$Unique_ID{COW00620} $Pretitle{407} $Title{Burkina Faso Politics and Government} $Subtitle{} $Author{Phoenix International Development Foundation} $Affiliation{Embassy of Burkina Faso, Washington DC} $Subject{burkina faso years materials ouagadougou workers exemption population cfa country} $Date{1989} $Log{} Country: Burkina Faso Book: Burkina Faso the Crossroads of West Africa Author: Phoenix International Development Foundation Affiliation: Embassy of Burkina Faso, Washington DC Date: 1989 Politics and Government Burkina Faso received its independence from France on August 5, 1960 as Upper Volta and changed its name to Burkina Faso on August 14, 1984. The country's first president, Maurice Yameogo, was forced to resign in 1966 following a general strike and several days of street demonstrations. During the following 17 years, Burkina Faso experienced several military coups and was ruled by both military and civilian governments. However, since 1983 when Captain Thomas Sankara seized power in a military coup, the country has been ruled by a "nationalistic" and "popular revolutionary" (but non-Marxist) leadership that follows policies of austerity and encourages private sector and foreign investment. This leadership group, known as the Popular Front, and the Burkinabe government are currently headed by President Blaise Compaore. Monetary and Banking System Burkina Faso is a member of the Union Monetaire Ouest-Africain (UMOA) or West African Monetary Union which uses the CFA franc as its currency. The other members of this union are Benin, Cote d'Ivoire, Mali, Niger, Senegal and Togo. The CFA franc is currently fixed at a rate of 50 CFA francs to one French franc and has unlimited convertibility into the French franc at this rate. This CFA francs' convertibility is guaranteed by the French treasury. The BCEAO (Banque Central des Etats de l'Afrique de l'Ouest) is the central bank for the franc zone and is located in Dakar, Senegal. The BCEAO controls the money supply within the union and within each member state. Monetary policy for the UMOA is determined by the Board of Directors of the BCEAO with assistance at the national levels from a monetary committee in each member country. Burkina Faso's banking system is well developed. It is comprised of eight commercial or development banks and five financial institutions which are all partly or wholly state-owned. Of these, three are traditional commercial banks which are affiliated with French Banks. They are - the Banque Internationale pour le Commerce, l'Industrie et l'Agriculture (BICIAB) which is affiliated with the Banque Nationale de Paris; - the International Bank of Burkina (BIB) which is affiliated with the Banque Internationale de l'Afrique Occidentale of France; and - the Banque pour le Financement du Commerce et des Investissements (BFCIB) which is affiliated with Societe Generale of France. Both the BIB and the BICIAB have correspondent banks in the United States. The former has AFRIBANK as its U.S correspondent bank, while the latter has Bank of America as its correspondent bank. People Population: 8 million in 1985 Annual growth rate: 2.6% Ethnic Groups: Mossi, Bobo, Mande, Fulani and others Religions: Animism - 53%, Islam - 36%, Christianity - 11% Languages: French (official); More, Dioula and Poular are the three main spoken languages Literacy rate: 26.92% in 1988, according to Embassy of Burkina Faso to the U.S.A. Demographics Burkina Faso's population is composed of over 50 distinct tribal groups. However, one tribal group, the Mossi, make up 48% of the population and dominate the country's economic and political life. Burkina Faso has a very young population, with 81 percent of Burkinabe being less than 40 years old and 6.8% being over the age of 55. Most of this population is concentrated in the southern and central areas of the country, with the population density in these areas sometimes exceeding 125 per square mile. Despite these high population concentrations, only 10 percent of Burkinabe live in an urban environment. Few Burkinabe have had a formal education. Schooling is free but not compulsory, and primary school attendance is about 22 percent. French, Burkina Faso's official language, is taught in the schools and used by the administration and bureaucracy. However, only about 15 percent of the total population speak French. Instead, most Burkinabe speak their own tribal languages with More, the Mossi language, being the lingua franca for half of the country and Dioula dominating the western third. Although most Burkinabe are either Animist or Muslim, many of Burkina Faso's elite are educated in Catholic schools. Thus, Catholicism has a significant influence in the country. Many of these elite were also trained in the educational system established by the French and follow the cultural standards of both Africa and Europe (especially France). Ouagadougou, the capital of Burkina Faso, is also its largest city and has a population of 366,000 inhabitants. The country's other two major towns the Bobo-Dioulasso which has a population of 290,000 inhabitants and Koudougou with a population of 106,000 inhabitants. The Labor Force Burkinabe workers have a reputation as good and serious workers. Unskilled and semiskilled workers are in abundant supply. However, Burkina Faso does have a shortage of skilled workers, mainly in the management, engineering and electrical fields. Burkina Faso has relatively well-developed labor regulations. The labor code guarantees many rights to workers and is effectively enforced by a Labor Court. Workers usually know these rights and do not hesitate to seek enforcement of their rights. Labor unions are also well organized and defend employees in industrial disputes. They claim allegiance of 60 percent of the country's government workers