Previous Quarterly Editions
Expropriation Risk: 44 45 43 45 Political Violence Risk: 60 62 62 62 Terrorism Risk: 36 38 38 38 Exchange Transfer and Trade Sanction Risk: 45 45 45 42 Sovereign Default Risk: 38 38 38 37
TREND ▲ OUTLOOK ▲
Côte d’Ivoire is debating whether to re-instate age limits to prevent those who are over 75 from becoming presidential candidates. This restriction, which was in place until the constitutional changes made in 2016, would rule out three of the leading contenders for the presidential election due in October 2020. The current president, Alassane Ouattara, is already 77, former president Henri Konan Bedie is 85, and another former president, Laurent Gbagbo, who is currently barred from running next year, is already 74. All three led their respective parties into the election that resulted in the civil war of 2010-11. Instituting an age rule would prevent Ouattara from seeking a third consecutive five-year term, something that is likely to be welcomed by an electorate that, polls show, strongly favour a two-term limit. It would also prevent Gbagbo, recently acquitted of crimes against humanity by the International Criminal Court (ICC) related to the 2010-11 conflict, from finding a way back onto the ballot. If Ouattara does not stand, his preferred successor is expected to Prime Minister Amadou Gon Coulibaly. In July, Bedie travelled to Brussels, where Gbagbo remains pending an appeal against his acquittal. The two held talks on how to defeat Ouattara’s Rally of the Republicans (RDR) party, although an effective anti-RDR alliance would appear difficult to sustain. Meanwhile, Guillaume Soro, 47, a Northern rebel leader who has already held the posts of prime minister and speaker of the National Assembly, has launched his own presidential bid and looks set to play a pivotal role in the outcome. The election will dominate the political landscape for the next twelve months, and a challenge to the result may well extend the unsettled period for some months afterwards. However, despite this uncertainty, the IMF expects growth to be 7.5% for 2019, slightly up on last year. Assuming there is no repetition of the post-election conflict experienced in 2010-11, the economy looks robust for at least the medium term. One area of concern, however, is the cocoa sector. Around 20% of the population depend on cocoa for their livelihood and it accounts for 40% of exports. Although it is the world’s leading producer of cocoa, the country is estimated to earn less than 8% of a global cocoa-chocolate market that is worth 100 billion dollars. Facing competition from new cocoa producers, the government is keen to move up the value chain into processing and distribution, where the bulk of the sector’s profits are made. However, it must first deal with renewed concerns in Washington about the use of child labour on cocoa farms.
TREND ▲ OUTLOOK ▼
Although cocoa remains the central pillar of the economy, the Ouattara administration is keen to boost hydrocarbon output amid the rising interest in exploration opportunities in West Africa. In July, it signed new production sharing contracts with Total and Eni to develop four offshore oil blocs. This should eventually result in investment worth almost 200 million dollars. The government changed its approach to the sector in 2015 by introducing the use of production sharing agreements and hopes that more will follow this initial success. The country should also benefit now that Total is set to complete its acquisition of Anadarko’s African assets. Meanwhile, the government is working hard to head off the threat of a US ban on imports of Ivorian cocoa over the use of child labour. The move, led by two senior Senators, would use existing legislation that allows customs agents to bar imports if there is a ‘reasonable’ indication that child or forced labour was involved in their production. The president’s wife met a US congressional delegation in Abidjan in August and, while acknowledging that this is still an issue, the government hopes to produce an acceptable plan for monitoring and then reducing the employment of children in the sector.
TREND ► OUTLOOK ▲
Tensions are already rising between Ouattara’s supporters and those of the other potential candidates ahead of next year’s election. Even if the older generation of politicians are excluded from the contest by age limits, all will work hard to influence the outcome by fielding proxies and mobilising their supporters. While a return to the previous widespread and bloody street clashes between Ouattara and Gbagbo supporters would seem unlikely after a decade of strong economic growth, a gradual increase in political violence over the coming months is possible.
While the migration of jihadists from Syria, Iraq and Libya to West Africa is a serious worry for the country, which suffered a terrorist incident at the beach resort of Grand-Bassam in 2016, another concern for Abidjan is the rise in piracy in the Gulf of Guinea, which stretches from Senegal to Angola. In 2018, 40% of the world’s seaborne attacks, including ship hijackings and ransoms, took place in the region as Somali piracy relocates to Africa’s western seaboard.
TREND ▼ OUTLOOK ►
Satisfied with the government’s economic progress, the IMF disbursed another tranche of 135 million dollars in July under the lending agreement reached in 2016. The country’s budget deficit is on target to fall to 3% of GDP this year, in line with the regional average. The annual inflation rate rose in June, responding to a sharp rise in food prices, but it remains manageable at 1.2%. Côte d’Ivoire has agreed to support the eco, the proposed new currency for the 15-member Economic Community of West African States (ECOWAS), although President Ouattara, who would play a significant role in such a transition, is not seen as keen to rush its introduction.
With a reputation for sound economic policy, the Ouattara government continues to retain the confidence of international capital markets. Its debt-to-GDP ratio stands at around 30%, which is low by African standards, and it successfully issued Eurobonds in 2017 and 2018 while offering some of the lowest yields in the region. The government has the option of tapping the international capital markets again if needed, although the cost of doing so is likely to rise as the 2020 election approaches.
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