Cote d'Ivoire 2014 African Economic Outlook

Côte d’IvoIre 2014

www.africaneconomicoutlook.org

Pascal Yembiline / [email protected] Bakary Traoré / [email protected]

Luis Padilla / [email protected]

2 African Economic Outlook © AfDB, OECD, UNDP 2014

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COte d’IvOIre

• Theeconomycontinuestoexpand–byarobust8.8%in2013(9.8%in2012)–inasteadyrecoveryfromthe2010-11post-electioncrisiswiththehelpofmajorpublicworks and resumption of private investment. Structural challenges still preventgrowthfrombeinginclusiveandlong-lasting.

• Thebusinessclimatehasimprovedwithvariousreformsbuttheprivatesectorneedsmoreenergeticandinventivefinancialinstitutions.Bankshaveexcessliquidityandcouldhelpwithmoresavings.

• The capacities of small and medium-sized enterprises need to be strengthened,especially in agro-industry, to take better advantage of global and regional valuechains.

Overview

Côte d’Ivoire’s prospects are quite good. The economic recovery, through major public works projects, produced estimated growth of 8.8% in 2013, which should hold up (at about 9%) in 2014 and 2015, with further social reforms and a better business climate. Plentiful funding from domestic and foreign sources, along with social and political peace, will also help.

The budget situation was much better in 2013, after declines in 2011 and 2012. Revenue increased after a reorganisation of the tax administration. Spending was steady as a percentage of gross domestic product (GDP), even if still burdened by reconstruction and the cost of national cohesion efforts such as recruiting teachers and former soldiers.

This positive view must not hide the big challenges, such as per capita GDP still being much lower than in 2000. The first priority is to make growth inclusive and long-lasting to respond to the pressing needs of a young population looking for jobs. National competitiveness needs to improve, with better roads, less rigid customs procedures and much simpler taxation (currently 62 taxes have to be paid compared with the African average of 36, according to Paying Taxes 2014). The workforce is still not very tuned to business needs, and the financial sector, with excess liquidity, is not very active in funding small and medium-sized enterprises (SMEs). Co-ordinated efforts between the government and the various economic operators will be needed to avoid new rounds of high inflation, especially involving food prices.

Political normalisation, under way since the end of the 2010-11 post-election crisis, continues even though national reconciliation and social cohesion are not proving easy. The government has begun a calm dialogue with the opposition, along with reconciliation measures, and many top-level meetings between the two sides were held in early 2014. Efforts are needed to strengthen national security, disarmament and protection of property (threatened by looting).

Global value chains (GVC) are good opportunities for the country’s growth as it has many natural and human resources, as well as quite good infrastructure for the sub-region. Industrialisation could boost GVCs that have a strong regional potential. Targeted policies are needed to get SMEs to play a key part by solving their funding and management-capacity problems.

3African Economic Outlook© AfDB, OECD, UNDP 2014

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Figure 1. RealGDPgrowth

%

-6

-4

-2

0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(e) 2014(p) 2015(p)

Real GDP growth (%) Western Africa (%) Africa (%)

Source: AfDB, Statistics Department AEO. Estimates (e); projections (p).

Table 1. Macroeconomicindicators

2012 2013(e) 2014(p) 2015(p)

Real GDP growth 9.8 8.8 9.1 9.2

Real GDP per capita growth 7.5 6.4 6.7 6.9

CPI inflation 2.0 2.7 2.9 2.7

Budget balance % GDP -2.6 -2.0 -2.0 -2.0

Current account balance % GDP -3.8 -6.4 -7.2 -6.8

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.

recent developments and prospects

The economy continued to grow (+8.8%) in 2013, on a solid social and political base that produced 9.8% growth in 2012. Reconstruction continued, with the main projects of the 2012- 15 national development plan (PND) speeding up. All productive sectors were buoyant and all demand components reacted well.

