2 Comeback of the Elephants

Comeback of the Elephants!

Ivory Coast’s Renewal to Progress from the Black decade.

A Compilation by Hemal Mehta. (Oct’14).

The Comeback!

• Cote D’Ivoire is no longer a “fragile” State.

In 3 years, it has achieved a nearly double-digit growth rate, balanced thebudget and gotten debt under control. Combined with structural reforms, goodperformances in strategic areas (infrastructure, agriculture, energy and socialsectors), supported by the NDP, have restored investor’s confidence. The fundmanagers who snatched up US$ 750 million worth of bonds CI issued on theinternational market in July were on to something. Trends are expected tocontinue upward in next few years, allowing the country to increase theinclusive character of its restored growth.

Comeback of the Elephants - Hemal Mehta, October 2014

Success of the Financial Markets.

• CI usually turns to WAEMU to close its budget gap, but this year the

country, feeling strong again tapped the euro zone’s financial market – and

overshot all expectations, raising US$ 750 Million instead of US$ 500 Million

initially sought!

• Investors in the USA accounted for half the total, Great Britain 39% and

Rest of Europe 9%.


Restored Confidence

• In another sign of the international markets’ interest, the 10 year

remuneration rate is 5.62% - better then Kenya’s issue in 2013 (6.87%) and

Gabon (6.37%).

• Ivoirian Officials have every reason to rejoice over the strong interest shown

by the international financial community – and to stress that it confirms a

high level of investor confidence in the country’s economic growth and

prosperity prospects.


High Growth Potential

The Economic recovery policy the government launched just after the 2011 political crisis quickly paid off and results will last!

• In July’14 Moody’s, the international financial ratings agency gave CI and it’s bond issue a B1 positive outlook rating, followed by Fitch a few days later.

• Acting at request of CI Government, for the first time, it hailed the country’s high potential growth rate and sound management of public accounts. The debt and the budget deficit are under control.

• In early 2014 the World Bank took CI off its list of fragile low income states.


Horizon 2020: The NDP gathers speed.

• With an annual economic growth rate of just under 10% for three years,

compared to less than 4% between 2004 and 2010 – it even dipped below

zero in 2011 – CI is one the region’s top students.

• That indicates a lot – West Africa is growing at a faster pace than any other

part of the continent (6.7% in 2013).


Massive Investment in Priority Sectors

• The CI Govt. has implemented a massive public investment policy in order

to achieve emerging nation status by 2020 as well as to increase national

wealth and to ensure that entire population benefits.

• With strong backing from International Community, investment, on target to

reach goals of NDP, has soared since 2012. In past 3 years it has risen an

avg. of 43% a year from 641.9 Billion FCFA in 2012 to 1.314 Trillion

forecast in 2014.


• Private Investments, up by 28.7% and FDI have followed same pace.

• Investment spending nearly doubled from 16% of its budget in 2008 to 30%

in 2014.

• Private sectors include Agriculture, Agro Industry, Energy, Education,

Health and Infrastructure, especially roads – the same that the US$. 750

Million raised this year will support.


Massive Investment in Priority Sectors

(Cont’d)

Support for Purchasing power, but Budget

Indicators are under control.

• Aware that the CFA Franc (XOF) does not stretch as far as it used to, the Govt. raised the min. monthly wage from 36,607 FCFA to 60,000 FCFA.

• This Year, steps were taken to unfreeze civil servants pay which were blocked since 1988.

• Those measures, the estimated cost of which is put at 82.5 billion FCFA for 2014, affect approx. 212,000 workers & retirees. Although expensive, they will allow the State’s wage bill to comply with WAEMU standards (Must not account for +35% of tax revenue) by 2019. Yet Budget Indicators are all under control.


Efficient, rigorous tax services

• Despite rising household spending (7.5%) fuelled by Govt. Policies to raise

wages, inflation remains at 2.7%, under the 3% limit set by WAEMU. The

Budget deficit is also likely to hold steady , around 2.3% forecast in 2014,

according to World Bank.

• State revenues have risen, thanks to reorganization of tax services.


Debit is under control

• External Public debt which plummeted from 59% GDP in 2009 to 25% in

2012, should also remain under control.

• With support from IMF the Govt. has implemented and new internal and

external debt management strategy.

• The scenario of default that haunted CI during the 2011 post electoral crisis

for political reasons – the elected Government had no access to Central

Bank - has been definitively swept away.



CI in figures (GDP Composition).

CI in figures (% and % of GDP)


Particulars 2012 2013 2014 (Est.) 2015 (Forecast)

GDP Growth 9.8 8.8 9.1 9.2

Inflation 2 2.7 2.9 2.7

Budget revenues 20.8 22.3 22.4 22.5

O/w Tax Rev. 17.6 18 18.2 18.3

Budget Balance -2.6 -2 -2 -2

Budget of Trade 10.8 5.6 3.5 1.4

Looking forward…

• The success of the International markets confirms the high level of

confidence in country’s prosperity prospects.

• Today it is quite a different country that has raised funds on the international

financial markets, reaping US$ 250 Million more than amount sought.


Bibiography

• www.economist.com

• www.theafricareport.com

• www.bbcnews.com

• www.newafricanmagazine.com


http://www.economist.com/

http://www.theafricareport.com/

http://www.bbcnews.com/

http://www.newafricanmagazine.com/

Documents

2 Comeback of the Elephants