Burkina Faso
Executive Summary
Burkina Faso welcomes foreign investment and actively seeks to attract foreign partners to aid in its development. It has partially put in place the legal and regulatory framework necessary to ensure that foreign investors are treated fairly, including setting up a venue for commercial disputes and streamlining the issuance of permits and company registration requirements. More progress is needed on diminishing the influence of state-owned firms in certain sectors and enforcing intellectual property protections. Burkina Faso scored 56.7, a 2.7 points decrease for fiscal health, in the 2020 Heritage Foundation Economic Freedom Index and ranked 85 out of 180 countries in Transparency International’s 2019 Corruption Index.
The gold mining industry has boomed in the last seven years, and the bulk of foreign investment is in the mining sector, mostly from Canadian firms. Moroccan, French and UAE companies control local subsidiaries in the telecommunications industry, while foreign investors are also active in the agriculture and transport sectors. In June 2015, a new mining code was approved with the intent to standardize contract terms and better regulate the sector, but the new code is not yet fully operational. In 2018, the parliament adopted a new investment code that offers many advantages to foreign investors. This code offers a range of tax breaks and incentives to lure foreign investors, including exemptions from value-added tax on certain equipment. Effective tax rates as a result are lower than the regional average, though the tax system is complex, and compliance can be burdensome. Opportunities for U.S. firms exist in the energy sector, where the government has an ambitious plan for the installation of new power capacity in both traditional and renewable sources.
Burkina Faso is a landlocked country and the world’s seventh poorest country according to the 2019 UN Development Program (UNDP) Human Development Index, ranked at 182 out of 189 countries. With a population of 20.28 million inhabitants in June 2019, an estimated 44 percent live under the poverty line. Some 80 percent of the country’s population is engaged in agriculture—mostly subsistence—with only a small fraction directly involved in agribusiness. There is a significant foreign investment interest in the growing security sector, and since Burkina Faso broke off relations with Taiwan in May 2018, a growing number of Chinese development projects. The government remains committed to a market-based economy without the establishment of any barriers to trade. Between 2006 and 2015, the national power utility’s (Société Nationale de l’Eléctricité du Burkina) customer base and consumption doubled; however, supply can only meet the demand in non-peak periods. The GoBF has set an ambitious goal of increasing the access rate to 40 percent by 2020. The Millennium Challenge Corporation (MCC) Board of Directors, on June 17, approved the second compact for Burkina Faso to focus on addressing the primary constraint to economic growth: the high cost, poor quality, and low access to electricity. The compact aims to improve energy infrastructure, generation capacity, and source diversification—it will also support Burkina Faso’s increased participation in regional power markets and development of a potential MCC regional investment.
Measure | Year | Index/Rank | Website Address |
TI Corruption Perceptions Index | 2019 | 85 of 180 | http://www.transparency.org/ research/cpi/overview |
World Bank’s Doing Business Report | 2019 | 151 of 190 | http://www.doingbusiness.org/en/rankings |
Global Innovation Index | 2019 | 117 of 129 | https://www.globalinnovationindex.org/ analysis-indicator |
U.S. FDI in partner country ($M USD, historical stock positions) | 2018 | NA | https://apps.bea.gov/international/factsheet/ |
World Bank GNI per capita | 2018 | $670 | http://data.worldbank.org/ indicator/NY.GNP.PCAP.CD |
3. Legal Regime
Transparency of the Regulatory System
The government of Burkina Faso aims for transparency in law and policy to foster competition. By law, prices of goods and services must be established according to fair and sound competition. The government believes that cartels, the abuse of dominant position, restrictive practices, refusal to sell to consumers, discriminatory practices, unauthorized sales, and selling at a loss are practices that distort free competition.
At the same time, the price of some staple goods and services are still regulated by the government, including fuel, essential generic drugs, tobacco, cotton, school supplies, water, electricity, and telecommunications.
There are regulatory authorities for government procurement, for electronic communication and posts, for electricity, and for quality standards.
Provinces and municipalities have the power to regulate in their jurisdiction, but that regulation has a minimal effect on business entities. There are several regulatory bodies at the national level and they usually internalize regulations enacted by international organizations. Regulations exist at the supra-national level mostly through WAEMU and ECOWAS.
Burkina Faso’s legal, regulatory, and accounting systems are transparent and consistent with international norms. Since January 2018, Burkina Faso as an Organization for the Harmonization of Corporate Law in Africa (OHCLA) member state adopted the revised version of the OHCLA accounting system. It is composed of the Uniform Act on Accounting and Financial Law (AUDCIF); the OHADA General Accounting Plan (PCGO); the SYSCOHADA application guide, and the International Financial Reporting Standards (IFRS) application guide. The OHCLA accounting system complies with the IFRS norms.
There is no online Regulatory Disclosure. However, the regulations of the parliament allow the various commissions to hear civil society organizations wishing to share information to inform parliamentarians when they are examining bills.
