Building on the basics: The sector continues to focus on agricultural processing and poultry, while making plans to expand into automotive assembly

Government initiatives to strengthen Côte d’Ivoire’s industrial base have continued to yield results. Following the August 2018 implementation of the new Investment Code, which was modified one year later, companies operating in agro-industry – one of the main pillars of the industrial sector – have invested hundreds of millions of dollars in processing facilities, as well as established poultry operations (see analysis). Moreover, public investment in the country’s industrial zones have enabled companies across all segments to grow their activities. These investments have facilitated the revamping and expanding of existing zones, such as those near Abidjan, as well as the construction of new ones in the country’s interior.

PERFORMANCE: Industry has logged robust performances in recent years: the sector grew by 9.7% in 2019 after growth of 7.1% in 2018, according to a January 2020 announcement by Souleymane Diarrassouba, the minister of commerce and industry. Diarrassouba said that the sector contributed 26% to overall GDP and 2.1 percentage points to GDP growth in 2019 – compared to 25.2% and 1.5 percentage points in the previous year – while noting that industrial investments led to the creation of approximately 3800 jobs. The minister added that the government will continue to support initiatives for the processing of raw agricultural products, and the refurbishment and development of the PK 24 industrial zone near Abidjan.

According to statistics published by the Ministry of Economy and Finance in November 2019, industry’s solid performance contributed to overall growth within the secondary sector. The manufacturing, extractive and utilities segments – all of which are classified under the industrial sector – contributed to this growth and played a part in electricity consumption rising by 9.7% year-on-year (y-o-y) in the first nine months of 2019. The volume of manufactured exports rose by 9.2% y-o-y during this period, while primary processed goods – mostly from the agriculture sector – grew by about 7%.

The production of fuel and other petroleum products grew by 13.4%, which was supported by both an increase in domestic demand of 4.5% and foreign sales of 29.4%, while ongoing infrastructure projects supported construction activity in the first three quarters of 2019 (see Construction & Real Estate chapter). Notably, the manufacturing and construction industries contributed to 14.8% and 12.3% of private sector job growth in 2019, respectively. Overall, the private sector created approximately 60,400 jobs through the first three quarters of 2019, against 67,700 in 2018.

STRUCTURE & OVERSIGHT: Companies in the agro-industry, extractive and petrochemicals segments constitute the majority of output from the industrial sector, and a limited number of high-production companies play leading roles in activity. The National Institute of Statistics estimates that there are a total of 8500 companies in the industrial sector, about 2700 (32%) of which operate in agro-industry. The remaining companies primarily operate in the extractive (18.7%), oil and petrochemicals (15.1%), and wood processing (14.9%) segments. Fewer companies are associated with utilities (6.6%), machine manufacturing (4.3%) and textiles (2.4%), while 5.8% are active in other industries.

The Ministry of Commerce and Industry is the government authority in charge of regulating the industrial sector. The ministry has a mandate to increase industry’s contribution to GDP to 40% – a goal initially established in the National Development Plan 2016-20. The Ministry of Agriculture and Rural Development, along with crop-specific organisations under its supervision, are also important regulatory players given the large size of the agro-industry segment. Among the most influential crop-specific authorities are the Coffee and Cocoa Council, and the Cotton and Cashew Council.

AGRO-INDUSTRY: One of the primary engines of the Ivorian economy is agro-industry, representing about 50% of the value added by the manufacturing sector and roughly 8% of national GDP, according to the World Bank’s June 2019 “Côte d’Ivoire Agricultural Sector Update” report. In addition, agro-industrial production constitutes about 30% of the total value of agricultural exports, with the remaining consisting of unprocessed commodities. Agro-industrial output is roughly split half and half between being exported and consumed by the domestic market.

Opportunities remain to boost value added through local processing. Most agro-industrial exports are minimally processed and mainly stem from cocoa, cotton and rubber. Cocoa, in particular, represents a major component of overall exports; the primary processing of cocoa accounts for about 80% of the total value of exports and about 40% of the total value of agro-industrial production. Moreover, Côte d’Ivoire is among Africa’s top agro-industrial exporters: the World Bank cited the country as the fifth-largest exporter of such products after South Africa, Egypt, Tunisia and Morocco in 2018 (see Agriculture chapter).

