Document of The World Bank FOR OFFICIAL USE ONLY Report No 78793-BF INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY FOR BURKINA FASO FOR THE PERIOD FY13-16 August 21, 2013 International Development Association West Africa 2 Country Management Unit, AFCF2 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency Sub-Saharan Africa Department 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. The previous Country Assistance Strategy for Burkina Faso (Report no. 49588-BF) was discussed by the Board of Executive Directors on 09/08/2009. CURRENCY EQUIVALENTS (Exchange rate effective as of Jan 21, 2013) Currency Unit = CFA Franc (CFAF) US$1 = 492.7 GOVERNMENT FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities ACC Adaptation/Attenuation of Climate Change AFD France Agency for Development or “Agence Française de Développement (AFD)” APE Students Parents Association or Association des Parents d’Elèves APL Adaptable Program Loan ASCE Higher Administrative Control Authority or “Autorité Supérieure de Contrôle de l’Etat” BCEAO Central Bank for West Africa States or “Banque Centrale des Etats de l’Afrique de l’Ouest” CAS Country Assistance Strategy CDD Community-driven development CEM Country Economic Memorandum CGAB General Framework for Organization of Budget Support or “Cadre Général des Appuis Budgétaires” CGCT General Code for Administrative Division or “Code Général des Collectivités Territoriales” CMU Country Management Unit COGES School-based management committee CONASUR National Council for Emergency Assistance and Réhabilitation or “Comité National de Secours d’Urgence et de Réhabilitation ” CONEDD National Council for Environment and Sustainable Development or “Conseil National pour l’Environnement et le Développement Durable” CPI Consumer Price Index CPIA Country Policy and Institutional Assessment CPS Country Partnership Strategy CSMOD Strategic Framework for the Implementation of Decentralization CSO Civil society organization CVD Village development committee DPO Development Policy Operation DRM Disaster risk management DSA Debt sustainability analysis ECF Extended Credit Facility ECOWAS Economic Community Organization for West Africa States EITI Extractive Industries Transparency Initiative ESW Economic and sector work FAARF Women Generating Activities Support Fund or “Fonds d’Appui aux Activités Rémunératrices des Femmes” FDI Foreign direct nvestment FER-B Burkina Road Maintenance Fund or “Fonds d’Entretien Routier du Burkina” FM Financial management ii FPD Finance and private sector development FY Fiscal year GAC Governance and anti-corruption GCC Growth and Competitiveness Credit GDP Gross domestic product GEF Global Environment Facility GER Gross Enrollment Rate GFDRR Global Facility for Disaster Reduction and Recovery GM Genetically modified GNI Gross national income GoBF Government of Burkinan Faso HiA Health in Africa HIMO High intensity labor force or “Haute Intensité de Main- Œuvre” HIV/AIDS Human immunodeficiency virus/ acquired immune deficiency syndrome ICT Information and communication technology IDA International Development Association IFC International Finance Corporation IMF International Monetary Fund IPP Independent power producer IT Information technology JSDF Japanese Social Development Fund KfW Germany International Agency for Development LIPW Labor-intensive public work M&E Monitoring and evaluation MDG Millennium Development Goals MDSP Mineral Development Support Project or “Projet d’Appui au Développement du Secteur Minier” MIGA Multilateral Investment Guarantee Agency MoF Ministry of Finance MOH Ministry of Health MTEF Medium-term expenditure framework NGO Non-governmental organization OHADA Organisation pour l'Harmonisation en Afrique du Droit des Affaires ONEA National Office for Water and Sanitation or “Office National de l’Eau et de l’Assainissement” PACDE Competitiveness and Enterprise Development Project or “Projet d’Appui à la Compétitivité et au Développement des Entreprises” PADSEM Mining Development Support Project or “Projet d’Appui au Développement du Secteur Minier” PAFASP Agricultural Diversification and Market Development Project or “Projet d’Appui aux Filières Agro-Sylvo-Pastorale” PAPSA Agricultural Productivity and Food Security Project or “Projet d’Amélioration de la Productivité Agricole et de la Sécurité Alimentaire” PASEB Basic Education Sector Support Project or “Projet d’Appui au Secteur de l’Education de Base (PASEB)” PDSEB Basic Education Strategic Development Plan or “Plan de Développement Stratégique de l’Education de Base (PDSEB)” PDSMA Plan for the Modernization of the Administration PEFA Public expenditures and financial accountability PEPP Post-Primary Education Project PER Public Expenditures Review iii PFM Public financial management PIF Forest Investment Project or “Projet d’Investissement Forestier” PNDS National Health Development Program PNGT Community-Based Rural Development Project POSEF Country’s Economic and Finance Sector Policy or “Politique du Secteur de l’Economie et des Finances” PPCB Bagré growth pole or “Projet Pôle de Croissance de Bagré” PPIAF Public-Private Infrastructure Advisory Facility PPP Public-private partnership PSDMA Strategic Plan for the Modernization of the Administration PST Sectoral Transport Program or “Programme Sectoriel de transport” SCADD Strategy for Accelerated Growth and Sustainable Development SFM Sustainable forest management SIP Small investment products SLWM Sustainable land and water management SME Small and medium-size enterprises SMI Small and medium-size industries SMU Sector Management Unit SNAT National Scheme for Territory Planning or “Schema National d’Aménagement du Territoire” SONAGESS National Society for Food Security Storage Management or “Société Nationale de Gestion des Stocks de Sécurité (SONAGESS)” TA Technical assistance UHC Universal health coverage UNDP United Nation Development Program UNFPA United Nation Population Fund UNICEF United Nations International Children’s Emergency Fund UPC Union for Progress and Change or “Union pour le Progrès et le Changement ” UWSP Urban Water Sector Project VET Vocation education and training WAAPP West African Agricultural Productivity Program WAEMU West African Economic and Monetary Union or “Union Economique et Monétaire Ouest Africaine (UEMOA)” WAPP West Africa Power Pool WBG World Bank Group WDI World Development Indicator WSS Water and sanitation service IDA IFC MIGA Vice President: Makhtar Diop Vice President:Jean Philippe Prosper Exec.Vice President: Keiko Honda Country Director: Madani M. Tall Regional Director: Yolande Duhem Program Manager: Olivier Lambert Country Manager: Mercy M. Tembon Senior Manager: Mary-Jean Moyo Task Team Leader: Conor Healy Task Team Leader: Mercy M. Tembon Task Team Leader: Jeremie Dumon iv The World Bank Group greatly appreciates the close collaboration with the Government of Burkina Faso in preparation of this Country Partnership Strategy. The preparation of this CPS was supported by a core CPS team and the broader Burkina Faso Country team who participated in review meetings, conducted CPS consultations and provided comments and advice. Recognition goes to the core CPS team was comprised of Abdoulaye Kane, Adama Ouedraogo, Adja Mansora Dahourou, Aguiratou Savadogo-Tinto, Azedine Ouerghi, Begnadehi Claude Bationo, Beloue Ido, Bepio C. Bado, Bienvenue Helene Karambiri, Bintou Sogodogo, Boubacar Diallo, Bronwyn Grieve, Catherine Marie Z. Compaore, Conor Healy, Djeneba Bambara Sere, Edith Atioumoutio Zannou Tchoko, Elisabeth Marie Bambara, Elisee Ouedraogo, Emmanuel Y. Nikiema, Georges Tiemoko Kam, Gwladys Nadine Isabelle Kinda, Haidara Ousmane Diadie, Hamidou Sorgo, Hawa Bondo-Sana, Inoussa De Youba Ouedraogo, Issouf Ouedraogo, Jean Baptiste Migraine, Jeremie Dumon, Jeremy Strauss, Kadidiatou Bah, Katrina Sharkey, Kofi Nouve, Kone Karim Soma, Lazare Tanga Zabre, Leopold Sedogo, Lionel F. Yaro, Mamata Tiendrebeogo, Mariam Diop, Mariam Lamizana-Ndao, Marie Genevieve Compaore, Marieme Travaly, Moise Kabore, Mouhamed Drabo, Mouhamed Fadel Ndaw, Nathalie Ramanivosoa, Oudouinde E. Rouamba, Ousseini Thanou, Sebastien Dessus, Seraphine Sawadogo, Seydou Traore, Suzane Rayaisse, Tassere Pitroipa, Yele Maweki Batana, Yolande Bougouma- Zagre, Abdoulaye Toure, Boubacar Bocoum, Diop Saidou, Djibrilla Adamou Issa, Fabio Galli, Fatouma Toure Ibrahima, Hocine Chalal, Loic Braune, Magueye Dia, Matar Fall, Ousmane Maurice Megnan Kolie, Serdar Yilmaz, Ali Zafar, Andrew Osei Asibey, Martien Van Nieuwkoop, Miria A. Pigato, Nabil M. Chaherli, Paul Noumba Um, Peter Nicolas Materu, Renaud Seligmann, Setareh Razmara, Tshiya A. Subayi, Volker Treichel. v FY13–16 COUNTRY PARTNERSHIP STRATEGY FOR BURKINA FASO TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................................... VIII I. INTRODUCTION ........................................................................................................................................................ 1 II. COUNTRY CONTEXT ............................................................................................................................................... 1 A. POLITICS ..................................................................................................................................................................... 1 B. THE ECONOMY ........................................................................................................................................................... 2 C. POVERTY .................................................................................................................................................................... 7 D. GENDER ...................................................................................................................................................................... 8 E. PROGRESS TOWARD THE MILLENNIUM DEVELOPMENT GOALS .................................................................................. 8 III. BURKINA FASO DEVELOPMENT CHALLENGES AND OPPORTUNITIES ........................................... 10 A. MACROECONOMIC MANAGEMENT AND AREAS OF GROWTH AND EXPORT POTENTIAL ............................................ 10 B. PRIVATE SECTOR-LED GROWTH, COMPETITIVENESS, AND JOB CREATION ............................................................... 12 C. EQUITABLE ACCESS TO QUALITY SOCIAL SERVICES ................................................................................................ 13 D. LOWER VULNERABILITY, HIGHER RESILIENCE ......................................................................................................... 14 E. GOVERNANCE AND GENDER EQUALITY .................................................................................................................... 15 IV. THE GOVERNMENT’S VISION AND DEVELOPMENT STRATEGY........................................................ 16 V. WORLD BANK GROUP PARTNERSHIP STRATEGY ....................................................................................... 16 A. LESSONS LEARNED FROM THE CAS COMPLETION REPORT ...................................................................................... 16 Key Findings from the Client Survey ............................................................................................................................ 18 Findings from the Gender Assessment .......................................................................................................................... 18 B. WORLD BANK GROUP PARTNERSHIP STRATEGY ...................................................................................................... 19 Strategic Approach ....................................................................................................................................................... 19 Partnership Strategy Overview ..................................................................................................................................... 20 Strategic Objectives: Supported and Expected Results................................................................................................. 22 - Strategic Objective One: Accelerate inclusive and sustained economic growth. ................................................ 22 - Strategic Objective Two: Enhance Governance to Deliver Social Services More Efficiently ............................. 28 - Strategic Objective Three: Reduce social, economic, and environmental vulnerabilities .................................. 32 - Cross-Cutting Themes: Governance and Gender Equality ................................................................................. 34 C. IMPLEMENTING THE FY13-16 COUNTRY PARTNERSHIP STRATEGY .......................................................................... 35 Financial Envelope ....................................................................................................................................................... 35 Managing the Program ................................................................................................................................................. 37 Portfolio and pipeline management .............................................................................................................................. 38 Fiduciary Aspects ......................................................................................................................................................... 39 Monitoring and Evaluation ........................................................................................................................................... 40 Knowledge Agenda ....................................................................................................................................................... 40 Partnerships and Donor Coordination ......................................................................................................................... 41 VI. MANAGING RISKS.............................................................................................................................................. 42 ANNEX 1: WORLD BANK PROGRAM RESULTS MATRIX (FY13-FY16) .............................................................. 44 ANNEX 2: CAS COMPLETION REPORT (CASCR) ..................................................................................................... 59 ANNEX 3: BURKINA FASO - SOCIAL INDICATORS ................................................................................................. 88 ANNEX 4: BURKINA FASO - KEY ECONOMIC INDICATORS ................................................................................ 89 vi ANNEX 5: BURKINA FASO - KEY EXPOSURE INDICATORS ................................................................................. 96 ANNEX 6: OPERATIONS PORTFOLIO (IBRD/IDA AND GRANTS) ........................................................................ 97 ANNEX 7: OVERVIEW OF MAIN ACTIVE TRUST FUNDS ...................................................................................... 98 ANNEX 8: STATEMENT OF IFC’S HELD AND DISBURSED PORTFOLIO ........................................................... 99 ANNEX 09: DEVELOPMENT PARTNERS DIVISION OF LABOR IN 2012 ........................................................... 100 ANNEX 10: STRENGTHENING STATISTICAL CAPACITY IN BURKINA FASO-A SUGGESTED PATH FORWARD ......................................................................................................................................................................... 101 ANNEX 11: DEBT SUSTAINABILITY ANALYSIS ..................................................................................................... 104 ANNEX 12: BURKINA FASO AT A GLANCE.............................................................................................................. 116 ANNEX 13: COUNTRY MAP .......................................................................................................................................... 117 LIST OF TABLES Table 1: Burkina Faso: Selected Economic and Financial Indicators (% of GDP) Table 2: Economic growth Decomposition Table 3: Medium-Term Macroeconomic Outlook Table 4: Dimensional deprivation rates by gender and by place of residence Table 5: Indicative Lending and AAA program mapped to CPS Strategic Objectives, FY13-16 LIST OF FIGURES Figure 1: Seed Cotton Production in Burkina (Thousand Tons) Figure 2: Current Account Financing (FCFA billions) Figure 3: Consumer Price Index (Percent) Figure 4: Poverty Headcount by Region, 2009 Figure 5: Health and Education Outcomes and GNI: Comparison with the Sub-region (WDI) Figure 6: Country Partnership Strategic Framework vii EXECUTIVE SUMMARY With cotton and gold its main export commodities, sound macroeconomic management has enabled Burkina Faso—a small land-locked country in West Africa—to achieve stable growth for 10 years even as its predominantly rural population of 13.6 million has been expanding rapidly. In recent years the country has made progress in terms of structural reforms, sound economic policies, increased cotton and mining production, steady investments, and a stable macroeconomic environment. Monetary and exchange rate policy is well-managed, and in 2012, inflation was held to about 3 percent. Burkina has a healthy banking sector, and its banks observe regional prudential norms. It is also working toward an integrated and open regional economic space through the West African Economic and Monetary Union (WAEMU), the Economic Community of West African States (ECOWAS), and other cooperative initiatives. However, reducing poverty has remained elusive. Stubborn and persistently high levels of predominantly rural poverty still undermine development—about 46 percent of the population lives below the poverty line. There are significant inequalities by region, gender, and location (urban or rural). Non-income indicators of poverty and welfare, particularly in the areas of education and health, are among the lowest in the world, and most of the Millennium Development Goals are out of reach: Infant and maternal mortality rates are very high, and the fertility rate is 6.2 children per woman. Access to sanitation is a particular problem. Dependence on a narrow base of natural resources coupled with a Sahelian climate and an inland location, exposes Burkina Faso to both climatic changes and exogenous shocks, such as exchange rate volatility and declines in international prices of cotton. These problems have been exacerbated by recent unrest in neighboring Mali, from which Burkina Faso has taken in numerous refugees, support of whom is putting additional pressure on the budget and food security. There has also been internal unrest about the unequal distribution of resources and a perceived lack of accountability in the management of public resources. As the 2015 presidential election approaches, political uncertainty is heightening. Even though the livelihoods of most of the population depend on agriculture, agricultural productivity is far below potential. The redistribution of growth gains has also been impeded by a lack of opportunities for gainful employment, particularly for youth, and by inefficiencies in public sector management. Despite numerous measures to promote equal rights for women and men, Burkina Faso is still among the 10 countries in the world with the lowest indices of gender equity. There is a 32 percent gender gap in employment, and a 15 percent gap in education. Women have minimal land use and ownership rights. The country’s development ultimately depends upon bringing down poverty by changing the pattern of growth. To accelerate and sustain economic growth, Burkina Faso must diversify the economy while drawing on its natural resource base. Although in recent years the country has made major progress in managing its public finances, perceptions of corruption are growing and governance indicators in general are low. It must also make determined efforts to expand the revenue base, increase household incomes, deliver social services more efficiently, and enhance its resilience to external shocks. In December 2010 the government adopted the Strategy for Accelerated Growth and viii Sustained Development for 2011–15 (Stratégie pour la Croissance Accélérée et le Développement Durable [SCADD]). The SCADD model combines promotion of growth poles to support agribusiness and small and medium-sized enterprises with pro-poor programs and critical structural reforms. This Country Partnership Strategy (CPS), which covers FY13-16, proposes an integrated World Bank Group (WBG) program of financial, knowledge, and partnership activities that selectively supports the SCADD and the WBG’s twin goals of reducing poverty and increasing shared prosperity. It is grounded in the WBG Africa Regional Strategy and in a series of World Bank analytical studies, such as the 2010 country economic memorandum. The strategy also draws on information collected in broad- based local consultations with civil society and private sector representatives, other development partners, and the government. In the proposed CPS the WBG (the Bank, IFC, and MIGA) will work with the country to (a) accelerate inclusive and sustainable economic growth; (b) enhance governance for more efficient social service delivery; and (c) reduce economic, social, and environmental vulnerabilities. Efforts to improve governance and ensure gender equity will infuse activities directed to achieving all three strategic objectives. The WBG will also be working to help create a business environment that is attractive to investors, primarily through efforts to ensure that Burkina Faso’s resource wealth is used in ways that promote growth and thus facilitate the structural transformation necessary to boost prosperity and reduce poverty permanently. The CPS will support reforms and interventions that strengthen core governance systems, and empower civil society and academia to demand good governance and administrative efficiency. Gender considerations are being mainstreamed in all WBG–supported interventions. The eight outcomes defined in the CPS program will be achieved through a mix of lending, knowledge, and convening services, managed as a comprehensive package to deliver timely development solutions. The program pays special attention to reducing the size of the portfolio over time, improving lending efficiency, promoting the knowledge agenda, and leveraging additional resources through strategic partnerships and trust funds. WBG interventions will be selective, strategic, and closely coordinated with the activities of other development partners. The CPS also has in place measures to minimize the macroeconomic, political economy, environmental, and implementation capacity risks that might affect CPS outcomes. ix I. INTRODUCTION 1. After a decade of reforms and prudent macroeconomic policies, although Burkina Faso’s economic growth has averaged 5 percent, stubborn and persistently high levels of predominantly rural poverty continue to undermine the country’s development efforts. Some reasons for the situation are (a) high population growth rates; (b) vulnerability to climate and economic shocks; (c) the fact that the country is landlocked; (d) poor human development indicators; and (e) governance flaws and inequities. Another problem is that the main engine of growth is mining, from which the majority of the poor do not benefit. In addition, although about 80 percent of the population are in rural areas and depend on agriculture, production systems are characterized by low productivity of both crops and livestock and mainly support subsistence. The central issues, then, are how to accelerate growth and ensure that the poor benefit from it; how to intensify the poverty-reducing power of growth by doing more to promote growth in rural areas where the poor reside; and how to increase resilience or reduce vulnerability in a landlocked country that is constantly facing climate change shocks and high population growth rates. 2. This Country Partnership Strategy (CPS) for FY13–16 proposes an integrated World Bank Group (WBG: World Bank, IFC, and MIGA) program of financial, knowledge, and partnership activities that will support the Government of Burkina Faso’s Strategy for Accelerated Growth and Sustainable Development (SCADD 2011–2015). The CPS supports the WBG’s goals of reducing poverty, for example, by strengthening social safety net systems such as cash transfers to extremely poor households; and increasing shared prosperity by expanding the access of the poor to quality education, health, water, and sanitation services. The CPS is also grounded in the Bank’s Africa Regional Strategy. The CPS proposes a program directed by three strategic objectives: (a) accelerate inclusive and sustained economic growth; (b) enhance governance to deliver social services more efficiently; and (c) reduce social, economic, and environmental vulnerabilities. The cross-cutting themes of governance and gender equality inform the entire program. II. COUNTRY CONTEXT A. Politics 3. For two decades Burkina Faso enjoyed relative political stability, until sociopolitical unrest in 2011 revealed underlying instabilities. Between February and May 2011, a tide of civil unrest swept the country, triggered by the alleged killing of a student by police. The unrest stimulated a national discourse on such critical governance issues as the unequal redistribution of resources and the rising cost of living. It raised concerns about the perceived lack of accountability, the prevalent culture of impunity, and dissatisfaction with how local governments were performing. This resulted in far-reaching administrative and political reforms, including appointment of a new prime minister and cabinet; social measures to reduce the cost of living; and constitutional amendments to reinforce legislative and judicial oversight. 4. Legislative and municipal elections on December 2, 2012, gave the ruling party a majority of the seats in the National Assembly (70), and the party held on to the presidency of the assembly. Led by a new party, the Union for Progress and Change (UPC), however, the opposition managed to double the seats it won to 43. The new configuration may well affect whether the legislature will approve or reject a proposed revision to Article 37 of the Constitution that would allow President Blaise Compaoré to run again in 2015. Gains by the opposition in municipal elections are also likely 1 to shift the balance of power there, changing local political dynamics. Poor judicial performance and limited independence interferes with judicial oversight. Although civil society in Burkina Faso is relatively dynamic, it has limited access to information and it has internal governance challenges. However, in the 2012 election, for which biometric voter registration was used for the first time, 4 million new voters were registered, nearly half of them women. 5. A new law creating the senate (second chamber of parliament) was passed on May 21, 2013, against protests from opposition parties and civil society. Creation of the senate raises fears that it will give the ruling party, the Congress for Democracy and Progress (CDP), more opportunities to revise Article 37. The imminent presidential election and associated political transitions could be a cause for concern. 6. Insecurity in neighboring countries threatens Burkina Faso’s political stability. The political crisis in Mali, which as of November 2012 had brought about 37,750 refugees into Burkina Faso, is also jeopardizing economic stability because the government has had to readjust its budget in order to feed both Malian refugees and its own vulnerable populations. Instability in Côte d’Ivoire, Benin, and Togo could also bode ill for Burkina Faso’s security and economic prospects. B. The Economy 7. Increased cotton and mining production have helped keep the economy relatively stable. From 2000 to 2010, Burkina Faso’s annual real gross domestic product (GDP) averaged more than 5 percent, one of the best performances in Western Africa. Although the global economic crisis pushed GDP down to 3.2 percent in 2009, real GDP growth surged back to 7.9 percent in 2010, fuelled by better terms of trade, a 50 percent increase in gold production and exports, and a major rebound of agriculture (Table 1). Production of cotton, the backbone of the rural economy because it accounts for more than 2 million jobs, shot up from 340,000 tons in 2011 to more than 500,000 tons in 2012 (Figure 1). Stoking the cotton recovery are new institutions that give greater power and a larger share of profits to producer associations and farmers, and the recapitalization of cotton ginneries. These gains were buttressed in 2012 by generally favorable weather with exceptional rainfall. The use of genetically modified (GM) cotton seeds has also increased productivity. Thanks to the performance of mining (gold) and agriculture (cotton and cereals), real GDP growth in 2012 was higher than projected, reaching 9 percent, up from 5 percent in 2011. However, manufacturing, which represents only 12 percent of GDP, is falling behind due to high transport and electricity costs and limited access to financing for companies. 2 Table 1: Burkina Faso: Selected Economic and Financial Indicators (% of GDP) 2009 2010 2011 2012 (% unless otherwise indicated) GDP Real GDP growth 3.2 7.9 4.2 8.0 GDP deflator 3.4 2.8 5.6 4.4 CPI AND MONEY Consumer price (annual average) -0.3 -0.3 2.7 3.6 Credit to the economy 1.2 8.9 13.6 10.7 (% of GDP) FISCAL Fiscal balance (including grants) -4.8 -5.6 -2.5 -3.2 Revenues 13.7 15.6 16.5 16.6 Tax revenues 12.6 13.0 14.5 15.0 Expenditures 24.4 25.7 24.3 27.2 Current expenditures 12.7 12.2 13.1 14.5 TRADE Current account (incl. transfers) -4.4 -3.6 -1.2 -4.7 Exports (CFA fob) 34.4 67.4 37.5 21.0 Imports (CFA fob) -8.3 29.6 26.3 31.5 Terms of trade (%) 19.2 0.1 10.2 4.1 Gold price ($ per ounce) 973 1,224.7 1,426.8 1,758.3 Cotton price (US cents per pound) 62.8 103.5 154.5 97.3 INVESTMENT Total investment 16.7 19.0 15.6 18.4 Government 8.1 8.5 7.1 8.8 Private 8.6 10.5 8.5 9.6 DEBT Debt (npv) 13.2 16.4 14.5 15.0 GDP (CFA billions) 3,938 4,368.0 4,807 5,421 Source: IMF staff and Burkina authorities. Figure 1: Seed Cotton Production in Burkina (Thousand Tons) 1000000 0 Source: National authorities. 3 8. In spite of high oil prices and more intensive use of non-oil imports for investment, cotton and gold exports brought the current account deficit up to a sustainable level. The current account deficit (including grants) fell from – 1.8 percent in 2011 to –1.4 percent in 2012 (Figure 2). Remittances grew considerably, totaling almost US$85.2 million, and foreign direct investment (FDI) flows increased slightly over 2011. In general, balance of payments financing will continue to depend particularly on donor aid (mostly grants and concessional lending) and remittances. However, additional Eurozone turbulence in 2013 carries a risk of more volatility in aid and possible decreases. 9. On the fiscal front, there have been pressures on the budget because of the increased financing needed to ensure food security. Higher spending on oil subsidies, food emergency provisions,1 and a higher wage bill2 also pushed current spending in 2012 to 14.7 percent of GDP and widening the fiscal deficit (including grants) to 3.1 percent of GDP, up from 2.4 percent in 2011. Unfortunately, externally financed investment spending was significantly behind projections in 2012 because of inadequate government capacity, complex procedures, and procurement-related bottlenecks (see Table 2). To help finance the deficit, multilateral and bilateral development agencies and national and international nongovernmental organizations (NGOs) provided about US$100 million. As a result, the higher deficit did not significantly add to Burkina’s debt burden. 10. Resource mobilization has sped up in the last three years. Revenue collection stood at 17.7 percent of GDP in 2012, when tax revenue made up 15.8 percent of GDP. Not only has tax administration improved but revenue from mining has also contributed significantly to the growth in tax revenues over the past three years. With the Ivorian economy recovering, tax collection is expected to get even better as trade with this neighbor picks up. As a result, Burkina Faso has been making steady progress 1 In response to the worsening of food security by the arrival of about 37,750 refugees from Mali, the government has designed an action plan in the amount of US$220 million, representing about 2 percent of GDP. Multilateral and bilateral development agencies including national and international nongovernmental organizations will provide US$110 million. In 2012, the government has spent about 1.2 percent of GDP on food security up to December 2012. 2 The 5 percent increase in civil service salaries approved in 2012 intensified spending pressure by 0.9 percent of GDP; the full-year impact on the fiscal deficit will be felt in 2013. 4 toward the WAEMU tax-to-GDP target of 17 percent. 11. One major challenge now is to ensure that the poverty elasticity of Burkina Faso’s growth is built up. The country must ensure that income from natural resource wealth and mining is used effectively to create conditions conducive to supporting economic diversification, particularly through competitive labor-intensive industries. Higher revenues from gold will come from higher royalties, profits taxes, and dividend payments. Over time, as mining contributes more to the economy in terms of both production and revenue, it will be important to use the windfalls for resource flows for long- term investments. Generating employment in local communities and doing more procurement locally will tighten links with the local economy. Given the multiple constraints on rural growth, part of the windfall can be used to heighten agricultural yields and support efforts to diversify agriculture. 12. Monetary and exchange rate policy is well-managed and inflation has been kept in the low single digits (Figure 3). Partly because BCEAO monetary policy has been prudent and partly due to a recent freeze in fuel retail prices, annual average inflation was about 3 percent in 2012. Burkina’s currency, the CFA franc, is pegged to the euro, monetary policy will continue to support the fixed exchange rate, but exchange rate developments in Europe will also continue to affect Burkinabe competitiveness over the medium term. After several years of appreciation, the real effective exchange rate depreciated by 8.4 percent in 2010 compared with 2009. The broad money supply rose 16 percent in 2012, in part because banks were holding more net foreign assets. Burkina’s banking sector is healthy, and banks observe regional prudential norms. Macroeconomic Outlook and Debt Sustainability 13. Medium-term macroeconomic prospects are positive—as long as there are no commodity shocks and public investment becomes more efficient. The main short-term risk to macroeconomic management and economic growth is deterioration in food security as refugees from Mali continue to pour across the border. If all goes well, economic growth could average 7 percent between 2012 and 2015, from higher cotton and gold prices, greater cereal production, a resilient services sector, and public investment in infrastructure (Table 3). The fiscal position is projected to be sustainable in that revenues should increase enough to pay for higher spending, particularly on investment. The amounts needed to address food security needs may, however, hurt the fiscal position. In 2012 the authorities spent close to 1.2 percent of GDP on the food security program. While high gold exports can keep the external current account sustainable, balance of payments pressures will arise from the need to import capital goods to finance development and higher oil imports. 5 Table 3: Burkina: Medium-Term Macroeconomic Outlook 2012–15 2012 2013 2014 2015 Proj. GDP at constant prices (%) 9.0 7.0 7.0 7.0 Consumer prices (annual average) (%) 3.8 2.0 2.0 2.0 Fiscal balances (including grants) (% GDP) -3.1 -2.3 -2.8 -2.8 Revenues (% GDP) 17.7 18.6 18.3 18.5 Expenditures (% GDP) 25.8 25.9 26.0 26.1 Current account (incl. Transfers) (% GDP) -1.4 -1.2 -0.8 -0.5 Terms of trade (%) 5.7 -0.7 3.7 3.0 Gold price ($ per oynce) 1,657.1 1,760.0 1,790.0 1,830.0 Cotton price ($ US cents per pound) 77.7 97.5 98.0 93.0 Oil price ($ US per barrel) 100.0 99.5 97.5 96.5 Debt (npv) (% GDP) 23.9 23.4 24.8 25.9 GDP (CFA billion) 5,628.0 5,919.0 6,457.0 7,045.0 Source: IMF staff and Burkina authorities. 14. High cotton and gold prices are likely to benefit Burkina in coming years. The price of cotton is still projected to remain close to $1 a pound through 2015, due to tight supplies and demand that is higher than the historical average. Moreover, the reform of agricultural input markets could stimulate output. Gold prices are expected to stay above US$1,500 an ounce due to gold’s status as a safe asset. 