Previous Quarterly Editions
Expropriation Risk: 45 48 50 52 Political Violence Risk: 62 63 61 63 Terrorism Risk: 38 39 42 44 Exchange Transfer and Trade Sanction Risk: 42 44 45 45 Sovereign Default Risk: 37 37 40 38
TREND ▲ OUTLOOK ▲
Just as it looked as though the presidential election in October 2020 would be relatively straightforward, the frontrunner to succeed President Alassane Ouattara died on July 8 2020. Prime Minister Amadou Gon Coulibaly, 61, became ill during a cabinet meeting and died at a nearby hospital. He had been chosen as the candidate of Ouattara’s ruling Rally of Houphouëtists for Democracy and Peace (RHDP) in March 2020, but subsequently spent two months in Paris to be treated for a serious heart condition. He had only returned to the country a week before his death. With a little over three months to go to polling, Gon Coulibaly was the clear frontrunner after several potential candidates were barred from standing. Although the RHDP has a potential replacement in Defence Minister Hamed Bakayoko, Gon Coulibaly’s death quickly sparked speculation that Ouattara may resurrect his earlier ambitions for a constitutionally questionable third term. Meanwhile, the government continues to deal with the impact of COVID-19 on the population, public finances, and economic growth. It has done well to limit fatalities, with the 14,000 confirmed cases recorded by mid-July 2020 producing less than 100 deaths. Moreover, with the country’s long-running track record of high economic growth, moderate external and fiscal deficits, and low inflation, the disruption associated with the effects of the pandemic should be relatively short term. Nevertheless, the state of the regional and global economy, together with the policy measures in place to stem the spread of the virus, are currently reducing economic activity across multiple sectors. Falling demand for exports, the slump in FDI inflows, and disruptions to large-scale infrastructure programmes, as well as a government relief plan worth 1.5% of GDP, will all contribute to a sharp fall in growth this year. However, the country is better protected than some of its regional neighbours because it is less reliant on income from hydrocarbon exports, tourism, or remittance inflows. At the same time, international prices for cocoa, the country’s main tradable commodity which accounts for 40% of exports, have remained strong. Consequently, in July 2020 the finance ministry estimated that growth in 2020 will fall below 1%, the lowest figure for a decade and down from 6.9% in 2019, although it expects a sharp rebound in 2021. The combination of falling tax revenues and rising public spending, as a result of COVID-19, will see the deficit reach around 5.5% in 2020 compared to 2.3% in 2019. Similarly, government debt is forecast to rise to 43.5% of GDP this year (2020), although this remains well below the 60% average for African peers. Falling oil prices will have little impact on the balance of payments as the country is a net importer of hydrocarbons. The devastating flash floods in the coastal city of Abidjan in June 2020, which caused widespread damage and twenty deaths, have been widely blamed on a combination of rapid urbanisation and illegal development facilitated by corruption.
The Ivoirian government remains determined to block a report produced for the US Department of Labor which shows that the proportion of children employed in cocoa production across Côte d’Ivoire and Ghana rose from 30% to 41% between 2009 and 2019. The US Senate sponsored the investigation into the use of children on cocoa farms in both countries after evidence emerged that a voluntary agreement with leading chocolate manufacturers had failed to reduce the practice. First Lady Dominique Ouattara is leading the response and has lobbied the US Congress in a bid to head off a US ban on cocoa imports from the two countries on the grounds that they were produced with child labour. The government is disputing the methodology in the report. 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 pandemic emergency is over. Meanwhile, the government is rolling out a programme to boost domestic cocoa exporters by reducing the fees they pay when acquiring beans from the Coffee and Cocoa Council (CCC), while also limiting the stockpiling of beans by multinational traders.
Some senior members of the RHDP are urging President Ouattara to seek a third term after the death of Amadou Gon Coulibaly, but others are more cautious. The risk of serious demonstrations rose when Ouattara was originally considering whether to stand again but was defused when he said that power should move to a ‘new generation’, a move which neatly marginalised perennial challenger Henri Konan Bedie, now 86, and Laurent Gbagbo, Ouattara predecessor as president. Guillaume Soro, the former rebel leader and would-be presidential candidate, was convicted of embezzlement in absentia and sentenced to 20 years in jail in April 2020. He is not expected to return to the country and will not be on the ballot. Although the country has not seen a peaceful transition of power since independence, the outlook is still good for relatively peaceful elections in October 2020 if the RHDP can quickly rally around a new candidate. However, if Ouattara pursues a third term then tensions will quickly rise.
Côte d’Ivoire is one of the most stable and prosperous countries in West Africa but is now concerned about the risk from northern neighbour Burkina Faso, which is experiencing the world’s fastest-growing Islamic insurgency. In June 2020, a cross-border jihadist attack killed at least 12 members of the security forces at an army post in Kafolo, an Ivoirian town near the border. The attack was apparently in revenge for a recent joint Ivoirian-Burkinabe mission against a terrorism training camp inside Burkina Faso.
TREND ► OUTLOOK ▼
Inflation has remained below 3% in recent monthsand even food inflation remains steady. The impact of COVID-19 means that the move, largely engineered by President Ouattara, to switch the eight members of the West African Economic and Monetary Union (WAEMU) from the CFA franc to new a currency, the Eco, will not now happen before 2021.
TREND ▼ OUTLOOK ►
The debt-to-GDP ratio is expected to rise to 44% this year, up from 38.6% in 2019. The country is participating in the G20’s Debt Service Suspension Initiative (DSSI) that would suspend debt payments on some 230 million USD of sovereign debt until the end of 2020, allowing the country to spend more on public health and tackle the fallout from the COVID-19 public health crisis. The DSSI initiative does not apply to private sector lenders as non-payment of these debts would automatically result in the downgrade of credit ratings. The country’s sovereign balances are unlikely to be affected by the COVID-19 crisis and, because of prudent debt management, the country does not face significant principal debt repayments until 2024.
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