection development; - negotiation of petroleum product prices with the CGP. (b) to improve service quality: rehabilitation and renewal of generating and distribution equipment (regularity and reliability) and expansion of the networks. - 27 - Construction and Public Works (SEG) 86. For the modern sector enterprises, the construction and public works market consists largely of government contracts (they account for 70 percent of SEG's turnover). This situation is due to a number of factors: (a) Because of their very low purchasing power, people are unable to self-finance the acquisition of "modern' homes whose construction would be sufficiently remunerative to attract modern construction companies. Most people are compelled to solve their housing problem by building their homes themselves or turning to the informal sector (jobbing builders). (b) The Government does not promote a policy of accession to home ownership for people of low purchasing power, the vast majority of whom lack access to bank credit. (c) The land tenure legislation and the taxation of land ownership and income are completely discouraging to a private investor wishing to undertake rental construction programs (lack of private land ownLrship, concessions granted by the Government without guarantees, and very heavy taxation of rental income). As a result, the Government is by far the biggest builder in the modern sector for both housing (Cite AnI, AnII, AnIII and AnIV housing developments) and public buildings. SEG has noticed a growing volume of government contracts due to numerous public investments made with external financing. 87. The following are the major problems mentioned: (a) contracts are not always awarded on the basis of objective criteria (individual pressures); (b) there is no system of preselection and classification of enterprises to be admitted to bidding on the basis of the works to be executed: any enterprise can bid, regardless of its competence and financial situation; (c) there is very strong competition from jobbing builders, who have much lower costs and often escape taxation. This has a positive impact on employment, but not necessarily on quality; (d) there is also sharp competition from foreign companies (COLAS, SETAO, etc.). There are no regulations favoring Burkinabb enterprises when they are competitive in terms of price, quality and delivery date; - 28 _ (e) the time taken by the Government to process payment is much too long. This creates cash-flow problems or increased financial costs; (f) import taxes are too heavy: public works equipment is taxed at 78 percent and there is no tax exemption or abatement of the type enjoyed by most industrial operators. 88. On the other hand, the problem of access to bank credit does not arise in the same way for construction as for industry. The construction enterprises finance their operations contract by contract; the signature of the contract gives ready access to credit (pledging of the contract, advance of 50 percent of the contract upon presentation of itemized accounts by the enterprise). Also, they often use supplier credits for the more expensive equipment. III. PROSPECTS AND RECOMMENDATIONS 89. In view of Burkina Faso's lack of sufficient and significant overall comparative advantages vis-&-vis its main competitors, the severe handicaps imposed by its landlocked situation, the small size of its domestic market, and its very limited export potential given the current competitiveness of the economy (in terms of relative prices of tradable and nontradable goods and services), the prospects for industrialization are limited. 90. The main possibilities for industrial development lie in exploitation of Burkina's predominantly agricultural domestic resources. The industries that could be considered are located upstream or downstream from agricultural production: - farm machinery and implements; - irrigation supplies and equipment; - processing of agricultural products (millet, sorghum, maize, shea butter); - fruit and vegetable canning and processing; - processing of dairy products; - industrial-scale egg and poultry production; - cattle feed manufacture; - processing of medicinal and aromatic plants; - cotton-based textiles. 