Burkina Faso Economic Update: Energy for Economic Growth – World Bank

 

Economic Performance and Sustainable Development in Burkina Faso: April 2025 Update

Executive Summary

A recent World Bank economic update for Burkina Faso indicates a notable acceleration in economic growth in 2024, alongside a significant reduction in extreme poverty. This progress aligns with key Sustainable Development Goals (SDGs), particularly SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth). However, challenges related to inflation, public finance, and structural constraints in the energy sector persist, posing risks to sustained and inclusive development. The report emphasizes the critical need for reforms in public resource management and the energy sector to achieve long-term national development objectives and the SDGs, with a special focus on SDG 7 (Affordable and Clean Energy).

Key Economic Indicators and Progress Towards SDG 8

The nation’s economic performance showed marked improvement, contributing directly to SDG 8 (Decent Work and Economic Growth). The primary drivers were the services and agriculture sectors, which benefited from enhanced security, favorable climatic conditions, and government support.

• GDP Growth: Accelerated to 4.9% in 2024, up from 3.0% in 2023.
• Real Per Capita GDP Growth: Increased significantly from 0.7% in 2023 to 2.5% in 2024.

Poverty Reduction and Challenges to SDG 1 and SDG 2

Strong sectoral growth translated into tangible progress on SDG 1 (No Poverty), especially in rural areas. However, rising inflation, driven by food prices, presents a challenge to both SDG 1 and SDG 2 (Zero Hunger) by eroding purchasing power.

• Poverty Rate: The extreme poverty rate declined by 3 percentage points to 23.2% in 2024.
• Absolute Poverty: Despite the reduction in the poverty rate, over 5.5 million people remain in extreme poverty.
• Inflation: Increased from 0.7% in 2023 to 4.2% in 2024, primarily due to food price speculation.

Fiscal Health and Alignment with SDG 17

The report notes an improvement in the country’s twin deficits, reflecting better fiscal management and favorable external conditions. These efforts support SDG 17 (Partnerships for the Goals), particularly targets related to strengthening domestic resource mobilization and ensuring long-term debt sustainability.

• Fiscal Deficit: Improved from 6.5% to 5.6% of GDP in 2024, aided by controlled spending and higher revenue.
• Current Account Deficit: Narrowed from 8.0% to 6.4% of GDP, boosted by higher gold export values.
• Financing Concerns: The deficit was largely financed through high-interest regional markets, posing a risk to debt sustainability.

Future Outlook and Identified Risks

Medium-Term Projections

The medium-term economic outlook is positive, with growth projected to stabilize and inflation expected to fall within the WAEMU target range. This forecast suggests a continued, albeit moderate, reduction in poverty, contributing to ongoing progress on SDG 1.

• Growth: Expected to strengthen to 5% over the medium term.
• Inflation: Projected to gradually stabilize.
• Poverty Reduction: Estimated to continue at a rate of approximately 1 percentage point per year.

Key Risks to Sustainable Growth

The positive outlook is subject to several risks that could undermine progress towards the SDGs, including SDG 16 (Peace, Justice and Strong Institutions) and SDG 13 (Climate Action).

• Insecurity
• Climate shocks
• Debt refinancing challenges
• Vulnerabilities in the financial sector

Special Focus: Energy Sector and its Role in Achieving the SDGs

Current State of the Energy Sector and Impact on SDG 7

The report’s special chapter highlights the energy sector as a major impediment to economic transformation. The lack of widespread access to electricity directly hinders the achievement of SDG 7 (Affordable and Clean Energy) and creates a bottleneck for broader development.

• Limited Access: The national electricity access rate is well below the regional average, particularly in rural areas.
• High Costs: The sector is characterized by some of the highest generation costs in the region.
• Import Reliance: Heavy dependence on imported fuels creates economic vulnerability.

Energy as a Catalyst for Broader Development Goals

Addressing the energy deficit is presented as essential for unlocking progress across multiple SDGs. As stated by the World Bank Country Manager, affordable and reliable electricity is a prerequisite for improving productivity and growth in key sectors, thereby supporting SDG 2 (Zero Hunger), SDG 8 (Decent Work and Economic Growth), and SDG 9 (Industry, Innovation, and Infrastructure).

Strategic Recommendations for Sustainable Transformation

Public Finance and Debt Management (SDG 17)

To ensure fiscal stability and support investment in development priorities, the report recommends a series of measures aligned with SDG 17:

1. Strengthen the mobilization and efficiency of public resources.
2. Continue the modernization of tax administration and broaden the tax base.
3. Optimize public spending to improve efficiency.
4. Improve debt management and prioritize concessional financing.

Energy Sector Reforms (SDG 7 & SDG 9)

To overcome structural constraints and foster inclusive growth, ambitious reforms are proposed for the energy sector. These recommendations are critical for achieving SDG 7 and enabling progress on SDG 9.

1. Implement pricing reforms based on the actual cost of electricity production.
2. Expand off-grid access to electricity to reduce vulnerabilities and promote inclusive growth, particularly in rural areas.
3. Tackle structural issues, including high generation costs and reliance on imported fuels.

