Côte d’Ivoire encourages private investment to balance fiscal deficit

After a decade-long political crisis ended in 2011 Côte d’Ivoire’s economy has bounced back to become one of the fastest-growing economies in Africa. Between 2012 and 2016 the country’s GDP grew by an annual average of 9%. This recovery was supported by rising commodity prices and substantial public sector investment to rebuild and upgrade infrastructure that had suffered from years of underinvestment. The government’s focus on large infrastructure projects has also helped Côte d’Ivoire regain its position as a regional hub in West Africa. At the same time, Côte d’Ivoire has sought to diversify its agriculture-focused economy, and develop its mining and oil and gas sectors.

Despite efforts to improve the business environment, governance has remained problematic, preventing greater involvement from the private sector. In addition, Côte d’Ivoire is vulnerable to shocks, as evidenced by social unrest and the abrupt fall of cocoa prices in 2017. The economic environment has stabilised in 2018, though many anticipate investment will slow down moderately ahead of the presidential elections scheduled for 2020.

Economic Growth

During the decade to 2011 annual GDP growth averaged 0.66%, reaching an all-time low of -4.4% in 2011. Following the end of the political and military crisis in 2011, expansion bounced back strongly to 10.7% in 2012 and averaged approximately 9.3% over the five years to 2016. According to the IMF, the economy grew by 8.8% in 2015, before moderating to 8% in 2016 and further to 7.7% in 2017. In October 2018 the IMF forecast growth would decelerate further to 7.4%, stabilising at 7% in 2019 and 6.9% in 2020. After 2020 GDP growth is expected to fall slightly, to 6.8% in 2021, 6.6% in 2022 and 6.5% in 2023.

“Growth has been very strong following the end of the crisis as the economy benefitted from a catch-up effect following years of underinvestment,” Alban Ahouré, an economist at the Ivorian Centre for Economic and Social Research, told OBG. “Growth is now gradually slowing to around 7%; however, this is still positive, as the demographic growth stands at 2.5%, meaning that growth per capita is rising.”

The Ivorian population has increased by 16.9% since 2011, growing from 20.9m to 24.3m in 2017. After a long-term decline starting at the end of the 1970s, which was exacerbated during the decade-long crisis, GDP per capita has risen by more than 60% since 2011, according to the World Bank. Measured at constant 2010 prices, GNI per capita increased from $1139 in 2011 to $1633 in 2017, matching mid-1980s levels. If the trend continues, the World Bank estimates that Côte d’Ivoire will become a middle-income country by 2035, with GDP per capita reaching $4300.

Development Plans

Launched in 2016, the National Development Plan 2016-20 follows the first iteration of the plan, which spanned 2012 to 2015. The strategy sets out designs for the structural transformation of the economy through to 2020, with an objective to process more locally, especially commodities, and boost investment from 20.2% of GDP in 2016 to 24.5% in 2020.

The plan envisages investment of CFA30trn (€45bn) over its duration, with 62% of this figure coming from private sources. Renewed efforts to improve the business environment and upgrade the countries infrastructure have seen the authorities launch a series of large infrastructure projects, including in the transport and energy sectors. So far, the most significant achievements are the construction of a third bridge spanning the lagoon of Abidjan, and a 275-MW hydroelectric dam in the western town of Soubré. Important projects are in the pipeline to triple the power generation capacity by 2030 and improve the road networks, with construction already under way on a fourth bridge and a $1.6bn commuter train in Abidjan. In terms of ICT infrastructure, 7000 km of fibre-optic cables are being installed, and the government is making a push to digitalise and dematerialise a number of services and administrative procedures.

Key Contributors to GDP

Agriculture has historically occupied a substantial share of the Ivorian economy. Côte d’Ivoire is the world’s biggest cocoa producer and a leading exporter of cashew nuts, cotton, palm oil, natural rubber and coffee. Although agriculture remains one of the country’s key sectors, representing around 60% of all jobs, there has been a gradual shift. World Bank data shows the agriculture sector accounted for a combined 17.6% of GDP in 2017, but this was down from its share of 19.8% in 2012. Over the same five-year period the share of industry rose from 21.1% to 24.2%, while the services sector increased its share from 36% to 38.7%. “Industries are evolving, but slowly,” Ahouré said. “We are still waiting to see a structural transformation where industrialisation of the economy creates jobs and more evenly distributes revenues.”

