Country Brief

Last updated March 2009

Overview

Côte d’Ivoire , a medium-size country with a population of 18.5 million, is the largest economy in the West African Economic and Monetary Union (WAEMU) and is critical to the overall development of the sub-region. Côte d’Ivoire has an important economic influence over the rest of the region, given its size—accounting for 40 percent of GDP in the WAEMU—its relatively high income per capita (US$960 in 2007 as per the Bank’s Atlas methodology), and its role in transit trade for landlocked neighboring countries. With its large immigrant population, Côte d’Ivoire has also been an important source of worker remittances for other countries in the sub-region. The country is the largest exporter of cocoa in the world, and its level of total goods exports is the fourth largest in sub-Saharan Africa (after South Africa, Nigeria and Angola). It has a relatively diversified agricultural economy as well as significant manufacturing and services sectors. However, the civil war in 2002-03 and subsequent years of stalemate in the peace process have taken a heavy toll on the economy and social outcomes.

Basic facts

• Measured by the Human Development Index (2006) Côte d'Ivoire is ranked 164th out of 177 countries.
• CPIA rating (2007): 2.6.
• Doing Business ranking (2009): 155 out of 175 countries.
• Up to 3,000 persons were killed during Côte d'Ivoire’s civil conflict and up to 700,000 persons were displaced.
• The HIV/AIDS prevalence rate, currently estimated at 4.7%, is lower than previously thought but remains much higher in war-affected areas due to widespread sexual violence and increased prostitution.
• Poverty has increased from 38% just before the crisis in 2002 to 49% in 200.
• Although still one of the largest economies in the region (accounting for close to 40% of the economic activity in the West African Economic and Monetary Union - WAEMU), the recent conflict has taken a toll on the country’s economic development: In 2000–06, average economic growth turned negative (-0.1 percent) and was well below the rates in the rest of WAEMU (4.1 percent) and sub-Saharan Africa (SSA, 4.9 percent).
• Helped by reunification , the economy registered a modest recovery in 2008. The medium-term macroeconomic outlook is based on the assumption of a durable resolution to the conflict and a steady recovery. Real GDP growth is projected to gradually pick up from stagnation during the 2000-06 years of crisis and settle at around 4.5 percent during 2008-10.
• Arrears to the Bank were cleared on April 2, 2008. Since the Bank reengaged in the country, the Board has approved nearly $810 million in IDA grant support (commitments) to Cote d’Ivoire

Historic Context     

Côte d'Ivoire became independent in 1960. The country’s first president after independence, Houphouët-Boigny, served as head of state for thirty-three years until his death in 1993. He was succeeded by Henri Konan Bédié, who was overthrown by a military coup d’état in December 1999. In January 2000, former army chief, General Robert Guéi, formed an interim coalition government until elections in October of that year brought Laurent Gbagbo to the presidency.

After the 1999 military coup, there were hopes for a recovery with the holding of a national reconciliation forum in 2001 and the formation of a reconciliation government. These hopes were shattered when civil war erupted in September 2002. The brief onset of hostilities led to a severe deterioration in socio-economic and humanitarian conditions. Some 700,000 people were displaced. The country was cut into two with the government holding the south and central regions and the rebels holding the north and west. After months of conflict, a peace agreement was concluded in Marcoussis in January 2003. The UN followed with a security council resolution providing a mandate for a UN peacekeeping mission whose forces would be supported by the French military, with its intervention, named Opération Licorne.

In early 2004, an escalation in tensions related to the power sharing arrangements and public protests led to a large number of killings. In November 2004, there was a resurgence of fighting and the subsequent withdrawal of ex-rebel ministers from the government resulted in a highly uncertain situation.

A further peace agreement was signed in Pretoria in April 2005, following the mediation by President Mbeki of South Africa. In order to move the peace process forward and keep preparations for the October 2005 elections on track, President Mbeki convened Ivorian political leaders to a new summit in Pretoria in June 2005. However, little progress was made in advancing the disarmament process upon which the October elections hinged.

The UN Security Council resolution 1633 of October 2005 extended President Gbagbo’s mandate for another year. The resolution also established an International Working Group on Côte d’Ivoire to monitor the peace process and the implementation of the Pretoria road map. Based on the efforts of African mediators, the Governor of the Central Bank of West African States, Konan Banny, was appointed Côte d‘Ivoire’s Prime Minister for the transition in December 2005. Banny formed a Government of national unity, an immediate step to break the deadlock in the country’s peace process.

Banny’s government tried to launch both the disarmament and identification processes, critical elements of the peace agreement, but failed. Then in August a massive toxic waste dumping outside Abidjan seriously embarrassed the government leading to Banny’s resignation. Although he was immediately reinstated, the remainder of his premiership was tarnished and rendered ineffective.