91. Other sectors with .ateresting potential include mining (though it is very unclear whether the deposits identified can be worked profitably, except perhaps for Perkoa zinc -- para. 21), construction and public works, and tourism. Development of construction and tourism would, however, depend on dynamic government policies. In particular, the Government should institute a global housing policy to meet the pressing needs of the population. Development of construction and public works could promote upstream the working of construction materials deposits (limestone, clay, marble, etc.) and the establishment of a construction materials industry which would enjoy natural protection because of high transportation costs. - 29 - 92. Generally speaking, a country's industrial success no longer depends solely on the availability of raw materials or energy. It is based also on its command of technologies, its procurement and distribution systems, the quality of its telecommunications network, the solution of its transportation problems, the availability and mastery of certain services (data processing, banking skills, and so on) and its general efficiency. 93. We b'elieve that the basis for any long-term industrialization of Burkina Faso must be based on a concentration of efforts to develop an environment conducive to efficiency and competitiveness. In view of the country's limited resources, it should not disperse its efforts but instead concentrate its resources on a few main development opportunities in order to raise their level of performance above that of its neighbors. It could either select one or two product lines (fruit, meat, textiles) and seek to master them thoroughly or else focus its efforts on certain services or sectors (health, tourism, data processing, telecommunications, banking, training, etc.) in which it would strive to become a regional leader or, alternatively, specialize in international subcontracting of certain activities. The goal would be to acquire regionally -- or even internationally -- recognized expertise in one or more fields, creating attractive comparative advantages, following the principle that in a modern economy the major comparative advantages are no longer endowed advantages (raw materials, energy, geographic location) but advantages that are acquired and maintained. 94. In manufacturing, the inflexibility of employment, pricing, distribution and foreign trade regulations; the high energy, wage and social contribution costs; and the other constraints mentioned in Part II mean that new enterprises can be viable only within the prebent protectionist framework. However, this involves compensating for inadequate overall comparative advantages through very high protection, expensive to the community -- Government and consumers -- without laying the basis for efficient industrialization in the long term. In contrast, general relaxation -- or even dismantling -- of Burkina's battery of laws and regulations could afford comparative advantages in relation to its competitors, particularly Cote d'Ivoire. For investors, these advantages would be supplemented by a labor force whose energy and skills are unanimously recognized in neighboring countries. The Government could also create new comparative advantages by taking other incentive measures (establishment of a "tax holiday," a free zone, and so on). While liberal regulation does not preclude affording thedr enterprises certain types of protection and advantages, they should be temporary and their sole purpose should be to increase the enterprises' true ability to compete. The initial cost to the community would be recovered in the form of export receipts, lower domestic prices, growth of the enterprises, and creation of jobs. 95. In other words, Burkina's industrial development potential depends not just on its natural resources but equally on adjustment of the legal and regulatory framework governing the functioning of the economy, the degree of freedom accorded to investors -- both public and private -- in every area, and the effectiveness of its investment and export promotion policies. We present below our recommended program of action in select areas for in order to begin the process leading to development of a competitive industrial (and tertiary) sector in Burkina Faso. Without prejudging the results of preliminary studies - 30 - needed to define a coherent strategy, we have based our recommendations on certain orientations for which the justification appears evident. 96. These recommendations aim essentially at a gradual reduction or abolition of protection (which is costly to the community), the progressive relaxation of requirements imposed on the enterprises, an increase in their domestic and external competitiveness in terms of price and quality, and the maximization of domestic resource use. We feel that this strategy is just as necessary in a system of public and mixed-capital enterprises as in a private enterprises system, the object being to provide them with an environment conducive to economic efficiency and competitiveness. The rates at which protection is reduced and requirements are relaxed will have to be carefully coordinated to avoid creating disequilibria. 