Economy of Côte d'Ivoire

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This article describes the 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.

Its current GDP per capita grew 82% in the 1960s, reaching a peak growth of 360% in the 1970s. But this proved unsustainable and it shrank by 28% in the 1980s and a further 22% in the 1990s. This coupled with high population growth 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 1996-1999. 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.

1 Foreign Direct Investment Statistics
2 Infrastructure
3 Major Trends and Outlooks
4 Economic Data
5 See also

[edit] Foreign Direct Investment Statistics

Foreign direct investment (FDI) 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.

[edit] Infrastructure

By developing country standards, Côte d'Ivoire has an outstanding infrastructure. There is a network of more than 8,000 miles of paved roads; modern telecommunications services, including a public data communications network; cellular phones and Internet access; two active ports, one of which, Abidjan, is the most European 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 real estate developments for commercial, industrial, retail, and residential use. Côte d'Ivoire's location and connections to neighboring countries makes it a preferred platform from which Europeans conduct West African business operations. The city of Abidjan is one of the most modern and liveable cities in the region for wealthy French expatriates. Its school system is highly regarded 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 is also 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 of the transport sector, will be financed without any direct government intervention.

[edit] Major Trends and Outlooks

This is a chart of trend of gross domestic product of Côte d'Ivoire at market prices estimated by the International Monetary Fund with figures in millions of West African CFA Francs.

Year	Gross Domestic Product	US Dollar Exchange
1980	2,121,163	211.27 Francs
1985	3,077,900	449.26 Francs
1990	2,939,400	272.26 Francs
1995	5,490,706	499.10 Francs
2000	7,416,793	709.87 Francs
2005	8,532,387	526.56 Francs

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, pineapple, 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 saw 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.

[edit] Economic Data

GDP (purchasing power parity): $28.52 billion (2005 est.)

GDP (official exchange rate): $16.57 billion (2005 est.)

GDP - real growth rate: 1% (2005 est.)

GDP - per capita (PPP): $1,600 (2005 est.)

GDP - composition by sector: agriculture: 27.7% industry: 16.7% services: 55.6% (2005 est.)

Labor force: 6.95 million (68% agricultural) (2005 est.)

Unemployment rate: 13% in urban areas (1998)

Population below poverty line: 37% (1995)

Household income or consumption by percentage share: lowest 10%: 3.1% highest 10%: 28.8% (1995)

Distribution of family income - Gini index: 45.2 (1998)

Inflation rate (consumer prices): 2% (2005 est.)

Investment (gross fixed): 8.7% of GDP (2005 est.)

Budget: revenues: $2.434 billion expenditures: $2.83 billion; including capital expenditures of $420 million (2005 est.)

Public debt: 70.4% of GDP (2005 est.)

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

Industries: foodstuffs, beverages; wood products, oil refining, truck and bus assembly, textiles, fertilizer, building materials, electricity, ship construction and repair

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

Electricity - production: 5.127 billion kWh (2003)

Electricity - consumption: 3.418 billion kWh (2003)

Electricity - exports: 1.35 billion kWh (2003)

Electricity - imports: 0 kWh (2003)

Oil - production: 32,900 bbl/day (2005 est.)

Oil - consumption: 20,000 bbl/day (2003 est.)

Oil - exports: NA bbl/day

Oil - imports: NA bbl/day

Oil - proved reserves: 220 million bbl (2005 est.)

Natural gas - production: 1.3 billion cu m (2003 est.)

Natural gas - consumption: 1.3 billion cu m (2003 est.)

Natural gas - exports: 0 cu m (2001 est.)

Natural gas - imports: 0 cu m (2001 est.)

Natural gas - proved reserves: 29.73 billion cu m (2005)

Current account balance: $-289 million (2005 est.)

Exports: $6.49 billion f.o.b. (2005 est.)

Exports - commodities: cocoa, coffee, timber, petroleum, cotton, bananas, pineapples, palm oil, fish

Exports - partners: France 23.7%, Netherlands 10.8%, US 10.2%, Nigeria 7.5%, Italy 4.8% (2004)

Imports: $4.759 billion f.o.b. (2005 est.)

Imports - commodities: fuel, capital equipment, foodstuffs

Imports - partners: France 32.7%, Nigeria 20.3%, Thailand 2.8% (2004)

Reserves of foreign exchange and gold: $1.95 billion (2005 est.)

Debt - external: $13.26 billion (2005 est.)

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

Currency (code): Communaute Financiere Africaine franc (XOF); note - responsible authority is the Central Bank of the West African States

Exchange rates: Communaute Financiere Africaine francs (XOF) per US dollar - 527.47 (2005), 528.29 (2004), 581.2 (2003), 696.99 (2002), 733.04 (2001)

Fiscal year: calendar year