Burundi: Investing

FDI in Figures

According to UNCTAD’s 2021 World Investment Report, FDI inflows into Burundi increased exponentially from USD 1 million in 2019 to USD 6 million in 2020, despite the global economic crisis triggered by the Covid-19 pandemic. The total FDI stock stood at USD 234 million in 2020. In 2021, global FDI flows rebounded strongly, but FDI flows to African countries (excluding South Africa) rose only moderately (UNCTAD’ Investment Trends Monitor). The mining and agricultural sectors capture most of the investment, while France and Japan are the main investors in the country. The ongoing construction of hydroelectric dams, international support in the country's agricultural policy and the development of rare earth production should attract foreign investment. However, disputes around contract renegotiations that lead to the suspension of foreign mining companies’ operations in April 2021 (including UK-based Rainbow Rare Earths) could dampen future investment (Coface).

In recent years, the government has made progress in terms of improving the business climate (notably through the adoption of a new investment law). Foreign investors enjoy the same rights as domestic ones, and can engage in all forms of activities. There are no general limits on foreign ownership or control, and foreign investments are not subject to any screening mechanism. However, in the mining sector at least 10% of the shares must be owned by the government, and foreign investors are required to make an initial investment of USD 50,000, while local investors are not subject to this rule. Foreign investment in arms, ammunition and other military and paramilitary activities is subject to restrictions. Political instability, high cost of public services, ambiguous trade policies, poor infrastructure, corruption, low skilled labour, limited privatization program and lack of foreign exchange are all factors limiting the influx of FDI into the country. As a result, the country was ranked 166th out of 190 economies in the Doing Business 2020 report. Burundi’s geographical position makes it a regional commercial hub but the country has not taken advantage of it so far. The country also has large deposits of copper, cobalt and nickel, largely untapped.

Country Comparison For the Protection of Investors

	Burundi	Sub-Saharan Africa	United States	Germany
Index of Transaction Transparency*	8.0	5.5	7.0	5.0
Index of Manager’s Responsibility**	7.0	3.5	9.0	5.0
Index of Shareholders’ Power***	2.0	5.5	9.0	5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

Foreign Direct Investment	2019	2020	2021
FDI Inward Flow (million USD)	1	8	8
FDI Stock (million USD)	227.7	233.8	241.7
Number of Greenfield Investments*	1.0	0.0	0.0
Value of Greenfield Investments (million USD)	186	0	0

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

Tax Rates

Value Added Tax (VAT) - Taxe sur la Valeur ajoutée (Local name) since July 2009.: 18% (standard rate).

10% reduced rate: imported foodstuff, processed agricultural products and agricultural fertilisers.
Exports and international transport are zero-rated. Telephone calls are exempt from VAT.
Company Tax: Higher of 1% of turnover or 30% of profits
Withholding Taxes: Dividends: 0% (resident, taxed as normal earnings)/15% (non-resident), Interests: 0% (resident companies, taxed as normal earnings)/15% (individuals; non-resident companies), Royalties: 15%.
Social Security Contributions Paid By Employers: 6% (8.8% for employees in arduous work).
The minimum monthly earnings used to calculate contributions are the legal monthly minimum wage.
Other Domestic Resources: Tax Authority of Burundi; Overview of Burundi's tax measures in response to Covid-19; Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

	Burundi	Sub-Saharan Africa	United States	Germany
Number of Payments of Taxes per Year	24.0	36.6	10.6	9.0
Time Taken For Administrative Formalities (Hours)	232.0	284.8	175.0	218.0
Total Share of Taxes (% of Profit)	41.2	47.3	36.6	48.8