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Why Is The Financial Sector In Burundi Not Development-Oriented?

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  • Janvier D. Nkurunziza

Abstract

The financial sector in Burundi has had a very limited effect on the country's development. High political and economic risks have prevented banks from engaging in long-term lending, constraining long-term investment. Moreover, the industrial organisation of the financial sector is not conducive for development lending because the sector is used more as a source of rents than development finance. As a result, the financial sector has been unable to address the needs of the core drivers of growth in Burundi, namely, agriculture and industry. Therefore, increasing the financial sector's participation in Burundi's economic development will require an improvement in political and macro-economic stability, as well as an increase of financial institutions' long-term re-sources. Most particularly, development banking should play its role of fostering the development of agriculture and the rural economy. In addition, more competition in the financial sector should be encouraged with the aim of diversifying financial services and pushing the sector's boundaries beyond the traditional urban market to embrace the rural economy where most economic activities take place.

Suggested Citation

  • Janvier D. Nkurunziza, 2010. "Why Is The Financial Sector In Burundi Not Development-Oriented?," EUI-RSCAS Working Papers 29, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    • Handle: RePEc:erp:euirsc:p0243
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    References listed on IDEAS

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    Cited by:

    1. Devon E.A. Curtis, 2015. "Development assistance and the lasting legacies of rebellion in Burundi and Rwanda," Third World Quarterly, Taylor & Francis Journals, vol. 36(7), pages 1365-1381, July.
    2. Devon E. A. Curtis, 2014. "Local Agency, Development Assistance and the Legacies of Rebellion in Burundi and Rwanda," WIDER Working Paper Series wp-2014-128, World Institute for Development Economic Research (UNU-WIDER).
    3. Curtis, Devon E. A., 2014. "Local agency, development assistance and the legacies of rebellion in Burundi and Rwanda," WIDER Working Paper Series 128, World Institute for Development Economic Research (UNU-WIDER).

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