PLAYERS: At the end of April 2020 the government announced that the country will create a cocoa-processing fund worth CFA10bn ($17.2m) to help domestic grinders compete against long-dominant international players. Indeed, a small number of large enterprises that primarily focus on exports play an outsized role in local agro-industry. The World Bank reported that about 20 enterprises with annual revenue of more than $20m generate 90% of the total value of agro-industrial production and around 40% of the segment’s value added. The largest agro-industrial companies in Côte d’Ivoire include Olam International, SIFCA Group and Cargill.

At the same time, small and medium-sized enterprises (SMEs), which mainly cater to the domestic market, are responsible for a significant portion of employment and value addition within agro-industry. According to the World Bank, there are several thousands SMEs in the segment, which collectively represent about 85% of total employment. Moreover, the average value added by SMEs as a whole equals about 24% of the value of output, while the figure for large enterprises is around 17%.

A number of investments in the country’s processing capacity have followed the implementation of government policies aimed at promoting local value addition. Among the most consequential regulatory changes for agro-industry – and the Ivorian business environment, in general – was the implementation of the country’s new Investment Code in August 2018. The new code grants fiscal incentives to eligible companies operating in agriculture, agro-industry and other activities. The incentives, which are subject to various conditions, include exemptions from import duties for industrial equipment and temporary relief from value-added tax. “The Investment Code provides for measures that are clearly aimed at encouraging companies to expand the processing of agricultural products, such as grinding cocoa,” Désiré N’zi, an Abidjan-based project director at food technology company Bühler Group, told OBG.

TRAINING: Opportunities are present to expand professional training within agro-industry, as initiatives to equip individuals with skills related to agro-industrial processes are limited to a handful of programmes. For example, Bühler Group opened a cocoa research and training centre in Abidjan in early 2020 to provide training related to the operation and maintenance of Bühler cocoa-grinding units and other machinery. However, the centre was waiting to receive students as of May due to ongoing restrictions amid the Covid-19 pandemic. The centre is also set to benefit graduates of the National Polytechnic Institute Félix Houphouë tBoigny at Yamoussoukro, as the two entities plan to join forces. Training will be available to institute graduates as well as professionals already working in the cocoa-processing industry.

The National Institute for Professional Agricultural Training also has a programme to equip students with general skills related to food processing. According to N’zi, the centre is a response to an undersupply of training opportunities that support the agro-industrial segment. He stressed that more training resources will be essential to meet Côte d’Ivoire’s objectives of promoting local value addition and boosting the country’s agro-processing capacity.

Furthermore, in February 2020 the Ministry for SME Promotion partnered with the German international development agency GIZ to launch SI Jobs, a €18m programme to provide training to 500 SMEs and 200 micro-enterprises in various sectors. The first phase of the initiative is slated to run for two years and aims to create 2250 new jobs. With the World Bank noting that large agricultural enterprises account for only 15% of employment in the agro-industrial segment, ensuring SME development will lead to gainful employment for many locals in this area and others.

Education of sustainable industrial practices is also advancing, according to César Aka-Khie, CEO of Envipur, a firm that promotes eco-logistics, and industrial quality and hygiene. “There has been a good level of development in terms of environmental awareness and the importance of investing in and promoting green values,” he told OBG. “However, there is still room for improvement, which can be achieved through the creation of synergies between the government, entrepreneurs and citizens.” Better understanding and promotion of green methods in the industrial sector is also expected to grow as players in Côte d’Ivoire increasingly adopt international best practices.

TEXTILES: Record-high levels of cotton fibre production in recent years augur good prospects for the textiles industry. According to estimates published by the US Department of Agriculture in April 2020, cotton fibre output in Côte d’Ivoire is projected to reach nearly 218,000 tonnes in the 2020/21 market year, setting a record for the third consecutive year. This projection takes into account expected challenges associated with the Covid-19 pandemic. However, according to Adama Coulibaly, director-general of the Cotton and Cashew Council, the health crisis is also an opportunity for Côte d’Ivoire to meet demand for cotton face masks.

