Côte d'Ivoire's plans to diversify the economy and reform tax


In the face of economic challenges after the political upheaval of the 2000-11 period, Côte d’Ivoire has implemented major reforms, allowing it to become one of the most dynamic economies in Africa. Significant public investment, combined with strong prices for many agricultural cash crops, helped achieve average annual GDP growth of 8.5% between 2012 and 2018, although provisional figures from the Ministry of Economy and Finance (Ministère de l’Economie et des Finances, MEF) placed growth at 7.5% in 2019. This sustained recovery helped improve the livelihoods of some segments of the population, and over the 2012-18 period real GDP per capita expanded by 32%, according to the World Bank.

Strong Platform

A recent focus on revamping transport and energy infrastructure has not only helped to make up for the years when investment slowed due to unrest, but has also created a strong platform for continued development. To build on vast natural resources, including cash crops such as cocoa, cashew and rubber, government policy has focused on expanding processing capabilities in order to increase the value-added of traditional activities, and strengthen manufacturing and processing industries. Several legislative changes and development programmes undertaken since 2011 are also beginning to have a positive impact on underdeveloped sectors such as mining, with the state recognising the need to diversify revenue sources and create new employment opportunities.

Despite the many improvements, some challenges remain. Private investment levels have lagged, and economic growth has been unequal, with poverty persisting within certain segments of the population. Low productivity and high input costs have hindered industrial expansion in some sectors, and the government continues to grapple with high rates of informal business activity, making it more difficult to mobilise the necessary internal resources for investment and budgetary expenses. Presidential elections scheduled for 2020, as well as the ongoing spread of Covid-19, are likely to temporarily curb investment and economic activity, although a successful and peaceful election process and the resolution of the pandemic should help usher continued development.

Growth Pattern

Economic expansion has remained strong, with real GDP at 2009 prices rising from CFA19.9trn ($34.2bn) in 2018 to CFA21.4trn ($36.8bn) in 2019, according to the latest MEF figures. Over the same period, annual GDP per capita at constant prices increased from CFA780,600 ($1340) to CFA818,200 ($1410). High economic growth has also been accompanied by a significant increase in the population, which climbed from 21m in 2011 to an estimated 25.1m in 2019, according to the World Bank Although the initial years of the post-conflict economic recovery were characterised by high growth rates, this has slowed somewhat, from 8.8% in 2015 to 7.4% and 7.5% in 2018 and 2019, respectively. Real growth was forecast to slow further in the coming years, with the MEF predicting an expansion of 7.3% in 2020, and the IMF forecasting 7% in 2021 and 6.7% the year after that. However, these estimates did not factor in the potential impact of Covid-19. More recent figures suggest that the pandemic will weigh on domestic growth, with the IMF projecting that the country’s real GDP will expand by 2.7% in 2020. However, its forecast of 8.7% growth in the following year indicates that a strong recovery is expected.

The end of the political and social crisis allowed the authorities to work on pushing investment levels back up, following a steep decrease that saw it fall from 25% of GDP in 1980 to 8.9% in 2011. Since 2015 the figure has only dropped below 19% once and stood at an estimated 20.8% in 2018. The MEF forecasts that it reached 22.1% of GDP in 2019. Between 2011 and 2018 government investment expanded from 2.6% to 7% of GDP, while private investment rose from 6.3% to 13.1%, with much of the capital allocated to critical transport infrastructure through private-public partnerships. The energy sector has been another major target of funds to fulfil the government’s aims of boosting generation capacity and increasing electrification in rural areas.

To a large extent, economic growth has been driven by the state, but the Ivorian authorities now intend to focus on fiscal consolidation and maintaining the budget deficit below 3%. Coupled with the new economic reality brought about by the Covid-19 pandemic, the government’s investment capacity is likely to be reduced, according to Amina Coulibaly, country economist at the World Bank. “In the medium term the Ivorian state will not be able to continue spending as it has since 2012. The country must find other sources of growth and the private sector should take a leading role in this,” she told OBG.

Despite solid performance in recent years, Côte d’ Ivoire, like most other countries, will be impacted by the economic slowdown caused by Covid-19, which developed into a worldwide pandemic in the first quarter of 2020 and is set to have a recessionary impact across the globe. The crisis has the potential to weigh on investment plans and reduce demand for Ivorian exports. To mitigate the various effects, the government launched an economic, social and humanitarian support plan at the end of March 2020 amounting to CFA1.7trn ($2.9bn), or about 5% of GDP. Numerous measures to support businesses – especially small and medium-sized enterprises (SMEs) and those in the informal sector – are planned. Among them is the suspension of taxes and social security contributions, and aid for producers of top export crops. Later, in early May, the World Bank and the government signed a $35m credit agreement from the International Development Association to expand efforts to combat the virus in Côte d’Ivoire. This follows $40m in financing already provided under the World Bank’s Strategic Purchasing and Alignment of Resources and Knowledge in Health project.