New elections were scheduled for October 2006, but getting to elections remained a challenging task. The disturbances around the “audiences foraines” ─ voter identification and registration process ─ and delay in the disarmament resulted in another postponement of the election deadline of end-October. In November 2006, the U.N. Security Council passed resolution 1721 extending President Gbagbo’s mandate for 12 months. It also granted executive powers to Banny with a full mandate to implement the DDR, unify the country and organize new elections. However, disagreements over the implementation of the new UNSC Resolution 1721 delayed the peace process.

Recent Political Developments

In March 2007, the Ouagadougou Political Accord, which received the support of the international community, set out a new roadmap for disarmament, demobilization and reintegration, the dismantling of militias, reunification of the country, and preparations for elections for 2008 ( Supplemental Ouagadougou Accords in November 2007 and December 2008 have been signed to reinforce implementation of the roadmap, especially the reunification of the army.). A new transition Government, with Forces Nouvelles leader Guillaume Soro named as Prime Minister, was formed in early April 2007. Later in the year, an integrated command center for the army and rebel forces was set up, the “confidence zone” was eliminated, and prefects for all districts and judges for the nationality identification hearings were appointed. Progress has also been made in the re-installment of prefectural authorities and the re-deployment of public administration and service provision in the Western, Northern and Western regions, formerly held by the rebels. In addition, the security situation has steadily improved and military roadblocks and racketeering have been significantly reduced in recent months.

Following initial delays, especially in the identification of the population and voter enrollment, the key political leaders agreed that the originally-scheduled November 30 date for elections was unrealistic. It was also agreed that a new date should be set, taking into proper account the steps still required (including completion of enrollment operations). The electoral commission plans to complete the voter registration process in the first half of 2009 and the new date for elections is expected to be announced thereafter. As of March 2009, some 6 million of an estimated 8 million eligible voters have been registered. Although the disarmament of militias and the reintegration of rebel forces into military or civilian life have only started, the continued presence of around 7,000 UN and 2,000 French troops should help maintain security for the elections.

Economic Developments

The conflict and political instability took a heavy toll on growth and poverty. In 2000–06, average economic growth turned negative (-0.4 percent) and was well below the rates in the rest of WAEMU (4.1 percent) and sub-Saharan Africa (4.9 percent). The partition of the country disrupted trade within the country and diminished Côte d’Ivoire’s role as a regional hub. Export volume growth fell between 1994–99 (8.7 percent) and 2000–06 (2.3 percent). Foreign direct investments took a major hit and many foreign businesses closed or significantly scaled down their operations awaiting the permanent resolution of the crisis. This has aggravated the already very high unemployment, especially among the youth. The external current account held up (1.5 percent of GDP during 2000-06) thanks to an increase in oil exports since 2002 and overall favorable terms of trade (notably for oil). The financial sector was adversely affected by the crisis, as all 19 bank branches were closed in the Center–North-West region since 2002, the quality of bank loans portfolios declined and the already weak judicial system deteriorated further. Developments in Côte d’Ivoire also hurt the WAEMU regional trade and output. Furthermore, fiscal performance and transparency suffered, owing to falling revenues and crisis-related expenditure pressures and weakened accountability. During 2007, some progress towards greater transparency and governance was made in the context of the renewed policy dialogue with the World Bank and the IMF in the cocoa, energy and financial sector (for example with the completion of two energy audits) as well in public financial management.

As the political normalization process continued in 2007, the economy registered a modest recovery. The Ouagadougou Accord gave new impetus to political normalization and the economy began gradually to respond to a more stable environment. A modest increase in private sector confidence and the ongoing rehabilitation of public infrastructure contributed to an estimated real GDP growth rate of 1.6 percent in 2007. Weather conditions adversely affected cotton and cocoa production and oil production declined in volume, but that was partly offset by higher oil and cocoa prices. The 2007 external current account balance (excluding official transfers) turned into a deficit of 1.5 percent of GDP as import volumes rose faster than real GDP. Inflation remained at 1.9 percent in 2007.

