The Burkina Faso military government led by Capt. Ibrahim Traoré has announced the nationalisation of the sugar sector in the country.
This is coming on the heels of a major drive by the government to localise ownership of the country’s economy following its recent efforts to reduce its longstanding economic reliance on France, its former colonial ruler.
It is not immediately clear what the implications of this move will be on the country’s sugar production capacity and how it would affect employment.
In 2021, Burkina Faso sugar cane production was at level of 506,733 tonnes, up from 504,017 tonnes previous year, this was a change of 0.54%. However, these figures seemed to have declined in 2022 and predictions by economic watchers suggest that it would drop further in coming years.
According to some sources, nationalisation could give the Burkina Faso government more control over the sugar industry and allow it to set prices and production levels in a way that benefits the country’s economy and people. For example, the government could lower prices for consumers or increase production to create more jobs.
Nationalisation, they also say, could lead to inefficiencies and corruption. If the government is not able to manage the sugar industry effectively, it could lead to higher costs, lower quality products, and fewer jobs.
Some sources also say nationalising the sugar sector could damage Burkina Faso’s relationship with France. France is a major economic partner for Burkina Faso. Before the establishment of the military regime, Burkina Faso was France’s sixth-largest trading partner in sub-Saharan Africa in 2021. Burkina Faso is home to some 50 subsidiaries of French companies. In total, there are an estimated 70 French subsidiaries or interests in Burkina Faso.
According to reports out of the country, the decision may have been the result of a breach of contract. One report says that during the privatisation of Société Sucrière de la Comoé (SOSUCO), the state-owned sugar company founded in 1968, “the State signed two agreements in 1998 with SUCRE PARTICIPATION, a French firm, which undertook to: 1. invest 20 billion CFA franc over 5 years following the signing of the agreement; 2. increase SOSUCO’s production through the implementation of an efficient investment program; 3. maintain the full activity of SOSUCO and its full development.
“However, the government observed and realised that these contractual commitments have not been met by the SUCRE PARICIPATION consortium, resulting in the obsolescence of the production tool, which is now fully amortised. Therefore, the government aims to cumulatively denounce the two agreements between the Burkinabè State and SUCRE PARTICIPATION, given that the contractual commitments have not been met by the majority shareholder. “
Several sources predict an escalation in diplomatic feud between Burkina Faso and France over the regime’s decision. However, the escalation is a likely scenario that the Burkinabè regime must have anticipated as it has boldly called out the French government for imposing unfair trade agreements on the country. France, on the other hand, has shown its willingness to take a tough stance against the regime. In August, France suspended its development aid and budget support to Burkina Faso, just days after Burkina Faso and Mali, both with military rulers, declared their strong backing for the junta that deposed Niger’s President Mohamed Bazoum in a military coup.
It is not certain if, SOSUCO will automatically return to government control or what mechanism the government intends to employ to achieve its goal. Today, SOSUCO is the largest private employer in Burkina Faso. How the regime’s decision will affect the company’s over 3,000 employees remain unknown.
The success or failure of nationalising the sugar sector in Burkina Faso will depend on how the government manages the industry.
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