Development Strategy

Recent economic policy was largely driven by the National Development Plan 2016-20 (Plan National de Développement 2016-20, PND), launched by the authorities in 2016 as a follow-up to the previous strategy, which covered the 2012-15 period. The PND aims to foster development by attracting larger volumes of private investment and diversifying the economy away from a reliance on primary exports by encouraging industrialisation and boosting domestic processing of raw agricultural materials, such as cocoa beans, cashew and cotton.

Besides increasing revenue streams and creating employment, reducing the economy’s exposure to international fluctuations in the price of Côte d’Ivoire’s main agricultural products will bring an added level of resilience. The execution of the PND has also attracted sizeable investments into the mining industry, which has long been recognised as a high-potential sector given that Côte d’Ivoire hosts a significant portion of the Birimian Greenstone Belt – a geological formation that runs through part of West Africa and possesses a large amount of gold and other metals and minerals.

Encouraging continued structural transformation and further job creation are two goals under the plan that will likely be carried over to its next iteration, due in 2021. The cost of the current PND was estimated at CFA30trn ($51.6bn), with 62% of this financed by private investors and 38% funded by annual state budgets and international financing partners.

GDP Structure

Diversification will be a critical step to maintain economic growth over the long term. To a large extent, the economy has been built around a strong agricultural industry and a variety of valuable cash crops, with roughly 50% of citizens still dependant on some form of agricultural activity for their income, according to the World Bank. The sector is also a key foreign exchange earner. Cocoa remains one of the most valuable crops, with domestic output accounting for 40% of the world’s total cocoa production. Other commodities, such as cashew, palm oil, coffee, fruits and natural rubber also make up a large percentage of the export portfolio. Although the sector maintains a critical position in terms of employment, government efforts to increase manufacturing activities have contributed to a change in the composition of GDP. As such, according to estimates by the MEF, agriculture accounts for approximately 18% of GDP, down from 22.7% in 2015 and as much as 32.5% in 1990. Nevertheless, year-on-year increases of 29.5%, 9.4%, 4.5% and 2.2% in the production of cotton seed, cocoa, rubber and banana, respectively, contributed to a solid agricultural performance in the first 11 months of 2019.

Key segments of the extractive industry also helped to bolster the overall performance of the primary sector in 2019, including crude oil, which recorded growth of 16.1% y-o-y in the January to November period to reach some 12.3m barrels. Gas output grew by 6.1% y-o-y over the same period. Mineral resource output has also expanded, with gold production up from 25 tonnes in 2017 to 32.5 tonnes in 2019, according to figures from the Professional Miners Association of Côte d’Ivoire. Moreover, tax receipts from mining operations increased by 43% to CFA94.6bn ($162.6m) in 2019.

Meanwhile, the industrial sector’s contribution to GDP expanded from 24.7% in 2017 to around 26% in 2019. Industry also registered production improvements in some of its key segments over the January-November 2019 period, leading to a 14.8% y-o-y increase in the volume of manufactured goods. “Industry is now the second-most-important economic sector, but industrialisation is not occurring as fast as the country needs it to,” Alban A E Ahouré, director of the Economic Policy Analysis Unit of the Ivorian Centre for Economic and Social Research, told OBG. “After eight years of growth, industrialisation could be advancing faster.”

In terms of construction, which remains largely driven by the state’s major infrastructure projects, an increase in activity spurred a 5.6% expansion in clinker imports and a 21.7% rise in imports of other construction materials between October 2018 and October 2019, according to government figures.

Meanwhile, the tertiary sector is also growing in its contribution to the economy, and services, which used to account for 31.3% of GDP in 2015, were forecast to represent 33.4% of economic output at the end of 2019.

The decreasing contribution of agriculture to national GDP is gradually reducing the economy’s exposure to climate conditions and international price fluctuations. That said, there is still some way to go. Agricultural exports accounted for 60% of merchandise exports in 2018, according to the World Bank, and with the economy still in a transition phase, lower international prices for crops like cocoa and cotton and/or adverse weather conditions could severely hamper exports. This in turn would weigh on tax receipts and increase the need for subsidies to cover growers’ losses.

