A Crisis Multiplied: How the global economic crisis, coming on top of other shocks, is worsening poverty in Burkina Faso

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This paper documents the impacts of the global economic crisis on Burkina Faso, which exacerbated the effects of the previous food and fuel price crises and was then made worse by subsequent serious flooding. Based on interviews by the author with a number of international donors, government officials, economists, and civil society organizations in Ouagadougou – as well as a series of interviews with Burkinabe people conducted for Oxfam – the paper reflects how the multiple crises have affected the country’s ability to achieve the Millennium Development Goals, and considers the government’s response.
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    Oxfam Discussion Paper A Crisis Multiplied How the global economic crisis, coming on top of other shocks, is worsening poverty in Burkina Faso Elizabeth Stuart Senior Policy Adviser, Oxfam International  June 2010 This paper documents the impacts of the global economic crisis on Burkina Faso, which exacerbated the effects of the previous food and fuel  price crises and was then made worse by subsequent serious flooding. Based on interviews by the author with a number of international donors, government officials, economists, and civil society organizations in Ouagadougou – as well as a series of interviews with Burkinabe  people conducted for Oxfam – the paper reflects how the multiple crises have affected the country’s ability to achieve the Millennium Development Goals, and considers the government’s response. Oxfam Discussion Papers Oxfam   Discussion   Papers   are   written   to   contribute   to   public   debate   and   to   invite   feedback   on   development   and   humanitarian   policy   issues.   They   are   ’work   in   progress’   documents,   and   do   not   necessarily   constitute   final   publications   or   reflect   Oxfam   policy   positions.   The   views   and   recommendations   expressed   are   those   of   the   author   and   not   necessarily   those   of   Oxfam.   For   more   information,   or   to   comment   on   this   paper,   email   research@oxfam.org.uk     A Crisis Multiplied: How the economic crisis, coming on top of other shocks, is worsening poverty in Burkina Faso , Oxfam, June 2010 2 Contents 1   Introduction   .......................................................................................................3   2   The   impact   of   the   economic   crisis   at   the   macro   level   ............................5   3   The   impacts   of   the   crisis   at   the   micro   level   .............................................11   4   Government   responses   .................................................................................13   5   Donor   responses   .............................................................................................15   6   What   are   the   future   prospects   for   recovery?   ..........................................16   Notes   ......................................................................................................................18   References   ............................................................................................................21     A Crisis Multiplied: How the economic crisis, coming on top of other shocks, is worsening poverty in Burkina Faso , Oxfam, June 2010 3 1 Introduction Burkina Faso is known as a country of paradox. It is a stable democracy, with an efficient and increasingly transparent government. 1  The entire budget is published online. Strong education and health plans are in place, and the government promotes the use of generic medicines. In recent years growth has been consistently robust, at around 6 per cent. The country hosts a world-renowned film festival. It has consistently sought to reform and modernize, just as the IMF and World Bank have prescribed. And, in turn, donors love to fund it. It was, for instance, one of the first countries to qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) programme. So confident is the international community that its money will be in safe hands that it readily gives budget support – which is very positive, as this form of aid allows the government to fund recurrent expenditures such as teachers’ and doctors’ salaries, though from a donor’s perspective it is more difficult to trace, in large amounts. Figure 1: Map of Burkina Faso Source: CIA Despite all this, Burkina Faso remains one of the poorest countries in the world and close to the bottom of the Human Development Index. It lags behind the rest of the sub-Saharan Africa region in its slow pace towards meeting the Millennium Development Goals (MDGs). More than one-third of all births take place without medical assistance. In 2010 the literacy rate for women is just 22 per cent. 2  Hence the Burkinabe paradox. There are several theories as to the root causes of this paradox. One is, of course, that the reform prescription was the wrong one. And there are other factors, too.   A Crisis Multiplied: How the economic crisis, coming on top of other shocks, is worsening poverty in Burkina Faso , Oxfam, June 2010 4 The landlocked country has not been favoured by nature: it is prone to both drought and flooding, factors which may be increasingly exacerbated by climate change. Until recently its export economy was almost entirely dependent on a single sector – cotton – which itself is subject to the vagaries of climate and the volatile international market (although gold is now the number one export). In addition, the high birth rate – on average each woman gives birth to 6.1 children – means that extending basic public services is extremely costly. What is clear is that this is a country surviving on thin margins. These margins have been eroded still further by a series of exogenous shocks, or crises, that have pummelled it. While focusing on the impact of the global economic crisis on Burkina Faso, this paper will also examine its aggregated impacts together with those of the food and fuel price crises and that of the serious flooding which hit the country in September 2009, causing an estimated 2 per cent loss in GDP. The paper will show that, so far, the main transmission mechanism for the economic crisis has been the cotton sector, where the 40 per cent drop in prices paid on the global market has reduced government revenue and further impoverished cotton producers. However, in the medium term, this crisis is likely to affect the Burkinabe economy more significantly – and poor people’s spending power had already been hit by the increase in the cost of food. The government has responded to these crises by producing an ambitious plan, including social safety nets and measures to boost the cotton sector. But with donors threatening to cut their aid, there is a real possibility that much of this plan will not become reality.
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