According to the Ministry of Finance, the biggest contributor to the economy in 2017 was the food-producing agriculture sector, with a share of 10.6%, followed by trade (9.4%), agricultural exports (9.2%), agri-business (5.9%), construction (5.6%), mining (4.8%), telecommunications (4.8%) and transport (2.7%). Through to 2022, the government projects the share of food-producing agriculture will stagnate at 10%, agriculture exports will fall to 5.8% and mining to 3.9%. Meanwhile, trade, agri-business and telecommunications are expected to rise to 9.9%, 6.4% and 4.9%, respectively.

The construction sector, which is supported by the state’s infrastructure projects, would see the biggest gain, with its share jumping to 9.5%.

Balance of Trade

Despite a strong decline in the prices of cocoa – which accounts for around one-third of Côte d’Ivoire’s exports earnings – the balance of trade has increased from CFA1.3trn (€2bn) in 2016 to CFA1.7trn (€2.6bn) in 2017. As a percentage of GDP, the trade balance rose from 9.2% in 2016 to 9.8% in 2017. The overall level of trade increased by 12.2% from CFA11.5trn (€17.3bn) in 2016 to CFA12.9trn (€19.4bn) in 2017.

Exports rose by 14% from CFA6.4trn (€9.6bn) to CFA7.3trn (€11bn). The 40% drop in cocoa prices from mid-2016 was offset by a record production of over 2m tonnes of beans in the 2016/17 season, up 29% from the previous season, while prices of other key export products such as cotton and cashew nuts increased. Imports also rose, but more slowly than exports, increasing by 9.9% in 2017 to CFA5.6trn (€8.4bn). However, according to the IMF, lower export prices for cocoa and rubber, deceleration of agricultural export volumes, recovering oil prices and growing import volumes weighed on the overall trade balance in 2018. These factors led to a lower surplus in the first half of 2018 compared with the same period in 2017.

The current account deficit widened slightly from 1.1% in 2016 in 2017 to 2.4% of GDP. The drop in the trade surplus caused by higher global oil prices and high petroleum imports, the deterioration of services deficits and deficits, of primary and secondary income are expected to further impact the current account. The deficit is projected to expand to almost 4% of GDP in 2018 before lowering to around 3.6% in 2019. In the medium term, however, with new oil wells and repairs under way at the country’s oil refinery, the IMF predicts that the deficit will narrow to around 2.5% of GDP by 2023.

Economic & Monetary Policy

Côte d’Ivoire is by far the largest economy in the eight-country UEMOA, accounting for 35% the union’s GDP and 43% of its trade flows. UEMOA countries share a currency, the West African CFA franc, whose name derives from its predecessor currency, the franc, used during the French colonial period in Africa. The CFA has a fixed one-to-one exchange rate with both its Central African counterpart, shared by six countries, and the former French franc. With the advent of the euro, this equates to a currency peg of CFA656 to €1. While maintaining the currency peg constrains monetary policy for all of UEMOA, it also helps to keep a lid on inflation across the region.

Côte d’Ivoire is no different, where inflation was estimated at 0.8% in 2017, according to the IMF. Although average inflation for the year is expected to increase to 1.7% in 2018 and 2% annually over 2019-23, it remains below the UEMOA average of 3%. The Central Bank of West African States, headquartered in Dakar, Senegal, serves as the central bank for UEMOA member states.

Fiscal Policy

Even if economic growth is expected to moderate, 2018 has been a respite for the government after a challenging 2017, which was marked by military mutinies, strikes of civil servants and plummeting cocoa prices. Although cocoa prices have not returned to their previous levels, the social situation stabilised over the course of 2018.

