BizCLIR

With a Doing Business ranking of 150 out of 181 economies for Protecting Investors, Burundi clearly has a long way to go before a sound corporate governance structure is in place. This ranking accurately reflects the lack of an effective corporate governance regime and culture of investor protections in Burundi. Indeed, the corporate governance factors that the Doing Business rankings assess are an advanced level of investor protections beyond what Burundi should be prioritizing in this area today, as more basic investor protections should be tackled first. The level of corporate governance that most Burundian businesses need to address at this time is basic good business practices – bookkeeping and management – rather than disclosure duties and shareholder protections.

Given the typical size and nature of most businesses in Burundi, improving basic business practices is more pressing than developing and instituting a complex corporate governance framework. However, corporate governance is a necessary part of a modern commercial legal framework and will increase in importance as Burundi’s economy grows and more sophisticated businesses develop. Ensuring that an adequate structure is in place and utilized as the need for stronger corporate governance develops will be important. In the meantime, Burundi should support and encourage a culture of good business management, which will benefit the broader business community and lay the foundation for more advanced corporate governance practices to come.

Sound corporate governance is an important part of the legal and institutional framework necessary to attract and retain investors, but other factors within the commercial environment are important to investor protections as well. Equal treatment of foreign and local investors is a strong consideration for many investors, and a transparent and predictable commercial environment is imperative if investors are to feel secure. In Burundi today, political instability, an outdated and unenforced commercial legal framework, and unpredictable fees and procedures all contribute to perceptions of risk in the Burundian business environment and lessen its appeal. As the indicator graph below suggests, significant work is needed in all the framework areas for investor protection, but implementing institutions and social dynamics are in the greatest need of reform.