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Cote d'Ivoire Business Forecast Report Q2 2010
Management Report
Published: February 2010
Pages: For full details, please email keithw@cmsinfo.com
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 480.00 Buy Now!
Research from: Business Monitor International
Sector: Regional Markets
With national elections the closest they ever have been, in this quarterly Business Forecast Reportwe turn special attention to the post-election future of Côte d’Ivoire. It is important to note that,while elections are a crucial step in the long-term move towards national reconciliation, there willstill be significant work and uncertainty in the years after their completion. Most crucial will bethe way in which the disbanding of the Forces Nouvelles proceeds, with an increase in crime orlocalised militancy the most likely scenario in our view, though a return to conflict cannot be ruledout. Assuming political stability holds, the government has many plans, ranging from an increasein pro-poor spending as part of the ambitious poverty reduction strategy paper (PRSP), to vitalreforms in public finance processes and the business climate. While we believe the government isunlikely to meet its investment goals with respect to the PRSP, given that half of the funding hasnot been identified, over the years to come successful implementation of business climate reformscould lead to a significant improvement in the country’s abysmal business environment ranking.
Elections are scheduled to occur in late February or early March (most recently delayed from November29 2009), and we believe that though they may be delayed it is likely they will take place inH110. While we believe the race is too close to call, more important than the identity of the winnerwill be a peaceful election with results respected by all parties. Going forward, the new governmentwill need to address the rise in poverty, the eventual resettlement of internally displaced people,and the disarmament of non-military actors.
Political stability should usher in an era of improved economic performance, with annual realGDP growth expected to climb above 5.0% in the coming years. That said, there are many riskswhich must be addressed in the coming years: domestic banks are vulnerable to a deteriorationof credit; a failure to contain wages and pensions could pose risk to long-term debt sustainability(and ultimately debt forgiveness); and the business environment needs urgent reform if the privatesector is to deliver improved growth. Hanging over everything, however, is the risk of a relapse ofpolitical instability, which would almost certainly result in prolonged economic stagnation.
Côte d’Ivoire’s business environment remains very poor, but a significant improvement may becoming over the next several years. First off, political stability and efforts by the government toclear its debt arrears will have a major impact on business planning and access to finance - theUN plans to review its arms and diamond embargoes after elections are held, and a cessation ofthese would signal a return to normality for international businesses. Additionally, the governmentis working to improve the electrical sector, relieve the over-taxed cocoa sector and foster improvementsin the slow and politically-aligned judiciary.
Political stability should usher in an era of improved economic performance, with annual realGDP growth expected to climb above 5.0% in the coming years. That said, there are many riskswhich must be addressed in the coming years: domestic banks are vulnerable to a deteriorationof credit; a failure to contain wages and pensions could pose risk to long-term debt sustainability(and ultimately debt forgiveness); and the business environment needs urgent reform if the privatesector is to deliver improved growth. Hanging over everything, however, is the risk of a relapse ofpolitical instability, which would almost certainly result in prolonged economic stagnation.
Côte d’Ivoire’s business environment remains very poor, but a significant improvement may becoming over the next several years. First off, political stability and efforts by the government toclear its debt arrears will have a major impact on business planning and access to finance - theUN plans to review its arms and diamond embargoes after elections are held, and a cessation ofthese would signal a return to normality for international businesses. Additionally, the governmentis working to improve the electrical sector, relieve the over-taxed cocoa sector and foster improvementsin the slow and politically-aligned judiciary.