Burundi instability poses problems for East Africa

Burundi instability poses problems for East Africa

President Nkurunziza is likely to continue to perpetuate political instability through repressive conduct, in order to hold on to power. This will negatively impact East Africa’s economic prospects.

Since April 2015, Burundi has been in a state of perpetual instability, triggered by President Pierre Nkurunziza’s decision to run for a third term and the Constitutional Court’s ruling in favour. He secured the Presidency in July following a boycotted election where his party supposedly won 70% of the vote.

Since then, over 240 people have been killed as a result of political violence.

Consequently, around 200,000 have fled Burundi into neighbouring Rwanda, Tanzania and the Democratic Republic of Congo, giving the crisis increased regional significance.

The President’s attempt to hang on to power is not unusual in the African political context. Yet, owing to increasing disillusionment in society, particularly in the capital, Bujumbura, combined with an increasingly unaccountable and unpopular leader, tensions fractured the political landscape and overflowed into violence.

Rumours of Genocide

The extent of violence had momentarily lulled until the security crackdown on 8th November 2015 following a week-long amnesty period.

During the allotted time, amnesty was offered to those who would hand in illegal firearms. Following the completion of the amnesty, the government would forcibly confiscate those remaining, punishing the “enemies of the nation” and go to “work” on them, a term mirroring rhetoric of neighbouring Rwanda’s genocide.

Predictably, such a threat caused hundreds to flee Bujumbura ahead of the disarmament program. These events point to the increased likelihood that the government’s intentions in Burundi could lead to bloodshed and a repeat of the past where Burundi suffered a civil war of 1993 – 2006, which killed 300,000 people.

Worryingly, reports have alleged that the UN is “less equipped” to deal with increased violence in Burundi than it had been for the Rwandan genocide. Currently, there are no UN troops in the country. This does not bode well for Burundi’s prospects of stability in the short to medium term.

However, one positive counterpoint to such a risk is that, in the run up to the Rwandan genocide, international actors had turned their back on the situation. In the case of Burundi, the international community’s eyes remain firmly on the crisis. This will reduce the possibility of civil war.

Encouragingly, plans are being formulated for either UN or regional forces to be transferred into the country in order to manage the risk of increased violence, or as some rumour: genocide.

Nonetheless, genocide does seem relatively farfetched at present, considering that widespread ethnic tensions between Hutu and Tutsi are not immediately evident and both groups are in united opposition to the government and vice versa.

Economic Implications

Regardless, the political situation has had an adverse impact on the economic fortunes of Burundi and will continue to do so. The IMF has forecast the country’s economy to contract by 7.2% in 2015, owing to declining tax revenue, a drop in key exports and foreign aid cuts (which account for 50% of the state budget).

In addition to this, international actors such as the EU, US, and UN are either implementing or threatening sanctions on the country. The looming economic collapse is set to deliver a devastating blow to the world’s second poorest country, impacting a population of 10.4 million where 67% are below the poverty line.

Burundi’s economy is mainly composed of agriculture (40% of GDP) and nickel reserves (6% of global reserves). Coffee is the main export and accounts for 60% of export revenues. Unfortunately, the sector has been hampered by a collapse in commodity prices and aging coffee orchards incapable of producing adequate harvests.

The result of these economic problems, compounded by political troubles and sanctions, could counterproductively work to incentivize repressive behaviour by the President, who is desperate to hold on to power. In turn, a cycle of political violence and economic crisis could snowball into a regional disaster.

Before the political crisis, such challenging economic issues were difficult to predict, with generally healthy economic growth. The macroeconomic stability of the country was vulnerable, however.

Over the past 15 years, coffee production has declined by 50%, exposing the government to an increasing pressure to diversify the economy whilst ensuring political opponents did not benefit and, in turn, gain power.

East Africa and Investors

For East Africa’s economic prospects, as the political crisis escalates, the region is likely to take a turn for the worse as risk averse investors avoid the region or suspend operations exposed to security risks. A number of political leaders have argued that the region’s economic potential is reliant on the extent of its political stability or at least the perception of its risk profile.

For investors remaining in the region, the evolving crisis will need to be monitored on a national and regional level. Companies operating out of Burundi itself undoubtedly face heightened political, security and reputational risks. They could bear the brunt of sanctions, destruction of assets, or at least disruption to supply chains.

Contingency plans will need to be developed in order to mitigate the potential of the political crisis’ impact on operations.

About Author

Elliot Kratt

Elliot is a Freelance Analyst with The Economist Intelligence Unit. Prior to this, he held positions in a number of risk consultancies and has worked in East and West Africa. He has been quoted by journalists with the Financial Times and Wall Street Journal. Elliot holds a first class BA (Hons) in International Relations from the University of Leeds. All views expressed are his own.