Burundi facing foreign exchange crunch as suspension of aid bites

Businesses in Burundi are facing a shortage of foreign exchange, particularly the United States dollar, in the face of ongoing political crisis worsened by the suspension of financial aid from the European Union (EU).

Several business people who spoke to Reuters in the capital Bujumbura, decried the currency crunch which they say has resulted in their inability to import depleting stocks and could force them to close their businesses if nothing is done about it.

Jean Ciza, governor of the central bank, has told Reuters that the financial crisis of 2008 allied with the falling prices of export products like coffee and the freeze in foreign aid was making hard currency difficult to come by.

“That is why we have to manage well all what we have, so that we spare it for the most priority sectors,” Ciza said even though he would not give the size of the foreign exchange reserves currently.

Traders said they had to rely on the Bujumbura black market to get limited dollar supplies from neighboring Democratic Republic of Congo. Even though the official exchange rate is 1,658 Burundian dollars, they have to pay about twice the amount to get the currency on the black market, (i.e. 2,730 Burundian dollars).

The EU suspended financial support to the Nkurunziza-led government in March asserting that the president had failed to do enough to resolve the ongoing political and economic crisis.

Nkurunziza’s decision to seek a third term as president led to political unrest since last April. He went on to win elections in July and was subsequently sworn in as president.

Rebel groups have been making the country ungovernable with tit-for-tat assassinations and running grenade and gun battles that have killed more than 450 people and forced over 250,000 people to flee the country.