97. The action program suggested by this first analysis therefore comprises: (i) Creation of an Environment Conducive to the Development of Profitable and Competitive Activities 1. Reduction of Excessive Protection Short-term action: - In-depth examination of customs tariff and effective protection rates; revision and simplification of the customs tariff and the entire import duties system to reduce the effective protection of each sector to a level that is coherent with -,he rest of the national economy, so as to assist integration into it, but does not eliminate all incentive to be internationally competitive, while still affording the degree of protection required by a developing industry; - Comprehensive examination of quantitative import restrictions; study of the impact of progressively abolishing them and replacing them by tariff protection; - Study and revision of the Investment Code and the whole of the concessions granted to new investments (establishment agreements, etc.); selection and adaptation of concessions to be retained or introduced; definition of eligibility criteria to prevent their improper use; drafting of an Investment Code setting forth in a single document all the possible benefits available to enterprises; elimination of special case-by-case negotiation procedures, which create distortions between sectors and enterprises. Without presupposing the new incentive clauses that should appear in the future Investment Code, we can define a few basic principles: - 31 - (a) the concessions should apply only to projects with proven longer-run profitability; (b) they should have limited duration (e.g. a maximum of five years) and be regressive over time so as to stimulate the enterprise to prepare itself to function under ordinary law; (c) they should be automatic and identical for all projects that meet the eligibility criteria, without any special systems or procedures; (d) they should directly affect investment, reinvestments and profits rather than operating costs, so as to avoid distorting competition among enterprises in a given type of activity or threatening the survival of sound enterprises already established but no longer eligible for the benefits of the Code. Medium-term action: Introduction of a new customs tariff and phased replacement of quotas by tariff protection. These measures will, however, have to coordinate fully with other measures to eliminate constraints and introduce new incentives; a balance will need to be struck among all the measures taken, each tariff reduction being matched by new incentives or elimination of constraints. A timetable of phased implementation of these reforms will have to be drawn up, together with a procedure for continuously monitoring their effectiveness and their coordination with the measures taken in other fields, to avoid creating any sudden disequilibrium. Radical measures would jeopardize the success of the program by eliminating social and political consensus. 2. Relaxation of Constraints Short-term action: Administrative formalities: - review of the procedures for establishing enterprises and closing them down (bankrupt or not); recommendations include simplification, liberalization and streamlining of procedures. Price control: - simplification of application documentation and procedures; - 32 - authorization of immediate adoption of a new price, with a posteriori administrative control; deregulation of margin rates within certain ranges; Marketing, procurement: - relaxation of existing requirements that certain enterprises procure from prescribed suppliers (giving certain public enterprises captive clientele) in order to introduce some degree of competition; - abolition of the requirement that industrial enterprises market their products through wholesale distributors; this action could be supported by prior or simultaneous training and assistance from the manufacturers for the wholesale distributors, so that those who make the necessary effort to achieve the level of competitiveness required by the manufacturers can retain their market. Taxation: - study of the modalities for replacing the turnover tax (TCA) with a value added tax (VAT) that conforms to CEAO rules; definition of future procedures and transitional stages; preparation of a timetable for reform. Personnel: - abolition of the compulsory ideology test included in recruitment testing; - authorization of enterprises to recruit freely without ONPE supervision; refocussing of ONPE's activities towards its other functions. - actual deregulation of dismissals for economic reasons, at least for private enterprises, and on condition that they honor any commitments previously entered into with the