Côte d’Ivoire has long been one of the rapidly-growing countries in Africa, with an average growth rate of over 7% from 2012 until 2020, according to the IMF. It is expected to resume this trajectory in the emergent post-Covid-19 period.
What are the economic trends and investment possibilities in this fast-expanding nation, which is the largest economy in Francophone Africa and third largest in West Africa after Nigeria and Ghana? We speak to Joël Touré, chief executive of Stanbic Bank in Côte d’Ivoire.
Agriculture is one of Côte d’Ivoire’s most important industries. In your opinion, what are some of the most lucrative investment opportunities within this sector?
The main pillar of the economy is definitely agriculture and agribusiness, which contributes about 16% to GDP and makes up 40% of exports. Côte d’Ivoire is among the top global producers of cocoa beans, cashew nuts and coffee. Through the National Development Plan, the government is trying to increase the processing of agricultural products to provide jobs and increase the value chain in this sector. In the past four to five years, most of the main players have expanded into or invested in processing.
There are many opportunities in this sector as Côte d’Ivoire still imports most of its needs. The livestock industry does not meet local demand, so animals are imported, particularly from Niger, Mali and Burkina Faso. In the dairy industry, most operators are informal players and not organised, so demand is met through imports here too. France has traditionally been the source of imports, but the country is looking for regional suppliers.
Production of fruit and flowers is an opportunity, but skills are not well developed. There is some local production of palm oil, but we also import from countries like Nigeria. Fishing is another opportunity. We have a lot of water here and there are fisheries locally, but we also import fish from countries like China and Senegal.
The government wants processed goods to represent 50% of the country’s economy, up from 25% now. In agriculture, this will help to absorb the volatility of international commodity prices.
There are regulatory bodies for the bigger crops such as cocoa, coffee, cashew and cotton. They support farmers through co-operatives to improve productivity and the quality of production, help to maintain fair pricing for producers each season and ensure that exporters comply with export guidelines.
Most growing is done by co-operatives, although there are also big investors such as Olam, Barry Callebaut, Nestlé and Cargill. Foreign investors can own land only if they enter into a bilateral agreement with landowners – the government doesn’t own the land. But they need to work with the cooperatives who work the land. A foreign company cannot own the whole value chain.
In which other sectors do you see investment opportunities?
Mining is another pillar of growth in Côte d’Ivoire and the government is encouraging investment in the industry to make it the next biggest sector after agriculture. Although investors need to give the government 30% ownership in mining ventures, there are no other restrictions. The mining code was revised in 2014 to make it more investor friendly. The government offers guidance, making sure the mining and labour codes are followed but there are no local content regulations and expatriates are welcome. The state-owned mining company SODEMI is responsible for engaging with investors.
The oil and gas sector is also developing and the government has entered into joint ventures with international companies through the national oil company, PETROCI. The country has access to the same reserves that have already been exploited by Ghana and there is a wide scope of opportunities both onshore and offshore that international companies are already active in.
Industrial development zones are attracting a lot of investment. The main zones are around the ports. Côte d’Ivoire has two ports – Abidjan in the east, which processes 85% of trade, and the fast-growing Port of San-Pedro in the south west, which is addressing congestion problems in Abidjan and boosting development in this part of the country. San-Pedro is also becoming the main trade port for landlocked countries to the north and for the export of manganese and other minerals in the area. There are large investments here and lots of opportunity.
There is another industrial zone about 20km outside Abidjan, a 940-ha economic zone called PK 24, that is attracting investors because of space issues in the Abidjan zone. Investors include cement producers from Morocco, Nigeria, Togo and Burkina Faso and Heineken, which has set up a brewery in a joint venture with CFAO. There is also a free zone near Abidjan where pharmaceutical manufacturers are located, mostly producing basic medications, as well as services businesses.
Power is readily available with 95% of needs covered by the national grid. There has also been private investment in the sector by companies such as GE and Azito Energie and there are many opportunities for energy investment, particularly in the industrial zones. Hydropower is a further opportunity although renewable energy is fairly new.
