Economy of Côte d'Ivoire

The Ivorian economy is largely market based and depends heavily on the agricultural sector. Almost 70% of the Ivorian people are engaged in some form of agricultural activity. Côte d'Ivoire is among the world's largest producers and exporters of coffee, cocoa beans, and palm oil. Consequently, the economy is highly sensitive to fluctuations in international prices for these products and to weather conditions. Despite attempts by the government to diversify the economy, it is still largely dependent on agriculture and related activities, which engage roughly 68% of the population.

The economy performed poorly in the 1980s and early 1990s, and high population growth coupled with economic decline resulted in a steady fall in living standards. Gross national product per capita, now rising again, was about U.S. $727 in 1996. (It was substantially higher two decades ago.) After several years of lagging performance, the Ivorian economy began a comeback in 1994, due to the devaluation of the CFA franc and improved prices for cocoa and coffee, growth in nontraditional primary exports such as pineapples and rubber, limited trade and banking liberalization, offshore oil and gas discoveries, and generous external financing and debt rescheduling by multilateral lenders and France. The 50% devaluation of Franc Zone currencies on 12 January 1994 caused a one-time jump in the inflation rate to 26% in 1994, but the rate fell sharply in 1996-99. Moreover, government adherence to donor-mandated reforms led to a jump in growth to 5% annually in 1996-99. A majority of the population remains dependent on smallholder cash crop[?] production. Principal exports are cocoa, coffee, and tropical woods. Principal U.S. exports are rice and wheat, plastic materials and resins, Kraft paper, agricultural chemicals, telecommunications, and oil and gas equipment. Principal U.S. imports are cocoa and cocoa products, petroleum, rubber, and coffee.

Foreign Direct Investment Statistics

Direct foreign investment (DFI) plays a key role in the Ivorian economy, accounting for between 40% and 45% of total capital in Ivorian firms. France is overwhelmingly the most important foreign investor. In recent years, French investment has accounted for about one-quarter of the total capital in Ivorian enterprises, and between 55% and 60% of the total stock of foreign investment capital.

Infrastructure

By developing country standards, Côte d'Ivoire has an outstanding infrastructure. There is an excellent network of more than 8,000 miles of paved roads; good telecommunications services, including a public data communications network; cellular phones and Internet access; two active ports, one of which, Abidjan, is the most modern in West Africa; rail links-in the process of being upgraded-both within the country and to Burkina Faso; regular air service within the region and to and from Europe; and modern real estate developments for commercial, industrial, retail, and residential use. Côte d'Ivoire's location and easy, reliable connection to neighboring countries makes it a preferred platform from which to conduct West African operations. The city of Abidjan is one of the most modern and liveable cities in the region. Its school system is good by regional standards and includes an excellent international school based on a U.S. curriculum and several excellent French-based schools.

Côte d'Ivoire has stepped up public investment programs after the stagnation of the pre-devaluation era. The government's public investment plan accords priority to investment in human capital, but it also will provide for significant spending on economic infrastructure needed to sustain growth. Continued infrastructure development also is expected to occur because of private sector activity. In the new environment of government disengagement from productive activities and in the wake of recent privatizations, anticipated investments in the petroleum, electricity, water, and telecommunications sectors, and in part in the transportation sector, will be financed without any direct government intervention.

Major Trends and Outlooks

Since the colonial period, Côte d'Ivoire's economy has been based on the production and export of tropical products. Agriculture, forestry, and fisheries account for more than one-third of GDP and two-thirds of exports. Côte d'Ivoire produces 40% of the world's cocoa crop and is a major exporter of bananas, coffee, cotton, palm oil, pineapples, rubber, tropical wood products, and tuna. The 1994 devaluation of the CFA franc and accompanying structural adjustment measures generally favored the agricultural sector by increasing competitiveness. However, reliance on raw cocoa and coffee exports, which account for 40% of total exports, exposes the economy to sharp price swings on world markets for these commodities. The government encourages export diversification and intermediate processing of cocoa beans to reduce this exposure. Cocoa beans exports to the U.S. increased sharply in 1996 due to lower freight rates.

