BURKINA FASO Investment Guide
Openness to Foreign Investment
Given the limited capital resources available in Burkina Faso, the Government is
actively seeking direct foreign investment. The development of the private
sector is a key goal of the economic reforms undertaken by the Government. The
Government welcomes interest on the part of the foreign mining firms in order
to develop and extract Burkinabe mineral resources. A new investment code was
adopted in June, 1992 with the specific goal of “mobilizing national savings
and external capital”. While the new investment code is intended to provide a
welcome mat to foreign investors, the Government has shown itself disposed to
heed potential foreign investors' concerns/priorities. In this sense the code is
still fluid.
The investment code guarantees the equal treatment of both foreign and domestic
investors. The Ministry of industry, Commerce and Mines approves all new
investments, foreign and domestic, based on the recommendation of the National
Investment Commission. The Commission's principle criterion is the investment's
direct value added. Its minimum acceptable level is set at 35 percent. Other
criteria include the investment's contribution to Burkina's economy, and it's
environmental impact. Review mechanisms are designed to be routing and
non-discriminatory, but are of such recent creation that they have not yet
established a proven track record.
Currency Conversion and Transfer Policies
Burkina Faso is a member of the West African Monetary and Economic
Union (UEMOA), (formerly the West African Monetary Union). The 14-member West
African union uses a common currency, the CFA franc, and includes the countries
of Benin, Cote D' Ivoire, Mali, Niger, Senegal and Togo. Prior to January's devaluation, the CFA franc was
freely convertible into French francs (FF) at a rate of 50 CFA to 1 FF. At the
January 1994 meeting in Dakar, Senegal, representatives of the franc zone and France
agreed to a change in parity. The new rate is now 100 CFA to 1 FF.
Investors should consider the advantages offered by the UEMOA. The CFA may be
freely used in a between member countries and exchanged into French francs at
the fixed rate. With the exception of the post-devaluation period, membership
in the UEMOA has resulted in historically low or controlled inflation in Burkina Faso.
Burkina Faso's investment code guarantees foreign investors the
right to transfer abroad funds associated with an investment, including
dividends, receipts from liquidation, assets, and salaries. Such transfers are
authorized in the original currency of the investment. Transfer is made
directly by Burkinabe banks once the interested party presents all relevant
documents to the bank. Transfers and preparation of funds are not limited and
there is no waiting period. Wire transfers to an American correspondent bank
take three days (up to a week to a non-correspondent bank).
Burkinabe policies facilitate the free flow of financial resources and support
the flow of resources in the product and factor markets. Credit, when
available, is allocated on market terms. Legal, regulatory and accounting
systems are consistent with the international norms. The Government uses the
OCAM Plan, and has at least three commercial accounting systems that match
world norms. Burkina Faso does not have a stock exchange, but does have
regulations, which guarantee and facilitate portfolio investment.
Expropriation and Compensation
The Burkinabe constitution guarantees basic property rights. Such rights cannot
be infringed upon except in the case of public necessity, as defined by the
Government. Just compensation must be paid in cases where property is
expropriated. Such compensation must be paid in advance of the expropriation,
except in the event of emergency. Since 1960, three instances of expropriation
have occurred. In 1968, the electric company (then called Safelec) was
nationalized by the Government in conformity with Burkinabe law. In 1970, Comacico-Benin
and SECM, film making and distribution companies, were nationalized. In 1980, a
manufacturer of ammunition, Carvolt, was nationalized for national defense
reasons. No further cases of nationalization have occurred.
Dispute Settlement
If an amicable settlement of a dispute between the Government and an investor
proves impossible, the investment code provides arbitration procedures be
submitted to international arbitration under the rules outlined by the March
1965 Convention of the IBRD. In cases where the enterprise of a national does
not meet the nationality conditions stipulated by Article 25 of the convention,
this code specifies that the dispute be resolved in accordance with the
dispositions of the supplementary mechanisms approved on September 27, 1978, by
the International Court for Settlement of Investment Disputes.
Performance Requirements and Incentives
There are no specific performance incentives, other than a general exhortation
that companies foster the recruitment of national employees. There are no
requirements that investors purchase from local sources. Certain incentives
encourage the establishment of export industries (regime “C” described above)
and the location of plants outside of Ouagadougou and Bobo-Dioulasso. Given the Government's required
stated desire to increase foreign investment, an increase in performance
requirements is not anticipated.
Private Ownership Rights
The rights to foreign and domestic private entities to establish and own
business enterprises and engage in all forms of renumerative activity are
guaranteed by the constitution and the Investment Code. Businesses can be
freely established, subject to the screening process discussed above, and
disposed of. Most public enterprises have enjoyed a monopoly position in their
markets. However, the implementation of structural adjustment is moving Burkina
Faso towards competitive equality. Foreigners are encouraged to engage in the
privatization of parastatal enterprises.
