Business climate and private investment environment

THE BUSINESS CLIMATE AND THE PRIVATE INVESTMENT ENVIRONMENT

1. INVESTMENT CLIMATE AT INTERNATIONAL STANDARDS

Since 2004, Burkina Faso has adopted more than 190 measures to improve its business climate. These reforms help Burkina Faso to rank among the world top 10 reformers according to Doing Business 2009 report. These efforts allowed the country to receive in 2007 the Doing  Business Africa Reformers’ Club award from the World Bank, because of progress made in carrying out reforms to improve the business climate.

Burkina Faso has facilitated the creation of enterprises and strengthened access to credit by implementing the amendments of the Uniform Acts of the OHADA (Organization for the Harmonization of Business Law in Africa). Under these amendments, contractors may, upon registration, produce a sworn statement instead of a criminal record certificate. Burkina Faso has made obtaining of building permits less costly.

The topic of Regulatory reform focused on starting a business, getting credit (legal rights), and dealing with construction permits.

2. IMPROVING THE LEGAL AND INSTITUTIONAL FRAMEWORK

Over the last years the Government has made significant improvements in the legal framework in several areas:

(i) Effective liberalization of the economy and opening of major sectors to private sector (telecommunications, energy, air transportation, mining, banks, insurance etc.).

(ii) Adoption of a policy of openness to Foreign Direct Investment (FDI),

(iii) Price liberalization with the removal of price control except for hydrocarbons

(iv) Elimination of monopolies,

(v) Privatization of public or parasternal enterprises,

(vi) Liberalization of markets,

(vii) Labor market liberalization with the adoption of a labor code guaranteeing freedom of hiring, employment and dismissal, which fostering better human resource management by the investor,

(viii) Revision of the entire legislative and regulatory business system,

(ix) Revision of the trade legislation,

(x) Adoption of a very attractive Mining Code,

(xi) Adhesion of Burkina Faso to the OHADA in 1998 with the objective to address legal and judicial insecurity. Burkina Faso is also distinguished, within the WAEMU and the Organization for the Harmonization of Business Law in Africa (OHADA), as the country which has undertaken most reforms;

(xii) Revision of the overall legislative and regulatory system and strengthening the rights and guarantees granted to investors;

(xiii) Improvement of land tenure: revision of the Law on the Agrarian and Land Reform (RAF) and adoption of the Law on Rural Land Use;

(xiv) Adoption of a comprehensive strategy for tax policy reforms,

(xv) improvement of legal security with the creation of the Center for Arbitration, Mediation and Conciliation of Ouagadougou, appointment of arbitrators and mediators, establishment and operationalization of the commercial courts, adoption and implementation of the National Action Plan for Legal Reform, strengthening the training of judges, etc.;

(xvi) Building good quality economic infrastructures and good international road system and an efficient international transit system, which makes Burkina Faso the crossroads of trade in the WAEMU and ECOWAS countries;

(xvii) Implementation of the Program Doing Better Business in Burkina Faso;

(xix) Institutionalization of the annual Private Sector-Government meeting;

(xx) Strengthening of private sector support current institutions and creation of many organizations:

– Set up of Export Promotion Agency (Agence de Promotion des Exportations) and the Chamber of Commerce and Industry of Burkina Faso;

– Enterprise House of Burkina Faso (Maison de l’Entreprise du Burkina Faso – MEBF);

– The business registry or Center for Enterprise Formalities (CEFORE: business start-up time reduced to 3 days) decentralization of the CEFOREs; Facilitation Centre for Building Documents (CEFAC), One stop shop for construction permits;

– One-stop shop for Land titles (GUF: established in Ouagadougou and Bobo-Dioulasso): Simplification of the procedure for issuing land titles

– Accredited Management Centers (CGA);

– Chamber of Crafts;

– Regional Chambers of Agriculture (Chambres Régionales de l’Agriculture – CRA);

– Office for enterprises Restructuring and Upgrading;

– Presidential Council for Investment;

– National investment promotion agency newly created

In addition to a commitment to protect investors, Burkina Faso has signed investment protection conventions with several countries.

