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Expropriation Risk: 56 56 56 56 Political Violence Risk: 57 57 57 57 Terrorism Risk: 42 42 44 44 Exchange Transfer and Trade Sanction Risk: 55 55 55 55 Sovereign Default Risk: 66 66 66 66
TREND ►
Third-term President Alassane Ouattara’s ruling Rally of Houphouetists for Democracy and Peace (RHDP) celebrated victory over opposition rivals in the March 2021 legislative ballot, in which the ruling party won 137 of the 254 National Assembly seats. The vote passed peacefully, unlike the October 2020 presidential poll in which more than 85 people died in pre- and post-election violence and which was also boycotted by the main opposition parties. In contrast, all major opposition parties participated in the March 2021 legislative elections for the first time since the eruption of the 2010-11 civil war that resulted in the death of more than 3,000 people.
This has raised hopes that Côte d’Ivoire has put its decade-long political turmoil behind it. Opposition parties won only 97 seats in March 2021, significantly less than expected. The largest opposition grouping will now be a coalition formed by members of former President Henri Konan Bedie’s Democratic Party of Côte d’Ivoire (PDCI) and former President Laurent Gbagbo’s Ivorian Popular Front (FPI), which together won 50 seats. While the RHDP’s 137 seats is less than the two-thirds majority it won in the 2016 legislative ballot (which then enabled it to re-write the constitution), it is still large enough to push through Ouattara’s third-term agenda of attracting foreign investment and cutting red tape.
The turnout was relatively low at 37.8%, although this was roughly comparable with the turnout in 2016. Foreign investors are likely to be encouraged not only by the opposition’s poor performance but also by the RHDP’s success in winning support in a broad range of regions beyond its traditional strongholds in the north, enabling it to claim status as a truly national party. Any lingering opposition hope that it could leverage opposition against Ouattara’s constitutionally questionable third term would seem to have been laid to rest.
Ouattara insisted that the new constitution re-set the clock and allowed him to run for a third term, whereas previously presidents were limited to two. Ouattara lost little time in appointing Patrick Achi, a long-time confidant, as the new prime minister, following the March 2021 death of Hamed Bakayoko, the second prime minister to die in eight months.
The country’s economy is now set to rebound from the impact of COVID-19, which saw economic growth fall to less than 2% in 2020, the lowest level in recent memory. The International Monetary Fund expects growth to reach 6.5% in 2021, making Côte d’Ivoire Africa’s fastest-growing economy after Ethiopia. The world’s largest cocoa producer will nonetheless face formidable challenges supporting economic recovery and managing debt.
Attempts by the governments of Côte d’Ivoire and Ghana to boost the incomes of an estimated three million subsistence cocoa farmers, by unilaterally imposing a USD400-a-ton levy on all purchases of cocoa beans in late 2020, have triggered an unprecedented standoff between producers, traders and processors of the cash crop. The two West African cocoa producers, who account for 60% of global output, have been accused by large US chocolate vendors of behaving akin to a ‘cocoa cartel’ for introducing the levy. The US companies have in turn been accused of abandoning their traditional purchases of West African cocoa, and of trying to ‘subvert’ established markets by buying cocoa on the US futures market or sourcing supplies from Asian producers.
The standoff has led to warnings by both West African countries that they will suspend the US companies’ licence to operate in their territories if they continue to avoid paying the levy. The companies have responded that they have had little option but to cut costs in the face of reduced chocolate demand during COVID-19. The accusations have further tarnished the reputations of the chocolate vendors, who have come under increasing pressure for their role in deforestation, child labour and poverty. But fears of a potential US cocoa import ban over rising child labour in the industry appear to have receded.
The legislative elections in March 2021, in which all major opposition parties participated for the first time since the 2010-11 civil war, passed without any significant violent protests, in contrast to the presidential election of October 2020. The success of the ruling RHDP party in broadening its appeal across the country, and the relatively poor performance of the opposition PDCI and FPI parties, have been interpreted as signalling that the Ivorian population, weary of a decade of political violence, have turned the page on past political turbulence and backs Ouattara’s agenda of economic growth and socio-economic improvement for all. Ouattara’s third term has ceased to be an electoral issue, and the March 2021 ballot was more representative of the political landscape in the country of any ballot since 2010.
Although Côte d’Ivoire remains one of the most stable and prosperous West African countries, it has become increasingly alarmed by the growing risk from its neighbour Burkina Faso, host to the world’s fastest-growing Islamic insurgency. An attack in March 2021 by an estimated 60 gunmen, believed to be jihadis from Burkina Faso, killed at least three soldiers at military installations in Kafolo and Kolobogou, the latest in a series of cross-border skirmishes.
With the economy expected to rebound sharply this year following the downturn in 2020 ,triggered by COVID-19, Côte d’Ivoire expects its budget deficit to fall to 3% of gross domestic product (GDP) by 2023, compared to 5.9% for 2020. Ouattara’s government plans to spend the equivalent of USD2.8bn, about 5% of total output, to mitigate COVID-19’s negative socio-economic impacts. The government is allocating the equivalent of 1% of GDP for coronavirus support in 2021, helping to kickstart economic recovery.
The Ouattara government’s commitment to fiscal prudence and economic reform has not been derailed by COVID-19, as reaffirmed by Fitch’s decision to retain Côte d’Ivoire’s B+ credit rating and positive outlook. The country’s debt is expected to stabilise well below the average of its African peers despite the temporary setback to fiscal rectitude due to COVID-19’s economic fallout. A strong economic growth outlook, combined with low external and fiscal deficits and stable inflation, are expected to help mitigate against any further macroeconomic stability shocks.
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