Burundi investment strategy: The only article you need to read before investing in Burundi

Navigating through the emerging markets sector can be a challenge for even the most experienced investors. How Burundi promotes and facilitates both foreign direct investment and local investment? To answer this question Mr. Leonard Sentore the CEO of Burundi Investment Promotion Authority ( Agence de Promotion de l’Investissement) gave us an Interview.

How was the Burundi Investment Promotion Agency initially formed?

Burundi Investment Promotion Authority (API) was established in 2009. As a reminder, at that time, when the Government of Burundi started the process of setting up an Investment Authority, there was an economic recession in the world.

In this context of economic crisis and slowdown of Foreign Direct Investment (FDI) flows, the challenge for the developing countries was to remain or become very attractive to foreign investment, especially those serving their long-term development goals and improve their competitiveness.

As a result of the increased international competition for Foreign Direct Investments and the associated economic and social development potential, most countries have developed an Investment Promotion Agency, whose role is very significant for the economy of a country since it is not limited to only attracting FDI, but also to ensure that their impact on development is beneficial and sustainable, while boosting local investment.

It is in this context that Burundi Investment Promotion Authority (API) was established by Presidential Decree N° .100/177 of October 19th 2009, based on the Burundi investment Code, voted by the Parliament in 2008 and is under the umbrella of the Ministry in charge of Planning which is currently the Ministry of Finance, Budget, and Cooperation for Economic Development.

What is the role of the Burundi Investment Promotion Agency, in contrast with other government bodies that oversee or directly influence the economy?

API’s main mission is to assist the Government of Burundi in the design and implementation of the policy defined in the areas of promoting the investment and exports. The general missions assigned to API are the support and assistance to investors and exporters, the facilitation of their steps and formalities required by the law, appealing to the administration for failure to apply or misapplication of the laws or regulations in force as well as steering reforms aimed at improving the business climate in the country.

How would you describe Burundi’s strategy (or actions) for investment promotion?

Burundi Investment Promotion Authority (API) has put on agenda diversified actions aiming at running a proactive promotion. On a national level, we are geared to pursue a campaign within various provinces of the country to sensitize and raise awareness of API activities and how businessmen and local entrepreneurs can benefit the services we deliver. On the same note, we plan to run a trade fare designed to showcase made in Burundi products by Investors who have been supporting by grating them incentives based on to the Burundi Investment Code.

As well, we have developed a campaign to inform and raise awareness of students by touring the local universities campus and explaining API mission and what we do. This will translate into building entrepreneurship knowledge into the new generation.

On the regional and international level, we are closely working with organizations such as EAC to harmonize investment promotion policies and strategies to promote the EAC Region as one single investment destination. We are also working with COMESA RIA by designing Projects summaries looking for investment and having them advertised within the COMESA members States and internationally through the Investment Teaser Platform.

API has also attended lately the annual African Business Forum in Egypt, the annual Investment forum in Dubai and the EXIM Bank Investment Conference in India to put Burundi on the map and promote investment opportunities.

Last but not least, we are closely working with Burundi Diaspora around the world to sensitize our Burundians fellow living abroad on the need to come and invest in Burundi, creates jobs thus contributing to the development of their mother country.

We inform foreign investors that it is the best time to invest in Burundi because we are still a developing economy that offers so much promise into the future. We have untapped opportunities and a young population, actually one of the youngest in the region and in addition to this, we have access to a wider regional market.

 

Why should investors choose Burundi, what are the opportunities?

Investors should choose Burundi because of its strategic position and market size:

  • It is a Member of EAC Market: 146 million consumers
  • It is a Member of COMESA: 433.9 million consumers
  • It is a Member of CEPGL (ECGLC) and borders Eastern DRC with 16 million consumers
  • It is a Bridge between EAC & ECCAS (Economic Community of Central African States)
  • It is the Connection to the SADC market through Lake Tanganyika
  • Its capital City Bujumbura, is the main city on Lake Tanganyika. Stands as the business hub for the entire region

Burundi has got a big number of investments opportunities such as :