3. RIGHTS AND COMMON RIGHT GUARANTIES GIVEN TO INVESTORS

In order to protect investments, the provisions of the investment code guarantee investors

(Registered or not):

– The faculty to acquire the relevant rights to carry out their activities

– The freedom for any investor to manage his enterprise

– The right to equal protection:

– The right to transfer capital and incomes:

– The freedom of exchange;

– The right to benefit from an incentive customs regime:

– The rights set out in the conventions

4. LAND TENURE LEGISLATION

Land ownership is ruled by the Law on Agrarian and Land Reform of 1996, and its amendments. No discrimination is made between nationals and foreigners with respect to access to land ownership.

5. LEGAL AND JUDICIAL SYSTEM

5.1. Justice

Burkina Faso’s judicial system, evolving in a State of right, protects and secures any investor who can freely devotes himself to his activities of design, production and commercialization in the context of free movement.

Commercial courts are contributing to solve problems related to the slowness and lengthy/heavy procedures in commercial litigation. Their establishment has helped to reduce the time for resolving commercial dispute over the last five days.

The judicial system also ensures the enforcement of international agreements, of contracts and decisions of specialized institutions such as the Common Court of Justice and Arbitration (CCJA) of the Organization for the Harmonization of Business Law in Africa (OHADA) and the International Center for the Settlement of Investment Disputes (ICSID)…

5.2. Alternative mechanisms for the settlement of commercial disputes

The Centre for Arbitration, Mediation and Conciliation of Ouagadougou (CAMC-O) provides the private sector and investors with an alternative method for settling disputes through conciliation and mediation between the parties in order to preserve business relationships, to the possible extent. Justice is rendered at greater speed, with confidentiality and transparency. This is an accessible, efficient and convenient mechanism. Processing time is six (6) months for arbitration, and one (01) month for mediation.

6. LABOR LAW

In May 2008 Burkina Faso adopted a new pioneering Labor Code (Law 028-2008/AN of May 13, 2008). The law provides for freedom of employment and dismissal. It has enabled Burkina Faso to be selected as the top reformer worldwide regarding deregulation of labor by the Doing Business program in 2009.

In addition, Burkina Faso has ratified several international conventions on labor, protection of workers’ rights, including the International Convention on the protection of the rights of all migrant workers and members of their families, adopted by the UN General Assembly resolution 45/158, ratified by Decree 2003-369 of 07-16-2003. Burkina Faso committed to observe the International Labor Organization (ILO) standards.

7. TAX LAW

Burkina Faso has implemented a comprehensive tax policy reform.

a) The adoption of the comprehensive fiscal policy reform has as objective, an efficient modern tax system balancing the state’s budget targets and the expectations of businesses in terms of simplification of the legislation and tax procedures, transparency, consistency, without impacting negatively on investments development.

b) Favorable regime: the Investment Code. This particular incentive system for investment gives some guarantees for the treatment and protection to all investors, regardless of nationality.

c) Information on common law taxes

– VAT rate: 18% for domestic operations and 0% for exports, exemption from the sale of unprocessed agricultural products;

– Corporate tax rate: 27.5%;

– Tax Rate on Securities Income: 12.5% cut in half for the first three years. The IRVM is a deposit deducted from the corporate tax;

– No registration fee on company documents (incorporation, capital increase, share transfer …);

– Free access to land, either through leasing (Emphyteutic lease) or by property acquisition with a registration fee set at 8% of the value of the building;

– Contribution of trading licenses based on the sales forecast or realized, together with a prorated fee of 8% of the rental value of the business premises.

8. GOVERNANCE INDICATORS

Various measures of indicators concerning Burkina Faso with regional comparisons show Burkina Faso stands consistently among the top three.

Such indicators are:

– Participation and accountability

– Political stability

– Government efficiency

– Quality management

– Rule of law

– Control and corruption.