Arriving in Bujumbura’s undescriptive small airport, you could be mistaken for thinking you have arrived in a district town, not a country’s capital. “Bienvenue!” says Alain, my driver for the day. There is a sense of optimism in his voice, even with political turmoil hanging in the air. [hidepost=9][/hidepost]
Burundi is small landlocked country in East Africa, and often in the shadow of its headline grabbing neighbour, Rwanda. Burundi’s 9m people are densely populated, with around 315 people per square kilometre. It is the third highest density in Africa, after Mauritius and Rwanda. However, 90% of Burundi’s population remains rural.
Importing and exporting goods can be challenging, being landlocked, with transport and handling costs often making up more than 50% of the retail price. Such costs contribute to the poor intra-East African Community (EAC) trade. In addition, the electricity supply in the country is unreliable. According to the African Development Bank, only 2% of Burundians have access to electricity, far behind the average of 16% in the rest of sub-Saharan Africa. However, where many investors are seeing obstacles, some are seeing opportunities.
For instance, telecom provides real opportunities. Far fewer Burundians have access to mobiles phones, compared with the rest of Africa, suggesting huge growth potential. In addition, the country has ideal conditions for growing Arabica coffee, with an altitude of 1,500-2,000 metres and heavy rainfall.
As an EAC member, Burundi has a very good potential base for growth. The country has seen a rise in direct foreign investment. There are major infrastructure plans in the pipeline, such as the proposed $5.8bn infrastructure action plan drafted by the African Development Bank. Infrastructure initiatives in the action plan range from electricity and roads to an upgrade of the Tanzania railway service connecting Burundi. The plan aims to pave all 2,000km of existing roads while adding 1,000km to the urban centres by 2020. With improved infrastructure the country can develop a more diverse import base, beyond coffee and tea. Tapping into the proposed railway, Burundi plans to export 2.5m tons of nickel per year.
Burundi’s retail environment is still very fragmented, with large numbers of grocery stores and supermarkets scattered all over the city. Alain drives me to the central market. Earlier in the year a fire ripped through the market, leaving a trail of destruction. Today, investors are looking beyond traditional markets. In 2012 a consortium of foreign and local investors announced plans to open an $80m shopping mall in Bujumbura, with Kenya’s Uchumi supermarket chain planning to enter the country.
Obstacles remain, but Burundi has become an easier place to do business. Burundi is among the global top 10 improvers in the World Bank’s Doing Business Index. Burundi is still ranked at a lowly 140th, but this is a big improvement from 2011, when it was ranked 181 out of 183 countries.
Burundians like to have a good time, as the many bars and nightclubs indicate. The country has reportedly one of the highest per capita alcohol consumption in Africa. Brarudi, Burundi’s largest brewery, is majority owned by Heineken. The company produces Amstel and Primus beers and is also the local Coca-Cola bottler. Beyond big brands, Burundi is famous for its banana beer, an alcoholic beverage made from fermenting mashed bananas. I asked Alain if he is a consumer of the infamous banana-based moonshine. “There is money in moonshine,” he says sternly. “So money does grow on trees,” I say with a smile. “Yes, but so does trouble,” he laughs.
Tielman Nieuwoudt is principal of The Supply Chain Lab and has extensive supply chain experience covering more than 30 emerging markets in Africa and Asia. The Supply Chain Lab is a group of supply chain improvement specialists with a focus on factory-to-village supply chain solutions.