The elephant in the room

Feature | 14 September 2016

Behind the impressive numbers of Côte d'Ivoire's economic surge, a peaceful political landscape has quietly ticked on and encouraged investment, but can it last? Hugo Williamson and Gethin Jenkins investigate

At a Paris conference on May 17 of this year, Côte d'Ivoire secured US$15bn in pledges from international lenders for its five-year development plan - almost double the amount it was seeking.

Such investor interest is indicative of the optimism that currently surrounds Africa's fasting growing economy, and Côte d'Ivoire's Centre for Investment Promotion (CEPICI) states investment is up 25% in the first six months
of this year, in comparison to the same period
in 2015.1

With a former IMF director as president and a cabinet full of experienced financiers, economists and statisticians, Ivoirian economic reforms are being steered by one of the strongest economic teams in Africa. A relatively diversified economy has allowed Côte d'Ivoire to circumvent the commodity-induced bust that now affects so many of its African counterparts, and much is being made of its significant agri-business potential, its booming retail, banking and telecoms sectors, and its large public-private infrastructure projects.

For all Côte d'Ivoire's recent economic success however, it is important to remember the country found itself gripped by civil war only five years ago. It remains in a delicate state of political transition, and legitimate grounds for economic optimism continue to rest upon a bed of political stability. The correlation between strong GDP growth and stable government is clear to see, but as President Alassane Ouattara stands down in 2020, investors are right to question the longevity of this stability, and whether Côte d'Ivoire could revert to the state of turbulence that characterised its recent past.

In pursuit of political stability

A lingering criticism of President Ouattara's first term in office (2010 - 2015) has been that for all the remarkable economic gains the government made over this period, not enough was done to address the underlying political and social factors that caused so much conflict in the country over its 'lost decade' of the 2000s. Ouattara consequently seems intent on making long term political stability a more central pillar of his second, and final, term in office.

On 22 July 2015, the Ivoirian parliament approved President Ouattara's intentions to hold a referendum on a new constitutional charter for Côte d'Ivoire. The Independent Electoral Commission (CEI) anticipates this will take place on 30 October 2016, and although 23 opposition political parties came out against the reform in early July, sources in Abidjan interviewed for this article are confident the proposal will go on to
be approved - however they caution of a risk
of unrest in the build up to polling day.

Having transformed the state of Côte d'Ivoire's economy, many see the new constitutional charter as Ouattara's attempt
to secure a similar legacy in the political realm, addressing some of the unresolved issues that lay behind the years of civil unrest and war. Foremost among these is the controversial nationality clause which has became a symbol of exclusion for many, particularly in the north where family ties often span regional borders.

The idea of 'Ivoirité' - that both of one's parents must be Côte d'Ivoire nationals to be a 'pure Ivoirian' - has led to 100,000s of residents being denied a nationality, and deprived many
of land rights in the past, which remains the source of much of the country's on-going social and ethnic tensions.

While intermittent flair ups in ethnic and immigrant-related violence remain possible - especially as thousands of refugees from the civil war begin to return to Côte d'Ivoire from neighbouring countries - a constitutional response to the question of nationality will improve political stability and curb the likelihood of a return to the depths of social unrest witnessed prior to Ouattara's presidency.2

Is constitutional change enough?

Despite the upcoming referendum, there are concerns that Ouattara has not yet done enough to address many of the unresolved social issues in the country, and this could yet lead to public unrest if ordinary Ivoirians do not see evidence of more overt efforts to improve their lot. Recent violent protests over electricity tariffs throughout July have highlighted the disparity between strong economic growth figures and a lack of material improvements for the vast majority of Ivoirians.

The rate of poverty still stands at 46%,3 and development outside of Abidjan has so far been very limited. Having failed to pursue a fair civil war reconciliation process to date, the government also faces frequent allegations of "victor's justice" from the FPI party and supporters of Laurent Gbagbo - the former president who lost to Ouattara in the 2010 elections, and who is now on trial at the International Criminal Court for crimes against humanity.

This issue in particular has the capacity to engender further instability as the opposition draws on lingering resentment and feelings of injustice in the build up to the 2020 elections.

In addition to unresolved social issues, it is noteworthy that some in Côte d'Ivoire have grown increasingly uncomfortable with Ouattara's build-up of power. There have been concerns raised about the issuing of contracts to family members, and it is noteworthy that 'Ivoirité' is not the only issue at stake in the new constitution, with the proposed creation of a vice-president's office seen by many as an attempt by Ouattara to retain control over his successor come the 2020 presidential elections - or sooner should he find himself incapacitated.

