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Nairobi, May 1, 2016 (AFP) – A year into a political crisis which has claimed about 500 lives, driven a quarter of a million into exile and prompted Western donors to suspend government aid, Burundi’s economy is on the ropes. The central African country had only just begun to recover from a 1993-2006 ethnic-based civil war when it became sucked back into violence after President Pierre Nkurunziza announced a year ago that he would seek a third term in office. “The economy had been starting to stabilise, inflation was under control, and with average growth of around 4.5 percent over several years, Burundi seemed to be on the right path,” said an economics professor at Burundi University, who did not wish to be named. “But the current crisis has had catastrophic consequences, particularly on public finances” and on the business sector, he told AFP.
Nkurunziza’s quest for a third term sparked outrage among the opposition and human rights groups, who said the move violated a two-term limit on presidential mandates and flouted a peace deal that ended the civil war. Despite mass protests and an attempted coup, Nkurunziza refused calls from the international community to step aside, winning another term in July elections that were boycotted by the opposition. With his re-election came recession and a further slide in global development ranks.
World’s poorest nation
The economy shrank by 7.4 percent in 2015, taking Burundi from the world’s third-poorest country to the poorest, with a GDP of $315.20 dollars per inhabitant, according to the International Monetary Fund. The effects of the recession are plain to see in the capital Bujumbura, where most hotels have gone to the wall or laid off most of their staff. “The hotel sector is a disaster zone,” said the owner of a big hotel in the capital, which had only two guests during the first four months of the crisis. “I only kept a tenth of my staff because it’s impossible to just shut up shop given the investments I’ve made and the bank loans I took out,” the hotelier told AFP.
Like many people in Bujumbura, he refused to give his name for fear of repercussions. The collapse of the fledgling tourism sector has also hit the banks that provided loans for hotel construction in the mountainous country in recent years. “No-one is paying them back,” the university professor explained.
In March, the European Union, Burundi’s biggest donor, cut funding to the government in a move aimed at pressuring Nkurunziza into talks with the opposition on a way out of the political deadlock. “It was a very hard blow to the government, even though it has tried to downplay its impact,” a European diplomat in Bujumbura told AFP. While the economy had not collapsed per se, the country’s budget deficit has grown and the effects of the recession were “plain to see,” the diplomat said.
In Bujumbura, at least one bridge on a major road that was washed away by floods has yet to be rebuilt, for lack of funds. Several main roads are also in a dire state of repair. And for the first time since the University of Burundi opened in 1964, the canteen has struck breakfast off the menu, as a cost-saving measure. It has also dropped meat, increasingly seen as a luxury.
In a move aimed at boosting its foreign exchange reserves, the government recently demanded that NGOs — who are continuing to receive foreign aid — keep their accounts in foreign currency at the central bank. Thierry Vircoulon, of the International Crisis Group, said that while the formal economy, centred on Bujumbura, was badly squeezed by the crisis, “the subsistence-style rural economy, which is largely non-monetised” had been less affected.
But rural dwellers, who have already been hit by falling production of coffee — the country’s main export, are also feeling the pinch as funding for health, education and infrastructure programmes dry up. “So far the Burundian government has been living by its wits, cutting social programmes, going cap in hand to friendly countries or just printing money, but the situation is becoming critical,” a senior UN official based in Bujumbura said. “The question is how long Nkurunziza’s administration can hold on,” he added.
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