I love cashews and seafood.
“Then you will love Cote d’Ivoire,” a young Ivorian once told me. He was right.
A short stop at Saakan restaurant will provide a variety of delicious options—including Grillade de fruits de mer (grilled seafood)—while a walk through downtown Abidjan will include buying cashews and a chocolate bar on the side of the street. This is not the same country consumed by political chaos following the 2011 election that ousted Laurent Gbagbo. It is a country re-emerging as a West African darling for investment.
By many standards, Cote d’Ivoire (also known as Ivory Coast) is the economic glue to the eight-country West African Economic and Monetary Union (UEMOA). The country once accounted for 40 percent of the GDP in the union, and it is the largest and most diversified country in the union, which includes Senegal, Mali and Niger. Cote d’Ivoire is fundamental to trade for its landlocked UEMOA neighbors: Burkina Faso, Mali and Niger. It is also gaining greater influence as one of sub-Saharan Africa’s more populated countries.
Things continue to improve since the former deputy managing director of the International Monetary Fund (IMF), Alassane Ouattara, assumed the presidency in April 2011. The country has repaid debt arrears and brought many inter- and non-governmental institutions back into the fold. In June 2012, Cote d’Ivoire secured $7.7 billion in debt relief, due to improving economic activity and financial management.
Real GDP growth in 2012 surpassed IMF projections, growing by 9.8 percent and contrasting with the shrinking of real GDP by 4.7 percent in 2011. Real GDP growth in 2013 and 2014 is expected to approach 9 percent and 10 percent respectively. This will be backed by a vociferous rebound in the industrial and service sectors. Inflation remains below the 3 percent level established by the UEMOA, a robust signal of the return to normalcy within the country and the union.
Cote d’Ivoire remains one of the world’s top exporters of raw cashew nuts and cocoa. The West African country is one of the top coffee producers and maintains a strong manufacturing sector (reported at more than 21 percent of GDP in 2011). They also export oil and gas. The story speaks to a growing redemption for the country’s economy, but there is still more to be done to capitalize on its potential.
Diverse Investment Opportunities
Cote d’Ivoire has great mining potential, emphasized by Ivorian-born football star Didier Drogba’s recent purchase of 5 percent in the one of the country’s gold mines. The mining minister recently announced plans to triple gold production within the next four to six years, as well as potentially double oil production and bump gas production by 50 percent in the next five years. The country also possesses great potential for mining of precious metals and diamonds. A new mining code, which reduces the complexity of the permit process to replace the code of 1995, would go far to advance the sector.
Home to fertile land and a pleasant climate, Cote d’Ivoire is strategically situated for an agricultural revolution. More than 70 percent of the country’s land is arable, and it is blessed with nearly six months of rainfall. Daniel Kablan Duncan, the country’s Prime Minister and Minister of Economy and Finance, has pledged to diversify the sector away from dependence on the cash cows of cocoa and coffee. Improved processing, which sits anywhere between 3 percent and 25 percent, will boost the cash value for certain crops, particularly cashews and coffee. Greater access to export credit and seeds could transform the sector.
Minister Duncan openly shares the view that Cote d’Ivoire will reach its target of double-digit growth by 2015 as well as emerging country status by 2020. Despite past political instability, the country remains the second biggest exporter of non-oil products in sub-Saharan Africa, right after South Africa. It is a major exporter of natural rubber and has attracted much attention for its potential to produce homemade tires for the continent.
Strong Infrastructural Base
Cote d’Ivoire possesses a relatively well-developed network of infrastructure, including road, rail and power. The country, in many ways, pioneered private participation in infrastructure in sub-Saharan Africa. Its Road Fund and Road Agency are currently looking to improve road infrastructure and bring in private investment.
Cote d’Ivoire and Burkina Faso jointly own Sitarail, a transnational railway that was one of the first in Africa to be awarded as a concession to the private sector in 1995. The Port of Abidjan continues to see a growth in image and potential as a regional hub; specifically, with the expansion of efforts by logistic companies in the region, like Bollore Africa Logistics, and the extension of the Port of Abidjan to Ile Boulay.
Hydroelectricity is a major component of the Ivorian power sector, but it has not yet reached its full potential. Private sector investments in the sector lagged for last few years, however, a loan of $500 million from the Export-Import Bank of China for a hydroelectric dam signifies a change in tide. In 2012, the Minister of Oil and Energy announced the government’s intention to invest $4 billion over the next six years to increase power output by at least 80 percent.
Telecommunication in Cote d’Ivoire is steadily improving. Mobile penetration is approaching 80 percent, thus offering a great opportunity for the Information and Communications Technology(ICT) sector. Mobile money services and greater internet access will be a big boost to the economy. The landing of a second international fiber optic cable in November 2011, with the potential of three more cables added in the near future, has pushed down prices and further accelerated growth.
Despite a relatively strong infrastructural base for the region, the country requires further investment. According to the World Bank, the country must spend nearly $2.4 billion over the next decade to maintain and upgrade its existing infrastructure network. Upgrading the power capacity at an average capacity increase of 150 MW per year accounts for nearly half of the spending, which amounts to 4.5 percent of GDP in 2011.
The overall National Development Plan (PND) projects that the spending on infrastructure could amount to 18 percent of GDP by 2013. The construction of up to 24 new bridges, transformation San Pedro ( the country’s second largest port), and the upgrading of railways and airports underline the rest of a remarkably robust development plan. The spending is particularly aggressive for the country. An $8.6 billion pledge from the World Bank and other international partners should help alleviate the budgetary pressure created by the $22 billion PND.
Investors, Come All, Come Now
Under the current regime, Cote d’Ivoire is expected to enter a period of uninterrupted growth. The African Development Bank has already commenced its move back into the country, sending a persuasive message to potential investors.
Recent fundraising of more than $430 million by electricity production company, CIPREL, to finalize power plant expansion speaks to the excitement surrounding the country. Investment fund company Amethis Finance’s purchase of Petrolvoire, a downstream oil and gas operator in Cote d’Ivoire, demonstrates that first-time fund managers are approaching the country with zeal.
A new investment code – recently passed in June 2012 – that introduces new tax incentives, new commercial courts and improved investment protection mechanisms – further underscores investor confidence. The transformation of the mining sector, including oil and gas, is well under its way, with many investors speaking of unimaginable potential for the country, especially if it has similar offshore success seen by neighboring Ghana.
More investors should follow Cote d’Ivoire as the country strives to be a part of a three-prong gateway into West Africa, alongside Ghana and Nigeria. Regional projects, including highways linking Accra and Abidjan, and the strengthening of commercial interaction amongst the Economic Community of West African States (ECOWAS)—an economic union of 16 West African countries with almost 300 million consumers — should further the endeavour. Yet annual inward FDI at 1.44 percent of GDP in 2011 is a sign that the country is not fully there.
Economic policy will continue to improve and consequently lift FDI. Structural reforms should reduce the country’s exposure to volatility in commodity prices and motivate private sector involvement in infrastructure projects, such as energy, housing and airports.
All the new changes point towards stability and sustained growth in the country. A new business facilitation centre aims to be a ‘one-stop-shop’ for entrepreneurs. Cote d’Ivoire could as well become a ‘one-stop-shop’ for investors seeking high returns.
Now that would be a complete return to glory.