15. Based on the June 2012 Debt Sustainability Analysis (DSA), Burkina Faso is currently at moderate risk of debt distress and is receiving a mix of IDA grants and IDA credits. Like all other countries at moderate risk, the debt burden indicators are below the thresholds in the baseline scenario, but stress tests indicate that external shocks or abrupt changes in macroeconomic policy could cause a breach in the thresholds. The 2012 DSA indicated that following current policies would keep debt ratios well below indicative thresholds. The country is currently in the International Monetary Fund (IMF) Extended Credit Facility (ECF) Program; the IMF Board approved the Fifth Review on December 17, 2012, and the Sixth Review was being finalized in mid-May 2013. Higher Country Policy and Institutional Assessment (CPIA) ratings over the last three years suggest that in 2013 Burkina Faso will be reclassified from medium to strong performer, which could mean that its risk of debt distress would be reclassified from moderate to low; however, higher non-concessional borrowing to finance construction of the Donsin airport may keep debt distress risk at moderate. 3 3 Currently, the IDA translates debt distress risk ratings into "traffic lights" that determine eligibility for its grants and highly concessional credits: high risk or in debt distress ("red" light) is associated with 100 percent grants, medium-risk ("yellow") with 50 percent grants and 50 percent credits, and low risk ("green") with 100 percent credits and zero grants. A reclassification can have implications for the volume and terms of IDA allocations for Burkina Faso. 6 C. Poverty 16. Sustained economic growth has not done much to alleviate poverty in Burkina Faso. Stubborn and persistently high levels of poverty continue to undermine the country’s development; most of the poor live in rural areas, where there is little industry and very little agricultural capital formation. About 46 percent of the Burkina Faso population lives below the poverty line, and there are significant inequalities by region, gender, and urban or rural location. While the incidence of poverty fell by nearly 4 percent between 2003 and 2009, official estimates suggest that since 2009 the poverty headcount has stagnated. In other words, the growth elasticity of poverty was almost zero. As for inequality, the national estimates suggest that it narrowed slightly between 2003 and 2009, from 43 percent to 40 percent, but it did not diminish in 2012. The Gini coefficient was still high at 0.46 in 2012. As noted, poverty is most pronounced in the agricultural sector (farmers) where the incidence is 53.8 percent, compared to only 7.6 percent in the public sector. Urban inequality is higher than rural, which might in part explain why poverty levels in urban areas have stagnated since 2000 despite steady growth. Regional poverty rates show marked disparities (Figure 4). For example, less than 30 percent of the population in the Centre (Ouagadougou) and Cascades regions live below the poverty line compared to more than 60 percent in the East and North regions. 17. The main determinants of rural poverty include (a) low productivity of agricultural activities due to low per-hectare yields, wide fluctuations in climatic conditions, high dependency ratio and low levels of education in households (b) sharp variability in prices of produce within a year due to inadequate infrastructure and communication networks to spur inter-market activities for example between the more productive west of the country with the less productive north and (c) poor access to basic social services (education, health, water and sanitation) and goods that improve the quality of life; (d) limited access and ownership of farmland by the poor and (e) low access to productive capital, employment and financial services. Besides the factors cited above, poverty in Burkina Faso can also be attributed to a non-competitive economy that is not conducive to generating income or creating jobs for a large part of the population or producing sufficient resources to enable the government to provide efficient basic social and economic services particularly to the poor. 18. Persistently high poverty, particularly in Figure 4. Poverty Headcount by Region, 2009 rural areas, and exceptionally feeble human development outcomes may well thwart the Sahel country’s development trajectory and Nord undermine economic and political stability. Centre-Nord Burkina Faso has the opportunity to leverage its Boucle du Mo Plateau Cent track record of sound macroeconomic management, Centre Est steady investment, robust structural reform, and Centre-Ouest Centre-Sud Centre-Est Hauts-Bassin sustained growth to meaningfully alleviate poverty. It will be necessary to focus on reducing poverty Cascades Sud-Ouest Poverty headcount (60,70] (50,60] among the rural population which represents over (40,50] (30,40] [20,30] 80 percent of the country’s poor by increasing rural incomes and improving rural living conditions. Poverty reduction in Burkina will also require maintaining a steady growth trajectory by addressing its dependence on primary commodities, its high vulnerability to weather conditions and exogenous shocks, and its untapped potential for private investment. 7 D. Gender 19. Although a range of legal and political measures have been introduced to promote equal rights between men and women,4 Burkina Faso is one of the 10 countries with the lowest indices of gender equity in the world.5 The degree of gender inequality is highlighted by the multidimensional deprivation analysis summarized in Table 4, which indicates that the gender gap is most influenced by employment (32 percent), followed by education (15 percent). Despite adoption of a 30 percent quota for women as electoral candidates, women are under-represented in both parliament and municipal councils. They are similarly under-represented in both the public and the private sectors. Table 4: Dimensional Deprivation Rates by Gender and by Place of Residence By Gender By Place of Residence Dimensions National Male Female Rural Urban Access to credit 52.6 50.2 54.6 53.7 49.9 Employment 49.5 31.9 64.2 55.0 35.7 Education 71.6 63.4 78.4 83.4 41.7 Housing* 53.8 53.1 54.3 69.3 14.5 Assets* 69.5 68.5 70.3 78.1 47.9 Basic utilities* 54.1 52.5 55.4 69.1 16.1 (*) indicates that deprivation rates are computed using the mean value of each index as the threshold. 20. Although women make up 65 percent of farmers, they largely do subsistence farming and have very limited land use and ownership rights. Women represent 60 percent of those employed in the informal sector. Their lack of education, vocational training, and access to credit makes it particularly difficult for them to move from the informal to the formal sector. Education represents the second most significant dimension of the gender gap: the difference in literacy rates between men (33 percent) and women (20.2 percent) is more than 10 percentage points. The dimensions of access to credit, housing, assets, and basic utilities also deeply affect gender equality. E. Progress toward the Millennium Development Goals 21. Since Burkina’s human development outcomes are among the lowest in the world, despite its good economic performance it is unlikely that it can to reach many MDG targets by 2015 (Figure 5). While its rankings on the UNDP Human Development Indicators rose slightly, from 169 out of 173 countries in 2000 to 181 of 187 countries in 2011, it is still near the bottom, and its net score has changed little over the last decade (0.325 in 2000 to 0.331 in 2011). In education, gross enrollment rates (GER) for primary education rose from 72.4 percent in 2008 to 79.6 percent in 2012 and completion rates from 41.7 percent to 55 percent, but the advances will not enable the country to reach the education MDG by 2015. Persistent disparities in educational outcomes by income level, geographic location, and gender are particularly worrisome. Moderate improvements in primary completion rates are placing increasing pressure on access to secondary education. GERs for secondary education still reached only 29.9 percent in 2010 (32.3 percent in lower secondary and 10.7 4 These measures included adoption of a national gender policy in 2009, an action plan for 2011–2013, government-funded levies to parents associations (APE) to promote enrollment of female students in primary schools, provision of free health care to prevent malaria in pregnant women and subsidies for obstetric services, a 10 percent increase in the proportion of female recruits into the armed forces, a law establishing a 30 percent quota for female electoral candidates and provisions to promote women’s access to land in rural areas in the 2009 Rural Land Law. 5 Gender equity index 0.596, Human Development Report 2011; United Nations Development Program 2011. 8 percent in upper secondary) and only 336 students per 100,000 inhabitants were in higher education in 2010. The adult literacy rate is less than 30 percent (females: 21 percent; males: 37 percent). With regard to health, infant and maternal mortality rates are still alarmingly high. One in 8 children will die before the age of 5, one of the highest mortality rates in Africa. Under-5 malnutrition, diarrhea, malaria, acute respiratory infections, and vaccine-preventable diseases are the main causes of infant mortality; malnutrition is responsible for over one-third of child deaths. The maternal mortality ratio of 341:100,000 reflects the limited access of women to health facilities. Fertility is very high, averaging 6.2 children per woman. In 2011, access to safe drinking water reached 79 percent in urban areas and 60 percent in rural areas, so that Burkina is likely to reach the MDG for urban water. However, at only 27 percent for urban areas and 11 percent for rural areas, access to sanitation is a major problem. 9   Figure 5 : Health and Education Outcomes and GNI: Comparison with the Sub‐region (WDI Under-5 Mortality rate by per capita GNI, 2011 Primary completion rate by per capita GNI, 2011 200 100 Sierra Leone Ghana Primary completion rate,tot (% relevant age grp) Mortality rate, under-5 (per 1,000 live births) Mali Guinea-Bissau 150 80 Burkina Faso Togo Benin Mauritania Sierra Leone Nigeria Niger Guinea Nigeria Guinea-Bissau Guinea Gambia, The Cote d'Ivoire Togo Mauritania Benin Senegal 100 60 Gambia, The Cote d'Ivoire Mali Ghana Senegal Niger Burkina Faso 40 50 400 600 800 1000 1200 1400 400 600 800 1000 1200 1400 GNI per capita, Atlas method (current US$) GNI per capita, Atlas method (current US$) Note: 2010 numbers for Burkina Faso, Guinea-Bissau, Mauritania and Nigeria Source: HD staff calculations III. BURKINA FASO DEVELOPMENT CHALLENGES AND OPPORTUNITIES 22. Burkina Faso is well positioned to reduce absolute poverty and foster an increase in consumption growth of the bottom 40 percent of its population if it can maintain sustained economic growth, the country. This will require a strategic focus on the country's key drivers of poverty reduction and shared prosperity enhancement. To this end, there is a need to accelerate economic diversification including agricultural diversification through value addition to income enhancing products for which the country has a comparative advantage, access to finance, skills development for the youth, and security of land tenure. In addition, it is important to create the conditions for greater productivity in the informal and agricultural sector, promote equitable access to quality social services, and develop efficient, cost effective, and affordable social safety nets to protect the poor from economic social and environmental shocks. Lastly, the country can reverse the current poverty trends through more accountable public institutions and increased participation of women and the poor in economic growth, decision-making and monitoring of public service delivery. In an increasingly unstable international and regional context, the country confronts a number of challenges but also opportunities. A. Macroeconomic Management and Areas of Growth and Export Potential 23. To accelerate and sustain economic growth, Burkina Faso will need to continue drawing on its natural resource and commodity base while diversifying its economy. Recent improvements in macroeconomic management, especially fiscal consolidation, need to be put on a permanent sustainable footing by improving revenue collection, strengthening investment management, and enhancing the capacity of the administration to deal with the fiscal and financial risks that might arise from the mining boom. Although fiscal policy reforms have brought in substantially more revenue in recent years, the country can do more. Execution of public investment would greatly benefit from a better system for selecting investment projects based on economic returns, building ministry capacity to manage projects, fewer donor procedures for disbursements, and improvements in the procurement chain. At the same time, Burkina needs to diversify its sources of revenue through the integrated development of key areas of growth and export potential, focusing on adding value to income- enhancing products for which Burkina has a competitive advantage and simultaneously overcoming 10 barriers to production, private sector engagement, and trade. Dramatic movements in commodity markets since the early 2000s, the recent global economic crisis, and recurrent droughts and floods underscore the importance of carefully managing and moving beyond the country’s dependence on commodities. 24. Burkina is now considered one of the best mining jurisdictions in West Africa due to favorable investment laws, good geology, and political stability. Gold has recently overtaken cotton as Burkina’s main export, with production growing tenfold between 2008 and 2011. While mining revenues have been rising with favorable international prices, a critical challenge will be to ensure that the sector contributes sufficiently to the government’s fiscal accounts and to economic development generally. The government is now reviewing the 2003 Mining Code to increase resource flows and jumpstart local development around mining communities. To ensure effective monitoring and enhance information flows, the government will need to tackle institutional incapacities, improve physical and financial controls on mining companies, reinforce geospatial tracking, enhance information flows, and continue to promote good governance in mining through the EITI. There is also a need to address the negative externalities of mining activity (land use conflicts, environmental pollution, and disruption of social cohesion) and ensure that revenues are used to benefit local communities, limit the impact on the environment and natural resources, promote social cohesion, and create employment opportunities. 25. As Burkina becomes richer, it will be important that in addition to the efforts to establish industrial zones, the government supports promising industries, such as agro-processing and light industrial production, by removing bottlenecks to faster growth. Areas with development potential—growth poles—should be identified based on current private sector activity, with the government helping to ease financing and site issues. Also necessary will be focused efforts to ensure that growth is inclusive and gains are equitably and efficiently distributed to ensure that poor populations have access to quality services and are protected against vulnerability. In an increasingly unstable international and regional context, the country confronts a number of challenges but also opportunities. 26. Transformational interventions are necessary to make agriculture lead inclusive growth and economic diversification. Agriculture, including livestock and agro-processing, accounts for about 40 percent of GDP and employs over 80 percent of the population. With the mining boom agriculture is becoming less dominant in total exports, but within agricultural exports, cotton continues to dominate, despite recent increases in other agricultural exports. Burkina Faso’s agriculture-based economy is still dominated by low-productivity subsistence production systems; low though increasing diversification; and limited participation of formal businesses in agricultural value chains. According to the 2010 Country Economic Memorandum, the most competitive products in the West African market are onions, tomatoes, cowpeas, beef, and maize. Burkina also has a comparative advantage in exporting mangoes, sesame, and shea nut products to international markets, but it is trading these at lower levels of the value chain. The government has initiated a policy of diversifying export revenue sources through agribusiness and agro-processing, with powerful growth potential in cotton oil, fruit and vegetable processing, meat, leather, and skins. As Dafani, an emerging agro-processing company, has demonstrated, there is also tremendous export opportunity for mango juice. To exploit the potential for agricultural diversification, the country needs to make efforts to (a) secure land use and land rights as incentives for long-term investment in value-added production; (b) promote productivity- enhancing farm activities through more effective technology transfer and skills development programs, better integration of land, fertilizer, and water management, and scaled-up investments in irrigation and water harvesting; (c) tackle beyond-the-farm-gate constraints that affect logistics, marketing, and 11 product transformation; and (d) attract private investment to heighten production of higher-value products, boost agro-processing, and create remunerative jobs. B. Private Sector-led Growth, Competitiveness, and Job Creation 27. Burkina’s development depends extensively on its taking part in regional initiatives to sustain competitiveness within the region, overcome trade barriers, reduce transportation and energy costs, and enhance the stability of the region. Burkina Faso has assumed a leading role in pursuing an integrated and open West African regional economic space under the auspices of the West African Economic and Monetary Union (WAEMU), the Economic Community of West African States (ECOWAS), and other cooperative initiatives. The country hosts the WAEMU headquarters and has been active in peace-brokering initiatives in neighboring Côte D’Ivoire, Togo, Guinea, and Mali. However, since it is landlocked, its intraregional as well as international trade is minimal and dominated by unprocessed raw materials. High transport costs, slow goods transit, and long customs clearance procedures in both Burkina and neighboring countries increase the cost of doing business relative to other countries in the sub-region. The government’s strategy and action plan for export promotion, which would tackle supply-chain organization, communication, and promotion of exports, will, if implemented effectively, also make Burkina Faso more competitive in world markets. 28. Burkina Faso’s major infrastructure deficits constrain private investment and inhibit competitiveness. Limited access, high costs, and unreliable economic infrastructure in Burkina Faso raise the cost of doing business, deter potential investors, and adversely affect trade-related transactions. Underinvestment in infrastructure and the poor quality and coverage of services also has significant impact on the livelihoods of the poor. For instance:  In transport, although the classified road network is in good condition, that is not true of secondary and tertiary rural roads (which provide mobility to 75 percent of the population). Maintenance of classified paved and unpaved roads can be assured by strengthening the financial autonomy and performance of the road maintenance fund (FER-B). The 2013 Public Expenditure Review (PER) recommended concerted efforts to enhance transport planning and management capacity.  In energy, only 20 percent of the entire population and only 5 percent of the rural population has access to power. For those who do, the tariffs are among the highest in sub-Saharan Africa, averaging 25 US cents per kWh, and government subsidies are costly. To address high production costs and growing demand, the government has worked systematically to access additional generation capacity at low cost from neighboring countries through the West African Power Pool (WAPP). Unfortunately, that has been delayed. There is also a need for systems to ensure security of supply in case of interruption, improve the efficiency and equity of energy service in Burkina through reform of tariffs and subsidy policies, and craft an efficient demand- side management strategy. It is also necessary to promote access to solar power and off-grid energy.  In telecommunications, despite significant improvements in connectivity, many people in Burkina Faso still do not have access, either because networks do not cover the areas where they live or because communications services cost too much. Regulatory reforms are now needed to increase competition and broadband penetration. The Internet is still very slow and irregular connectivity is one of the main concerns of the private sector. 29. Moving speedily to reform the investment climate is critical. High on the agenda are enabling laws and regulations, access to finance, skills development, and security of land tenure. While 12 Burkina Faso is making some progress with its investment climate and supporting domestic private development, it is still in the lowest quartile of countries according to the 2012 Doing Business indicators.6 Private participation in the economy is undermined by the limited capacity of domestic small and medium-size enterprises (SMEs) and minimal availability of tailored financial services.7 Investors in Burkina need to realize that the market is larger than Burkina and that Burkina can be a gateway into the sub-region. The government’s financial sector strategy is directed to improving financial intermediation and access to finance to support private sector-led growth, particularly with regard to SMEs, rural, housing, and long-term financing. Efforts are needed to better link financing instruments to particular market segments, particularly agricultural, and to build the capacity of local private operators, especially women. 30. Youth employment is a major development challenge. Burkina has a young and rapidly growing working-age population,8 but joblessness is a major problem for young people, particularly in urban areas. The vast majority of the labor force is working in precarious and low-earning agricultural or other informal jobs. Low demand for labor in the formal sector, private and public, reflects a lack of basic skills and a mismatch between the skills of recent graduates and labor market needs. A comprehensive strategy to target critical skills deficits and address the employability of the range of actors in the labor force will accelerate growth and improve the employment prospects of youths in particular. Finally, there is a need to make informal activities more productive; accelerate land tenure and management processes already underway; enhance agricultural productivity; increase the access, quality, and relevance of the skills development system; and help vulnerable groups improve their employability by acquiring basic skills. C. Equitable Access to Quality Social Services 31. If economic growth is to have more impact on poverty, there must be closer links between public investment and efficient delivery of services, particularly to the poor. It is crucial that Burkina Faso build a more inclusive society in which each individual can meaningfully contribute to progress. The government will need to simultaneously create opportunities for poor citizens to build up their human capital while protecting them from the vulnerabilities associated with environmental and climatic shocks, food insecurity, and precarious rural livelihoods. This will require a paradigm shift in how public resources are allocated and managed and a results-oriented focus on social service delivery and social protection. 32. Ensuring that the dividends from economic growth are efficiently spent and equitably shared requires a move away from centralized public management, with ex ante controls, to a more performance-oriented system that emphasizes ex post monitoring. Burkina Faso scores low on public sector and governance indicators. Inefficiencies contribute substantially to its low execution of social sector budgets and to investments poorly aligned with the needs of the population, particularly the most vulnerable. Past attempts at reforms have had little impact on service delivery. They were directed to improving the central administration without addressing the problems caused by the highly centralized administrative structure system and the lack of results-based management. True, Burkina has made progress in managing public finances and procurement, but efficiency is still impeded by onerous ex ante and weak ex post controls. Spending ministries and local governments 6 Burkina is ranked 148 out of 181 countries in Doing Business. 7 A 2009 Investment Climate Assessment indicates that nearly 80% of all formal SMEs consider limited access to financial services as a major obstacle to their development. 8 There are currently 3 million adults aged 15-24 and the number is expected to double by 2030 13 have little authority to make decisions about resource allocation, financial or nonfinancial. And although the control structure was reinforced with the creation in 2000 of the external audit institution, the Cour des Comptes, and in 2007 of the state inspection body, l’Autorité Supérieure de Contrôle d’Etat, the Cour des Comptes lacks an effective mandate, and inadequate staffing and resources limit the effectiveness of internal controls. Shifting to results-based management can improve efficiency. It is critical that Burkina implement the government’s Ten-Year Strategic Plan for the Modernization of the Administration, which seeks to make line ministries accountable for outcomes by empowering them with greater policymaking, planning, and coordination responsibilities. 33. Implemented effectively, the government’s decentralization policy offers a real opportunity to streamline spending, reduce regional inequalities, and better address local needs. The 2009 Public Expenditure Review on Decentralization provided evidence of the positive impact effective decentralization could have on social service delivery in Burkina. The country already has a decentralization policy consisting of the 2004 General Code for Territorial Collectivities (Code Général des Collectivités Territoriales, CGCT) and the Strategic Framework for the Implementation of Decentralization (Cadre Stratégique de Mise en Œuvre de la Décentralisation, CSMOD). While local governments have been in place throughout the country since 2006, as yet they have little capacity to fulfill their social services mandates. The challenge now is to accelerate fiscal decentralization and build up the capacity of local governments to effectively oversee decentralized service delivery. 34. Progress toward the MDGs needs to be accelerated. Although Burkina has made progress on the MDGs for urban access to water and combatting AIDS and other diseases, it will be harder to achieve the MDGs for primary education; maternal, infant, and under-5 mortality; and malnutrition. In education, besides raising enrollment rates in rural areas there is a need to improve the quality of education, curb high drop-out and repetition rates, and increase completion rates, especially for girls. In health, more forceful efforts are needed to give mothers and children b roader access to health care. In water and sanitation, the priorities must be to (a) improve rural access to drinking water by building up the absorption capacity of rural investments and ensuring that rural water facilities are well- maintained; and (2) bridging the gap in urban areas between high rates of access to water and low rates of access to sanitation services. The incidence of malnutrition in particular demands a multifaceted approach to raising agricultural productivity and food security while ensuring effective social safety nets and access to health services. 35. Burkina’s high fertility rate and expanding population are a major drag on economic growth and restrict the impact of human development initiatives. At 6.2 children per woman, fertility is very high. Similarly, seven out of ten Burkinabè are younger than 30, and one in four is younger than 7. Efforts to decrease fertility and slow the unsustainable rate of demographic growth are urgently needed. High population growth rate translates into lower GDP per capita. It also entails high costs for human development. Fertility can be reduced with the help of expanded reproductive health activities undeterred by service delivery constraints, coupled with effective communications. Tackling persistent gender gaps and promoting better access to quality health and education services, as well as remunerative work for women would help address the demographic dilemma. D. Lower Vulnerability, Higher Resilience 36. As a Sahelian country, Burkina Faso is subject to vulnerability caused by disaster and risks from flood or droughts, deteriorating natural resources, food insecurity and malnutrition, in addition to the pastoralist lifestyle, which involves increasing the competition for water and 14 pasture that sometimes lead to conflict. Food security in Burkina Faso is precarious; insecurity affects over 20 percent of the population (more than 3.5 million people). Periodic droughts lead to food crises, and government uses food reserves to transfer food from surplus to deficit regions. The situation can be exacerbated by the influx of refugees as a result of crises in neighboring countries, such as Mali. There is a critical need for productivity-enhancing agricultural interventions through better integration of land, fertilizer and water management. As a semi-arid Sahelian country subject to low and variable rainfalls, locust invasions, and storms, Burkina Faso must deal with significant problems of land degradation, deforestation, and desertification. In parallel with efforts to enhance productivity, the country therefore needs to ensure the sustainable development of its natural capital and proper management of weather-related risks. Leveraging the government’s sustained commitment to environmental protection and sustainable land management over the last 30 years, it must move forcefully to bring about change in land use and in management of forest, agro-forestry, and agricultural systems to slow land degradation and enhance climate resilience. More effective disaster risk management processes are also critical for addressing vulnerability to climate changes. Only by promoting food security through productivity enhancement, environmental protection, and disaster risk management can the vulnerability of poor populations be addressed. 37. To protect its people from exposure to recurrent risks, the government also needs a more efficient, cost-effective, and affordable social safety net. Household exposure to risks ranging from natural hazards (droughts, floods, locusts, wildfires, and wind) to food security and regional instability exacerbates the vulnerability of the poor to shortfalls in consumption and revenue and causes seasonal hikes in the incidence of poverty. The social security system covers only those employed in the formal private sector (23,055 contributors) and civil servants (124,550 contributors), leaving over 90 percent of the labor force without coverage. Meanwhile, the scope and coverage of the social safety net programs that do exist is limited; most interventions are small, temporary, and externally financed. From 2005 to 2009, on average and excluding fuel subsidies, spending on social safety net programs was about 0.6 percent of GDP. Clearly, the strategic, institutional, and financial framework for designing, implementing, managing, monitoring, and evaluating these programs need to be reinforced. That effort needs to be supported by a plan for a more effective system that will reform existing programs and design new ones. E. Governance and Gender Equality 38. Addressing the all-encompassing and cross-cutting challenge of inadequate governance lies at the heart of promoting social cohesion, reducing poverty, and delivering services efficiently. Some progress has been made in making public institutions more effective and more credible, enhancing transparency by publishing budget information and adhering to the EITI, promoting accountability through external and internal audits and anti-corruption drives, and encouraging participation through decentralization. Nevertheless, Burkina’s ranking on the Transparency International Corruption Perception Index has been going down rather than up, from 81/180 in 2009 to 98/178 in 2010 and 100/182 in 2011. Parliamentary investigations into procurement practices and health subsidies in July 2012, together with annual audits published by the internal and external control agencies, highlight the persistence of corruption across sectors. Information asymmetries limit the extent to which civil society and local populations can actively participate in decision-making and oversight. There is a need to increase transparency, improve management capacity, and make public institutions more accountable. Because systems for conflict resolution are ineffective, unresolved disputes have multiplied, particularly with respect to land use, and localized 15 civil unrest has risen. The unrest in 2011 also revealed general discontent with the culture of impunity shaped by ineffective sanctions. 39. It will be very important to enhance participation and ensure that public institutions and officials are held to account. The decentralization process is a stellar opportunity to promote community participation in decision-making and monitoring of service delivery, particularly for the poor. The challenge will be to ensure that information and forums for engagement are sufficiently accessible, particularly for women. Here, the remarkable increase in women voters in the December elections is highly encouraging—it suggests that women are committed to taking their full part in the life of the nation. Improving the capacity of local actors to manage public resources, such as public procurement, is critical for fiscal discipline, operational efficiency, and transparency in the use of public resources. Effective internal and external controls and an independent, efficient, and responsive judiciary equipped with adequate resources are vital for ensuring that corrupt practices are prevented and sanctioned. IV. THE GOVERNMENT’S VISION AND DEVELOPMENT STRATEGY 40. In December 2010 the government adopted the Strategy for Accelerated Growth and Sustained Development for 2011–2015 (SCADD: Stratégie pour la Croissance Accélérée et le Développement Durable). The strategy provides a structure for achieving the government’s medium- term goals in the first five-year phase of the government’s vision for “Burkina 2025.” The objective is to achieve solid, sustained, and quality economic growth that will have a multiplier effect on income generation, the Burkinabe quality of life, and sustainable development. To achieve this ambitious goal, the SCADD identifies four strategic pillars: (a) promotion of growth and reduction of economic vulnerability; (b) investment in human capital and social protection to increase resilience; (c) good governance that makes the public sector more effective and efficient; and (d) incorporation of cross- cutting priorities, such as gender, demography, planning, and building capacity to implement development policies and programs. 41. The SCADD model combines promotion of private sector–led growth (growth poles; SMEs), pro-poor programming, and critical structural reforms. The government’s strategy incorporates (a) an emphasis on macroeconomic stability, fiscal management, and prudent borrowing, all of which are critical for sustainable growth and poverty reduction; (b) structural reforms in priority areas, such as finance, cotton, and the business environment; (c) more attention to building up economic infrastructure; (d) greater emphasis on rural development, given the prevalence of poverty in rural areas; (e) effective decentralization of service delivery so as to simplify spending processes, reduce regional inequalities, and better address the needs of the population, especially vulnerable groups; (f) more emphasis on developing human capital development to repair the skills deficit and provide social protection for the vulnerable; and (g) addressing gender inequality, a major constraint to Burkina Faso’s economic growth. V. WORLD BANK GROUP PARTNERSHIP STRATEGY A. Lessons Learned from the CAS Completion Report 42. The FY10-12 CAS Completion Report (Annex 2) assesses the effectiveness of the strategy of minimizing economic vulnerability, promoting growth through economy transformation, and promoting shared growth through better delivery of social services. The report concluded that the 16 CAS, which set out to lay the foundation for a transition to a new development strategy, was sound and responded to the country’s development needs. Although gender mainstreaming was not a specific CAS objective, IDA-financed operations incorporated gender-sensitive components. For example, the education, health, and community-driven development projects included components to provide training; improve female literacy and education; enhance women’s involvement in local governance; and address female genital mutilation. The lack of sex-disaggregated data in some Bank-financed projects made it difficult to evaluate the impact of demography and gender mainstreaming efforts. 