Côte d’Ivoire is once again open for business. After a brief civil war in 2010-2011 that all but halted the economy, the country is witnessing a large stream of FDI targeted at a wide variety of sectors. The government is pushing Côte d’Ivoire, and especially its economic capital Abidjan, to become a hub for the wider French-speaking region. Côte d’Ivoire was once Francophone West Africa’s most prosperous country, and it is poised to reclaim its title as the region’s economic powerhouse. This is due to a variety of reasons:
- GDP Growth: Côte d’Ivoire is one of Sub-Saharan Africa’s fastest-growing economies, with GDP growth expected to reach 8.5% YOY in 2014. Its strong economic performance is driven by infrastructure developments, exploration in the mining, oil, and gas sectors, and growth in the telecom, banking, and consumer goods industries.
- Stable macroeconomic environment: Unlike many Sub-Saharan African countries, Côte d’Ivoire displays low inflation, relatively low interest rates, and little currency volatility. The CFA Franc, also used in seven other French-speaking West African countries, is pegged to the euro and partially held in the French treasury. Companies therefore benefit from low exchange rate risk and transactions costs.
- Business reforms: The government is aggressively promoting Côte d’Ivoire as a preferred destination for investment in West Africa. It has passed a series of reforms that increase transparency, decrease bureaucratic delays, digitize registries, and improve accessibility to relevant information. Moreover, major infrastructure projects will further open up the country to trade and promote new distribution channels as private consumption increases.
Although the country is on the right track to reconstruction, it still faces several challenges to reaching its goal of becoming an emerging economy with a robust middle class and an open market by 2030:
- Political risk: Society in Côte d’Ivoire remains divided in the wake of the 2010-2011 civil war, which erupted when then-president Lauren Gbagbo refused to concede to president-elect and current incumbent Alassane Ouattara. The conflict around Gbagbo’s refusal to give power was the culmination of years of tensions between adherents to opposing political parties and the legal status of Ivoirians of foreign descent. Now that Gbagbo is indicted at the ICC and Ouattara is expected to re-run for president, uncertainty prevails over the security situation ahead of the October 2015 presidential election. The common sentiment on the ground is to avoid war at all costs, but the process of reconciliation has been slow, old wounds remain, and skirmishes are likely.
- Wealth gap: Poverty is acute and the gap between wealthy and poor is very wide. The middle class remains small and concentrated in Abidjan. Government policies that target small and medium enterprises (SMEs), the agriculture sector, and value-added industries are vital to bridging the wealth gap and encouraging inclusive growth.
As such, Côte d’Ivoire is most attractive when taken in context. It is part of the West African Economic and Monetary Union (WAEMU), a common monetary, legal, and interbank market of eight French-speaking countries: Mali, Niger, Benin, Togo, Burkina Faso, Guinea Bissau, Senegal and Côte d’Ivoire. As the wealthiest, most developed country in this group, Côte d’Ivoire is an attractive hub for companies seeking to tap into less accessible, yet rapidly growing Francophone countries. As more companies such as Standard Bank, Carrefour, and Accor Hotels enter Abidjan, a wider range of business infrastructure will become available and boost Abidjan’s attractiveness.
Côte d’Ivoire is a long-term game. While wealth is not widespread and politics are sensitive, Côte d’Ivoire has the macroeconomic fundamentals, business reforms, and infrastructure projects to become the first stop for companies entering Francophone West Africa.