Governament; - reassessment of management salaries to avoid the 'brain drain' and instill dynamism into managers and staff. Medium-term action: Prices: - abolition of the administered price system, in close coordination with the lifting of import quotas, except possibly for a few very specific products to be defined (study required); for the latter, creation of a highly efficient and streamlined price control unit (organization, - 33 - modern techniques and equipment, nationwide coverage), designed and set up as a function of the list of products deemed necessary to control. Taxation: - training and consciousness-raising of all economic operators affected by the shift from the TCA to a VAT; presentation of the reform timetable as drawn up; definition of the procedure to be followed at each stage of the transition process; monitoring of the efficiency with which the administrative organization of the VAT progresses. 3. Export Promotion Short-term action: - in collaboration with other member countries, an in-depth study of the impact of the Regional Cooperation Tax (TCR) in the CEAO: assessment of the costs and benefits of the TCR for Burkina Faso by developing a balance sheet of its trade flows with each CEAO country; recommendation of appropriate TCR rates based on various scenarios for customs tariff reform which would be defined under a simultaneous study; - abolition of export taxes; - extension of the temporary admission system for imports made by exporting enterprises; - simplification of export procedures; - comprehensive review of the potential for subcontracting for foreign enterprises: providing productive and cheap labor, furnishing of certain services, and so on; - study to identify the major obstacles to exporting that are beyond the enterprises' control (market information, telecommunications, transportation, etc.); recommendations that a priori avoid recourse to public export promotion agencies; - study of the possibilities for assigning unused quotas (Lome conventions, etc.) to foreign investors interested in preferential access to protected markets (EEC). Medium-term action: - following identification of 'product/market" pairs which could be exported competitively, specific measures -- which cannot be defined in advance -- will need to be devised to stimulate export of those products during the enterprises' start-up phase; studies should be undertaken to assess the - 34 - suitability of granting export bonuses and insurance against certain risks (default in payment, exchange risks, prospecting costs, etc.), and of setting up an Export Promotion Center; - application to the fullest possible extent of the recommendatione concerning export constraints beyond the control of enterprises, (particularly those concerning the provision of information to them). 4. Public Sector - streamlining of procedures and shortening of processing times for Public Treasury payments of billings to the Government; decentralization of the management of certain public budgets to the recipient agencies. 5. Industrial Environment, Supporting Agencies Short-term action: Infrastructure: - continuous improvement of communications networks (air, land, rail); access is a major factor for investors, particularly in a landlocked coumtry. - very substantial improvement of the national and international telecommunications networks; this is essential to Burkina's ability to compete, particularly in export markets; - implementation of the SONABEL expansion, modernization and rehabilitation programs; design and implementation of a vigorous promotional and informational campaign on electric power consumption in Burkina Faso. Supporting agencies: - as a counterpart to tariff reform, which will lower the protection enjoyed by many industrial operators, the Government must be able to guarantee whatever future level of protection it decide to retain. To that end, it is essential to make a start now on action to rationalize customs control: training, organization, better use of resources, introduction of modern techniques and equipment (computerization), overhaul and speeding up of customs procedures, improved verification of value declarations; - study of the performance of the CAI to determine whether it should be maintained and/or reformed in favor of other incentive systems that are more efficient or better adapted - 35 - to the country's development goals; in particular, the advisability of the following reforms should be examined: -- review of the CAI's operating mechanisms (principle of a long-term loan to the Government, etc.); -- basing an enterprise's contribution on its net profit, not its turnover, so as to avoid aggravating the difficulties of enterprises running at a