and half the private sector employees in its urban areas. Although trade unions are free to operate within the country, the government strongly discourages strikes. The latest collective agreement for the commercial sector divides employees into eight categories with minimum basic pay rates from 19,780 CFA fr. (about $75) to 70,000 CFA fr. (about $264) per month, and management staff into four categories with pay rates from 70,000 CFA fr. to 500,000 CFA fr. (about $1,900). Employers must provide all employees with social security coverage which is 18.5% of the monthly salary. However, the government provides free health care for all workers. The minimum wage for agricultural workers (SMAG) is 117 CFA (about $.44) per hour. Conditions for the employment of workers by enterprises are provided in Decree No. 98 of February 15, 1967. To comply with this decree, a statement must be made to the Inspector of Work and Social Rules before the start-up of any new enterprise, and the creation of new jobs must be reported to the Office of Employment and Migration by the employer before he fills any positions. For compliance, an employer must also ask any worker he is about to hire for his job seekers' registration card which is issued by this office. No job seeking card will be issued to foreigners in professions where a great number of unemployed Burkinabe are registered, and employment contracts for all non-citizens must be authorized by the Director of Labor. In the event of a layoff, the Labor Code requires that the employer dismiss workers according to the amount of training and seniority and advise them at least 30 days prior to their termination. Workers terminated in a general reduction of force have re-employment priority over other applicants for a two-year period, and employees terminated for reasons other than theft or flagrant neglect of duty have the right to termination benefits. Economic Infrastructure Air Transportation Burkina Faso has two international airports. One is in Ouagadougou, the capital, and is in the heart of the downtown area. The other is in Bobo-Dioulasso, its second largest city, and is approximately 3 miles from the town. In addition to these international airports, there are more than 30 local airports around the country. Air Afrique provides flights between New York and Ouagadougou via Dakar and Abidjan. Other international airlines serving Ouagadougou International Airport include UTA French Airlines, Aeroflot, Ethiopian Airlines, Air Algier and Air Ivoire. They link Ouagadougou with Abidjan, Niamey, Bamako, Dakar, and Algiers in Africa and points in Europe. Domestic air service is provided by Air Burkina. It operates between the capital and other large towns in Burkina Faso, as well as Niamey, Abidjan, Cotonou, Lome and Bamako. Railroads Burkina Faso has a railroad that links Ouagadougou and Bobo-Dioulasso to the port of Abidjan in the Cote d'Ivoire. In addition, construction work on an extension of the railroad from Ouagadougou to Niger is now underway. Roads Burkina Faso has 16,462 kilometers or approximately 10,000 miles of roads which link Ouagadougou to the main towns within the country and all the countries on its borders, i.e., Benin, Cote d'Ivoire, Ghana, Mali, Niger and Togo. About a quarter of these road surfaces are paved including the roads that link Ouagadougou to Abidjan (Cote d'Ivoire), Lome (Togo), Niamey (Niger) and Bamako (Mali), as well as most of the roads that interconnect the country's principal towns. Ports Being a landlocked country, Burkina Faso has no ports within its own borders. Thus, the ports of Abidjan in the Cote d'Ivoire and Lome in Togo must serve as the major ports of entry for raw materials, fuels and manufactured goods destined for Burkina Faso, while ports in Benin and Ghana handle its remaining cargo traffic. As mentioned above, both a railroad and paved road link Ouagadougou to the excellent deepwater port of Abidjan which is located 1,150 kilometers or 715 miles away. As a consequence, this port handles the majority of Burkina Faso's overseas merchandise traffic. Telecommunications The telecommunications system in Burkina Faso has been planned and built with assistance from several American companies. These include COMSAT which conducted the engineering feasibility study and GTE International Systems which built the country's first earth station and is currently constructing a second earth station, as well as a telephone switching center and a Telex and Data Center in Bobo-Dioulasso. Long distance telephone service is via satellite, and direct dial satellite telecommunications service is available to the United States and most European countries. There is also direct and automatic dial service between Ouagadougou, Bobo-Dioulasso, Banfora, Koudougou and bordering countries such as the Cote d'Ivoire, Ghana and Benin. Local telephone operator service is available 24 hours a day, and local cable and telex services are available Monday through Saturday. Energy An electricity network supplies Burkina Faso's main towns with electrical power. At present, this electricity is entirely diesel generated, and occasional power shortages do occur at peak hours, especially during the March-June hot season. However, a new hydro-electric dam has just been completed at Kompienga and will add to Burkina Faso's electrical generating capacity when it starts to operate in early 1990. A second hydro-electric dam is under construction at Bagre. When completed, it will lessen the country's dependence upon diesel generated electrical power and should provide it with less expensive, and more importantly, reliable electricity. Summary of Burkina Faso's Investment Code Burkina Faso's Investment Code, which was written in 1984 and took effect in 1986, governs all investment in the country