The secondary sector advanced 13.3% and the tertiary 12.6% in 2013. Construction (up 25.3% due to the major public works) boosted the secondary sector, as did energy (up 16.2%). Telecommunications (+7.9%), commerce (+10.8%) and other services (+10.7%) drove the tertiary sector. The primary sector grew more slowly (+3.7%), with good food-crop production (+4%) and the recovery of export crops such as rubber (+7.8%), cashews (+6.7%), palm oil (+5.8%) and cocoa (+1.1%). Despite a 13.6% drop in oil output because of natural depletion, the extractive sector grew 1.3%, after declining in 2012. This was due to higher natural gas production (+9.3% because of investment in fields CI-26 and CI-27), a 15.1% rise in gold output thanks to a rise in production at the Tongon and Bonikro mines, and a huge 121.5% leap in production of manganese.

All demand components supported growth in 2013. Final consumption increased 4.3% due to 7.5% more household consumption. Total investment grew 39.9% because of a 60% increase in public investment and the recovery of private investment (up 28.7%). However, the private funding largely went to upgrading productive equipment and rebuilding stocks, without necessarily creating jobs. Overall investment was estimated at 17.5% of GDP and public investment at 7.2% of GDP.


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Exports and imports were both up – imports due to growing demand for intermediate and capital goods, and exports thanks to robust output in agriculture, agro-industry and the extractive industries.

Greater supply and demand should boost real GDP 9.1% in 2014, with more public and private investment increasing overall investment to 18.7% of GDP (and public funding to 7.5% of GDP). The vigorous primary sector should expand further, with good food-crop production, reorganisation of the sector’s professionals and the continuing national rice development strategy (Stratégie nationale de développement de la filière riz). Higher cotton and cashew output is also expected as a result of reforms concerning these crops under a September 2013 law. The extractive sector should benefit from investment incentives contained in new mining and oil laws. The secondary sector should also advance, driven by construction and agro-industry. The tertiary sector should keep growing thanks to strong primary and secondary sectors and strong growth in hotels and distribution. The return to Abidjan of the African Development Bank (AfDB), due in 2014, should boost the services and construction sectors. Growing external demand should see exports increase 13.8% in 2014, due to export agriculture and agro-industry, and imports by 12.6%.

The government plans to continue building affordable housing in 2014 through a public-private partnership that will create formal jobs. Reforms introduced to improve the business climate aim to attract foreign and domestic investment to create jobs, especially for young people and women and in rural areas that suffered in the fighting. The new universal healthcare system (couverture maladie universelle, CMU) comes into effect in 2014, and further steps will be taken to offset inflation. But possible problems include:

• Political and security risk. Political and social stability depend on the success of the national reconciliation, disarmament, demobilisation and reintegration policy (DDR). This policy could run into snags in the long-term reintegration of former fighters. External risks also exist: instability could spill over from neighbouring Mali, Liberia and Guinea. But these dangers are offset by the government’s determination, the reconciliation talks that have begun and the international community’s support for peace and democracy in the three countries.

• PND funding uncertainty. Growth depends on massive mobilisation of investment and strengthening a productive base that still depends heavily on raw materials. Problems raising this money and world price fluctuations for commodity exports could destabilise government finances and mean less funding for the development plan. The world economic recovery, especially in emerging countries, offers good medium-term prospects for commodity demand. The firm pledge by the country’s technical and financial partners (TFPs) at the round-table conference on the PND is a major step towards getting this funding.

Table 2. GDPbysector(percentage)2008 2013

Agriculture, hunting, forestry, fishing 26.7 29.2

of which fishing 0.2 0.2

Mining 7.6 4.6

of which oil

Manufacturing 12.9 13.0

Electricity, gas and water 2.5 2.8

Construction 5.0 7.5

Wholesale and retail trade, hotels and restaurants 14.7 15.0

of which hotels and restaurants

Transport, storage and communication 4.3 3.7

Finance, real estate and business services 12.0 11.0

Public administration, education, health and social work, community, social and personal services 13.9 12.9

Other services 0.3 0.3

Gross domestic product at basic prices / factor cost 100 100

Source: Data from domestic authorities.