loss; -- review of the eligibility criteria fue CAI investment financing to bring them more into line with the enterprises' real needs; -- creation of new products and services (assistance to investors, loans to the informal sector, and so on); -- prohibition of the Government's ability to use CAI resources for projects that do not meet CAI criteria. Medium-term action: Measures need to be taken by the Government and/or the enterprises to improve the quality of industrial products, for example: development of "Quality Control Circles' within the enterprises; -- creation of a National Quality Control Office to control the quality of Burkinab6 products and their conformity with export standards; these measures should foster the gradual development of a brand image or quality label for Burkinabe products. - In light of the need identified earlier, a vocational training policy will need to be formulated, defining: -- the priority areas for immediate and longer-run action; -- the types of training that should be organized locally and those for which it would be better to rely on foreign institutions; -- the share of the national training effort incumbent upon the Government and upon the enterprises. - 36 - The Government will need to formulate and implement a promotion policy for Burkinabb products abroad; The development of service activities for to the enterprises will call for in-depth studies and vigorous support (particularly in all aspects of informational and data processing techniques). These services are not only essential to achieving of the goal of making the existing enterprises competitive; they also have the advantage that they do not depend on the country's natural resources and offer strong export potential (subcontracting or direct export). 6. Elements of a Strateav for the Informal Sector 3/ The "informal' sector of small and artisanai enterprises plays an essential role in development of the country's industrial fabric, employment creation and economic development in general. To sustain this sector, action is needed in three areas: Institutions and regulations. Action should be taken to define the legal status of small and artisanal enterprises; to review the "small investment code" with a view to taking measures to assist them, (e.g., creating an industrial free zone in which they can operate free of, in particular, employment and wage regulation and enjoy various benefits such as partial tax exemptions); and to integrate the "small code, into the general investment code; Extension and assistance institutions. Unless the OPEB is revived, units should be set up within existing institutions (for example, the Chamber of Commerce) with responsibility for helping the informal sector identify, prepare and appraise small industrial projects, obtain access to credit, and organize their production and marketing; Basic and refresher training. Steps should be taken to reactivate the Fada and Nouna technical training centers, extend the activities of the CNPAR to the urban sector, and set up a center for basic and refresher vocational training which responds to the needs of economic operators. 3/ See footnote 1. ANNEX II LIST OF TABLES 1. POPULATION AND EMPLOYMENT 1.1 Basic Data, 1988 1.2 Basic Population Indicators, 1985 1.3 Resident Population, 1985 (Structure by age and sex) 1.4 Net Average Annual Population and Emigration Growth, 1975-85 1.5 Resident Labor Force, by Sex, Area and Education (in Z), 1985 1.6 Labor Force by Economic Sector, Sex and Area (in 2), 1985 1.7 Population per Health Unit and Hospital Bed, 1980-86 1.8 Distribution of Health Personnel by Category and by Training, 1986 1.9 Basic Indicators for Nutrition, 1986 1.10 Student Enrollments, by Educational Level, 1980-87 1.11 Evolution of Unit Costs in Public Education, 1981-86 1.12 Budgetary Expenditures in the Human Resource Sectors, 1976-87 1.13 Public Sector Employment, 1988 1.14 Income Distribution in Public Sector Employment, 1988 2. NATIONAL ACCOUNTS 2.1 Gross Domestic Product, by Industrial Origin (billions of current CFA Francs) 2.2 Gross Domestic Product, by Industrial Origin (billion of constant 1979 CFA Francs) 2.3 Implicit Price Deflators (1979 = 100) 2.4 Origin and Use of Resources (billions of current CFA Francs) 2.5 Origin and Use of Resources (billions of constant 1979 CFA Francs) 2.6 Implicit Price Deflator for use of GDP (1979 = 100) 2.7 Gross Domestic Product, by Industrial Origin (percent of total, current prices) 2.8 Gross Domestic Product, by Industrial Origin (percent of total, constant 1979 prices) 2.9 Gross Fixed Investment (billions of current CFA Francs) 2.10 Gross Fixed Investment (billions of constant 1979 CFA Francs) 3. EXTERNAL ACCOUNTS 3.1 Balance of