SDGs Addressed in the Article

• SDG 1: No Poverty
• SDG 2: Zero Hunger
• SDG 7: Affordable and Clean Energy
• SDG 8: Decent Work and Economic Growth
• SDG 17: Partnerships for the Goals

Identified SDG Targets

1. SDG 1: No Poverty

   • Target 1.1: By 2030, eradicate extreme poverty for all people everywhere, currently measured as people living on less than $1.25 a day. The article directly addresses this by stating that “the strong growth in the agriculture and services sectors in 2024 reduced the extreme poverty rate by 3 points to 23.2%.”
   • Target 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions. The article highlights that the “absolute number of people living in poverty remains high, exceeding 5.5 million” and projects a “continued but moderate reduction in poverty estimated at about 1 percentage point per year,” which relates to the ongoing effort to reduce poverty in all its dimensions.

2. SDG 2: Zero Hunger

   • Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious and sufficient food all year round. The article connects to this target by discussing food price inflation, noting that inflation “increased in 2024 to 4.2% from 0.7% in 2023, driven by the spike in food prices, caused by market speculation linked to a late start to the rainy season.” This directly impacts food access and affordability for the population.
   • Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production. The article mentions that economic acceleration is attributed to “the performance of services and agriculture, supported by an improved security situation, favorable weather conditions, and increased government support to the agriculture sector,” which points towards efforts to strengthen agricultural practices.

3. SDG 7: Affordable and Clean Energy

   • Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services. The article’s special chapter on energy explicitly states that “access to electricity remains limited in Burkina Faso, with a rate well below the regional average.” It also calls for the “expansion of off-grid access” to ensure inclusive growth.
   • Target 7.b: By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries. The report recommends tackling “structural constraints to the country’s economic transformation, particularly in the electricity sector, which remains characterized by some of the region’s highest generation costs and heavy reliance on imported fuels.” This implies a need to upgrade technology and infrastructure.

4. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries. The article is an economic update focused on growth. It states that “the country’s economy grew by 4.9% in 2024” and “Real per capita GDP growth also increased from 0.7% to 2.5%.” It also projects growth to “strengthen to 5% over the medium term.”

5. SDG 17: Partnerships for the Goals

   • Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection. The report directly calls for “Strengthening the mobilization and efficiency of public resources, including through the continuous modernization of the tax administration, the broadening of the tax base and the optimization of public spending.”
   • Target 17.4: Assist developing countries in attaining long-term debt sustainability through coordinated policies aimed at fostering debt financing, debt relief and debt restructuring, as appropriate, and address the external debt of highly indebted poor countries to reduce debt distress. The article mentions the need for “improving debt management and mobilizing more concessional financing” and notes that the financing of the current account deficit “largely relied on regional markets, in an environment of high interest rates,” highlighting debt sustainability challenges.

Implied Indicators for Measuring Progress

1. SDG 1: No Poverty

   • Indicator for Target 1.1/1.2: The article explicitly provides the “extreme poverty rate” (23.2%) and the “absolute number of people living in poverty” (exceeding 5.5 million). It also mentions the annual reduction rate (“about 1 percentage point per year”) as a measure of progress.

2. SDG 2: Zero Hunger

   • Indicator for Target 2.1: The “inflation” rate (4.2%) specifically driven by “the spike in food prices” serves as an implied indicator for food affordability and access.

3. SDG 7: Affordable and Clean Energy

   • Indicator for Target 7.1: The “rate of access to electricity” is the key indicator, although a specific number is not given, it is stated to be “well below the regional average.” The expansion of “off-grid access” is also mentioned as a measurable action.

4. SDG 8: Decent Work and Economic Growth

   • Indicator for Target 8.1: The article provides direct indicators, including the “annual growth rate of real GDP” (4.9%) and the “annual growth rate of real GDP per capita” (2.5%).

5. SDG 17: Partnerships for the Goals

   • Indicator for Target 17.1: The “fiscal deficit as a proportion of GDP” (improved from 6.5% to 5.6%) is a direct indicator of domestic resource management. The call for “increased revenue mobilization” also points to the indicator of total government revenue as a proportion of GDP.

Summary of SDGs, Targets, and Indicators

SDGs	Targets	Indicators
SDG 1: No Poverty	1.1: Eradicate extreme poverty. 1.2: Reduce poverty in all its dimensions.	Proportion of population below the international poverty line (Extreme poverty rate at 23.2%). Number of people living in poverty (exceeding 5.5 million).
SDG 2: Zero Hunger	2.1: End hunger and ensure access to food. 2.4: Ensure sustainable food production systems.	Prevalence of food insecurity (implied by spike in food prices and inflation at 4.2%). Agricultural productivity (implied by agriculture sector performance).
SDG 7: Affordable and Clean Energy	7.1: Ensure universal access to affordable, reliable and modern energy services. 7.b: Expand infrastructure and upgrade technology.	Proportion of population with access to electricity (mentioned as “limited” and “well below the regional average”). Investment in energy infrastructure (implied by need to tackle high generation costs and reliance on imported fuels).
SDG 8: Decent Work and Economic Growth	8.1: Sustain per capita economic growth.	Annual growth rate of real GDP (4.9%). Annual growth rate of real GDP per capita (2.5%).
SDG 17: Partnerships for the Goals	17.1: Strengthen domestic resource mobilization. 17.4: Attain long-term debt sustainability.	Total government revenue as a proportion of GDP (implied by “increased revenue mobilization” and fiscal deficit improving to 5.6% of GDP). Debt service as a proportion of exports (implied by discussion on debt management and financing).

Source: worldbank.org