COTE d’Ivoire is one of Africa’s fastest growing economies, reporting a GDP of $61.4bn in 2020. From 2012, the Francophone country achieved admirable economic growth rates of around 8 percent year on year – growth only slowed, but not reversed, by the pandemic. As one of the key economic driving forces in West Africa, Cote d’Ivoire has adopted an important role in promoting intra-African trade integration.
23 percent of Cote d’Ivoire’s trade is with other African markets. Of this, most imports come from Nigeria, and the lion’s share of exports head to neighbouring Mali and Burkina Faso. And while its proportion of intra-African trade activity is already greater than several of its neighbours, Cote d’Ivoire has taken concrete steps to further develop its trading links with the rest of the continent. Indeed, the country’s economic capital Abidjan is playing host to the 2023 Inter-African Trade Fair (IATF), a conference aimed at promoting trade, investment, and continental integration.
Cote d’Ivoire’s business community is committed to the intra-African project – the country’s Chamber of Commerce & Industry is working closely with the International Finance Corporation (IFC) and other supranational entities, and political leaders have demonstrated willingness to engage with other African counterparts.
It is this spirit of regional dialogue which enabled the creation of the African Continental Free Trade Area (AfCFTA) – launched in 2021 following the signing of a landmark agreement in 2018. Bringing together 44 African nations in an effort to create the world’s largest free trade zone by number of countries, the AfCFTA is a game changer for Cote d’Ivoire’s trade relationships with its neighbours and the rest of the world. It envisions a trade bloc of 1.3 billion people, with a cumulative GDP of $4 trillion, and draws upon a long-standing movement for wider intra-African integration.
The AfCFTA envisions a more interconnected continent, but also one with a stronger position in the global market. The benefits therefore extend beyond Africa’s borders – enhanced pan-African integration would enable the harmonisation of regulatory frameworks across the continent, encouraging international businesses to invest in Africa and facilitating their expansion into new markets. This is increasingly relevant in the context of supply-chain volatility, which has prompted some corporates to consider relocating manufacturing capabilities there from further afield.
The AfCFTA envisions a more interconnected continent
It is estimated that AfCFTA could increase total intra-continental trade flows by over 65 percent, and, according to the World Bank, Cote d’Ivoire is among those who stand to gain most. The implementation of the free trade area could see tariffs eliminated on 90 percent of goods over a five-year period pending ongoing negotiations. Cote d’Ivoire’s national income is consequently projected to increase by 14 percent.
The country is no stranger to pan-regional initiatives. Before the launch of AfCFTA, proponents of African trade integration focused on the establishment of a network of overlapping Regional Economic Communities (RECs), which are now seen as essential stepping stones to the more ambitious goal. The Economic Community of West African States (ECOWAS), within which Cote d’Ivoire falls, is one such REC. A longstanding champion of regional integration, ECOWAS has previously grabbed headlines with ambitious plans to create a common currency for its 15 members and applies a common external tariff to goods originating from outside the region.
The country also forms part of the community of Sahel-Saharan States (CEN-SAD), though this REC does not currently have a corresponding trade agreement. Furthermore, Cote d’Ivoire is the largest member of the West African Economic Monetary Union (WAEMU) and represents the largest economy within the zone, making up 40 percent of the Union’s economic activity.
Many African economies are highly dependent on commodities, but unlike many of its peers Cote D’Ivoire has a relatively diversified economy – deriving its income from goods such as cocoa, refined oil, rubber, cotton, but also from its strong services sector, which makes a significant contribution to the country’s GDP.
As such, Cote d’Ivoire represents one of the region’s most robust economies. The World Bank sees trade as a critical driver of the country’s recovery to pre-pandemic growth levels, and though currently the majority of its trade activity is conducted with partners outside the continent, expanding intra-regional trade links will doubtless provide Cote d’Ivoire with additional economic stability.
In terms of trade with African partners, Cote d’Ivoire naturally does most business with its ECOWAS neighbours. It imports a significant amount of petroleum from Nigeria, while Mali and Burkina Faso combined comprise 43% of the country’s African exports. But Cote d’Ivoire also engages with markets beyond West Africa, exporting unwrought gold to South Africa – where it enters the market duty-free – and buying fish from Mauritania.
Notwithstanding its great potential, intra-African trade still faces several obstacles. Many such barriers are common to a number of African markets – poor infrastructure, excessive border bureaucracy, and, in some areas, political unrest – all of which complicate efforts towards integration. But the Ivorian government has taken real positive steps towards addressing these challenges – making large investments into highway and rail infrastructure, and improving the processes at borders to facilitate the movement of goods.
And as the AfCFTA progresses towards maturity – 41 out of 54 countries have now ratified it – the opportunities for Cote d’Ivoire to expand its trade horizons are great. The county is the world’s largest producer and exporter of cocoa, contributing to 40 percent of global production, and Ivorian cocoa could find new markets across the continent.
Other exports such as coconut, banana, fish, refined petroleum, gold and rubber could also increase as trade barriers are reduced – in this regard, trade volumes with Ghana, Liberia and Guinea are likely to see a significant uptick given their close geographical proximity.
Though most attention has been devoted to the benefits a connected Africa will bring to trade in goods, Cote d’Ivoire’s strong services sector is also set to gain from the standardisation, reduced cross-border bureaucracy, and increased mobility promised by AfCFTA.
The services sector in Cote d’Ivoire is dominated by banking, telecoms and private equity – and it forms a large part of the economy, contributing to 53.9 percent of GDP and employing 47.3 percent of the workforce. In recent years, the number of banks within the country has almost doubled, in part due to the arrival of Nigerian, Moroccan and South African financial institutions. Greater regional integration should bolster the sector further and, in turn, improve access to finance for businesses in the country. In this respect, specialist trade banks with the capacity to connect the continent’s disparate markets will no doubt continue to play an instrumental role in financing and supporting intra-African initiatives.
International businesses, whether financial institutions, traders or other corporates, are taking note. Its significant natural resources and burgeoning agricultural sector suggest that Cote d’Ivoire will occupy an important role in cross continental supply-chains, while the country has also carried out substantial economic reforms to broaden its tax base, digitise administrative processes and restructure its banking sector. Cote d’Ivoire has all the ingredients necessary for success as part of an increasingly integrated African economy.
This article was first published in the March-April 2022 edition of the Africa Briefing Magazine