43. The Completion Report also noted synergies between World Bank and IFC activities, especially in terms of private sector development. The report highlighted the need for the next program to advance the sound fiscal management and improved governance that prevailed in order to sustain economic growth and reduce poverty. It recommended that the new CPS consolidate gains made while identifying opportunities to accelerate growth and prosperity for all. The following lessons learned have implications for design and implementation of the FY13–16 CPS. 44. WBG institutions and other development partners should collaborate more closely. Given that they all have the same development objectives; there are considerable efficiency gains to be made from joint analyses, assistance strategies, and even joint progress and completion reports. At the very start efforts are needed to improve the internal synergies between WB, IFC, and MIGA. 45. Knowledge products to guide strategic reform proved useful. The CEM provided analytical underpinnings for selection of options for diversification and accelerated export development; it focused on national industrial policy and the rural investment climate, and identified sources of competitiveness and sustainable growth. The CEM was accepted as of high quality and helped to inform government design of the government’s poverty reduction and economic prosperity strategies. Other analyses, including political economy work, proved useful in guiding policy dialogue and orienting interventions. 46. Harnessing the potential benefits of regional initiatives is crucial. Linkages between the country program and several region-wide projects yielded demonstrable benefits, especially given common socioeconomic challenges in the region (notably in small landlocked economies). Most Doing Business indicators and IFC investment climate activities are closely linked to regional regulations, such as those of the Organisation pour l’Harmonisation en Afrique du Droit des Affaires (OHADA) and the BCEAO. There is scope to more tightly integrate and manage regional projects by improving internal coordination and incentives within the World Bank. 47. Project and program design must be more attentive to capacity constraints. To ensure sustainability, communities need both direct support and capacity development, through e.g. training of agricultural technicians, teachers, and health workers and encouraging their acquisition of cross-cutting skills, such as planning, programming, and project preparation. Programs will be more successful if the Bank helps build the capacity of civil society and includes civil society organizations in operations. 48. IFC financing arrangements need to be responsive to local demand. Currently IFC cannot directly finance most local agribusiness firms, except in the cotton sector, because most of them are too small. IFC needs to explore risk-sharing opportunities with local banks to facilitate access to finance for small firms and help meet the needs of local agribusiness clients. 17 49. Embedding governance and anti-corruption concerns, gender, and capacity building as pervasive cross-cutting themes needs continuing attention in Bank-supported programs. In the previous CAS the Bank made concerted efforts to mainstream governance and address public sector performance in such areas as monitoring and evaluation, public procurement, and accountability. These efforts need to be carried forward in the new program. Gender also needs to be more explicitly addressed. 50. New ways of doing business through spatial concentration, cross-sectoral coordination, and project coordination contributed to synergies and positive outcomes. Better coordination of agriculture and private sector projects has improved their linkages. Consolidated approaches to addressing decentralization and service delivery also helped to ensure that Bank support was consistent. While not explicitly addressed in the former CAS, land tenure surfaced as a critical issue. Private sector and local development operations regularly face challenges because land tenure arrangements are insecure. Land management now deserves early targeted attention.   Key Findings from the Client Survey 51. The FY13 Client Survey found that compared to the survey conducted in 2009 in general stakeholders had more positive views of the effectiveness of the World Bank, its outreach, and the way it operates in the country. The Bank received high ratings for the quality of its knowledge products and for collaborating with the government and other donors. In terms of where the Bank should focus its resources, respondents highlighted education, agriculture and rural development, private sector development, energy and public sector reform (governance) as most critical to Burkina Faso’s economic growth and poverty reduction. While the Bank was well-regarded for its relevance, realistic strategies, and alignment with country priorities, it was criticized for inflexibility and dilatory responses to client requests. Clients surveyed also felt that the Bank worked very well with the government and other development partners but less well with nongovernmental actors—25 percent of respondents felt that the leisurely pace of reforms supported by the Bank were the result of failure to involve non-governmental actors and a lack of sensitivity to the political and social realities in Burkina Faso. Four out of ten respondents suggested that the Bank should increase its outreach to groups outside the government during design of its programs. Respondents also recommended that knowledge products be translated into French and disseminated widely. Findings from the Gender Assessment 52. According to findings of the last national gender assessment, socially and culturally women are considered to be inferior to men. These attitudes are manifested in persistent, significant gender differences in educational attainment, access to and control of resources, basic social services, and participation in decision-making (box 1). This led in 2009 to the adoption of the Burkina Faso National Gender Policy in 2009. 18 Box 1: Gender Disparities and Inequalities in Burkina Faso In July 2009, after an assessment of gender disparities and inequalities in Burkina Faso the government adopted a National Gender Policy (NGP). There are problems across the board:  Education: Though girls are making progress, it is slow because of cultural attitudes, poverty, and food insecurity.  Employment and training: Because they are under-educated, women are not able to contribute to economic growth.  Economic sectors: Girls and women have little if any access to credit, productive land, and agricultural inputs and technology. Social stigma is also a barrier to their entrepreneurial activities.  Health: Girls and women have less access than men to health facilities and to advice on reproductive health.  Legal rights: They also have less access than men to the law and the courts and are less able to protect their property rights. Source: National Gender Policy. 53. A gender-focused review of 16 projects in the World Bank Group portfolio found 75 percent (12 projects) to be gender-informed. The gender-informed projects were those that identified barriers to women’s participation in economic and social activities, designed interventions to address imbalances, and analyzed intervention outcomes. However, even though projects were gender-informed, less than 40 percent of the projects had sex-disaggregated data and specified gender targets for monitoring and evaluation, though 63 percent of the projects in the current portfolio addressed at least one of the global gender priorities: (a) reducing excess female mortality; (b) closing earnings and productivity gaps between men and women; (c) shrinking gender differences in voice in the household and society; and (d) investing in youth to break intergenerational transmission of gender inequality. Clearly, data produced during the new CPS need to be sex-disaggregated, with specific gender targets. B. World Bank Group Partnership Strategy Strategic Approach The CPS will be guided by the following principles: 54. Adaptability and an integrative perspective: Given global uncertainties and Burkina Faso’s vulnerability to climatic and exogenous shocks, the WBG needs to have the flexibility to adapt to changing circumstances. The strategy envisages possibilities for adjustment and adaptation of the program to ensure rapid responses to crises that might jeopardize achievement of Burkina Faso’s development outcomes. At the same time, to achieve greater impact the results-focused CPS seeks to bring fragmented operations under common umbrellas (such as human development), and new lending will be selectively confined to a few sectors that can help advance the goals of reducing extreme poverty and boosting shared prosperity. Under the CPS’s support to education, the WBG will no longer focus on classroom construction, given government and partner focus on that, but will instead focus its support on education quality improvement and on improving learning outcomes. Accordingly, the number of projects in the portfolio will gradually decrease over the term of the CPS. Teams will be encouraged to combine efforts and work across sectoral silos to achieve measurable results. 19 55. Collaboration/ coordination: Many of the development challenges that Burkina faces call for solutions that incorporate both “public goods” interventions, such as improved policies, institutions, and incentives, and private sector investments. The new CPS emphasizes closer collaboration between the World Bank and the IFC through joint support of programs and promotes public-private partnerships (PPPs) in such sectors as infrastructure, mining, agribusiness, and finance. Where necessary MIGA will also continue to offer its guarantees. A significant proportion of Burkina Faso’s investment resources come from donors and development partners. Ensuring that the multitude of interventions translates into measurable and substantive results will be a challenge for the government and development partners alike. The Bank will continue to work with other partners to better harmonize policy dialogue and development support. 56. Knowledge: Burkina Faso’s sophisticated development challenges necessitate high-quality analytical work. The WBG has a comparative advantage in producing applicable knowledge, sharing international experiences, and convening the development community that will support the government in achieving its development goals. Consequently the CPS incorporates a robust knowledge agenda. 57. Regional integration: Because it is landlocked, Burkina Faso’s economic growth Faso is inextricably linked to its ability to integrate with regional neighbors and other countries to improve the terms of trade, expand exports, and tackle common development and insecurity challenges. The CPS promotes regional integration by ensuring synergies between the Bank and IFC’s national and regional development programs and by incorporating support for Burkina’s participation and alignment with other regional programs. Partnership Strategy Overview 58. The proposed CPS selectively supports the government’s medium-term strategy for accelerated growth and sustainable development. To reduce poverty and increase shared prosperity the CPS will seek to achieve three mutually reinforcing strategic objectives with two cross-cutting themes (see figure 6): 59. Strategic Objective One: Accelerate inclusive and sustained economic growth. Given that macroeconomic stability is a pre-requisite for economic growth, and poverty reduction cannot take place without robust growth, the WBG will work to help the government keep the economy stable and mitigate the risks linked to global economic uncertainties, regional political insecurities, and climatic variations. This will be done by building up a solid revenue base, maintaining fiscal discipline, investing in skills development and infrastructure aimed at increasing overall productivity, bringing women as well as men into a more active role in the economy. The WBG will also help the country to diversify its sources of growth and create value chains; enhance the business environment for investors by promoting competitiveness, productivity, and employment, especially in agriculture to increase the incomes of small farmers and rural women. Access to energy, transport, and information and communications technology (ICT) will be improved. 20 Figure 6. Country Partnership Strategic Framework Burkina Faso’s Long Term Vision: Prospective Vision Burkina 2025 Schéma National d’Aménagement du Territoire (SNAT) Burkina Faso’s Medium Term Vision: Strategy for Accelerated Growth and Sustainable Development 2011- 2015 (SCADD): Axis-1: Development of the pillars of accelerated growth Axis-2: Consolidation of Human Capital and promotion of Social Protection Axis-3: Strengthening Governance Axis-4: Cross-Cutting Priorities: Gender, demography, Natural Resources, Capacity Building Country Partnership Strategy (CPS) FY 2013-2016 Strategic Objective 1: Strategic Objective 2: Strategic Objective 3: Accelerate Inclusive and Sustained Enhance governance to deliver Reduce social, economic, and Growth social services more efficiently environmental vulnerabilities (SCADD axis-1) (SCADD axis-2&3) (SCADD axis-2&4) Outcomes: Outcomes: Outcomes: 1.1 Macroeconomic stability & 2.1 Improved public financial 3.1 Strong social safety net more efficient financial management system system conductive to higher for good governance; 3.2 Enhanced food security investment by the private 2.2 Expanded access to quality sector; social services by the poor 3.3 Better disaster and risk 1.2 A higher skilled workforce management and less unemployment; 1.3 Reduced infrastructure deficits (energy, Roads, ICT) and more effective value chains Cross-Cutting themes: Governance and Gender equality (SCADD axis-3 &4) 60. Strategic Objective Two: Enhance governance to deliver social services more efficiently. Mindful that Burkina’s macroeconomic performance has not significantly reduced poverty of the vast majority of households, the WBG intends to help the government strengthen human resources, which is a prerequisite for raising living standards, and increasing participation of the bulk of the population in sustainable growth. Throughout the CPS period, the Bank will support vigorous implementation of programs designed to improve access by the poor to quality basic social services (health, education, and drinking water. The WBG will pay particular attention to ensure that women and men have access equal to services. The approaches used will especially promote institutional capacity-building and results accountability where urban and local communities are responsible for delivering services. 21 61. Strategic Objective Three: Reduce social, economic, and environmental vulnerabilities. The WBG will support sector- and gender-specific measures, such as social safety net programs and greater agricultural productivity to ensure food security. It will also work with the government to mitigate the impact of hazards by, e.g., measures to adapt to and mitigate climate change and to reduce risks through hazard early warning and response systems. The Bank and the IFC will in particular support social and environmental safeguards in mining, SME linkages with local communities, and better management and use of natural resources. 62. Cross-Cutting Themes: Governance and gender equality. The CPS will promote good governance at the national, community, and project levels by supporting reforms that reinforce core systems for procurement and financial management while building institutional capacity, transparency, and accountability into public service delivery. The WBG will also empower civil society and academia to effectively assert their demands for good governance and more efficient delivery of public services. It will also ensure that gender considerations are mainstreamed in all WBG-supported interventions, especially those related to social and economic empowerment. Strategic Objectives: Supported and Expected Results - Strategic Objective One: Accelerate inclusive and sustained economic growth.   Indicators Outcomes - Increase revenue as proportion of GDP from 13% in 2012 to 15% in 2016 - Increase ratio of credit to private sector as a percentage of GDP from 17% in 2012 to 25% in 2016 - Increase in total value of financial and operating leases in Burkina from $33.4 million in 2012 to $60.0 million in 2016 - Increase in portfolio of SMEs borrowing from IFC-client banks to $10 million in 2016 1.1. Macroeconomic stability and - Increased financial institution support to SMEs through dedicated credit lines a more efficient financial or financial products: 2012: 1 Bank ; 2016: 3 banks   system conducive to higher Mining investment by the private - Mining revenue as a proportion of GDP increased from 2.5% in 2012 to 5% in sector 2016. - Annual increase in gold exports (in Ton) increased from 4.233 tons in 2010 to 45 tons in 2016 - IFC to finance the sector and implement mining linkages program increase from 2 companies at exploration stage in 2012 to 2 companies at exploitation stage in 2016; and from 0 mining linkages program in 2012 to 1 mining linkages program in 2016: - Number of entrepreneurship training participants who prepare business plan is increased form zero in 2012 to 100,000 in 2016 - Number of apprenticeship contracts signed increased from zero in 2012 to 1.2. A higher skilled workforce 2,500 in 2016 and less unemployment - Number of out of school youth enrolled in apprenticeship increased from zero in 2012 to 2,500 in 2016 - Number of youth benefiting from temporary jobs increase from zero in 2012 to 11,000 in 2016 22 Energy - Electricity production capacity increased from 256 MW in 2012 to 300MW 2016: - Percentage of households with access to electricity increased (IDA TIER 1) increased from 28.60% in 2012 to 50% in 2016 - Increased Renewable energy and off-grid lighting available in at least 50 rural communes from zero in 2012 to 50 in 2016 - Increased private sector investments in electricity generation and distribution (IFC’s Energy program) from zero in 2012 to 60 MW in 2016 1.3. Reduced infrastructure Information and Communication Technology deficits (Energy, Roads, ICT) - Volume of international traffic (Kbit/s per person) increased from 28 in 2010 to 74 in 2016: and more effective value - Access to internet services (number of subscribers per 100 people) increased chain from 0.2% in 2010 to 0.6% in 2016. Agribusiness - Average cereal production increase by at least 20 % -Average of the last five years (2008-2012)- increased from 4,100,000 tons in 2012 to 4,800,000 tons in 2016: - Increase in irrigated land by at least 20% increased from 50,000 ha in 2011 to 60,000 ha in 2016: - Volume (ton) of fish production in the Bagré zone increase from 522 in 2010: to 1,150 in 2016: - Number of public private partnerships in Burkina Faso (IFC’s PPP support) increased from zero in 2011 to 3 in 2016 Outcome 1.1. Macroeconomic stability and a more efficient financial system conducive to higher investment by the private sector 63. While the macroeconomic outlook for Burkina Faso is positive, the risks associated with its reliance on commodity prices need to be carefully managed. The central issues are how to accelerate growth, ensure that the poor benefit from growth, and reduce economic as well as social and environmental vulnerability. The WBG will support government efforts to optimize revenues by improving tax administration and revenue collection, especially with regard to collection and equitable distribution of revenues from such natural resources as cotton and mining. Through the Mineral Development Support Project (MDSP) and the EITI secretariat, the WBG is already supporting information-sharing on mining revenues for the Tax Office. Institutional capacity is being significantly strengthened by standards and norms to drive mining sector compliance. The Growth and Competitiveness Credit Development Policy Operations (DPO) series is also tackling reforms to ensure higher mining revenues, transparency, and contributions to economic development. The first operation supported the government’s move to strengthen physical and financial controls with collaboration between the Ministry of Finance and the Ministry of Mines. Future WBG operations including IFC funding and advisory are expected to support (a) increase in mining production (b) disclosure and validation of the EITI report; and (c) a revised Mining Code that addresses both fiscal and environmental concerns and establishes a social development fund to increase mining company contributions to improve the lives of poor people in local communities. Also, although the recent debt sustainability analysis found Burkina Faso to be at only moderate risk of debt distress, because stress tests indicate that under some conditions thresholds could be breached, the Bank and the IMF will continue to monitor the macro-fiscal and macro-financial situation and provide technical assistance (TA) to the government. 23 64. The WBG will continue to work with Burkina Faso to improve the business environment and facilitate access to financing, especially for micro, small, and medium enterprises (MSMEs). IFC will provide advisory services to enhance regulation of leasing; implement an investment promotion strategy; attract investment in priority sectors (agribusiness, mining, and tourism); broaden entrepreneurship; create jobs; and improve the national quality system for export diversification and competitiveness. To revive momentum for investment climate reform, the Bank will promote targeted initiatives through development policy lending. Ongoing operations, such as Projet d’Appui à la Compétivité et au Développement de l’Entreprise (PACDE II), Projet Pole de Croissance de Bagré (PPCB), PADSEM, and PAFASP will continue to build private sector capacity while expanding opportunities for employment and income generating activities for the poor. To boost shared prosperity, the WBG will also support regional investment climate initiatives championed by WAEMU and ECOWAS, such as OHADA and other efforts to at harmonizing investment climate best practice. 65. The growth pole approach will be expanded to facilitate economic growth targeted at the poor. The Bagrepole project which will be jointly implemented by the WB and IFC as a model of WBG multi-sectoral cooperation will build the infrastructure needed to attract private investment; support access to instruments for financing SMEs, and promote leasing to increase domestic SME investment. A new growth pole operation will be undertaken during the CPS to respond to the government’s strategic target of developing at least five growth poles in different regions. The new operation will seek to reduce poverty and boost shared prosperity by broadening the development of SMEs and their engagement in priority sectors, such as the mining and tertiary sectors, and incorporate artisan industries into SME development and access to finance. Finally, to encourage private sector engagement, the WBG will support licensing reforms and simplification of processes with an emphasis on sectors being built up through growth pole operations. 66. Improvements in the investment climate also require increased access to finance and expansion of sources of financing for rural and underserved areas. Besides increased access, refinements and innovations are required to better tailor financing instruments to particular segments of the market such as the poor and women, attract new financial service providers, and encourage borrowers to polish their creditworthiness. Through the Competitiveness and Enterprise Development Project, the WBG will facilitate access to additional sources of finance, such as commercial banks, sub-sovereign lending, and local currency loans. To help reduce extreme poverty, access to grants and concessional financing will be increased, especially for low-income groups. Drafting guidelines and transparency mechanisms for the publicly-managed farm credit guarantee facility will increase access to credit for small farmers. Options for increasing access by private agribusiness will also be explored. Over the CPS period, the WBG will pilot such innovations as testing a long-term credit facility for agriculture/agribusiness and an index (weather)-based agricultural insurance system. 67. A series of investment climate policy notes will provide targeted analysis to support government efforts to improve the investment climate. Drawing from the recent assessment for Burkina, the Bank will produce policy notes on second- and third-level reforms needed for private sector-led growth. The policy notes will offer recommendations to encourage financial market operators to reach down to those not served in order to broaden financial inclusion. This aspect will be informed by the Financial Sector Policy Note scheduled for delivery in FY14 and a financial literacy and consumer protection survey that may be undertaken in the next few years. Follow-up TA will build individual and enterprise financial services capacity on the demand side. TA will also help to reinforce the supply side and will specifically improve the capacity of both financial and non-bank 24 financial institutions to finance SMEs. Finally, a demand-driven approach to the Skills Development and Youth Employment agenda will be introduced in partnership with the education sector. 68. MIGA will continue to offer its political risk insurance product lines (transfer restriction, expropriation, breach of contract, and war and civil disturbance) in Burkina Faso as well as non- honoring of sovereign obligations under certain conditions. These product lines can be used along with other Bank products, such as IFC loans, to directly support government PPPs or independent power producers (IPPs), as has been done elsewhere in the region. MIGA's Small Investment Products (SIP) program, which has streamlined procedures, will also be available. MIGA’s current exposure in Burkina Faso consists of one tourism project amounting to US$1.6m (in both gross and net terms). MIGA’s role in the project supports government privatization. Outcome 1.2. A higher-skilled workforce and less unemployment 69. Acceleration of inclusive economic growth and poverty reduction are unlikely to happen without increasing the productivity of labor and capital. Raising the productivity of labor requires upgrading the skills and improving the quality of human resources particularly of the poor. To respond to rising youth un- and under-employment which are major determinants of poverty, the Bank will incorporate job creation and training opportunities in its investment operations, such as through the use of labor-intensive construction methods (HIMO). The Youth Employment and Skills Development Project which supports labor-intensive public works (LIPW) employment for youth with little or no education will also improve their employability by offering training experience. With the view to reduce poverty and boost shared prosperity the project will successfully open up employment opportunities and promote self-employment in both farm and non-farm sectors particularly for the poor and women in regions where poverty is most pronounced such as the East and North. 70. Professional training is another essential factor in raising productivity, encouraging private sector investment, attracting foreign capital, facilitating technology transfer, and reinforcing the ability of enterprises to compete in a rapidly changing world market. The WBG will also support apprenticeships and short-term professional training programs in key economic growth sectors and related professional branches, entrepreneurship training, as well as initiatives to create or reinforce enterprise enablers, such as business incubators, and other accelerators, including business plan competitions. The WBG will also support Burkina Faso’s participation in the Higher Education Africa Centers of Excellence program. The regional program seeks to promote specialization among participating universities within areas that address common regional development challenges, and to build the capacities of these universities for high-quality training and applied research. The higher-order objective is to meet the demand for higher level skills required for Africa's development, such as those sought in the growing energy sector, extractive industries, health and agriculture. Outcome 1.3. Reduced infrastructure deficits (energy, roads, information communication technology) and more effective value chains 71. High costs and poor access to economic infrastructures in Burkina Faso constrain efforts to accelerate growth, boost prosperity and reduce poverty. Only 20 percent of the population and only 5 percent of the rural population have access to power—and for those who do, the tariffs are very high. Improving access to energy requires a multipronged effort that will increase and regularize supply, expand coverage, make energy services more efficient, and encourage private investment in 25 production. The Bank will continue to support government efforts to diversify and make regionally supplied energy more reliable by putting in place a transmission line between Ghana and Burkina Faso. To improve the living conditions of the poor, the current Energy Access Project will direct its efforts to expanding access to energy and promoting sustainable energy consumption in targeted rural, peri- urban, and urban areas. The Electricity Sector Support Project ($50 million), to be presented to the Board in FY14, will (a) improve the reliability of energy supply by financing the construction of two power stations to reinforce the capacity of two growth poles; (b) increase access to electricity low cost energy by rural populations in about 40 communes; and (c) enhance rational use of energy in target areas by strengthening the institutional, legal and regulatory framework to support demand side financing. Schools in poor off-grid communities will benefit from solar lanterns to enable students to increase their study time, improve learning outcomes and eventually improve the standard of living of poor households. IFC infrastructure investments are likely to principally supporting IPPs that are interested in renewable energy, such as solar power. The IFC will work closely with the Bank to explore options for energy PPPs, with support for risk mitigation, IPPs, and creation of PPP equity funds. 72. ICT in Burkina is facing major challenges as a result of several constraints: (a) limited access to internet and broadband services; (b) limited areas covered; (c) high tariffs for mobile, broadband and international bandwidth; and, (d) lack of regulatory framework to spur competition and broadband penetration. The regional communications infrastructure program (WARCIP APL 1B) will support Burkina to increase its geographical reach of broadband networks and reduce the cost of communications services. The WBG will provide the country with access to international submarine cable connectivity, thereby enabling the country to benefit from additional infrastructure (72 pair fiber link) between Ouagadougou and the closest border point (Paga, Ghana). This missing link will provide security and wider access to low cost capacity.  73. Burkina Faso’s transport infrastructure challenges are to maintain existing assets, improve logistics, build up institutional capacity, and enhance regional cooperation. Using a mix of current programs and development policy lending, and in close collaboration with other partners, the Bank will help the government to (a) enhance transport competitiveness to reduce costs and facilitate trade, with particular emphasis on internal and external logistics supply chains; and (b) accelerate transport sector reforms and enhance management and service provision with the view to more broadly sharing prosperity. The WBG will continue to provide TA to the government on freight liberalization, structural changes to the road maintenance fund, and efficient management of urban transport. 74. To speed productivity growth, increase diversification, and create more jobs, the Bank and IFC will take a three-pronged approach to promoting sustainable transformation in agriculture which is the main source of employment in rural areas: (a) secure land use and tenure arrangements in order to reduce conflicts and build incentives for long-term investments in value- added businesses; (b) enhance productivity and reduce vulnerability to weather by scaling up investments in irrigation and water harvesting; and (c) encourage strategic reforms to attract private investment in production of higher-value products through agro-processing that will create more remunerative jobs. 75. Securing land use and tenure: Building on previous support of the Community-Based Rural Development Project (PNGT) that led to adoption of a rural land law, the third phase of the program will accelerate application of the law. This will involve establishing institutions proposed by the law in both villages and communes. The Bank will also continue policy dialogue with the government and 26 other partners to ensure that resources are adequate for full implementation of the new land tenure arrangements. Growth in cotton output will continue to be achieved by accelerating the development of land that is currently available but not exploited, by rehabilitating degraded soils and improving modern means of production. To boost prosperity, policies leading to higher prices for producers will be pursued. 76. Massive investments in irrigation: Less than 9 percent of irrigable land in Burkina Faso—this is less than 1 percent of the total area under cultivation—is actually irrigated. In the current Bank portfolio, the Programme d’Appui aux Filières Agro-Sylvo Pastorales (PAFASP) and the Bagré Growth Pole projects will continue to support large-scale irrigation, starting with putting in place the infrastructure to facilitate private investments in network extensions and irrigation equipment. IFC will actively support the Bagré project through its C3P unit, providing advice on PPP best practices and assisting with the bidding process to recruit a private investor that can manage and maintain the canal. IFC will also support the Bagré pole through its Agribusiness in Africa Special Initiative (Agasi). The Projet d’Amélioration de la Productivité et de la Sécurité Alimentaire (PAPSA) and PNGT projects particularly support creation of a thriving value chain for fruits and vegetables, oleaginous crops (sesame and Shea) and livestock. Both PNGT and PAPSA will continue to support development of wetlands for year-long cereal and vegetable production. While these investments and those of the government and other development partners are relatively small given the magnitude of untapped irrigation potential, many have already yielded successful outcomes that are considered best practices in the region. There is scope for scaling up these interventions. However, the expansion of small-scale irrigation into lowlands has been constrained by a lack of financial resources. Given the risk of more refugees coming into Burkina Faso from Mali and the need to ensure food security, the WBG will work closely with other development partners to mobilize resources to finance small-scale irrigation throughout the country. 27 - Strategic Objective Two: Enhance Governance to Deliver Social Services More Efficiently Outcomes Indicators - Improve actual availability of funds to communes by the central government earlier in budget cycle from April 30 in 2012 to No later than February 28 in 2016 - Increase budget execution rates in key poverty reduction ministries (Agriculture, Education, Health, Water and Sanitation) at decentralized 2.1. Public financial management for level from 50% in 2012 to at least 70% in 2016 good governance - Increase in percentage of citizens rating commune government’s performance satisfactory from 47.3% in 2012 to 70% in 2016 - Percentage of mining communities members who are aware of amount of social investment and government revenues supposed to be transferred to local communities and actual transfers increased from zero percent in 2012 to 50% in 2016 Education - Second grade reading and math skills increased by two percentage points annually: Reading increased from 50.8% in 2012 to 56.8% in 2016 while Math increased from 39.2% in 2012 to 45.2% in 2016 - Fifty percent in the five poorest regions9 School management committees receive and implement their annual budget increased from zero percent in 2012 to 50% in 2016 - Increase Girls enrolment rate in lower secondary education from 32.5% in 2011-2012 to 40% in 2015-2016 - Increase Gross enrolment rate to 13% for upper Secondary Education for girls from 8% in 2011-2012 to 13% in 2015-2016 Health 2.2. Expanded access of the poor to - Proportion of Births assisted by skilled personnel increased from 67% in quality social services 2010: 67% (DHS 2010) to 76% in 2016 (DHS 2015) - Pregnant women receiving antenatal care during a visit to a health provider (Core indicator) increased from 85.3% in 2010 (DHS 2010) to 95% in 2016 - Children under five with a severe acute malnutrition being treated according to the new protocol increased from 30% in 2010 to 50% in 2016 - Children fully immunized (IDA Core indicator) increased from 81% in 2010 (DHS 2010) to 96% in 2015 Water and Sanitation - Additional number of persons in urban areas having access to safe water increased from 304,505 in 2012 to 527,000 in 2016 - Additional number of persons in urban areas having access to adequate sanitation services increased from 203,905 in 2012 to 351,600 in 2016 - Additional number of students in urban areas having access to school latrines increased from 29,480 in 2012 to 120,000 in 2016 9 Nord, Est, Plateau Central, Sud-Ouest et Centre-Est 28 Outcome 2.1. Improved public financial management for good governance 77. Although Burkina has made major progress in public financial management (PFM) and procurement reform in recent years, efficiency is hampered by onerous ex ante controls. Efforts have been made to improve transparency by publishing accessible budget information and signing up to the Extractive Industries Transparency Initiative (EITI) process but efficiency gains can best be made by shifting to results-based PFM. Budget execution is still very centralized and both financing of local governments and decentralization are constrained by inadequate institutional capacity. Perceptions of corruption in Burkina are growing. According to the Transparency International Corruption Perception Index, Burkina’s ranking fell from 81/180 in 2009 to 98/178 in 2010 and 100/182 in 2011. Public sector inefficiencies are reflected in both poor social outcomes and low execution rates for sectoral budgets. 