Index trend
Previous Quarterly Editions
Expropriation risk: 54 53 54 49 ▼ Political violence risk:51 51 51 49 ▼Terrorism risk:46 44 43 41 ►Exchange transfer and trade sanction risk: 55 55 55 55 ►Sovereign default risk:73 73 73 73 ►
Overall Risk Temperature: 57 (Significant -1) TREND ▼
Special topic: Relationship with the 'global rules-based order'
Cote d’Ivoire’s mainstream political leaders support multiparty democracy and the global rules-based order, which have underpinned the development of the country’s economy since independence from France in 1960. This includes President Alassane Ouattara and the newly elected leader of the main opposition Democratic Party of Cote d'Ivoire (PDCI), Tidjane Thiam. Both have been part of international institutions: Ouattara was a former International Monetary Fund (IMF) managing director, and Thiam was the CEO at Credit Suisse.
Cote d’Ivoire is a vocal advocate of multiparty democracy, human rights and economic development through free trade. Alongside the Economic Community of West African States (ECOWAS) and the African Union (AU), they have supported free trade initiatives at both the regional and continental levels, which are essential for Africa’s economic development.
Despite calls for U.N. and international monetary institutions reform to provide greater representation and support to Africa, both ECOWAS and the AU credit the rules-based international order with fostering democracy, human rights, free trade and capital mobility, which have helped promote economic growth in Cote d’Ivoire. Moreover, when former President Laurent Gbagbo refused to accept Ouattara’s election victory in 2010, the international community stood by Cote d’Ivoire until democracy was fully restored. Few other African countries have received such sustained Western support.
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Cote d’Ivoire and neighboring Ghana are the world’s largest and second-largest cocoa producers, respectively. Together they aim to dominate the international cocoa industry. This will reduce their dependence on exporting primary commodities in a global industry expected to grow to $200 billion by 2028.
The government in Accra continues to press ahead with plans to ensure that 100% of all domestically produced cocoa is processed locally by 2030. This will benefit international companies such as Cargill, the food and agricultural giant, which recently built a $100 million processing plant in Yopougon. Smaller players that cannot match such investments may be forced out of the sector.
There is little or no prospect of the government defaulting on its stock of domestic and external debt. The country is expected to retain its B-rated sovereign status for the foreseeable future. Its ability to tap additional loans from the international capital markets may, however, be constrained until the government recovers from the current pressure on the public finances. The IMF’s April 2023 $3.5 billion extended credit facility is designed to ease this situation.
Ouattara must step down when his third term of office expires in 2025. The outcome of the race to succeed him from within the ruling Rally of the Republicans and the main opposition PDCI Democratic Party is likely to rest on a knife’s edge. There is a risk of outbreaks of violence should the result be narrow or contested.
The West African country appears to have weathered the risk of street protests over increased food and fertilizer prices triggered by Russia’s invasion of Ukraine. Cocoa yields have declined sharply, as farmers can no longer afford the volumes of fertilizer needed to boost output.
Fresh challenges remain on the horizon. The government must now shift from providing broad food and fuel subsidies to implementing a more targeted policy of cash transfers to low-income groups. This change is necessary to comply with the IMF’s $3.5 billion financial rescue package, but it also carries the risk of sparking protests.
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Political stability will continue to be tested by jihadist strife in the northern region bordering Burkina Faso. It has led to a growing number of displaced people and increased humanitarian challenges.
The government has sought to neutralize the threat of jihadist violence from the Sahel by increasing security spending in the north and strengthening security cooperation with regional neighbors. They are also targeting youth poverty and unemployment to reduce the risk of youth radicalization.
Despite official fears of the threat posed by renewed terrorist incidents, militant violence in the country has actually declined in recent years. Neither al-Qaida in the Islamic Maghreb nor Islamic State have succeeded in securing a foothold in the country.
Cote d’Ivoire entered the new year with expressions of confidence from the IMF, which approved a $3.5 billion loan package. The World Bank also contributed $300 million to the country’s 2021 – 2025 National Development Plan, while the African Development Bank provided a 165-million-euro loan to promote economic diversification.
The World Bank and the IMF are both forecasting an economic growth rate of 6.5% of GDP for 2024 and 2025. Inflation eased to a three-year low of 3.1% in January, down from the 3.9% recorded in December. Simultaneously, investors expressed their confidence in the country’s medium-term economic outlook by investing US$2.6 billion in two Eurobonds with maturities of nine and 13 years in Accra’s first return to the international bond market in two years.
Cote d’Ivoire is set to join the ranks of Africa’s major oil producers this year. Italian oil and gas explorer Eni’s proposed US$10 billion investment in the offshore Baleine field is gathering momentum. The country is already a minor exporter, but the Baleine field promises to increase production from the current level of 30,000 barrels per day to between 150,000 and 200,000 barrels per day by 2027 to 2028.
Cote d’Ivoire can expect to maintain if not improve its B-rated sovereign status in the months ahead, making the risk of default on the government’s stock of domestic and international debt extremely remote. The outlook is for continued fiscal consolidation in the 2024 budget, underpinned by prudent tax policies and increased revenue-raising measures. The government aims to reduce the budget deficit to around 3% of GDP, down from 5% of GDP in 2023, over the short- to medium-term horizon.
The World Bank expects the government’s continued investment in infrastructure, especially in the digital and transport sectors, recent oil discoveries and prudent macroeconomic policies to lead to a significant uptick in business confidence and productivity. This is currently forecast to make the country one of the fastest-growing economies in sub-Saharan Africa.
Public debt remains stable at around 57% of GDP — particularly low by African standards. This is forecast to fall significantly to around 50.8% over the next three years to 2027. No other African country can claim to have emerged from the triple exogenous shocks of the COVID-19 pandemic, rising global interest rates and the economic reverberations arising out of Russia’s invasion of Ukraine in such rude health as Cote d’Ivoire.
