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Côte d’Ivoire has made some remarkable economic achievements over the past decade. Since the end of the political crisis in 2011 the country has seen its GDP grow by an average of around 8% annually. Thanks to a number of financial and monetary reforms, it has succeeded in bringing its public debt-to-GDP ratio down to one of the lowest levels in the region (48.6%). At the same time, foreign direct investment has risen from $577m in 2016 to $675m in 2017, before climbing to $913m in 2019, according to data from the UN Conference on Trade and Development.
Industrialisation and infrastructure development drive growth
In light of this positive performance, Côte d’Ivoire has been a top performer in the World Bank’s “Doing Business” reports over the past few years, and the business community remains bullish about its nearterm economic prospects. In the third edition of OBG’s Côte d’Ivoire CEO Survey, 72% of respondent say they have positive or very positive expectations of local business conditions in the coming 12 months, while 75% say their companies plan to make a significant capital investment.
These results suggest the country has come a long way in fostering an attractive business environment for economic operators. Efforts to diversify the economy and introduce targeted policies to develop key sectors have played a major role in this regard. Under the National Development Plan – the country’s economic blueprint, first introduced in 201 and currently in its final phase – the government made industrialisation a key pillar, with the goal to raise the sector’s contribution to GDP from 25% in 2016 to 40% by 2020, while boosting value added in key segments such as agri-business.
Côte d’Ivoire is the largest cocoa producer in the world, yet only around 30% of its output is processed locally. To that end, the government is aiming to bring local processing capacity of the commodity to 50% by 2023. A similar plan is in place to boost the processing capacity of cashew nuts from less than 10% in 2019 to 100% by 2021.
Infrastructure development is another major focus of the National Development Plan, with significant investment having gone towards the construction of roads and bridges, particularly in and around Abidjan. The economic capital is scheduled to receive a fourth bridge that will connect the neighbourhoods of Yopougon and Plateau next year. In addition, plans were recently firmed up for construction to resume on the city’s first metro line. With an estimated price of around €1.36bn, the project is being entirely financed by France and is expected to be delivered in 2024.
Other sectors benefitting from infrastructure development in recent years include telecommunications, power, and extractive industries such as mining and hydrocarbons.
Sustained diversification and stability key to economic prosperity
While Côte d’Ivoire has undeniably made significant headway on main economic indicators, it remains vulnerable in the short to medium term to volatility in commodity prices, according to 68% of CEOs surveyed. Indeed, with cocoa, cashew nuts and cotton among the main exported goods, a sharp decrease in global prices could put the country’s economic gains in jeopardy.
In a precautionary move to hedge against such events, Côte d’Ivoire joined hands with Ghana to set a minimum price on cocoa bean sales in August. The plan aims to protect farmers from negative fluctuations in cocoa prices, setting a minimum floor price of $2600 per tonne and a $400-per-tonne living income differential should the rate fall below $2600.
Another external event identified by CEOs as a potential obstacle to the country’s economic growth is instability in neighbouring countries, climbing from 9% in 2018 to 19% in 2019.
Lastly, CEOs identified infrastructure as the third-greatest challenge to economic prosperity. However, there was a drop in the number of respondents who considered gaps in infrastructure to be a hindrance, declining from 9% in OBG’s 2018 Côte d’Ivoire CEO Survey to 3% in 2019. This could point to the business community’s positive expectations that projects under way in the country and throughout the region – of which Côte d’Ivoire is a strong advocate – will strengthen transport networks to facilitate the movement of goods, services and people. A key project in this regard is the Trans-African Highway, comprising nine motorways across the continent.
Skills needed to steer future economic progress
Another persistent challenge is related to local skills, with 66% of respondents describing the availability of qualified labour in the country as either low or very low.
While this issue can be seen as a wider problem that is experienced in many other African markets as well, it is particularly critical to the success of Côte d’Ivoire’s plans to diversify its economy. Three fields in particular have been flagged by the Ivorian business community as lacking over the past three years: leadership, engineering, and research and development.
Testing sentiment for the year ahead
Despite the challenges that lie ahead, Côte d’Ivoire’s business community remains bullish about the country’s near-term economic outlook. The lead up to the 2020 elections, however, is likely to see business activity slow somewhat, with the percentage of participants responding that they were unlikely or very unlikely to make a significant capital investment in the next 12 months rising from 12% in 2018 to 23% in 2019.
2020 is undoubtedly going to be a trying year for Côte d’Ivoire, but its strengthening economic foundations and sustained pursuit of economic diversification put it in a better position to face challenges head on.
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