The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
On January 24, 2022, the Burkinabé military officers deposed the democratically elected government of former President Roch Marc Christian Kabore, dissolved the government and national assembly, and suspended the constitution. The coup leader Lieutenant Colonel (LTC) Paul-Henri Damiba assumed the role of president of Burkina Faso’s Transition Government. In February 2022, a transitional charter was signed by Transition President LTC Damiba laying out a three-year transition period before democratic elections would be held. Since then, a Transitional government and a Transition Legislative Assembly have been installed. In July 2022, Transition President Damiba agreed to a 24 month transition period for the country to return to a democratically elected, civilian government. . However, on September 30, 2022, Captain Ibrahim Traore overthrew Damiba in yet another military putsch. On October 21, Captain Traore was sworn in as Burkina Faso’s new Transition Government President. He committed to the July 2024 dateline for the country to return to a democratically elected, civilian government.
Coup d’État-related Restrictions in U.S. Foreign Aid Appropriation
Section 7008 of the annual State and Foreign Operations appropriations act restricts foreign assistance to governments that have taken power through a military coup d’état. As a consequence of the coup d’état, the U.S. government suspended certain assistance benefiting the government of Burkina Faso, including the $500 million Millennium Challenge Corporation (MCC) compact, which was terminated in September 2022. The Compact had aimed to unlock economic growth by strengthening electricity sector effectiveness, energy reliability cost-effectiveness, and grid development and access, creating a more favorable investment environment for firms in the energy sector and the wider economy and spurring further foreign direct investment in Burkina Faso. On November 1, 2022, the U.S. government announced its intent to terminate Burkina Faso’s eligibility for trade incentives under the Africa Growth and Opportunities Act (AGOA) for lack of progress on the protection of the rule of law and of political pluralism. This AGOA ineligibility takes effect on January 1, 2023. However, U.S. humanitarian assistance and most development assistance is continuing. All assistance that benefits the government is provided pursuant to an available authority to do so. In Burkina Faso, the United States remains the largest humanitarian donor and one of its largest bilateral donors.
Burkina Faso is a landlocked country and the world’s seventh poorest country according to the 2020 UN Development Program (UNDP) Human Development Index, ranked at 182 out of 189 countries. Burkina Faso has an estimated population of 22 million inhabitants (as of June 2022) according to the United Nations, and the IMF estimates its growth domestic product (GDP) at US$ 19.62 billion. Burkina Faso’s economy rebounded in 2021 and grew at an estimated 8.5%, attributable to increases in gold exports and the services sector, according to the World Bank. The economy is forecasted to grow at 5.6% in 2022. The fiscal deficit stood at 5.5% of GDP in 2021, but could reach 6.6% of GDP in 2022 as a result of the multitude of challenges Burkina Faso faces, including security, humanitarian, food, and social, etc. Over 40% of the Burkinabe population live below the poverty line, and the country ranks 144th out of 157 countries in the World Bank’s Human Capital Index. Some 80% of the country’s population is engaged in agriculture—mostly subsistence—with only a small fraction directly involved in agribusiness. In 2020, as a response to the COVID-19 crisis, the Burkinabe government announced a series of socio-economic measures ranging from tax breaks to subsidies and food support to low-income families. The overall cost of the measures was estimated at US$656 million.
Overall, Burkina Faso welcomes foreign investment and actively seeks to attract foreign partners to aid in its development. It has partially put in place the legal and regulatory framework necessary to ensure that foreign investors are treated fairly, including setting up a venue for commercial disputes and streamlining the issuance of permits and company registration requirements. More progress is needed to diminish the dominance of state-owned firms in certain sectors and to enforce intellectual property protections.
Burkina Faso ranks 100th of 177 countries in the Heritage Foundation’s 2022 Economic Freedom Index. Among the 51 African countries in the report, Burkina Faso ranked 14th, improving its 21st position in the 2021 economic freedom report. Burkina Faso’s corruption perception score improved slightly from 40 in 2020 to 42 in 2021 and improved the country’s ranking from 86th to 78th of 180 countries.
The gold mining industry has boomed in the last decade, and the bulk of foreign investment is in the mining sector, mostly from Canadian firms. Moroccan, French and UAE companies control local subsidiaries in the telecommunications industry, while foreign investors are also active in sectors such as agriculture, transport and logistics, energy, and financial technology. There is a growing foreign investment interest in the security sector. In June 2015, a new mining code was approved to standardize contract terms and better regulate the sector. In 2018, the parliament adopted a new investment code that offers many advantages to foreign investors. This code offers a range of tax breaks and incentives to lure foreign investors, including exemptions from value-added tax (VAT) on certain equipment. Effective tax rates as a result are lower than the regional average, though the tax system is complex, and compliance can be burdensome. Opportunities for U.S. firms exist in many sectors, including agriculture and manufacturing.
Burkina Faso remains committed to a market-based economy without barriers to trade. Over the last 15 years, the national power utility’s Société Nationale de l’Eléctricité du Burkina (SONABEL) customer base and energy demand ballooned. Between 2015 and 2021, SONABEL’s customer base grew by 64%. However, supply can only meet the demand in non-peak periods. Burkina Faso imports nearly 70% of its electricity from neighboring Ghana and Cote d’Ivoire and faces electricity reliability and affordability challenges. It also imports other energy products such as gasoline and gas through a network of foreign companies to meet local demand. In September 2022, the Millennium Challenge Corporation (MCC) terminated the US$ 500 million compact with the Government of Burkina Faso because of the coup in January. The Compact aimed to unlock economic growth by strengthening electricity sector effectiveness, energy reliability cost-effectiveness, and grid development and access, creating a more favorable investment environment for firms in the energy sector and the wider economy and spurring further foreign direct investment in Burkina Faso. On November 1, 2022, the U.S. government announced its intent to terminate Burkina Faso’s eligibility for trade incentives under the Africa Growth and Opportunities Act (AGOA) for lack of progress on the protection of the rule of law and of political pluralism. This AGOA ineligibility takes effect on January 1, 2023.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.
Contact for More Information
Gai Nyok
Economic and Commercial Officer
U.S. Embassy Ouagadougou
Ouaga 2000, Avenue Sembene Ousmane
Ouagadougou, Burkina Faso
(+226) 25 49 56 80