78. The government has generally been effective in keeping its spending in line with the country’s fiscal capacity and in recent years has increased the budgets of priority ministries like Education, Health and Agriculture. While these allocation decisions generally improved spending composition, spending efficiency is still impeded by slow and top-heavy financial management and procurement. Major efforts have been undertaken in recent years to improve the management and monitoring of public finances but more needs to be done to resolve problems of low budget execution capacity especially in the social sectors. To ensure that public expenditures are effective and lead to shared prosperity outcomes, there is need to implements the WAEMU PFM directives that promote transparency, probity, and accountability in public finance management. In this regard the Bank is supporting the government with technical assistance as it improves expenditure allocation through budget programming and introduction of medium-term expenditure plans in key ministries. Current TA will be supplemented with programmatic analytic and advisory activities (AAA) on public spending issues. 79. To accelerate delivery of public services to targeted poor communities, the Bank will continue to partner with national ministries, communes, development partners, NGOs, and other civil society organizations on a nationwide platform of support for decentralized service delivery and community-driven development. Particular attention will be given to areas and groups whose characteristics make service delivery especially challenging, such as disaster-prone and environmentally fragile areas, rural and urban poor communities, and vulnerable and marginalized groups. The Bank will also provide targeted vertical support to the critical sectors of education, health, and water and sanitation. The Local Government Support Project will work to enhance central government policies for effective fiscal and administrative decentralized service delivery and to build up the institutional capacities of local governments to deliver services transparently and inclusively. The third phase of the PNGT3 will build on the successful community-driven approach of the earlier phases by supporting communes and local communities in planning, implementing, and monitoring local development. 80. The Bank’s program of support for community-driven development and decentralization will emphasize empowering local communities and civil society to substantively engage in decision-making and oversee local development and service delivery. It will undertake initiatives to build the capacity of local councils, civil society representatives, and communities to voice their needs and monitor local government performance. IDA will continue to support a nationwide competition to reward local governments that adopt effective participatory practices for use of public resources and 29 will assist local communities in disseminating accessible information to members of the communities. In the mining sector, the PADSEM will support the government in establishing an inclusive multi- stakeholder roundtable and in building a national framework for mining company contributions to local community development. Building upon the EITI initiative, the Bank will promote access to mining information. In addition to IDA lending, trust fund opportunities will be harnessed to support civil society-led demand for good governance initiatives, notably with participatory monitoring. Outcome 2.2. Expanded access of the poor to quality social services 81. Aware that macroeconomic performance has not significantly reduced poverty in Burkina Faso due to the poor quality of its human resources, the WBG will continue to deepen its engagement to improve access to and quality of services in education, health, and water and sanitation which are prerequisites for raising living standards, reducing poverty of the population and eventually achieving the MDGs This will be done simultaneously with are measures to improve how public administrators deliver social services. Decentralization presents an excellent opportunity to address regional inequalities, share prosperity, and improve service delivery through community- driven development. 82. Education: Through its partnership with the government and other development partners, the Bank will continue to support the attainment of basic education for all (primary and lower secondary) which is considered the minimum required for better job opportunities and higher productivity. While access to basic education as measured by enrolment rates is a major concern in rural areas, improving the quality of education services throughout the country is even a more pressing priority, given high drop-out and repetition rates and low completion and achievement rates. The WBG will not continue with classroom construction as the government and other development partners are taking care of that but will rather focus on quality and improving learning outcomes. The Bank will also support decentralized anchor system management with deep community involvement through school-based management committees (COGES) for basic education. 83. WBG support will align with the holistic approach of the government to education. Therefore in addition to improving the quality of basic education, the Bank will direct its interventions in secondary education, to improving quality and the relevance by promoting science and technology. In tertiary education, the Bank will promote the development of high level skills and competencies through the Africa Centers of Excellence (ACE) program in West Africa project. This holistic approach will ensure better overall balance within the system by satisfying the aspirations of a large portion of the rural and poor populations deprived of quality education, while simultaneously creating the bases for responding to the development needs of a modern sector labor market. 84. Despite significant progress made in recent years the status of health in Burkina Faso remains worrying and contributes significantly to poverty. The Ministry of Health (MOH) through its National Health Development Program (PNDS 2011–20), aims at improved health outcomes and attainment of the health MDGs. The PNDS seeks to (a) increase public investments in health care; (b) increase access to obstetric health services; (c) target efforts to prevent and treat malnutrition; (d) involve the private sector more in delivering health care; (e) raise immunization rates; and (f) facilitate AIDS prevention, particularly for the poor. It also calls for universal health insurance, enhanced insurance benefits, and performance-based financing to support local service delivery and improve the performance of public hospitals. The PNDS also includes initiatives to build regulatory capacity to ensure improvements in the quality of health care. 30 85. Health: To improve the living conditions and reduce poverty amongst poor, rural and vulnerable groups, children’s health and access to health services, the Bank will work to scale up maternal and child health care, support interventions against malnutrition, enhance access to family planning services, and reinforce health insurance financing (universal health coverage [UHC]). The Bank will also help to reinforce the health medium-term expenditure framework (MTEF) to ensure that resource allocations are linked to MDG priorities and will increase social protection measures by combining cash transfers with community health insurance. To address the demographic challenge, the Bank will work closely with the United Nations Population Fund (UNFPA) and UNICEF to promote reproductive health and cultural change. The Reproductive Health Financing project will continue to support awareness-raising and access to family planning services. 86. The World Bank and the IFC will work together to support structuring and financing the private health sector to optimize outcomes. The joint HNP/Health in Africa Burkina Initiative seeks to encourage the private sector to contribute more to health care by creating an environment that enables effective dialogue between public and private health sector stakeholders. This initiative prepared a private sector health assessment in 2011. Through the Health in Africa Initiative (HiA) program support will be given to (a) revise laws and regulations to take into account the private sector; and (b) facilitate public-private contracting and development of a PPP sectoral strategy. 87. Water and Sanitation: After over a decade of sustained support for the sector, with impressive results in providing water and sanitation services in urban and peri-urban areas the Bank will continue to help the government to make further gains particularly in rural areas. The positive outcomes of the IDA-funded Urban Water Sector Project (UWSP), due for completion in 2015, will be carried forward with preparation of a new operation. The new project will (a) contribute to the ZIGA 2 investment program for Ouagadougou now being prepared by the Office National de l’Eau et de l’Assainissement (ONEA); (b) support investments in water and sanitation systems in selected secondary towns; and (c) consolidate the achievements of current institutional reforms. This intervention will make safe drinking water more readily available in urban areas and allow urban dwellers, mainly in Ouagadougou and Bobo-Dioulasso, to access sustainable water services. Simultaneously, the Bank will support the government in engaging the private sector to manage water systems in informal settlements, peri-urban zones, and rural areas through advisory PPP transactions, scaling-up output-based aid programs, targeting poor households, and crafting innovative financing mechanisms to support small-scale providers of water supplies. 31 - Strategic Objective Three: Reduce social, economic, and environmental vulnerabilities Outcomes Indicators - Number of households benefiting from targeted safety net programs (cash transfers and cash for work) increased from zero in 2012 to 20,000 in 2016 3.1. Strong social safety net system - Minimum food stock in the SONAGESS reserves and intervention stocks increased from 35,000 for reserve stocks and 5,000 in the intervention stocks in 2011 to 50,000 tons for reserve stocks and 10000 tons in the intervention stocks in 2016 - Percentage increase in food crop production in targeted zones (millet, sorghum, maize, rice and cowpea) increased from 15% in 2011 to 35% 3.2. Enhance food security in 2016 - Increase in quantity of products stored in the warrantage schemes in targeted zones from 500 tons in 2011 to 10,000 tons in 2016: - An Integrated System for Alerts and Responses to manage Risk and Catastrophes is set up and functional from No in 2012 to Yes in 2016 - Additional land area under sustainable land and water management 3.3. Better disaster and risk (SLWM) or Sustainable Forest Management (SFM) practices (hectares) management increased from zero in 2012 to 8,000 in 2016 in 2016 - Participatory management plans developed and implemented in targeted communities shared forests in targeted zones from zero in 2012 to 16 in 2016 Outcome 3.1. Stronger social safety net systems 88. Ensuring that economic growth in Burkina Faso is translated into poverty reduction and progress towards the attainment of key MDGs will require a balancing of supply side efforts to improve access of the poor to basic social services as described under Outcome 2.2 above with demand side safety net programs that can allow poor households to demand and invest in the health and education of their children and thereby break the cycle of inter-generational poverty. Existing safety net programs in Burkina include food transfers, accounting for 69 percent of total social safety net spending and over 80 percent of all estimated social safety net beneficiaries in 2009. According to a safety net assessment10 undertaken by the World Bank in 2011 the existing safety net system is weak, uncoordinated and does not address the needs of the poor adequately. The scope and coverage of existing safety net programs is limited, most interventions are small in scale, temporary in nature and externally financed. For example, to increase the demand for basic education in poor areas, more than 50 percent of primary schools in the country have school feeding activities, and over 50 percent of spending is externally funded. Given the large volumes of resources required, there is therefore a critical need to strengthen social safety nets and build an efficient and coordinated system. Drawing from recent analytical work, the Bank will support the government in designing a social safety net system that can respond to the needs of poor and vulnerable groups. Emphasis will be on (a) reinforcing the strategic, institutional, and financial framework for designing, implementing, managing, monitoring, and evaluating cash transfer safety net programs; and (b) drafting a plan for reforming current programs and designing new ones as needed. To reduce extreme poverty and 10 World Bank, 2011. “Burkina Faso Social Safety Nets”, Report number 54491-BF. 32 increase shared prosperity, the system would also spell out substitutes for regressive non-targeted and fiscally expensive general subsidies. Outcome 3.2. Enhanced food security 89. Given the nature and structure of poverty which continues to be essentially a rural phenomenon with subsistence farmers highly represented in the bottom 40 percent of the poorest, accelerating agricultural sector growth will be the most effective way of reducing poverty. Agricultural growth will have the direct benefit of ensuring food security and improving rural incomes. The Rural Sector Strategy outlines the government’s vision for modernizing Burkina Faso’s rural sector and making it a driver of long-term food security and growth. Climate change and population growth have put increased pressure on land resources and hastened environmental degradation, creating an untenable situation of food insecurity considering that 80 percent of the population relies on natural resources for both food and income. The need for more agricultural production and better land management and conservation are pressing and will require critical investments in both institutional development and productive infrastructures, such as massive scaling- up of irrigation capacity. To enhance agricultural productivity, the Bank will continue to support improved soil fertility management under the ongoing PNGT, commodity-specific productivity improvements under ongoing PAFASP, use of safety net mechanisms to spread technology to the most vulnerable households through ongoing PAPSA, and promotion of low-carbon rural development to ensure sustainable use of the land and natural resources under the Forest Investment Program (PIF) in the pipeline. The ongoing regional West African Agricultural Productivity Program, in which Burkina Faso participates with 12 other countries, will move the productivity agenda forward through regional cooperation and financing of regional public goods for faster adoption of transformative technologies. Outcome 3.3. Better disaster and risk management 90. Mindful of the severe impact of droughts and floods on exacerbating poverty, the WBG will support the long-term integration of disaster risk management including early warning systems and climate adaptation into the government’s vision for sustainable development. Through the Global Facility for Disaster Reduction and Recovery (GFDRR), efforts will be made to better integrate disaster risk management into the planning of sustainable development and to strengthen the capacity of the Conseil National de Secours d’Urgence et de Réhabilitation (CONASUR) and Conseil National pour l’Environnement et pour le Développement Durable (CONEDD) to actively collaborate with other agencies to develop multi-response plans. In addition, GEF grant-funded activities will contribute to integrating climate risk management into agriculture and natural resource management and will demonstrate cost-effective measures to make investments more resilient. 91. The World Bank will also help the government to create a framework within which to implement the draft law on disaster risk management. This will involve support to (a) strengthen national, provincial, and municipal policies and procedures; (b) monitor resource and environmental quality and economic instruments for resource and environmental management; (c) provide incentives to national, provincial, and local institutions to identify, prioritize, and address their most pressing natural resource and environmental challenges by consolidating forestry rehabilitation programs (currently scattered among community-driven development, energy, and agriculture projects) and by providing matching or conditional grants for communities to protect resources and adapt to climate change; (d) manage technical and administrative capacity-building for decentralized subprojects and 33 activities of institutions such as CONASUR; (e) develop a national resilience and vulnerability reduction strategy; and (f) perform research in disaster risk management (DRM) and adaption/ attenuation of climate change (ACC). Cross-Cutting Themes: Governance and Gender Equality Tackling governance issues 92. Because governance and institutional capacity are cross-cutting, substantive reform efforts related to these themes are infused within each of the three CPS Strategic Objectives. The second objective addresses economic governance and corruption by supporting reforms and capacity development in PFM and procurement and promoting robust systems for controls and sanctions within the administration and the judiciary, including forest governance and land rights enforcement, especially in rural areas. Based on sectoral political economy analyses and governance reviews conducted for the previous CAS, Strategic Objective One also seeks to tackle specific governance challenges, notably with respect to transparent upstream and downstream management of natural mineral resources, liberalization of the transport industry, and securing access to land. Under the second strategic objective, the Bank will help both central and local governments to build up their policy-making and institutional capacities to ensure that social services are delivered to local populations transparently, inclusively, and efficiently. In addition to the governance-related outcomes within each of the strategic objectives, the CPS targets the following three specific outcomes on governance and institutional capacity. 93. The Bank will continue to emphasize mainstreaming governance and anti-corruption throughout Bank-financed projects and TA by (a) ensuring robust upstream risk assessments and political economy analysis; (b) supporting third-party monitoring of all Bank-financed operations; (c) ensuring that complaints-handling mechanisms are designed into projects; and (d) focusing on building professional skills in the public administration so that programs are properly executed. 94. To enhance social cohesion and promote stability and good governance, the Bank will support efforts to streamline dispute resolution processes. The PNGT3 and the Local Government Support Project will continue to help communities adopt formal and effective complaints-handling mechanisms and establish inclusive committees to resolve land tenure disputes and build local capacity to mediate disputes. The forest investment program will also support rural conflict resolution processes in the context of securing land rights. Enhancing access to the formal justice system and making more information available on accessing justice are also critical to effective conflict resolution. The Public Sector Modernization Project will also support the Ministry of Justice in implementing its strategy to enhance local access to justice by strengthening the capacities of local courts and sensitizing local communities. Reducing gender inequities and enhancing female economic empowerment 95. The WBG will promote gender equality throughout its operational and non-lending programs in health, education, agriculture, and private sector development. Consistent with government policy, gender considerations will also be mainstreamed in all future WBG- supported operations. In addition, the group will help the government to: (a) draft policies for alternative social protection mechanisms and services and reproductive health / family planning; (b) increase investment for more inclusive education and access to reproductive health services; (c) adopt a coordinated 34 response to gender-based violence; and (d) ensure that the gender dimension is incorporated into disaster management. It will promote the economic empowerment of women through private sector development and access to financing initiatives, such as the Fonds d’Appui Aux Activités Rémunératrices des Femmes (FAARF) that the WBG supports. C. Implementing the FY13-16 Country Partnership Strategy Financial Envelope 96. The indicative amount of resources available to Burkina Faso for IDA 16 period (FY12–1) is equivalent to US$800 million. Although the amount of resources available under IDA 17 will not be known until the end of FY14, it is assumed for purposes of the proposed CPS that financing for FY15-16 (the first 2 years of IDA 17) will be similar. Therefore, the amounts shown in the outer years are indicative only (Table 5). Actual allocations will depend on (a) the country’s own performance; (b) its performance relative to that of other IDA recipients; (c) the total amount of resources available to IDA; (d) changes in the list of active IDA-eligible countries; (e) terms of financial assistance provided (grants or loans); and (f) global economic developments. The recent joint Bank-Fund DSA completed in June, 2013 finds that the risk of debt distress in Burkina remains moderate. The breakdown of IDA funding for FY14 will be 50% grants and 50% credits and that per IDA's grant allocation formula, the share of grants in IDA financing for the following years will be determined based on updated DSA's. 35 Table 5: Indicative Lending and AAA Program mapped to CPS Strategic Objectives, FY13-16 CPS Strategic Objectives One: Accelerate Two: Three: Inclusive and Enhance Reduce Sustained Growth governanc social, Source of Financing e to deliver economic, Analytic and Operations by Fiscal (US$ million) social and Advisory Year (FY) services environmen Activities more tal efficiently. vulnerabilit ies IDA TF FY13 DPO (GCC1) 90        Strengthening DPO (GCC2) 70 X X fiscal revenues    X for Communes Youth Employment and TA 50 X X Skills Development     Mining Pole Transport (Donsin Policy Note 85 X Airport)     BF-PER Community Based Rural (Energy & 70 X X X Transport) Development, Phase 3     BF-EITI Strengthening Public 0.7 X Implementatio Sector n Support Regional Training Center  Strengthen 10 X (2iE)       Safety Net Response to Emergency Livestock 2.85 X Crisis Feed Access Project    Subtotal FY13 375 3.55    FY14  Competitiveness and sustainable DPO 100    X X growth policy Energy 50 X X note     Financial Sector Social Safety Nets 30    X X Policy Note PAFASP II 50    X X X  Public Expenditure FIP-Forest Management 18 X Review     BF-Health status Regional Projects:       Report  Africa Centers  Feasibility Study of Excellence of Agricultural Micro-  Sahel Regional insurances Pastoral  GAC Livelihoods 60.82 Mainstreaming Resilience  Disaster Risk Management Project and Climate  Other Change Adaptation Subtotal FY14 290.82 18    36 IDA 16 allocated 889.72 including FY12 (213.9)       FY15  Study on Agro- Processing DPO 70    X X Opportunities PSD/Growth Pole 100    X X X  Country Public Sector Integrated 30    X Fiduciary Modernization Assessment (FM, Education quality procurement, 50 improvement and Governance)       Subtotal FY15 250 0    FY16 DPO 80    X X X    Water Supply (Ziga 2) 80       X X TBD       Subtotal FY16 160 0    TOTAL Scheduled* 1,299.72 21.55    *Total scheduled is funded by IDA 16 and 17 allocations. Managing the Program 97. Outcomes in the CPS program (Annex 1) will be achieved through a mix of lending, knowledge, and convening services, managed as a comprehensive package of support under each strategic objective to deliver timely development solutions. Programmatic support for growth and competitiveness will account for roughly one-third of the program. This will be complemented by policy dialogue, investment lending, economic and sector work, and TA by the Bank and IFC. Country management will flexibly adjust resource allocation among results areas depending on progress and emerging opportunities in those areas. IFC’s resources will be integrated into jointly developed results areas, notably in infrastructure, agribusiness, and the financial sector. Consistent with the overall strategy, MIGA will also continue to offer its guarantees. 98. In delivering the program, special attention will be paid to reinforcing the portfolio, lending more efficiently, promoting the knowledge agenda, and leveraging additional resources through strategic partnerships and trust funds. This will be part of an approach that includes clear indicators and commitments for reducing the cost of doing business with the Bank, as well as the cost of business for the Bank itself in terms of preparation time and budget. The WBG will use innovative financing products, such as output-based schemes or guarantee products, to attract private financing. It will also actively mobilize other funding sources to support analytical, advisory, and supervision work and will use resources more efficiently through risk-based approaches to fiduciary supervision. The group, in agreement with the government will ensure that solicitation of trust funds over the course of the CPS will follow the thrust of this strategy. 37 Portfolio and pipeline management 99. As of May 30, 2013, the Bank’s portfolio comprised 22 projects for a total commitment of US$1,044.37 million (10 IDA grants totaling US$605.01 million and 5 credits totaling US$303.50 million, 1 GEF for US$1.8 million and 6 regional operations totaling US$135.86 million), of which US$300 million, 33.02 percent, had been disbursed. The trust fund portfolio consists of 10 recipient-executed trust funds totaling US$15.89 million, of which US$6.87 million, 43.26 percent, has been disbursed. At the end of FY12, Burkina Faso’s disbursement ratio was 23.23 percent compared to 21.3 percent region-wide. Currently, the Burkina Faso portfolio has zero projects at risk, although a number are rated “Moderately Satisfactory.” Fifteen loans (including 3 DPOs) totaling US$819 million were approved during FY10–12. This was higher than the US$501 million anticipated in the CPS. The increase was due to additional resources for crisis response (2009 floods, global financial crisis, and high food and fuel prices). 100. Despite the improved lending commitment for FY10–12, portfolio performance reflected delays in effectiveness for many projects (averaging 4–6 months for national projects and 6–9 months for regional projects) and also delays in procurement. Consequently disbursements tended to be lower than expected. Both the Bank and the government recognize the importance of sustaining performance momentum and the need to institutionalize sustainable measures so that commitment levels will be matched with disbursements so as to achieve desired results. 101. To improve program planning and budgeting, the WBG will identify readiness criteria agreed with the government, which will be used to screen projects during regular programming discussions. This will enable both parties to effectively determine which projects are ready for preparation and decide whether to postpone or drop those that are not. Only project ideas that go through this process will receive full preparation budgets. Project preparation activities will then be monitored closely, to ensure that they are completed efficiently and to Bank standards. 102. The WBG will actively engage with the government to address inadequate technical capacity within implementing agencies, including measures to improve quality at entry as well as readiness to implement projects. The government recognizes the need to improve monitoring practices, particularly for projects whose status is problematic, so that follow-up action can be taken quickly. The Bank has offered to provide TA to strengthen institutional capacity and monitoring processes and systems to help improve government fiduciary functions. The Bank will also help the government to identify the main constraints on building and retaining capacity in government agencies, especially as they relate to completion of projects and programs. 103. During the CPS program, the WBG will apply stringent performance criteria to project preparation and portfolio review, building on the interest and the commitment of government agencies to improve efficiency and responsiveness. This will require making more strategic choices and agreeing to engage only in areas where the Bank has strong partners and a shared commitment to delivering results. The Country Management Unit (CMU) will take an active hand in shaping the pipeline by encouraging teams to pursue additional financing for operations that are functioning well and engaging with teams during the pre-identification stage. Opportunities to pursue additional financing will be actively evaluated with a view to reducing transaction costs, deepening and broadening successful reform efforts, and building on tested fiduciary and implementation arrangements (e.g. PNGT, PAFASP, and PST). 38 104. New project ideas will be screened early and preparation resources will be allocated incrementally based on project complexity and demonstrated progress and traction with counterparts. Teams will initially be given modest budgets to draw up the business case for potentially innovative project ideas. These initial assessments will cover critical issues, the progress of reforms in the sector, and the likelihood of success in proposed reform areas. As part of the work program agreement process, all project ideas will be subject to an initial CMU and Sector Management Unit (SMU) review before they are cleared for additional resources to move to the pre-identification stage, leading to preparation of the project concept note. Fiduciary Aspects 105. Scaling up the use of country systems: During the last CAS, the Bank assessed country systems to identify steps the government and the Bank would need to take to increase the use of country PFM systems in Bank-financed investment operations. An action plan was drawn up based on the assessment’s recommendations and this CPS will support implementation of this action plan. The Bank will also continue to scale up the use of national systems by (a) supporting the government as it implements the Politique du Secteur de l’Economie et des Finances (POSEF) action plan; and (b) promoting PFM harmonization and coordination through active participation in the PFM Donor Coordination Group. 106. Supporting a more integrated approach to PFM and procurement: Recent assessments (including the 2007 and 2010 Public Expenditures and Financial Accountability [PEFA] and the 2013 PER) have identified a range of weaknesses in Burkina’s PFM system—many of which create payment delays or failure to pay private contractors and affect the population as ultimate beneficiaries. The reports identified critical shortcomings in budget preparation and execution and in internal and external controls at both central and decentralized levels. As an initial response, the government adopted an action plan, the Economy and Finance Sector Policy (POSEF), which is slowly being implemented. In addition, the WAEMU in 2009 adopted six new PFM regulations (directives) covering transparency in public finances in general, budget preparation and execution laws, government accounting, budget classifications, the central government chart of accounts, and central government operations. These set ambitious objectives, including performance budgeting, decentralization of commitment authority to line ministries, reinforcement and modernization of internal and external controls, modernization of expenditure management, implementation of accrual accounting, and budget classifications aligned with international standards. A harmonized WAEMU public finance reform, supported by all funding partners, is a major objective of the POSEF. Done effectively, this reform will have considerable consequences for organization of the expenditures chain, organization of the Public Treasury, the functions and organization of general directorates of Budget and Financial Control, and PFM systems, including infrastructure and IT applications for both procurement and financial management. Over the CPS period, the Bank will continue to support the Burkina government as it aligns its laws with the WAEMU directives. 107. Identifying bottlenecks in approval and execution of contracts: Bottlenecks in PFM and procurement in execution of the national budget and use of donor resources persist. With a view to improving budget execution and disbursement of funds allocated to the country, during the CPS the Bank will undertake a well-sequenced AAA series to strengthen analysis of critical PFM and procurement shortfalls along the value chain. This program will include (a) collection of data on 39 procurement and PFM processes and a review of existing systems; and (b) value chain analysis of contracting processes (both nationally financed and donor-financed) in specific sectors. 108. Integrating procurement planning into the annual and multi-year (MTEF) budget processes: To strengthen budget processes, Burkina Faso needs a stronger framework for integrating planning and monitoring of procurement expenditures into the public financial system. The Bank will help the government to ensure that the annual procurement plans of each government ministry and agency feed into the budget process before August each year. This will enable procurement entities to update and obtain approval of their procurement plans immediately after the budget is approved at the end of January. Monitoring and Evaluation 109. The CPS Results Framework outlines the outcomes expected from the Bank’s program of support. (See Annex 1.) Using Burkina Faso’s SCADD as a starting point, the framework narrows the range of outcomes to those the WBG can demonstrably influence. Since most of the new operations in the CPS will not likely be finished until after the CPS period ends, results will be drawn from existing operations and the quicker disbursing interventions included in the CPS. To accelerate disbursements the WBG will monitor progress of projects and pursue improvements in portfolio management. The WBG will further strengthen implementation and M&E review practices in project supervision and monitoring through (a) regular project/program supervision; (b) periodic results-based Country Portfolio Performance Reviews; (c) quarterly portfolio reviews in collaboration with the Ministry of Finance; and (d) a CPS Progress Report in mid-2015 to evaluate progress toward CPS outcomes and adjust the strategy and program as needed. The government will monitor and evaluate the strategy using the same country systems that will be used to monitor the SCADD. Timely Implementation Status and Results Report (ISR) reporting for all projects will be strictly required and supervision budgets will be increased, if necessary, for projects considered at high risk or in problem status. Integrated fiduciary performance reviews will use a more risk-based approach, with particular attention to high-risk projects. The WBG will also strengthen project M&E by encouraging civil society and local communities to monitor program performance. The Bank will continue to work closely with other partners to support the government’s efforts to make more effective and operational the national M&E system for SCADD implementation. Knowledge Agenda 110. The Bank will follow a focused knowledge agenda based on areas that are consistent with CPS strategic objectives. Without being restrictive, the program will focus on deepening the Bank’s knowledge of and engagement in the strategic areas identified in the CPS. The knowledge program (Table 6) will therefore focus on one or more of the following themes: (a) macro/fiscal stability; (b) the investment climate; (c) better service to the poor; (d) reducing vulnerabilities; and (e) governance. Through close coordination with the government and in partnerships with think tanks and universities, the WBG will endeavor to maximize the developmental impact of its analytical work in Burkina Faso, taking into account the SCADD and the long-term vision in “Burkina Faso 2025.” Understanding the causes of poverty and how the poor can better benefit from growth are critical questions needing answers. Through a process of consulting with the government and other stakeholders the WBG will set priorities for knowledge activity. However, some knowledge work will also respond to the Bank’s needs for further information in critical areas where policy and operational responses are needed. 