The fiscal outcome in 2007 was broadly in line with the budgetary program targets supported by the IMF Emergency Post-Conflict Assistance (EPCA) ( In August 2007 the IMF Board approved an Emergency Post-Conflict Assistance for Côte d’Ivoire in an amount of SDR 40.6 million (about US$62.2 million).). The primary basic surplus was 0.6 percent of GDP. However, operating spending, especially that of national institutions (including sovereignty outlays and military premia), exceeded budget allocations, while post-conflict related and investment outlays were lower. Revenue was broadly on target, but only because of large recourse to advance tax payments, especially on cocoa export duties. The government also made progress in clearing arrears to external creditors and domestic suppliers thanks to exceptional efforts to mobilize resources on the regional financial market. The stock of domestic arrears (including on subsidies to private schools) declined from 4.5 percent of GDP at end-2006 to 2.7 percent of GDP at end-2008. The Government also stayed current on debt obligations to several multilateral creditors and repaid its share in arrears clearance to the World Bank Group in early 2008 (one-half of arrears or 1.1 percent of GDP).

The economic recovery which started in 2007 accelerated in 2008, but inflation increased. Output growth in 2008 is estimated at 2.3 percent, driven by a recovery in oil and gas output from the technical problems in the previous year, favorable rains and prices for food and export crops, and the further reunification of the country. The value of exports is estimated to have increased by 8.3 percent in 2008, after declining by 5.7 percent the previous year. The current account balance (excluding official transfers) is estimated to have improved to 1.0 percent of GDP. Twelve-month CPI inflation, which fluctuated at around 2.5 percent in recent years, reached 9.0 percent at end-2008, reflecting the mid-year surge in world food and oil prices; however, with prices falling toward the end of the year, annual inflation moderated to 6.3 percent for 2008. In April 2008, the government temporarily suspended or reduced taxes on essential food items, such as rice, wheat, sugar, and edible oil, to offset the rising cost of living.

The medium-term macroeconomic outlook is based on the assumption of a steady recovery after years of civil conflict. Real GDP growth is projected to increase to 3.7 percent in 2009 and 4.2 percent in 2010, and to surpass 5.0 percent over the period 2011-13, as productivity and investment return to their pre-crisis growth path. Longer–term growth is a projected at 5.1 percent per annum, which is below the averages of the post-devaluation 1994-99 period (6.6 percent per year) and of the 1960-80 boom years (6 percent a year). Growth during the recovery phase would come from renewed private sector confidence and investments, the return of capacity utilization in industry to normal, normalization of the situation in the central, northern and western parts of the country, the rehabilitation of public infrastructure, and expected reforms in the cocoa, energy and financial sectors. Rehabilitation of public infrastructure (especially roads to the North) will be particularly critical to help domestic and external trade and re-launch nontraditional exports and agricultural processing industries. Restoration of capacity of the electricity sector will also be critical for the country’s economic recovery. Longer-term growth would be sustained by diversification of the economy, increased investment, and expanded trade to regional and global markets.

Social Developments

The crisis has resulted in increasing poverty, from 38.2% in 2002 before the conflict to an estimated 49% in 2008, massive population displacement, rising unemployment, and a worsening composition of public expenditures. Access to and delivery of basic social services, especially in the war-affected areas deteriorated. Achievement of most MDGs is seriously off track. According to a 2006 UNICEF MICS survey, 33 percent of children under five are suffering from moderate malnutrition and 15 percent from severe malnutrition. During the height of the crisis at least 500,000 children were out of school. There has also been a significant deterioration in Côte d’Ivoire’s UNDP Human Development Index (HDI) and the country now ranks 164th out of 177 countries. The HIV/AIDS prevalence rate, currently estimated at 4.7%, is lower than previously thought, but remains much higher in the war-affected areas.

Donor Coordination

The World Bank Group is a key donor to Côte d’Ivoire. Given the fragility of the recovery process, the Bank has played an important role in ensuring close coordination of development partners in support of the Government’s recovery and governance reform program; including helping define the arrears clearance plan and the HIPC debt relief process. At the policy level, key donor partners coordinate around the international consultative body which is attached to the Ouagadougou process (comprising the UN, European Commission, IMF, AfDB and the World Bank) and monitors implementation progress and challenges.

Upon the signing of the first Ouagadougou accord, a donor roundtable was held to mobilize resources – about US$200 million was committed for a US$350 million program. Since then, a monthly Supervision Committee has been created to better monitor and coordinate implementation. A more formal Consultative Group meeting is planned for early next year. At the technical level, donors coordinate according to sectors with the line ministries as well as by way of a regular Groupe de Reflexion Strategique, comprising heads of UN agencies, key bilateral partners and the IFIs. The Bank and Fund are closely coordinating their dialogue with authorities on macro-economic policy and economic governance reform.

Relationship with Country and Bank role in supporting post-conflict reconstruction

The World Bank Group activities in Côte d’Ivoire are undertaken within the context of the Interim Strategy Note (ISN) for FY08-09. The ISN is organized around three pillars:

• Support stabilization of the crisis and peace-building , and assist the government in addressing key conflict factors (through implementation of the Ouaga accords);
• Assist war-affected populations by way of community rehabilitation and support to the provision of basic social services;
• Assist economic recovery and reform by focusing on economic governance reforms, institution building, fostering demand for governance and accountability and supporting sustained economic growth.