Protection of Property Rights
Burkina Faso has a legal system, which protects and facilitates
acquisition and disposition of all property rights, including intellectual
property. Burkina is a member of the World Intellectual Property Organization
(WIPO). The Investment Code guarantees foreign investors the same rights and
protection as Burkinabe enterprises regarding trademarks, patent rights,
labels, copyrights and licenses. Divulging commercial secrets is a criminal
offense in Burkina Faso.
Transparency of Regulatory System
The Government is in the process of adopting a more refined and transparent
policy of effective laws to foster competition. For example, price controls
have been lifted, and the Labor Code revised. Burkina Faso's regulations
governing the establishment of businesses include most forms of companies
admissible under French business law. These include:
• public corporations,
• limited liability companies,
• limited share partnerships,
• subsidiaries and affiliates of foreign enterprises,
• and sole proprietorships.
Political Violence
The capital of Ouagadougou periodically experiences demonstrations and civil
unrest. Although the demonstrations are generally peaceful, there have been
several incidents of violence and destruction within recent years.
Labor
Burkina has relatively well developed labor regulations. A revised Labor Code
guarantees many rights to workers and is effectively enforced by a Labor court.
Unions are well organized and defend employees’ interests in industrial
disputes. Workers know their rights and do not hesitate to seek redress of
grievances.
The modern sector represents approximately 10 percent of the workforce, with
allegiances of 60 percent of Government workers and half the private sector
employees in urban areas. Trade unions are free to operate in Burkina Faso.
The Collective Agreement for the commercial sectors of February 1, 1982
divides employees (laborers, craftsmen, senior staff) into eight categories
with minimum basic pat rates from 25,000 CFA per month. Conditions for the
employment of workers by enterprises are provided in Decree No. 98 of February 15, 1967. Pursuant
to this decree, the creation of new jobs must be immediately reported to the
Office of Employment and Migration by a new employer before he hires any
personnel. An employer should ask any worker he is about to hire for his Job
Seeker's Registration Card issued by this office.
It
is Burkinabe policy to increase employment opportunities for national workers.
Therefore, in professions where a great number of unemployed Burkinabes are
registered, no job-seeking cards will be issued to non-nationals. When
non-nationals are hired, their employment contract will be authorized by the
Director of Labor. A statement must be made to the Regional Inspector of work
and social rules before start-up of any new enterprise according to a decree of
February 15, 1967.
In the event of a reduction in personnel, the Labor Code requires the employer
first to dismiss those employees with the least amount of training and the
lowest seniority. The employer must advise the employees in question at least
30 days prior to termination. Workers terminated in a general reduction of work
force have re-employment priority over other applicants for a two-year period.
Employees terminated for reasons other than theft or flagrant neglect of duty
have the right to termination benefits.
Though there is a scarcity of skilled workers, mainly in management,
engineering and electrical trades, Burkinabe workers have a reputation as
hardworking and dedicated employees.
International Investment Agreements
Burkina signed a cooperation treaty with France on April 24,
1961, providing that funds can be
transferred freely between the two countries.
A trade, investment protection and technical cooperation agreement was signed
between Burkina and Switzerland on May 6,1969. This agreement provides for free transfer of
corporate earnings, interests, dividends, etc., between the two countries.
Various multilateral investment agreements have been signed by Burkina in the
framework of international and regional organizations including the Lome
Convention, the UEMOA or West African Economic Community, and the Council of
the Entente. These treaties guarantee the free movement of investment capital
among member states.
Foreign Trade Zones
There are no foreign trade zones or free ports in Burkina. Foreign owned firms
established in Burkina have the same investment opportunities as host country
entities, pursuant to the provisions of the New Investment Code that prohibits
discrimination between foreigners and nationals. American firms not registered
in Burkina can compete for contracts or projects financed by international
sources such as the World Bank, U.N. organizations, or the African Development
Bank.
Taxation
The tax rates on company profits are 40 percent. If approved, industrial and
mining enterprises may be exempt from profit taxes for the first five years of
operation. Profits that are reinvested may be subject to a tax reduction.
Special exemptions are listed above.
Stock Market
The Bourse Regionale des Valeurs Mobilieres (BRVM) was opened in September 1998
to serve as a regional financial market for the member-states of the West
African Economic and Monetary Union (UMOEA), which includes Benin, Burkina Faso,
Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. At inception, the BRVM had 35 listed companies.
Listing requirements include: a share capital of CFAF 200-500 million; 15-20
percent public ownership; five annual reports; balance sheet.
The BRVM has computerized trading with satellite links. Trading occurs on
Mondays, Wednesdays, and Fridays. Trading is now decentralized so that
member-countries can trade simultaneously from their national bourse via
satellite links.
For more information on the
Bourse Regionale des Valeurs Mobilieres, see URL: http://www.brvm.org
For
further information on Investing in Burkina Faso, please visit: http://www.primature.gov.bf
Sources: International Monetary Fund (Country Watch): http://www.imf.org