US Sanctions Removal a Positive for Investment in Cote d'Ivoire


Monday, October 24, 2016/ 8.25am /BMI Research

BMI View: The removal of US sanctions against Côte d'Ivoire will send a positive signal to international investors that the country is cementing its recovery from its 2010-2011 civil war. There remain salient risks to security in both the near- and longer-term timeframes, but the overall picture is one of increasing stability.

Our projection that Côte d'Ivoire will far outpace growth in  the remainder of Sub-Saharan Africa (SSA) is in    large part predicated on strongly positive investor sentiment towards  the country,  and we believe that this will have been further bolstered by news that the US is removing the West African country from its sanctions list.    

Our forecast for real GDP growth of 9.6% compares to the weighted average of just 2.3% across the region as a whole (dragged down by recessionary or all-but flat growth in giants Nigeria and South Africa).          

Indeed, Côte d'Ivoire has been an outperformer for some years, averaging growth of 9.7% in the period from 2012 to 2015, as the country has recovered from its brief civil war in 2010-2011.

In a major milestone in Côte d'Ivoire's progression towards lasting political stability, on September 14, US President Barack Obama signed an executive order cancelling the national emergency under  which the US had imposed sanctions against Côte d'Ivoire.        

This had been in place since declared by former President George W Bush in 2006. The development sends a highly positive message to international investors, supporting our bullish real GDP growth forecast.        

Even prior to the outbreak of violence following disputed elections in late 2010, Côte d'Ivoire struggled with unrest and violence, and was engaged in a civil war of varying intensity from 2002 to 2007.

Since the end  of the  2010-2011  conflict, the country has enjoyed increasing stability, underscored by the peaceful October 2015 presidential elections which gave President Alassane Ouattara  his second term in office (see 'Presidential Incumbents' Victories A Positive For Growth', November 2 2015).

We expect that Côte d'Ivoire will  continue to   be largely peaceful in the coming years, and that the 2020 elections will mark  a peaceful succession from President Alassane Ouattara,            likely  to a fellow member of his  Rassemblement des

The country  scores above  the unweighted SSA average on both of our proprietary political risk indices. On our Short-Term Political Risk Index, Côte d'Ivoire scores 62.7 to the SSA average 54.6, while on the Long-Term   Political Risk Index it scores 49.5 to the average         48.3.  The post-conflict peace dividend has fuelled rapid GDP growth in recent years, and will continue to do so.

Although our expectation  is for   continued stability  in Côte d'Ivoire, we do acknowledge that this stability remains fragile, and there are significant risks in both the near and longer  term.

In the immediate future, we note that the constitutional referendum scheduled for October 30 could fuel conflict, especially over  the issue of the vice presidency. The referendum aims to introduce the post, which would take  the succession away from the speaker of the house, a position currently held by Guillaume Soro.

Soro is the leader of the Forces Nouvelles militia which supported  Ouattara during the 2010-2011 civil war, and still maintains considerable arms outside of state control.

Should the ambitious Soro feel like he is being sidelined, it is a potential flashpoint. Over the longer-term  period, there remains a risk that  conflict could break out around the 2020 elections, given that President Ouattara will have served his second term and cannot be re-elected.   

We do not expect that he will attempt to prolong his time in office  past his constitutional limits, meaning that there will be many parties jockeying for position. We also expect that this will slow policy formation over the next several years (see 'Policy Formation Will Slow In Ouattara's Second Term', June 13).

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