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Macroeconomic policy

Fiscalpolicy

The budget situation in 2013 was much better than in 2012 and execution was quite satisfactory under the International Monetary Fund’s Extended Credit Facility (ECF).

Fiscal revenue increased to 22.3% of GDP (from 20.8% in 2012) due to good collection of non-tax revenue. Public development aid was 1.7% of GDP, almost a fifth of all public investment. The overall tax burden was 18.0% of GDP (17.6% in 2012), slightly above the 17% limit set by regional authorities.

Investment spending was well up, at 7.2% of GDP (4.9% in 2012), because of domestic funding, especially the large-scale government works projects. The public wage bill was above the limit of 35% of government revenue set by the West African Economic and Monetary Union (WAEMU), reaching 43.6% in 2013 (up from 42.2% in 2012), reflecting the weight of national reconstruction (hiring of teachers and former fighters). Spending on wages, however, held steady at 7.4% of GDP. Domestically funded investment was 26% of tax revenue, thus complying with WAEMU’s minimum of 20%. Execution of investment funding was low due to delays in projects involving development partners.

Higher revenue and better management of spending reduced the overall deficit, which shrank to 2% of GDP in 2013 (from 2.6% in 2012) and was funded by external sources and borrowing on the regional financial market. The primary deficit also shrank, to 0.3% (from 0.8% in 2012), but was still above the WAEMU level (0% of GDP).

The government hopes to raise XOF 810 billion (CFA Franc BCEAO) in 2014 on sub-regional financial and money markets (XOF 806.7 billion was expected in 2013) in the form of treasury bills and bonds. Foreign funding, including budget support, should be XOF 266 billion.

Table 3. Publicfinances(percentageofGDP)2005 2010 2011 2012 2013(e) 2014(p) 2015(p)

Total revenue and grants 18.2 20.1 15.2 20.8 22.3 22.4 22.5

Tax revenue 14.5 17.0 13.1 17.6 18.0 18.2 18.3

Grants 1.1 0.9 0.3 0.6 1.6 1.7 1.6

Total expenditure and net lending (a) 19 20.6 18.5 23.4 24.3 24.4 24.5

Current expenditure 16.0 17.3 16.0 18.5 18.6 18.4 18.0

Excluding interest 14.0 15.6 14.1 16.7 16.9 17.0 16.6

Wages and salaries 6.5 7.1 6.3 7.4 7.1 6.6 6.1

Interest 2.1 1.7 1.9 1.8 1.7 1.4 1.4

Capital expenditure 2.7 3.1 2.5 4.9 5.7 6.0 6.5

Primary balance 1.2 1.2 -1.4 -0.8 -0.3 -0.6 -0.6

Overall balance -0.8 -0.5 -3.3 -2.6 -2.0 -2.0 -2.0

Note: a. Only major items are reported.Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations

Monetarypolicy

The country’s monetary policy is conducted regionally by the Central Bank of West African States (CBWAS) and aims at price stability and growth. Annualised inflation was estimated at 2.7% in 2013, below the CBWAS limit of 3% but above the 2% recorded in 2012, reflecting the new automatic setting of oil-product prices and more costly food imports. A national policy of price-labelling was introduced. Consumer prices were hit by badly organised distribution arrangements between urban and rural areas.


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Foreign currency reserves are steadily being rebuilt thanks to the export revival and especially greater foreign investment, public development aid, and debt-service relief after Côte d’Ivoire reached the completion point under the Heavily Indebted Poor Countries (HIPC) initiative. But reserves were down 19% at the end of September 2013 compared to the beginning of the year, due to higher imports of intermediate and capital goods and the rebuilding of stocks. Credits to the economy were up 7.3%, including a steady rise in medium- and long-term loans (+11.28% by the end of September 2013). Average lending rates fell from 8.43% to 7.18% between January and October 2013 (compared with 8.08% to 8.20% year-on-year), due to CBWAS lowering the reserve requirement from 7% to 5% on 16 March 2012. The tender rate for cash injections was reduced on 16 September 2013 to 2.5% (from 2.75%) and the marginal lending window rate to 3.5% (from 3.75%). These new intervention rates should further drive down lending rates and help fund the economy.