40 Knowledge work focused on innovative ideas and business development would, for example, be important to guide the Bank program in Burkina Faso. Partnerships and Donor Coordination 111. A network of effective partnerships is critical to both Bank lending and the knowledge agenda. Even though the WBG maintains a strong presence in Burkina Faso, it needs to continue to build productive partnerships with the government and other development partners in order to optimize the impact of its engagement on the country’s development. Capitalizing on a joint need to prepare new strategies, the Bank undertook a collaborative CPS preparation process with the African Development Bank, in which the two institutions (a) worked together in the field and shared common diagnostics of the country context, development challenges, and the government vision in their strategy documents of December 2011; and (b) made concerted efforts to identify synergies during the strategy period for investments, analytic work, and policy dialogue with the government. Though each institution has its own strategy document, both reflect the efforts to harmonize dialogue and planned interventions during the CPS period. 112. During preparation of this CPS, the World Bank and the IFC undertook several months of substantive discussion and consultation with government authorities at the central level and in the seven regions, civil society, private sector actors, parliamentarians, and other development partners. In total, 250 people took part, and in December 2012 and January 2013 another 314 stakeholders provided their views on the Bank’s performance, effectiveness, and future role through the Client Survey. From these activities emerged a consensual vision for the WBG’s engagement in Burkina Faso during the CPS period. 113. During CPS implementation the World Bank Group will scale up its partnerships and strengthen complementarity with other development interventions. Along the lines of the WBG- AfDB joint diagnosis, the WBG will seek to ensure complementarity between its lending program and those of other multilateral organizations, such as the European Union (EU) and the African Development Bank (AfDB), in areas of common interest (see Annex 9). The WBG will continue to expand current partnerships and explore new activities with global programs like the Public-Private Infrastructure Advisory Facility (PPIAF), the Global Environment Facility (GEF), the Water and Sanitation Program, Carbon Finance Funds, and others. Close coordination with the IMF will continue, especially in assessing macroeconomic policies and conditions. Co-financing with both multilateral and bilateral development agencies will be explored, particularly for large program loans. The Bank will continue to cooperate with the United Nations country team on addressing the MDGs and other common activities. The Bank country team will also proactively pursue new partnerships and trust funds to mobilize additional resources and expertise for the Burkina Faso country program. Drawing on its convening power in Burkina Faso, the Bank will actively coordinate with other donors and continue to support partnership efforts like the General Framework for Organization of Budget Support (Cadre Général d’Organisation des Appuis Budgétaires) and the thematic working groups that relate to WBG engagement in Burkina. 114. The Bank recognizes the potential partnerships offered by Burkina’s active and vibrant civil society. Building on the partnerships the Bank has developed with civil society in recent years, the WBG will make efforts to expand its engagement in the context of its lending and knowledge agenda. The development dialogue series initiated during the CAS period will be continued, offering an opportunity for regular dialogue and information-sharing on current issues. To enhance capacity 41 and expand the opportunities available to civil society, the Bank will also promote inclusion of civil society in implementing and monitoring operations as it designs its operations. Current monitoring of World Bank projects by the Japanese Social Development Fund (JSDF) Burkina Faso Community Monitoring project will also promote collection of civil society feedback about project performance. VI. MANAGING RISKS 115. Four major risks might affect implementation of the CPS: macroeconomic risks; political economy risks; climatic and disaster risks; and implementation capacity risks. 116. Macroeconomic risks. Risks associated with a recession in Europe, both through changes in commodity prices and through volatility from its peg to the euro, could negatively affect the environment for CPS implementation. WBG engagement proposed in agriculture, cotton, and mining sectors are particularly vulnerable. Since Burkina is heavily dependent on revenues from gold and cotton exports, commodity price shocks affect export revenues. An increase in oil imports may also put pressure on the country’s balance of payments. Moreover, since the CFAF is pegged to the euro, a shock to the euro system can have ripple effects on CFAF economies. Other risks include a decline in foreign aid, and hence budget support, that may jeopardize public investment, growth, and debt sustainability. The development policy operation in the CPS is designed to mitigate many of these risks through, e.g., reforms of the agricultural input markets such as the fertilizer fund to stimulate output, improve cotton sector competitiveness, as well as measures to accelerate development of the private sector, the key driver of the economy. Effective implementation of growth-enhancing reforms and export diversification will reduce these risks. The CPS will support EITI conformity and strengthen the government’s capacity to negotiate contracts, monitor operations, and invest natural resource rents for inclusive and sustainable development. In the short term, possibilities for flexibility and adaptation of the program are envisaged to ensure rapid responses to crises such as the global financial and economic crisis that might jeopardize the achievement of the objectives of the CPS. 117. Political economy risks. Risks of political instability induced by the potential for civil unrest could undermine sustained implementation of the WBG program. These political economy risks stem from the sociopolitical unrest of 2011 which exposed popular discontent with governance shortcomings, especially the perceived lack of accountability in the management of public resources. Instability in neighboring countries, especially Mali, Côte d’Ivoire, and Niger, could also affect Burkina’s security and its political and economic stability. The law establishing the Senate, which raises the possibility of constitutional changes related to the term of the president, somewhat exacerbates that risk should President Compaoré seek another term in 2015. The influx of refugees could aggravate food security problems, put pressure on scarce humanitarian resources, and trigger conflict between host communities and refugee populations. The conflict in Mali also carries the potential that illegal arms will be introduced into Burkina Faso. The WBG will mitigate these political economy risks by promoting more transparent decision-making and spending processes; strengthening the capacity of external audit institutions and the judiciary; and encouraging inclusive local development procedures, including allocation of land. The WBG will continue to conduct analysis of political economy sectors, fund programs that target and increase economic opportunities of the youth thus reducing their desire to engage in violence. The WBG will also work closely with the United Nations Department of Security and Safety (UNDSS) to regularly assess the risks of engagement in regions facing increased insecurity, and facilitate a change of course if needed. 42 118. Climate risks. Weather fluctuations have a marked effect on Burkinabe agriculture, particularly cotton, and therefore on rural livelihoods. The risk of disasters (floods, locusts, wild fires) could interfere with implementation of this CPS. TA on managing disaster risks and adapting to climate change, complemented by sustainable management of the price-smoothing fund and actions to improve food security, will help to mitigate these risks. The WBG will provide rapid responses to help populations that have been affected by natural disasters (droughts and floods) and continue to work with other development partners to fund activities that strengthen people’s resilience.  119. Implementation capacity risks: Realization of the strategy may suffer from inadequate institutional capacity, particularly in the municipalities, and inadequate capacity of civil society groups to monitor performance. The Bank will mitigate these risks by providing more support during the preparation of programs and projects making sure that adequate measures that target the delivery of results and evaluation of impact are in place before effectiveness. During program implementation the WBG will continue to focus on strengthening capacity in public financial management and governance and provide technical assistance necessary to overcome weaknesses where identified. The Bank will continue to promote ownership of development activities by the government and civil society at the local level and harmonization of efforts among development partners. 43 Annex 1: World Bank Program Results Matrix (FY13-FY16) Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators CPS Strategic Objective 1 – Accelerate Inclusive and Sustained Economic Growth Outcome 1.1. Macroeconomic stability and a more efficient financial system conductive to higher investment by the private sector. Accelerated growth  Macro-economic Increased revenue as ‐ Tax administration Ongoing Operations (SCADD Axis 1.1) framework is stable and proportion of GDP strengthened  Growth and fiscal risks are moderate 2012: 13% ‐ Mining code revised to Competitiveness but vulnerability to 2016: 15% benefit the poor in the Credit series (GCCs) external shocks, macro local communities  Mineral development and financial risks remain Mining revenue as a ‐ Fiscal and financial support project high; proportion of GDP control of the mining Pipeline operations  Burkina Faso has lots of increased to 5% sector improved.  Public Sector mineral deposits that need 2012: 2.5% ‐ Transparency and Modernization to be exploited and well 2016: 5% accountability in Project managed to benefit the compliance with EITI ESW/TA/AAA poor in the local procedures  Public expenditure communities; review  While mining revenues  Strengthen of fiscal have been increasing due revenues for the to favorable international communes prices, a critical challenge Other Development will be to ensure that the Partners: sector contributes European Union, sufficiently to France, FMI, AFD, Government’s fiscal Denmark, Sweden, accounts and to the Switzerland, KfW overall economic development of the country 44 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators Small and Medium  Low capacity of SMEs Total value of financial and Improved investment and Ongoing operations Enterprises, Small and due to limited access to operating leases (crédit- regulatory reforms  Competitiveness and Medium Industries financial services bail) in Burkina. Enterprise (SMEs/SMIs)  Quasi absence of access to 2012: $33.4 million Require specific product Development Project finance in rural areas to 2016: $60.0 million to be tailored and  Bagré Growth Pole (SCADD Axis 1.) promote agriculture and AMSME program to be Project Pipeline small scale agro- Increase in portfolio of agreed thereby expanding operations processing SMEs borrowing from IFC- opportunities for new  Growth and  Private sector interest in client banks. income generating Competitiveness the economy is limited 2012: To be established by activities for the poor and Grant2 thus reducing employment progress report women. ESW/TA/AAA opportunities for the poor 2016: $10 million  Competitiveness & Participating in setting up sustain Growth Increased financial and financing a institution support to SMEs microfinance institution through dedicated credit to target SME needs lines or financial products: 2012: 1 bank 2016: 3 banks Development of Mining Mining Ongoing operations priority sectors  Weak institutional Annual increase in gold Mining code still relevant  Mineral development capacity production and exports (in for private sector support project (SCADD Axis 1.1.2)  Poor physical and Ton) investment financial control on 2010: 4.233 tons Pipeline operations mining companies 2016: 45 tons  Negative externalities  IFC Natural resulting from mining IFC to finance the sector resources investment activities such as: land use and implement mining Climate program conflicts, environmental linkages program increased: IFC advisory in pollution and disruption 2012: 2 companies at mining linkages of social cohesion, etc. exploration stage programESW/TA/AA 45 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators  Revenues generated from 2016: 2 companies at A mining activities do not exploration stage and 2 necessarily benefited to companies at exploitation  Mining Pole Policy poor local communities stage Note 2012 : 0 mining linkages program 2016: 1 mining linkages program Outcome 1.2. A higher skilled workforce and less unemployment  Acute skills deficit in Number of participants of - National policy on Ongoing operations major high productivity entrepreneurship training Vocation Education and  Competitiveness and sectors of the economy supported by Youth/Skills Training (VET) is Enterprise across the country and project who prepare adopted and Development Project particularly in the East business plan implemented  Growth and and North 2012: 0 - VET training Competitiveness  Majority of the labor force 2016: 100,000 opportunities are Grant2 is working in agriculture extended to 5 new areas  Youth and Skills or non-agricultural Percentage of participants including the East and Development Project informal jobs supported under the North part of the  Employability of youth is Youth/Skills project who country hindered by absence of complete: (a) - Apprenticeship Pipeline operations basic literacy and apprenticeship, (b) programs promoted  Africa Centers of numeracy skills entrepreneurship, short and Excellence  The skills development midterm training programs; system is limited, low (c) Proportion of graduates ESW/TA/AAA quality, and the who continue to apply their  Feasibility studies curriculum does not skills in job opportunities financed by prepare youth for working investment Climate life 2012: 0% Facility for Africa  The skill level of the 2016: 80% (IFC) workforce is too low to 46 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators support diversification Under Youth/Skills project, and productivity of the number of out of school economy; youth enrolled in  Traditional apprenticeship increased apprenticeships, which are 2012: 0 the primary source of 2016: 2,500 skills development in Burkina Faso, are not Under Youth/Skills project, amenable to number of youth benefiting standardization and from temporary jobs established norms increased 2012: 0 2016: 11,000 Outcome 1.3. Reduced infrastructure deficits (Energy Roads, ICT) and more effective value chains Development of Energy Energy - 158 (GWH) of energy Ongoing operations priority sectors  Total generation capacity Electricity production imported from Ghana  Energy Access (SCADD Axis 1.1.2) is insufficient to meet capacity increased by 2016 Project peak demand which is 2012: 256MW - strategy to catalyze the  WAPP: the First growing at 10 percent per 2016: 300MW market for low-cost, Phase of the Inter- annum modern off-grid zonal Transmission  Limited access to Percentage of households lighting adopted Hub Project (APL3) electricity particularly in with access to electricity - Increased private sector  West and Central rural areas constrains increased (IDA TIER 1): participation in off-grid Africa Air Transport economic growth (only 2012: 28.60% energy production and Safely & Security 20 percent of the 2016: 50% distribution. Project population has access to - Rural Electrification  West Africa power with less than 5 Increased Renewable energy program covers in all Regional Transport percent for rural and off-grid lighting regions and Transit populations) available in at least 50 rural - Provide solar power to Facilitation Project  High tariff s averaging 25 communes. face higher energy  West Africa 47 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators US cents per KWH demand Regional hampers private 2012: 0 - Provide schools in poor Communications development and 2016: 50 off-grid communities Infrastructures competitiveness, with solar lanterns Project  Grid expansion and Increased private sector - Increased access to low  Set up three 20 MW installation of investments in electricity cost energy in by rural solar power plant connections is still generation and distribution communities in about limited to small number (IFC’s Energy program) 40 communities Pipeline operations of communities  Electricity Access 2012: 0 and Energy Supply 2016: 60 MW  Donsin Transport Infrastructure project Roads Roads - A sustainable financing  Regional DPO on  Road network especiallyMaintenance carried out on and maintenance classified road network (%) those linking rural areas strategy for rural and Transport and Trade with high potential of secondary roads is Facilitation production, mining and 2011: 74% established. tourism are poorly 2016:100% - Institutional planning maintained thus reducing and management of the ESW/TA/AAA their connectivity to Share of rural population transport sector  GEF Ouagadougou markets and urban within 2 km of all-season strengthened Transport Modal consumption areas road increases Shift  Road maintenance fund 2011: 25% - Private sector, and not financially 2016: 35% Public Private Partner autonomous. laws- are set up and  60 percent of the 8,230Information and functional Communication Technology villages in Burkina Faso have no access to all- - The legal and regulatory weather road Volume of international environment traffic (Kbit/s per person): strengthened (licenses, Information and 2010: 28 competition, cyber Communication Technology 2016: 74 security -access to 48 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators (ICT) information and freedom  Limited access to internet Access to telephone services of information, and broadband services (fixed mainlines plus protection and  Only limited areas are cellular phones per 100 confidentiality of data, covered people) transactions and  High tariffs for mobile, 2010: 37.2% electronic broadband and 2016: 62% authentication, international bandwidth cybercrime and related  Regulatory framework to issues), spur competition and Access to internet services broadband penetration (number of subscribers per needed. 100 people) 2010: 0.2% 2016: 0.6% Promotion of growth Agribusiness Agribusiness - Coordination Ongoing operations poles (SCADD Axis  Revenue sources narrow Increased exports volume mechanism for  Bagré Growth Pole 1.1) across the country and in in diversification products investment and export Project rural areas in particular by at least 20% (onion, promotion in place  Agricultural  Predominant subsistence mangoes and Sesame) Productivity & Food agriculture leads to low - Cotton: Full Security Project crop and livestock 2012: 60,000 tons implementation of new  Agricultural productivity 2016: 72,000 tons price formula for Diversification and  Limited participation of determining farm Markets the private sector to spur Average cereal production producer prices and for Development Project agro value chains increase by at least 20 %: adequate capitalization  Third Phase of the  Burkina has a of stabilization fund Community Based comparative advantage in Average of the last five (fonds de lissage) Rural Development exporting mangoes, years (2008-2012): Project sesame, and shea nut 4,100,000 tons - Operationalization  West Africa products to the 2016: 4,800,000 tons (including Agricultural international markets, but capitalization) of the Productivity Program the country is trading Increase in irrigated land by input fund (the 2013-14 (WAAPP-1B) 49 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators these products at the at least 20% campaign's inputs are  Competitiveness and lower levels of the value purchased using the Enterprise chain. 2011: 50,000 ha fund) based on manual Development Project  Insecurities in land tenure 2016: 60,000 ha prepared by producer  Mineral discourage long term association AICB and Development investments in value Volume (ton) of fish associated legal Support Project added production production in the Bagré documents  Inadequate supply of zone: - Improved investment Pipeline operations water and agricultural and regulatory reforms  Growth and inputs limit productivity 2010: 522 established. Competitiveness 2016:1,150 - Enhanced institutional Grant2 capacity for zone Average minimum cotton management and for production is at least equal better investment ESW/TA/AAA to 500,000 tons climate around the  Mining Pole 2009-2011: 375000 tons Bagré Growth Pole;  Competitiveness & 2012-2016: 500,000 tons - Improved infrastructure sustain Growth Number of service providers and critical services in operating in the Bagré zone Bagré. 2010: 0 2016: 15 Number of public private IFC help promote Bagré partnerships in Burkina zone and finance 2  IFC industries Faso (IFC’s PPP support): anchor private investors (MAS and Infra), 2011: 0 IFC Investment 2016: 3 Climate program, WB FPD Number of anchor investor in Bagré zone 2012: 0 2016: 2 50 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators CAS Strategic Objective 2 –Enhance governance to deliver social services more efficiently Outcome 2.1. Improved public financial management for good governance Strengthening  Slow availability of funds Improved actual availability - Notification of Ongoing operations Governance to communes committed of funds to communes indicative allocation of  Growth and (SCADD: Axis-3):   by the central government committed by the central transfer amounts by Competitiveness  Low budget execution government earlier in the central government to Grant series (GCGs) capacity in the social budget cycle each commune council  Local Government sectors by November of Support Project 2012: April 30, 2012 preceding fiscal year ESW/TA/AAA 2016: No later than 2012: No  Public expenditure February 28, 2016 2016= Yes review  Strengthen of Fiscal Increased budget execution - Mechanism for budget revenues for the rates in key poverty transferred to line communes reduction ministries ministries and then to Other Development (Agriculture, Education, municipalities Partners Health, Water and established. European Union, Sanitation ) at decentralized - Capacity of local France, FMI, AFD, level government officials in Denmark, Switzerland, public financial KfW 2012: 50% management 2016: at least 70% strengthened. Increase in the number of people attending periodic “cadre de concertation” meetings 2012: 0 2016: 80% Increase in the number of communes submitting their candidacy documents for the 51 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators good governance competition 2012: 0 2016: 60% Governance Ongoing operations  Weak governance Increased in percentage of Local Government  Corruption Perceptions citizens rating commune Support Project Index remain amongst the government’s performance  Third phase of the highest in the World, thus satisfactory Regular attendance of/bi- Community Based Burkina has declined from annual public - local Rural Development 81/180 in 2009 to 100/182 2012: 47.3% council meetings Project I 2011 2016: 70%  GCG series  Persistence of the Publication of mining ESW/TA/AAA corruption phenomenon in Percentage of mining conventions  AAA on revenue procurement process communities members who collection (FY13) (health subsidies) are aware of amount of National mining  Financial Sector  Information asymmetries social investment and roundtable introduced Policy Note continue to limit the government revenues  Public Expenditure extent to which civil supposed to be transferred review servant and local to local communities and  BF-EITI populations can actively actual transfers: Implementation participate in decision- 2012: 0 Support’ making and oversight 2016: 50%  Mainstreaming Governance and Anti-Corruption Other Development Partners: European Union, African Development Bank, France, KfW, Denmark, Switzerland, Netherlands. 52 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators Outcome 2.2. Expanded access by the poor to quality social services Axis 2. Consolidation Education Second grade reading and Ongoing operations of Human capital and  Primary completion rate math skills increased by two  Fast Track Initiative promotion of social remains low with wide percentage points annually  Third phase of the protection (SCADD) disparities between urban - School management is Community Based and rural and between Reading created and is Rural Development girls and boys 2012: 50.8% functional in all Project  Poor reading and math 2016: 56.8% (All) schools  Decentralized skills in earlier grade Math Development Project cause high dropout 2012: 39.2%  Growth and especially for girls. 2016: 45.2% Competitiveness  Gender disparities in Grant series enrollment rate for Fifty percent in the five Pipeline operations secondary education poorest regions11 School  Youth Employment management committees and Skills receive and implement their annual budget Development Project (50) 2012: 0% 2016: 50% Increase Girls enrolment ESW/TA rate in lower secondary Technical support on education post-basic education 2011-2012: 32.5% 2015-2016: 40% Increase Gross enrolment rate to 13% for upper Secondary Education for 11 Nord, Est, Plateau Central, Sud-Ouest et Centre-Est 53 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators girls 2011-2012: 8% 2015-2016: 13% Health and Nutrition Health Proportion of Births assisted Cumulative number of Ongoing operations (SCADD Axis 2.3)  High maternal mortality by skilled personnel: pregnant women Health Sector Support rates 2010: 67% (DHS 2010) receiving antenatal care Project  High infant mortality rates 2016: 76% (DHS 2015) during a visit to a skilled  Reproductive Health  Under-five malnutrition, health provider Project malaria and vaccine Pregnant women receiving (specialist or non-  Decentralized preventable diseases are antenatal care during a visit specialist doctor, or other Development Project among the main cause of to a health provider (Core persons with midwifery  Third phase of the infant mortality. indicator) skills who can diagnose Community Based 2010: 85.3% (DHS 2010) obstetric complications) Rural Development 2016: 95% for reasons related to Project pregnancy  Growth and Children under five with a 2011: 87.7% Competitiveness severe acute malnutrition 2016: 95% Grant series being treated according to ESW/TA/AAA the new protocol:  Health status report  Health Procurement 2010: 30% and Risk 2016: 50% Management (P145375) Children fully immunized  Demography (IDA Core indicator): challenges in the 2010: 81% (DHS 2010) Sahel region 2015: 96% Water and Sanitation Additional number of Rural and small towns Ongoing operations  Access to potable water persons in urban areas PPP strategy and action  Urban Water Project limited in the urban and having access to safe water: plan for WSS and sector  Growth and rural areas. 2012: 304,505 regulation adopted and Competitiveness 2016: 527,000 implemented Grant series 54 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators  Low rate of access to  Third phase of the sanitation services urban Additional number of Capacity building Community Based area. persons in urban areas program for sanitation Rural Development having access to adequate scaling up in the 49 small Project  Weak capacities have sanitation services: towns and Urban limited the development 2012: 203,905 developed and training and sustainability of water 2016: 351,600 delivered services in rural areas. Additional number of Performing monitoring students in urban areas system on the WSS having access to school assets and the delegated latrines: management of rural, 2012: 29,480 small and peri-urban 2016: 120,000 WSS services developed and implemented CAS Strategic Objective 3 –Reduce social, economic, and environmental vulnerabilities Outcome 3.1. Strong social safety net systems  The safety nets system is Number of households Effective safety net set of Ongoing operations weak and does not address benefiting from targeted program in place targeted  Global Environment the needs of the bottom safety net programs (cash at reducing vulnerability Facility 40% of the population. transfers and cash for work to shocks and increasing  Third phase of the  The existing formal social income of the poor (in Community Based security system only 2012: 0 both crisis and no crisis Rural Development Promotion of social covers those employed in 2016: 20,000 period) Project protection (SCADD the formal private sector  GFDRR for Disaster Axis 2.5) and civil servants. Minimum food stock in the Strategy defined and Risk Management &  The scope and coverage SONAGESS reserves and action plan defined and Climate Change of existing social safety intervention stocks implemented to Project net program is limited, strengthen the existing  Growth and with most interventions 2011: 35,000 for reserve safety net programs Competitiveness being small scale, stocks and 5,000 in the Grant series intervention stocks. Introduce/reinforce 55 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators temporary in nature and 2016: 50,000 tons for demand-side measures Pipeline operations externally financed reserve stocks and 10000 (at household-community  Social Safety Nets tons in the intervention level), while maximizing Project stocks demand-supply synergies Trust Fund (e.g. health insurance  FIP Investment +cash transfers coupled Facility with a result-based financing strategy) ESW/TA/AAA  Strengthen Safety Nets Response to crisis Other Development Partners; UNFPA Outcome 3.2. Enhanced food security  Households in Burkina Percentage increase in food 300,000 producers who Ongoing operations Faso face several crop production in targeted have benefited from  Third phase of the categories of risks, zones (millet, sorghum, vouchers by 2016 Community Based ranging from natural risks maize, rice and cowpea): Rural Development (droughts, floods, locusts, 200 warrantage schemes Project wildfires, and wind) and 2011: 15% set up and functional by  Growth and food security, economic 2016: 35% 2016 Competitiveness and social risks, regional Grant series stability, to health and 2,000 seed producers other individual risks. trained and active by  Agriculture Increase in quantity of 2016 Productivity & Food  Over 20 percent of the products stored in the Security project  population (over 3.5 warrantage schemes in million) is food insecure targeted zones:  Agricultural and lives permanently in 2011: 500 tons Diversification & chronic poverty. 2016: 10,000 tons Markets Development Project  Bagré Growth Pole 56 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators Project  Emergency Livestock Feed Access Project Pipeline  FIP Forest management Trust Fund  FIP Investment Facility Outcome 3.3. Better disaster and risk management SCADD Axis 4.3,  Strong dependence of the An Integrated System for Natural wealth and Ongoing operations Management of the rural economy on Alerts and Responses to environmental assets  Global Environment environment and agriculture, manage Risk and resiliency program Facility maximum use of  Main environmental issues Catastrophes is set up and bringing under one roof  Third phase of the natural resources are land degradation and functional interventions on disaster Community Based desertification 2012: No risks, environmental Rural Development  Decline of land 2016: Yes protection, adaptation to Project productivity, climate change in water,  GFDRR for Disaster  Loose of natural Additional land area under agriculture and livestock Risk Management & vegetation and natural sustainable land and water Climate Change habitat due to land management (SLWM) or Implementation of the Project degradation and Sustainable Forest National risk and  Growth and deforestation. Management (SFM) catastrophes Strategy Competitiveness practices (hectares) Grant series  Agriculture 2012: 0 Productivity & Food 2016: 8000 Security Project  Agricultural Participatory management Diversification & plans developed and Markets 57 Long Term Country Bank Program (and Development Objectives Issues and Challenges CPS Indicators Milestones Partners) and Indicators implemented in targeted Development Project communities shared forests  Bagré Growth Pole in targeted zones Project 2012: 0 Pipeline 2016: 16  Emergency Livestock Feed Access Project  FIP Forest management  Sahel Regional Pastoral Livelihoods Reilience Project Trust Fund  FIP Investment Facility 58 Annex 2: CAS Completion Report (CASCR) INTRODUCTION 1. This Completion Report (CASCR) assesses the program outcomes and performance of World Bank Group’s CAS for Burkina Faso (FY2010–12) and draws lessons for preparation of the next CAS. Because the period of the CAS was only three years, a progress report was not prepared, but annual program/portfolio reviews were conducted. This report uses the Results matrix12 originally formulated as the basis for assessing CAS program performance. The overall CAS performance is moderately satisfactory. Burkina Faso’s Political, Economic, and Social Background 2. Since the early 1990s Burkina Faso has had relative political stability, democratic rule, and a platform of political and economic reforms. Led by President Blaise Compaoré, the country has moved toward market-oriented reforms. It was one of the first countries to be eligible for the Heavily Indebted and Poor Countries initiative. Structural reforms, sound macroeconomic policies, and steady investment enabled significant growth and economic stability despite few resources and vulnerability to exogenous shocks. From 2000 - 2010 cotton exports formed the basis of Gross Domestic Product (GDP) growth rates which averaged 6 percent, well above the West African Economic and Monetary Union (WAEMU) average. Inflation was low or even negative. External assistance, private flows, and transfers helped finance current account deficits. Spending on education, health, and water and sanitation increased. 3. Nevertheless development economic and social challenges remain. Though the Burkina Faso economy was resilient to the direct effects of the global crisis because its banking system had few cross linkages, it was affected by the plunge in cotton prices, though it benefited somewhat from lower oil and high gold prices. Although the country had been spending more on basic services, Burkina Faso was ranked 173 out of 179 countries in the United Nations Human Development Index in 2010. At 3.1 percent, the population growth rate was high, as was the poverty rate at 46 percent, which predominantly affected rural areas. Households headed by women were the most affected by poverty and chronic food insecurity. World Bank Program of Support 4. The objectives of the FY2010–12 County Assistance Strategy (CAS) were to lay the foundations for a transformation of the Burkinabe economy, with the proceeds of growth shared more equitably, and to address vulnerabilities—macroeconomic, sectoral, and households—using a mix of financing instruments, knowledge products, and policy advice. The CAS supported two strategic objectives of the Accelerated Growth and Sustainable Development Strategy (SCADD): (a) minimizing economic vulnerability and promoting growth; and (b) sharing growth through better service delivery. Improving governance and capacity development and addressing the challenge of population growth were cross- cutting themes. 