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Expropriation Risk: 43 45 48 50 Political Violence Risk: 62 62 63 61 Terrorism Risk: 38 38 39 42 Exchange Transfer and Trade Sanction Risk: 45 42 44 45 Sovereign Default Risk: 38 37 37 40
TREND ▲ OUTLOOK ▲
The twin challenge posed by the COVID-19 outbreak and falling oil prices arrived at a time of some political uncertainty for Côte d’Ivoire. After a prolonged period of relative stability and prosperity under President Alassane Ouattara, the presidential elections due at the end of October 2020 introduced an aspect of unease earlier this year. Statements from Ouattara in January 2020 about constitutional change suggested that he may be clearing the way to run for a constitutionally questionable third term, particularly as they followed the government’s issue of an international arrest warrant for former rebel leader and National Assembly President Guillaume Soro, who it accused of plotting a coup. Soro had already announced his intention to run for the presidency on an avowedly populist ticket, claiming significant support in the army. In March 2020, Ouattara defused some of the tension by announcing that he would respect the two-term limit on the presidency and not run again, while adding a dig at long-time rivals Laurent Gbagbo, 75, and Henri Konan Bédié, 85, by stating his desire to transfer power to “a younger generation”. Prime Minister Amadou Gon Coulibaly, long a Ouattara loyalist, was quickly nominated as the presidential candidate for the ruling RHDP and looks well placed to win, especially given his role in establishing the government's universal healthcare programme, which is especially targeted at low-income citizens, although he may also be blamed for the government’s failure to deliver on other promises in areas like housing. He will also hope that Ouattara uses the political leeway gained from not running to take the difficult decisions required to tackle the virus crisis. Ivorians remember well the outbreak of the Ebola virus in 2014 that centred on neighbouring Liberia, as this resulted in deep and long-lasting economic damage across the region, and the response to government measures to limit the impact of COVID-19 has so far been positive. By mid-March 2020, the government had ended international arrivals from most long-haul destinations, closed schools and universities, and banned all public gatherings in places of entertainment and open spaces. Having already acknowledged that its original growth forecast of 7% this year would be more than halved, at the start of April 2020 the government pledged 500 million USD to support jobs in the commodities sector, which includes coffee and cotton as well as cocoa, as global demand falls. The longer-term outlook has also been made bleaker by the prospect of a sustained drop in oil prices. While the West African country remains a modest exporter at present with output averaging around 70,000 barrels per day, it has been anticipating a marked increase in exploration and production over the medium term to around 200,000 barrels per day. This ramp-up will be delayed as consequence of the virus-related drop in global demand, and that delay may be prolonged. Meanwhile, the impact of lower prices on current spending plans will be less than in many other oil-producing countries but will complicate government efforts to offset the economic impact of the virus.
Abidjan is still awaiting a decision by the US Congress on a possible ban on imports of Ivorian cocoa because of the use of child labour. The US Senate sponsored investigation into the use of children on cocoa farms in both Côte d’Ivoire and Ghana in late 2019, after evidence emerged that a voluntary agreement with leading chocolate manufacturers had failed to reduce the practice. Media reports at the start of April 2020 indicated that the resulting report will show that the number of children working on farms has actually risen over the past decade. The Ouattara government has insisted that claims of child exploitation are unfair, although it has tried to raise the price paid for cocoa so that more money reaches farmers and can be used to pay adult labourers. While prospects of an immediate clash over the issue have been overtaken by Washington’s preoccupation with COVID-19, Congress will return to it once the virus emergency is over.
TREND ▼ OUTLOOK ▲
The international arrest warrant issued against National Assembly speaker and presidential hopeful Guillaume Soro at the end of 2019 accused him of embezzlement and money laundering as well as planning to overthrow the government. Soro, who had spent the preceding months in Europe, was attempting to return to the country when the warrant was issued, with the public prosecutor threatening a lifelong prison sentence. In his absence, 15 of his leading supporters, including several MPs, were arrested in the capital. The move was widely seen at the time as intended to ensure that he would not prevent Ouattara from winning a third term. While the president’s subsequent decision not to stand has reduced some of the backing for Soro, he still retains significant support among former rebel commanders who now hold senior posts in the army and there remains a risk that a standoff between Soro and Ouattara could lead to violence. Such a confrontation may be less likely if the October 2020 elections are postponed.
Côte d’Ivoire and neighbouring Ghana remain two of the most stable and prosperous countries in West Africa but both have been affected by the wave of deadly jihadi insurgent attacks seen in the region in recent years. Neighbouring and landlocked Burkina Faso is now host to the world’s fastest-growing Islamic insurgency, and the risk of militant atrocities spilling out into neighbouring countries is rising.
Inflation rose to 2.6% in February 2020, the highest level since 2013 and up from 2% in January 2020 on rising food and transport costs. Shortages related to the virus emergency are likely to continue pushing the rate upward, and related disruption in the crucial cocoa sector will add to pressure on the currency. It may also delay the move, overseen by President Ouattara, to switch the eight members of the West African Economic and Monetary Union (WAEMU) from the CFA franc to a new currency, the Eco, later this year.
Even with the early impact of falling oil prices and the Covid-19 outbreak, Côte d’Ivoire does not face an immediate balance of payments crisis, near-term debt distress, or unmanageable deficits. External public debt remains relatively low at less than 40% of GDP, and it can sustain plans for new bond issues to help finance key reconstruction projects. But a prolonged combination of higher levels of spending to combat the virus and falling income from cocoa and oil could create problems in the medium term.
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