The Report: Cote d'Ivoire 2015

Economy

Driven by rising government spending and public-private partnerships (PPPs) in infrastructure, economic growth has rebounded to high single-digits in the years since 2012. While substantial debt relief and support from development finance institutions is underwriting fast-rising public investment, attracting both foreign and domestic private investment will be crucial to attaining the government’s goal of becoming an emerging economy by 2020 – an area where the government has seen some early successes, with a six-times oversubscribed eurobond and a rise in PPPs. Eager to regain its position as the unrivalled economic hub for the region, the authorities are aggressively reforming the business climate to support private sector development. With substantial public investment in infrastructure driving the country’s rapid economic rebound, Côte d’Ivoire looks set for at least high single-digit growth in 2015 and 2016.

This chapter contains interviews with Prime Minister Daniel Kablan Duncan; Donald Kaberuka, President, African Development Bank; Emmanuel Esmel Essis, Director-General, Investment Promotion Agency of Côte d’Ivoire.

Banking

As the established banking centre of the West African Economic and Monetary Union (Union Economique et Monétaire Ouest-Africaine, UEMOA), Côte d’Ivoire’s financial services industry has sustained double-digit growth since emerging from the national crisis in 2011. The market still faces legacy issues, such as high aggregate non-performing loans and under-performing public lenders, but authorities are steering a course of ambitious restructuring and privatisation that should help sanitise the sector. As in many emerging markets, lending is still skewed towards the high-end corporate segment. Yet growing competition among regional and international banks is driving efforts to attract both consumers and small and medium-sized enterprises. With banking penetration still low, there is considerable scope for the sector to further support economic growth.

This chapter contains interviews Tiémoko Meyliet Koné, Governor, Central Bank of West African States; and Mohamed El Kettani, CEO, Attijariwafa Bank.

Capital Markets

Host to francophone West Africa’s regional stock exchange, the Bourse Régionale des Valeurs Mobilières (BRVM), Côte d’Ivoire has a more sophisticated financial services industry than most of its peers in the region. The sixth-largest of Africa’s 29 exchanges by capitalisation, the BRVM has seen the market value of its listed equities grow over five-fold from CFA1.02trn (€1.53bn) at its inception in 1998 to CFA6.32trn (€9.48bn) at the end of 2014. Although still marginal to broader economic growth, accounting for 12% of the GDP of the West African Economic and Monetary Union and 38.5% of domestic GDP, the BRVM plans to break into the continent’s top-five exchanges by 2015. Indeed, 2015 will prove dynamic both in terms of initial public offerings (IPOs) and developing secondary trading in bonds – a linchpin of sovereign financing in the region.

This chapter contains an viewpoint from Kadi Fadika-Coulibaly, Managing Director, Hudson & Cie.

Insurance

Bolstered by the economic rebound since 2012, double-digit growth in Côte d’Ivoire’s insurance sector is attracting new entrants and product innovation. While it is the largest market of the 15-country Inter-African Conference of Insurance Markets, the sector is fragmented for its size. With large-scale public projects expected to generate strong GDP growth in 2014, the priority will be to expand the domestic market’s retention capacity, enhance the domestication of larger risks and improve business conduct to shore up underwriters’ liquidity. Meanwhile, as alternative distribution channels continue to gain traction, the life insurance segment is expected to overtake non-life. Major players and foreign investors are likely to drive consolidation to achieve the scale necessary to boost Côte d’Ivoire’s growth.

This chapter contains an interview with Roger Eugène Johnson Boa, President, Association of Insurance Companies of Côte d’Ivoire.

Industry & Mining

Côte d’Ivoire’s industrial sector has a long and storied history as one of the most developed in the sub-region, but as with many parts of the economy, it is recovering from the adverse impact of a decade of unrest. Resolution of the political crisis in 2011, and the recovery that it sparked, has started to bring about improvements. As such, the secondary sector increased its contribution to national GDP to 30% in 2011, compared to 27% in 2010, according to figures from the Ministry of Industry and Mines. While rising global prices of natural resources such as oil and gas, which accounted for 21% of the sector in 2011, have been a key factor, an uptick in agro-industrial activity in cocoa, palm oil and rubber has led to higher output in the nation’s processing plants. Other factors were public works and energy, which accounted for 9% and 3%, respectively. While the 2012 Investment Code and the new industrial policy are steps in the right direction, there is scope for more improvement.

