Burundi on the Brink: How a Devastating Economic Crisis is Threatening the Nation’s Future
Benjamin Kuriyo, Publishing Director
Uncontrolled inflation is a danger to the economy. It is driven by the deterioration of macroeconomic indicators. Economic instability continues despite initiatives taken to remedy the economic situation. The country is in shortage mode while the state budget increases every year at the same time as public debt. The continued depreciation of the BIF affects all sectors. The foreign exchange market panics and the value of the BIF collapses. At the beginning of this week, the value of the greenback crossed the FBu 7,000 mark per unit.
A decline in exchange rates leads to the scarcity and/or high cost of strategic products including fuel and medicines. Consumers are helpless to see the surge in prices that now affects all products. In recent days, the price of meat has exploded. A kilo of steak is sold for around 30,000 FBu. The loss of value of the BIF against the Tanzanian shilling has significantly reduced cow imports. It is important to note that Tanzania remains the main supplier of livestock. Local industries regularly revise prices based on the increasing cost of production. Despite government subsidies, public companies are not spared at all. The price of sugar has been restructured. Consumers adopt rational behavior by focusing on cheaper products or delaying their purchases. This delays the impact of the macroeconomic reforms that have been made.
Sugar consumption has increased exponentially with the creation of agri-food and pastry units. To meet demand, Sosumo turns to imports. Every year, the country spends tens of millions of dollars to import an additional amount of more than 40,000 tons of sugar.
Annual production rarely exceeds 20,000 tonnes of sugar. The government has tried to establish partnerships with Ugandan investors to revive the public sugar company established in the Kumoso plain since 1988. The SOSUMO revival project has been the subject of debate in the upper house of parliament. The Minister of Agriculture failed to convince the parliamentarians. For them, the latter shows a poor performance due to the obsolescence of the equipment. The State should authorize this company to take loans for its expansion and modernisation.
The government is aware that Sosumo’s production remains low to meet local demand. He encourages other investors to set up other sugar factories to complement Sosumo’s production. In a context of a clear shortage of foreign currency, the recent zero rate of sugar has favored the import of this product, but it is not within the reach of all budgets.
The Sosumo rehabilitation and modernization-extension project has fallen into disrepute. His specific aim was to rehabilitate the factory’s obsolete equipment. Ultimately, the annual production of sugar should reach 35 thousand tons. The cost of the investment was estimated at more than 132 billion FBu.