International Regulatory Considerations
Burkina Faso is a member of the West African Economic Monetary Union (WAEMU) and the Economic Community of West African States. There is a supranational relationship between these organizations and their state members. Burkina Faso is also a member of the Organization for the Harmonization of Corporate Law in Africa (OHCLA). As such, Uniform Laws adopted by the OHCLA are automatically part of the national legal system.
The Government of Burkina Faso regularly notifies all the draft technical barriers to the relevant WTO Committee. In the October 2017 Trade Policy Review, the WTO congratulated WAEMU countries for their continued efforts to improve their international trading environment, especially through the implementation of the Trade Facilitation Agreement (TFA). Burkina Faso has begun the ratification process of the TFA, but it has not yet completed it. However, WAEMU and ECOWAS members already implement many of the TFA provisions.
Legal System and Judicial Independence
The legal system of Burkina Faso is the civil law. Contracts must always be performed in good faith. Burkina Faso has commercial courts that judge commercial cases. Commercial law is constituted by the uniform acts of the OHADA. The Commercial Code governs all matters that are not covered by the OHADA law.
The Burkinabe judiciary is independent despite press reports of cases of corruption of judges. The Disciplinary Commission of the Judiciary has sanctioned corrupt judges. There are three degrees of jurisdiction in Burkina Faso allowing the loser to appeal a decision rendered in first instance. In the event of a dispute over the execution of a contract, the plaintiff must first abstain a judgment from a court first and if the loser does not execute, the winner can retain a bailiff.
Laws and Regulations on Foreign Direct Investment
The investment code adopted by law 038-2018 demonstrates the government’s interest in attracting FDI to create industries that produce export goods and provide training and jobs for its domestic workforce. The code provides standardized guarantees to all legally established firms operating in Burkina Faso, whether foreign or domestic. It contains four investment and operations preference schemes, which are equally applicable to all investments, mergers, and acquisitions.
Burkina Faso’s regulations governing the establishment of businesses include most forms of companies admissible under French business law, including public corporations, limited liability companies, limited share partnerships, sole proprietorships, subsidiaries, and affiliates of foreign enterprises. With each scheme, there is a corresponding set of related preferences, duty exceptions, corporate tax exemptions, and operation-related taxes.
Under the investment code, all personal and legal entities lawfully established in Burkina Faso, both local and foreign, are entitled to the following rights: fixed property, forest and industrial rights, concessions, administrative authorizations, access to permits, and participation in state contracts.
Competition and Anti-Trust Laws
The National Commission for Competition and Consumption (Commission Nationale pour la Concurrence et la Consommation) reviews competition matters. Some competition matters are under the aegis of the West African Economic and Monetary Union (WAEMU). Law No. 016-2017/AN of 27 April 2017 on organizing competition in Burkina Faso governs the competition sector. This law is intended to create a free and transparent market, a guarantee of the development of a market economy driven by competitive and wealth-creating businesses.
Expropriation and Compensation
The Burkinabe constitution guarantees basic property rights. These rights cannot be infringed upon except in the case of public necessity, as defined by the government. This has rarely occurred. Until 2007, all land belonged to the government but could be leased to interested parties. The government reserves the right to expropriate land at any time for public use. In instances where property is expropriated, the government must compensate the property holder in advance, except in the event of an emergency.
In 2007, Burkina Faso drafted a national land reform policy that recognizes and protects the rights of all rural and urban stakeholders to land and natural resources. It also clarifies the institutional framework for conflict resolution at a local level, establishes a viable institutional framework for land management, and strengthens the general capacities of the government, local communities and civil society on land issues.
A 2009 rural land management law provides for equitable access to rural lands in order to promote agricultural productivity, manage natural resources, encourage investment, and reduce poverty. It enables legal recognition of rights legitimated by traditional rules and practices. In rural areas, traditional land tenure rules have long governed land transactions and allocations. The 2009 law reinforces the decentralization and devolution of authority over land matters and provides for formalization of individual and collective use rights and the possibility of transforming these rights into private titles.
In 2012, the government revised the 2009 law, marking the end of exclusive authority of the state over all land. It includes provisions to recognize local land use practices. The new law provides conciliation committees to resolve conflicts between parties prior to any legal action. There are several property rights recognition and protection acts, such as land charters, individual or collective land ownership certificates, and loan agreements that govern the nature, duration and counterparties for transfer rights between a landowner and a third party.
The first (2010-2014) Millennium Challenge Corporation (MCC) compact supported the establishment of local authorities and the issuance of titles as part of the land tenure reform process.
Dispute Settlement
ICSID Convention and New York Convention
The ICSID Convention entered into force for Burkina Faso on October 14, 1966. In the event that an amicable settlement of a dispute between the government and an investor cannot be reached, the investment code requires that arbitration procedures be submitted to international arbitration under the rules outlined by the 1965 Convention of the International Center for Settlement of Investment Disputes (ICSID), of which Burkina Faso is a member. When the ownership of a company does not meet the nationality requirements laid out by Article 25 of the Convention, the code specifies that the dispute be resolved in accordance with the dispositions of the supplementary mechanisms approved by ICSID in September 1978.
