# **Box 2: Comparison with other African post-conflict countries**

Burundi’s economy has performed poorly when compared to other post-conflict countries. Rwanda and Sierra Leone, for example, have recorded growth rates above 10 percent on average in the post-conflict years, while Burundi’s growth rate averaged only 2.8 percent in the same timeframe. DRC, on the other hand, has also not recorded the typical post-conflict boom, but has nevertheless achieved higher growth rates than Burundi.

There are several possible reasons for the poor performance of Burundi. One reason is the different peace consolidation processes experienced by Burundi relative to comparable post-conflict countries. In Burundi, this process has been multi-party, slow and fraught with political tension and security concerns, distracting the authorities from pursuing fully the development goals expressed in the PRSP. On the other hand, under the strong leadership of President Kagame, Rwanda restored order and security. The government has worked to reduce the institutional decay and ethnic and frictions in the aftermath of the 1994 genocide and is strengthening democratic governance and decentralized public institutions. It also boosted economic activities and service delivery with the support of donors. In DRC, the government has also taken important steps to restore stability, security and national reconciliation, establishing a multiparty transitional government and trying to resuscitate state institutions through capacity building on natural resource management. Nonetheless eastern Congo remains in turmoil and peace building fragile.

A second possible reason for the difference in growth rates - and one related to security and an attractive economic/business environment - is the level of private investment as well as government consumption. Burundi’s private investment rate is significantly lower than in the other three countries, especially DRC, while government consumption in percent of GDP exceeds those of the comparator countries (Table Box2a). Foreign direct investment has been particularly low in Burundi, while in DRC and Sierra Leone private funds from abroad have contributed notably to economic development. The revival of the Rwandese economy was accompanied by a conscious government effort to make the country more attractive to foreign investments.

|**Table Box-2a:**Comparison of economic indicators for seven years|post-conflict<br>Burundi|DRC|Rwanda|Sierra Leone|
|---|---|---|---|---|
|GDP growth (%)|2.8|6.1|13.6|12.0|
|GDP per capita growth (%)|-0.7|2.9|7.6|7.9|
|ODA (% of GDP)|40.0|43.1|24.7|33.8|
|Gross fixed capital formation (% of GDP)|10.5|15.4|15.8|12.1|
|Public (% of GDP)|6.8|3.0|7.7|4.9|
|Private (% of GDP)|3.6|12.4|8.1|7.2|
|General government final consumption expenditure (% of GDP)|23.9|8.1|10.8|14.3|
|Foreign direct investment, net inflows(% of GDP)<br>_Source:_WDI, IMF and authors' calculations. Burundi and Sierra Leone: 2001-20|0.02<br>07, DRC: 2003-200|2.3<br>8, Rw anda: 199|0.2<br>5-2001.|3.6|

A third reason for differential growth performances between Burundi and other post-conflict countries is the difference in the allocation of aid to different sectors and their possible lagged impact on growth. Table Box-2b shows that the share of humanitarian aid was significantly less in Rwanda and Sierra Leone. Sectors with a short-run impact on growth received higher allocations, especially in Sierra Leone, while in Rwanda the majority of funds was allocated to long-run growth enhancing sectors. In DRC, however, the share allocated to sectors that promote growth in the short run has been even lower than in Burundi. In contrast to Rwanda and Sierra Leone, the peace process in Burundi and DRC has been prolonged and the situation remained fragile, thereby necessitating the allocation of more funds to emergency and humanitarian aid than to growth enhancing sectors and dampening growth prospects in general.

**Table Box-2b:** Comparison of aid allocation and GDP growth for seven years post-conflict (share of total aid)

||Burundi|DRC|Rwanda|Sierra Leone|
|---|---|---|---|---|
|Humanitarian Aid|41.1|33.7|29.4|27.9|
|Short-run impact|24.3|21.2|26.6|35.2|
|Long-run impact|36.8|45.1|44.0|36.9|
|Real GDPgrowth rate(%)|2.8|6.1|13.6|11.9|

_Source_ : Author’s calculation based on OECD – DAC data and WDI; Burundi and Sierra Leone: 2001-2007, DRC: 2003-2007, Rw anda: 1995-2001.

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