Key political risks to watch in Côte d'Ivoire

05 June 2018

Côte d'Ivoire’s rapid economic growth and ambitious infrastructure programme will continue to generate investor interest. However, there is a persistent threat of army mutiny and the risk of political instability is likely to rise in the lead-up to the 2020 presidential elections.

Security Environment

Political stability in Côte d’Ivoire continues to be undermined by persistent divisions within the military, which emerged following post-election conflict in 2010-11. On 6 January 2017, troops in Bouaké took to the streets, demanding the payment of bonuses previously promised to them. During mutinies that followed across the country, four soldiers were killed in Yamoussoukro and Abidjan port was briefly closed, disrupting cocoa exports. The government offered staggered bonuses to the troops totalling around USD 19,000 each. Further mutinies occurred in February and May 2017. In January 2018, fighting in which at least one soldier was killed was reported between military units in Bouaké.

Concerns over deteriorating political stability were raised between July and August 2017, following a series of at least five armed attacks on police assets and four prison escapes. In September 2017, the government blamed the incidents on allies of former president Laurent Gbagbo, although no evidence has been given for these claims. Any further incidents will elevate the risk of property damage, although security establishments will remain the primary targets.

In May 2018, Côte d’Ivoire’s ruling coalition, the Rally of Houphouetists for Democracy and Peace (RHDP), agreed to merge into a unified political party. While the union will attempt to mitigate the RHDP’s internal divisions, political tensions are likely to increase ahead of the 2020 presidential elections, as the issue of who should succeed President Alassane Ouattara remains unresolved, raising the possibility of politically motivated violence.

Côte d'Ivoire has increased security at hotels and restaurants popular with expatriates, following an attack by al-Qaeda in the Islamic Maghreb (AQIM) on a hotel in Grand Bassam in March 2016 in which 19 people were killed. Enhanced security measures will moderate the threat of further terrorist attacks on soft targets in the south of the country, although additional attacks in northern areas remain likely. Any incidents are likely to involve firearms and/or improvised explosive devices.

Trading Environment

While political tensions pose a significant risk, Côte d'Ivoire’s economic growth is set to remain robust. Real GDP growth is forecasted to slow slightly from 7.6% in 2017 to 7.5% in 2018, as growth will continue to be driven by the mining and transport sectors as well as investment in infrastructure. However, Côte d'Ivoire’s economy remains reliant on cocoa exports, which account for around 30% of GDP. While cocoa prices have climbed by 50% since reaching a low in December 2017, their value remains volatile, posing downside risks to the economy.

Côte d'Ivoire is pursuing fiscal consolidation as part of a programme agreed with the International Monetary Fund (IMF) in December 2016. While the 2018 fiscal deficit target of 3.7% of GDP is unlikely to be met, a rise in tax revenues is likely to see the deficit gradually fall to 4.1% of GDP in 2018 and 3.5% in 2019. Government debt is forecasted to remain relatively stable at under 45% of GDP until 2021, supported by high GDP growth. In March 2018, Côte d'Ivoire issued a EUR 1.7 billion Eurobond, which will support its balance of payments.

Côte d'Ivoire is exposed to exchange rate risks, as over 38% of the government debt burden is denominated in dollars. However, the potential for sudden currency depreciations will be mitigated as debt is increasingly denominated in euros, which have a fixed rate of exchange with Côte d'Ivoire’s CFA franc.

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Investment Environment

President Ouattara continues to pursue investor-friendly policies, and Côte d'Ivoire’s business environment has improved significantly since the end of the civil war in 2011. In 2016, Côte d'Ivoire launched a four-year National Development Plan, and major projects under construction include an expansion of Abidjan port terminal and a railway link to Burkina Faso. In addition, the government is seeking to almost double power generation capacity to 4000 MW by 2020. Other initiatives to encourage foreign investment include 2014’s Mining Code, which guarantees stable tax and customs regimes for mining permit holders.

Although corruption persists, the creation of specialised commercial courts in 2012 has improved contract enforcement. The average time required to enforce a contract in Côte d'Ivoire’s is 525 days, below the OECD average. While the judiciary is politicised and is unlikely to rule against the government, the risk of contract alteration is tempered by Ouattara’s desire to attract foreign investment.

Côte d'Ivoire Pricing Outlook
††† One insurer’s pricing was considerably lower than the others, broadening the pricing range.

In this month's Risk Outlook, we also provide a detailed forward looking assessment of developments within the security, trading and investment environments for Argentina, Iran, Armenia and Mozambique all of which have been the subject of recent enquiries from JLT's client base.

World Risk Review June2018

The monthly Risk Outlook is supported by JLT’s proprietary country risk rating tool, World Risk Review (WRR) which provides risk ratings across nine insurable perils for 197 countries. The country risk ratings are generated by a proprietary, algorithm-based modelling system incorporating over 200 international sources of data.

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For further information, please contact Eleanor Smith, Political Risk Analyst on +44 (0)121 626 7837 or email