This strategic framework is underpinned by IDA support, including: a US$120 million Post-Conflict Assistance Project (PCAP, effective since August 2007); a US$308 million development policy operation fully disbursed in April 2008 (EGRG, of which US$35 million was for direct budget support; the remainder for immediate clearance of arrears); three new emergency projects approved by the Board in June, including Urban Infrastructure Rehabilitation (PUIUR, US$94 million); support for HIV/AIDS (MAP SIDA, US$20 million) and a Governance and Institution Building TA (DGDI, US$13 million). The US$104 million portfolio that was suspended under arrears, with operations in transport (CI PAST), education (PASEF), rural development (PNGTER), and distance learning (CED CI), has recently been approved for reactivation and restructuring, including to provide some support for the food crisis. In the Bank’s fiscal year 2009, a second development policy operation (budget support) of US$150 million (EGRG-II) has been approved; and an Urgent Energy Rehabilitation Project of US$50 million and Emergency SME Revitalization Operation of $15 million (with IFC/FIAS) are being prepared. A GEF national park protection project for US$2.5 million (CI PARC) has also been approved. The Bank frontloaded IDA resources in fiscal year 2009 in an effort to buffer the impact of the global recession. The Bank is also preparing a LICUS TF grant program of $3.4 million to support a young entrepreneurs and job creation pilot and to strengthen communications and CSOs monitoring PRSP and governance reforms.

Before the resumption of IDA financing, Bank support to Côte d’Ivoire from 2004-2007 was primarily in the form of PCF and LICUS grants. This flexible and rapid funding provided strategic support for the implementation of peace agreements and post-conflict recovery, preparatory analytical work and pilot projects. About US$3.5 million in various PCF grants helped finance reintegration, community rehabilitation, and reconciliation activities as well as address gender-based violence. A LICUS Trust Fund recovery package of US$6.4 million approved in June 2006 included support for strengthening governance and post-conflict planning as well as and capacity building to prepare for reengagement and a full-fledged IDA program. The LICUS program also includes support for civil registry modernization and the national identification process jointly designed with the EC (approved in May 2008) and helped finance employment creation for youth at risk. New LICUS funding of US$1.5 million approved in FY09 to support the PRSP process and peace facilitation of the Ouagadougou Political Accord was signed in January 2009.

Analytical work: Following good practice in other fragile and post-crisis countries, the Bank has focused its engagement over the last years on a comprehensive analytical program to rebuild its socio-economic knowledge of Côte d’Ivoire after several years of absence, define key areas for reform and inform design of new operations. Key studies include a Poverty Diagnostic, a Country Social Assessment, a Public Expenditure Management and Financial Accountability Review (PEMFAR, jointly undertaken with the IMF, EU and AfDB), and Bank-financed energy audits. Going forward, other key studies will focus on management of natural resources and the agricultural sector; economic diversification, competitiveness and sources of growth; and doing business reforms. Country Status Reports in Health and Education and an Environmental Assessment are also planned.

International Finance Corporation

The IFC has a portfolio of US$73.2 million, invested mostly in oil and gas and electricity generation. Throughout the crisis in Côte d’Ivoire, IFC has remained active and is now considering new investments in selected sectors, particularly for private sector development and microeconomic reforms.

Multilateral Investment Guarantee Agency

MIGA has issued coverage of US$11.7 million for a French investment in three cocoa plantations and expansion of cocoa production. As the situation in Côte d’Ivoire continues to stabilize, MIGA will also work to play a catalytic role in supporting foreign direct investment (FDI) in the country, either directly or in collaboration with regional African institutions.

MIGA’s online investment promotion services ( www.fdi.net and www.pri-center.com ) are unique web portals that offer free country analyses and information relating to foreign direct investment (FDI) and political risk management and insurance for 175 countries. These initiatives contribute to MIGA’s mandate of promoting FDI in developing countries as a way to enhance growth and development. At present, these services feature 117 documents on investment opportunities and the related business, legal and regulatory environment in Cote d’Ivoire.

World Bank Institute

The number of Ivorian participants in WBI activities had been increasing sharply since the launch of the global distance learning network (GDLN) in Abidjan. Unfortunately, as a result of the security situation in the country, that number dropped significantly afterwards. The majority of those who participate do so through videoconferencing, either through the GDLN or Web-based courses. The rest are flown to face-to-face events that take place in neighboring countries. The most popular programs are Water and Rural Development and Education.