The politics of succession will dominate the Ivoirian political landscape over the next few years, and the ease with which a vice-president
is appointed will serve as a useful indicator of how the ensuing presidential campaign is likely
to unfold, and the level of short-term instability to be expected.

Despite the potential for political disruption in the build up to 2020 however, sources interviewed have been keen to assert that the risk of serious political instability should not be overstated. Potential troublemakers within the governing RHDP party, such as President of the National Assembly, Guillaume Soro, are not politically strong enough to launch any overt power grab should their political aspirations fail to materialise, and the opposition FPI party remains heavily divided and in disarray.4 For all the party in-fighting and opposition scare-mongering, there is a sense that no one is keen to seriously jeopardise the economic success that holds such promise for Côte d'Ivoire's future.

The economic landscape

In 2015, Prime Minister Daniel Kablan Duncan made a pledge that Côte d'Ivoire would achieve a top 50 ranking in the World Bank's annual 'Doing Business' Report within three years. Such an ambitious aim is indicative of the attractive investor climate the Ivoirian government is so keen to establish, and reforms to that end are being pushed as a national priority. Good progress has been made under Ouattara's presidency, and Côte d'Ivoire has moved from
a rank of 177 in 2012 to 142 in 2016.

Further improvements are clearly still needed however. Businesses continue to cite judicial proceedings, contract awards, customs, and tax issues, as areas particularly exposed to ongoing corrupt practices, and supplementary "commissions" remain commonplace requests by many public officials.5

In a show of intent, the government announced 46 reforms for 2016 which aim to increase the attractiveness of Côte d'Ivoire to investors; 17 of which have been implemented to date.6 Many of these reforms focus on the digitisation and simplification of the public administration, making it easier to set up a business, obtain construction permits, and settle tax payments for example. Such measures build on the back of Côte d'Ivoire's 2012 Investment Code, which set up a one-stop shop for investors under the Investment Promotion Agency (CEPICI), and introduced a sliding scale of tax exemptions, where projects located furthest from Abidjan qualify for the highest incentives.

The recent introduction of tax breaks in the cocoa grinding sector to incentivise more local processing is indicative of government efforts to increase the production of value-added products.7 The cocoa industry currently accounts for 15-20% of GDP, and provides roughly 900,000 jobs in Côte d'Ivoire, yet only 33% of the country's annual harvest is currently processed locally.8 The strategy is central to Côte d'Ivoire's 2016-2020 National Development Plan, which at an estimated cost of $48.6bn,9 is a key growth driver. Its 94 public-private partnerships represent substantial opportunity for foreign investors, and the Ivoirian government aims for private investment to finance 70% of the total cost of the development plan.

Investments in infrastructure, logistics and transport links are viewed as key to providing the necessary conditions for the expansion of private industry. Port upgrades are a priority, especially when recent reports suggest the Port of Abidjan contributes up to 70% of total government revenues.10

Côte d'Ivoire aims to open its second container terminal at Abidjan in 2018, which will make it West Africa's largest port by capacity. Similar plans exist to expand the land transport links, with developments underway for a highway road network linking Abidjan to Yamoussoukro, Bouaké and on to Burkina Faso, and a railway corridor that would link up to Bamako in Mali - 1000km to the north.

Stability breeds stability

If the government can ensure that its growth strategy translates into tangible improvements in the quality of life for Ivoirian citizens - something it states as a priority in its aspiration to reach emerging economy status by 202011 - then Côte d'Ivoire's long-term investment potential continues to look very promising. While economic growth has been dependent upon five years of political stability, there is a sense now that the reverse could also hold true, with Côte d'Ivoire's economic success possibly going some way to ensuring the country's long-term political stability.

Hugo Williamson is a senior managing director and leads the EMEA practice at IPSA International, a global risk advisory firm specialising in advising corporate, finance and legal clients operating in challenging new markets. Gethin Jenkins is an analyst in the firm's London based Africa practice


  1. The Africa Report, 'Côte d'Ivoire: Investment up by 25 per cent':

  2. Bloomberg article, 'Ivory Coast aimes to scrap disputed national clause by October':

  3. See data from The World Bank:

  4. See rfi Africa article, 'Côte d'Ivoire: FPI struggling to overcome divisions':

  5. See data from the US Department of State:

  6. Jeune Afrique article, 'Ivory Coast: Moroccan Investments were down in the first half':

  7. Bloomber article, 'Ivory Coast grants tax incentives for cocoa processors':

  8. Oxford Business Group, The Report: 'Côte d'Ivoire 2015':

  9. See data from the Oxford Business Group:

  10. Dutch Market Overview, Ivory Coast:

  11. See OECD report on Côte d'Ivoire:

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