Cotton fibre production reached an estimated 204,000 tonnes in 2018/2019 and 215,500 tonnes in 2019/20. These estimates are based on cotton mills in Côte d’Ivoire reporting a fibre yield of 43.5% of the country’s total seed cotton production, which stood at around 495,000 tonnes in the 2019/20 harvest. Notably, Côte d’Ivoire is now the third-largest seed cotton producer in Africa, behind Benin and Mali.

The rising levels of cotton fibre production come in the wake of government policies to support the cotton industry. For the 2019/20 seed cotton harvest the government allocated around CFA21bn ($36.1m) to support, among other things, a purchase price of CFA300 ($0.52) per kg for farmers versus a price of CFA265 ($0.46) during the previous harvest. The government has also facilitated the distribution of fertilisers and other inputs to cotton farmers and growers of other crops to encourage higher productivity.

A small set of large companies have led the rising levels of cotton fibre production. These companies are the Ivorian Company for Textile Development (Compagnie Ivoirienne pour le Développement du Textile, CIDT), Ivoire Coton, Ivorian Cotton Company (Compagnie Ivoirienne de Coton, COIC), Cotton Production Company (Société d’Exploitation Cotonnière Olam, SECO) and Industrial Cotton Company of Savanes (Societe Industrielle Cotonniere des Savanes (SICOSA). According to InterCoton, the local cotton trade association, COIC was the top seed cotton producer in 2019/20, responsible for 35% of the total harvest, followed by Ivoire Coton (33%), SECO (15%) and CIDT (17%). COIC assumed control of the production areas assigned to SICOSA under the country’s zoning scheme after a May 2019 decision by the Cotton and Cashew Council to suspend SICOSA’s operations for two years for failing to meet target yields and adequately distribute inputs to producers. Meanwhile, CIDT has seen yields rise since its privatisation in 2017, when Ivorian businessman Koné Daouda Soukpafolo – who also owns COIC – acquired a 90% stake in the company. CIDT’s annual production had fallen as low as 32,000 tonnes in the years preceding its privatisation and the firm was near bankruptcy, but the company recorded some 84,000 tonnes in the 2019/20 harvest.

POULTRY: Meanwhile, in another area of agro-industry, Côte d’Ivoire’s poultry operations have developed rapidly in line with a growing and increasingly urban population. Between 2005 and 2018 the population grew from 18.3m to 25.1m, and the percentage of people living in urban areas rose from 45.2% to 50.8%, according to the World Bank. During the same period the production of poultry meat almost tripled, rising from 20,600 tonnes to 56,000 tonnes, per estimates by the Food and Agriculture Organisation of the UN and regional media. Moreover, a study on poultry in Côte d’Ivoire published in November 2019 by the Dutch government showed that the yearly per capita consumption of poultry meat rose from 0.92 kg in 2009 to 2.15 kg in 2017, although this is still below the African average of 3.3 kg and the global average of 13.9 kg.

Major investments have made the poultry industry’s swift development possible. According to Société Ivoirienne de Productions Animales (SIPRA), a large industry player, some CFA100bn ($171.9m) has been invested to grow and modernise operations between 2011 and 2018. Among the most recent investments was a CFA2bn ($3.4m) hatchery in Azaguié that was inaugurated in April 2019. The hatchery uses advanced equipment and has an output capacity of 6m chicks per year. Known as Poussin d’or d’Azaguié, the hatchery is run by a subsidiary of the Netherlands-based feed technology company Koudijs Animal Nutrition.

Since 2010 the poultry industry’s value chain has become increasingly sophisticated and integrated. For example, SIPRA is among the most vertically integrated producers in the country: the company produces animal feed, has commercial units dedicated to day-old chicks, and offers finished poultry products. Moreover, the Dutch government study reported growth in the number of mid-level value chain actors, such as feed suppliers; breeding farms; and testing labs during the 2010-20 period. International investors have contributed to the development of the sector’s value chain. In addition to Koudijs’ new hatchery in Azaguié, the France-based animal feed company Vitalac also operates production units in Côte d’Ivoire.

