Country Profile: CÔTE D’IVOIRE
About Côte d’Ivoire (Ivory Coast)
The Republic of Côte d’Ivoire is a sovereign state in West Africa, with a political capital Yamoussoukro, and its economic capital & largest city, Abidjan. It borders the North Atlantic Ocean, between Ghana and Liberia. Ethnically, linguistically and religiously diverse, Côte d’Ivoire has a rich culture. Once one of the continent’s leading economic powerhouses, the country was troubled by civil war. However, peace has largely prevailed since April 2011, and the nation is now looking to reclaim its former glory.
Since 2012, the economy of Côte d’Ivoire has turned in a stellar performance, marked by a rapid increase in GDP that has triggered the beginnings of a reduction in poverty. For the 2016–2020 period, the Government adopted a new National Development Plan (NDP) designed to transform Côte d’Ivoire into a middle-income economy by 2020 and further reduce the poverty rate. In April 2016, donors pledged $15.4 billion in grants and loans to support the NDP. The World Bank Group committed to doubling its support over the next four years to approximately $5 billion.
Political stability was restored with the re-election of President Ouattara in October 2015 for a second five-year term, and with a referendum, held in October 2016, which established the country’s Third Republic. The country is gearing up for the forthcoming presidential elections, slated for 2020, with a number of candidates lining up. Like all countries in the sub-region, Côte d’Ivoire has been hit by terrorist attacks, the most notorious being the attack in Grand Bassam in March 2016.
Economy
Overview
As the world’s leading cocoa and cashew nut producer and an oil exporter with a major manufacturing sector, Côte d’Ivoire wields considerable economic clout in the sub-region.
In 2017, Côte d’Ivoire continued to be one of Africa’s most vibrant economies, with a growth rate that is expected to hold steady at around 7.6%. This sound performance is attributable to the rebound in agriculture and attests to the country’s resilience to internal and external shocks. The outlook in the short and medium term remains encouraging.
Outlook
- The economic outlook for the next two to three years is positive, and the GDP growth rate is projected to reach 7% in 2018 and 2019. This bodes well for the maintenance of moderate inflation and the control of public finances through prudent fiscal and monetary policies, as well as the furtherance of reforms aimed at improving the business climate and facilitating the efficient use of public-private partnerships.
- However, the Ivorian economy remains vulnerable to such external risks as volatility in the prices of agricultural and mining products, climate conditions, global and regional security risks, and a tightening of regional and international financial markets.
- In order to diversify its economy successfully, Côte d’Ivoire must build its human capital so as to meet labor market needs more effectively. Indeed, the production of modern goods and services require skills that are still scarce among local workers.
Source: World Bank
Investment Climate
Economic Performance and Outlook
Economic activity in 2016 was driven mainly by structural public investment and the dynamism of the private sector. This trend continued in 2017, with real GDP growth estimated at 8%, despite domestic and external shocks at the beginning of the year. The 35% drop in the price of cocoa, the main source of export earnings, between November 2016 and January 2017 led to an estimated CFAF 200 billion loss for local producers.
Growth was helped by the upswing in the primary sector, the good performance of the energy sector, and higher domestic consumption. Due to the dynamism of the secondary and tertiary sectors, growth is projected to reach 7.9% in 2018 and 7.8% in 2019.
Macroeconomic Evolution
In December 2017, the IMF completed the second reviews of Côte d’Ivoire program supported by the Extended Credit Facility and the Extended Fund Facility, which allowed disbursements of $137 million. Performance under the program was considered strong enough for the decisions on the reviews to take place without a Board meeting. The budget deficit was estimated at 4.5% of GDP in 2017, higher than the anticipated 3.7%.
This deterioration is explained by several internal and external shocks, including the downward revision of the single exit tax and registration duty, which are intended to support producer prices and to limit revenue losses to 0.5% of GDP. Social demands resulted in additional one-off expenditures of 0.6% of GDP in 2017 and are projected to require recurrent spending equal to at least 0.07% of GDP in 2018. The deficit is projected to gradually decrease to 3.8% in 2018 and to 2.8% in 2019.
Inflation and Debt
Inflation stood at 0.7% in 2016, was estimated at 1% in 2017, and is projected to remain moderate, at 1.8% in 2018 and 1.9% 2019.
Debt remains under control; in 2016, the country was considered a moderate risk by the International Monetary Fund. However, the consolidation of repayments due on 2014 and 2015 Eurobonds over 2024–28 poses a potential risk to debt sustainability.
Key Sectors
Sector I: Agriculture & Agro-processing
West Africa Agricultural Productivity Program (WAAPP) was launched in 2011, this project has enabled thousands of rural women to improve their standard of living. In addition to agricultural produce processing equipment, the project disseminated technologies that help increase plantain, cassava, and corn yields significantly. Cassava varieties such as Bocou 1 and Yavo are a source of pride for many cooperatives, whose average yield per hectare increased from 25 to 35 metric tons, compared to an increase from 8 to 10 metric tons using traditional cassava varieties.
The project’s first phase, completed in 2016, allowed rural population groups, particularly in forest zones, to shift from food crops, such as plantains and cassava, to cash crops, which are financially more advantageous.
Sector II: Power Generation & Renewable Energy
In 2017, the World Bank Group approved the largest loan ever granted to Côte d’Ivoire ($325 million), for the purpose of expanding access to power, particularly in the rural areas. $1 billion invested in Côte d’Ivoire by IFC over the past four years, one half has consisted in equity financing. In particular, IFC provided guarantees for the Azito III and CIPREL IV power plants, which increased the country’s power generation capacity by 370 megawatts.
Currently, IFC and its partners finance almost 50% of the energy produced in Côte d’Ivoire. In the financial sector, IFC, through the Global Trade Finance Program (GTFP), helps local banks increase their support for small and medium enterprises, cooperatives, farmers, and smallholders.
Uhusiano Capital
Established in May 2016, Uhusiano Capital addresses the capital requirement needs for African-based projects and opportunities. The founding principle of Uhusiano Capital is the fundamental belief that commercial capital and impact capital can come together. This interaction can generate sustainable long-term projects in Africa for which both impact capital and commercial capital can be catalysts.
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