and defines priority sectors to be: agricultural equipment manufacturing; livestock production and processing; and industries using raw materials, e.g., food processing, textile manufacturing and leather processing. It grants tax reductions or exemptions for 2 to 5 years and gives certain guarantees to foreign investors including nondiscrimination between foreigners and nationals, the right to freely manage a business, freedom of choice of suppliers and services, retention of foreign exchange necessary for the conduct of business, and repatriation of dividends. Under the Code, the reinvestment of profits above the legal requirements also leads to extended privileges. The Code establishes three investment categories which are open to all qualified investors. To qualify for any of the three investment regimes, all investment must meet the following requirements: - the out-going joint stock allocated to the firm must represent at least 25% of the total amount of corporate investments; and - employment opportunities reserved for nationals must meet the following minimum allowable percentages: Skilled employees................50% Clerks...........................90% Laborers........................100% Regime A is the most advantageous of the three categories. It applies to a wide range of activities considered high priority by the government and grants the most benefits to the investor, foreign or domestic, who invests 500 million CFA francs (about $1.9 million) or more. Regime B is granted to firms producing common consumption items. Firms in this category qualify for the same tax exemptions as those under Regime A but for shorter periods of time. Regime C is the least advantageous of the three investment regimes and is granted to firms producing luxury consumption items. Firms qualified under this category receive the same benefits as in Regime B but with the minimum tax on industrial and commercial businesses (IMFPIC) exemption reduced to 2 years and the apprenticeship tax (TPA) reduction applying for only 3 years. More specific details about the regimes are as follows: Regime A: Applies to investment in: - Manufacturing of food products from local raw materials; - Manufacturing of products used as inputs for the agricultural and industrial sectors; - Mineral research and exploration; - Production, transportation and energy distribution; - Manufacturing of pharmaceutical and veterinary products; - Textile industry based on local raw materials; - Processing of local leather and skins; - Animal husbandry, and slaughtering, processing and exportation of meat; - Manufacturing of building materials; - Tourism and hotel lodging; - Manufacturing of materials for rural hydraulics. Benefits: - Exemption from taxes and import duties for the first two years on equipment required for business start-up including one set of spare parts; - Exemption for the first two years from import duties on raw materials; - For firms producing for export, exemption from the Taxe sur le chiffre d'affaires (TCA) -- turnover tax -- on exported products; - Exemption during the first 4 years from Impot Minimum Forfaitaire sur les Professions Industrielles et Commerciales (IMFPIC) -- minimum presumptive tax on industrial and commercial occupations: - 50% reduction for 5 years of the Taxe Patronale d'Apprentissage (TPA) -- apprenticeship tax -- paid by employers which is normally 4% on wages paid to Burkinabe workers and 8% on wages of foreign workers. Regime B: Applies to investments in: - Manufacture of goods for current domestic use such as bicycles and accessories, school materials, household articles, electric batteries, plastic items, glassware, oil lamps, electronic and electrical materials. Benefits: - Exemption for two years from import taxes on equipment required for set-up, materials for construction of buildings, one set of spare parts, and raw materials; - Exemption from the TCA (turnover tax) on exported products for 4 years; - Exemption from the IMFPIC for 3 years; - 50% reduction in TPA for 4 years. Regime C: Applies to investments in: - Tobacco production; - Production of alcoholic beverages such as beer and whiskey; - Production of beverages from imported raw materials; - Manufacturing of luxury articles and products for exportation. Benefits: - Exemption for two years from import taxes on equipment required for set-up, materials for construction of buildings, one set of spare parts, and raw materials; - Exemption from the TCA (turnover tax) on exported products for 4 years; - Exemption from the IMFPIC for 2 years; - 50% reduction in TPA for 3 years. A copy of Burkina Faso's Investment Code is available at the Embassy of Burkina Faso in Washington, D.C. (for address and telephone number, see CONTACTS FOR FURTHER INFORMATION IN NORTH AMERICA, below). Contacts for Further Information Doing Business in Burkina Faso The appropriate institutions that investors and businessmen should contact in Burkina Faso are one or more of the following: The Chamber of Commerce, Industry and Craftsman's Trade (Chambre du Commerce, d'Industrie et d'Artisanat) B.P. 502 Ouagadougou Burkina Faso Telephone: 30 61 14/15 Telex: 985.5268 BF The Ministry of Economic Promotion (Ministere de la Promotion Economique) B.P. 7008 Ouagadougou Burkina Faso Telephone: 30 63 61/70 Telex: 985.5221 BF The Ministry of Trade and People's Supply (Ministere du Commerce et de l'Approvisionnement du Peuple) B.P. 365 Ouagadougou Burkina Faso Telephone: 30 68 88/89 Telex: 985.5221 BF Information about Import/Export Regulations in Burkina Faso can be found in the following documents which are available at the Embassy of Burkina Faso in Washington, D.C. (see below for address and telephone number): - ORDONNANCE No. 83/019/CNR/PRES of 27 October 1983 - DECRET No. 83/237/CNR/PRES of 2 December 1983