12 Changes that were made through the program over the course if years are presented in Annexes 2 and 3. 59 5. To minimize economic vulnerability and promote growth, the program sought to promote sustained performance of the cotton sector; increase agricultural productivity and improve environmental management; diversify high-value exports; enhance the business environment, and improve access to regional and integrated markets, as well as making public resource management more efficient and improve the quality of social services. In terms of financing, the indicative IDA envelope of about SDR354.3 million was spread out with an average annual allocation of about SDR118 million for each year. Most of the activities proposed in the CAS were carried out, with some adjustments as the global economic environment changed (see Annex 2 & 3). 6. The Bank was successful in helping Burkina Faso weather the consequences of crises while continuing to deliver services to its citizens. The PRSG9 (June 2009) financing helped the government sustain its development program and reduce the national impact of the global crisis. EFA-FTI provided additional funding of US$30 million to keep the primary education program on track. The PRSG10 (June 2010) focused on mitigating the secondary effects of the global crisis (US$70 million). It was supplemented by US$20 million from the Bank’s Global Crisis Response Facility. PRSG11 (FY12) addressed rises in international food prices and oil. The regular commitment of US$ 70 million was supplemented by US$55 million in resources from the regional envelope and reallocations in the country portfolio. The Bank Group also provided knowledge and advisory products as requested. CAS PROGRAM PERFORMANCE 7. Overall, CAS Program performance is rated “Moderately Satisfactory”. Of the five outcomes under strategic objective one, four were partially but almost fully achieved and one was not achieved. However, in general the results contributed to Burkina Faso’s positive growth and helped minimize its economic vulnerability. Of the three outcomes under strategic objective two, one was fully achieved and the other two were partially but almost fully achieved, thus contributing to the improvement of social service delivery. Strategic Objective 1: Minimizing economic vulnerability and promoting growth through economic transformation. – Moderately Satisfactory. 8. Macroeconomic stability was maintained despite climatic and external shocks. Budget programming and procurement processes were improved and the capacity of control institutions to monitor economic performance was built up. For 2007–2011 Burkina Faso had an average growth rate of 5 percent. 9. Sustained performance of the cotton sector. IDA resources supported the government’s three-year action plan for restructuring to improve cotton sector competitiveness. Cotton productivity went up more than 25 percent, from 900kg/ha in 2009 to 1,140kg/ha in 2012. SOFITEX was restructured, leading to better financial management and higher profitability. Adjusting prices to international rates also helped cotton performance. Heavy losses previously incurred were significantly reduced. 10. Increased agricultural productivity and improved environmental management. IDA’s Community Based and Rural Development (PNGT) program built local capacity to use small investments to acquire productive assets and protect natural resources. IDA also helped to raise productivity in areas from livestock to horticulture by supporting farming cooperatives, small and medium-sized agribusinesses, and irrigation schemes. Cereal production targets were exceeded, but milk production and functional 60 collection centers targets fell short. Delays in implementing the warrantage system and the absence of data on how much grain was stored in cereal banks caused problems in monitoring. The project did help to commercialize high-value agriculture products by forming well-integrated agricultural supply chains geared toward regional export markets, and contributing to food security 11. The CAS program also supported government efforts to diminish and reverse natural resource degradation, and two regional agricultural projects, the West Africa Biosafety Program and Niger Basin Water Resources, supported conservation and sustainable biological diversity, contributing to environmental sustainability and mitigating the impact of climate change. A Country Note on Disaster Risk Management and Adaptation to Climate Change in Burkina Faso (May 2011) proposed actions to strengthen preparedness to respond to climate variability and change. 12. Laid the foundation for accelerated diversification and increased exports. IDA supported the intensification, diversification, and commercialization of Burkina’s agricultural base and its export capacity. It underwrote supply chain studies, helped cooperatives to negotiate export contracts for mangoes, meat, and onions, and scaled up investments in export infrastructure, such as cold storage rooms at the two major airports. The Bagré Growth Pole Project was launched as a model of spatial development to be applied in other provinces. As a medium-term endeavor that began late in the CAS period, the project is now seeking to encourage private investment and expand exports. The impact of these interventions is not yet visible but there are indications they will in the long run. 13. IDA also provided technical and financial support to facilitate private mining exploration and investment in gold, manganese, phosphates, and zinc. Gold, now the dominant export, has quickly become a driver of growth (75 percent of all exports in 2011). Through a technical assistance operation, Mineral Development Support Project, the capacity of national institutions to manage the industrial mineral sector is being built in order to (a) update national mining policy and laws to ensure transparency, good governance, and environmental and social safety; (b) make geo-scientific information more available; and (c) build strengthen capacity for contracting and for monitoring contracts. 14. Promoting an enabling environment for private sector-led diversification. Burkina has made good progress toward private sector-led diversification. The creation of the one-stop counter in the Maison de l’Entreprise du Burkina Faso (MEBF) has given the country a major boost in the Doing Business Report. IFC and IDA coordinated closely to identify support for private activities in a variety of ways, from improving the investment climate to supporting development of financial, hospitality, infrastructure, agribusiness and mining projects. 15. The government has now made major progress on business entry, dealing with construction permits, trading across borders, property registration, paying taxes, and accessing credit. The cost of registering a business plunged from 62 percent of GNI in 2008 to 48 percent in 2011, and the number of days it took was cut from 16 days in 2008 to 13 in 2011. Opening one-stop-shops for business registration in nine regions was a significant achievement. With regard to access to credit, the World Bank supported amendments to the OHADA Uniform Act on Secured Transactions, which among other things broadened the range of assets (including assets to be acquired) that could be used as collateral. The Doing Business report recognized Burkina Faso as the 5th most constant reformer in sub-Saharan Africa in the previous five years. 61 16. Improved access to regional and international markets. The one-stop-shop for commercial documents expedited trade across borders, and during 2011 Burkina Faso also reduced documentation The West Africa Transport and Transit Facilitation Project reduced transport delays, uncertainty, and costs along the Tema-Ouagadougou-Bamako corridor and made it easier Burkina Faso and Mali to access the sea. Interconnection of the Burkina customs management system with Mali and Ghana is nearing completion. 17. With regard to access to electricity, IDA invested in both expansion of the electrification grid and in alternative technologies. WAPP interconnections with Côte d’Ivoire reduced generation costs and completion of the Bobo-Dioulasso-Ouagadougou transmission line (335 km of 225 kv) made Burkina’s energy supply more reliable. Preparation of a WAPP interconnection with Ghana during the CAS period laid the foundations for further progress. The proportion of households with access to electricity went up from 22 percent to 28 percent, well above the target. With IDA support government institutions also became more-energy efficient, saving more than 1 billion CFAF. 18. Burkina Faso has also benefited from regional capital markets, especially through its participation in the West Africa Economic and Monetary Union (WAEMU), which has common capital market regulations and better governance of cross-border financial institutions. Regional capital market institutions all received IDA-funded technical assistance to undertake major structural reforms including the reform of the guarantee system. Strategic Objective 2: Sharing growth through improved service delivery - Moderately satisfactory 19. As a result of PFM reforms, Burkina’s Public Expenditures and Financial Accountability (PEFA) assessments show progressive improvements. An agency to regulate procurement was put in place and the government is now decentralizing procurement functions to units in the regions and ministries, and is now closely monitoring procurement processes. To ensure that budgets are aligned with policy priorities, with donor support Burkina Faso began implementing program budgeting in 2010. In 2011, 16 ministries participated in budget preparation, with full roll-out planned by 2015. Through technical assistance, the Bank helped to build the capacity of internal and external control institutions. The overall good performance on public financial management is reflected in Burkina Faso’s relatively high CPIA score of 3.8. However, it now needs to move from a concern with inputs and compliance to emphasize performance, value for money, and service delivery. 20. With IDA support, through the CBRD the capacity of local governments to deliver services was enhanced and several reform processes initiated. Design of the Local Government Support project during the CAS period laid the foundations for sustained support for decentralization at both the policy and institutional capacity levels. 21. Education. The Bank has supported education reforms, especially those related to devolution of education management to communes and community-based management committees. The Post-Primary Education Project helped to reduce school fees and promote girl enrollment in secondary school. Gross enrolment in primary education increased from 77.6 percent in 2010–2011 to 82.4 percent the next year, and completion went up from 41.7 percent in 2008– 2009 to 51.4 percent in 2010–2011. There was only modest progress in enrollment growth, but lower secondary completion rates rose from 15.8 percent in 2008–2009 to 18.8 percent in 2011–2012. 62 22. Health. Significant progress was made in improving access to, and the quality of, basic health services and decreasing HIV/AIDS prevalence. In 2011, 73.5 percent of all births were attended by skilled personnel, and all children under a year old received a third dose of the pentavalent vaccine. The number of subsidized treated bed nets distributed annually increased from less than 1 million in 2009, to 7 million in 2011. The proportion of pregnant women making at least two prenatal consultations increased from 29 percent in 2010 to 83 percent in 2012, exceeding the project target, and use of modern contraceptives rose from 26.9 percent in 2009 to 28.3 percent in 2010. HIV rates in urban areas declined to about 1.9 percent in 2012. The Ministry of Health’s emphasis on community mobilization has built grassroots demand for service and accountability. 23. Drinking water. With IDA support, Burkina is on track to meet the MDG for urban access to drinking water, reaching about 94 percent of the Ouagadougou population and 80 percent in the city of Bobo-Dioulasso -only 2 percentage points less than the target-. As part of a 13 donor effort, IDA contributed to the secondary and tertiary water networks in the capital. Through the CBRD Project, rural populations benefited from sanitized wells and hand pumps, with measurable effects on disease prevention and economic activity. 24. Social safety nets. An IDA-supported Social Safety Nets (SSN) review in 2010, found the scope and coverage of the existing SSN to be too limited. On average, excluding fuel subsidies, spending on SSN programs was about 0.6 percent of GDP for 2005—and about 20 percent of the population was food insecure and lived in chronic poverty. Food transfers remained the main program, accounting for 69 percent of total SSN spending and over 80 percent of estimated SSN beneficiaries in 2009. A consensus was built on the need to consolidate and improve effectiveness and targeting, and the Bank was asked to provide financial and technical support. Cross-cutting Themes Governance and Capacity Development 25. The CAS program worked to build the capacities of central government ministries and agencies and local governments while responding to specific governance challenges. The program built the capacity of civil society to demand good governance on issues ranging from mining to fiscal transparency. The Bank also supported development of a national tool for monitoring corruption trends and a procedural mechanism for dealing with complaints. The absence of targeted results inhibited the extent to which this work could be assessed. 26. A Governance Partnership Facility (GPF)-financed project enabled the Bank to adopt a consolidated and strategic approach to addressing governance. The Bank also supported political economy analyses of sector-specific risks (e.g., mining, the Bagré Growth Pole Project, decentralization, justice) to broaden the knowledge base for “smart project design”; established complaints-handling mechanisms in several projects; and designed a third-party monitoring mechanism (EISR+) to assess performance of Bank-funded operations. The Burkina Faso CAS received a rating of 3.3 out of 5 (average 3.2) from the EISR. 63 Addressing Population Growth 27. Although gender mainstreaming was not a specific CAS objective, IDA-financed operations incorporated gender-sensitive components. For example, the education, health and community-driven development projects included components to provide training; improve female literacy and education; enhance women’s involvement in local governance; and address female genital mutilation. The lack of sex-disaggregated data in some Bank-financed projects made it difficult to evaluate the impact of demography and gender mainstreaming efforts. WORLD BANK PERFORMANCE 28. Overall Bank performance is rated moderately satisfactory. The CAS design was highly relevant and aligned with the government’s development strategy. However the implementation of some program activities suffered delays that consequently led to partial achievement of the expected outcomes. Nevertheless the program contributed significantly to achieving the government’s development program or set the trend to reaching them in the remaining time frame. A. CAS Design and Relevance 29. The CAS design was based on extensive experience and understanding of the conditions and the development challenges of Burkina Faso and supported the country’s long-term strategic goals. The design made it possible for the Bank to adjust its program to reallocate resources as needs emerged. The results framework was realistic. However, some performance indicator targets were optimistic given the reduced duration of the CAS implementation period (three years instead of four). 30. The FY10–12 CAS program addressed two challenges: promoting long- term growth in order to sustainably reduce poverty, and helping Burkina Faso to weather external shocks and address the needs of its most vulnerable citizens. The program consisted of three PRSC operations, one DPO grant (EFA/FTI catalytic fund), four new investment operations and additional financing for four others, four regional programs, and four TF grants. Sixteen operations were launched at the start date with commitments of US$610 million, and the Bank provided a variety of knowledge products. 31. The CAS was shorter to allow for alignment with the SCADD. Despite the time constraint, the Bank team succeeded in delivering most of the CAS outcomes. 32. Implementation of the strategy is rated moderately satisfactory. For the most part it proceeded as expected but there were delays in two investment operations that had innovative approaches. All the investment projects identified in the CAS were delivered. As shown in the Results Matrix attached, most of the activities of the Bank involved extensive knowledge transfer, policy advice, and technical assistance. Two flagship reports prepared during the CAS period accompanied the Bank’s support for Burkina Faso’s economic transformation efforts. 33. The active portfolio as of June 2012, consisted of 16 projects, representing total financing of US$959 million. The disbursement ratio, given the number of new projects, was an acceptable 49 percent. Average project age is four years. The regional component of the portfolio consists of eight operations, 64 including two that are not yet effective (Regional Project for Communication Infrastructure [WARCIP] and the regional project for electricity interconnection with Ghana). The commitment amount is about US$140 million, including the new operations. Table 4. Burkina Faso- IDA Portfolio Assessment (as of June 2012) FY09 FY10 FY11 FY12 Number of projects being implemented 17 16 14 16 Net commitment amount (US$ mil) 618.8 740 789.9 959 Average years of projects 3.24 4.36 4.19 4 Number of problem projects 1 2 2 1 Percent of projects at risk 5.9 13 14 7 Percent of commitment at risk 1.05 7 6 4 Disbursement ratio (percent) 16.84 33.41 20.47 23.23 34. From FY09 to FY11, IFC invested a total of US$29.9 million in seven companies, for a cumulative commitment since the start of its operation of US$70.5 million. The portfolio as of June 30, 2012, is US$31.7 million. 35. The main issues affecting the portfolio related to the government’s evolving processes for formulating and implementing projects. The portfolio review in December 2011 identified as structural problems the complex system of procurement; the poor quality audit reports; and difficulty in demonstrating results. Nevertheless, the results have been steady and sustainable. B. Partnerships and Aid Effectiveness 36. The Bank worked with other donors to bring the CAS commitment to fruition. Partners focused their assistance on agreed areas of comparative advantage and on programmatic budget support. The Bank took the lead on strengthening aid effectiveness and donor coordination in its capacity as president of the troika which consisted of the United Nations Development Program and Switzerland representing the donors. The Bank also served as a sector leader for education, agriculture, decentralization, private sector development, and infrastructure. The Bank financed some projects with other donors. For example, IDA is part of a 13-member donor consortium supporting rehabilitation and maintenance of essential transport, and the Local Government Support project was designed to complement a decentralization project financed by the European Union. 37. The Bank also developed close working relations with parliament, civil society and the media, especially on the civil society anti-corruption and governance efforts (notably related to mining) as well as monitoring of Bank- funded programs. 65 C. Management of Risks 38. The CAS anticipated the impact of the global crisis and the vulnerability of the economy to external shocks, which were mitigated through program adjustments and additional financing for countercyclical budget support. Nevertheless, political insecurity in the sub-region affected Burkina Faso’s competitiveness because several launch of regional programs was delayed. 39. The country’s strong ownership and commitment considerably reduced the risks of change in direction. The government is leading major reforms, e.g., land tenure, governance and demography, that until recently were not considered possible. The relationship of trust built between the Bank, the government, and other development partners has increased the predictability of assistance flows to sustain many CAS initiatives. D. Lessons Learned 40. The following are areas where the experience of CAS (FY10–12) could inform drafts for the forthcoming CAS: a) Collaboration between WBG institutions and with other development partners should be closer. When the same development objectives are pursued, there are efficiency gains to be made from joint analyses, assistance strategies, and even progress and completion reports. Efforts are needed in advance to improve synergies between WB, IFC, and MIGA. b) Knowledge products to guide strategic reform proved useful. The CEM provided the analytical bases for choosing options for diversification and accelerated export development and significantly informed design of the SCADD. Other sectoral analyses, including political economy work, proved useful in guiding policy dialogue and orienting sectoral interventions. c) Recognizing the potential benefits of regional initiatives is crucial. Linkages between region-wide projects yielded demonstrable benefits, especially for a small and landlocked economy. However, management of regional projects could be improved. d) Project and program design must give more attention to capacity constraints. Hands-on support and capacity development of communities, with the help of CSOs, are what made programs sustainable. e) Embedding GAC, gender, and capacity building as pervasive cross-cutting themes in Bank- supported programs requires continuous attention. The new program needs to dedicate resources and staff to concerted efforts to mainstream governance and address public sector performance. Gender also needs to be more explicitly addressed. f) New ways of doing business through spatial concentration, cross-sectoral coordination, and project coordination contributed to synergies and positive outcomes. For instance, consolidated approaches to developing a growth pole and addressing decentralization made Bank support more consistent. g) Land tenure—not explicitly addressed in the CAS—surfaced as a critical issue: Private sector and local development operations had to deal with numerous problems because land tenure was insecure. Land management requires early attention. 66 Conclusions 41. For the most part, the CAS supported Burkina Faso’s efforts to achieve development goals. Unfortunately, the incidence of poverty barely moved. With a few exceptions in health and water and sanitation, Burkina is not likely to reach the MDG targets. Comprehensive fiscal management and improved governance will be critical for ensuring sustained economic growth and reducing poverty. The next CAS will need to ensure that the gains this one made are consolidated while pursuing opportunities to tackle poverty specifically. 42. In terms of how the Bank implemented the strategy, the following conclusions can be drawn:  Alignment of the timeframe and duration of the CAS with the government strategy was pivotal in eliciting commitment to the program and producing concrete and sustainable results.  Careful choice of areas of intervention and adaptability were critical to meeting urgent needs of the country, given the global financial crisis, climatic shocks, and political crises in neighboring countries.  The cross-sectoral approach to addressing decentralization through continuation of community- driven approaches was effective in improving delivery of public services, particularly in rural areas.  Enormous socioeconomic benefits can be derived from linking with regional initiatives. 43. IFC encountered the following difficulties:  The project financing ceiling of US$15 million is too low for the fourth poorest economy in the world.  Client banks or companies are very reluctant to incur foreign currency loans and currency risk.  Although IFC financing costs are the same in Burkina as in China or Brazil, the conditions are too expensive for this economy; a way needs to be found to mitigate the costs.  The small size of companies in Burkina limits their ability to meet international business standards.  IFC’s relationship with the country was maintained from a distance, although Burkina has a strong culture of fostering personal relationship in business. 67 ANNEXES Annex A Summary of CAS program Self-Evaluation CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome CAS strategic theme 1 - Minimizing economic vulnerability and promoting growth recovery through economic transformation. 1. Sustained performance of the cotton Partially Achieved PRSC series sector (P099033/P117278/P122805) a) At least 20 % increase in cotton a) Achieved: Cotton productivity target productivity: achieved in 2011with 1140 kg/ha Community Based Rural 2009: 900 kg/ha (average 2006-9) Development Project II 2012: 1,100 kg/ha (P098378/ P104700) b) All three cotton companies generate a b) Partially achieved: The three companies did Agricultural Productivity and profit without government subsidies: not generate a profit as planned but losses Food Security Project 2009: CFAF22 billion losses incurred decreased significantly from CFAF (P114236) 2012: profit > 0 22 billion in 2009 through CFAF 6.054 billion in 2010 to CFAF 1.18 billion in 2011. Sources of Growth and Competitiveness (CEM; Policy Notes) 2. Increased agricultural productivity Not achieved and improved environmental Agricultural Diversification management and Market Development Food production Project (P081567) a) 25 % increase in cereal production a) Not achieved: Target for cereal production (millet, sorghum, maize): achieved in 2010 - 4.56 million tons and Agricultural Productivity and 2008: 3.5 million tons 3.822 million in 2012; Area covered with Food Security Project 2012: 4.4 million tons improved technologies (seed, fertilizer and (P114236) manure) has increased from 3% in 2008 to 10 % in 2011 60% of existing seed producers Regional West Africa 68 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome (3000) trained in (2012) Agriculture productivity Program (P117148) b) Increase in processed milk production: b) Not achieved: Processed milk production 2008: 2 million liters increased from 2 million liters to 3.822 Bagré Growth Pole Project 2012: 15 million liters million liters in 2012 significantly less than (P119662) what was planned. West Africa Emergency Food security Locust Project (P092473) c) Increase in the quantity of grains storedc) Not achieved: No data to report on this in cereal banks and warrantage systems indicator due to delay in implementing the GEF Sahel Lowland Number of warrantage schemes set up and Warrantage systems. Ecosystem Mgmt (P070871) functional: 2008: 5; 2011: 60; 2012: 100  At the End 2012, the warrantage system was Number of functional milk collection not yet functional; centers (rehabilitated or created): 2008: 0;  The milk collection centers remained at 60 2011: 60; 2012: 100 2012. Environmental Management Percent increase in the number of targeted Indicator dropped from Agricultural farmers and pastoral communities that Productivity and Food Security Project KPIs. So adopt sustainable land and water there is no data to report on this indicator. management practices: 2009: 40 % ;2012: 60 % 3. Accelerated diversification and Partially achieved Agricultural Diversification increased exports and Market Development a) Increased export of meat to neighboring a) No data to report on export of meat in 2011. Project (P081567) countries One slaughterhouse was functional in 2011 2008: 50 tons; 2012: 65 tons but not yet able to export meat as required Agricultural Productivity and standards had not yet been met. Food Security Project (P114236) b) Increased productivity in selected b) Partially achieved: Onion productivity 69 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome products: increased to 24 tons/ha in 2011 and for Maize Competitiveness & Enterprise Onion: 2008: 20 tons/ha remained flat (1.44 tons/ha) Development Project 2012: 25 tons/ha (P071443) Maize: 2008: 1.5 ton/ha c) Achieved: In 2010 gold exports reached 2012: 2 tons/ha 605,247 ounces and in 2012 it doubled to MIGA guarantee (Essakane) 1,344000 ounces (42 tons) representing 60% c) Increase in gold exports in ounces of total exports and 12% of GDP. Six EITI Implementation TAL 2009: 430,830 industrial gold mines and a small manganese (P111210) /Regional Mining 2012: 1,073,540 mine were in operation. Sector Initiative (FY10) Regional Mining Sector Initiative TA (FY10) 4. Enhanced enabling environment for Partially Achieved PRSC series (P099033/ private sector-led diversification P117278/ P122805) a) Cost of business start-up procedures a) Achieved: The cost of business start-up (percent of GNI per capita): procedures as a percent of GNI per capita IFC Doing Business 2008: 62.3 % decreased faster than planned, from 62.3% in 2012: 50 % 2008 through 50.3% in 2010 to 47.7% in 2011. Competitiveness & Enterprise b) Number of days needed to create an Development Project enterprise: b) Partially achieved: The number of days (P071443) 2008: 16 days needed to create an enterprise has decreased 2012: 11 days from 16 in 2008 to 13 days in 2012. c) Ratio of credit to the private sector over GDP: c) Not achieved: The ratio of credit to the 2009: 16 % private sector over GDP has increased 2012: 28 % slightly from 16 % in 2009 to 18 % in 2012. 5. Improved access to regional and Partially achieved. IFC Doing Business international markets 70 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome a) Reduction in average time for exports: a) Progress but target not achieved: A One Transport Sector 2008: 45 days Stop Shop for import and export operations Development Project 2012: 34 days became functional in 2012. Average time for (P074030) exports was reduced slightly from 45 days to 41 days. West Africa Transport and b) Reduction in average time for imports: b) Partially achieved: Average time for import Transit Facilitation (P079749) 2008: 54 days was reduced slightly from 54days to 47 days 2012: 41 days in 2012. West and Central Africa Air However the Customs system of Ghana, Mali Transport Safety and Security and Burkina are now connected. project (P083751) Transport Transport Infrastructure c) Increased percent of roads in good and c) Achieved: The share of roads in good and Project AF (FY12) fair condition as a share of total fair condition in total classified roads has classified roads (Int Roughness Indicator increased to 70 % in 2011. The road Ouaga- Energy Access Project <4.5): Sakoinsé (56 km) was completed in (P078091) 2009: 50 % December 2012. The rehabilitated roads have increased to 3366 km in 2012, instead of the Power Sector Development planned 2770 km, a 22% above target. Project (P069126) Energy d) Percent of households with access to d) Achieved: Percentage of households with West Africa Inter-zonal electricity (IDA TIER 1): access to electricity reached 28.60 percent in Transmission (P094919) 2009: 23 %(revised by GoBF) 2011 exceeding the target for 2012. The 225 2012: 22 % [multi-donor] kv Bobo-Ouaga transmission line was completed in 2010. CAS strategic theme 2 - Sharing growth through improved service delivery 1. Enhance efficiency of public resource Partially Achieved. PRSC series (P099033/ management for better service delivery P117278/ P122805) a) At least 60 percent of PEFA indicators a) Partially achieved: Performance on PEFA on public Financial Management indicators rated A or B increased from 43 % Public Administrative performance are rated A or B (excluding in 2007 to 57.14 %in 2011. Capacity Building Project 71 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome the 3 indicators pertaining to donors) (P078596) b) Increase in OECD DAC indicator on b) There is no data to report on this indicator Public Sector Control procurement: Institutions [P100959] c) Full adoption of new WAEMU PFM c) Not achieved: The draft law and decrees are Decentralized Urban Capacity directives (legal requirement by 31st Dec finalized but not yet formally endorsed by the Building Project (P084027) 2011) Government and approved by the Parliament. PER Programmatic Series (Module II-Decentralization Policy Note) PEFA (FY11) Country Systems TA (FY10) 2. Strengthened institutions for delivery Achieved of quality social services a) Increase in percent of municipalities a) Achieved: All municipalities (100 percent) PRSCs series that prepare their budget and submit their prepare/submit budgets/ accounts on time accounts on time (PER 2010) (2011). A streamlined national procedure to Public Sector Control link significant additional transfers to local Institutions (P100959) authorities to the results of an independent verification of their capacities in Community Based Rural procurement, FM, HR and transparency/ Development Project II participation has been established. (P104700) b) Percent of Rural Municipal Councils b) Achieved: In 2011, 100 %of rural councils submitting trimester M&E reports submit M&E reports. Decentralized Urban Capacity Building Project (P084027) c) Number of Urban Municipal Councils c) Achieved: All 49 urban councils have having adopted and using transparent, adopted and use the new procedures. Local Government Support standardized and efficient budget Project (P114236) 72 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome management procedures as specified in administrative management procedures manual. d) Increase in percent of municipalities d) Achieved: 91.5% of Rural municipalities with at least 1 'B" level staff have been rated satisfactory in 2011 of which 35.5% rated Highly Satisfactory. Quality and access to basic services e) Average access time to education and health e) Achieved: Access time to education facilities Basic Education Sector facilities: was less than 30 minutes in 2011 Project (P000309) 2009: 36 minutes; The number of classrooms built or rehabilitated 2012: 30 minutes has increased by 30 %from 2009 to 2011 Fast Track Initiative for Basic (from 32,501 to 42,364). Education (P115264) Education f) Increase in primary education total f) Partially achieved: Total enrollment has BF Post Primary Education enrollment: increased to 85.8 % in 2011 project (P098956) 2009: 80 % 2012: 110 % Education Sector Status Report (2010) g) including girls enrollment: g) Achieved: Girls’ enrollment increased from 2009: 68 % 68 % in 2009 to 84.4 % in 2011. 2012: 85 %[multi-donor] h) Increase in primary completion rate h) Partially achieved: Slow but steady progress 2005: 34 % in primary completion rate: 46 percent in 2012: 57 % [multi-donor] 2010, and 55.1 %n 2011 i) Increase in secondary education total i) Partially achieved: Although progress is enrollment: 2009: 28.5 percent slow in secondary education total enrollment, 2012: 35 % increase to 32.6 % in 2011; while girls’ including girls enrollment: enrollment increased to 29.5 % in 2011 very 73 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome 2008: 24 % close to the 2012 target. 2012: 30 %[multi-donor] j) Increase in secondary completion rate: j) Not achieved: Very Slow progress in Secondary Reproductive Health (FY11) 2009: 6.4 % (Revised by GoBF) completion rate: 6.4 % in 2010 to 8% 2011. 2012: 31 % [multi-donor] JSDF Fight against Female Genital Mutilation/C Health services (P116645) k) Increase in percent of total births k) Achieved: in 2012, 78.85 % of total births attended by skilled personnel at health have been attended to by skilled personnel. Health Sector Support and facilities Multisectoral AIDS Project 2007: 57 % (PP093987 & P110815) 2012: 78 % [Revised] l) Increase in percent of children under l) Achieved: 100 % in 2010 and 104% in 2012. Health Status Report one year of age receiving a third dose of the pentavalent vaccine: 2003: 5 percent 2012: 91 percent [multi-donor] Demography Policy Note & m)Achieved: 71.3 % in 2011 (1 years earlier Action Plan TA m) Increase in percent of children under than target date). Increase in number of five sleeping under insecticide-treated subsidized treated bed nets distributed bed nets: annually from 900,000 in 2009 to 1,200,000 2009: 24.8 percent in 2010, and 7 million in 2011 (all partners). 2012: 70 % [multi-donor] n) Partially achieved: The most recent data n) Reduction in percent of case fatality available in 2010 indicates a reduction of rate within three months of the onset of meningitis case fatalities to 10 % meningitis outbreak 2006: 15 % 2012: 7.5 % o) Achieved: Remarkable increase to 82 percent in Health Sector Support and 74 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome o) Increase in proportion of women in 2011 of women having pre-natal consultations in Multisectoral AIDS Project intervention areas making two or more intervention areas and exceeding the project target (PP093987 & P110815) pre-natal consultations during for 2012. pregnancy: 2003: 62 % 2012: 75 % [multi-donor] p) Data not available p) Increase in percent of STI patients who are correctly diagnosed, counseled and treated in health facilities: 2007: 21 % Health Sector Support and 2012: 20 % Multisectoral AIDS Project (PP093987 & P110815) q) Increase in number of HIV positive q) Partially achieved: In 2010- 25,113 have persons receiving antiretroviral received antiretroviral treatment, and in 2011 treatment: – 33,282. Data for 2012 not available. 