Casting a wider net: The country is aiming to diversify its economy and its trade partners

n open economy with trade accounting for 91% of GDP in 2013, Côte d’Ivoire has traditionally held a central position in regional trade. The heavyweight of the West African Economic and Monetary Union (Union Economique et Monétaire Ouest-Africaine, UEMOA) with 35% of regional GDP, the country lost some of its stature over the decade of unrest. As it rebuilds its infrastructure to regain West African transit and transshipment trade that has been lost to Senegal, Togo and Ghana, it is also seeking to diversify its export markets. Amid gradual progress towards a common market in ECOWAS, Côte d’Ivoire has pursued trade liberalisation. Improving its logistics infrastructure and reducing non-tariff barriers will be key to leveraging such agreements towards greater economic diversification.

Regional Growth

Côte d’Ivoire is a key producer of refined oil, agri-foods and cosmetics. Yet while UEMOA treaties include a common external tariff (CET), a common currency and efforts to ease barriers like poor infrastructure and corruption along trade routes, growth in intra-regional trade has been lacklustre. One explanation for this is the lack of complementarities between member economies. Aside from Côte d’Ivoire, UEMOA countries predominantly export unprocessed raw materials. This has led to the development of the Abidjan and San Pedro ports as gateways for trade with landlocked countries, both for exports and, far more significantly, for imports to the region.

Intent on maintaining Côte d’Ivoire’s gateway status, the government is extending its ports’ capacities through new concessions and upgrading its road network, already the most extensive in UEMOA. Yet it will also need to focus on the enabling environment, given Côte d’Ivoire’s ranking on the World Economic Forum’s Enabling Trade Index at 126th of 132 countries, compared to Senegal’s 92nd place and Burkina Faso’s 122nd.

Links with Anglophone West African economies such as Ghana and Nigeria have been growing. By 2013 Nigeria ranked third among export destination for Ivorian goods, with 8% of the total, and second for imports with 26%, according to the World Trade Organisation (WTO). Nigeria is a key supplier of crude oil to the Ivorian refinery. The IMF found that exports to Nigeria from 2010 to 2012 accounted for 3.1% of Ivorian GDP, while imports reached 8.6%. Ghana ranked fifth for exports, accounting for 4% of sales, although this likely underestimates the value of smuggled goods.

Further integration within the 15-member ECOWAS group should benefit Côte d’Ivoire. “Because of its importance in the sub-region, diversification of its economy and its geographic position...Côte d’Ivoire makes a significant contribution to the economic expansion of the West African region,” the African Development Bank noted in its four-year country strategy to 2017. Yet while the creation of a single trading zone with a population of over 300m and GDP of $650bn should create benefits for all, there has been some conservatism given Nigeria’s dominance and fears of lost revenue should tariff barriers be lifted.

The ECOWAS Trade Liberalisation Scheme aims to establish a free trade area, starting with a CET from early 2015. The CET includes tariff bands of 0%, 5%, 10% and 20%. “A precondition for ECOWAS to be able to negotiate trade agreements as a block is for the CET to be implemented by 2015,” said Euloge Camara, officer at the African Growth and Opportunities Act (AGOA) Resource Centre. Easing logistics barriers will also be key. Under the National Development Plan, the government is implementing major upgrades to transport infrastructure to support growing trade within the ECOWAS region. Aside from rehabilitating its trade with UEMOA, it is focusing on developing the Abidjan-Lagos and Abidjan-Dakar highway corridors, alongside increased connectivity within the Mano River Union with Liberia, Sierra Leone and Guinea.

Europe

While regional integration is rising, the EU as a block remains the largest trading partner, with 36% of exports and 27% of imports as of 2013. Trade with historically dominant France was hard hit by the unrest. The value of bilateral trade fell 57%, from €2.4bn to €1bn, between 2005 and 2011, while France’s share of exports fell from 18% to 7%, according to the Export Promotion Agency of Côte d’Ivoire (Association pour la Promotion des Exportations de Côte d’Ivoire, APEX-CI). In line with the recovery, however, bilateral trade rebounded by 65% to €1.7bn in 2013.

The significance of the EU to Ivorian trade explains its eagerness to secure preferential market access rights after the Cotonou agreement ended in December 2007. While ECOWAS was still negotiating a multilateral economic partnership agreement (EPA) with the EU, Côte d’Ivoire signed an interim EPA with the EU in 2007. This provided duty-free access to the European market for all goods, while Côte d’Ivoire has pledged to fully liberalise 81% of imports from the EU by 2022. This was seen at the time as endangering the chances of an ECOWAS-wide deal, but the community endorsed a regional EPA “in principle” in March 2014, after a decade of negotiations. If ratified by members this would supersede Côte d’Ivoire’s bilateral EPA.

Liberal Attitude

Under the draft agreement, the zone will phase in liberalisation for 75% of goods and services over the next 20 years, down from the 80% in 15 years originally requested by the EU, while the common market will grant duty-free access immediately. The EU will also provide €6.5bn up to 2019 to support capacity development in the region.

The trade deal relaxes the rules of origin by allowing goods that involve at least 35% transformation within ECOWAS duty-free access to the EU. While the March 2014 agreement was an important step, Nigeria has announced that phased liberalisation would hinder its efforts to protect key domestic industries and promote industrialisation.

New Markets

Eager to diversify trade and investment partners away from its traditional reliance on France, the government is seeking to expand ties with North America and Asia. The lifting of the ban on Côte d’Ivoire’s participation in the US’s AGOA in 2011 was an important signal, even if the impact on bilateral trade patterns is relatively small.

“Most of the products covered by AGOA are already covered by the WTO’s Generalised System of Preferences (GSP),” Camara told OBG. AGOA covers around 2400 products over the 4000 covered by the GSP, but the dominance of coffee, cocoa and food products among Ivorian exports means AGOA has not made a major impact. The US’s share of Ivorian exports rose from 7.2% in 2002 to 7.6% in 2012 according to APEXCI. “Exports of processed and manufactured goods under AGOA remain marginal,” said Camara.

Trade with Asian partners has grown more significantly, albeit from a low base. Exports to India rose from 1.9% of the total in 2002 to 3% in 2012, and Malaysia’s share grew from 0.1% to 3.3%. China’s share of Ivorian imports increased from 2.4% to 8.1% in the decade to 2012, while India’s grew from 2.8% to 4.2% and Thailand saw its share increase from 2% to 3%.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Côte d'Ivoire 2015

Economy chapter from The Report: Côte d'Ivoire 2015