Burkina Faso, a landlocked country in the sudano-sahelian region of West Africa, faces many socio-economic challenges on its path to sustainable development. The country is challenged by difficult economic conditions, made worse by severe intermittent droughts. Furthermore, industrial development is disadvantaged by a small market economy and by the absence of a direct outlet to the sea. Burkina Faso also has one of the most poorly developed road networks in the region, a situation that is slowly improving. More than 90 per cent of the ten million inhabitants of the country gain a subsistence living from agriculture.

Burkina Faso, a landlocked country in the sudano-sahelian region of West Africa, is challenged by difficult economic conditions, made worse by severe intermittent droughts. Industrial development is disadvantaged by a small market economy, the absence of a direct outlet to the sea, and a still larglely undeveloped road network. More than 90 per cent of the ten million inhabitants of the country gain a subsistence living from agriculture. UNCDF has been active in Burkina Faso since the early 1980s, working closely with the United Nations Development Programme (UNDP) to assist the government with a wide range of projects.

Local Development

Recent UNCDF local development projects in Burkina Faso concentrate on environmentally sensitive rural areas in the northern Sahel Region and in the neighbouring Namentenga Province. This focus on some of the country's poorest regions contributes to preventing irreversible damage to the natural resources pool in the event of recurring droughts: erratic rainfall already constrains rural livelihoods in Namentenga, a Province that would not be able to sustain an influx of population deserting the Sahel region.

In the Sahel Region, UNCDF supports a national programme that embodies Burkina Faso's anti-desertification policies. A first phase of the Sahel project, in partnership with cooperation from the Government of Germany has enhanced access to water for livestock raisers, and made a decisive input into the Region's Schéma d'aménagement du territoire (holistic land planning) - the first in the country -, providing all levels of local government and donors with a sound basis for planning and investment. The second phase focuses on the Soum Province, where six clusters of villages and two rural districts are implementing their local development plans, thus building capacities for managing rural investment at a higher level than the individual village, in preparation for the implementation of the decentralization reform in rural areas.

UNCDF support in Namentenga started in the South of the province with community- managed small irrigation schemes (which now attract vegetable traders from as far as Ghana, and provide local food security) and the construction of a feeder road opening traffic for trucks to and from the landlocked North of the province. Two larger irrigation plots will be built in the centre of the province, while nine clusters of villages and two rural districts in the North are starting to implement their development plans, tackling problems such as lack of access to basic social services and lack of water for livestock and food crops in the dry season.

The issue of decentralization has spawned considerable thinking, writing and debates in Burkina Faso, yet the implementation of decentralization to date essentially concerns urban settings and small towns in rural areas. In synergy with UNCDF investment, UNDP has taken the lead in promoting donor-government coordination at the Province level, as well as at the larger Region level. A major challenge for local governance lies at the sub-provincial level: the current legal framework is supportive of community-based organizations at the village level, yet does not assign responsibility to rural district councils (communes rurales) to provide services to villages situated outside their own town boundaries.

Building capacities at inter-village level to create an interface with district and regional councils is be the main target of UNCDF's pilot experience in 2004-2005. Micro-investment in social services, compatible with local resources available at the inter-village level, is the tool of choice to build participatory planning and implementation capacities.

This focus on helping local institutions to provide services compatible with their resources is different from the earlier "structuring investment" approach, typically rainwater retention facilities (dams, reservoirs) with a cost of $100,000 to $300,000. Such relatively large grants were not commensurate with local saving/fiscal capabilities, yet they provided an appropriate entry point for several villages to cooperate in managing productive assets. Ideally, the two approaches should be combined to better address root causes of poverty and promote local environmental governance, but for this to be achieved equitably, the resources available to UNCDF worldwide would need to increase significantly.

Microfinance

Since 1998, as part of SUM's programme "Guichet Microfinance pour l'Afrique de l'Ouest", UNCDF, in conjunction with the UNDP, launched a programme in Burkina Faso called "Strengthening Financial Intermediation in the Southeast region of Burkina Faso" (Renforcement de l'Intermédiation Financière dans le Sud-Est du Burkina Faso) in October 2001. The African Development Bank is considering to join this effort in 2004.

UNCDF's microfinance programme in Burkina Faso intends to support the national strategy of poverty reduction by improving access to credit in the southeastern provinces of Tapoa, Gourma, Kompienga, and Zoundweogo. It provides technical support to microfinance practitioner organizations receiving capital investments, and focusing on expanding outreach in remote rural areas.

As 62 per cent of the people living in these rural areas are women, the programme has envisaged the expansion of 350 village MFIs targeting women in particular. With this formula, UNCDF is bringing financial services to the poorest and most disadvantaged in the region.

The technical provider of the programme is the "Réseau de Caisses Populaires de Burkina" (RCPB). Since its inception, in spite of less-than optimal financial, operational, and institutional sustainability, , RCPB has provided credit and saving services to poor men and women in Burkina Faso. Today, RCPB is one of the biggest Microfinance Programmes in the region with more than 19,000 active clients.

As the RCPB is not paying any interest on members' savings, which is the RCPB's primary revenue source, the economic sustainability of the programme is much higher than it would be if the RCPB was paying interest. If in future however, interest is paid on savings, or if the association should resort to borrowing from the capital market, its profit rate could prove to be inadequate. The rate of coverage from earnings is satisfactory and provides a large reserve in the event of a future increase in fees.

RCPB has considerable development potential and a sizable reserve without having to resort to capital markets in the short and medium term. The lending procedures are prudent and the repayment rate reflects the overall soundness of its portfolio. The variety of loan products offered by RCPB is meeting most of the needs of the population and the lending conditions appear to be suited to the local situations. The application processes are streamlined, and there is relatively easy access and short waiting periods. Flexibility and speed, in terms of deposits and withdrawals, has increased member confidence in the savings and loan associations.

For more detailed information on UNCDF Programmes in Burkina Faso, please visit the Fact Sheet, or the project specific documents.