Economicco-operation,regionalintegrationandtrade

With the extension of the common external tariff (CET) to all countries in the Economic Community of West African States (ECOWAS) in 2014, regional issues and economic opportunities changed greatly. The tariff, composed of five bands (0%, 5%, 10%, 20% and 35%), should boost trade with non-WAEMU countries, especially neighbouring Ghana, which has a similar economy to Côte d’Ivoire. Nigeria has promising outlets for Ivorian food products, such as palm oil. Côte d’Ivoire is already one of the biggest suppliers of goods to other WAEMU states, especially agro-food products and cosmetics. The country should speed up its application of community agreements and rules to take advantage of the new regional integration efforts.

Côte d’Ivoire’s trade surplus fell as a proportion of GDP in 2013 due to a big rise in imports of intermediate and capital goods. Exports remained high, supported by raw materials and processed goods. Production, quality and traceability of raw materials improved. The higher primary sector exports were also due to new rules requiring exporters to ship their products within a deadline or face penalties. The services deficit shrank because of better freight-handling conditions in the port of Abidjan. The smaller trade surplus and better services balance undermined the current account balance, but this was offset by higher remittances from Ivorians abroad. The capital and financial operations account showed a slight surplus because of an increase in the amount received in “project grants”, and this should be boosted in 2014 and 2015 by foreign investment in the key sectors of agro-industry, distribution, mines and oil.

Table 4. Currentaccount(percentageofGDP)2005 2010 2011 2012 2013(e) 2014(p) 2015(p)

Trade balance 14.6 14.5 20.4 10.8 5.6 3.5 1.4

Exports of goods (f.o.b.) 45.7 47.0 48.7 47.9 42.2 38.6 35.4

Imports of goods (f.o.b.) 31.1 32.6 28.3 37.1 36.6 35.1 34.0

Services -7.1 -7.2 -8.2 -7.4 -6.7 -6.0 -5.3

Factor income -4.4 -4.3 -4.3 -5.0 -3.8 -3.5 -1.8

Current transfers -2.8 -1.8 -1.2 -2.2 -1.5 -1.2 -1.0

Current account balance 0.2 1.1 6.7 -3.8 -6.4 -7.2 -6.8

Source: Data from the Central Bank and domestic authorities; estimates (e) and projections (p) based on authors' calculations.

Debtpolicy

Côte d’Ivoire reached the completion point under the HIPC initiative in June 2012. Public external debt fell from 55.1% of GDP at the end of 2011 to 27.7% at the end of June 2013. The country’s risk of debt distress is now graded as moderate. To strengthen debt sustainability, the government has introduced a thorough new management strategy, with IMF and World Bank support, to handle domestic and foreign debts and new borrowing. This medium-term indebtedness was continued in 2013 along with improved debt management capacity, including oversight by the national public debt committee (Comité national de la dette publique) set up in November 2011, as recommended by WAEMU.


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A medium-term debt management strategy will be taken into account in the 2014 budget. The strategy will promote medium and long-term domestic debt, seek concessional external loans and use public-private partnerships while keeping their cost to a minimum. The government is also continuing to repay its domestic debts, which were audited annually between 2000 and 2010. Audit of arrears between 12 September 2012 and 22 October 2013 validated 42.9% of the original XOF 356 billion debt. The aim is to reduce the weight of the government’s commercial debt on the ability of SMEs to fund themselves.

Figure 2. Stockoftotalexternaldebt

%

0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Outstanding debt (public and private) /GDP Debt service/Exports

Source: IMF (WEO & Article IV).

economic and political governance

Publicsector

Regular consultation between the government and the private sector has helped ongoing reforms. Public-private partnerships are a solid basis for co-operation as they accounted for 46% of investment made under the PND in 2013. A new investment law was passed that streamlined bureaucracy for investors through the national investment promotion centre (Cepici), with the help of the companies facilitation centre (Centre de facilité des entreprises). Since 2012, a one-stop shop (Guichet unique de formalité d’entreprises) has reduced the time needed to set up a company to 48 hours.