Bonuses paid out to soldiers and civil servants in 2017 increased spending pressure, widening the fiscal deficit to 4.5% of GDP, although this figure was later revised to 4% after a revision of the GDP deflator. The government is now seeking to strengthen fiscal consolidation in the short term, a move that will require collecting more revenue and restraining some spending, especially as growth rates gradually decline. The authorities have targeted lowering the deficit to 3.7% in 2018, and further to reach 3% in 2019, in line with the regional UEMOA deficit target.

While the export duty on cashews has been cut from 10% to 3.5%, in the fourth quarter of 2018 Côte d’Ivoire reintroduced the registration tax on cocoa for the 2018/19 growing season. It was previously scrapped in 2017 to support shipments. Successive fuel taxes instigated over the course of the year underperformed on lower sales and delayed adjustment to recovering oil prices. Still, the tax authority collected CFA1.1trn (€1.7bn) in duties in the first half of 2018, up 4% from a year earlier. During this period the tax-to-GDP ratio was 16.5%, below the government’s target of 20%.

State Budget

In October 2018 the government announced it would seek to boost the 2019 budget by 8.6% to CFA7.3trn (€11bn), up from CFA6.7trn (€10.1bn) in 2018. The draft budget, which was adopted by lawmakers in December 2018, sees tax income rising to CFA3.7trn (€5.6bn), a 12% increase from the amount estimated at the end of 2018, which would bring the tax-to-GDP ratio to 17%. In a context of low cocoa and cashew nut prices, the government is seeking to improve the efficiency of the tax administration and broaden the tax base (see analysis). However, it has been noted that certain factors – such as the liquidation of SAF-Cacao, the largest domestic cocoa exporter – may impact budgeted tax revenue (see Banking chapter).

Sovereign Debt

The government has signalled its plans to sell CFA1.33trn (€2bn) on capital markets in 2019, though it has not been announced whether the money will be raised on international markets via eurobond issuances as it was in 2017 and 2018. In 2018 Côte d’Ivoire raised CFA1.1trn (€1.7bn) on international markets and CFA475.6bn (€713.4m) regionally. The government had previously raised a eurobond of $1.2bn in June 2017. While the debt is sustainable, the IMF recommended following a prudent loan policy to avoid an over-reliance on global market funding. The World Bank estimates that public debt fell to 46.1% of GDP at the end of 2017, from 47.1% in 2016. Debt levels are expected to rise to 48.1% of GDP in 2018, but then decline again to 46.7% in 2019, 46.4% in 2020 and 45.5% in 2021.

However, Côte d’Ivoire presents a “moderate risk” of debt distress because of the importance of non-concessional loans and concentration of maturities around 2023-25. Non-concessional external debt increased from 22.5% of GDP in 2015 to 25.4% in 2017 and 32.7% in 2018.

Private & Public Investment

The IMF expects overall investment levels to rise from 20.1% of GDP in 2015, to 21.8% in 2018 and 23.5% in 2020. Meanwhile, investment from the government is projected to rise slightly from the 2016 level of 6.7% to reach 7.6% in 2018, before declining to 7.3%, in 2020 in line with the government’s plan to reduce its expenses. Private sector investment, meanwhile, is forecast to rise from 13.4% in 2015 to 16.2% in 2020. By contrast, estimates of the World Bank show that the contribution of the public sector to GDP growth has increased from 1.2% in 2015 to 1.3% in 2017, while private sector participation declined from 10.5% in 2015 to 9.3% in 2016 and 2.9% in 2017.

The slowdown of private sector activity has partially resulted from concerns about the business climate, uncertainties deriving from social unrest in 2017 and fears of political instability ahead of the presidential vote scheduled for 2020. Private investment declined from 13.4% in 2015 to 12% in 2017, and the construction index – which is a helpful measure of infrastructure development – has recorded slowing growth since 2016. After a period of enthusiasm, private investors seem to have progressively become more cautious. “Although the business climate has improved in recent years, a lot remains to be done to attract investors,” Jacques Morisset, lead economist at the World Bank, told OBG. “The system remains too complicated and politicised. Most contracts, including public-private partnerships (PPPs), are not processed through fully competitive and transparent procedures. There is also a need to remove the informal barriers to investment, such as long-standing monopolies and the lack of transparency in procurement contracts.”

