Author : Emilie Combaz
Type of publication : Research paper
Date of publication : July 2020
*Les Wathinotes sont des extraits de publications choisies par WATHI et conformes aux documents originaux. Les rapports utilisés pour l’élaboration des Wathinotes sont sélectionnés par WATHI compte tenu de leur pertinence par rapport au contexte du pays. Toutes les Wathinotes renvoient aux publications originales et intégrales qui ne sont pas hébergées par le site de WATHI, et sont destinées à promouvoir la lecture de ces documents, fruit du travail de recherche d’universitaires et d’experts.
Overview
Cote d’Ivoire presents a paradoxical picture on development: it ranks as a lower–middle income country and has had strong economic growth, yet it ranks low by human development – lower than countries with similar levels of per capita income (UNDP, 2019b, p. 302). Certainly, this is partly a legacy of the country’s civil war (2002-2007), and of the years of political violence and tensions that followed, which all saw massive drops in GDP and living standards for the population (Elgazzar et al., 2019, p. 4).
The present report synthesises evidence about the effects of political economy on development in Cote d’Ivoire, based on a rapid review of academic, practitioner, and policy literature in English and French published in the past five years. There is limited knowledge on the core causal question of the report, but a strong knowledge base on key aspects of Ivorian political economy.
Economic growth with little development
The large increase in economic growth has only led to small increases in human development. Cote d’Ivoire ranks 165th out of 189 countries and territories in UNDP’s latest human development index (HDI), placing it in the category of low human development. This is 16 places below its rank for the level of gross national income (GNI) per capita, which is US$ 3,5891 . Its HDI rank is below the average in Sub-Saharan Africa, and below countries comparable in HDI rank and in population size, such as Mozambique and Tanzania (UNDP, 2019b, p. 302, 2019a, p. 4). Cote d’Ivoire is not on course to meet the UN’s sustainable development goals if it continues on its current trajectory, or even if it implements the government’s ‘National Prospective Study 2040’ as it is (Pedercini et al., 2018).
Severe shortcomings in the country’s development mean that, even as GNI continues to grow, multiple problems in areas such as standards of living, education, and health exist in addition to and in combination with widespread monetary poverty. Indeed, the headcount of multidimensional poverty “is 17.9 percentage points higher than income poverty”, according to the latest available UNDP calculations for 2016-2017 (UNDP, 2019a, pp. 6–7, 2019b, p. 320).
A growing economy generating wealth and income at macroeconomic level
Since the end of the 2010-2011 crisis, Cote d’Ivoire has performed well in macroeconomic terms, manifested among others in a high growth rate of its Gross Domestic Product (GDP). Annual growth averaged approximately 9% between 2012 and 2018, and was at 7.2% in 2019. Cote d’Ivoire is the largest economy in the WAEMU, and has had annual growth rates since 2012 that have been higher than almost all WAEMU comparators, as well as higher than Ghana, Sri Lanka, and Ethiopia (Elgazzar et al., 2019, p. 1).
Cote d’Ivoire is the largest economy in the WAEMU, and has had annual growth rates since 2012 that have been higher than almost all WAEMU comparators, as well as higher than Ghana, Sri Lanka, and Ethiopia (Elgazzar et al., 2019, p. 1).
The country is also well integrated into its regional and African economic environment, especially within ECOWAS. In its relations with other African countries, it largely allows the free movement of people, has eliminated many tariffs in its trade, exchanges significant imports and exports, and is strongly integrated in regional value chains of intermediate goods as an upstream exporter. Its integration is somewhat more limited in other regards, such as downstream imports in its regional value chains (UNECA, 2015, pp. 4–5).
An export-oriented, rent-based economy concentrated in a few productions
From colonial times until now, the Ivorian growth model has rested on a plantation economy where the rents generated by forests are exploited extensively by a workforce that is plentiful thanks to demographic growth and immigrant labour. It has changed very little since independence, and the agricultural sector has hardly diversified. Agriculture has thus historically constituted a major components of the country’s growth, though it has decreased and now represents about 28% of GDP.