2009: 21,000 2012: 42,000 [multi-donor] Health Sector Support and Multisectoral AIDS Project Nutrition: (PP093987 & P110815) r) Increase in percent of infants under six r) Achieved: 24.80 % in 2010 (Health and months in the intervention areas Demographic Census 4th). exclusively breastfed in the past 24hours: Health Sector Support and 2006: 7 %; 2012: 12 % Multisectoral AIDS Project (PP093987 & P110815) s)Maintain percent of children aged 6-59 months receiving a vitamin A supplement in the past six months at above 80 %: s) Achieved: 100% in 2012 (HMIS). 2009: 91 % [multi-donor] Family Planning t) Increased use of modern contraceptives 75 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome (women aged 15-49 years): 2003: 14% 2012: 20% [multi-donor] t) Achieved: Increased use of modern Urban Water and Sanitation contraceptives from 14 % in 2003 to 26.9% in Project II (P106909) Water and sanitation 2009 to 28.3% in 2010 and 31.36 % in 2012. Family planning module incorporated into Transport Sector u) Increase percent of the urban national education curricula (ongoing). Development project population having access to safe water: (P074030) In Ouagadougou: 2009: 90% 2012: 92% u) Achieved: Ouagadougou - 94% in 2012, In Bobo-Dioulasso while Bobo-Dioulasso remains at 80 % in 2009: 70 % 2012. 288,850 people who never had access 2012: 82 % [multi-donor] to safe water sources have access in 2012. v) Increase percent of the urban population having access to adequate sanitation facilities: In Ouagadougou 2009: 25% 2012: 40% v) Partially achieved: Ouagadougou, 35 In Bobo-Dioulasso percent in 2012; Bobo-Dioulasso, 30 percent 2009: 22% in 2012. The number of additional people 2012: 38 % [multi-donor] with access to improved sanitation facilities has increased from 0 in 2008 to 187,000 in Social Safety Nets 2012. Social Safety Nets Review w) Effective safety net set of programs in place targeted at reducing vulnerability to shocks and increasing income of the poor (in both crisis and non-crisis periods) 76 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome w) Not achieved: A social safety net report was prepared with close collaboration of the GoBF (report #54491-BF) and the results x) Increase in percent of poor population were disseminated in April 2010. Strategy covered by safety net programs and action plan defined by end of 2010 to strengthen the existing safety net programs. Social Protection System is still under preparation. x) Nothing to report at this stage because 3. Improved demand for quality social Achieved PRSCs series (P099033/ services P117278/ P122805) a) Increase in percent of Municipal a) Achieved: 40 % in 2010; 88 percent in 2011 Communes with a satisfactory rating and 88.13 %t in 2012. Rural Municipal Public Administrative during their annual performance reviews Councils in which planning functions are Capacity Building Project carried out satisfactorily have increased to 65 (P078596) percent in 2010, and 100 percent in 2011. The Public Sector Control percentage of Rural Municipal Councils that Institutions [P100959] organize quarterly public meetings during which they report on their activities has Decentralized Urban Capacity increased to 70 % in 2010 and 92, 3 in 2011. Building Project (P084027) b) Percent of CVDs (Village Development b) Achieved. 85 % of CVDs in 2010 and 88 in Community Based Rural Council) organizing annual public 2011 are organizing annual public meetings Development Project II meetings to report on activities to discuss and report activities. Revision of (P104700) 2006: 65 % the parent teacher association texts to include 2012: 90 % school management and teacher absenteeism Local Government Support monitoring. Project (P114236) Mainstreaming Governance & 77 CAS Outcome/Cluster of Outcomes and Status and Lending Outcome Indicators (baselines and Evaluation Summary and Non-lending Activities targets) that contributed to the outcome Capacity Dev. Project (GPF) Local participatory monitoring (JSDF) Decentralization Policy Note Media, parliament, capacity development program (WBI) Outreach program for civil society 78 Annex B Planned Lending Program and Actual Deliveries (FY10–12) CAS PLANS STATUS Year Activity US$(M) Activity US$(M) 13 PRSC10 70 PRCS 10 90 Agricultural Productivity & 45 Agricultural Productivity & 40 Food Security Project Food Security Project Growth Pole Project 70 BF-Competitiveness & 15 Enterprise Development Project Regional14 (AF) FY10 Agriculture Technology Sharing 5 (Jul 09-Jun Project 10) Regional 21 Grants West Africa Agriculture Education for All Fast Track 102 productivity Program Initiative (EFA/FTI catalytic fund US$102 million) Environmental Risk 5 Management Program (GFDRR grant US$5 million) Subtotal FY10 297 Subtotal 166 FY11 PRSC11 (series IV) 70 Mineral Development Support 33 (Jul 10-Jun Decentralized Development Project 115 11) Project 60 BAGRÉ Growth Pole Project 16 13 Dollar amounts are subject to the prevailing SDR/USD$ exchange rate. 14 Amounts refer to the proportion of country IDA allocations for regional project financing only. 79 CAS PLANS STATUS Year Activity US$(M) Activity US$(M) 13 Reproductive Health Project BF-Transport Sector Project 33 Regional 10 (AF) West African Power Pool 10 BF- Health Sector and VIH/Aid 16 Project (Ghana/BF) and Nutrition project Regional Mining Sector TA 5 Regional 23 Initiative (incl. EITI++) West African Power Pool Project 155 (Ghana/BF) Subtotal FY11 Africa Regional Communications Infrastructures 187 Program Subtotal FY11 PRSC12 (series IV) 70 Local Government Support 60 Project 125 Transport Infrastructure Project 60 PRCS 11 28.9 FY12 Reproductive Health Project (Jul 11 – Jun Regional 213.9 12) - Regional Rail Project 10 Sub-total FY12 Sub-total FY12 140 Total IDA Planned FY–FY12 485 Total Committed 566.9 80 Annex C Planned Non lending Services and Actual Deliveries (FY2010-12) CAS Plans Actual Status FY10 ESW: ESW: 1. Sources of Growth & Competitiveness 1. Delivered in September 10, 2010 (FY11) (CEM; Policy Notes) 2. PER Programmatic Series (Module II) 2. Module I Decentralization Policy Notes delivered in April Decentralization Policy Note) 2011 (FY10) / Module II in 2012 3. BF Disaster Risk Management 3. BF Disaster Risk Management Delivered in January 2012 (FY12) 4. SSN Report delivered 2012 TA Non Lending 1. Demography Policy Note & Action Plan TA Non Lending 2. Donsin Airport Study 1. Dropped P118175 3. Rural Investment Climate Assessment 2. Donsin Feasibility study (PPIAF/BB) delivered in August 4. Mining Linkages Study (Trade and Dev. 2010 Grant) 3. Delivered in February 2012 (FY12) 5. BF EITI Implementation Support 4. Dropped 5. Delivered in December 2009 (FY10) and Under implementation FY11 ESW: ESW: 1. Poverty Assessment 1. Poverty assessment (Delivered in 2012) 2. PEFA 2. PEFA – Delivered in June 2010 (FY10) 3. Impact of crisis and Policy response Delivered in November 2011 (FY12) TA Non Lending: TA Non Lending: 1. Urban Transport 1. Delivered in January 2012 (FY12) /Under implementation 2. Sub-regional ICT 2. WARCIP project delivered in May 2011 (FY11) 3. Sub-regional PPP TA 3. Policy Note PPP Law (TA Dropped by the region) 4. Public Sector Control Institutions 4. Delivered in April 2012/Under implementation 5. Complaint Handling Mechanism 5. Delivered in September 2012 (FY13) Under 81 CAS Plans Actual Status implementation 6. Strengthening Institutional Capacity of the Ministry of Economy and Finance to improve Results-Oriented Monitoring and Evaluation delivered in June 2011 and under implementation FY12 ESW: ESW: 1. Health Status Report 1. Postponed to FY13 2. PER Programmatic Series (Module II)- 2. PER Programmatic Series (Module II)- Transport and Transport and Energy Energy – under finalization to be delivered in May 2013 (FY13) 3. Health Status Report (postponed to FY13) 4. Advice on Financial Strategy delivered in July 2011 (FY12) 5. BF-Impact of Crisis and Policy Response – Delivered in June 2011 (FY10) TA Non Lending 6. DEMPA delivered in June 2011 (FY11) 1. Sub-regional Water Resource TA Non Lending Management 1. Dropped 2. Sub-regional Trade Regime Note 2. Dropped Continued TA (FY10–12) Actual Status 1. Country systems (PFM and procurement) TA 1. PFM Delivered in November 2009 but Procurement not 2. Social Safety Nets Review and TA delivered 3. Local participatory monitoring project (JSDF) 2. Social Safety Nets Report 2011 (Delivered in 2012 4. Mainstreaming Governance and Capacity Development Project (GPF) 3. Delivered in 2010 in July 2010 (FY11) and Under 5. Female Genital Mutilation Project(JSDF) implementation 6. ROSC Implementation 4. Delivered in January 2010 (FY10) and Under implementation 5. Delivered in November 2009(FY10) and Under implementation 6. Delivered in September 2010 (FY11) 7. Harmonization +Results+ Donor Coord + Consultative Group delivered in February 2012 82 Annex D CASCR Aid Effectiveness (FY10-12) Accra Agenda Current status Roadmap Target Results Action Plan Multiple Rationalize  Joint accountability  CGAB protocol in effect. Nine donors are Govt monitoring PRSP/CGAB framework established parties to the general budget support ownership initiatives monitoring framework by 2010 framework protocol. The process is led by the Government. Joint WBG Rationalize and  Development Partner  African Development Bank and the World strategy strengthen the Joint Assistance Bank prepared a joint diagnostic for development Strategy aligned with assistance strategies aligned with Burkina partnership and new PRSP by 2012 Faso’s Strategy for Accelerated Growth Alignment processes (retreat and Sustainable Development (SCADD). with FY10)  A roadmap has been established by the Developmen Government jointly with development t Partners partners for division of labor. The government leads this process. Development partners focus their assistance in agreed sectors of comparative advantage. Efforts at pooling Burkina Faso is a WB  Pilot use of FM country  Since April 2011 the national FM system funds with the pilot for adopting systems – 2010 (Circuit Integré des Financements use of WB rules financial management Extérieurs-CIFE) is used for all projects, country systems and a excluding the external audits which are candidate for the carried out by private audit firms. On the Use of procurement systems reporting side, the traditional system of country pilot first reconciliation within CIFE is still in systems  Pilot use of procurement use. country systems – 2012  Pilot dropped by the Bank. Procurement (subject to acceptance thresholds increased, allowing for use of into pilot project) the country procurement system up to the thresholds. Annex D 83 CASCR Aid Effectiveness (FY10-12) Accra Agenda Results Current status Roadmap Target Action Plan Multiple Rationalize  Joint accountability  CGAB protocol in effect. Nine donors Govt monitoring PRSP/CGAB framework are parties to the general budget support ownership initiatives monitoring established by 2010 framework protocol. The process is led framework by the Government. Joint WBG Rationalize and  Development Partner  African Development Bank and the strategy strengthen the Joint Assistance World Bank prepared a joint diagnostic development Strategy aligned with for assistance strategies aligned with partnership and new PRSP by 2012 Burkina Faso’s Strategy for Accelerated processes (retreat Growth and Sustainable Development Alignment FY10) (SCADD). with  A roadmap has been established by the Developme Government jointly with development nt Partners partners for division of labor. The government leads this process. Development partners focus their assistance in agreed sectors of comparative advantage. Efforts at Burkina Faso is a  Pilot use of FM  Since April 2011 the national FM system pooling funds WB pilot for country systems – (Circuit Integré des Financements with the use of adopting financial 2010 Extérieurs-CIFE) is used for all projects, WB rules management country excluding the external audits which are systems and a carried out by private audit firms. On the Use of candidate for the reporting side, the traditional system of country procurement systems first reconciliation within CIFE is still in systems pilot use.  Pilot use of  Pilot dropped by the Bank. Procurement procurement country thresholds increased, allowing for use of systems – 2012 the country procurement system up to the (subject to thresholds. 84 acceptance into pilot project) General budget Maintain high level  Total budget  PRSC 9 = US$100 million support (GBS) of GBS support averages 50  PRSC 10 = US$90 million averages 50% % of IDA  PRSC 11 = US$125 million of IDA allocation. allocation  Planned GBS  Total PRSC 9- 11 = US$315 million allocation US$70 million Limited work Participatory CAS  Participatory  Participatory monitoring approaches are with civil (2009) monitoring effective in 8 projects. Different society/media/P approaches adopted approaches have been adopted to take arliament WBI programs for in 8 Bank into account project particularities. The capacity operations EISR+ third party monitoring approach, development in  WBG quarterly piloted in four projects, introduced Parliament and outreach program regular external collection and analysis media with media and of civil society and beneficiary civil society feedback. The approach has achieved Emphasis on local  Improved results and will be scaled up. The JSDF participatory information participatory monitoring fund is also monitoring of Bank dissemination piloting specific participatory Inclusive projects. through press approaches to the monitoring of broader partnerships releases, more education and health service delivery in Pan African Film accessible Public select regions. and Television Information Center  FESPACO WB-sponsored prize/stand: Festival of (Ouagadougou & The World Bank Office in Ouagadougou – Bobo-Dioulasso), Ouagadougou supports the creative FESPACO: internet and industries through FESPACO. This FESPACO WB- explanatory support is highly appreciated by the sponsored documents civil society and strengthens the Bank prize/stand outreach as a credible development partner in Burkina Faso. It is an opportunity to showcase the WB support to development outside of the classic communication channels. 85  Establishment of a Public Information Extended outreach Center network (Bobo-Dioulasso and and consultation IRD); program with civil  Production and dissemination of WB society and media Country Office newsletter (printed and e-mail) ;  Regular organization of workshops and seminars with the parliament and civil society organizations;  A new initiative - Development dialog series - is an innovative approach to involve civil society in debates on development issues.  Projects under preparation (including the Growth Poles, Local Government Support, Reproductive Health projects) systematically engaged with civil society and local media with support from the GovID taskforce. 86 Annex E Project Management in Burkina Faso (FY10-12) Project Institution Projects Managed by the Respective Ministry/Institution 1. Post Primary Education Ministry of Secondary and High Education 2. 2iE 2iE management system 3. Urban Water Sector Project ONEA 4. Administration Capacity Building Already closed/ Prime minister 5. Mineral Development Project Ministry of Mining, Energy and Quarry 6. Competitiveness & Enterprise Development Maison de l'Entreprise du Burkina Project (MEBF) 7. Decentralized Development Project Prime Ministry and Decentralization ministry 8. Bagré Growth Pole Project Maitrise d'Ouvrage de Bagré 9. Agricultural and Food Security Project Ministry of Agriculture jointly with the Ministry of Environment and Livestock Projects Managed by Sector Ministries through a Specialized Body of these Ministries 1. PNGT2 Project Unit 2. PAFASP 3. West Africa Agricultural Productivity Project Project Unit (WAAP) 4. Transport sector project 5. West Africa regional Transit and Transport Ministry of Transport – Transport Sector Facilitation Program (PST). PST is unit that manages 6. West Africa Regional Transport Security Project transport sector reforms. 7. West Africa Regional Infrastructures Communication project (ICT Project) 8. Energy Access Specialized Unit that develops energy 9. Power sector Development Project sector strategies and manages projects 10. Health Sector Project Programme d'Appui au Développement 11. Reproductive Health Project Sanitaire (PADS) – unit that manages all donor financing in the health sector 87 Annex 3: Burkina Faso - Social Indicators Latest single year Same region/income group SSA Sub- LIC Saharan Low- 1980-85 1990-95 2005-11 Africa income POPULATION SP.POP.TOTL Total population, mid-year (millions) 8.2 10.7 17.0 853.4 796.3 SP.POP.TOTL.ZG Growth rate (% annual average for period) 2.5 2.7 3.0 2.5 2.1 SP.URB.TOTL.IN.ZS Urban population (% of population) 12.3 15.1 26.5 37.4 28.3 SP.DYN.TFRT.IN Total fertility rate (births per woman) 7.0 6.6 5.8 4.9 4.1 POVERTY (% of population) SI.POV.NAHC National headcount index .. .. 46.7 .. .. SI.POV.URHC Urban headcount index .. .. 27.9 .. .. SI.POV.RUHC Rural headcount index .. .. 52.6 .. .. INCOME NY.GNP.PCAP.CD GNI per capita (US$) 200 220 520 1,176 528 FP.CPI.TOTL Consumer price index (2005=100) 67 89 126 147 151 FP.FPI.TOTL Food price index (2000=100) .. .. .. .. .. INCOME/CONSUMPTION DISTRIBUTION SI.POV.GINI Gini index .. 50.7 39.8 .. .. SI.DST.FRST.20 Lowest quintile (% of income or consumption) .. 5.1 6.7 .. .. SI.DST.05TH.20 Highest quintile (% of income or consumption) .. 56.7 47.0 .. .. SOCIAL INDICATORS Public expenditure SH.XPD.PUBL.ZS Health (% of GDP) .. 1.7 3.4 3.0 2.0 SE.XPD.TOTL.GN.ZS Education (% of GNI) .. .. .. 5.0 3.8 Net primary school enrollment rate (% of age group) SE.PRM.NENR Total 20 30 63 75 80 SE.PRM.NENR.MA Male 25 36 65 77 81 SE.PRM.NENR.FE Female 15 23 61 73 78 Access to an improved water source (% of population) SH.H2O.SAFE.ZS Total .. 51 79 61 65 SH.H2O.SAFE.UR.ZS Urban .. 79 95 83 86 SH.H2O.SAFE.RU.ZS Rural .. 46 73 49 57 Immunization rate (% of children ages 12-23 months) SH.IMM.MEAS Measles 38 43 63 75 78 SH.IMM.IDPT DPT 9 34 91 77 80 SH.STA.MALN.ZS Child malnutrition (% under 5 years) .. 30 26 22 23 Life expectancy at birth (years) SP.DYN.LE00.IN Total 48 49 55 54 59 SP.DYN.LE00.MA.IN Male 47 48 54 53 58 SP.DYN.LE00.FE.IN Female 49 50 56 55 60 Mortality SP.DYN.IMRT.IN Infant (per 1,000 live births) 109 101 82 76 70 SH.DYN.MORT Under 5 (per 1,000 live births) 218 199 146 121 108 Adult (15-59) SP.DYN.AMRT.MA Male (per 1,000 population) .. .. 300 379 297 SP.DYN.AMRT.FE Female (per 1,000 population) .. .. 249 346 260 SH.STA.MMRT Maternal (per 100,000 live births) .. 560 300 650 590 SH.STA.BRTC.ZS Births attended by skilled health staff (%) .. 42 54 46 44 CAS Annex B5. This table was produced from the CMU LDB system. 06/25/13 Note: 0 or 0.0 means zero or less than half the unit shown. Net enrollment rate: break in series between 1997 and 1998 due t change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months who received vaccinations before one year of age or at any time before the survey. 88 Annex 4: Burkina Faso - Key Economic Indicators 89 90 91 92 93 Burkina Faso - Key Economic Indicators Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Nati onal accounts (as % of GDP) a Gross domestic product 100 100 100 100 100 100 100 100 100 Agriculture 33 40 36 35 34 33 .. .. .. Industry 19 16 18 23 24 25 .. .. .. Services 48 44 46 42 42 42 .. .. .. Total Consumption 92 91 90 82 84 85 .. .. .. Gross domestic fixed investment 21 21 23 20 17 18 .. .. .. Government investment 6 6 6 7 7 8 .. .. .. Private investment 15 15 17 13 10 10 .. .. .. b Exports (GNFS) 11 10 13 17 21 24 .. .. .. Imports (GNFS) 25 26 28 25 29 28 .. .. .. Gross domestic savings 8 9 10 18 16 15 .. .. .. c Gross national savings 14 14 16 15 14 16 .. .. .. Memorandum items Gross domestic product 6756 8351 8348 9209 10396 11542 .. .. .. (US$ million at current prices) GNI per capita (US$, Atlas method) 430 480 520 560 580u are welcome .. .. .. Real annual growth rates (%, calculated from 99 prices) Gross domestic product at market pric 3.6 5.8 3.0 7.9 4.2 8.0 .. .. .. Gross Domestic Income 2.8 5.7 3.3 7.5 3.6 5.6 .. .. .. Real annual per capita growth rates (%, calculated from 99 prices) Gross domestic product at market pric 0.6 2.7 -0.1 4.8 1.1 1.5 .. .. .. Total consumption -1.3 5.5 -6.8 -2.4 5.0 2.6 .. .. .. Private consumption -2.4 7.1 -8.1 -3.2 4.6 3.2 .. .. .. Balance of Payments (US$ ) b Exports (GNFS) 715205757 749255380 938930672 1623463804 2248888798 2567443541 .. .. .. Merchandise FOB 624935131 692758204 900433130 1585290712 2206487477 2458098113 .. .. .. b Imports (GNFS) 1674019176 2118366285 1827808370 2291163724 2970702458 3343219181 .. .. .. Merchandise FOB 1220911891 1589325830 1382444630 1724755971 2241756652 2458098113 .. .. .. Resource balance -958813419 -1369110906 -888877699 -667699920 -721813660 -765095055 .. .. .. Net current transfers 403256046 409442527 514229562 492581794 575204012 598704948 .. .. Current account balance -557777182 -962723755 -380116321 -181554265 -150629186 -179609806 .. .. .. 0 Net private foreign direct investment 343308963 106004779 92412736 38150367 41844497 44672342 .. .. .. Long-term loans (net) 312206918 602760036 469041558 82262999 98655003 108947444 .. .. .. Official 195039000 273438000 189821000 249900000 122801000 134709890 Private 117167918 329322036 279220558 -167637001 -24145997 -25762446 .. .. .. Other capital (net, incl. errors & ommiss ions ) 218577016 164744988 -31435604 -120126948 -106225776 123435309 .. .. .. d Change in reserves -316315715 89213952 -149902369 181267848 116355463 134398790 .. .. .. Memorandum items Resource balance (% of GDP) -14.2 -16.4 -10.6 -7.3 -6.9 -7.7 .. .. .. (Continued) 94 Burkina Faso - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 e Public finance (as % of GDP at market prices) Current revenues 16.5 15.3 15.1 15.7 16.5 16.6 .. .. .. Current expenditures 13.9 12.2 11.7 10.9 13.1 14.5 .. .. .. Current account surplus (+) or deficit ( 2.6 3.1 3.4 4.8 -1.1 -4.7 .. .. .. Capital expenditure 11.9 9.0 10.8 12.0 11.0 12.7 .. .. .. Foreign financing 5.8 5.1 6.5 6.5 5.9 6.3 .. .. .. Monetary indicators M2/GDP 26.5 25.1 28.9 29.7 31.2 33.5 .. .. .. Growth of M2 (%) 26.7 9.1 21.6 19.0 12.8 15.4 .. .. .. Private sector credit growth / -16.5 74.8 -51.0 72.2 102.3 98.6 .. .. .. total credit growth (%) Price indices( YR99 =100) Merchandise export price index .. .. .. .. .. .. .. .. .. Merchandise import price index .. .. .. .. .. .. .. .. .. Merchandise terms of trade index .. .. .. .. .. .. .. .. .. f Real exchange rate (US$/LCU) 108.5 117.6 120.4 110.3 112.2 113.3 .. .. .. Real interest rates Consumer price index (% change) 0.0 2.0 4.0 3.3 2.7 3.6 .. .. .. GDP deflator (% change) 2.3 9.2 2.4 7.2 5.6 4.5 .. .. .. a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 95 Annex 5: Burkina Faso - Key Exposure Indicators Burkina Faso - Key Exposure Indicators Actual Estimated Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 1465 1689 1921 2179 2362 2242 2034 1889 1739 a disbursed (TDO) (US$m) a Net disbursements (US$m) 689 697 705 715 812 907 1053 1106 1187 Total debt service (TDS) 48 49 60 51 56 54 53 51 54 a (US$m) Debt and debt service indicators (%) b TDO/XGS 60.3 58.6 57.9 57.6 56.6 53.6 50.8 48.7 49.2 TDO/GDP 21.7 20.2 23.0 23.7 24.1 24.0 23.8 23.9 23.8 TDS/XGS 3.7 3.9 4.6 2.7 2.6 2.8 2.5 2.4 2.6 Concessional/TDO 83.5 87.7 88.2 87.7 86.0 98.7 116.9 130.1 142.3 IBRD exposure indicators (%) IBRD DS/public DS .. .. .. .. .. .. .. .. .. Preferred creditor DS/public .. .. .. c DS (%) IBRD DS/XGS .. .. .. .. .. .. .. .. .. d IBRD TDO (US$m) .. .. .. .. .. .. .. .. .. Of which present value of guarantees (US$m) Share of IBRD portfolio (%) .. .. .. .. .. .. .. .. .. d IDA TDO (US$m) 468 626 721 776 837 892 929 945 945 IFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (US$m) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 96 Annex 6: Operation portfolio (IBRD/IDA and Grants) CPS Annex B8-Burkina Faso Operations Portfolio (IBRD/IDA and Grants) As of July 15, 2013 Closed Projects IBRD/IDA Total Disbursed (Active) 311.31 Total Disbursed (Closed) 398.01 Total Disbursed (Active + Closed) 709.32 Total Undisbursed (Active) 591.6 Total Undisbursed (Closed) 2.49 Total Undisbursed (Active + Closed) 594.09 Difference between expected and Actual Active Projects Supervision rating Original Amount in US$ millions Disbursements Development Implementation Fiscal Projects ID Projects Objective Progress Year IBRD IDA Grant Cancel Undisb Orig Frm Rev'd P132210 BF- Growth and Competitiveness Credit 2 S S 2013 70.00 70.00 P130735 BF-Youth Employment & Skills Development S S 2013 50.00 49.82 P130568 BF-APL 3 Com Based Rur Dev III (GEF) S S 2013 7.41 7.41 P129688 BF-APL 3 Com Based Rur Dev III S S 2013 70.00 68.76 P124648 BF-Mineral Development Support Project MS MS 2011 33.00 30.03 P120960 BF Donsin Transport Infrastructure Project S S 2013 85.00 86.43 P120517 BF-Decentralized Development S S 2011 60.00 55.87 P119917 BF-Reproductive Health Project (FY12) S MS 2011 28.9 24.83 P119662 Bagre Growth Pole MS MS 2011 115.00 97.93 P114236 BF-Agricultural Productivity & Food Sec. MS S 2009 40.00 17.52 P108791 BF-Regional Training Center 2IE SIL (FY08) S S 2008 15.00 10.36 P106909 BF-Urban Water Sector Project S S 2009 80.00 38.28 P093987 BF-Health Sector Sup. & AIDS Project (FY06) S MS 2006 98.7 35.91 P081567 BF-Ag. Diversification & Market Dev. S MS 2006 66.00 16.35 P078091 BF-Energy Access SIL MS MS 2008 38.8 25.17 P071443 BF-Competitiveness & Enterprise Dev (FY03) MS MS 2002 50.7 16.46 Overall result 218.5 620.01 581.13 97 Annex 7: Overview of Main Active Trust Funds 1. Recipient Executed TF Trust Avail. Program Project # Project Name Amount Closing Date Unit Fund # Balance Source P096058 TF091199 3A-GEF W Afr Biosafety APL (FY07) 5,400.00 2,111.47 30-Jun-13 GEFIA AFTN1 P116645 TF094889 BF - JSDF Fight against FGM/C (FY10) 2,773.30 1,048.97 4-Nov-13 JSDF AFTHW P126109 TF099231 GFDRR for Disaster Risk Mgt & Climate Ad 1,260.00 1,260.00 23-Nov-13 GFDRR AFTN2 P116468 TF098156 BF: Strengthen Institutional Capac. for M&E 279.78 250.06 17-Jun-14 IDF AFTDE P087630 TF097091 BF-GEF Ouagadougou Transport Modal Shift 909.00 678.48 30-Jun-14 GEFIA AFTU2 P121714 TF096703 Burkina Faso: Community Monitoring 1,408.81 931.82 10-Jul-14 JSDF AFTP4 P130791 TF012464 IDF Burkina Faso Implementing AML/CFT 495.65 495.65 18-Sep-15 IDF FFSFI P119917 TF011678 BF-Reproductive Health Project (FY12) 1,700.00 1,700.00 31-Dec-16 HRBF AFTHW Total 14,226.54 2. Bank Executed TF Trust Avail. Closing Program Project # Project Name Amount Unit Fund # Balance Date Source P120689 TF094694 BF-Mainstreaming GAC (FY14) 1,025.25 50.59 30-Apr-13 GPF AFTP4 P132240 TF013216 Strengthening of Fiscal Revenues for the 75.00 27.17 30-Sep-13 PPIAF AFTP4 P121714 TF099517 Burkina Faso: Community Monitoring 200.00 34.33 30-Sep-13 LPRP AFTP4 P116645 TF094890 BF - JSDF Fight against FGM/C (FY10) 60.00 17.24 4-Nov-13 JSDF AFTHW P145235 TF014544 Burkina Faso - DTIS 130.00 130.00 31-Dec-13 EIF AFTP4 P126109 TF099230 GFDRR for Disaster Risk Mgt & Climate Ad 140.00 42.43 31-Dec-13 GFDRR AFTN1 P143833 TF012458 AFSF-Burkina Faso-FCPB 151.00 77.06 30-Jun-14 ARFF AES P121714 TF097004 Burkina Faso: Community Monitoring 67.72 9.88 10-Jul-14 JSDF AFTP4 P131922 TF013784 Burkina Domestic Private Sector in Water 500.00 500.00 30-Jun-15 WSP TWIAF P121419 TF096607 BF: Strengthen safety net response to crises 500.00 281.98 30-Jun-15 RSR AFTSW 15-Aug- P119917 TF011651 BF-Reproductive Health Project (FY12) 290.00 81.60 HRBF AFTHW 16 P143984 TF013650 Burkina Faso - HRITF Impact Evaluation 75.00 68.56 5-Oct-16 HRBF AFTHW P143993 TF014223 Burkina Faso - FIP - Forest Mgmt. 100.00 100.00 31-Dec-19 CSCFIA AFTN2 Total 3,313.97 1,420.84 98 Annex 8: Statement of IFC’s Held and Disbursed Portfolio A. Donor Activity (as of February 28, 2013) Key Donors Austria, Denmark, Japan, the Netherlands, SECO, European Commission, IFC B. Syndication/Resource Mobilization (as of December 31, 2012) Source Committed Portfolio (in US$) AMC 7.2 Total 7.2 C. Investment Activity (as of February 28, 2013) Client Sector Committed Portfolio (in US$m) Gryphon Oil, Gas and Mining 9.8 Onatel S.A. Information 9.1 Volta Oil, Gas and Mining 5.8 Scatec Solar Electric Power 1.2 Marina Market BF Wholesale and Retail Trade 1.0 BHBF Finance & Insurance 0.6 Hotel Independence Accommodation & Tourism Services 0.1 Grand Total 27.6 D. Investment Pipeline (as of March 15, 2013) Client Sector Committed Portfolio (in US$m) Coris Bank Finance & Insurance 15 Ecobank Finance & Insurance 5 Grand Total 20 99 Annex 09: Development Partners Division of Labor in 2012 Governance Sector Rural Priv Infrastr Social Sector Wate Housi Commun Vocati Popul Gen HIV/ Enviro To Polit Econ Administ Lo Develop ate ucture Form Healt r and ng ication onal ation der AIDS nment tal ical omic rative cal ment Sect al h Soci Sanit Urban Sport Traini Nature Development Partners (DP) or ation isme ng Educ Nutri al ation tion Acti ons 1. Germany - X - X X - - - - - X - - - - - - - 4 2. Austria - - - - - - - - - - - - - - - - - - - 3. Canada - - - - X X - X - - - - - - - - - - 3 4. Taiwan, China - - - - - - - - - - - - - - - - - - - 5. Denmark X - - X X - - X - - X - - - - - - - 5 6. United States - - - - - - - - - - - - - - - - - - - 7. France x x x x - x x x - - X - - - - - - - 8 8. Japan - - - - x - - x - - - - - - - - - - 2 9. Luxemburg - - - - - - - - - - - - - x - - - x 2 10. Netherland - x - - - - - x x - - - - - - - - - 3 11. Switzerland - x - x x - - - - - x - - x - x - - 6 12. Sweden x - - - - - - - - - x - - - - - - x 3 1. African Development x x x x x - x - - - - - - - - - - - 6 Bank (AfDB) 2. World Bank - x - x x x x x x x - - - - x x 10 3. West African - - - - - - - - - - - - - - - - - - - Development Bank (BOAD) 4. European Union x x x x - - x x x x - - - - - - - 10 5. IMF - - - - - - - - - - - - - - - - - - - 6. UNDP x x x x x - - x - - - - - x - x - x 9 7. UNICEF x - - - - - - x x - x - - - - - - - 4 8. UNFPA - - - - - - - - - x - - - - x x x - 4 Number 7 8 4 8 8 3 4 9 4 1 7 - - 3 1 3 2 4 (Source : Development Cooperation Report 2011) 100 Annex 10: Strengthening Statistical Capacity in Burkina Faso-A suggested path forwarded 1. Burkina Faso has made remarkable progress in the last decade in the production and dissemination of key statistical data for decision makers in all sectors and at all levels of decision-making. The World Bank worked in synergy with other development partners, such as the European Union and the Swedish cooperation- to strengthen the national statistics system. As a result, a new regulatory and institutional framework for the national statistical system is in place and operational. The National Statistical Council (CNS) is established and operational and the National Institute of Statistics and Demography (INSD) have three regional statistical offices. According to the World Bank’s Bulletin Board on Statistical Capacity (BBSC), Burkina Faso’s overall score (OS) for 2012 is 72. 2. To meet the needs of monitoring poverty and the Millennium Development Goals (MDGs) Burkinabe authorities have strengthened their commitment to implement a system for collecting and processing statistical data. The National Institute of Statistics and Demography (INSD) is the office responsible for collecting this information. To provide indicators for monitoring and evaluation of poverty, several surveys have been conducted in past years. For example poverty surveys were conducted in 1994, 1998, two integrated households surveys in 2003 and 2009-2010, respectively, Core Welfare Indicator Questionnaire (CWIQ) surveys in 2005 and 2007, as well as demographic and health surveys in 1993, 1998, 2003 and 2010 (See Table 1). The main problem is that the results in terms of poverty are generally not comparable from one survey to another. The reasons are related among others to differences in recall periods, seasonality and the list of consumption items. A second problem is the significant time lag between the surveys. For example, the latest household integrated survey (EICVM) was conducted in 2009-2010 while the previous one was in 2003 (EBCVM). Table 1: Inventory of Burkina Faso national households surveys Surveys Year Remarks There is a comparison issue between the two surveys because of Integrated households surveys (EBCVM 2003 & period recalls, seasonality and EICVM 2009) 2003, 2009-2010 consumption items list These surveys did not collect CWIQ 2005, 2007 consumption and income data Priority surveys 1994, 1998 Missing data on consumption these DHS (Demographic and Health 1993, 1998, 2003, surveys are useful for non-monetary Surveys) 2010 poverty analysis and other human development indicators Enquête permanente agricole These Panel data are mainly (Permanent agricultural survey) 2001-2012 focused on rural areas 101 3. While the main phase of EICVM was completed and allowed an estimation of the poverty rate in 2009, data that could enable a consumption seasonality analysis, was only available at the end of April 2013. Given the quality of the methodology adopted to collect data in EICVM, it was suggested that future surveys should be guided so as to make poverty comparable across time. Three years after this survey it appears necessary to conduct another survey to update poverty figures and to monitor the progress made since the implementation of the SCADD (Stratégie de Croissance Accélérée et de Développement Durable) which covers the period 2011-2015. There is also a need for technical assistance to increase the capacity of the INSD to analyze for seasonal poverty, and to perform other statistical robust tools of poverty analysis generally useful in monitoring poverty. It is also urgent to introduce innovations to undertake less costly quick surveys in order to assess poverty on an annual or a more regular basis. Recently, INSD developed a project with the Swedish Cooperation to conduct five annual living standard surveys on a sample of about 9600 households from October 2013. 4. Burkina Faso was one of the two pilot countries in the World Bank’s STATCAP program, through the National Statistical System Development project –NSSDP- (2004-2009). The overall objectives of the STATCAP program were to make sustainable improvements in countries’ statistical systems, and to provide reliable, timely, accurate economic, socio- demographic, and other data for policy formulation and evaluation in line with international good practice. Success in meeting these objectives contributed to improved governance, informed resource allocation, and accelerated achievement of national goals, such as the MDGs. It is evident that the successful implementation of the (NSSDP) convinced the Government even more of the necessity of having a reliable statistical system, as demonstrated by the approval of the new SDS and its support to capacity building and data collection. Moreover, the benefits of a strong M&E system in managing for results by both producers and users of statistical data have urged the INSD to respond to the growing demand for statistics. 5. Notwithstanding the recent progress, efforts are still needed to make the national statistical system more robust and responsive in improving the knowledge of the priority areas of the SCADD (the Government strategy for accelerated and sustainable growth). The main challenges will be specifically to support the national statistics system to be able to continue to provide data to: (a) ensure the availability and reliability of the identified indicators; (b) develop new indicators needed for extending the monitoring and evaluation of results to all the pillars of the strategy; (c) creating a critical mass of statisticians is a pre-requisite for the sustainability of a national statistical system. 6. In addition to aspects related to the organization of information production and specific actions for implementation and impact indicators, Government will need to prioritize the following activities: (a) full surveys on household living conditions (EICVM); (b) population and health surveys (EDS); (c) general agricultural census (RGA); (d) the regular production of national economic accounts; (e) production of social performance indicators; (f) regular production of sector statistics; 7. Currently, the Bank is providing support to the ministry of economics and finance through an IDF grant that aims at diagnosing the main statistical constraints in line ministries. There are plans within the program of activities to then train trainers on managing for results on 102 the themes of the country’s development strategy. Going forward the Bank will take stock of the regional instruments available to support the government of Burkina Faso to build and sustain the national statistics system in close collaboration with EU and the Swedish cooperation efforts. The regional approach will also help to harmonize and better coordinate data production and dissemination by using and sharing tools so that Burkina national statistics system could reach international standards and norms. 