Recent Developments & Prospects
Economic Cooperation, Regional Integration & Trade
Economic & Political Governance
Public Sector Management, Institutions & Reform
Natural Resource Management & Environment
Thematic analysis: Structural transformation and natural resources
Authors: Pascal Yembiline, Bakary Traoré, Luis Padilla
- The economy continues to expand – by a robust 8.8% in 2013 (9.8% in 2012) – in a steady recovery from the 2010-11 post-election crisis with the help of major public works and resumption of private investment. Structural challenges still prevent growth from being inclusive and long-lasting.
- The business climate has improved with various reforms but the private sector needs more energetic and inventive financial institutions. Banks have excess liquidity and could help with more savings.
- The capacities of small and medium-sized enterprises need to be strengthened, especially in agro-industry, to take better advantage of global and regional value chains.
Côte d’Ivoire’s prospects are quite good. The economic recovery, through major public works projects, produced estimated growth of 8.8% in 2013, which should hold up (at about 9%) in 2014 and 2015, with further social reforms and a better business climate. Plentiful funding from domestic and foreign sources, along with social and political peace, will also help.
The budget situation was much better in 2013, after declines in 2011 and 2012. Revenue increased after a re-organisation of the tax administration. Spending was steady as a percentage of gross domestic product (GDP), even if still burdened by reconstruction and the cost of national cohesion efforts such as recruiting teachers and former soldiers.
This positive view must not hide the big challenges, such as per capita GDP still being much lower than in 2000. The first priority is to make growth inclusive and long-lasting to respond to the pressing needs of a young population looking for jobs. National competitiveness needs to improve, with better roads, less rigid customs procedures and much simpler taxation (currently 62 taxes have to be paid compared with the African average of 36, according to Paying Taxes 2014). The workforce is still not very tuned to business needs, and the financial sector, with excess liquidity, is not very active in funding small and medium-sized enterprises (SMEs). Co-ordinated efforts between the government and the various economic operators will be needed to avoid new rounds of high inflation, especially involving food prices.
Political normalisation, under way since the end of the 2010-11 post-election crisis, continues even though national reconciliation and social cohesion are not proving easy. The government has begun a calm dialogue with the opposition, along with reconciliation measures, and many top-level meetings between the two sides were held in early 2014. Efforts are needed to strengthen national security, disarmament and protection of property (threatened by looting).
Global value chains (GVC) are good opportunities for the country’s growth as it has many natural and human resources, as well as quite good infrastructure for the sub-region. Industrialisation could boost GVCs that have a strong regional potential. Targeted policies are needed to get SMEs to play a key part by solving their funding and management-capacity problems.
Table 1: Macroeconomic indicators
|Real GDP growth||9.8||8.8||9.1||9.2|
|Real GDP per capita growth||7.5||6.4||6.7||6.9|
|Budget balance % GDP||-2.6||-2||-2||-2|
|Current account balance % GDP||-3.8||-6.4||-7.2||-6.8|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.