  1. Mining: Nickel, gold, wolframite, Rare Earth, Vanadium, coltan, etc. Burundi has 6 % of world reserves of nickel with 180 million tones estimate. Research of Uranium is underway
  2. Energy: Hydro & solar power plants construction
  3. Agro-processing: Coffee, tea, cotton, palm oil, fish, raw hides, fruits, and vegetables, etc.
  4. Manufacturing: soft drinks, carbonated waters, dark glass bottles, beer, cigarettes, sugar, soaps, etc.
  5. Transport: Roads construction, Maritime transport on Lake Tanganyika, Air Burundi and Makamba-Musongati-Gitega railway construction
  6. Health & Educational infrastructure
  7. Tourism (High standard 4 or 5 stars hotel with an international conference center, Supermarket, Malls)
  8. Financial Institutions (Banking & micro-financing)
  9. Information Technology & Communication
  10. Real Estate and Government Buildings construction
  11. Special Economic Zone & Wirehouse and Cooling depot at Bujumbura Airport

What is Burundi doing to gain competitiveness and be an investment destination in East Africa?

Burundi has a legal framework in continuous reforming: The establishment of the Burundi Revenue Authority (OBR) for better tax payment services and tax collection performance. It has also enacted a more attractive Investments code.

 Fiscal & Customs Benefits.

  1. Exemption of charges on property transfer (mutation fee)
  2. No duty on the Raw material, Capital goods & Specialized vehicles
  3. No customs duty is charged if investment goods are made within the EAC or COMESA
  4. Corporate tax rate: 30%. It is reduced of 2% if 50-200 Burundians are employed; it is reduced of 5% if more than 200 Burundians nationals are employed.
  5. Free repatriation of profit after payment of tax

Burundi has also an improving business environment:

  • Institutions for better economic and political governance (anti-corruption court, Secretariat for economic & social reforms)
  • November 2010: Doing Business Steering Committee involving the 2Vice-President office, 10 ministries, API & other public and private key stakeholders.

Burundi has upgraded reforms on many aspects:

  • Reinforcing the One Stop Shop for (1) starting business, (2) construction permits and (3) Registering property.
  • The One-stop-shop for starting a business have streamlined and remodeled institutions and processes for business registration: – it is operational since March 2012 – an investor can register a company in 2 hours and for  US $ 20 only (BIF 40,000)
  • Simplification of tax procedures for SMEs.
  • The launch of the electronic single window for business transactions.
  • Improving the legal framework for the business law: harmonization of commercial laws with those of EAC; adoption of the law reorganizing Mining and Energy (electricity) sector in Burundi.

The Doing Business report shows Burundi making significant improvements, but what are some of the major successes or challenges that the World Bank’s quantitative rankings do not highlight?

Burundi has made remarkable progress in improving the business climate, which is evident in the World Bank’s Doing Business Reports. Nevertheless, some of the Government’s efforts to improve the business environment are not necessarily taken into consideration and evaluated at their fair value.

Indeed, all the reforms initiated and put in place are not evaluated by the World Bank because it has a methodology specific to it. Reforms, while important for the country, if they fall outside the scope of their methodology, they are not considered. For example, reforms such as interfacing the customs system ASYCUDA WORLD with SIGTAS, which has reduced the number of documents to be submitted during import, have not been taken into consideration.

The payment of the costs of registering a company through an API agent at a bank counter within the One-stop shop of company registration Office is still considered another procedure.  Liberalization of the electricity sector with regard to the purchase of connection equipment such as transformers, which gave consumers the opportunity to obtain these materials from suppliers of their choice without having to wait for their availability by the REGIDESO is not considered by doing business … as many reforms that have not yet been accepted by the World Bank.

The challenges are that the current World Bank methodology requires the modernization of institutions/infrastructure on the one hand and the legal framework governing business on the other. The reforms that fit this methodology are time-consuming and require significant financial resources, which is why we are not making good progress in recent Doing Business rankings.

 

What advice would you have for young people who are interested in working in development or are interested in promoting business in Africa?

The young entrepreneurs, the youth forming the new generation have to realize that the world has gone global so is the business. The business itself has upgraded to e-business using very modern information technology. I urge the Burundi Youth to embark in the same: dream business and think business, to develop entrepreneurship and be business oriented. They represent a significant portion of the Burundi population that form the labor force. Burundi Government supports the youth and have put the measures such as establishing API that fully encourages youth participation in the economy.

Furthermore, I take the advantage of this media to invite these young people to register themselves for the training on the conception of a business plan. Registrations are done online on the Burundi Investment Promotion’s website (www.investburundi.bi).  It is a training that we organize every year. Practical quizzes are organized and a panel selects the best project idea. The Burundi Investment Promotion Authority support, in different ways, the promoter of a project in its implementation.

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