103 Annex 11: Debt Sustainability Analysis This joint World Bank/ IMF DSA has been prepared in the context of authorities’ request to augment access under their program supported by the IMF’s Extended Credit Facility (ECF). It indicates a significant improvement in Burkina Faso’s debt profile, based on updated gold export projections and new end-2011 debt data. 15 While none of the external debt ratios under the baseline scenario or standardized stress tests breach their respective indicative debt distress thresholds, a country-specific stress test that better reflects the high dependency on projections for gold prices does result in a minor breach of the indicative debt distress threshold for the NPV of debt-to-exports. As a result, Burkina Faso’s risk rating for external debt distress shifts to moderate from high. BACKGROUND AND UNDERLYING DSA ASSUMPTIONS 1. Burkina Faso’s nominal stock of debt as of end-2011 was 29.3 percent of GDP, equivalent to around US$700 million (Table 1). Roughly 83 percent of this was external debt and the remainder was domestic debt, comprised almost entirely of 10 year Table 1. Burkina Faso: Stock of Public Debt, 2008-2011 government bonds. 2008 2009 2010 2011 2. Compared to the December 2011 (CFAF billions) DSA, the main change in macroeconomic Total Debt 883.5 1029.6 1185.2 1407.1 assumptions in this DSA is an increase in External 786.4 867.7 1045.7 1159.1 gold production and associated exports Multilaterals 604.7 688.5 853.1 961.0 (Table 2). Export projections were Bilaterals 181.8 179.2 192.6 198.1 significantly increased based gold Domestic 97.1 162.0 139.5 248.0 production development in the pipeline and (percent of GDP) a slightly higher 2011 outturn than forecast Total Debt 23.6 26.1 27.1 29.3 (gold production was 32.4 tons vs. 31.4 External 21.0 22.0 23.9 24.1 tons projected in the December 2011 DSA). The December 2011 DSA had assumed that Multilaterals 16.2 17.5 19.5 20.0 gold production would drop in 2012 and Bilaterals 4.9 4.5 4.4 4.1 remain largely flat over the medium term. Domestic 2.6 4.1 3.2 5.2 Recent information show that investments Source: Burkinabe authorities already underway in new mining capacity should bring about large increases in production over the next 2 years, and large ongoing discovery and development—over 50 additional projects are in the exploration or development phases—suggest that production should be at least 49 tons by 2015, if not much higher. Despite a marginal downward adjustment in WEO gold prices, these production volumes would lead to much larger export values. 3. Higher exports also lead to higher GDP growth and more revenues in the near term. Real GDP growth has been increased to 7.0 percent per year until 2015, and revenues are 15 Based on the average CPIA score in 2008–10, Burkina Faso is ranked as a “medium performer.” Burkina Faso’s CPIA average for 2009–11 may move it into the category of “high performer.” 104 boosted by mining royalties and higher corporate income taxes. An associated reduction in the current account deficit is assumed, which is the main variable driving the accumulation of new external financing under the DS framework. Growth over the longer term, however, has been revised downward somewhat to account for the likelihood of future shocks. 4. This DSA is based on new end-2011 debt data. The authorities had revised the end- 2010 stock of debt upward slightly, and the outturn of the end-2011 debt stock was higher than projected (CFAF 1407 billion vs. CFAF 1246 billion projected), and higher still in GDP terms since the 2011 GDP outturn was lower than expected. 5. New external financing assumptions are somewhat more conservative. The proposed augmentation in access to the ECF-supported program (US$55.7 million) has been included in new external borrowing in 2012. The December 2011 assumption of a gradual move from grants to loans has been maintained, but with somewhat less concessional terms for new borrowing (from an average grant element of roughly 45 percent in 2012 to about 35 percent in 2032). Table 2. Changes in Assumptions: April 2012 DSA vs. the December 2011 DSA 2011 2012 2013 2014 2015 2022 2030 Gold production 2011 DSA 31.4 30.6 32.0 34.7 34.9 40.1 48.3 (tons) 2012 DSA 32.4 35.0 40.0 46.1 49.1 69.1 86.6 Exports of G& S 2011 DSA 24.1 24.6 24.4 24.5 23.2 18.4 13.6 (% of GDP) 2012 DSA 25.7 27.1 28.4 29.7 29.6 27.4 26.7 GDP growth (y/y) 2011 DSA 5.6 5.8 6.4 6.8 6.8 7.3 7.4 2012 DSA 4.2 7.0 7.0 7.0 7.0 6.4 6.0 Revenue (% of 2011 DSA 15.8 16.2 16.3 16.6 17.0 18.5 19.2 GDP) 2012 DSA 16.5 16.1 16.3 17.0 17.5 18.5 19.2 IMF (US$ millions) 2011 DSA 20.4 19.9 10.0 0.0 0.0 0.0 0.0 2012 DSA 20.4 75.6 10.0 0.0 0.0 0.0 0.0 Sources: Burkinabe authorities and staff projections. 105 6. Other underlying assumptions remain the same as in the December DSA, summarized in Box 1. Box 1. Burkina Faso: Macroeconomic Assumptions Underlying the DSA Real GDP growth is projected at 7 percent per year until 2015, supported by projections of: () an increase in gold production and sustained global gold prices; (ii) improved agricultural production; and (iii) an ambitious public investment program. However, longer term real growth has been moderated to 6 percent to account for a deceleration in the rate of growth of gold production and to reflect a more conservative investment-longer term growth link, particularly in light of the frequency of weather and other shocks. Inflation is projected to remain below 3 percent over the whole projection period. This is consistent with past performance and WAEMU macroeconomic criteria. Current account deficit is expected to fall to 2.7 percent of GDP by 2015, in line with gold exports and somewhat higher near term imports. Over the longer term, the current account deficit is projected to increase gradually to 6 percent by 2032, as gold exports decelerate but imports remain relatively constant. The overall balance of payments remains relatively unaffected by these developments, however, since gold proceeds (after wage and supplier payments) are mainly held in offshore accounts in order to repay intra-company loans. Fiscal deficits (including grants) are projected to decrease very gradually, from 3.3 percent of GDP in 2013 to around 2.8 percent in 2032, despite a pronounced decrease in grants (from 6.4 percent of GDP to 2 percent of GDP) and a shift toward external borrowing. Domestic debt assumptions remain unchanged from the December 2011 DSA, that is, the nominal stock of domestic debt is held constant, resulting in a sharp decline in terms of percent of GDP. Absent a higher fiscal deficit, changing this assumption would result in a lower external financing requirement still. EXTERNAL DEBT DSA RESULTS 7. The December 2011 DSA maintained a determination of a “high risk” of external debt distress. This was based on a single indicator, the NPV of debt-to- exports, breaching its indicative threshold, both under the stress tests and the baseline scenario. None of the other stock variables or stress tests breached the indicative thresholds and the flow variables were far below the indicative thresholds. Indeed, the December 2011 DSA noted that it was based on conservative export assumptions and the NPV of debt-to-exports breach under the baseline scenario was 10 years later (2026) than under the 2010 DSA. The 2011 DSA concluded that further improvements in gold exports would lead to a situation where there was no breach. 106 8. This DSA does not show a breach of the indicative debt distress threshold for NPV of debt-to-exports (Tables 4a and b and Figure 2). The baseline scenario shows a slight decrease in NPV of debt-to-exports, from 54.1 percent in 2012 to 49.3 percent in 2014 (during the years of rapid growth of gold exports), followed by a steady increase to a maximum of 97.6 percent in 2032. The other debt indicators continue to show no breach in their indicative debt distress thresholds. Similarly, the standardized stress tests show no breach in the indicative thresholds. 9. Given that the DSA results are highly dependent upon gold projections, the staffs felt that consideration of a customized stress test was merited. Gold prices are inherently difficult to predict, and production projections in the outlook would also be likely to be affected by a significant change in prices, as this would probably affect investment. Staffs therefore ran a customized scenario based on World Bank Commodities Group projections for gold prices, which are lower than WEO projections. The effect of this change on export values was approximated by extending the standardized export shock for three further years (2013-17). World Bank baseline projections show cumulative price declines of around 40 percent over five years, with lower prices sustained over the remainder of the projection period. Even without altering production, under this scenario the debt distress threshold with respect to exports is breached. Adding any adverse impact on production would intensify this breach. 10. This DSA shows a large deviation between the historical and baseline scenarios (Table 3). This is mainly due to a significant reduction in the current account deficit in the baseline, and thus debt accumulation, relative to the historical average. This reduction is a function of stronger export projections, and is consistent with current account performance over the last three years—those with significant gold exports—in which the current account deficit averaged just 2.5 percent of GDP. In the December 2011 analysis, it was assumed that the current account deficit returned to its pre-gold trend, hence the baseline and historical scenarios were closer. The historical scenario in this new DSA shows an improvement in debt indicators in later years, since the underlying historical averages for GDP, export, and revenue growth are significantly higher than long run projections in the baseline. Table 3. Historical vs. Baseline: December 2011 DSA vs. April 2012 DSA CA Deficit Revenues (% GDP growth GDP deflator Export Growth (% of GDP) of GDP) Historical 5.7 7.1 24.1 8.9 12.9 2001-2010 Baseline 2011 5.6 7.2 50.5 3.3 15.8 Dec. 2011 DSA Baseline 2012- 6.6 1.0 5.6 7.3 16.8 17 avg Baseline 2018- 7.3 1.8 5.8 6.7 18.6 31 avg Historical 5.6 7.9 29.2 7.8 13.5 2002-2011 … of which 4.2 9.2 36.6 1.0 16.5 2011 April 2012 DSA Baseline 2012- 7.0 1.0 10.1 3.1 17.3 17 avg Baseline 2018- 6.3 2.0 7.8 4.6 18.8 32 avg Sources: Burkinabe authorities and IMF staff projections. 107 TOTAL PUBLIC DEBT DSA RESULTS 11. This DSA does not modify the December 2011 assumptions for the evolution of domestic debt (Box 1, Tables 5a and b, and Figure 3). Therefore, the results of the total public debt analysis mimic those of the external debt analysis, especially over the long term. However, the most extreme shock corresponds now to a shock to growth rather than the primary balance, which results in worse debt indicators under the shock than in the December DSA. The decision to leave domestic financing assumptions unchanged was taken to avoid, in the absence of a higher fiscal deficit, creating lower external financing requirements still and so that the impact of new export projections could be isolated. However, it would be reasonable to assume, in the next joint DSA, that domestic debt levels are maintained, in line with efforts to create a regional bond market and deepen financial markets. DEBT MANAGEMENT ISSUES 12. Burkina Faso has been classified at “low debt management capacity” by the World Bank/IMF for the purposes of setting programmatic external debt limits. The authorities have enhanced debt management capacity in recent years, as noted by technical experts from the World Bank and IMF. Remaining areas for improvement include: (a) exposition of a medium- term debt management strategy (MTDS); (b) stronger auditing procedures; (c) better risk accounting; and (d) an improved debt database management. The authorities have requested technical assistance from the IMF and the World Bank for the preparation of a MTDS by end- 2012, and TA from the IMF to conduct a DSF workshop as a means to start preparing their own regular DSAs. AUTHORITIES VIEWS 13. The authorities concurred with the DSA results and reaffirmed their commitment to prudent borrowing policies. They noted that a move from a “high risk” rating would unlock new sources of concessional financing. They acknowledged that the rating change could result in an accelerated move away from grants toward concessional financing, and that this would require determined efforts to continue strengthening debt management capacity and increased diligence to ensure financing terms are the most generous possible. 14. The authorities stressed, however, that more flexibility is needed regarding the zero limit on non-concessional borrowing under the ECF-supported program. The argued for consideration of some non-concessional financing linked to specific, high return large infrastructure projects. They would like to explore this topic in more detail at the time of the next program review.] 108 CONCLUSION 15. Based on the results of the new DSA, Burkina Faso’s risk of debt distress shifts from high to moderate. This shift primarily reflects the rapid development of Burkina Faso’s gold mining sector, combined with notable improvements in underlying macroeconomic fundamentals. However, the staffs caution that any adjustments in financing plans—both on the part of the authorities and development partners—should only be undertaken gradually, to ensure that debt management capacity is sufficient to handle evolving needs. 109 Table 4a. Burkina Faso: External Debt Sustainability Framework, Baseline Scenario, 2009-2032 1/ (In percent of GDP, unless otherwise indicated) 6/ 6/ Actual Hist. Std. Projections Average Deviation 2012-2017 2018-2032 2009 2010 2011 2012 2013 2014 2015 2016 2017 Average 2022 2032 Average External debt (nominal) 1/ 22.0 23.9 24.1 24.0 23.8 23.9 24.1 24.4 24.9 30.2 38.1 o/w public and publicly guaranteed (PPG) 22.0 23.9 24.1 24.0 23.8 23.9 24.1 24.4 24.9 30.2 38.1 Change in external debt 1.0 1.9 0.2 -0.1 -0.2 0.1 0.2 0.3 0.5 1.3 0.4 Identified net debt-creating flows 3.7 0.5 -2.0 2.5 1.0 0.8 0.8 1.2 1.8 1.9 2.5 Non-interest current account deficit 4.5 2.1 1.0 7.8 3.9 4.2 2.7 2.6 2.5 3.0 3.5 3.9 5.1 4.4 Deficit in balance of goods and services 10.6 7.6 6.8 9.2 7.1 6.7 6.4 6.6 7.2 7.2 7.0 Exports 12.6 21.4 25.7 27.1 28.4 29.7 29.6 29.3 28.8 27.4 26.6 Imports 23.3 29.0 32.5 36.3 35.5 36.4 36.0 35.9 36.1 34.6 33.6 Net current transfers (negative = inflow) -6.0 -5.3 -5.6 -4.9 0.8 -4.7 -4.1 -3.8 -3.6 -3.3 -3.4 -3.0 -1.9 -2.6 o/w official -4.4 -3.9 -4.2 -3.5 -2.9 -2.8 -2.6 -2.4 -2.5 -2.1 -1.1 Other current account flows (negative = net inflow) -0.2 -0.2 -0.2 -0.3 -0.3 -0.3 -0.4 -0.4 -0.4 -0.3 0.0 Net FDI (negative = inflow) -1.1 -0.4 -0.4 -1.1 1.4 -0.3 -0.4 -0.4 -0.4 -0.4 -0.4 -0.5 -0.9 -0.6 Endogenous debt dynamics 2/ 0.3 -1.2 -2.6 -1.4 -1.3 -1.3 -1.3 -1.3 -1.3 -1.5 -1.8 Contribution from nominal interest rate 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 Contribution from real GDP growth -0.6 -1.6 -0.9 -1.6 -1.5 -1.5 -1.5 -1.5 -1.5 -1.7 -2.1 Contribution from price and exchange rate changes 0.7 0.2 -2.0 … … … … … … … … Residual (3-4) 3/ -2.7 1.4 2.2 -2.6 -1.2 -0.8 -0.6 -0.9 -1.2 -0.6 -2.1 o/w exceptional financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 PV of external debt 4/ ... ... 14.6 14.5 14.4 14.5 14.6 14.8 15.2 19.3 26.4 In percent of exports ... ... 56.6 53.6 50.8 48.7 49.2 50.5 52.7 70.2 99.2 PV of PPG external debt ... ... 14.6 14.5 14.4 14.5 14.6 14.8 15.2 19.3 26.4 In percent of exports ... ... 56.6 53.6 50.8 48.7 49.2 50.5 52.7 70.2 99.2 In percent of government revenues ... ... 88.2 90.2 88.4 84.8 83.3 80.9 83.3 104.4 137.0 Debt service-to-exports ratio (in percent) 4.6 2.7 2.6 2.8 2.5 2.4 2.6 2.6 2.5 2.5 4.7 PPG debt service-to-exports ratio (in percent) 4.6 2.7 2.6 2.8 2.5 2.4 2.6 2.6 2.5 2.5 4.7 PPG debt service-to-revenue ratio (in percent) 4.3 3.7 4.0 4.7 4.4 4.2 4.3 4.1 3.9 3.7 6.6 Total gross financing need (Billions of U.S. dollars) 0.3 0.2 0.1 0.5 0.4 0.4 0.4 0.5 0.6 1.0 3.0 Non-interest current account deficit that stabilizes debt ratio 3.5 0.2 0.8 4.3 2.9 2.5 2.3 2.6 3.0 2.6 4.8 Key macroeconomic assumptions Real GDP growth (in percent) 3.0 7.9 4.2 5.6 1.9 7.0 7.0 7.0 7.0 6.9 6.8 7.0 6.4 6.0 6.3 GDP deflator in US dollar terms (change in percent) -3.2 -0.7 9.2 7.9 7.9 -2.1 2.1 1.6 1.5 1.5 1.4 1.0 2.0 2.0 2.0 Effective interest rate (percent) 5/ 1.1 1.1 1.2 0.9 0.3 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Growth of exports of G&S (US dollar terms, in percent) 27.4 81.8 36.6 29.2 25.4 10.6 14.2 13.7 8.3 7.5 6.6 10.1 7.6 8.0 7.8 Growth of imports of G&S (US dollar terms, in percent) -11.7 33.4 27.7 18.2 15.0 16.9 6.8 11.5 7.4 8.4 8.7 9.9 7.3 8.1 7.9 Grant element of new public sector borrowing (in percent) ... ... ... ... ... 41.1 46.4 45.2 43.8 42.7 41.7 43.5 38.1 36.2 37.6 Government revenues (excluding grants, in percent of GDP) 13.7 15.6 16.5 16.1 16.3 17.0 17.5 18.3 18.3 18.4 19.3 18.7 Aid flows (in Billions of US dollars) 7/ 0.8 0.7 0.8 0.9 1.0 1.1 1.1 1.2 1.3 1.9 3.0 o/w Grants 0.5 0.4 0.5 0.8 0.7 0.8 0.8 0.8 0.9 1.0 1.0 o/w Concessional loans 0.3 0.3 0.3 0.2 0.2 0.3 0.3 0.4 0.4 0.9 2.0 Grant-equivalent financing (in percent of GDP) 8/ ... ... ... 8.2 7.5 7.2 7.0 6.7 6.7 5.6 3.3 4.8 Grant-equivalent financing (in percent of external financing) 8/ ... ... ... 83.5 85.7 84.2 82.5 80.8 79.6 69.3 55.9 65.1 Memorandum items: Nominal GDP (Billions of US dollars) 8.4 9.0 10.2 10.7 11.7 12.7 13.8 15.0 16.2 24.5 54.3 Nominal dollar GDP growth -0.3 7.1 13.7 4.7 9.2 8.8 8.6 8.5 8.3 8.0 8.5 8.1 8.4 PV of PPG external debt (in Billions of US dollars) 1.4 1.6 1.7 1.8 2.0 2.2 2.5 4.7 14.3 (PVt-PVt-1)/GDPt-1 (in percent) 1.5 1.2 1.3 1.4 1.5 1.7 1.4 2.7 2.5 2.5 Gross workers' remittances (Billions of US dollars) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 PV of PPG external debt (in % of GDP + remittances) ... ... 14.5 14.5 14.4 14.4 14.5 14.8 15.2 19.2 26.3 PV of PPG external debt (in % of exports + remittances) ... ... 56.3 53.3 50.6 48.5 49.1 50.4 52.5 69.8 98.3 Debt service of PPG external debt (in % of exports + remittances) ... ... 2.6 2.8 2.5 2.4 2.6 2.6 2.5 2.5 4.7 Sources: Country authorities; and staff estimates and projections. 0 1/ Includes both public and private sector external debt. 2/ Derived as [r - g - ρ(1+g)]/(1+g+ρ+g ρ) times previous period debt ratio, with r = nominal interest rate; g = real GDP growth rate, and ρ = growth rate of GDP deflator in U.S. dollar terms. 3/ Includes exceptional financing (i.e., changes in arrears and debt relief); changes in gross foreign assets; and valuation adjustments. For projections also includes contribution from price and exchange rate changes. 4/ Assumes that PV of private sector debt is equivalent to its face value. 5/ Current-year interest payments divided by previous period debt stock. 6/ Historical averages and standard deviations are generally derived over the past 10 years, subject to data availability. 7/ Defined as grants, concessional loans, and debt relief. 8/ Grant-equivalent financing includes grants provided directly to the government and through new borrowing (difference between the face value and the PV of new debt). 110 Table 4b. Burkina Faso: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2012-2032 (In percent) Proje ctions 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 PV of debt-to GDP ratio Baseline 15 14 14 15 15 15 16 16 17 18 19 20 21 22 23 24 24 25 26 26 26 A. Alternative Scenarios A1. Key variables at their historical averages in 2012-2032 1/ 15 17 19 21 22 24 25 26 27 29 30 31 31 32 32 33 33 33 32 32 32 A2. New public sector loans on less favorable terms in 2012-2032 2 15 15 16 17 18 19 20 21 23 24 26 28 30 31 33 34 35 36 37 38 39 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 15 15 15 15 16 16 17 17 18 19 20 22 23 24 25 25 26 27 27 28 28 B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ 15 16 19 19 19 19 19 20 21 21 22 23 23 24 25 25 26 26 27 27 27 B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 15 15 15 15 15 16 16 17 18 19 20 21 22 23 24 25 25 26 26 27 27 B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ 15 15 15 15 15 16 16 17 18 19 20 21 22 22 23 24 25 25 26 26 26 B5. Combination of B1-B4 using one-half standard deviation shocks 15 14 13 13 13 14 14 15 16 17 18 19 20 21 22 23 24 25 25 26 26 B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ 15 20 20 21 21 21 22 23 24 26 27 29 30 31 33 34 35 35 36 37 37 PV of debt-to-exports ratio Baseline 54 51 49 49 51 53 55 57 61 66 70 75 79 83 86 89 92 94 96 98 99 A. Alternative Scenarios A1. Key variables at their historical averages in 2012-2032 1/ 54 58 63 70 76 82 87 92 98 104 109 113 116 119 121 122 122 122 122 121 120 A2. New public sector loans on less favorable terms in 2012-2032 2 54 53 53 56 60 65 69 74 81 88 96 102 109 115 121 127 131 135 139 143 146 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 54 51 49 49 50 53 55 57 61 66 70 74 79 82 86 89 91 94 95 97 99 B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ 54 62 77 77 78 80 82 84 88 92 96 100 104 108 111 114 116 118 120 121 123 B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 54 51 49 49 50 53 55 57 61 66 70 74 79 82 86 89 91 94 95 97 99 B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ 54 52 51 51 52 54 56 59 63 67 71 75 80 83 87 90 92 94 96 98 99 B5. Combination of B1-B4 using one-half standard deviation shocks 54 47 40 41 42 45 47 50 54 58 63 67 72 76 80 83 85 88 90 92 93 B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ 54 51 49 49 50 53 55 57 61 66 70 74 79 82 86 89 91 94 95 97 99 PV of de bt-to-revenue ratio Baseline 90 88 85 83 81 83 86 90 95 100 104 109 113 118 122 126 129 131 133 135 137 A. Alternative Scenarios A1. Key variables at their historical averages in 2012-2032 1/ 90 101 109 118 121 129 136 144 152 158 163 165 167 170 172 173 172 171 169 167 166 A2. New public sector loans on less favorable terms in 2012-2032 2 90 93 93 95 96 102 109 117 125 134 142 149 157 164 172 179 184 189 193 197 201 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 90 91 90 88 86 88 92 96 101 106 111 115 120 125 130 134 137 140 142 143 145 B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ 90 98 112 108 104 105 107 110 113 116 119 122 124 128 131 134 136 138 139 140 141 B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 90 90 88 86 84 86 89 94 98 103 108 113 117 122 126 131 134 136 138 140 142 B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ 90 91 88 86 84 86 89 93 97 101 106 110 114 119 123 127 130 132 134 135 137 B5. Combination of B1-B4 using one-half standard deviation shocks 90 85 74 73 72 74 78 82 87 93 98 103 108 113 118 123 126 129 131 133 135 B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ 90 125 120 118 114 118 122 128 134 141 147 154 159 166 172 178 182 186 188 191 194 111 Table 4b. Burkina Faso: Sensitivity Analysis for Key Indicators of Public and Publicly Guaranteed External Debt, 2012-2032 (continued) (In percent) Debt service-to-exports ratio Baseline 3 3 2 3 3 2 3 3 2 2 3 2 3 3 3 4 4 4 4 5 5 A. Alternative Scenarios A1. Key variables at their historical averages in 2012-2032 1/ 3 2 2 2 2 2 3 2 3 3 3 3 3 4 4 4 4 4 5 5 5 A2. New public sector loans on less favorable terms in 2012-2032 2 3 3 2 3 3 3 3 3 3 3 4 4 5 5 6 6 7 7 8 8 9 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 3 3 2 3 3 2 3 3 2 2 3 2 3 3 3 4 4 4 4 5 5 B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ 3 3 3 3 3 3 3 3 3 4 4 4 4 4 5 5 5 5 6 6 6 B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 3 3 2 3 3 2 3 3 2 2 3 2 3 3 3 4 4 4 4 5 5 B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ 3 3 2 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 5 5 B5. Combination of B1-B4 using one-half standard deviation shocks 3 2 2 2 2 2 3 2 2 2 2 2 2 3 3 3 4 4 4 4 4 B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ 3 3 2 3 3 2 3 3 2 2 3 2 3 3 3 4 4 4 4 5 5 Debt service-to-revenue ratio Baseline 5 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 6 6 6 7 A. Alternative Scenarios A1. Key variables at their historical averages in 2012-2032 1/ 5 4 4 4 4 4 4 4 4 4 5 5 5 5 6 6 6 6 6 6 6 A2. New public sector loans on less favorable terms in 2012-2032 2 5 4 4 5 5 5 5 5 5 5 6 6 7 7 8 9 9 10 11 11 12 B. Bound Tests B1. Real GDP growth at historical average minus one standard deviation in 2013-2014 5 4 4 5 4 4 5 4 4 4 4 4 4 5 5 5 6 6 7 7 7 B2. Export value growth at historical average minus one standard deviation in 2013-2014 3/ 5 4 4 5 4 4 5 4 4 5 5 5 5 5 5 6 6 6 7 7 7 B3. US dollar GDP deflator at historical average minus one standard deviation in 2013-2014 5 4 4 5 4 4 4 4 4 4 4 4 4 4 5 5 6 6 6 6 7 B4. Net non-debt creating flows at historical average minus one standard deviation in 2013-2014 4/ 5 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 6 6 6 6 7 B5. Combination of B1-B4 using one-half standard deviation shocks 5 4 4 4 4 4 4 4 4 3 3 3 4 4 4 5 5 6 6 6 6 B6. One-time 30 percent nominal depreciation relative to the baseline in 2013 5/ 5 6 6 6 6 6 6 6 5 5 5 5 5 6 7 7 8 8 9 9 9 Memorandum item: Grant element assumed on residual financing (i.e., financing required above baseline) 6/ 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 38 Sources: Country authorities; and staff estimates and projections. 1/ Variables include real GDP growth, growth of GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 2/ Assumes that the interest rate on new borrowing is by 2 percentage points higher than in the baseline., while grace and maturity periods are the same as in the baseline. 3/ Exports values are assumed to remain permanently at the lower level, but the current account as a share of GDP is assumed to return to its baseline level after the shock (implicitly assuming an offsetting adjustment in import levels). 4/ Includes official and private transfers and FDI. 5/ Depreciation is defined as percentage decline in dollar/local currency rate, such that it never exceeds 100 percent. 6/ Applies to all stress scenarios except for A2 (less favorable financing) in which the terms on all new financing are as specified in footnote 2. 112 Figure 2. Burkina Faso: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios, 2012-2032 1/ a. Debt Accumulation 45 b.PV of debt-to GDP ratio 10 45 9 40 40 8 35 35 7 30 30 6 5 25 25 4 20 20 3 15 15 2 10 10 1 5 0 0 5 2012 2017 2022 2027 2032 0 Rate of Debt Accumulation 2012 2017 2022 2027 2032 Grant-equivalent financing (% of GDP) Grant element of new borrowing (% right scale) c.PV of debt-to-exports ratio 300 d.PV of debt-to-revenue ratio 300 250 250 200 200 150 150 100 100 50 50 0 0 2012 2017 2022 2027 2032 2012 2017 2022 2027 2032 f.Debt service-to-revenue ratio 25 e.Debt service-to-exports ratio 25 20 20 15 15 10 10 5 5 0 0 2012 2017 2022 2027 2032 2012 2017 2022 2027 2032 Baseline Historical scenario Most extreme shock 1/ Threshold Sources: Country authorities; and staff estimates and projections. 1/ T he most extreme stress test is the test that yields the highest ratio in 2022. In figure b. it corresponds to a One-time depreciation shock; in c. to a Customized scenario (lower prices for 5 years and LT production decrease) shock; in d. to a One- time depreciation shock; in e. to a Exports shock and in figure f. to a T erms shock 113 Table 5a.Burkina Faso: Total Public Sector Debt Sustainability Framework, Baseline Scenario, 2009-2032 (In percent of GDP, unless otherwise indicated) Actual Estimate Projections 5/ 5/ Std. 2012-17 2018-32 Average Dev. Average Average 2009 2010 2011 2012 2013 2014 2015 2016 2017 2022 2032 Public sector debt 1/ 26.1 27.1 29.3 28.3 27.2 26.0 25.3 24.9 25.1 30.2 38.1 o/w foreign-currency denominated 22.0 23.9 24.1 24.0 23.8 23.9 24.1 24.4 24.9 30.2 38.1 Change in public sector debt 2.5 1.0 2.2 -1.0 -1.2 -1.1 -0.7 -0.4 0.2 1.3 0.4 Identified debt-creating flows 1.5 3.4 0.5 0.6 0.9 0.8 1.0 0.5 0.7 1.4 0.2 Primary deficit 4.3 4.1 2.0 1.8 6.7 3.0 2.8 2.6 2.8 2.3 2.4 2.6 3.5 2.7 3.1 Revenue and grants 19.6 20.1 21.8 23.2 22.7 23.2 23.3 23.8 23.7 22.5 21.1 of which: grants 5.9 4.6 5.3 7.1 6.4 6.1 5.8 5.5 5.4 4.1 1.9 Primary (noninterest) expenditure 23.9 24.2 23.8 26.2 25.6 25.8 26.1 26.1 26.1 26.0 23.8 Automatic debt dynamics -2.1 -0.5 -1.5 -2.4 -1.9 -1.8 -1.8 -1.7 -1.7 -2.0 -2.5 Contribution from interest rate/growth differential -0.8 -2.1 -2.0 -2.4 -2.0 -1.9 -1.9 -1.8 -1.8 -2.0 -2.5 of which: contribution from average real interest rate -0.1 -0.2 -0.9 -0.5 -0.1 -0.1 -0.2 -0.2 -0.2 -0.3 -0.4 of which: contribution from real GDP growth -0.7 -1.9 -1.1 -1.9 -1.9 -1.8 -1.7 -1.6 -1.6 -1.7 -2.1 Contribution from real exchange rate depreciation -1.3 1.7 0.5 0.0 0.0 0.1 0.1 0.1 0.1 ... ... Other identified debt-creating flows -0.8 -0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Privatization receipts (negative) -0.8 -0.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Recognition of implicit or contingent liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Debt relief (HIPC and other) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other (specify, e.g. bank recapitalization) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Residual, including asset changes 1.0 -2.4 1.6 -1.6 -2.1 -1.9 -1.7 -0.9 -0.5 -0.1 0.1 Other S ustainability Indicators PV of public sector debt ... ... 19.7 18.9 17.8 16.6 15.8 15.3 15.4 19.3 26.4 o/w foreign-currency denominated ... ... 14.6 14.5 14.4 14.5 14.6 14.8 15.2 19.3 26.4 o/w external ... ... 14.6 14.5 14.4 14.5 14.6 14.8 15.2 19.3 26.4 PV of contingent liabilities (not included in public sector debt) ... ... ... ... ... ... ... ... ... ... ... Gross financing need 2/ 5.4 5.4 3.4 4.6 4.4 4.4 4.3 3.7 3.4 4.2 4.0 PV of public sector debt-to-revenue and grants ratio (in p ercent) … … 90.5 81.5 78.1 71.6 67.8 64.2 64.9 85.4 125.0 PV of public sector debt-to-revenue ratio (in percent) … … 119.4 117.2 108.8 97.3 90.4 83.5 84.2 104.4 137.0 o/w external 3/ … … 88.2 90.2 88.4 84.8 83.3 80.9 83.3 104.4 137.0 Debt service-to-revenue and grants ratio (in p ercent) 4/ 5.2 6.7 6.3 6.9 7.0 7.7 6.8 6.2 4.2 3.1 6.0 Debt service-to-revenue ratio (in p ercent) 4/ 7.4 8.6 8.3 9.9 9.7 10.5 9.1 8.1 5.5 3.7 6.6 Primary deficit that stabilizes the debt-to-GDP ratio 1.8 3.1 -0.1 3.9 4.0 3.8 3.5 2.7 2.2 2.2 2.4 Key macroeconomic and fiscal assumptions Real GDP growth (in p ercent) 3.0 7.9 4.2 5.6 1.9 7.0 7.0 7.0 7.0 6.9 6.8 7.0 6.4 6.0 6.3 Average nominal interest rate on forex debt (in percent) 1.1 1.1 1.2 0.9 0.3 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 Average real interest rate on domestic debt (in p ercent) 5.9 2.8 1.7 3.0 3.4 2.3 3.6 3.6 3.4 3.2 2.3 3.0 1.0 1.0 1.0 Real exchange rate depreciation (in p ercent, + indicates dep reciation) -6.7 8.3 2.3 -3.3 10.2 0.1 ... ... ... ... ... ... ... ... ... Inflation rate (GDP deflator, in p ercent) 2.3 2.8 5.6 3.0 2.8 3.5 2.0 2.0 2.0 2.0 2.0 2.3 2.0 2.0 2.0 Growth of real p rimary sp ending (deflated by GDP deflator, in p ercent) 0.2 0.1 0.0 0.1 0.1 0.2 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Grant element of new external borrowing (in p ercent) ... ... ... … … 41.1 46.4 45.2 43.8 42.7 41.7 43.5 38.1 36.2 ... Sources: Country authorities; and staff estimates and projections. 1/ M edium term and long term general government gross debt 2/ Gross financing need is defined as the primary deficit p lus debt service plus the stock of short-term debt at the end of the last p eriod. 3/ Revenues excluding grants. 4/ Debt service is defined as the sum of interest and amortization of medium and long-term debt. 5/ Historical averages and standard deviations are generally derived over the p ast 10 y ears, subject to data availability. 114 Table 5b.Burkina Faso: Sensitivity Analysis for Key Indicators of Public Debt 2012-2032 Projections 2012 2013 2014 2015 2016 2017 2022 2032 PV of Debt-to-GDP Ratio Baseline 19 18 17 16 15 15 19 26 A. Alternative scenarios A1. Real GDP growth and primary balance are at historical averages 19 17 16 15 14 14 15 18 A2. Primary balance is unchanged from 2012 19 18 17 16 16 17 20 26 A3. Permanently lower GDP growth 1/ 19 18 17 16 16 16 22 36 B. Bound tests B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 19 19 19 18 19 19 26 37 B2. Primary balance is at historical average minus one standard deviations in 2013-2014 19 21 23 22 21 21 24 29 B3. Combination of B1-B2 using one half standard deviation shocks 19 20 20 20 19 20 25 35 B4. One-time 30 percent real depreciation in 2013 19 23 21 20 19 18 19 23 B5. 10 percent of GDP increase in other debt-creating flows in 2013 19 24 22 21 20 20 23 28 PV of Debt-to-Revenue Ratio 2/ Baseline 81 78 72 68 64 65 85 125 A. Alternative scenarios A1. Real GDP growth and primary balance are at historical averages 81 76 68 62 58 58 65 85 A2. Primary balance is unchanged from 2012 81 79 73 70 68 70 88 123 A3. Permanently lower GDP growth 1/ 81 78 73 69 67 68 98 170 B. Bound tests B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 81 81 79 78 77 80 114 175 B2. Primary balance is at historical average minus one standard deviations in 2013-2014 81 93 101 96 90 90 105 136 B3. Combination of B1-B2 using one half standard deviation shocks 81 85 86 83 81 83 111 163 B4. One-time 30 percent real depreciation in 2013 81 102 92 85 78 76 85 111 B5. 10 percent of GDP increase in other debt-creating flows in 2013 81 105 96 91 86 86 102 134 Debt Service-to-Revenue Ratio 2/ Baseline 7 7 8 7 6 4 3 6 A. Alternative scenarios A1. Real GDP growth and primary balance are at historical averages 7 7 8 7 6 4 3 5 A2. Primary balance is unchanged from 2012 7 7 8 7 6 4 3 6 A3. Permanently lower GDP growth 1/ 7 7 8 7 6 4 3 7 B. Bound tests B1. Real GDP growth is at historical average minus one standard deviations in 2013-2014 7 7 8 7 7 5 4 8 B2. Primary balance is at historical average minus one standard deviations in 2013-2014 7 7 8 7 7 5 4 7 B3. Combination of B1-B2 using one half standard deviation shocks 7 7 8 7 7 5 4 8 B4. One-time 30 percent real depreciation in 2013 7 8 9 8 8 6 5 9 B5. 10 percent of GDP increase in other debt-creating flows in 2013 7 7 8 8 6 4 4 7 Sources: Country authorities; and staff estimates and projections. 1/ Assumes that real GDP growth is at baseline minus one standard deviation divided by the square root of the length of the projection period. 2/ Revenues are defined inclusive of grants. 115 Annex 12: Burkina Faso at a Glance Burkina Faso at a glance 3/15/13 Sub- Key Development Indicators Burkina Saharan Low Age distribution, 2011 Faso Africa income (2011) Male Female Population, mid-year (millions) 17.0 875 817 75-79 Surface area (thousand sq. km) 274 24,244 16,584 60-64 Population growth (%) 3.0 2.5 2.1 Urban population (% of total population) 27 36 28 45-49 30-34 GNI (Atlas method, US$ billions) 9.9 1,101 466 15-19 GNI per capita (Atlas method, US$) 580 1,258 571 GNI per capita (PPP, international $) 1,330 2,225 1,378 0-4 15 10 5 0 5 10 GDP growth (%) 4.2 4.7 6.0 percent of total population GDP per capita growth (%) 1.1 2.1 3.7 (most recent estimate, 2005–2011) Poverty headcount ratio at $1 .25 a day (PPP, %) 45 48 48.4 Under-5 mortality rate (per 1,000) Poverty headcount ratio at $2.00 a day (PPP, %) 73 69 74.3 Life expectancy at birth (years) 55 55 59 250 Infant mortality (per 1,000 live births) 82 69 63 Child malnutrition (% of children under 5) 26 21 23 200 Adult literacy, male (% of ages 15 and older) 37 71 70 150 Adult literacy, female (% of ages 15 and older) 22 54 56 100 Gross primary enrollment, male (% of age group) 82 103 108 Gross primary enrollment, female (% of age group) 76 96 103 50 0 Access to an improved water source (% of population) 79 61 65 1990 1995 2000 2011 Access to improved sanitation facilities (% of population) 17 31 37 Burkina Faso Sub-Saharan Africa Net Aid Flows 1980 1990 2000 2011 (US$ millions) Net ODA and official aid 210 327 180 1,062 Growth of GDP and GDP per capita (%) Top 3 donors (in 2010): European Union Institutions 11 20 42 164 12 France 56 85 82 64 10 United States 28 11 9 62 8 6 4 Aid (% of GNI) 10.9 10.6 6.9 11.5 2 Aid per capita (US$) 29 35 15 65 0 -2 Long-T erm Economic T rends -4 95 05 Consumer prices (annual % change) 12.1 -0.8 -0.3 4.0 GDP implicit deflator (annual % change) 8.7 1.8 -1.7 3.2 GDP GDP per capita Exchange rate (annual average, local per US$) 211.3 272.3 712.0 471.9 Terms of trade index (2000 = 100) .. 95 1 00 273 1980–90 1990–2000 2000–11 (average annual growth %) Population, mid-year (millions) 7.2 9.3 12.3 17.0 2.6 2.8 2.9 GDP (US$ millions) 1,929 3,101 2,611 10,396 3.7 5.5 5.8 (% of GDP) Agriculture 29.4 29.1 29.3 33.8 3.1 5.9 4.3 Industry 20.5 21.2 24.7 24.3 4.2 5.9 4.9 Manufacturing 15.2 15.4 16.3 6.7 2.7 5.9 1.3 Services 50.1 49.6 46.1 41.9 4.4 3.9 6.8 Household final consumption expenditure 98.0 73.5 78.5 64.6 0.9 5.7 3.8 General gov't final consumption expenditure 9.2 21.1 20.8 19.3 6.9 2.9 5.2 Gross capital formation 15.1 18.9 16.8 23.6 8.5 3.1 10.8 Exports of goods and services 9.0 11.0 9.1 21.1 0.8 4.4 13.6 Imports of goods and services 31.3 24.5 25.2 28.6 0.7 1.9 7.9 Gross savings -1.6 13.7 5.1 21.6 Note: Figures in italics are for years other than those specified. .. indicates data are not available. Development Economics, Development Data Group (DECDG). 116 Annex 13: Country Map 117