Balance of Trade

Large export volumes have helped to offset relatively high levels of imports – which consist of significant amounts of finished products, such as construction machinery, electronics and industrial equipment – meaning Côte d’Ivoire has been able to maintain a trade surplus. However, between 2016 and 2018 the surplus fell from CFA1.8trn ($3.1bn) to an estimated CFA1.3trn ($2.2bn), according to the IMF. The figure was projected to edge up to CFA1.6trn ($2.8bn) in 2019 and CFA1.7trn ($2.9bn) and CFA1.8trn ($3.1bn) in 2020 and 2021, respectively. Since it is one of the country’s biggest exports, cocoa tends to affect the overall trade balance. The value of exports reached CFA6.5trn ($11.2bn) in 2018, a slight decrease from CFA6.7trn ($2.9bn) in 2017. Exports were projected to bounce back to CFA7.2trn ($12.4bn) in 2019 and to CFA7.6trn ($13.1bn) in 2020. On the other side of the scale, imports have been progressing at a more stable pace, rising from CFA4.6trn ($7.9bn) in 2016 to CFA5.3trn ($9.1bn) in 2018, and were projected to rise further to CFA5.6trn ($9.6bn) in 2019 and CFA5.9trn ($10.1bn) in 2020. However, these predictions did not take into account the considerable disruption to global trade caused by Covid-19 in 2020, which is affecting import and export activity in the shorter term.

Monetary Policy

Côte d’Ivoire is part of UEMOA, an eight-country union that uses the euro-pegged West African CFA franc as its currency. UEMOA nations have been under social and political pressure to scrap the currency, which has long been viewed as a vestige of French colonial rule since all the eight countries in UEMOA are former French colonies, except Guinea-Bissau. The adoption of a new currency, named the eco, was agreed in principle and announced in December 2019 by President Alassane Dramane Ouattara and President Emmauel Macron of France. The move was expected to materialise with the launch of the currency in 2020, but this has been marred by political disagreements within the larger regional body, ECOWAS. Indeed, six of the ECOWAS member states that do not use the CFA franc – that is, The Gambia, Ghana, Guinea, Liberia, Nigeria and Sierra Leone – claimed that UEMOA had pre-empted the name eco, which had also been put forward as a name for a common currency for the whole of ECOWAS (see analysis).

As part of UEMOA and its currency peg to the euro, Côte d’Ivoire’s monetary policy is influenced by the regional agreements and the management of UEMOA and the Central Bank of West African States (Banque Centrale des Etats de l’Afrique de l’Ouest, BCEAO) based in Dakar, Senegal. The BCEAO mandates an inflation target of 3% among member states, and monetary convergence has helped countries in the union keep excessive inflation at bay. After reaching 0.4% in 2018, inflation in Côte d’Ivoire was expected to rise by 1% in 2019 and remain steady at 2% between 2020 and 2024.

Budgetary Position

Although lower inflation has helped maintain macroeconomic stability, budget requirements are expected to climb. In October 2019 the government approved a 9.9% increase in its budget for 2020, which stands at CFA8.1trn ($13.9bn). Spending is also expected to rise over the near term, hitting CFA8.4trn ($14.4bn) in 2021 and CFA9.3trn ($16bn) the following year, according to end-2019 projections.

The government is dedicated to reducing the budget deficit to an amount equal to 3% of GDP, on a par with regional commitments under UEMOA. The deficit fell from 4.5% to 4% over the 2017-18 period, and the authorities were expected to reduce it to 3% by the end of 2019 and keep it steady through to 2024.

Although a focus on infrastructure spending has pushed debt levels up from 49.8% of GDP in 2017 to 52.5% in 2019, the level of public debt has remained relatively manageable, with the government expecting to reduce it further to 49.9% by 2020 and 46.7% by 2024. This debt is considerably lower than the maximum level of 70% of GDP set by UEMOA. However, reality may deviate from fiscal goals in 2020-21 due to Covid-19.


Promoting domestic and international private investment into the national economy continues to be a major priority as the government seeks to reduce the burden on the state budget. In early 2020 the Investment Promotion Agency of Côte d’Ivoire (Centre de Promotion des Investissements en Côte d’Ivoire, CEPICI) announced that it had approved CFA730bn ($1.3bn) in private investment in 2019, up from CFA703bn ($1.2bn) the previous year. CEPICI also registered more than 16,700 new companies that year, compared to 14,800 in 2018.