Payments, 1982-87 (billions of current CFAF) 3.2 Balance of Payments, 1982-87 (millions of US dollars) 3.3 Merchandise Trade Balance, 1982-87 (billions of CFAF) 4. EXTERNAL DEBT 4.1 External Debt, 1967, 1977, and 1987 (millions of US$) 4.2 External Debt, End-1987 (millions of US$) - 38 - 5. PUBLIC FINANCE 5.1 Central Government Revenues, 1980-88 (billions of CFAF) 5.2 Central Government Expenditures, 1975-88 (billions of CFAF) 5.3 Government Expenditures by Functional Classification, 1977 and 1982-87 (billions of CFAF) 5.4 Treasury Operations, 1982-87 (billions of CFAF) 6. MONEY AND CREDIT 6.1 Monetary Survey, 1982-87 (millions of CFAF) 6.2 Central Bank (BCEAO) Balance Sheet, 1982-87 (millions of CFAF) 6.3 Deposit Money Banks Consolidated Balance Sheet, 1982-87 (millions of CFAF) 6.4 Distribution of Bank Credit by Sector, 1980-87 (millions of CFAF) 7. WAGES AND PRICES 7.1 African Consumer Price Index in Ouagadougou, (1981-82 = 100) 7.2 Evolution of Minimum Guaranteed Professional Salary (S.M.I.G.), 1977-88 7.3 Civil Service Remunerations in Selected Countries, 1987 8. INDUSTRY 8.1 Industrial Production, 1978-1987 8.2 Structure of the Modern Industrial Sector 8.3 Principal Enterprises in the Modern Industrial Manufacturing Sector: Turnover, Employment, Value Added 8.4 Geographic Distribution of "Modern Industrial Enterprises 9. AGRICULTURE 9.1 Surfaces of Major Crops (in hectares) 9.2 Production of Main Crops (in tons) 9.3 Yields (in kg/ha) 9.4 Trends in Cultivated Area and Yields by CRPA 9.5 Livestock (no. of heads) 9.6 Animal Production (offtake, no. of heads) 9.7 Official Producer Price for Products - Export Crops (CFAF/kg) 9.8 Official Consumer Prices - Subsistence Crops (CFAF/kg) 9.9 Export Prices of Main Products, 1982-87 9.10 Agricultural Trade Balance According to Customs (in millions of current CFA Francs) 9.11 Food Aid and Cereals Imports 9.12 Ministry of Agriculture and Livestock, Budget 1981-1988 (in millions of CFAF) 9.13 Cotton Production, 1982-1988 9.14 Trend in Cereal Production (in '000 tons) - 39 - 9.15 Evolution of Fertilizer Demand, 1974-87 9.16 Irrigable Potential in Burkina Faso 9.17 Development of Irrigated Perimeters 9.18 Main Export Crops: Volume, Value. Price Index 9.19 Main Subsistence Crops: Volume, Value, Price Index 9.20 Nominal Protection Coefficient for Main Commodities 9.21 Evolution of Cereal Prices in Ouagadougou, 1984-88 9.22 Structure of Prices and Taxation of Butane Gas and Kerosene 9.23 Relative Fuel Prices for Cooking Purposes 9.24 Summary of Main Interventions of the Price Stabilization Fund (in millions of CFAF) 9.25 Cotton Projections (in current prices) 9.26 Cotton Projections (in constant 1985 prices) 9.27 Cereals Projections 9.28 Supply of Raw Industrial Products 9.29 Projected Demand for Wood Products 1985-2000 10. OTHER SECTORS 10.1 Evolution of Export/Import Volumes by Transport Mode, 1978-198/ ('000 tons) Tabl- 1.1.: BASIC DATA, 1988 Tableau 1.1.: DONNEES DE BASE, 1988 G.N.P. per capita In dollore (1986) 16 P.N.B. par habitant on S (1986) Surface area 274112 km2 Superfici. Agriculture (X of the total surfaco area) 46.1 Agriculture (X de Is superficie total-) Resident population (1986 census) 7.9 million Population Residente (recensament 1986) Number of Inhabitants per square kilometer 29 Nombre d'habltants au ke2 Urban population in percentage of the Population Urbaino en X de total population 11.8 Ia Population Total- Natural population growth rate Taux d'acroissement naturel do la Population - Total 3.28X - Total - Urban 8X - Urb;in Cross birth rate (1986) 61.3 pour 10M Taux do Notalite brute (1986) Fertility rate 6.5 6nfants/fe_ Taux de Fecondito Life expectancy at birth (1988) 48 ons Esperance do Vie a la naissance (1988) Infant mortality (1986) 162 pour 1000 Mortalite Infantile (1988) Mortality rate (1988) 18.7 pour 1080 Taux do Mortalite (1986) Rate of alphabetization Taux d*Alphabetisation Primary education rate (1987) 27.1X Taux de Scolarisation Prisaire (1987) Population structure by age Structure par Age do Is Population 0-14 years 48.3X 0-14 *ns 16-64 years 47.6X 15-64 ans 84 and over 4.1X 64 et plus Population per doctor 30607 Population par Uedecin Population per nurse 3932 Population par Infirmier(-) Population per aid-wife 27781 Populations par Sage-fe e Population per hospital bed 1384 Population par lit hospitalier Caloric intake per person in Apport Colorique journalier par X of minimum daily requirement 86 tote en X du Minimum requis Sources: INSD, Ministry of Plan and Cooperation, 1986 Census INSD, Plan et Cooperation, Reensement 1986. Tabl- 1.2: BASIC POPULATION INDICATORS, 1905 Tableau 1.2: INDICATEURS DE BASE SUR LA POPULATION, 1986 Burkina Faso Recent Statistics (96) Burkina Faso