The four years following the January 12, 1994, devaluation of the CFA franc have seen Côte d'Ivoire return to the rapid economic growth it knew in the 1960s and 1970s. The spur provided by the devaluation, by increased aid flows, rigorous macroeconomic policies, and fortuitous international commodity prices yielded strong GDP growth in both 1996 and 1997. In addition to these factors, the long period of pre-devaluation stagnation, in which local businesses and potential outside investors put off capital expenditure, caused a boom in investment following the devaluation. Côte d'Ivoire has also begun to turn the corner on its daunting debt problem: first with a generous rescheduling of official bilateral debt at the Paris Club in March 1994; more recently, with a tentative London Club agreement in November 1996, and the April 1997 decision by the G-7 countries to include Côte d'Ivoire in the new IMF-World Bank debt forgiveness initiative for highly indebted poor countries.

Côte d'Ivoire's recent economic performance has been impressive, particularly in 1995 and 1996. Real GDP growth was 7% in 1995, 6.8% in 1996, and an estimated 6% in 1997. The country has been meeting its IMF targets for growth, inflation, government finance, and balance of payments. Traditional commodity exports were boosted both by the devaluation (though improved prices in local currency terms were only partially passed through to farmers) and by higher world prices for cocoa and coffee. At the same time, the devaluation and the generally favorable business environment produced growth in nontraditional crops, local processing of commodities, and the services sector.

In 1996 and 1997, inflation continued the downward trend begun after the devaluation, when the government kept a tight lid both on salary increases and on the size of the public sector work force. Inflation as measured by the increase in the consumer price index has fallen sharply, from 1994's post-devaluation 32.2% to 7.7% in 1995, 3.5% in 1996, and an estimated 5% in 1997.

Public sector finances are another bright spot: Government revenues are on a strongly rising trend since 1993, capped by a 15% increase from 1995 to 1996. The stronger revenue picture, when combined with restraint on the spending side, has resulted in three years of primary surpluses (i.e., receipts minus expenditure, excluding borrowing and debt service). Following a concerted government repayment effort, domestic arrears had been virtually eliminated by the end of 1996.

The outlook for the near and medium term in Côte d'Ivoire remains positive. The government hopes to attain double-digit real GDP growth, but this appears achievable only in a best-case scenario, including continued or enhanced investment flows, additional oil or mineral production, and no drop in world commodity prices; short of this optimistic scenario, a continuation of 6% or 7% growth seems likely for the near term.

GDP: purchasing power parity - $25.7 billion (1999 est.)

GDP - real growth rate: 5% (1999 est.)

GDP - per capita: purchasing power parity - $1,600 (1999 est.)

GDP - composition by sector:
agriculture: 32%
industry: 18%
services: 50% (1998)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 2.8%
highest 10%: 28.5% (1988)

Inflation rate (consumer prices): 2.5% (1999 est.)

Labor force: NA

Unemployment rate: NA%

Budget:
revenues: $2.3 billion
expenditures: $2.6 billion, including capital expenditures of $640 million (1997 est.)

Industries: foodstuffs, beverages; wood products, oil refining, automobile assembly, textiles, fertilizer, construction materials, electricity

Industrial production growth rate: 15% (1998 est.)

Electricity - production: 3.36 billion kWh (1998)

Electricity - production by source:
fossil fuel: 35.71%
hydro: 64.29%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 3.165 billion kWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 40 million kWh (1998)

Agriculture - products: coffee, cocoa beans, bananas, palm kernels, maize, rice, manioc (tapioca), sweet potatoes, sugar, cotton, rubber; timber

Exports: $3.9 billion (f.o.b., 1999 est.)

Exports - commodities: cocoa 37%, coffee, tropical woods, petroleum, cotton, bananas, pineapples, palm oil, cotton, fish (1998)

Exports - partners: France 17%, Netherlands 12%, United States 9%, Italy 6% (1998)

Imports: $2.6 billion (f.o.b., 1999 est.)

Imports - commodities: food, consumer goods; capital goods, fuel, transport equipment

Imports - partners: France 29%, United States 5%, Italy 5%, Germany 5% (1998)

Debt - external: $16.8 billion (1998 est.)

Economic aid - recipient: ODA, $1 billion (1996 est.)

Currency: 1 Communaute Financiere Africaine franc (CFAF) = 100 centimes

Exchange rates: CFA francs (CFAF) per US$1 - 647.25 (January 2000), 615.70 (1999), 589.95 (1998), 583.67 (1997), 511.55 (1996), 499.15 (1995)
note: since 1 January 1999, the CFAF is pegged to the euro at a rate of 655.957 CFA francs per euro

Fiscal year: calendar year

See also : Côte d'Ivoire