According to a UN Conference on Trade and Development report, foreign direct investment (FDI) inflows grew by 31% over the 2016-18 period, rising from $577m to $913m. According to the document, Côte d’Ivoire was the most attractive country for FDI in UEMOA, accounting for 28% of total FDI in the group, ahead of Senegal (20%), Mali (15%) and Niger (15%).

Despite these increases, FDI as a percentage of GDP has remained relatively stable: it stood at 1.6% in 2016 before falling to 0.8% in 2017 and bouncing back to 1.4% in 2018. “Despite the reforms that have been put in place, FDI remains low, at 1.5% of GDP on average over these years of growth. This is an issue that the country needs to find solutions to. The authorities would like to attract more FDI by implementing further reforms to improve the business environment,” Coulibaly told OBG. Emmanuel Esmel Essis, director-general of CEPICI, said in comments to the press in early 2020 that there was the potential for annual FDI to reach $2.5bn-$3bn.

Business Environment

Some improvements are already having an impact. Two critical changes – the creation of the CEPICI one-stop shop and the establishment of the Commercial Court of Abidjan – took place in 2012 and have helped to enhance the business environment. That year the government also launched the Investment Code, which included tax exemptions for domestic and international investors. A newer code was implemented in August 2018 and revised in 2019.

These and other efforts have helped the country show regular improvements in the World Bank’s yearly “Doing Business” reports, with Côte d’Ivoire’s ranking rising from 142nd in 2015 to 110th out of 190 countries for ease of doing business in the 2020 edition. Under some indicators, Côte d’Ivoire fared much better than its overall ranking suggests. For instance, it ranked 29th for ease of starting a business and 48th for accessing credit. However, it ranked 163rd for trading across borders, 152nd for dealing with construction permits, 141st for getting electricity and 112th for registering property. Difficulties in assessing property ownership remain a critical problem that negatively affects individuals and businesses alike, although the Construction Code adopted in June 2019 tries to cope with this issue.

SME Incentives

Improvements to the business environment have benefitted SMEs, which account for roughly 80% of firms. In 2014 the government established the Côte d’Ivoire SME Agency, which aims to improve the operational environment for domestic companies. The creation of a UEMOA-wide credit bureau, Creditinfo Volo, in mid-2015 is also likely to improve the environment for SMEs as it continues to become more active. As of early 2019 the bureau covered 22% of the adult population in Côte d’Ivoire, according to the World Bank, followed by 13% of the population in Togo and 7% in Senegal and Niger. The bureau’s implementation was made possible by a single credit reporting law that applies to all eight UEMOA countries and facilitates the flow of credit information across borders. According to the IMF, credit bureau registration expanded by 11.8 % in the first half of 2019.

In mid-2019 the authorities announced the launch of a new, CFA20bn ($34.4m) fund to support new business creation. The funding will be disbursed through the Côte d’Ivoire SME Agency to enhance credit access and facilitate equipment acquisition. In May 2019 the local subsidiary of France’s bank Société Générale signed a loan agreement with the Ministry of Commerce, Industry and SME Promotion to allocate approximately CFA350bn ($601.7m) to support SMEs.

Another move towards boosting access to credit and banking services in general took place in June 2019, when the state launched its financial inclusion strategy for 2019-24. The main goal of the strategy is to increase the financial inclusion rate from 40% in 2017 to 60%, with the newly created Agency for the Promotion of Financial Inclusion charged with implementation.

To further assist SME growth, the government has also been strengthening the microfinance sector through increased monitoring and consolidation. Besides revoking the operating licences of six microfinance operators in 2018, the government is also restructuring the sector’s largest microfinance network, the National Union of Savings and Loan Cooperatives. As part of this, 133 service points are being grouped into separate 24 cooperatives, and moves are also being made to improve member contributions. Enhancing economic conditions for SMEs are expected to lead to several long-term benefits, including more employment opportunities and an increase in tax receipts, which will be critical to facilitate the government’s higher spending targets in the years ahead.

Fiscal Policy

Sustaining economic growth over the coming years will require greater mobilisation of tax resources and a reduction in the dependence on debt financing. There have been difficulties maintaining a solid level of tax revenue as a percentage of GDP, which dropped from 16% in 2012 to 14.7% in 2014, and recovered to 15.6% in 2017. The figure stood at 12% after the government re-based GDP in February 2020.

“Fiscal pressure in Côte d’Ivoire is weak compared to other countries and to our capacity as a country. We cannot continue to take in more debt; we need to mobilise internal resources,” Ahouré told OBG. “That is why there are increasing efforts to formalise economic activity.” The government’s goal is to raise tax collection to 20% of GDP, which is the agreed level under the UEMOA convergence policy.

