Following the global economic shock of the Covid-19 pandemic, Cote d’Ivoire’s economy has rebounded strongly relative to regional peers.
According to data from the World Bank, the country averaged 7% GDP growth between 2015 and 2019. While this fell to 2% in 2020 amid the crisis, it recovered to 7% in 2021.
FDI has also been rising consistently over the past decade. Despite the slowdown in global economic activity in 2020, Côte d’Ivoire attracted $713m in FDI inflows, according to the World Bank, down from roughly $850m in 2019. Last year total FDI stock was estimated at $12.8bn.
Robust economic performance and investment flows over the past decade have helped position the country as the strongest economy in ECOWAS, according to a 2022 report by Lloyds Bank.
However, despite this positive economic performance, there is room for further improvement on human development indicators. Roughly 45% of the population is below the poverty line and a quarter of working-age Ivorians are unemployed.
Although the country weathered the pandemic better than many of its regional peers and maintained positive growth, the crisis had a major impact on households. According to the UN Development Programme, as a result of the pandemic some 27.5% of households were unemployed and 44.4% were working part-time.
On the production front, Côte d’Ivoire is a top exporter of a number of commodities. It is the number-one producer of cocoa, cashews and kola nuts globally, as well as the leading producer of latex and bananas in Africa.
It is also a net exporter of oil and the second-largest producer of cotton in Africa. Côte d’Ivoire aims to boost its textile industry further to benefit from the segment’s growth potential.
However, the economic weight of the agriculture sector also exposes the country to a certain degree of risk. Climate change is a pressing concern, given Cote d’Ivoire vulnerability to natural disasters, and price fluctuations in global commodity markets have a significant impact on Ivorian receipts for key crops like cocoa.
Looking ahead, policymakers are working to leverage Côte d’Ivoire’s current growth trajectory and positioning in strategic sectors to attract further investment in industrialisation and local processing of commodities.
The country has benefitted from reforms to the investment code in 2012 and 2018, focused on strengthening the investment environment, improving public services, and expanding the incentives offered to companies to develop human capital and boost productivity.
“Through the effective implementation of the National Development Plan 2021-25, the investment code of 2018 and robust recent economic performance, Côte d’Ivoire’s administration is focused on achieving the objectives of increasing competitiveness in sectors with high potential for inclusive growth and value addition, particularly agro-industry, manufacturing, automotive, textiles, chemicals, energy and other key segments,” Salomon Bieffo, director of strategy planning, studies and statistics at the Investment Promotion Agency of Côte d’Ivoire (Centre de Promotion des Investissements en Côte d’Ivoire, CEPICI), told OBG.
Other reform initiatives include making paying taxes easier through the creation of an electronic filing and payment system, as well as streamlining value-added tax cash refunds, which can now be done automatically via an online portal.
In addition, fiscal measures have been rolled out to boost key sectors of the economy such as agri-business, agriculture, health and education, with incentives for the construction of factories and infrastructure development.
Renewable energy is slated to play a central role in the government’s transformation agenda. It aims to achieve a 42% share of the energy mix from renewable sources, including hydropower, by the end of the decade. Demand for power is expected to grow by 7% per year through to 2025.
The International Finance Corporation estimates there is up to $9bn of renewable energy investment potential in the country, and has developed a series of recommendations to unlock this, including “competitive international tenders for new generation; resource availability studies to unlock new hydropower and wind potential; and policies to catalyse innovative off-grid solutions such as solar home systems”.
Government policy is likely to play an enabling role for investment in renewables, as well as other high-growth sectors, in the years ahead.
“Increasing and targeting investment flows in high-potential sectors will require a continuation of the government’s current multi-pronged strategy. National entities, including CEPICI, are charged with reinforcing support mechanisms, such as the one-stop shop, to enable private sector activities to be done efficiently and at competitive costs,” Bieffo told OBG.
CEPICI was created by national decree in 2012, with the objective of promoting and attracting national and foreign investment as a one-stop shop to ensure investors receive incentives stated in the investment code, along with other services such as facilitating access to industrial land. It has been attached to the office of the prime minister since May 2022.
Several other actors complement the government’s efforts, including the Chamber of Commerce and Industry Côte d’Ivoire, and the General Confederation of Businesses of Côte d’Ivoire.
Beyond monetary investment, attracting individuals and firms with the relevant skills will be a key priority as the country seeks to boost strategic segments such as cocoa, coffee, cashews and cotton; increase land productivity; and encourage more value-added processing.
“Improving the skills of the local population through specialised educational programmes will continue to be essential to sustain value-added economic activities. Increasing the supply of skilled labour remains a key objective of the government to enable the long-term growth of FDI in the country,” Bieffo added.
Challenges and opportunities
Given the national focus on value-added processing, the availability of industrial land will be an important growth driver.
With more than 90% of the industrial sector centred around Abidjan, the sector’s expansion has put upward pressure on the price of industrial land. In recent years this rose from less than $0.20 per sq metre to more than $8.
Against this backdrop, the Ministry of Investment Promotion and Private Sector Development is seeking to develop more industrial zones, including both economic and free zones. This would create much-needed industrial space and more attractive conditions for FDI.
In the prevailing environment of global uncertainty, additional reforms could help to solidify Côte d’Ivoire’s competitive positioning.
For instance, one-quarter of firms surveyed firms by the World Bank in 2016/17 cited access to finance as the biggest obstacle in the business environment. The informal sector, meanwhile, was cited by 16% of respondents, and 8.3% believed tax rates were the greatest challenge.
Cote d’Ivoire’s economic freedom score on the Heritage Foundation’s 2020 index fell by 2.7 points from the previous year, placing the country 101st globally and ninth in sub-Saharan Africa, due to lower scores for judicial effectiveness and government integrity.
While the 2018 reforms to the investment code have strengthened some aspects of the legal framework for business – for example, improved dispute-resolution mechanisms – concerted efforts to address the remaining barriers to growth would help increase investor confidence, particularly in the current inflationary context of rising transport and energy costs, which have led to greater of capital flight across emerging markets.
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