With the government planning to adjust its spending in order to lower the fiscal deficit, greater participation from the private sector is necessary to maintain growth in the medium term. “Economic growth is much too reliant on public investment. This means that it is not supported by solid enough foundations,” Ahouré told OBG. “While public investment is essential to leverage private sector investment, it has become clear that it is not enough. It is not sustainable for the public sector to eternally remain the primary growth driver,” he added.

Private Sector Development

As part of its efforts to stimulate private sector development and improve efficiency among 79 fully or partly state-owned enterprises, in 2013 the authorities selected 15 companies to be privatised. In the past several years the state sold some of its stakes in banks such as Société Ivoirienne de Banques, NSIA Banque and Banque de l’Habitat de Côte d’Ivoire, and has exit plans for Caisse Nationale des Caisses d’Epargne and Banque Nationale d’Investissement, as well as sugar producer Sucrivoire (see Banking chapter).

The formation of PPPs slowed during the decade of political strife, but the PPP model has become a central component of efforts to rebuild infrastructure. In order to facilitate PPPs, a new institutional and regulatory PPP framework was launched in late 2012. In 2014 the government also launched a programme to help small and medium-sized enterprises (SMEs) develop and grow. While SMEs account for 98% of the country’s private sector, they only represent around 20% of GDP, according to government data. With an estimated cost of CFA86bn (€129m), the plan intends to boost the number of SMEs in the country from 50,000 to 120,000, as well as improve their access to financing, which remains a significant challenge for SMEs (see analysis).

Single Window

Operational since 2012, the guichet unique (single window) serves as a onestop shop that allows both foreign and domestic entrepreneurs to establish a business in the country in 24 hours. According to the Investment Promotion Agency of Côte d’Ivoire (Centre de Promotion des Investissements en Côte d’Ivoire, CEPICI), 638 businesses were created through this channel over the 2015-17 period, resulting in investment of CFA1.8bn (€2.7m). In line with the lower levels of private sector activity, the resources mobilised by companies established through the single window declined from CFA672bn (€1bn) in 2016 to CFA466bn (€699m) in 2017.

A pick-up was already perceptible in the first half of 2018, however, with the number of companies created through the single window rising by 12% year-on-year from 92 to 103. Alongside this, investment during the period amounted to CFA322.1bn (€483.2m), up from CFA199.5bn (€299.3m) in the first half of 2017. In sector terms, agri-business, energy, civil engineering and transport have been the main drivers of such investment in 2018. However, it is worth noting that the single window is not available for a number of important sectors, including banking, housing, retail, mining and energy.


Inflows of foreign direct investment (FDI) have been on a steadily upwards trajectory in recent years, increasing from $439m in 2014, to $494m in 2015, $577m in 2016 and $675m in 2017, according to the UN Conference on Trade and Development. Côte d’Ivoire’s stock of FDI stood at $9.5bn at end-2017, up from $7.38bn in 2015. This trend continued in the first half of 2018, with FDI inflows reaching CFA351.5bn (€527.6m), indicating a 76% increase year-on-year. The sources of foreign investment have also diversified, with companies from North Africa – especially Morocco – and China boosting their presence in Côte d’Ivoire, while the share of French companies gradually declined.

However, net inward FDI as a percentage of GDP has remained relatively constant in recent years, at 1.8% in 2017. FDI is primarily concentrated in the extractive sector, financial services and telecommunications. Côte d’Ivoire ranked third in West Africa for inward FDI in 2017, behind neighbouring Ghana’s $3.26bn and Nigeria’s $3.5bn. While Côte d’Ivoire’s FDI inflows experienced growth in a year that the West African region saw inflows decrease by 11%, they are not significantly higher than that of smaller countries such as Sierra Leone ($560m) or Burkina Faso ($486m), suggesting there is still more work to be done to attract interest from foreign investors.

