How urbanisation and trade drive economic growth in Côte d’Ivoire

Following the outbreak of Covid-19 in 2020 and the subsequent economic impact of the pandemic, Côte d'Ivoire's construction sector helped the economy recover. There has been growing demand for residential properties to house the expanding middle class due to rapid urbanisation. Furthermore, industrialisation has increased the need for larger industrial zones and commercial centres, as well as an expansion of modern transportation networks across the country.

Structure & Oversight

The Ministry of Construction, Housing and Urban Planning (Ministère de la Construction, du Logement et de l’Urbanisme, MCLU) oversees the implementation of policy in terms of both infrastructure development and the construction sector. The MCLU also provides permits for commercial and residential infrastructure programmes.

The Ministry of Equipment and Road Maintenance (Ministère de l’équipement et de l’Entretien Routier, MEER) supports the MCLU by carrying out national priorities across several public works segments. MEER manages the design and construction of the road network, airfields, airports, ports, urban and national railways, river infrastructure and public water distribution systems. It also sets regulations for the maintenance and management of related public infrastructure.

Performance & Size

The construction sector is expected to achieve a compound annual growth rate of 6% globally between 2019 and 2026. In 2021 the sector contributed 4% to Côte d’Ivoire’s GDP, and several projects slated for 2022 onwards mean this figure will likely grow through to 2027. The industry is the third-largest source of employment, with around 10% of the workforce employed in construction in 2019, and 28,000 employees in buildings and public works in 2020. According to the Ivorian Barometer of Building and Public Works Group, between 2012 and 2018 the buildings and public works sector saw annual growth of around 26%. The World Bank reported the construction sector and public investment were the primary growth drivers in 2019. This is expected to shift to manufacturing services and exports, which have grown as a result of recent infrastructure improvements.

A financial package from the IMF approved in April 2020 totalling $886.2m to be drawn under the Rapid Credit Facility and Rapid Financing Instrument, and the government's emergency spending plan helped mitigate the economic impact of the pandemic. Although GDP growth slowed in 2020 to 2% – below the 6.4% seen in 2019 – investment in construction and industry has helped the economy rebound at pace. New construction projects are expected to contribute to future employment creation and a decline in poverty levels.

The focus on public spending is set to continue, as increased public investment associated with the implementation of National Development Plan (Plan National de Développement, PND) 2021-25 will support the construction of the port of Abidjan, the Abidjan-Dakar highway, the development of transport networks with Niger and Burkina Faso, infrastructure related to the organisation of the 2023 Africa Cup of Nations football tournament, and the Abidjan Metro (see Industry analysis). The government anticipates that significant investment in strategic infrastructure will encourage greater private funding across multiple industries.

Land Acquisition

Land use and rights are among the most significant obstacles to construction and infrastructure development. Although constitutional reforms passed since 2000 affirmed that land ownership is restricted to Ivorian citizens, as of 2017 around 0.3% of certifiable land had been formalised, according to the World Bank. This indicates that much of the rural land in Côte d'Ivoire is subject to ownership disputes, making it challenging to find property for development.

As urbanisation progressed, the government launched several initiatives to improve land access. The most recent programme for the simplification and digital transformation of urban land management was proposed in 2021 by the MCLU and the Ministry of Budget, with the goals of accelerating administrative processes, reducing land-related disputes and enhancing the business environment. Geographic information consultancy IGN France International was selected to launch the Integrated Urban Land Management System of Côte d’Ivoire, which will digitalise and register over 100,000 land records during the initial phase of the project, spanning between 2021 and 2023.

An additional challenge for the industry is quality. Urban areas in particular have a housing shortage and as of March 2022, the country had a housing gap of approximately 500,000 units. This issue is compounded by the fact that around 80% of buildings in Abidjan do not have building permits, highlighting the need for stricter safety measures. Nevertheless, according to a 2021 IMF report the perceived quality of public infrastructure is relatively high, particularly regarding trade-related infrastructure such as ports and airports. Furthermore, Côte d’Ivoire’s ranking in the World Bank’s Logistics Performance Index, which evaluates Customs performance, infrastructure quality and other trade aspects across 160 countries, improved its overall ranking from 95th to 50th between 2016 and 2018.

