Top-Rated Debt Collection Agency in Burundi

The economic risk in Burundi

Economic risk in Burundi is very high (6 out of 6). An economic risk of 6 out of 6 is relatively high in Africa.

GDP and economic growth are critical drivers for economic risk.
The GDP of Burundi is 2,9 bn. USD (2021), growing by 1,8% per year.

In terms of the size of its economy, Burundi ranks #156 out of 183 countries and has a small economy.

In terms of growth rate, it is ranked #145 out of 183 countries and is therefore considered a slow-growing economy.

GDP per capita is 237 USD, ranking Burundi number #175 out of 183 countries. This means the purchasing power of citizens in Burundi is low compared to the rest of the world.

You can see a more detailed picture of GDP and economic growth in Burundi in the table below:

Another critical driver for the economic risk score is the inflation rate and the interest rates. You can see a more detailed picture of monetary key performance indicators in Burundi in the table below:

The inflation in Burundi was 8,4% in 2021 which, unfortunately, is considered a quite high inflation rate.

The interest rate for businesses is 12,63%.

The business environment risk in Burundi

Our analysis shows that the business environment risk in Burundi is very high (6 out of 6), which is a high risk score in Africa.

The business environment risk are determined by the level of economic freedom and rights in a country. Take a look at the important facts for Burundi in the table below:

As you can see in the table, the property rights index is 28 in Burundi, which is considered low in Africa.

The business freedom index is based on 10 indicators, using data from the World Bank’s Doing Business study. The Index is 52 in Burundi, a pretty average score for a country in Africa.

Burundi's overall economic freedom index is 50 out of 100 and is based on factors such as the rule of law, regulatory efficiency, and market openness.

The political risk in Burundi

The political risk in Burundi is high, with a score of 5/6. This is a pretty average political risk score in Africa.

The governance and political stability indicators are important drivers for political risk. An overview of Burundi can be seen in the graphs below:

The rule of law index analyses to which extent agents have confidence in and abide by the rules of society, in particular the quality of contract enforcement, property rights, the quality of the courts, and the police's ability to enforce court orders.

When transacting business in a country, the rule of law index is critical as it describes your ability to enforce commercial contracts.

In Burundi, the rule of law index is at -1,29 points, with the score going from -2.5 (weak) to 2.5 (strong). Burundi has, therefore, a very low rule of law index, which means it is often close to impossible to enforce your contracts. We, therefore, recommend avoiding credits and recommend charging upfront payment instead.

Other drivers for the high political risks are the very weak control of corruption, the very weak political stability index, and the very large shadow economy that is 35,68% of Burundi's GDP.

The commercial risk in Burundi

In Burundi, the commercial risk score is 3/4, which in our model is a medium score. This medium commercial risk score is relatively high compared to the average in Africa.

The commercial risk is relying on a country's international trade relationships. You can see some of the key facts for Burundi in the table below:

Burundi has a foreign exchange reserve of 0.27 bn. USD.

Burundi has a negative trade balance of -18,82% of GDP. What this means is that Burundi imports more goods and services than the country exports.

The annual growth of exports of goods and services has been growing 18,2% annually - now 5% of GDP. Import of goods and services represents 23,82% of the GDP in Burundi.

The financing risk in Burundi

We have calculated the financing risk to be 3/4, which equals a medium risk. A medium financing risk score is pretty average for countries in Africa.

The country's banking system, efficiency, and stability influence the financing risk. Additional facts and info can be found for Burundi in the table below:

In Burundi, the credit information sharing index is 1 on a scale from 0 (low) to 8 (high). The result of this, is that the access and trustworthiness of the credit information in Burundi is low.

This makes it very difficult for you to understand the credit risk of your counterpart in Burundi. Unless you have a strong relationship with your customers in Burundi, we highly recommend charging payment upfront or using credit insurance.

Your legal rights as a creditor (and as a borrower) are 2 out of 12 and, therefore, very weak.

The medium financing risk for creditors also impacts the high interest rate in the private sector of 12,63%.