Cote d’Ivoire forecasts double-digit growth for 2015

Cote d’Ivoire, the world’s top cocoa producer whose economy was battered by a civil war and ensuing political unrest, should see double-digit growth this year according to Prime Minister Daniel Kablan. 

The West African country has seen its economy expand on average by 9.0% since 2012, and this year “we want to reach double-digit growth,” the Prime Minister added.  “We are ambitious in Cote d’Ivoire,” he went on, adding that he expected the country to maintain its high growth rates for years to come. 

Speaking on 17 March on the sidelines of the Africa CEO Forum in Geneva, the Prime Minister said drastic steps were being taken to dramatically transform the economy after a decade of conflict. Cote d’Ivoire, which is also the world’s second largest producer of cashew nuts, is trying to diversify its key agriculture sector that accounts for nearly a third of its gross domestic product. It aims to process more of its raw products locally, moving from just 35% of cocoa processed in the country now to at least 60% before 2020.  

The former French colony is also striving to revive its mining industry and dramatically boost production. Mr. Duncan said Cote d’Ivoire’s annual gold production had already leapt from just eight tonnes before his government came to power in late 2012 to 18 tonnes in 2014, adding that manganese production had seen “the same kind of growth.” As for its oil sector, his government had “more than tripled the permits since we came to power.”  

All of this activity meanwhile requires far more electricity and Cote d’Ivoire is aiming to boost capacity from 1,650MW in 2014 to 2,000MW this year. But the eventual target is 4,000MW by 2020, enabling it to become a regional electricity supplier to neighbouring countries. “Electricity is very important. You cannot have development if you don’t have electricity,” Mr. Duncan said.  

Cote d’Ivoire’s massive investments in infrastructure have largely been financed with credit. According to the Prime Minister the country is set to sign a USD 800m loan from China to upgrade its electrical grid and transformers in the near future. It has also tapped international lending markets twice in less than a year, issuing a USD 1.0bn Eurobond in February 2015 after raising USD 750m in July 2014. The government has borrowed about as much on the local market and as a result has faced harsh domestic criticism for burdening the country with too much debt. “The weight of the debt per inhabitant just keeps rising,” lamented Mamadou Koulibaly, a finance minister under ousted president Laurent Gbagbo. “Instead of seeing consumption rise, or industry productivity, we simply see the debt rising,” he said. “The government has no economic policy beyond a succession of public expenses financed through debt. They are digging new holes to fill old holes,” he said. 

However, the Prime Minister brushed aside the criticism, saying there was a special committee to ensure “the sustainability of the debt.” The International Monetary Fund and the World Bank were also keeping close tabs, he said. “The government is simply doing its job. You have to invest, you have to make highways, roads,” he went on. And while the country’s loan facility in 2013 stood at around USD 4.0bn, it only used USD750m, and in 2014 it had a loan facility of USD 3.7bn but used just USD 1.0bn. “We only take what we need.”

 Whilst the rising debt levels in the Ivory Coast remains a concern, we commend the country for seeking to boost economic growth by additional infrastructure spends. We believe that ultimately the rising consumption and GDP growth in the country will boost prospects for listed companies such as SONATEL and SOGB.