A participatory approach in drafting reforms, linking the main economic operators and liberal professions concerned, has had good results and led to creation of more than 4 000 firms in 2013. The cost of creating a company has been greatly reduced, especially for obtaining urban property titles, legal documents, expertise and legal-publication fees. Establishment of a special business court has also helped.

But progress is still needed in land and taxation matters, notably how to obtain construction permits more easily. Employers’ organisations also want better access to bank loans and to government contracts for local firms, as well as training for young people so they can better meet the needs of business.


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Financialsector

The relatively excessive liquidity of the banks is mostly due to the large amount of sight deposits, which is partly why banks offer few long-term loans and explains the cost of banking operations, which are still the weak spot of the economy. Access to loans remains very difficult for many economic operators, especially long-term credit (only 6% of all loans). SMEs also have little access to short-term working capital, unlike large firms. Guarantees, the cost of banking and lack of information all need to be reformed. The collateral effects of the crisis and the public internal debt have damaged the quality of bank portfolios, with bad debts now between 15% and 17% of all gross loans.

Bank penetration is 13.4%, but the rapid growth of telephone banking is promising for increasing bank use by the population, 4 million of whom (a third of the workforce) were signed up for the various mobile financial services in 2013. The number of distribution channels for mobile financial services is estimated at 4 000. The opening of bank branches in remote areas is encouraged by the government through incentives for installing cash machines.

Publicsectormanagement,institutionsandreform

Public finance management has been made more transparent, with a census of civil servants and the introduction of SIGFAE (Système intégré de gestion des fonctionnaires et agents de l’État), an integrated system to manage all government employees, in 2012. Spending in 2013, mostly through the SIGFIP integrated public-finance management system (Système intégré de gestion des finances publiques), was 24.3% of GDP (23.4% in 2012). The domestic debt was also audited and found to be XOF 352 billion, a third less than had been thought.

The national good governance and anti-corruption plan (Plan national de bonne gouvernance et de lutte contre la corruption) is expected to make further progress in 2014, with the establishment of a good governance authority (Haute autorité pour la bonne gouvernance) and an anti-corruption court (Cour spéciale de prévention et de lutte contre la corruption) in the second half of the year. Enactment of a new public procurement law is also expected during the year, giving those involved effective recourse. Public procurement has also been speeded up.

New nationwide decentralisation measures were taken in 2011 and 2012 and the country now has 2 autonomous districts, 12 districts, 31 regions, 107 départements and 509 sous-préfectures. A lot needs to be done to make decentralised government more efficient and to make it quicker and cheaper for citizens and businesses to obtain official documents.

Naturalresourcemanagementandenvironment

Production of natural gas doubled in 2013 to more than 6 million m³ and the plan to build a gas pipeline between Takoradi (Ghana) and the Ivorian port of Assinie is being revived. The 2008, 2009 and 2010 reports on the flow of funds between the government and the extractive industries were published in May 2012, in compliance with the rules of the Extractive Industries Transparency Initiative (EITI). Thanks to the progress made, Côte d’Ivoire became an “EITI compliant country” in May 2013.

There is heavy deforestation, with at least a third of its forests invaded (unsupervised concessions and unorganised occupation). The national reforestation programme (Programme national de reboisement) was launched in 2005 with a goal of replanting 6.45 million hectares in 10 years, but is behind schedule. The country suffers from a lack of drainage for rainwater and facilities for collecting and treating sewage. Domestic waste collection and treatment is poor and there are few public toilets. Almost two-thirds of the population have access to clean water, so achieving the Millennium Development Goal (MDG) target of 80% by 2015 would require efficient management of little-used water resources and better infrastructure.


