Previous Quarterly Editions
Expropriation Risk: 57 58 57 54 ▼Political Violence Risk:57 57 57 51 ▼Terrorism Risk:46 46 46 46 ►Exchange Transfer and Trade Sanction Risk: 45 45 54 63 ▲Sovereign Default Risk:66 65 73 73 ►
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Protest intensity in 2022 and Q1 2023* 2022 Q1 2023Cost of living : Low LowAll protest: Low Low
Cost-of-living protest risk in 2023*Wage protest: Medium Food/fuel policy protests: Medium
Sub-Saharan African economies in general, and Cote d’Ivoire’s economy in particular, are set to out-perform the economies in the rest of the world with real economic growth in the region averaging 4% of GDP in 2023 and 2024. This is compared to a global average of between 2.7% and 3.2% growth, according to the African Development Bank’s twice-yearly Africa’s Macroeconomic Performance and Outlook report published in January.
*Note: Protest intensity is calculated based on ACLED. Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of calculations, see the introductory essay.
The forecasts are a marginal improvement on Sub-Saharan African growth performance in 2022, when GDP growth slowed to 3.8% compared to 4.8% in 2021, as a result of the combined impacts of the COVID-19 pandemic and the fallout from Russia’s invasion of Ukraine in February 2022, which initially trigged across-the-board price increases in oil, gas, cereals, and energy intensive products such as steel, before leading to inflationary pressure across the supply chain.
Cote d’Ivoire is forecast to see economic growth in excess of 7% in 2023, a marginal increase from the 6.5% recorded in 2022. Inflationary pressures, along with the global tightening of financial conditions, has nonetheless led to rising cost-of-living pressures. These pressures forced the government to intervene in November and impose prices caps on a range of staples including pasta, meat, milk, and tomato paste, in an effort to curb inflationary pressures and circumvent the risk of popular food price riots.
The country’s robust growth performance, and track record of fiscal prudence and responsible public borrowing, have enabled Abidjan to emerge from the twin external shocks of COVID-19 and the Russian invasion of Ukraine in a far stronger position than neighbouring Ghana.
But President Alassane Ouattara’s government in Côte d’Ivoire was still forced to call on the IMF for a
USD2.6 billion financial assistance package to be disbursed in direct and indirect subsidies, to help curb price pressures on vulnerable households, offset increased security spending, and help to bridge a modest widening of macroeconomic imbalances caused by the twin external shocks. An IMF team departed the commercial capital in March, and a favourable decision on the request for financial aid is now pending.
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The country has retained its B-rated sovereign debt status and remains one of the Sub-Saharan African region’s most favoured destinations for foreign direct investment, with little or no risk of the government defaulting on its stocks of public debt and where the risk of outright expropriation of investor assets is seen as extremely remote.
The government is nonetheless pressing ahead with plans capture an ever-greater proportion of the global chocolate industry, currently valued at in excess of USD130 billion. While Côte d’Ivoire produces around two million tonnes of cocoa beans a year – which is roughly 40% of global supply – it only processes around 30% of its raw product into cocoa butter and cocoa powder domestically, where the profits are significantly higher.
Côte d’Ivoire recently unveiled plans to process 100% of domestic production into cocoa butter and cocoa powder by 2030. With demand for chocolate forecast to grow by 3-4% a year, the global chocolate industry is expected to increase to more than USD200 billion before the end of the decade.
Côte d’Ivoire and neighbouring Ghana are respectively the world’s largest and second largest producers of cocoa beans, accounting for 65% of all global production. The countries are offering tax incentives for international buyers to process ever-increasing amounts of the raw product domestically, thereby capturing an increasing share of the value chain. The more international buyers and processers process domestically, the lower the export taxes.
Millions of subsistence cocoa farmers in both countries – many of whom work small holdings of only a few acres and subsist on less than USD1 a day – are expected to see a significant improvement in their incomes over time as more and more of the raw product is turned into cocoa butter and cocoa powder locally, squeezing out international processers from their hitherto highly profitable segment of the chocolate value chain.
Following the outbreak of civil war in 2002, the resumption of political violence in 2010-11, and the violent street protests in 2020 over President Ouattara’s controversial third term in which 85 people were killed, domestic political violence risks appear to be waning in the face of the ongoing national dialogue between leaders of the main political parties and civil society groups in pursuit of national reconciliation.
A decision by the local courts two commute the two-year prison sentences imposed on 26 supporters of former President Laurent Gbagbo for the violent demonstrations to suspended sentences has helped further to ease tensions on a hitherto troubled political landscape. The harsh prison sentences triggered sharp criticism from rights-monitoring group Amnesty International as being excessive, with which the appeal courts concurred.
Tensions between the Côte d’Ivoire government and the military junta in neighbouring Mali continue to fester following Mali’s miliary authorities’ arrest of 49 Côte d’Ivoire soldiers at Bamako airport in July last year, accusing them of being mercenaries without orders or supporting documents. The soldiers were formally charged in August, and Côte d’Ivoire has continued to demand the soldiers’ release.
The two governments have been locked in a diplomatic tug-of-war since the arrests. Mali has been demanding the extradition of Karim Keita, the son of former President Ibrahim Keita who was overthrown by the junta in 2020, currently living under political asylum in Abidjan. Meanwhile, Abidjan demanded the expulsion of Mali from the Economic Community of West African States (ECOWAS) regional trading bloc.
Tensions are expected to ease significantly now both Mali and Burkina Faso have agreed with ECOWAS on a 20-month timetable for the return to civilian rule, and the restoration of constitutional order.
Memories of the threat posed by jihadist terrorism groups such as Islamic State and Al-Qaida were rekindled in November following the long-awaited trial of 18 people accused of aiding and abetting one of West Africa’s bloodiest jihadist attacks – the machine gun assault on a beach resort in 2016 that left 19 people dead.
Only four of the accused were in court – the others, including the suspected masterminds, are either still on the run or held in Mali. The attack took place at the Grand-Bassam tourist complex some 25 miles to the east of Abidjan, and Al-Qaida in the Islamic Maghreb claimed responsibility. Despite fears of further attacks, neither of the two Islamic extremist groups have so far managed to secure a foothold in the country.
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The price caps introduced by the government in November helped forestall an inflationary spiral, with inflation falling to 4.8% in January from 5.1% in December, the fourth consecutive monthly decline.
The twin external shocks arising out of the long-term impacts of the COVID-19 pandemic and the reverberations triggered by Russia’s invasion of Ukraine in February 2022, while contributing to inflationary pressures, have not knocked the medium-term growth forecasts off course.
The IMF decision on the requested USD2.6 billion loan, if approved as expected, should help the government overcome any short-term pressures that might arise on its finances and economic prospects.
The government announced in October a budget of USD16.9 billion for the 2023 fiscal year – up 18.1% on the initial budget proposed for 2022 – with much of the increase targeted at those sectors still suffering from the fallout associated with COVID-19 and the Russia/Ukraine crisis.
Despite increased public spending, total government debt is forecast to peak at 52% of GDP in 2022 and fall to 50.8% by 2027 – one of the lowest in Sub-Saharan Africa – as a result of steady economic growth and rising fiscal receipts. With a fiscal deficit of below 5% of GDP, the risk of a sovereign default is remote.
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