GROWING THE INDUSTRY: The flourishing of the poultry industry in recent times comes on the back of years of policies aimed at supporting poultry activities and achieving self-sufficiency in this area. In 2005 the government increased taxes on imported poultry products and banned the import of such products from countries affected at the time by the avian influenza. Specifically, import taxes targeted backyard poultry, including their fresh, refrigerated and frozen edible by-products. Money collected through the import tax has been channelled into the Poultry Sector Guarantee Fund (Fonds de Garantie du Secteur Avicole, FGSA), which provides poultry producers with financial support, such as loans ranging between CFA1m ($1719) and CFA50m ($86,000). In December 2019 the government decided to continue funding the FGSA and taxing the import of poultry products for an additional 10 years beginning on January 1, 2020. The import tax and FGSA are part of the state’s wider moves to support the poultry industry – efforts that are consolidated in a 10-year roadmap known as the Strategic Plan for the Recovery of the Poultry Industry (Plan Stratégique de Relance de l’Aviculture, PSRA).

The PSRA, which was implemented between 2012 and 2020, has largely been a success. Among the plan’s objectives were achieving poultry production of 60,000 tonnes per year and yearly per capita consumption of 2 kg. As noted, Côte d’Ivoire has met the latter and is close to reaching the former. The success of the PSRA is significant given the challenges the poultry industry faced in the early 2000s. Between 2000 and 2005 Côte d’Ivoire saw a large influx of cheap poultry products – primarily from Europe – after the country joined other ECOWAS member states in implementing the trade bloc’s common external tariff. Although poultry consumption rose during this time, about 1500 domestic poultry producers went out of business and 15,000 local jobs were lost, according to the Poultry Industry Association. While the import tax has helped protect local poultry producers, more remains to be done in other industries. “We need better policies to protect Ivorian industrialists from international competition,” Jean-Maurice Ibrahim, CEO of DMEIB, a distributor of industrial electrical supplies, told OBG. “Foreign goods entering the country at uncompetitive prices limit the potential of the domestic market, while also compromising the quality the end user receives.”

Going forward, the poultry industry’s main hurdles remain those related to bio-security. Small and low-cost producers, which are responsible for approximately 60% of output, rarely have bio-security protocols ensuring the health and cleanliness of their animals and finished products. The lack of bio-security measures among small-scale producers differs from industrial producers, which often have in-house veterinarians who supervise adherence to health and quality measures. Alphonse Coffi, operations director at SIPRA, told OBG that issues related to bio-security pose both a public health and commercial risk, since chickens that succumb to disease have a negative impact on profitability. He added that undocumented poultry imports, which continue to occur despite restrictions, complicate maintaining industry-wide bio-security norms. Nonetheless, Coffi noted that the government is working on measures to improve bio-security within the industry.

AUTOMOTIVES: In heavier industrial operations, plans to build automotive assembly plants have followed rising vehicle sales in recent years. In August 2019 Toyota and the Ivorian government signed a memorandum of understanding to build a vehicle assembly plant in the country. The facility is expected by be located at the Yopougon Industrial Zone and be completed in 2021. Although no further details have been published, the two parties stated at the time that the agreement is part of a long-term vision to build whole cars in Côte d’Ivoire. In earlier, less concrete plans, local media reported in February 2019 that Renault had informed the government of the company’s interest in establishing an assembly plant in the country.

While plans by Toyota and Renault appear to be in the preliminary stages, these moves reflect a strategy to build on the rising level of new car sales over the last decade. The number of new cars sold rose from 8160 in 2013 to 8962 in 2016, 9989 in 2017 and 11,376 in 2018, according to the Interprofessional Automotive, Material and Equipment Association (Groupement Interprofessionnel Automobiles, Materiels et Equipements, GIPAME). The number of new cars sold through the end of October 2019 reached 11,026, according to the latest figures from GIPAME, on track for another record year. GIPAME also reported that the number of imported new cars outpaced that of used cars through to October 2019 – at 13,627 and 8354, respectively – in the wake of a government decision implemented in July 2018 to ban the import of cars older than five years, as well as certain types of trucks older than 10 years.

