Coface Group
Ivory Coast

Ivory Coast

Population 23.1 million
GDP per capita 1,460 US$
C
Country risk assessment
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Business Climate
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Since 01/26/2016
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Synthesis

major macro economic indicators

  2013  2014  2015 (f) 2016 (f)
GDP growth (%) 8.7 7.9 8.2 7.6
Inflation (yearly average) (%) 2.6 0.4 1.6 1.5
Budget balance (% GDP) -2.3 -2.3 -3.2 -3.2
Current account balance (% GDP) -1.4 -20.7 -1.0 -1.9
Public debt (% GDP) 39.9 36.6 34.7 33.4

 

(e) Estimate (f) Forecast

STRENGTHS

  • Diversification: hydrocarbons, ores and agricultural wealth (world's leading cocoa producer)
  • Port, road and energy infrastructure undergoing modernisation
  • Further debt relief obtained in 2012 under the HIPC and MDRI initiatives
  • Normalisation of the political situation

WEAKNESSES

  • Economy dependent on climatic conditions and movements in the prices of cocoa, the country’s main export product
  • Gaps to be filled in the management of public finances, infrastructure and governance, despite progress recorded in recent years
  • Slow progress on national reconciliation

Risk assessment

Growth driven by the dynamism of agriculture and services and by major public works

Growth, which was robust in most sectors, increased in 2015. Agriculture continued to take advantage of the implementation of the National Agricultural Investment Programme. Subsistence farming and cash crop production continued to increase. As regards its leading export crop, cocoa (accounting for one third of sales abroad), the country enjoyed both a record level of output and firm international prices. Meanwhile, the dynamism in transport and telecommunications has driven activity in the services sector. Construction, agrifood and gold mining have held up well, benefitting the secondary sector. By contrast, the depletion of deposits is putting pressure on oil production (the country has been a net oil importer since 2014).
In 2016, ongoing public works projects (Soubré dam, modernisation of the airports, extension of the Port of Abidjan, …) in the context of the second National Development Plan, reinforced political stability, an improved business climate and the implementation of a strategy to develop SMEs/SMIs, are expected to sustain activity, which could however suffer slightly from a dip in agricultural output.
Growth remains broadly exposed to commodity price fluctuations and is still stifled by outdated infrastructure. There is a long way to go to make up the losses due to a long period of economic stagnation and political crisis (average growth of 1.2% p.a. between 2005 and 2011, including a 4.4% contraction in economic activity in 2011). However, the economic recovery since the end of the post-electoral crisis has helped raise the population's living standards (per capita GDP up by 35% in purchasing power parity terms between 2011 and 2015) and thus to stimulate household consumption. Under the reform of the cocoa/coffee sector, planters benefit from higher production prices. The minimum wage and the civil service sector wages have been increased, access to public services is improving and universal healthcare insurance is being introduced. The maintenance of relatively low inflation, even if there is upward pressure due to the dynamism of domestic demand and the loosening of fiscal policy, also benefits consumption.

 

A slight increase in the current account deficit and proper management of the public finances

While remaining limited, the current account deficit will continue to widen in 2016, with the momentum of domestic demand accompanied by a rise in the import of goods (especially capital goods) and services (freight, insurance). In addition, cocoa exports are expected to increase more slowly. However, as it is not very dependent on demand from China, the country is not expected to suffer significantly from the slowdown there. The ongoing robustness of foreign direct investment should broadly cover the deficit.
The performance criteria under the programme supported by the IMF’s Extended Credit Facility (which expired at the end of 2015) were met. Business climate and tax administration have improved significantly and progress have been recorded on the restructuring of State-owned banks. The direction of fiscal policy for 2015 remained appropriate, despite budgetary pressures (loss of revenue and inclusion of extra-budgetary spending) which led the authorities to make certain adjustments to contain the rise in the public deficit (raising additional revenue and squeezing of some expenditure). The successful issuance of eurobonds in 2014 and 2015, taking place just three years after the country defaulted on some of its 2010 eurobond coupons, helped finance the budget and lengthen the average maturity of the public debt. The weight of that debt has decreased substantially since the debt relief granted to the country in 2012 under the HIPC/MDRI initiatives. The risk of overindebtedness is considered to be moderate.

 

Strengthened political stability

The political and security climate had already improved substantially in recent years. The presidential election of 25 October 2015, which ran smoothly and resulted in the re-election, in the first round, of the outgoing President Alassane Ouattara, allowed the country to finally turn the page on the violence which bloodied the country after the 2010 presidential election. Nevertheless, a part of the opposition called for a boycott, citing loyalty to former President Gbagbo (who is being detained in the Netherlands awaiting his trial for crimes against humanity by the International Criminal Court). The president will continue to rely on the governing coalition, which is likely to be renewed following the 2016 parliamentary elections.

 

Last update: January 2015

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