Measured Optimism: CEOs Gauge Industrialisation Efforts in Côte D’Ivoire

In French

After more than a decade of political turmoil, Côte d’Ivoire has emerged as one of the world’s best-performing economies, boasting average annual GDP growth of 9.3% between 2011 and 2016, driven primarily by strong investment in sectors such as construction, energy and ICT.

Though growth has moderated somewhat over the past couple of years on the back of poorer agricultural performance due to severe droughts in 2016 and a drop in cocoa prices – the country’s main cash crop – GDP growth is still expected to hit 7.4% in 2018 and 7.1% in 2019, according to the IMF.

To capitalise on its robust performance and propel the economy further, Côte d’Ivoire has undertaken a number of reforms and national policies to support its ambition of achieving emerging market status by 2020.

Perhaps one of its most significant policy drives in recent years was the introduction of the 2016-20 National Development Plan (Plan National de Développement, PND), which outlined various strategies for evolving the Ivorian economy, with a key focus on enhancing industrialisation.

Industry, the way forward

The strategy for the expansion of the industrial sector involves measures to improve production and marketing value chains, technological innovation, a revamp of industrial zones and improved capacity in energy generation.

When asked about their level of satisfaction with the measures in place to drive industrialisation, 58% of the 139 C-suite executives participating in the inaugural OBG Business Barometer: Côte d’Ivoire CEO Survey are positive or very positive, while 28% are negative or very negative.

Similarly, 50% of CEOs report a high or very high level of satisfaction with local suppliers and service providers, while 31% of respondents say it is low or very low.

This suggests that a majority feel positively not only about the country’s governing industrial policy, but also their ability to access inputs and raw materials locally, though there is still plenty of room for growth and improvement in both areas.

Côte d’Ivoire’s industrial ambitions more or less line up with the wider continental vision to bolster this vital sector. Having been largely overlooked – particularly by resource-rich nations – Africa has finally come to the realisation that the development of its industrial value chain has become more pressing than ever for local
economies to prosper and trade balances to improve.

The African Continental Free Trade Area agreement, signed by more than 40 nations in March, has also served to highlight the situation even further as one of the continent’s largest economies, Nigeria, chose to abstain from the deal on the grounds that it needed to protect its local manufacturers from heightened competition
emanating from enhanced cross-border trade.

In pursuing its development plans, Côte d’Ivoire aims to bring industry’s contribution to GDP to 40% by 2020, up from 25% in 2016. Matching its expanding industrial base with workers with the required skills will be a determining factor in the strategy’s success. Our findings suggest research and development (20.9%), engineering (19.4%), leadership (18.7%) and business administration (15.8%) are the skills in greatest need in Côte d’Ivoire.

Business leaders optimistic about the country’s economic outlook

In line with its recent macroeconomic performance – and its target to attract up to CFA30trn (€45bn) of investment under the PND, of which more than half is to be derived from the private sector – the overall outlook for doing business in Côte d’Ivoire seems promising.

Indeed, 84% of respondents have either positive or very positive expectations of local business conditions in the coming 12 months. Moreover, 82% say they are either likely or very likely to make a significant capital investment over that period.

The government’s decision in early 2018 to introduce changes to its tax system should help further bolster sentiment among the business community. When asked to forecast GDP growth for 2018, the majority of participants (72%) gave a response of between 5% and 8%.

The new fiscal changes aim to simplify tax collection and widen the revenue base, making it possible for businesses to declare and pay taxes online since January. Such efforts should help enhance the competitiveness of the tax environment, which roughly 60% respondents classify as either uncompetitive or very uncompetitive on a global scale.

… Yet cautiously optimistic

While prospects seem bright, the road ahead is not all that smooth. When it comes to doing business in Africa, a common set of challenges can be applied to almost every country on the continent. That said, certain obstacles tend to be more pronounced in some places than others.

In Côte d’Ivoire, access to credit is deemed difficult or very difficult by 68% of survey participants. This is in contrast to 41% in Egypt, for example, though it is more or less in line with the 61% of all the countries included in the Business Barometer: OBG in Africa CEO Survey.

Opinions diverged greatly between those who deem the level of transparency for conducting business relative to the region as low or very low (49%) and those who see it as high or very high (39%).

The government has sought to tackle issues of transparency and credit access – among others – in recent years in a bid to improve its business environment. Such efforts include the rollout of the one-stop shop single window in 2012 and the more recent plan to bring a number of business formalisation processes online, such
as land registry and construction permits.

It will take time, however, for the full effect of these measures to materialise. Our follow-up survey, which is currently under way and the results of which will be revealed in a few months from now, should help gauge the level of progress on this front.