M&G Africa Reporter and AFP

03 Jun 2015 12:20

People are changing their Burundian francs for dollars or euros, and sheltering their savings in their homes or in neighbouring Rwanda.

 

BURUNDI and South Sudan are separated by the vast Democratic Republic of Congo (DRC), both but these Great Lakes nations face a similar risk - economic collapse.

During Burundi Monday’s truce in anti-government protests, Renovat Ndayizeye was quick to try to reopen his stall in Jabe market in Burundi’s capital. He has scarcely sold a single pair of shoes since demonstrations began weeks ago, and he is getting desperate.

“I haven’t worked since the protests began, we are living on our savings, and now I have nothing,” said the 26-year old salesman, surrounded by others who had taken advantage of a pause in the protests to reopen their small wooden shack shops.

Some customers did turn up to shop, but only for basic necessities like rice, meat, vegetables and soap.

Across the Burundian capital, business has been paralysed since demonstrators opposed to President Pierre Nkurunziza’s third term bid began street protests, leading to almost daily, violent clashes with police. For over a month, customers have deserted the market and traders have left their goods locked up in the once teeming alleys.

The consequences of the political crisis in Burundi, and the protests primarily in its capital, are dramatic for traders like Ndayizeye, but also potentially disastrous for the country’s already faltering economy.

The tiny Great Lakes nation was ravaged by a 13-year civil war that ended in 2006 and today is one of the poorest countries on the planet: gross national income per capita is $260 (238 euros), 58% of the population suffers chronic malnutrition, it exports very little, produces too little to feed itself and is riddled with corruption.

        Across the Burundian capital, business has been paralysed since demonstrators opposed to President Nkurunziza’s third term bid began street protests, leading to almost daily, violent clashes with police. (Photo/AFP).

Many of the demonstrations have taken place on the outskirts of Bujumbura, fuelled by poverty and unemployment. This does not prevent them from playing the economic card, erecting barricades to prevent people from reaching their workplaces in order to hit the economy and force the president to abandon a third term bid they believe is unconstitutional.

Protesters are seeking to “turn Bujumbura into a dead city,” fumed a senior official in the ruling CNDD-FDD party. “The impact of the demonstrations on the economy is real. It is a terrible weapon.”

Painful times ahead 

Even before the announcement of Nkurunziza’s third term bid at the end of April, and the start of protests, the economy was suffering from a pre-election depression.

Fears of a return to large-scale violence in a country—which has a bitter history of inter-ethnic massacres—has driven people to change their Burundian francs for dollars or euros, and shelter their savings in their homes or in neighbouring Rwanda.

April tax revenues, collected mainly in Bujumbura, dropped 18%. The shortfall was worse in May which saw the closing of shops and banks, the blocking of roads into key areas of the capital and the fearful exodus of tens of thousands of Burundians to neighbouring countries.

The dire economic situation is compounded by the effect of the political crisis on vital foreign aid, which accounts for half the national budget. Insecurity directly affects projects financed by donors such as the World Bank, whose experts were evacuated amid the violence leading to a reduction in disbursements.

Hard currency is already missing for the import of fuel, for hops used in production of the popular local beer, for medicines and for products such as charcoal used for cooking which has tripled in price. A leading local economist, speaking on condition of anonymity, has warned of looming hyperinflation.

The ruling party official has said the salaries of civil servants will be paid in May, June and July. But that might come at a price, the economist said, with increased pressure on the Burundian franc, and therefore on prices, if the government were to print money or default on debt repayments.

Like the small scale traders in Jabe, the private sector lacks room to manoeuvre: the crisis and insecurity has hit private hotels hard and forced them to lay off staff.

An end to violence, however, may not be enough to revive the economy, especially if the election re-instates the president, analysts said.

Ignoring international warnings, Nkurunziza is preparing for five hard years at the head of an isolated country. Belgium, the former colonial power and a key donor to the country, has notably already suspended direct aid.

“After the elections it will be painful,” said the CNDD-FDD official.

South Sudan expulsion

In South Sudan, the UN announced announced Monday that its officials had decided to expel its outspoken aid coordinator Toby Lanzer.

South Sudan’s government justified the move by stating that Lanzer had crossed a line when he made a comment predicting that the country would collapse.

The world’s newest state was plunged into conflict nearly 18 months ago between forces loyal to President Salva Kiir and rebels allied with his former deputy, Riek Machar.

Some 50,000 people have been killed, another 4.6 million face extreme, life-threatening hunger as a result of the situation,  and over 1.5 million have been displaced, and at least 500,000 people have fled into neighbouring countries. 

South Sudan’s oil production has also been cut by 60%.