Tax collection has increased at a relatively slow pace considering Côte d’Ivoire’s investment requirements: revenue rose from CFA3.6trn ($6.2bn) in 2017 to a projected CFA4.3trn ($7.4bn) in 2019. However, the government is implementing several measures to further enhance tax receipts and has targeted bringing in as much as CFA6.8trn ($11.7bn) in taxes by 2024. It aims to do this via two main routes: expanding the tax base by simplifying the existing tax structure, and improving collection and controls through digitalisation. In 2019 a plan was approved to streamline existing tax exemptions up to 2023, modernise property taxes, and broaden the income tax and value-added tax (VAT) bases. “Côte d’Ivoire needs strong fiscal measures. The tax base remains small, so the country should increase it by taxing sectors that are currently exempt, such as insurance, agriculture and mining,” Coulibaly told OBG. “VAT exonerations also have to be reviewed and streamlined, as these are widespread at the moment.” Various measures were implemented on January 2, 2020 as part of the 2020 budget that introduced a series of tax exemptions and suspensions, as well as new levies and an increase in some existing tax rates.

According to a 2019 World Bank report titled “In the land of cocoa: How to transform Côte d’Ivoire?”, VAT collection amounted to 1.8% of GDP in 2018, well below other sub-Saharan African countries, such as Kenya (2.6%), Cameroon (3.5%) and South Africa (7.5%). If the government were to push the level of VAT collection to around 2.6% of GDP, overall state income would rise by 1% of GDP, the report says. If VAT collection were to be increased to 3.5%, state income would rise to 2% of GDP.

The introduction of a single tax identification number (STIN) is expected to help in this regard and reduce avoidance. The STIN is being assigned to all new businesses, allowing the tax administration to merge different reference codes and payments, and better identify taxpayers across databases in different branches of government. One step aimed at improving collection from larger companies involved the launch of an integrated tax management system in February 2019, as well as a new electronic invoicing system for VAT, which is expected to increase tax receipts significantly.

Poverty Reduction

Improved tax collection will also help the government reduce income gaps across the population. According to the latest available data from the World Bank, the poverty rate stood at 46.3% in 2015, with 10.7m citizens living on less than CFA750 ($1.30) a day. While poverty is higher in rural areas, affecting 58.6% of the population, the rural poverty rate dropped by 5.7% over the 2008-15 period. The urban poor, on the other hand, saw their numbers swell by 6.4% during the same period. Government efforts are currently under way to collect data for a national poverty study, which is expected to be published in 2020.

Several measures have been critical in curbing the issue of poverty, especially increasing the prices paid to farmers of some of the country’s main commodities. The Living Income Differential was enacted by Côte d’Ivoire and Ghana in mid-2019, introducing a common floor on cocoa prices to address low farmer incomes. Furthermore, in early October 2020 the Council for Coffee and Cocoa, which sets cocoa prices, raised farm gate prices paid to cocoa producers by 10% to CFA825 ($1.42) per kg for the main harvest of the 2019/20 season, which ran from October 1 to March 30. Similar measures for other cash crops could help reduce poverty further, especially as up to three-quarters of the rural population is employed in agriculture.

Other anti-poverty measures include the Social Government Programme (Programme Social du Gouvernement, PSG ouv) 2019-20, which aims to improve social services in rural areas and has already delivered tangible improvements in health, education, access to drinking water and electrification.

With support from the African Development Bank and the World Bank, the government has also created a single social registry to better allocate social support to lower-income households. The number of beneficiaries under the scheme increased from 35,000 at the end of 2018 to 50,000 by the end of March 2019, according to the IMF, and the aim was to extend that number to 80,000 before the end of 2019; yet as of late April 2020 it was unclear whether this goal was met.


Following the achievements of the past few years, Côte d’Ivoire is in a good position to continue along its path of strong economic growth once the global economy has recovered from the effects of the Covid-19 pandemic. Moves made to diversify the economy away from a reliance on raw exports are already paying dividends, as are improvements made to the investment environment in sectors with untapped potential, such as mining. Meanwhile, developing the business environment will be necessary to further encourage private-sector led growth.

While the current strategy of investing into poverty reduction highlights the government’s recognition of the need for more equitable growth, poverty rates are still high. Besides the PSG ouv, a longer-term plan to reduce poverty by raising formal employment and boosting productivity across nascent sectors, such as manufacturing, will be key to the nation’s development.

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The Report: Cote d'Ivoire 2020

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