Côte d’Ivoire: An era of economic recovery
As Côte d’Ivoire’s government seeks to solidify political stability following a decade of intermittent conflict, the country’s economy is showing signs of an encouraging recovery. While post-electoral violence in late 2010 and early 2011 led to a 5.9% reduction in GDP, economic activity has picked up dramatically. In 2012, GDP is expected to expand by a robust 8.6%, in part due to the suppressed performance of the preceding 12 months. However, key to maintaining this level of growth will be ensuring political stability.
The return to form for what was once one of West Africa’s fastest-growing economies is being underwritten by its primary sector. Agriculture is the largest industry in Côte d’Ivoire, which is the world’s single-biggest producer of cocoa beans. According to the African Development Bank’s African Economic Outlook 2012, the agricultural sector accounted for 31.2% of GDP in 2011.
While the industry’s cash crops experienced a setback in early 2011 when an embargo was imposed during the last political conflict, slipping to second place in terms of global cocoa production, it has since recovered. This year’s crop is expected to be the second largest the country has ever produced, with around 80% of cocoa exports for 2012 already pre-purchased.
Coffee cultivation has also borne some encouraging figures. As of July, coffee exports were up 41.5% year-on-year (y-o-y). Total production levels this year are expected to lag only slightly behind last year’s crop due to less-than-favourable weather conditions, according to local media reports.
Côte d’Ivoire is also an oil-producing nation, though not to the same degree as some of its West African neighbours, such as traditional heavyweight Nigeria and newly-minted producer Ghana. Adama Toungara, the minister of mines, petrol and energy, would like to see the country take more of a lead in the sector. According to the US Energy Information Administration, as of February 2012 Côte d’Ivoire produced 44,000 barrels per day (bpd). However, in light of the sizeable finds found next door in Ghana’s offshore fields, Toungara would like to see production grow to 300,000 bpd by the end of 2020, and he has announced plans to begin drilling on seven wells by the end of this year.
The encouraging news for Ivoirian commodities also extends to the mining sector, where extractive production of gold is expected to nearly double from 7 tonnes to 13 tonnes by 2013. In order to facilitate this progress, the government is launching a review of the permit-granting process, which has traditionally been cumbersome.
The rapid return of activity in these key segments has led to a strong post-crisis fiscal recovery. Total grants and revenues are estimated at 19.6% of GDP in 2012, according to the African Economic Outlook 2012. This revenue could not come at a better time, as the government seeks to increase public spending, aimed at upgrading the infrastructure that once earned Abidjan, the former capital, the title of “Paris of West Africa”, but which has since fallen into disrepair during years of unrest.
As of 2010, foreign direct investment (FDI) stock stood at $6.6bn, or 28.9% of GDP, according to the UN Conference on Trade and Development’s World Investment Report 2012. This total fell slightly to $6.4bn at end-2011, due to continued political instability. FDI is concentrated primarily in food production (34%), services (19%), and hotels (17%), and France is the country’s largest source of FDI.
According to a statement by the US Department of State, Côte d’Ivoire’s government would like to see FDI double over the next two years. In particular, the government hopes to encourage foreign investment in the development of local processing plants for cocoa and coffee, with the Côte d’Ivoire Centre for Investment Promotion (CEPCI) helping facilitate new inbound agricultural investments through a “single window” facility.
Of course, continued economic progress hinges upon political stability under the administration of President Alassane Ouattara, a former managing director of the IMF and a University of Pennsylvania-trained economist. A new government-sponsored Truth, Reconciliation and Dialogue Commission (TRDC) has been set up in an attempt to address past grievances, although a lack of funding and an initial focus on prosecution of political criminals have stalled the TRDC’s progress.
While the road ahead will not be easy, Côte d’Ivoire’s leadership has so far shown commitment to restarting the economy. However, given the progress that some of the country’s neighbours have made in the interim, there is a lot to do.