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The government has made encouraging efforts with sanitation projects in the cities. Decrees were passed in February 2012 to set up a national commission for the World Environment Fund (GEF) and a commission to reclassify national parks and nature reserves.

Politicalcontext

Progress towards civil peace and national reconciliation was encouraging in 2013. A joint force to provide security in the capital was created in March 2013. Joint operations to secure border areas were conducted between the United Nations Operation in Côte d’Ivoire (UNOCI) and the Ivorian army. The dialogue, truth and reconciliation commission (Commission dialogue, vérité et réconciliation) set up in 2011 continued its work. A national social cohesion programme (Programme national de cohésion sociale) was launched in 2013. The return of social and political peace depends on continuing dialogue between the government and all opposition parties. Direct talks began with the former ruling party, the Front populaire ivoirien (FPI). President Alassane Ouattara’s visit to the western part of the country in April 2013 included holding a cabinet meeting in the town of Man. Supporters of the old regime jailed after the 2010-11 post-election crisis were provisionally released.

Peace steadily took hold as the electoral cycle ended fairly calmly, though some outbreaks of violence marred the regional and municipal elections in April 2013. The gradual return of political exiles was co-ordinated with the United Nations High Commission for Refugees (UNHCR). The security situation remains fragile. Laws on nationality and statelessness were passed in August 2013 but the process of restoring social cohesion needs to be strengthened by settling major issues such as persistent clashes over land rights in forest areas, especially in the west. Disarmament of former fighters and professional retraining for demobilised young people and ex-militia needs to be stepped up. The body in charge of disarmament, demobilisation, retraining and economic reintegration of former combatants (Autorité pour le désarmement, la démobilisation, la réinsertion et la réintégration économique des ex-combattants) has shown mixed results.

Social context and human development

Buildinghumanresources

The country needs targeted policies to train the workforce while continuing to improve the education system. The policy of “free schools for all” allows children better access to schooling. Public-sector staff recruitment will focus on education, health and social security until 2020. Gross primary enrolment has increased significantly, from 80% in 2010 to 91% in 2013. To improve quality, the government has reoriented the curriculum towards practical skills and new subjects, including information and communication technologies and human rights and citizenship, along with strict observance of the weekly number of hours for courses.

Efforts must continue to tackle the problem of geographical disparities in teacher-pupil numbers, with classrooms empty in some places and overcrowded in others. Efforts are also needed to improve the primary school completion rate, which stood at a lowly 59.1% in 2012, making it unlikely that Côte d’Ivoire will achieve the MDG of universal primary education by 2015.

More than 36% of the population are aged 15 to 35. They represent a large potential workforce, but their education is not very suited to the needs of employers. Targeted short-term extra training should be provided as a priority for young people who have already left the education system, with the aim of upgrading their key skills and the services needed for supplying major export chains. The young should also be given a chance to obtain certification for skills acquired in the informal sector. Ideally, technical and university courses should include more training in new professions to better respond to market needs.


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HIV/AIDS prevalence among 15-49 year-olds is 3.7% (4.6% among women and 2.7% among men), according to the 2012 Demographic and Health Survey (DHS) and Multiple Indicator Cluster Survey (MICS). Malaria remains the main cause of death, but treatment is now free for cases detected in government clinics. About 8 million insecticide-treated nets were distributed free of charge in 2013.

Povertyreduction,socialprotectionandlabour

Government spending on the poor rose to 9.3% of GDP in 2013 (from 8.6% in 2012), but the 2013 national human development report (Rapport national sur le développement humain) said the multidimensional poverty rate increased from 31.8% in 2008 to 34.4% in 2011, while income poverty increase from 48.9% to 51.3% over the same period. A third of all children under five had stunted growth or chronic malnutrition according to the 2012 DHS and MICS. The government has commissioned the national coffee and cocoa council (Conseil du café-cacao) with upgrading rural roads to improve the transport of food crops to major markets. Greater electrification remains a long-term key to increasing productivity and living conditions in the countryside. The government is also trying to stamp out child labour: there were 303 951 economically active children aged 5-13 in 2012 according to a report by the labour-surveys agency Agepe (Agence d’études et de promotion de l’emploi).

