Previous Quarterly Editions
Expropriation Risk: 43 44 45 43 Political Violence Risk: 61 60 62 62 Terrorism Risk: 36 36 38 38 Exchange Transfer and Trade Sanction Risk: 45 45 45 43 Sovereign Default Risk: 36 38 38 38
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The Ivorian political landscape has not fully adjusted to the shock decision by the International Criminal Court (ICC) in January to acquit former President Laurent Gbagbo of charges of crimes against humanity arising out of the country’s 2010-11 civil war. It is not yet clear whether Gbagbo, 74, plans to return to domestic politics as head of the Ivorian Popular Front (PFI), or to anoint a successor to head the party and instead take on the role of elder statesman. His choice could have a material bearing on President Alassane Ouattara’s decision on whether to step down at the end of his second five-year term in 2020 or seek a third term specifically to keep Gbagbo from the presidency. The two were at the centre of the violent confrontation a decade ago. Although maximum age limits for elected office were removed in the 2016 constitution, thus allowing the 77-year-old Ouattara to run for a third term, such a move risks alienating his allies and is not popular with the electorate, which overwhelmingly supports a two-term limit. The 2020 ballot could potentially become a three-way contest between Ouattara, Gbagbo, and former president Henri Konan Bedie, whose Democratic Party of Côte d’Ivoire (PDCI) has broken ranks with Ouattara’s Rally of Republicans (RDR). That would effectively mean a rerun of the 2010 contest that triggered post-election violence which saw 3,000 people dead and more than half a million displaced. While it remains unlikely at present, there are growing concerns that the country could be heading for a bout of renewed turmoil. Ouattara’s first term saw average economic growth of 9% a year, but army mutinies and strikes by civil servants have made for a much rockier second term. The 2010-11 civil war continues to be a major element in the country’s politics. Ouattara’s critics accused him of overseeing a biased approach to post-war justice, as few of his supporters were prosecuted for crimes committed during the conflict. At the same time, following the ICC decision, those who suffered at the hands of Gbagbo’s forces fear that they will now never obtain justice. However, despite the uncertain political outlook, the economy continues to out-perform its regional peers. According to the IMF mission to Abidjan in March, GDP grew by 7.4% in 2018 and growth is expected to be above 5% this year thanks to strong domestic demand. Ivory Coast and Ghana, which together account for more than 60% of global cocoa production, have jointly invited other producers to a summit in June to help prevent the wild swings in cocoa prices seen in recent years by establishing a global minimum price. This is another step towards greater cooperation between the two neighbours, who have already taken initial steps to reduce the extent of cross-border cocoa smuggling that takes advantage of the price differential between them. However, Abidjan is still trying to cope with the impact of the 2017 cocoa price slump on the banking sector after falling prices triggered extensive loan defaults. President Abdel Fatah el-Sisi visited Abidjan in April as part of a tour to raise Egypt’s profile while it holds the chair of the African Union.
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Ouattara’s government is in advanced talks with Total and Eni on the licensing of six new offshore blocks as the country seeks to boost hydrocarbon output amid the rising interest in exploring opportunities in West Africa. The country should also benefit if Total completes its acquisition of Anadarko’s African assets. At present, the country only produces some 70,000 barrels per day but the importance of these capital-intensive projects for the country’s economic future means that the government will work hard to maintain investor confidence.
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Tensions between rival Ouattara and Gbagbo supporters are likely to rise significantly in the run up to the 2020 ballot, as leading figures in both camps continue to nurse their grievances. The idea of Gbagbo returning to an active role in politics is reopening some of the fissures that Ouattara has been hoping to close by growing the economy. The resignation in February of Guillaume Soto, a former rebel leader from the north, from the post of Speaker of the House gives himself the freedom to campaign in 2020 and this will not ease the political atmosphere.
The regional threat posed by jihadists with active experience in Syria, Iraq and Libya who may now be attempting to link up with Islamist groups in West Africa has been a constant concern since the coordinated attacks on the French embassy and army headquarters in the capital of neighbouring Burkina Faso in March 2018. While the country has not seen a major incidence since the attack on a beach resort at Grand Bassam in March 2016, the authorities remain on heightened alert.
The IMF expects growth to be above 7% again this year, having been 7.4% in 2018 and 7.8% in 2017. Inflation remains under 1%, well below the target set by the West Africa Economic and Monetary Union (WAEMU). A budget deficit of 4%, while high, is still below the ceiling that has been agreed with the IMF. While revenues have been slightly weaker than forecast, this is being offset by a modest reduction in public spending. The government has also been praised by the IMF for restructuring the national oil refinery complex and its progress in making the country’s public banks more robust.
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The country’s debt-to-GDP ratio stands at around 30%, which is low by African standards. A reputation for sound economic policy enabled the government to successfully issue Eurobonds in 2017 and 2018 while offering some of the lowest yields in the region. The 2018 issue was denominated entirely in euros in an effort to benefit from the CFA currency’s relative strength against the dollar. The government has the option of tapping the international capital markets again if needed, but the cost of doing so may rise as the 2020 election approaches.
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