Transparency of the Regulatory System
Although parts of the government are working to create more transparent policies for fostering competition, Burundi lacks clear rules of the game. Many policies for foreign investment are not transparent and laws or regulations on the books are often ineffective or unenforced. Burundi’s regulatory and accounting systems are generally transparent and consistent with international norms on paper, but a lack of capacity, training, and political will sometimes limit the regularity and transparency of their implementation.
Rule-making and regulatory authority is exercised exclusively at the national level. Relevant ministries and the Council of Ministers exercise regulatory and rule-making authority, based on laws passed by the Senate and National Assembly. In practice, government officials sometimes exercise influence over the application and interpretation of rules and regulations outside of formal structures. The government sometimes discusses proposed legislation and rule-making with private sector interlocutors and civil society, but does not have a formal public comment process. There are no informal regulatory processes managed by NGOs or private sector associations.
Accounting, legal and regulatory procedures are generally transparent or consistent with international norms on paper but are unevenly implemented in practice. The government generally issues terms of reference and recruits private consultants who prepare a study on the draft legislation for review and comment by the private sector. The government analyzes these comments and takes them into consideration while drafting new regulations. New regulations can be issued by a presidential decree or submitted to the parliament when they have become a law. This mechanism applies to laws and regulations on investment.
Burundi does not have a centralized online location where key regulatory actions are published. Burundi has sectoral regulatory agencies covering taxes and revenues, mining and energy, water, and agriculture. Regulatory actions are reviewable by courts. There have been no recent reforms to the regulatory enforcement system.
International Regulatory Considerations
The member states of the East African Community including Burundi have not yet harmonized their regulatory systems.
Burundian law and regulations reference a number of standards including the East African Standards, Codex Alimentarius Standards, the International Organization for Standardization (ISO), and its own standards. However, ISO remains the main reference.
The country joined the WTO member on July 23, 1995. According to the Ministry of Commerce, Industry, and Tourism, Burundi has not notified the WTO Committee on TBT of all draft technical regulations.
Legal System and Judicial Independence
The country’s legal system is civil (Roman), based on German and French civil codes. For local civil matters, customary law also applies. Burundi’s legal system contains standard provisions guaranteeing the right to private property and the enforcement of contracts. The country has a written commercial law and a commercial court. The investment code offers plaintiffs recourse in the national court system and to international arbitration.
The judicial system is not effectively independent of the executive branch. A lack of capacity hinders judicial effectiveness, and judicial procedures are not rigorously observed.
Laws and Regulations on Foreign Direct Investment
There were no major laws, regulations, or judicial decisions pertaining to foreign investment in the past year. In August 2009, a series of amendments designed to clarify the somewhat vague provisions of the investment code came into effect. These amendments include substantial tax exemptions for real estate purchases related to new investments, tax reductions for goods used to establish new businesses and profit-tax breaks for investors employing more than 50 Burundian workers. The paperwork for creating a business has been made easier and most proposals receive a response within three to four days after the application is submitted. Along with the new code, the government created the API. Currently, its main objectives are not only to inform and assist potential investors, but also to ensure that new laws and regulations that benefit investors are being upheld, and promote reforms aimed at improving the business climate. In 2012, API set up a one-stop investment center to help facilitate and simplify business registration in Burundi. In 2014, API created a follow-up mechanism to make sure that investors are implementing projects for which they received tax exemptions and other advantages provided in the investment code.
Competition and Anti-Trust Laws
There is no Burundian agency in charge of reviewing transactions for competition-related concerns.
Expropriation and Compensation
Burundian law allows the GoB to expropriate property for exceptional and state-approved reasons but stipulates that fair market value payment is required. There are no recent cases involving expropriation of foreign investments, nor do any foreign firms have active pending complaints regarding compensation in Burundian courts.
ICSID Convention and New York Convention
Burundi is a full member of ICSID Convention since 1969 and became the 150th country to sign the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).
Burundi has a commercial law allowing enforcement of foreign courts judgments by local courts.
Investor-State Dispute Settlement
Burundi is a signatory of ICSID and MIGA. Burundi has no bilateral investment treaty with the US.
After receiving a 30-year concession to manage the Port of Bujumbura in 2012, the United Kingdom-based company Global Port Services accused the Government of Burundi of breach of contract, citing numerous issues including misrepresentation of cash flows, alleged solicitation of bribes, illegal collusion with ostensibly private Burundian shareholders, and theft. In September of 2014, the claimant sued the Government of Burundi and the private Burundian shareholders for USD 56 million. As of April 2018, the commercial court’s decision is still pending.
In cases involving international elements, the GoB accepts international arbitration, and recognizes and enforces foreign arbitral awards. There is no history of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
In rare cases involving international elements the GoB accepts international arbitration, and recognizes and enforces foreign arbitral awards. In investment disputes between private parties, international arbitration is accepted as a means of settlement provided one of the parties is an extra-national. In 2007, the GOB created a Center for Arbitration and Mediation (CEBAC) to handle such disputes, but it is not very active. There is no operational commercial arbitration body in the country besides CEBAC.
Foreign arbitral awards are recognized but local courts are not legally equipped to enforce them. No Burundian private entity has been involved in a foreign arbitration. In the past, one registered case involved the Government and a private gold refining company (Affimet). The ICSID ruling was enforced by GoB, which lost the case.
Although there are complaints about the discriminatory and opaque nature of court processes in general, there are no known cases involving SOEs in investment disputes.
Burundi has two laws governing or pertaining to bankruptcy: Law No1/07 of 15 March 2006 on bankruptcy and Law No1/08 of March 15, 2006 on legal settlement of insolvent companies. Under Burundian law, creditors have the right to file for liquidation and the right to request information from the legal bankruptcy agent. The bankruptcy framework does not require that creditors approve the selection of the bankruptcy agent and does not provide creditors the right to object to decisions accepting or rejecting creditors’ claims.
Burundi’s credit bureau is the Banque de la Republique du Burundi (BRB), the country’s central bank. Burundi ranks 144 on resolving insolvency in the World Bank Doing business report.