Corruption & Governance

Tackling corruption is a key policy challenge, as it is one of the most difficult aspects of doing business in the country. In its Corruption Perception Index for 2017, Transparency International ranked Côte d’Ivoire 103rd out of 180 countries, awarding the country a score of 36 out of 100. This marks an improvement from the 2016 placement of 108th. Indeed, steps have been taken in recent years to fight corruption, including the adoption of a presidential anti-corruption decree in 2013, and the creation of anti-corruption bodies like the Brigade for the Fight Against Corruption in 2012 and the High Authority for Good Governance in 2014. However, Transparency International noted that for now corruption remains “endemic, systemic, permeating all levels of society”.

Doing Business

In other areas there have also been concerted efforts to improve the business environment in recent years. Important advances have included the CEPICI’s single window in 2012 and the launch of the Commercial Court in Abidjan that same year. The revised Investment Code – which provides numerous tax exemptions for investors – was also adopted 2012, before being reviewed in August 2018 (see analysis).

These efforts have paid off in the World Bank’s ease of doing business index, with the country’s ranking rising from 170th in 2011 to 122nd in the 2018 iteration. After gaining three places in 2017, Côte d’Ivoire jumped 17 places in 2018 and was among the 10 economies identified to be carrying out the most notable improvements. Côte d’Ivoire placed 26th in the category for starting a business and, having improved credit information access, moved up to 44th place for getting credit. Although progress was made in terms of ensuring quality control in construction, the country remained in 142nd place for this marker. Despite the introduction of an online platform to pay corporate income tax, a measure that is seen as a major advancement for transparency and efficiency, Côte d’Ivoire still occupied 175th place in the category for paying taxes.

Inclusive Growth

While the National Development Plan 2016-20 states that a better distribution of wealth is one of the main pillars of the government’s development strategy, there has been some criticism that the growth of recent years has not been inclusive enough. For instance, economic expansion has only translated into a modest reduction in the poverty rate – which declined to 46.3% in 2015, the latest year for which data is available – from 48.9% in 2008. Other human development indicators have also only advanced a moderate amount; in 2017 Côte d’Ivoire ranked 170th out of 189 countries in the UN Human Development Index.

With 8.42m persons in employment, official figures suggest an unemployment rate of 2.8%. However, according to the World Bank, the informal sector constitutes 90% of the workforce, meaning only a small proportion of the population is guaranteed the minimum monthly salary, which was raised to CFA60,000 (€90) in 2013. Taking into account the levels of underemployment and the weight of the informal sector, the real unemployment rate was estimated to be around 25% in 2013. Growing discontent over the perception that opportunities are unequally distributed has led to protests, including riots in Bouake in 2016 after the increase in utility fees, military mutinies, and strikes from civil servants and private sector workers in 2017.

The education system, which greatly suffered from a decade of underinvestment, is recognised as one of the education systems with the biggest margin of improvement. The health system is also seen as expensive and as providing poor-quality services. Effective implementation of the universal care programme, which is expected to be generalised in 2019, would be a key step in developing more social safety nets (see Health & Education chapter).

Regional inequalities comprise another challenge. Economic activity, particularly the higher-value-added manufacturing and services sectors, is greatly concentrated in Abidjan, the commercial capital. The city of 4.5m people has been the recipient of the largest infrastructure programmes since 2011, exacerbating the feeling of growing inequality between Abidjan and the interior of the country.

At the same time, rural areas have benefitted, at least until recently, from the rising prices of cash crops – including cocoa in the south and cashew nuts in the north – and significant efforts have been made to improve the road network across the country (see Construction & Real Estate chapter).


Although economic growth has been slowing since 2016, the outlook remains bright, with the IMF forecasting an annual expansion of at least 6.5% through to 2023. However, challenges need to be overcome. The country remains highly vulnerable to external shocks, especially the fluctuation of commodity prices. Economic expansion has been greatly supported by the state, but the government is expected to curtail public spending in the coming years to narrow its fiscal deficit, as agreed with the IMF. Despite rising investment, private sector contributions remain weak, meaning further efforts are needed to improve governance, tackle corruption and cement the rule of law. Especially as investors become more cautious in the lead up to the presidential election scheduled to take place in 2020.


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The Report: Côte d'Ivoire 2019

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