Stat;itiques recentes (1966) 1976 1986 Low income Total low incom countries (1) countries (2) 1975 1965 Pays a faible Ensemble doe pays rovenu(1) a faible rovenu(2) Life expectancy Esperance do Vie at birth 43 46 62 61 a Is naissance Fertility rate 6.4 6.5 6 3.9 Taux do Fecondite Gross birth rate Taux de Natalite brut per (low) 49 61.3 48 3e pour (1O6) Infant mortality Taux do Mortalite rate (1166) 167 162 infantile (1166) Gross mortality Taux do Mortalite brut rate per (1000) 22 18.7 16 10 pour (1666) Natural growth Taux do croissance rate in X 2.7 3.26 2.8 1.9 naturelle (en X) Sources: General Directorate of Studies and Planning, Health Statistic., 1966 Report; World Bank, World Devolopment Report 1986 Notes: (1) Excluding China and India. (2) Including China and India. Sources: Direction Generale doe etud*s et do la Planification, Statiatiques Sanitaires, Rapport 1966; Banque Mondiale, Rapport our le Devolopp_ment dans I Monde, 1986 Notes: (1) A l'exception do ls China et do l'Inde. (2) Y compris la Chino at l'Inde. - 42 - Table 1.3: RESIDENT POPULATION, 1985 (Structure by age and sex) Tableau 1.3: POPULATION RESIDENTE, 1985 (Structure par age et sexe) Population totale recensee: 7,964,705 Total census population: 7,964,705 Proportion for 1000 Inhabitants Absolute variation Ages In accumulated Z of the age group share Males Females 1975-85 (Z) Proportion pour 1000 Habitants Variation absolue de la Ages Er. 2 cumules part de la classe d'age Hommes Femmes 1975-85 (Z) 0-4 91.95 91.62 18.36 1.04 5-9 91.40 90.02 36.50 1.64 10-14 60.85 56.91 48.28 0.26 15-19 49.25 47.82 57.98 0.06 20-24 32.44 40.18 65.24 -0.02 25-29 26.63 37.69 71.68 -1.20 30-34 21.42 28.57 76.68 -0.96 35-39 20.42 25.87 81.30 -0.45 40-44 16.42 21.19 85.07 -0.58 45-49 16.01 18.22 88.49 -0.05 50-54 13.43 15.30 91.36 -0.39 55-59 11.71 11.85 93.72 0.21 60-64 10.10 11.43 95.87 0.03 65-69 7.60 7.30 97.36 0.40 70-74 4.92 5.95 98.45 -0.08 75-79 2.72 3.01 99.02 0.00 80+ 3.42 5.15 99.88 -0.05 Undetermined Non precise 0.59 0.64 100.00 -0.04 481.28 518.72 Total: 1000 Source: Plan and Cooperation/INSD: 1985 Census Source: Plan et Cooperation/INSD: Recensement 1985 Table 1.4: NET AVERAGE ANNUAL POPULATION AND EMIGRATION GROWTH, 1976-96 Tablau 1.4: TAUX ANNUELS D'ACCROISSEMENT NET ET D'EUIGRATION DE LA POPULATION, 1976-65 Absolute 1976-85 1975 1985 growth X Variation annuelle uoyonne AccroTnsement 1976-86 1975 1985 abeolu X Resident Population 6038208 7964705 2326502 8.5 Population Residente Average number of Nombre moy-n d'._igr-s emigrants abroad 1/ 1009999 741507 -288492 -3.0 a l otranger 1/ Source: Planning and Cooperation/INSD: 1986 Census, Condo J., *Migration In Upper-Volta', 1981. Source: Plan et Cooperation/INSD: Recens_ment 1986, Condo J., "Migration in Upper/Volta', 1981. 1/ Census figures, which my underestimate the real numers. 1/ Chiffres do recensmomnt, quT sous-stimont probablemont les chiffres reels. Table 1.5: RESIDENT LABOR FORCE; AGED 15 YEARS AND OVER, BY SEX, AREA AND EDUCATION (in S), 1985 Tableau 1.5 TAUX D'ACTIVITE DES RESIDENTS DE 15 ANS ET PLUS SELON LE SEXEj LE MILIEU ET LA FORMATION (en Z). 1985 Active Population X of 16-24 yeor olds/unoccupied Active lnacive Total Populatlon Sex Area _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Population of 15 year. old Oceupiod Unoccupled having an education (1) averag Occupled Unoccup oed sow over Actifs X de 16-24 ann/inoccupes Actifs Population tote- Sex* Milieu Inactits -I de 16 Occqpee Inoccupo *yant ane formation(l) moyenne Occupee inoccupoe an* et plus men Total 90.5 1.6 4".6 63.2 1766 211042 16051 183366 Hems. Rural 98.2 0.a 36.6 64.7 1616741 6242 U57 18627890 Urbein 73.6 8.9 41.9 62.9 16619 229 P 44794 256218 Woman Total 7C.1 9.4 56.9 74.9 167164 JO64 546652 2226252 Femme Rural 79.6 6.1 47.6 66.1 16672 1649 464044 1994625 Urbain 36.9 2.0 61.6 77.0 63174 6m 142040 281727 Total: 62.2 *.9 S6.1 66.6 8876911 J6496 696653 419966 Source: INSO: 1906 Census Notes: (1) Cloeical Education System, Professionas Education, Koren-Arabic School Source: DUSD: Recenscment 1986 Notes: (1) System acoloire clno;sque/formtion profoeionnelle/ecolo coronique-arebe Table 1.6: LABOR FORCE BY ECONOMIC SECTOR; SEX AND AREA (in I), 1985 Tableau 1.6: POPULATION ACTIVE OCCUPEE SELON LE SECTEUR D'ACTIVITE, LE SEXE ET LE MILIEU (en 2), 1985 Men Women Sector a/ Tottal _______ _______ Total Rural Urbrn Total Rural Urban Hames Fer.F " Sectour */ Total _ Total Rural Urbain Total Rural Urbain - Primry Sector 92.4 96.4 96.8 28.9 92.8 95.4 42.9 - Socteur Primire Absolute vortation of shares Variation absolue des part. since 1976 8.4 -1.7 t.6 -2.1 par rapport a 1976 - Secondary Sector 2.1 2.8 1.8 13.3 1.9 1.7 6.2 - Secteur Secondairo e Absolute variation of shares