There are still huge needs in the area of social protection, with only 18% of the population using health services and only 69.2% of births in 2011 being assisted. The overall health situation is worrying and the government continued priority programmes in 2013, such as improving the distribution of vaccines and hard-to-find basic drugs. Only 5% of the budget goes to healthcare, far below the 15% called for by the 2001 Abuja Declaration. The three MDGs concerning health are unlikely to be achieved by the target date of 2015. The government declared 2013 the “Year of Health” to focus its efforts on modernising healthcare infrastructure, launching the pilot phase of the new CMU and increasing the number of trained healthcare staff. After a short period of completely free healthcare (April 2011 to January 2012), the government chose to provide free healthcare just for pregnant women and children under five, which will be less of a burden on the budget. A total of 10 541 severely malnourished people, 22 502 moderately malnourished and 15 000 pregnant and breastfeeding women were given nutritional inputs. Child mortality (under fives) declined, from 125 per thousand in 2008 to 108 per thousand in 2012.

The PNDS 2012-15 health plan (Plan national de développement sanitaire) focuses on healthcare staffing, reform of hospitals and the new public health pharmacy (Nouvelle pharmacie de la santé publique, NPSP) so as to increase the supply and quality of service, and reorganisation of community health centres. A total of 4 406 healthcare personnel were recruited and assigned in 2012, increasing the number of staff by 31%.

To improve access to jobs, Agepe was strengthened in 2013 with projects to train and integrate young graduates and jobless people. The Pejedec youth employment and skills training project (Projet emplois jeunes et développement des compétences) began an active phase. The FAFCI women’s support fund (Fonds d’appui aux femmes de Côte d’Ivoire) set up in 2012 was given a XOF 1 billion budget in 2013 to facilitate access to cheap microloans (1% monthly interest). The national monthly minimum wage was increased in November 2013 from XOF 35 000 to XOF 60 000.

Genderequality

Côte d’Ivoire has made legislative and institutional progress in promoting gender equality in all sectors. A policy of encouraging equal opportunity, fairness and gender equality was adopted in 2009, followed by ratification of all international instruments on gender equality and women’s autonomy. Bodies to encourage entrenchment and promotion of gender equality have also been set up, including an office for gender equality and promotion (Direction de l’égalité et de la promotion du genre) and the UNESCO Chair on Water, Women and Decision-Making. The 2014 World Bank report on women listed Côte d’Ivoire as one of the countries that had introduced most reforms, increasing women’s economic opportunities.


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The government should continue efforts to break down the many structural roots of gender inequality. In 2012, 10.3% of members of parliament and 17.2% of those in government were women. Meanwhile, the proportion of girls in education was 46% in primary schools but only 37% in higher education. Efforts are also needed to fight gender inequality in the job market. Only 5.2% of women in the workforce had jobs in the formal sector, compared with 11.5% of men.

thematic analysis: Global value chains and industrialisation in Africa

Côte d’Ivoire participates in GVCs involving many agro-food items (palm oil, cashews, pineapples, bananas) and agro-industries in heavy demand regionally or worldwide. The country supplies 40% of the world’s cocoa, as well as coffee (300 000 tonnes a year) and rubber (256 000 tonnes in 2012). These are exported unprocessed or after intermediate processing and attract giant international firms such as Cargill, Michelin, Olam, Nestlé and Unilever.

Potential exists for better participation in GVCs, through rich soil, plentiful farm labour, established firms and production sectors with good growth prospects. Rubber, for example, already has 16 industrial processing plants. Very good weather for production results in yields among the five highest in the world, in a global market where supply cannot keep up with demand.

Worldwide cocoa demand is also growing, driven by chocolate consumption in emerging countries. Since 2012, Ivorian coffee and cocoa producers enjoy locally guaranteed prices and new quality control giving the right to a country-of-origin label under the 2QC (Quality, Quantity, Growth) programme. The last harvest produced 81% grade-1 cocoa.

