That day, the country’s football team had beaten Guinea-Bissau 2-0 at the new stadium on the capital’s outskirts. The surrounding bars and restaurants remained full. On previous trips to West Africa, I’ve always found the region a wall of noise, colour and chaos. The arrival of Africa’s premier football spectacle had elevated excitement levels to fever pitch.

A truly emerging market

Like many West African countries, Côte d'Ivoire has experienced its share of social unrest over the last few decades. This includes a bloody civil war that ended in 2011. Now, however, the country is a bastion of stability in an otherwise volatile region. Coups have erupted in neighbouring Mali (2020 and 2021) and Burkina Faso (2019). Offshoots of Islamic State pose a serious threat to the civilian way of life.

Why has Cote d’Ivoire thrived where others have not? On one level, we can attribute its prosperity to the country’s remarkable economic success. Annual growth averaged 7.2% (see Chart 1) over the past decade, making it Africa’s fastest-growing economy, according to the International Monetary Fund (IMF). That said, economic success alone can’t bring peace to a country. So what does? My interactions with policymakers and civilians gave me some invaluable insights. 

Côte d'Ivoire is one of the world’s largest cocoa exporters. The country flourished in the 1980s as demand soared. But then global prices crashed, sparking armed conflict between the predominantly wealthy landowners in the south and the poor north. The cocoa market remains volatile. Côte d'Ivoire exports were expected to fall around 28% in 2023, thanks to an especially powerful El Nino late last year. True, cocoa price rises have helped offset some of the losses (no one I spoke with expected a meaningful revision in the country’s 2024 fiscal position). However, this dramatic production slump reinforced the government’s need to diversify its income stream.

From a debt-servicing standpoint, the primary concern for Côte d'Ivoire is not its overall debt, which amounts to a modest 56% of gross domestic product (GDP), nor the possibility of currency devaluation, as it’s pegged to the euro. Instead, the key issue lies in the country's capacity to endure another shock, such as a surge in food and energy prices, given its low tax revenue to GDP ratio of 12.7%. [1]

A shock of this nature could pressure the government to reintroduce extensive subsidies. Implementing these handouts could potentially derail the country's efforts to achieve a 3% budget deficit target by 2025, set by the WAEMU (West African Economic and Monetary Union).

There are positives. The recent discovery of the Baleine offshore oil and gas field, which could deliver a maximum of 150,000 barrels per day in the medium term, will ease the energy import bill. The ongoing development of the country’s long-neglected mining sector will further support the current account. And, of course, the AFCON has temporarily boosted domestic economic activity.

Bond markets picking-up

For bondholders, Côte d'Ivoire is a potentially compelling investment case. There’s a clear fiscal consolidation plan, economic growth remains high and the debt-to-GDP ratio is low. The political landscape is relatively stable and policymakers are rationalising the tax exemption system. These are widely acknowledged as positives, even among the country’s opposition Democratic Party of Ivory Coast (PDCI). However, one PDCI member I spoke with was far more critical of the government’s flagship National Development Plan (NDP). The government, they argued, prioritises infrastructure spending over other programmes like education.

True, the NDP is bearing fruit. I was able to see the impressive intercity connections between Abidjan in the south and Korhogo in the north. This extended to rural parts of the country, including a detour to Kong where I visited the country’s most famous mud mosque. But it’s hard to ignore shortfalls this creates elsewhere. As the PDCI supporters highlighted, only 56.7% of children completed their primary education despite mandatory schooling. [2]

Open for business

Since the Covid pandemic, concessional financing has provided a lifeline to many emerging market countries. The Côte d'Ivoire is no different. It received €3.5 billion (bn) from the IMF in May 2023. The country continues to meet the programme’s conditions for disbursements.

Encouragingly, Côte d'Ivoire became the first Sub-Saharan African (SSA) country to return to the primary bond market, with a $2.6bn eurobond issue in January. Prudently, the government allocated some of the funds for liability management and to streamline the amortisation profile. Simultaneously, it ring-fenced approximately $1.1bn for sustainability-related projects as part of the country's 2023 sustainability framework. The debt deal was heavily oversubscribed, confirming renewed investor confidence in the region. Benin has since followed suit with its inaugural US dollar issue. These deals could be the first step in rousing the wider market back to life after two years of no issuance.

Currently rated BB, government officials hope rating agencies will upgrade Côte d'Ivoire’s debt to investment grade (IG) in the next couple of years. It’s no surprise the country remains one of the most heavily owned credits among investors, and spreads are well inside the SSA average (see Chart 2).

Final thoughts…

Regardless of whether an upgrade to IG materialises, in a world of significant geopolitical and economic uncertainties, Côte d'Ivoire is an African story that is remarkable on numerous levels. Indeed, against all the odds, the country triumphed in the AFCON final, beating favourites Nigeria. This could herald the start of a long line of victories on and off the field.