This chapter contains interviews with Adham El Khalil, CEO, Eurofind Participation; and Clare Short, Chair of the Board, Extractive Industries Transparency Initiative.

Energy

With the recent economic growth spurt serving as a testament to Côte d’Ivoire’s recovery, the subsequent increase in energy consumption has also highlighted gaps in provision. Under pressure to satisfy growing domestic demand and to consolidate its position as a regional energy supplier, the power segment is currently going through an ambitious expansion exercise. Meanwhile, in the upstream oil and gas segment, operators are ramping up exploration and production activity in a bid to feed the country’s predominantly gas-fired thermal power plants. Such efforts should drive generating capacity to 3000 MW by 2020, up from 1600 MW in 2014 – an ambitious target alongside equally bold objectives of doubling production of natural gas and increasing oil output five-fold to 200,000 barrels per day (bpd). As the slate of ongoing projects in the power segment demonstrates, a guaranteed market and the commitment of the government to enable returns on investment, including by sharing the financial burden, has made for an attractive investment environment.

This chapter contains an interview with Izak Elyashiv, CEO, Telemenia.

Agriculture

Agriculture is one of the most important drivers of growth in the Ivorian economy in terms of revenues, employment and value-added activities. Contributing 22% to GDP, the sector accounts for at least 50% of exports and provides jobs to 60-70% of the population, according to the World Bank. Fertile land and favourable weather conditions enabled the country to become one of the most successful yet diversified agricultural producers in the world, contributing the largest share of cocoa to the global market, equivalent to 40% of global output in 2013/14. Although years of civil war obstructed investment, government initiatives are facilitating the restructuring and rejuvenation of production in crops as diverse as cocoa, cashew, cotton, rice and maize. State programmes also hope to address challenges to sectoral growth such as low agricultural productivity, poor access to credit and price insecurity. The diversity and potential of Côte d’Ivoire’s agricultural activities will ensure the sector remains a key source of economic growth and employment.

This chapter contains interviews with Massandjé Touré-Litsé, CEO, Coffee Cocoa Council; and Youval Rasin, CEO, DekelOil.

Transport

In the decades following independence in 1960, Côte d’Ivoire led West Africa in terms of transport infrastructure. Today, although several years of civil unrest have taken their toll, it still has one of the largest road networks in the region, as well as relatively competitive aviation and maritime port infrastructure. As the government pushes to attain emerging country status by 2020, the nation’s transport networks are set for a boost in public funding: out of the CFA11trn (€16.5bn) budgeted in the 2012-15 National Development Plan, the state has allocated 25.5% to projects in transport infrastructure. Côte d’Ivoire’s reinvestment in its long-neglected transport infrastructure comes just in time to keep pace with the demands of a growing population and an expanding economy. Sustaining the funding levels needed to maintain these networks will pose challenges, but strong investment from the private sector and a high level of public-private collaboration bode well for the sector.

This chapter contains interviews with Dominique Lafont, CEO, Bolloré Africa Logistics; and Gervais Koffi Djondo, Chairman, Asky.

Construction & Real Estate

After a decade of under-investment, Côte d’Ivoire’s construction sector has sustained double-digit growth over the past three years as private reconstruction and public investment continue to rise sharply. Côte d’Ivoire’s property market has also grown rapidly since 2011. With private initiatives flourishing and public spending on the rise, the market is witnessing genuine developments, but much more will be needed to close a housing gap exacerbated by a decade of civil unrest. With a strong portfolio of public projects, particularly in transport infrastructure and low- to middle-income housing, the demand for construction materials is set to grow further. Substantially supported by international donors, Côte d’Ivoire has opened its doors to global construction firms and has diversified investments sources. However, further support for local SMEs is needed to sustain long-term growth, while the development of the country’s construction material manufacturing industry will be critical to controlling input prices and limiting imports.

This chapter contains an interview with Charles Paradis, CEO, Bouygues Construction Concessions.

