22 June 2017

Cote d'Ivoire: Building Inclusivity in Côte d'Ivoire? Promoting Sustainable Growth Through Infrastructure Development

Photo: AfDB
(File photo).
analysis

President Alassane Ouattara, in his second and final administration, has a clear opportunity to shape the future of Côte d'Ivoire.

Summary

The rapid recovery of Côte d'Ivoire's economy over the past half-decade brings with it an unprecedented opportunity to use massive flows of investment from abroad, particularly in infrastructural development, to achieve economic transformation. But the government must ensure that the benefits are sustainable and felt by all Ivorians. As part of this, enabling a vibrant, local private sector will be critical.

Côte d'Ivoire's long tradition of economic openness is key to attracting the capital that the process of recovery demands. The government has largely avoided imposing formal 'local content' requirements on external investors - such as skills transfer and use of local labour and materials - preferring instead to negotiate and incentivize on a case-by-case basis. Investors have rushed back to the country since 2011. The result has been public-private partnerships (PPPs) with a combined value of more than $16 billion, mostly concentrating on large-scale civic infrastructure, alongside substantial commercial investment.

There are a number of interlinked issues of concern. The first is that investment in infrastructure is balanced between high-profile, large-scale projects - such as transport bridges, power stations and ports - and the reconstruction of Côte d'Ivoire's basic civic infrastructure, notably its rural road network, schools and health facilities, between the booming economic hub of Abidjan and rural communities, and between wealthy and poor neighbourhoods.

Externally driven growth must not be allowed to mask domestic economic stagnation, with local enterprise and ambition stifled by the weight of international competition. Care must be taken that Ivorian business is not squeezed out, notably in creating sustainable employment for the estimated 350,000 young people entering Côte d'Ivoire's labour market every year. While many businesses have rebounded, taking advantage of access to enhanced transport, facilities, communication and electrification, significant blockages to enterprise growth remain. Chief among these are difficulties in accessing domestic finance, and a skills deficit within the local workforce, as well as strong regional competition.

Long-established networks of power and patronage - enabled by a lack of transparency, old-fashioned financing mechanisms and a highly complex bureaucracy - continue to serve vested interests rather than encouraging healthy, open competition. This could distort policy decisions, leading to resistance to reform and undermining local business growth. Once the 'easy wins' have been achieved, there is a risk that growth rates will drop, and few domestic businesses will have been created to ensure jobs lasting longer than a single landmark construction project.

President Alassane Ouattara, in his second and final administration, has a clear opportunity to shape the future of Côte d'Ivoire. He has already taken some decisive steps in improving the business climate, in modernizing the banking sector and in bringing youth employment to the top of the agenda. PPP projects can help to foster sustainable local employment if they are well managed. But the persistence of the 'shadow state' risks undermining progress. Greater transparency, notably concerning contracts with external investors, would enable public scrutiny of the terms offered to external partners, and would better allow the effectiveness of local content provisions to be judged.

Research Paper: Building Inclusivity in Côte d'Ivoire? Promoting Sustainable Growth Through Infrastructure Development

Ben Shepherd

Consulting Fellow, Africa Programme

Cote d'Ivoire

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