The country’s productions and exports centre on the rents generated by its natural resources – especially its forests –, and are strongly concentrated in a few products and destinations.
Cote d’Ivoire is the largest economy in the WAEMU, and has had annual growth rates since 2012 that have been higher than almost all WAEMU comparators, as well as higher than Ghana, Sri Lanka, and Ethiopia (Elgazzar et al., 2019, p. 1)
In 2014, 53.1% of exports were made up of primary products, and 46.9% of processed products. Primary products remained dominated by export agriculture (78.4%) – mainly cocoa (46.2%), cashew (12%), and rubber (9.3%). They also included mining products (21%), including gold (10.7%), and crude oil (9.9%) (UNECA, 2015, pp. 12–13). Indeed, mining and oil production are on the increase (Miran-Guyon, 2017a, p. 10). This concentration exposes the country to shocks affecting its core products, whether they come from world commodity prices, climate, or harvest levels.
Wealth accumulation and consolidation at the top, including through illicit financial flows
Illicit financial flows, including capital flight, have been pervasive in Cote d’Ivoire. Cote d’Ivoire was cited among the top 10 African countries by cumulative illicit financial flows over the period 1970-2008, losing an estimated total of US$ 21.6 billion during the period, and ranking 7th out of the 10 countries. Cote d’Ivoire represented 3% of Africa’s total illicit financial flows over the period. Illicit financial flows are particularly large in the country’s major economic sectors, such as cocoa (HLPIFFA, 2016, p. 100).
Illicit financial flows have deprived Cote d’Ivoire of resources needed for its development. For example, a 2013 study looked at their effects on the mortality of infants and children under five, which was an indicator for Millennium Development Goal (MDG) 4. The study calculated the potential reduction in the years required for Cote d’Ivoire to reach MDG 4 from the year 2000 if illicit financial flows were eliminated, as compared with the actual rate of progress of the country between 2000 and 2011. It found a dramatic impact: without illicit financial flows, Cote d’Ivoire could reach the MDG indicators in 26 years, instead of 62.
Within Cote d’Ivoire, wealthy individuals belonging to the country’s political and economic elites have used illicit financial flows to consolidate and grow their wealth.
Income accumulation at the top
As with wealth, incomes are distributed highly unequally in favour of the wealthy, and official figures typically underestimate income inequalities, especially because they fail to accurately measure the income of the wealthiest. UNDP estimates that the richest 10% in Cote d’Ivoire hold 31.9% of the income share – with the richest 1% holding 17.1% of it –, whereas the poorest 40% hold a paltry 15.9%, according the latest UNDP estimates. The Gini coefficient at 41.5 likewise confirms that inequalities in income are strong (UNDP, 2019b, p. 310).
State capacities that remain weakened, and intensified corruption
Economically, the country has not yet recovered from the major structural crisis of the 1980s, and from the structural adjustment plans that international financial institutions imposed on it. Both grand and petty corruption seems to have intensified in recent years. It “has become widespread, from the highest levels of the state to everyday functionaries across the country” . Certainly, the latest Afrobarometer surveys suggest that, in public perceptions, corruption has strongly worsened.
Lopsided public policies that have not significantly reduced inequalities and poverty
Ouattara and his party have focused on ‘emergence’ through economic development, which it promised to achieve by 2020. This has precedent in former President Bédié’s mass investments in 1996 (Miran-Guyon, 2017a, p. 9). In the Ouattara regime’s rhetoric, macroeconomic emergence is preeminent. The stated ambition has combined “the desire for rupture, for a ‘new Ivorian’ and a new constitution, with the desire for continuity, a second economic ‘miracle’ like the good old days of Félix Houphouët-Boigny”.
Poor provision has prevented many people from using public services altogether, and forced high costs onto users
In contrast, under Ouattara, public provision of essential public services, such as health care and education, has remained low (Elgazzar et al., 2019, p. 7). Health care is one well-documented area where the insufficiency and poor use of public budgets – related to health but also all other essential services – has had extremely negative effects, directly and indirectly. Poor provision has prevented many people from using public services altogether, and forced high costs onto users.
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