Telecoms & IT

With no less than six operators in a market of close to 20m inhabitants, Côte d’Ivoire’s telecommunications industry is competitive. However, with limited data usage, the scope for growth in revenues is sizeable. Mobile voice is by far the biggest generator of revenues in Côte d’Ivoire’s telecoms sector, representing close to 75% of revenues in 2013. Demand for voice services may be plateauing, but with 3G technologies deployed by the country’s biggest players, the short- and medium-term outlook is bright. Significant potential therefore remains in the sector to complement call tariffs, particularly in fixed-line and mobile internet segments. Despite high access costs, internet usage rates are gradually rising and the National Broadband Project should help further raise connection levels while at the same time putting downward pressure on tariffs. Sound growth fundamentals of the mobile money segment are testament to the potential popularity of e-services in the market and bode well for those with an appetite to deepen it. Meanwhile, fiscal and regulatory pressures aimed at optimising service standards are expected to become a more regular feature of the market, especially in light of the upcoming presidential elections in 2015 and the public drive to raise funding to complete ongoing, large-scale infrastructure projects.

This chapter contains interviews with Bruno Nabagné Koné, Minister of Post, Information Technology and Communication; and Michel Combes, CEO, Alcatel-Lucent.

Tourism

After years of neglect due to political instability, the tourism industry in Côte d’Ivoire is expected to enjoy a steady recovery as government efforts lead the rejuvenation of the country’s hotel, transport and national attractions infrastructure. Numerous transport and hotel projects currently under way are expected to boost national capacity and help connect travellers to attractions throughout the country. Meanwhile, the introduction of the new tourism code in 2015 will strengthen the position of formal travel agencies and reduce the operations of informal entities. In terms of boosting visitor arrivals, the significant reduction in the price for tourist visas is likely to have a positive effect, as is the shift to the online visa application system.

This chapter contains an interview with Wolfgang M Neumann, President and CEO, the Rezidor Hotel Group.

Health & Education

After over a decade of political instability and armed conflict, Côte d’Ivoire is beginning to rebuild its public health sector. A recent vote for a 29% increase in the budget of the Ministry of Health and the Fight against AIDS and large donor contributions for basic services signal a good start. Côte d’Ivoire’s health sector challenges cut across multiple areas: staffing, infrastructure, training, regulation, national coverage and funding. Improving the quality and equity of care will require sustained interventions in all areas, in particular expansion of access to basic services and better regulation of the private sector. Reining in the private sector through better regulation and training will enable it to serve as a sustainable engine for growth. Investment in public education has stalled over the past several decades, impeded first by the debt crisis of the 1980s and then by the outbreak of civil war. During more than a decade of political turmoil, school buildings were damaged and supplies pillaged. Many schools closed down, largely due to the absence of students, but also for lack of supplies lost to looting. But if Côte d’Ivoire is to harness the development potential of its impressive growth rate, it will need to further extend access to basic education to ensure the enrolment of rural children and girls. As political stability has been restored, the government is prioritising public education, but significant investment will be required to meet the educational needs of the growing population. Long-term gains will require sustained prioritisation and a greater allocation of public finances.

This chapter contains an interview with Oumar Kébé, General Manager for West Africa, GlaxoSmithKline.

Media & Advertising

Given its size, its status as a cultural hub of Francophone West Africa and its relatively diverse print media and radio sectors, Côte d’Ivoire has the potential to be a major regional media market. While high production costs and low household discretionary spending have limited growth, developments in the audio-visual (AV) sector, namely the migration to digital TV and planned liberalisation, should stimulate competition and spur investment in that side of the market. While high costs and demographic factors in the Ivorian market continue to pose a challenge to the profitability of the nation’s print media in the short-to-medium term, strong overall economic growth and a large youth population hold promise for the future of web media. By comparison, opportunities in the AV sector are larger. The move to AV liberalisation, plus the shift to digital TV, should create new opportunities for investment in the near future.

Tax

In conjunction with KPMG, OBG explores the taxation system, examining Cote d’Ivoire’s investor-friendly environment.

Legal Framework

OBG introduces the reader to the different aspects of the legal system in Cote d’Ivoire, in partnership with Bilé-Aka, Brizoua-Bi & Associés.

The chapter also features an interview with Michel K Brizoua-Bi and Joachim Bilé-Aka, Founders, Bilé-Aka, Brizoua-Bi & Associés.

The Guide

This section includes information on hotels, government and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.

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