Burundi faces the significant challenge of consolidating peace and security and strengthening overall governance, while at the same time, reconstructing and rehabilitating its economy and becoming an active member of the regional community.

Burundi made a successful transition to a multi-party political system between 2000 and 2005. Political progress and attempts to consolidate security since 2005 have, however, been mixed. Recent struggles between political parties in the coalition government to position themselves before the general elections scheduled for 2010 have paralysed parliament and slowed the government’s legislative programme.

Although the situation remains fragile, but since the May 26, 2008, agreement between the government and the Palipehutu (FNL), political commitment to the peace process has evolved positively and reforms have managed to keep the transition towards peace on track.

Economic activity has recovered since 2006 due, in part, to more peaceful conditions and to favourable weather as well as a dramatic recovery of coffee production. Although growth was 5.1% in 2006, 2007 estimates show a decline in growth to 3.6%.

Growth in construction, trade and manufacturing is expected to drive real expected GDP growth of 6% in 2008. Inflation has fluctuated over the last three years from 13.4% in 2005 to 2.8% in 2006 and rising again to 13.5% in 2007.

In 2006 and 2007, budget support from donors accounted for 30% and 20%, respectively, of the total budget. Burundi’s recent accession (July 2007) to the East African Community (EAC) provides a great opportunity; however, the immediate challenge is to develop policies, institutions and capacity to enable Burundi fulfill its commitments to the EAC and derive maximum benefits from its membership.

The Bank Group's portfolio in Burundi currently comprises seven ongoing operations:

• Amenagement des Bassins Versants (PABV),
• Energy infrastructure rehabilitation and extension,
• Social reintegration multisectoral project,
• Water supply and sanitation (rehaibilitation and extention);
• Kirundo-Gasenyi Road,
• Institutional capacity building project; and
• Governance structure support programme (PASG).

With regard to portfolio performance, out of the Bank's total commitment of UA56.6 million, UA 17.5million (30.9%) has been disbursed. 14.3% of the projects are at risk and the average project age is 2.8 years.

The AfDB board of directors approved a new 2008-2011 Country Strategy Paper (CSP)  for Burundi on  November 19, 2008, and endorsed Burundi’s eligibility to qualify for Fragile State Facility (FSF) funding.

The CSP will support the government’s emphasis on:

• job creation and economic growth,
• improving governance and security,
• strengthening capacity to formulate, implement and monitor policies, and
• regional integration.

Burundi’s performance-based allocation under ADF-XI is UA33.4 million, combined with UA46.1 million from the supplemental support window of the FSF.

The CSP aims at supporting the government’s poverty reduction strategy through two pillars:

• support to effective government; and 
• increasing employment opportunities.

To this end, it will focus on improving economic governance and the functioning of key public sector institutions, infrastructure development and targeted interventions in the agricultural sector in order to boost growth and create jobs.