Côte d’Ivoire is Africa’s biggest exporter of palm oil, with all processing (into refined oil and by-products) done domestically before export to ECOWAS countries, where demand is soaring. The two main firms, Palmci and Sania, majority-owned by the Ivorian group Sifca and its partners Olam and Wilmar (Singapore), do 90% of their business in the sub-regional market (Burkina Faso, Mali and Nigeria).

Limited access to rural land is one of the main structural obstacles to higher production and yields, mainly of perennial crops. Palm oil yields are seven times less than for growers in Indonesia and coffee yields are two-and-a-half times less than in Indonesia. A lack of secure long-term farmland tenancy (no deeds or leases) limits funding and development opportunities and also the possibility of outsourcing production. A good land access formula is needed, perhaps modelled on neighbouring Ghana’s Lands Commission, which enables a practical link between the government and local tribal chiefs and creates the predictability needed for agricultural contracts.

The government wants to boost the industrial sector’s share of the economy from around 30% of GDP in 2012 to 40% by 2020, and is looking into how to increase raw-material processing, taking into account that some strategic GVCs do not have much room for direct industrial input, such as those whose related products are not traded on world markets. Making a finished product also requires capital and proper transport and distribution. A committed policy of local processing to supply world markets could be costly and of little benefit for GVCs.

Côte d’Ivoire’s best industrial growth opportunities, along with creating value and jobs, lie in GVCs with strong regional potential, and also in strengthening SMEs involved in intermediate export activity. The country has a diversified production, ports and good roads. This potential is still underused in the sub-region, if not underestimated by sectors such as textiles and clothing.

Population growth, urbanisation, the emergence of regional hotel chains, the diaspora and regional trade preferences (zero duty inside WAEMU, preferential access to European markets and only 6% duty on exports to the United States) offer West African stylists and clothes designers healthy niche markets in high-class dressmaking, household textiles, interior decoration, traditional embroidery and luxury handicrafts. Côte d’Ivoire has good industrial capacity to compete in rapidly supplying these customers by diversifying its products. The two main current products, bazin and wax fabric, are only a small part of the regional market’s needs.


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Many industrial opportunities also exist in agro-food, especially tropical fruit processing. Côte d’Ivoire is Africa’s leading cashew-nut producer and top international exporter (450 000 tonnes a year). The wooden furniture market also has big potential, with Africa’s rapid urbanisation. By putting a specific focus on improving port facilities and administration, the country’s geography and expertise in port logistics would be an advantage in attracting assembly operations by big international firms seeking West African markets. The extension of the CET in ECOWAS in 2014 should provide better opportunities for these activities.

Additional obstacles need to be removed to use this regional potential. SMEs still perform too few useful functions for producers, such as packaging, marketing and distribution, and struggle to win new business in raw-material processing or exports. The national survey of SMEs (firms with annual turnover of less than XOF 1 billion and fewer than 200 employees) showed 30 000 enterprises, many more than expected. Nearly all were focused on the local market, 84% of them in the tertiary sector (telecommunications and commerce), only 15% in the secondary (processing) and 1% in the primary sector.

Apart from the idea of creating a guarantee fund for access to credit and setting up an SME development agency, export and sub-contracting activity must be made more attractive through simplified procedures for SMEs, special incentives and greater assistance in management. Small businesses know how to move quickly between sectors and into new and profitable activities. They lack the skills for the formalities required to get into export markets or presenting adequate loan applications. Their production capacities are also still too small to meet large orders.

Better local structuring of activity in special zones, with firms geographically close to the services they require, could also be an important attraction. The Moroccan model of integrated industrial platforms (with offers of infrastructure and training skilled labour) could be followed. The government’s plan to set up new free zones and modernise existing industrial areas is a first step in the right direction.

Business

Cote d'Ivoire 2014 African Economic Outlook