I am pleased to represent the World Bank Group on this important and critical occasion.

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1 Burundi Development Partners Conference October Geneva, Switzerland Session: Interventions by the Sponsors of the Conference Remarks by Philippe Dongier Country Director: Burundi, Tanzania, Uganda The World Bank Your Excellency, Mr. The Vice President of Burundi, Honorable Ministers, Excellencies, Dear Colleagues, I am pleased to represent the World Bank Group on this important and critical occasion. Burundi today stands at a cross- road: there are two paths that lie in front of this country. Our support can make a difference in helping Burundi continue to choose the right path. As you know, the World Bank has its share of economists. We like to argue about the one hand, and about the other. If you allow me, I will resist this approach and will argue that although hesitation can be understood, and after all factors considered, we cannot hesitate when it comes to Burundi today. We in this room today have the opportunity to work with Burundi so that it takes the right path of development, so that the next ten years build on the successes of the last 10, while not being naïve about the many challenges that remain.

2 Lets look at the path that Burundi has followed over the last decade. This is a a path of achievement, as presented by the Vice President: o Consolidating peace and security: a new constitution, democratic elections, former combatants demobilized, being reintegrated into communities. o An increasingly stable macro- economic environment: Economic growth rose from percent in 2003 to +4.2 percent in 2011; sound macroeconomic management and fiscal policy characterized by prudence, and numerous structural reforms as assessed by the IMF, o Improving social outcomes: In health, Burundi has become a model, for Africa and beyond. The President of the World Bank, Doctor Jim Kim, chose to highlight Burundi in his first major speech at the recent Tokkyo Annual Meetings. He highlighted results- based financing and policies of free health care for children under five, and pregnant women. These policies have led to a 375% increase in the percentage of births in health facilities; a 43% decrease in the mortality rate of women in childbirth; and a 35% decrease in the infant mortality rate since o Closing the gender gap: The World Economic Forum s 2012 Global Gender gap report ranks Burundi 24 among 135 countries on gender equality. Burundi ranks just behind the US and ahead of Australia. It is first among the East African Countries. Most notably, Burundi ranked 3 out of 135 on economic participation and opportunity for women.

3 o Improving the business climate: Private investment as a share of GDP has moved from 2.2% in 2000 to 13% in The Investment Promotion Agency championed reform in the investment climate. For the second consecutive year, Burundi is ranked as one of the top 10 reformers in the Doing Business Report. It is the only African country on that list. o Improving public financial management: There have been complementary and reinforcing actions. For example, the Procurement Law, the Public Finance Law, the regulation of public budgets decrees, the move towards a single treasury account, and the establishment of the Burundi Revenue Authority. This has led to a 30% increase in revenue collection from 2010 to We are not naive. Let s not forget that in relation to each of these achievements many challenges remain: o Peace and security have been consolidated, but security remains fragile in many parts of the country. o Growth has risen to 4%. But it needs to be at least 5-7% per year to make a real dent in poverty reduction, in the words only this weekend of Finance Minister Abdallah. o Social progress has been made in health and education, and other areas, but Burundi is still unlikely to reach the 2015 Milliennium Development Goals on poverty, health, and education.

4 o The investment climate is improving, but the private sector remains small and under- developed. Its contribution to growth is increasing, but remains limited. o Corruption is reducing, but much more needs to be done, including strengthening the justice system. This is one path for Burundi: to further consolidate peace and security, and inclusion, to strive for continued progress in growth and poverty reduction. The World Bank Group is convinced that Burundi needs greater support from its partners, to: o Tackle infrastructure bottlenecks, particularly in electricity supply, regional transport networks, and urban infrastructure for greater competitiveness; o Improve the business climate to accelerate private investment in labor- intensive sectors, support skills development to create jobs and make growth more inclusive; o Consolidate social stability through safety net programs in the form of targeted education and health services, support to agriculture livelihoods, and supporting labor- intensive public works; o Support urban development policies and programs to help create opportunities in rural areas, encourage migration and thereby contribute to reducing pressure on land; o Establish an appropriate legal and regulatory framework to support a viable mining sector with positive spillovers for the rest of the economy;

5 o Increase accountability in government to improve public service delivery o Increase anti- corruption efforts. There are many challenges amidst much potential. Nevertheless, it is puzzling to me that aid flows for Burundi have been decreasing just at a time when the country is making such progress, tangible and measurable results are being achieved, and the potential is there. It is puzzling also because absorptive capacity exists. Project implementation and disbursement performance is far above the average for the continent. Burundi is a high performer when it comes to the ability to implement projects and make use of funds. Now as we discussed earlier, there is another path possible. If Burundi does not go down the path of continued progress, it will be forced to take another path. Timid donor commitment could lead to something none of us want. Evidence shows that aid to African fragile states is more productive than aid in general. Some of Africa s fragile states are caught in a fragility trap. This is when: o instability and violence destroy part of the country s capital stock; o insecurity of property rights and unenforceable contracts undermine the productivity of labor; o corruption and other forms of capture limit government tax revenues; and o there is a minimum level of consumption below which people would starve.

6 The result is an economy that can collapse or is at risk of collapsing into a self- fulfilling prophecy: low levels of support means low levels of investment, and slow or no growth. Yet, the same evidence shows that if the aid can be channeled to addressing these problems, it could help these countries avoid the fragility trap. In that case, external resources would have been extremely productive. That is why we believe that significant support at this time, where we are seeing tangible evidence of progress, can help Burundi avoid the fragility trap. It can help establish a virtuous cycle of political and social stability, growth led by the private sector, and sustained poverty reduction. This is not the time to hesitate in supporting Burundi. Even though hesitations can be understood and well justified, even though the glass can be seen as half empty, we need to also remember that the cost of hesitation could be large. Burundi is one of the countries most affected, in the world, by widespread malnutrition and hunger. Hesitation can perpetuate this situation. Burundi can be a force for stability, or for instability in the Great Lakes zone. Hesitation can be a missed opportunity to promote peace in this region of Africa. What I am saying here is not to suggest that pledges of increased support are necessarily needed tomorrow, though that would be welcome. This is meant as an input for decision- making in the months and years ahead, respecting the decision- making cycles of each country and organization.

7 Burundi s Second Growth and Poverty Reduction Strategic Framework (CSLP- II) came about through extensive consultation with traditional and non- traditional development partners, with the private sector and civil society, as we believe each has an important role to play in this exercise. The CSLP- II opens the door to a process of mutual commitment; some may call it a compact, between the government of Burundi and iots partners from the international community. As Burundi continues to deliver on its commitments and to implement the strategy that we all support, we must, collectively, intensify support to at this time with eyes wide open, with all the check and balances that are required. We can differentiate between understanding that challenges remain, that many improvements are acutely needed, and at the same time understanding that Burundi is overall on a positive trajectory and that e must come behind them and support them with vigor. The cost of not doing it could be high. Ten years from now, our successors will look back at this conference. They will say that when the time came to choose a path, we helped Burundi to choose the right one. Thank you.

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