INDUSTRIAL ZONES: Côte d’Ivoire’s strategy to develop its industrial zones is in full swing: hundreds of millions of dollars are being mobilised to expand existing industrial zones and build new ones, as such areas are a critical part of the country’s industrial infrastructure. These investments were necessary as overcrowding and underinvestment in basic infrastructure represented challenges for tenants of the industrial zones at Yopougon, Koumassi and Vridi by the late 2000s. In May 2013 the government established the Agency for the Management and Development of Industrial Infrastructure (Agence de Gestion et de Développement des Infrastructures Industrielles, AGEDI), which is charged with managing and developing the country’s industrial zones. Among AGEDI’s top priorities are overseeing the creation of a new industrial zone near Abidjan and revamping the one at Yopougon.

The development of the PK 24 industrial zone – located at Akoupé-Zeudji, a town roughly 13 km north-west of Abidjan – is a primary example of Côte d’Ivoire’s ambitious plans to expand its industrial infrastructure. When completed, PK 24 will cover 940 ha and stand as the country’s largest industrial zone. According to AGEDI, 70 ha had already been allocated to 58 companies as of early 2020, and extensions were under way. Work on PK 24 first began in 2015 and companies such as Dutch beer producer Heineken and Turkish cement company Limak are tenants at the zone.

In August 2019 China Harbour Engineering Company (CHEC) began work to develop a 127-ha plot at PK 24. CHEC will build a road network and establish the basic infrastructure needed to provide future tenants at PK 24 with water, sanitation and electricity. The Bank of China provided a loan to finance the project’s estimated cost of CFA52.8bn ($90.8m), and CHEC is expected to complete the works in 2021. Additionally, in November 2019 the government signed a $300m public-private partnership (PPP) with the African Export-Import Bank to build another 113-ha extension at PK 24. “2019 was a successful year for infrastructure investment,” Alhi Keita, managing director of local road construction firm Moving Road, told OBG. “PPPs proved useful in this regard: they result in integrated spaces, operate more effectively than lone units and ensure knowledge transfer between private and public stakeholders.”

YOPOUGON: The renovation of the Yopougon Industrial Zone is also vital to the sector, as it remains the country’s largest zone to date, covering about 470 ha and hosting 400 companies, according to AGEDI. Works to overhaul the zone’s roads, utility systems and other basic infrastructure were mostly completed by January 2018. The renovation required an investment of approximately CFA24bn ($41.3m), which was financed by the government’s Fund for the Development of Industrial Infrastructure. More recently, in July 2019 Diarrassouba told local media about plans to invest about CFA4bn ($6.9m) to construct another 400-ha extension of the Yopougon Industrial Zone. He also reiterated the government’s commitment to develop industrial zones in various cities in the interior.

Building industrial zones in the interior will primarily support agro-industry. While the largest industrial zones are located near Abidjan in the south, much of the country’s agricultural production sites are in the central and northern regions, where new zones are set to be developed. One such zone is located in the capital of Yamoussoukro in central Côte d’Ivoire, where 190 ha of a planned 700 ha are already available for use. In August 2019 the government granted 12 installation permits to several companies at the zone, including cashew processing businesses.

In addition, in December 2019 the government announced plans to create a new 28-ha industrial zone in the northern city of Korhogo – the first in a set of industrial zones focused on supporting cashew processing. Other zones will be built in the cashew-producing regions of Worodougou, Gontougo and Gbêkê. Industrial zones are also set to be built in San Pedro, in the south-west of the country, Aboisso and Bonoua (southeast), Bouaké (north-central) and Bondoukou (east). “Abidjan is the main industrial hub of the country considering its population and economic weight, yet the government intends to spread industrial activity to other towns such as Bouaké and Korhogo,” Youssouf Ouattara, director-general of AGEDI, told OBG. “The advantages of establishing a factory in these growing cities are, among others, the lower cost of land and more advantageous taxation.”

OUTLOOK: Despite public investment and government policies that have attracted private participation to the industrial sector in recent times, 2020 is likely to be a challenging year with firms waiting to invest due to supply chain disruptions and the negative demand-side effects of the Covid-19 pandemic. Companies have also expressed apprehension about new investments ahead of the presidential election in October 2020, as regulations tend to change with leadership. Nevertheless, current policies and investments already under way leave Côte d’Ivoire’s industrial sector well positioned for continued growth over the medium and long term.