Which countries are Côte d’Ivoire’s main trade and investment partners?
The main investors in the country are France and China and some from the UK. We are also seeing Indian and Turkish companies looking for opportunities. Moroccan companies are investing in banks, cement and telecommunications. We are also doing business with Senegal, importing fish and we are refining their fuel. There is little coming from South Africa – just MTN and a few mining companies – although the two governments are working on improving this. The language barrier is one of the main issues.
We do trade with other countries in the West African Economic and Monetary Union (WAEMU), the eight-country customs and currency union in which all members use the CFA franc. We also trade a lot with our landlocked neighbours. It makes sense because they use our ports.
We don’t see Ghana and Nigeria as competitors despite their size. Our engagement is complementary. Ghana and Côte d’Ivoire, in particular, have common resources, such as cocoa, minerals and oil, that cross our shared borders and many companies operate in all three countries. But we do compete with Ghana, and even Benin and Togo, for port business from landlocked countries in the hinterland.
What is the state of infrastructure between Côte d’Ivoire and its northern neighbours?
There has not been a lot of investment until recently. The main roads for a long time have been the old colonial infrastructure and they have been beaten by heavy trucks. But in the past few years, there has been a lot of road maintenance and there are now up to 700km of new or refurbished roads, which makes life easier for exporters.
There is a rail line between Abidjan and Ouagadougou in Burkina Faso, a journey of about 1,000km, mostly for cargo. This also needs some refurbishment and there are many stops; it will take about 45 hours to move between the two cities. By road, depending on restrictions for trucks at certain hours, the journey can take 24 hours, including administration at the border.
Describe some of the business-friendly reforms Côte d’Ivoire has implemented in recent years?
The country adopted a new investment code in August 2018 to make investing more transparent and attractive. It includes investment dispute settlement mechanisms and the promotion of socially responsible and sustainable investment.
As I mentioned, the mining code was reformed in 2014 to make it more investor friendly and the government has put in place special regimes for other targeted sectors, including housing and construction. It has also simplified the process of registering a company. It now takes just 24 hours, although the process for larger companies requires more steps and may take longer. This has helped the country to improve its rankings on the World Bank Doing Business Index from 122 in 2019 to 110 in 2020.
What are the main risks investors need to consider?
Political risk is mostly an issue around elections and there was some trouble during the 2020 election but that has died down. The government is working on settling political issues to restore confidence in the country and we don’t expect problems for the foreseeable future.
A possible risk in time could be with the currency and possible depreciation because of the drive by ECOWAS, the regional bloc, to introduce a common currency. The CFA franc is pegged to the euro as a result of the historical link with France. This has provided stability for investors but the issue of a common currency for the whole region, including Nigeria and Ghana, is still on the table. However, this is a slow-moving process and unlikely to happen any time soon as the region is not ready for the currency convergence this requires.
Foreign exchange repatriation and availability is not a risk because this process is very well regulated by the central bank. All proceeds in and out of the country must go through the bank, which also monitors exports. It is important for investors to follow the processes and to get the right advice on entering the country.
How has Côte d’Ivoire coped with the Covid-19 pandemic and what are the future growth projections?
Côte d’Ivoire was one of the countries in sub-Saharan Africa that continued to grow during the Covid-19 pandemic despite the global recession, with expected growth of 1.8%. The World Bank predicts an increase in 2021 to 5.5% and 5.8% in 2022.
The country has been resilient because of its diversified economy and the fact that agricultural commodity prices have not been as volatile as those of industrial commodities. Businesses have also been allowed to operate during the pandemic as it was not so severe here.
Stanbic Bank expects long-term growth to trend back towards the 6% to 7% range in the wake of post-pandemic normalisation. We are aligned to the National Development Plan, with most of our focus being on financing projects in the agriculture, infrastructure, mining, energy, and oil and gas sectors.