Previous Quarterly Editions
Expropriation Risk: 56 56 56 56 ► Political Violence Risk: 57 57 57 57 ► Terrorism Risk: 44 44 46 46 ► Exchange Transfer and Trade Sanction Risk: 55 55 55 55 ► Sovereign Default Risk: 66 66 66 66 ►
TREND ►
Government's commitment on climate policy Weakest 1 2 3 4 5 Strongest
Côte d’Ivoire (C.D.I.) is planning an ambitious expansion of renewable energy. However, this is only as part of an expansion in overall energy production that will see renewables and traditional fossil fuel production roughly double over this decade. President Alassane Ouattara’s ruling Rally of the Houphouëtists for Democracy and Peace (RHDP) party is committed to boosting installed generation capacity from some 2,229 megawatts (MW) at present to 4,663 MW by 2030. However, renewables, which currently account for around 40% of energy production (mostly hydro), are only forecast to increase to 42% of the overall energy mix.
C.D.I. hailed Italian oil and gas explorer Eni’s discovery of an estimated 2 billion barrels of oil and 2.4 trillion cubic feet of natural gas in 2021 in offshore waters, roughly ten times the size of the country’s existing hydrocarbon reserves, and announced its intention to press ahead with plans to export the oil and harness the gas for domestic electricity production. Non-hydro renewables such as solar currently account for some 13 MW of installed renewable capacity, which will increase only modestly under current energy production expansion plans.
The new oil and gas discoveries can be expected to begin flowing in the next two to three years at the same time that the developed world is beginning to turn away from the production of new discoveries of fossil fuels, which are expected to decline over the medium to long term. C.D.I., along with other African oil producers, is calling for a so-called ‘just energy transition’ in which developing countries are permitted to continue producing and using fossil fuels for longer, to help foster their economic development. Africa accounts for just 3% of global carbon emissions and insists it cannot be expected to reduce fossil fuel dependence at the same pace as the developed world.
Gas currently supplies C.D.I. with some 60% of its electricity generation, and the government has signalled its intention to capitalise on recent offshore gas discoveries to power about half the planned increase in power generation over the forecast horizon. Energy Minister Thomas Camara announced recently the government plans to increase solar and biomass capacity (made from waste in the palm oil and cocoa sectors) but that gas will remain a key component in electricity production for the foreseeable future.
C.D.I. continues to remain a favoured destination for foreign investment, not least because of the country’s longstanding track record of upholding private property rights. At present, there is little or no indication of any appetite to alienate foreign investors by deviating from established precedent.
Tensions remain, however, between the governments of C.D.I. and Ghana and the international cocoa buyers, following the Cocoa Agreement signed in August 2021 aimed at tackling child labour, child slavery and low incomes. The two countries account for 60% of global cocoa output but receive only 3% of global revenues (estimated to be between USD80-100 billion per annum). They have been trying to increase their share of industry revenues since the inauguration of the 2018 Abidjan Declaration calling on the two countries to coordinate production, marketing and sales, and research. Attempts to improve the fortunes of growers by imposing a USD400-a-ton-levy on cocoa exports continues to attract heavy criticism from buyers.
The price of cocoa is, however, rising sharply because of more traditional supply and demand issues. Following price falls in 2021 due to oversupply, prices are forecast to increase in 2022 due to climate change-related drought. The absence of rain in January is expected to reduce the quality of the November-March main crop and shrink the April-November secondary crop as lack of rains and intense heat reduces the size of the beans.
C.D.I. appears to have put its track record of civil unrest behind it following a two and a half month-long national forum attended by the government, twenty political parties and more than two dozen civil society organisations, which ended in March, in which all participants committed themselves to non-violence.
The forum sought to turn the page on the 2010-11 civil war in which some 3,000 people were killed, and the renewed civil strife which erupted in 2020 in which an estimated 100 people died when President Ouattara sought what was branded an unconstitutional third term by opponents.
The all-party dialogue has been seen as an opportunity to cement the current mood of reconciliation, which Prime Minister Patrick Achi said symbolised “turning the page” on the country’s troubled past ahead of the next presidential ballot due in 2025.
Ouattara’s government has announced plans to spend USD55 million to help create jobs in gold and cotton production, in a bid to offer an alternative to the lure of jihadist recruitment. The funds are to be invested in projects aimed at thousands of young people over the next three years, with the median age in C.D.I. being just 19. This is after Achi claimed the root cause of most crises and instability was “idleness” amongst “despairing young people”. The north of the West African country was the target of terrorist attacks in 2020-21, which the government has linked to the Islamic insurgency that began in neighbouring Mali and has since spread to other countries in the region.
The government forecasts economic growth will increase to 7% of gross domestic product in 2022, up from the 6.5% recorded in 2021, giving the West African country one of the world’s fastest economic growth rates, a position the country occupied before the COVID-19 pandemic. Not only has the country weathered the downturn better than expected but no other African economy has rebounded as quickly as C.D.I. The country’s USD71 billion economy continues to see high growth rates, driven largely by expansion in the transport, construction, agricultural and hydrocarbons sectors.
C.D.I.’s strong growth outlook, relatively stable inflation and renewed political stability continue to inspire investor confidence, making the prospects of a sovereign default extremely remote. The West African country is one of the few sub-Saharan African sovereigns that have been able to borrow on the international capital markets both before and after the COVID-19 pandemic, largely because of the country’s track record for economic reform and fiscal prudence that has enabled Ouattara’s government to borrow without penalty.
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