Building Materials

Access to building materials and cement has become increasingly important in line with the expansion of the construction sector. Between 2003 and 2018 the demand for building materials increased by an estimated 3.9%. At the same time, companies have faced challenges acquiring these inputs during the pandemic due to supply constraints. “We faced major shortages in cement supply for several months,” Jean-François Moreau, then-president of the Chamber of Urban Developers and Developers-Builders of Côte d’Ivoire, told OBG. In addition, firms are finding it difficult to purchase materials due to increased energy costs. “PVC pipes cost two to three times as much as before the pandemic,” Moreau added.

Another issue related to building materials is sustainability. As of mid-2022 nearly 80% of building materials used in the market were imported from abroad, underscoring the segment's ecological impact. Moreover, more than half of the energy consumed in the country is used to cool homes. However, in recent years contractors have increasingly adopted bio-architecture elements into housing construction. This has helped to fuel a trend that is both environmentally friendly and in line with urban planning standards.

Demand for cement doubled between 2012 and 2018, growing from 2m tonnes to 4m tonnes a year. In February 2022 the Société de Ciment Côte d’ Ivoire inaugurated its second grinding plant in Abidjan and aims to double its installed cement production to 3m tonnes per year. Swiss firm LafargeHolcim also announced plans for the production of white cement in its Abidjan grinding plant starting in 2022. Turkish firm Limak Cement plans to establish operations in Africa, starting with an investment in a $50m facility in Côte d’Ivoire for the first phase of its project.

Energy Projects

Côte d’Ivoire has two major energy projects planned for 2022 that will expand its renewable energy sector and diversify its energy mix to position the country as a West African electricity centre. The first biomass power plant on the African continent will be located 100 km east of Abidjan. BIOVEA Energie, in a joint venture with French firm EDF, public infrastructure financer Meridiam and Biokola, a subsidiary of the SIFCA Group, will operate the facility. The consortium and Proparco, a subsidiary of the French Development Agency, are expected to invest €22m in the project. The second project is Singrobo, a 44-MW hydroelectric power station, scheduled to come on-line in 2023. Located south-east of Yamoussoukro, Singrobo will diversify the country's energy mix as part of the government goal to source 42% of its electricity from renewable sources by 2030. When complete, the plant is expected to deliver 217 GWh of power annually, reducing carbon emissions by approximately 124,000 tonnes per year.

New Heights

The government has attracted attention as Abidjan continues to expand. The Belgian construction group BESIX was awarded two major projects in the city currently under construction. The first is the F Tower, expected to be the tallest building in Africa once complete, measuring over 280 metres. Designed by PFO Africa in partnership with the MCLU, the building will have 64 floors of office space and a 200-seat auditorium. BESIX’s second project is the Abidjan Exhibition Centre, also called the Palais des Congrès. The exhibition centre was designed and developed by PFO Africa. The new structure will be 37 metres high, with a surface area of 12,000 sq metres and a capacity of 10,000 people. Construction began in June 2021 and, when complete, the space will host trade fairs, cultural and sporting events, and international conferences.

Subsector Investment

China has invested heavily in Africa, providing $11.2bn across the continent between March 2020 and June 2021. This trend is expected to continue, with China being the main driver of foreign direct investment in Africa over the next decade. Chinese firms invested approximately $4.9bn in Côte d’Ivoire between 2010 and September 2021. This includes infrastructure projects such as China Harbour Engineering Company’s $430m investment in the construction of a second container terminal at the Autonomous Port of Abidjan, which is expected to be complete by the end of 2022, and an agreement between the China State Construction Engineering and the Ministry of Transport in September 2021 to modify and build Abidjan’s fourth bridge.

In response, the EU announced a $22.7bn financing package in 2022 for various initiatives on the continent, including the support of African transport networks. The EU hopes to raise €150bn in investment in the scheme by 2027. Among the list of projects targeted by the programme is the Dakar-Abidjan corridor, establishing a strategic link with neighbouring countries.