Variation abeole, des parts since 1975 -1.9 -1.7 -1i0 -2.5 C par rapport a 1975 - Tertiary Sector 656 7.3 2.2 67.8 2 2.9 69.9 - Secteur Tertimire Variation cotpred to 1976 1.5 3.4 0.4 22.6 Vriation par rapport a 1976 Total occupied population 337696 1765306 1616741 188619 167164 166372 63174 Population total. occupe Memo it t: Pour memoirs Totl occupied population, 1976 137660 1382096 1228696 10949 4am U11 7O Population totals occup-e, 1976 Source: 1066 Census, INSD. a/ Strict definition of economic sectors have been used, particularly for the secondary sector, i.e. production industries other than those concerning the services. Source: Recensement 1965, INSD. a/ Dae definitions strictes des secteura dactivit.e ont *te rtenuos particulierement pour le secteur secondaire, c.a.d. Industrios de production autres quo celles concornant les services. - 46 - Table 1.7: POPULATION PER HEALTH UNIT AND PER HOSPITAL BED; ACCORDING TO DEPARTMENTS,1980-86 Tableau 1.7: POPULATION PAR FORMATION SANITAIRE ET PAR LIT D'HOPITAL, SELON LES DEPARTEMENTS, 1980-86 1980-86 Comparison according to the 1980 Nomenclature Departments of population/health unit of population/bed 1980: 1986: Variation(Z) 1980: 1986: Variation(Z) Comparaison 1980-86 selon la Nomenclature 1980 Departements de la population/formation de la population/lit 1980: 1986: Variation(Z) 1980: 1986: Variation(z) Ouagadougou 10300 13862 34.6 370 525 41.9 Bob-Dioulasso 8800 24809 181.9 200 547 173.5 Central 12600 11398 -9.5 2500 1862 -25.5 East Central 19900 15675 -21.1 2200 792 -64.0 North Central 19500 18210 -6.6 9100 2863 -68.5 West Central 16100 13562 -15.8 2580 2734 6.0 South Central '.1300 11124 -1.6 1680 825 -50.9 High Basins 13300 8339 -37.3 3740 2907 -22.3 East 16900 19340 14.4 900 2166 140.7 North 23800 13155 -44.7 1900 1315 -30.8 Sahel 21200, 18876 -11.0 9950 2879 -71.1 Black Volta 13500 14493 7.4 4432 1751 -60.5 15600 15237 3296 1764 Source: Figures from the Department of Public Health, Ministry of Health 1980-86 Source: Donnees de la Direction de la Sante Publique, Ministere de la Sante 1980-86 Table 12.: DISTRIBUTION OF HEALTH PERSONNEL BY CATEGORY AND BY TRAINING, 1986 Tableau 18: REPARTITION DU PERSONNEL PAR CATEGORIE ET PAR FORMATION SANITAIRE, 1986 Central Urban National Rural X chnnge Administration Servicos Hospitals Area Total 1961-86 Administration Services Hopitaux Milieu Vnriatioft centrale urbain. notionnux Rural Total 1981-86 en X Doctors and dentists as 12 162 119 263 174.0 Medecins et dentistes Pharmacists 12 8a 14 46 98 284.0 Pharmaciens State reg. nurse 92 14 18 561 S85 232.9 Infirieors d'-tnt Midwives is 162 69 62 293 45.6 Sages-fte 4 Registered nursn 46 94 182 892 1214 17.6 Infirmiers brevetes Other personnel (a) 49 296 841 6o6 1364 424.6 Autres personnels (a) : Total: 289 706 666 2280 4106 97.4 Total: Variation 1981-86 X chango 1961-86 157.6 166.6 184.4 106.4 en X Source: Provisional Budget 1981. Ministry of Health, 1908 Health Statistics. (o) Excludes administrative personnel, unskillod end drivers. Source: Budget provisoire 19S1. tinisters de Is Sant 19S6, Statistiques Sanitaires. (a) Hors personnel *dninistratif, mnoeuvres et chauffeurs. - 48- Tablo 1.9: BASIC INDICATORS FOR NUTRITION, 19M Tableau 1.9: INDICATEURS DE BASE SUR LA NUTRITION, 1986 Low-income/Semi-arid countries Burkina-Faso Pays a foible revenu semI-orldes (1) Energy noeds per i3soino enorgetiques day and per head par jour et par tete (calories) 2820 2376 (kilocalories) Daily contribution Apport journalier de calories, ; of calories, caloroes colories par habitant en X per person in X of des besoino noed 86 85.8 ; X of children weighting X Enfants de poido infori-ur a loss ethn 2.600 kg 2.5so kg a Is nalssance at birth 10.8 12.9 Sources: Division of Studies and Planning, Health Statistics, 1986 Report World Bank, World Dovelopment Report 1988. Sources: Direction General- deo etudes et de Is Plsnlflcstion, Statistique Sanitaires, Rapport 1988. Banque Mondislo, Rapport *ur le Developpoment dane Ia, Mond. 1908. Table 1.10: STlrJENT ENROLLMENTS, BY EDUCATIONAL LEVEL, 1980-87 Tableau 1.10: F.'VOLUTION DES EFFECTIFS AUX DIFFERENTS NIVEAUX DU SYSTEME EDUCATIF, 19m8-87 Primary Secondary Higher Primairo Secondanre Superiour Teacher Technical Local For-ign Tot.al Year* training (X) Ceneral Normal Technique Sur placo Etranger Totel Annes --------------------------------------------------------------------------------
Группа Всемирного банка · Pre-2003 Economic or Sector Report
Burkina Faso - Economic memorandum (Vol. 2 of 2) : Annexes : the industrial sector and statistical tables
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Pre-2003 Economic or Sector Report
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