Why Ouattara’s Victory Is Good For Ivory Coast Economy
By Jose Luengo-Cabrera | From Global Risk Insights
Ivorian citizens have been called to the polls today on Sunday 25 October to vote in the first presidential election since the 2010 contest that sparked a civil war. The incumbent Alassana Ouattara is expected to be re-elected given the support granted earlier this year by former President Henri Konan Bedie’s Democratic Party (PDCI) and the prevailing divisions among opposition parties.
Assuming that Ouattara wins in the first round, prospects look bright for Ivory Coast. The president’s economic reforms under his National Development Plan (NDP) and the progressive restoration of political stability and security have attracted investors to the country, particularly in the agricultural, energy and services sectors which are providing the highest returns on investment.
Its business and regulatory environment has improved amid low consumer price inflation and annual GDPgrowth rates averaging close to 9% in the past three years. The cancellation of debt by the Paris Club, the rising levels of FDI and the proactive support by the IMF and World Bank attest to the restored international confidence in the West African country. Given Ouattara’s economic track record, his re-election is seen as the preferred option by many international investors.
Low risk, stable prospects
In contrast to the previous election where the contestation of the outcome prompted violent confrontations that killed an estimated 3,000 people, Sunday’s election is unfolding with relative tranquillity.
With former president Laurent Gbagbo awaiting his trial at the International Criminal Court (ICC) for charges relating to the 2010 post-electoral violence, his party – the Ivorian Patriotic Front (FPI) – stands as one the main opposition contenders. But infighting within the FPI have fractured it, resulting in two breakout factions that have essentially undermined its electoral prospects.
Other opposition groups – mainly the Alliance of Democratic Forces (AFD) and the National Coalition for Change (CNC) – are unlikely to form an umbrella group to counterweight the incumbent party due to underlying political discrepancies.
Out of the 10 presidential candidates approved by the constitutional court, two have already dropped out in protest of the Independent Electoral Commission’s alleged bias for Ouattara’s party, restricted access to state-run media as well as fraudulent practices and voter intimidation in rural areas.
Although yet to be proved, the accusations point to a significant level of distrust and disgruntlement by some opposition candidates. This could put in question the legitimacy of the polls, particularly if a majority of opposition supporters do not cast their vote.
Notwithstanding these potential hindrances, assuming that the polls are carried out relatively peacefully – notably with the help of international observation missions and UN peacekeeping forces – an incumbent victory in the first round should consolidate the country’s stability prospects.
In spite of the fact that only 55% of biometric voting cards have been distributed, the high degree of opposition fractionalisation and citizen complacency with Ouattara’s presidency should guarantee him a safe victory even if low voter turnout and localised incidents in the divided western cocoa-rich regions lurk as downside risks to a peaceful outcome.
President Ouattara’s NDP has significantly contributed to re-launching the Ivorian economy. Public investments in the energy, agricultural and service sectors have been supported by notable improvements in infrastructural development and a revamped regulatory environment for foreign businesses.
This has been aided in particular by investor-friendly laws and the creation of a centre for investment promotions (Cepici) to facilitate the formation of new businesses and reduction in licensing costs.
As the world’s largest exporter of Cocoa and cashew nuts, Ivory Coast’s agri-business will continue to be the main driver of growth. With agriculture constituting 26% of GDP and 70% of export earnings, the country is one of the leading regional producers and exporters of rubber and palm oil.
Although global commodity prices have been sliding, the rapid expansion of this sector has relatively cushioned the deterioration in the terms of trade while the enlargement of its secondary and tertiary sectors have acted as economic catalysts.
The recent discovery of offshore oil and gas basins has brought many international oil corporations to the ground, prompting an inflow of capital goods for industrial production.
Moreover, the country’s unexploited vast mineral resources, particularly gold, bauxite, iron ore and diamonds present a huge potential in attracting further investment. With the government granting licences to Chinese and European companies, production in this sector is expected to triple within ten years.