Burkina Faso has been a member of the New York Convention since March 23, 1987.
Investor-State Dispute Settlement
Burkina Faso is a party to the Washington Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards and outlines arbitration procedures in its investment code as a means of solving investment disputes. BITs signed by Burkina Faso provide for international arbitration. Burkinabe courts accept international arbitration as a means for settling investment disputes between private parties. Longstanding disputes that remain unresolved after administrative jurisdictional hearings may be submitted to arbitration. Burkinabe courts recognize and enforce foreign arbitral awards. The United States has not signed a BIT with Burkina Faso.
International Commercial Arbitration and Foreign Courts
Mediation and conciliation are available and encouraged in Burkina Faso. In 2006, Burkina Faso introduced specialized commercial chambers in the general courts and in 2007 opened the Arbitration, Mediation and Resolution Center (Centre d’Arbitrage, de Mediation et de Conciliation de Ouagadougou (CAMCO)) under the auspices of the Chamber of Commerce and Industry. (http://www.camco.bf/ ). If a dispute is not settled by the CAMCO, the case can be referred to international bodies such as the International Chamber of Commerce of Paris.
The parliament adopted the Law number 047-2017 laying down modalities for intervention by the state jurisdictions on arbitration in Burkina Faso. Burkina Faso is not a member of the Apostille Convention. Consequently, any arbitral award rendered abroad should receive an exequatur before enforcement.
In 2016, a foreign mining company addressed an arbitration request to the International Chamber of Commerce’s International Court of Arbitration. The complaint stems from a dispute over the Tambao deposit in the northeastern corner of Burkina Faso. Prior to requesting arbitration in the Paris-based international court, the disputing parties seized the CAMCO.
Bankruptcy Regulations
Since Burkina Faso is a member of the OHADA, the Uniform Act on Bankruptcy is applicable.
There is no credit bureau in Burkina Faso. The World Bank’s 2019 “Doing Business” report ranked Burkina Faso 107 out of 190 countries for Resolving Insolvency.
5. Protection of Property Rights
Real Property
Since the 2009 land tenure reform law, the government of Burkina Faso has been engaged in an effort to issue titles recognizing land ownership rights. The first Millennium Challenge Corporation (MCC) compact focused on beginning this process in 47 communes, with plans for the government to expand the effort throughout the country.
Only about 5,000 land titles have been granted countrywide since 1960, according to the National Land Observatory, and the majority of those were issued pursuant to the first Millennium Challenge compact. Obtaining a title is the last step in the process of land acquisition and is preceded by obtaining a use permit or an urban dwelling permit, developing the land, and paying applicable fees. The title-holder becomes the owner of the surface and the subsoil.
Mortgages exist in Burkina Faso both for land and for structures. Rules governing mortgages are set at the regional level by the West African Economic and Monetary Union, specifically under the Organization for the Synchronization of Business Rights in Africa (Organisation pour l’Harmonisation en Afrique des Droits des Affaires (OHADA). Liens are not widely used.
Intellectual Property Rights
Burkina Faso’s legal system offiers protection for intellectual property rights (IPR), including patents, copyrights, trademarks, trade secrets, and semiconductor chip design. In practice, however, government enforcement of IPR law is lax. Burkina Faso is a destination point for counterfeit medicines, which can be purchased readily on the street in Ouagadougou and Bobo-Dioulasso.
Burkina Faso is a member of the World Intellectual Property Organization (WIPO) and the African Intellectual Property Organization (AIPO). The national investment code guarantees foreign investors the same rights and protection as Burkinabe enterprises for trademarks, patent rights, labels, copyrights, and licenses. In 1999, the government ratified both the WIPO Copyrights Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). In 2002, Burkina Faso was one of 30 countries that put the WCT and WPPT treaties into force. The government has also issued several decrees and rules to implement the two treaties.
The implementation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is under the purview of two ministries. The first is the Office of Copyrights (le Bureau Burkinabe des Droits d’Auteurs, or BBDA) under the Ministry of Art, Culture and Tourism, which has the lead for copyright and related rights. The National Directorate of Industrial Property under the Ministry of Commerce, Industry, and Handicrafts has the lead for industrial property issues. These two authorities have the technical competence to identify needs. Arrangements are underway to assess the needs for the implementation of the TRIPS Agreement in Burkina Faso.
Statistics on the seizure of counterfeit goods are available upon request from the relevant agency. For example, the BDDA tracks seizures pertaining to artistic material, and the the National Directorate of Industrial Property tracks seizures pertaining to pharmaceuticals..
Burkina Faso is not cited in the United States Trade Representative (USTR) Special 301 Reports or the Notorious Markets List.