Transport

The government is focusing on transport infrastructure to strengthen regional trade links. As of 2020 Côte d'Ivoire had approximately 6500 km of asphalt roads and an additional 75,600 km of unpaved roads. However, three-quarters of bitumen roads are between 15 and 35 years old, indicating additional investment is needed to update the road network.

A new 1081-km motorway between Abidjan and Lagos is expected to benefit the five West African economies of Côte d’Ivoire, Ghana, Togo, Benin and Nigeria. ECOWAS agreed to the project in March 2022, and is funding the $15.6bn public-private partnership (PPP). The route facilitates around 75% of West Africa’s commercial activities, and its expansion will further develop transport and trade across the region. Colas Afrique was awarded a contract to redesign and construct the major Route de l’Est in May 2021, as well as another to develop road networks in towns connected to the road. The project, which is expected to be complete by late 2023, is in line with the PND 2021-25's goals to improve inter-urban infrastructure. In 2020 Colas completed the widening of a section of the Route du Nord, connecting Bouaké and Kanawolo.

In April 2020 the ECOWAS Bank for Investment and Development agreed to give $25m in funding to construct 11 steel bridges across Côte d’Ivoire. This is part of the government's aim to build 100 new bridges across 1000 critical locations in rural areas as outlined in the previous PND running from 2016 to 2020.

The government has developed PPPs to improve inner-city transport as well. Plans for an 18-station, 37-km metro network in Abidjan are under way. A consortium of French groups Bouygues Travaux Publics, Alstom, Colas Rail and Keolis are collaborating on the $1.6bn project. Once complete, the network's projected daily capacity will be an estimated 540,000 passengers.

Industry

The government has invested $1.7bn in constructing three industrial zones in Akoupé Zeudji near Abidjan; San-Pédro in the south-west; and Ferkessédougou in the north. The African Export-Import Bank started construction on the PK24 Industrial Park in Abidjan in 2021, and once complete, is expected to host 60 companies and generate 1m jobs. The creation of another industrial zone on 540 ha of land in SanPédro will help expand industrialisation beyond Abidjan.

The agro-processing industry has seen a rise in private investment as well. Cargill finished a $100m upgrade of its cocoa processing facility in November 2021. The Yopougon grinding facility is among the largest of its kind on the continent. In the PK24 Industrial Park, the Dutch company De Heus is building a 7500-sq-metre animal feed plant scheduled for completion in the latter half of 2022.

Health Care

UK Export Finance (UKEF) is supporting developer NMS Infrastructure's aim to build six new hospitals across the country by 2024. The €326m project will support the construction of health care facilities in Bouaké, Boundiali, Katiola, Kouto, Minignan and Ouangolodougou. This is part of a broader investment outlook, as UKEF intends to fund up to £2m in new business in Côte d’Ivoire.

Sport Infrastructure

The construction and renovation of six stadia in preparation for the Africa Cup of Nations football tournament in January 2024 will drive funding in the construction sector, according to an April 2022 report from Fitch Solutions. In October 2018 the late Prime Minister Amadou Gon Coulibaly pledged $345m to support that objective. A 60,000-seat stadium in Ebimpe, a 35,000-seat stadium in Bouaké, and a 20,000-seat venue in Yamoussoukro are among the sites for the tournament. Two 20,000-capacity venues in San-Pédro and Korhogo, as well as the 50,000-seat Stade Félix Houphout-Boigny in the heart of Abidjan, will all be completed in time for the event.

Outlook

The government's efforts to boost infrastructure investment appear to be paying off, as it is gaining greater levels of private investment for construction across the economy. Numerous infrastructure projects in terms of office space, health care facilities and entertainment are under way in the economic centre of Abidjan, as well as industrialisation efforts in other regions. Investment in major transport routes across the country and those linking to its neighbours will enhance and encourage trade. Given the country's resilience in the face of the pandemic, the construction sector is likely to grow over the coming decade, attracting more funding from both China and the EU.