Côte d’Ivoire: Open for business

An FSG On The Ground Insight: Alexa Lion, Sub-Saharan Africa analyst at Frontier Strategy Group is currently on a research trip to Cameroon, Côte d’Ivoire, and Senegal. Here are her latest insights.

Akwaba! Meaning “welcome” in Côte d’Ivoire, the word appears at every corner on billboards, taxis, and phone stands. The sight is especially fitting for businesses as Côte d’Ivoire is very visibly in a period of renaissance as Francophone West Africa’s largest economy, driven by infrastructure investment, government reforms, and the development of capital markets.

Top-down development

“La Côte d’Ivoire est en chantier,” or “Côte d’Ivoire is a construction site,” remarks my driver as we drive from the airport to the business center, nodding to the graveling of the road and the billboards promoting the simple steps to register a business. Cranes dot the horizon, semi-finished buildings sprout from the ground, and a new bridge connecting the northern and southern parts of the city has just been unveiled. The country is under full-fledged development, propelled by President Alassane Ouattara’s government’s priorities: to rebuild the country after a decade-long political crisis and transform it into West Africa’s preferred investment destination.

An economist by training, Ouattara is prioritizing infrastructure spending as a catalyst for more broad-based development. Infrastructure constitutes about 25% of the government budget, and every banker I have spoken to describes construction, followed by oil and gas, as the sector receiving the most loans.


(Above: A billboard promoting the efficiency of setting up a business in Côte d’Ivoire greets visitors as they drive from the airport towards the city center.)

Improving the business environment

Low-level corruption has disappeared from sight. Police checks, a common occurrence across African cities, are a rarity in Abidjan. They abound in Cameroon’s economic capital Douala, where police officers try to make a few francs by nipping you for whatever small infraction they can find. Côte d’Ivoire used to be similar – “The police were who you went to for small change,” was the common saying – but since Ouattara’s election, the business environment has changed.

I met with the legal counsel to the Ministry of Budgets who minutely described some of the reforms in place. Police can no longer ask for money on the spot and are obliged to provide a reference to the driver who must deal with the matter at the commissariat. Import-export forms are cross-checked with tax filings to insure against fraud. Land registries are digitized.

The one-stop shop for investment, spearheaded by investment center “la CEPICI,” is operational – this was vouched for by the MD for Standard Bank in West Africa, who set up his office in Abidjan last year in only one day once the paperwork was in place. Tenders are rarely awarded on a discretionary basis in order to ensure fair competition. While top-down efforts to clean up the system will take a while to affect all segments of society, they are genuine and result in concrete policies implemented at a fast pace.


(Above: After relocating to Tunis for 10 years because of the Ivorian civil war, the African Development Bank is now back in its traditional headquarters of Abidjan, signaling that Côte d’Ivoire is now open for business.)

The consumer story

However, the picture is less rosy from a consumer perspective. The country’s economic boom has yet to trickle down to the majority of the population, and consumers remain very price sensitive. Multinationals in the fast-moving consumer goods (FMCG) sector struggle to compete on price, particularly given French supermarket Casino’s monopoly of the formal retail sector. Carrefour’s entry into the market this year will provide space for greater competition on price in the formal sector, but in the meantime, many importers are struggling with the U.S. dollar appreciation and the rising popularity of Chinese products.

I met with a major wholesaler for household appliances who was particularly hard-hit by the dollar’s upward trajectory. Although prices are decreasing nationwide (the country dipped in and out of deflation last year), those for branded consumer goods are paradoxically rising as multinational companies have increased prices to compensate for the U.S. dollar’s appreciation.

The pressure on margins is especially acute given that counterfeit products also flood the market.

“All Ivoirians care about is price,” lamented the wholesaler whose sales pitch emphasizing quality resonates less outside the pool of Western-exposed elites. Consequently, wholesalers find it increasingly difficult to find distributors who can afford to sell expensive branded goods, as the preference is for the fast-sell of a Chinese equivalent.

Stability is key

This year is pivotal for Côte d’Ivoire, as the general elections are instrumental in bolstering investor confidence that the country is committed to stability after decades of conflict sparked by political rivalries. Being on the ground, I can confidently say that fears of renewed conflict are superfluous. Ouattara will win the elections. There is war fatigue. His efforts to develop the country are visible and paying off. In fact, everyone I spoke to, including a commercial officer at the UK embassy, is advising multinationals to enter the market before the October elections. Once the elections are over, companies will rush into the country and the competition will be unforeseen. It is much better to take on the risk premium of entering now and retain an early-mover advantage.

Another facet of Côte d’Ivoire’s stability is its macroeconomic context. Bankers, legal advisors, economists all brought up the CFA franc’s peg to the euro as a massive pull factor for investors. While neighboring Ghana and Nigeria are witnessing massive currency volatility, the entire WAEMU (West African Economic and Monetary Union) zone benefits from a stable currency, a low inflationary environment, guaranteed convertibility of the CFA franc by the French Treasury and an independent central bank. Côte d’Ivoire just entered capital markets by issuing a eurobond last summer, which commanded the lowest yield of all African eurobonds last year. This speaks to investor confidence in the economy and low levels of risk perception.


(Above: The Abidjan skyline reflects the diversity of business services that exist in the country’s economic capital.)

Côte d’Ivoire is growing rapidly as investors pour money into the economy, construction projects are ongoing, and Abidjan’s business infrastructure is improving. While much remains to be done to tackle lingering corruption and create more value-added industries, there is a new optimism that Côte d’Ivoire is being born again as Francophone West Africa’s largest economy.

FSG’s Alexa Lion is currently on a research trip through Cameroon, Côte d’Ivoire, and Senegal. Follow her travels and insights on Twitter, and check back soon for more updates.


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