Cote D'ivoire Country Risk 2020
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2020 Bloomfield House, Cocody Riviera 3, Rue E-104 BP 1888 Abidjan 06 – Côte d’Ivoire www.bloomfield-investment.com Bloomfield Intelligence Department COTE D’IVOIRE COUNTRY RISK 2020 The Bloomfield Intelligence department is responsible for producing the information necessary for making investment decisions. It is responsible for analyzing the elements allowing Bloomfield Investment Corporation to take a position on the risk inherent to a financial product, a sector of activity or a geographical area. The department's analyzes are intended to support the decisions made by the rating agency's subscribing customers. The goal of this study is to highlight the constituent elements of investment risk in Côte d'Ivoire, following the methodology of the rating agency on country risk. Country risk assessment sheet Côte d’Ivoire Country risk – 2020 Short- Long- Current Previous Long-term Parameters term term ratings ratings rating Outlook Outlook forcast Ratings are assigned from 1 to 10 (best rating) to each Business Climate 6,5 6,5 Negative Negative 6 parameter to determine an overall rating. Macroeconomic performance 7 8 Negative Negative 6,5 Public finance management 6 6 Negative Stable 6 Soundness of the financial system 5,5 5,5 Stable Negative 5 Sociopolitical risk 3,5 4,5 Negative Negative 3 Global rating 5,7 6,1 Negative Negative 5,3 Business environment: The business environment in Côte d'Ivoire has benefited from the continuation due to the persistence of the health crisis and its of the reforms carried out by the Government, in consequences on the state budget. particular the payment of taxes through the Soundness of the financial system: Faced with the establishment of an electronic deposit and payment health crisis, the CBWAS is proactive in allowing system, the introduction of a new code public banks to continue to operate. On the other hand, it contracts. Such a dynamic positively impacts the would be difficult to rule out the hypothesis of performance of the Ivorian private sector, which defaults by companies and particularly SMEs, which bodes well for the country's economy. However, the would negatively impact banks' balance sheets. In current socio-political situation is expected to upset addition, the Regional Stock Exchange suffered from this environment in addition to the negative impact the decline in the equity market in 2019. This of the health crisis. downward trend in the market that began in 2016 is Macroeconomic performance: Since 2012, the expected to continue again in 2020 with the Covid- Ivorian economy's growth rate has been among the 19. highest in the world. A dynamism that reflects the Sociopolitical risk: The outgoing President’s 3rd country's resilience to the various national and term, the exclusion of politicians from the electoral international shocks it faces. However, the roll and the alleged failings of the Independent persistence of social tensions and the Covid-19 Electoral Commission have mainly exacerbated pandemic will have a significant impact on the political tensions in the run-up to the presidential economy and could weaken the private sector, thus election. This situation, which has already led to loss limiting its recovery. of life and material damage, could lead to a major Public finance management: In 2019, the conflict like the post-election crisis that Côte d'Ivoire management of public finances was characterized by experienced in 2011. an improvement in the budget deficit. The will of the Ivorian authorities to maintain the budget deficit at 3% will be severely constrained for fiscal year 2020, 2 Summary Summary ...................................................................................................................................... Erreur ! Signet non défini. PRESENTATION OF THE STUDY ........................................................................................ Erreur ! Signet non défini. ECONOMIC ENVIRONMENT ................................................................................................ Erreur ! Signet non défini. Economic Growth ............................................................................................................... Erreur ! Signet non défini. Outlooks ................................................................................................................................. Erreur ! Signet non défini. The leakage of agricultural raw material production, a significant challenge ......... Erreur ! Signet non défini. Côte d'Ivoire, an attractive destination for investments .................................... Erreur ! Signet non défini. A dynamic private sector in 2019 ................................................................................ Erreur ! Signet non défini. PUBLIC FINANCES ...................................................................................................................................................................... 16 Budget execution in 2019 ............................................................................................... Erreur ! Signet non défini. The 2020 tax schedule...................................................................................................... Erreur ! Signet non défini. Public debt analysis ........................................................................................................... Erreur ! Signet non défini. MONETARY AND FINANCIAL SYSTEM ............................................................................................................................... 23 An adjusted monetary policy in the face of the health crisis ............................ Erreur ! Signet non défini. ECO, a new paradigm with obstacles ......................................................................... Erreur ! Signet non défini. Low inflation......................................................................................................................... Erreur ! Signet non défini. A gloomy regional stock market................................................................................... Erreur ! Signet non défini. A banking sector to the test ................................................................................................................................................ 25 SOCIO-POLITICAL RISK ............................................................................................................................................................ 26 A regional security risk present ................................................................................... Erreur ! Signet non défini. A still tense political environment .................................................................................................................................. 27 Achievements of the PS-Gouv at the end of 2019 ................................................. Erreur ! Signet non défini. 3 PRESENTATION OF THE STUDY countries in the sub-region, notably Burkina Faso, This study is Côte d'Ivoire country risk assessment, Mali and Niger. notably through the analysis of economic Figure 1 : Geographical location of Côte d'Ivoire performance, public finances, the financial system and socio-political risk. Although Bloomfield Investment Corporation's sovereign financial rating methodology and country risk assessment methodology have similarities, this study is by no means an assessment of government credit quality. The purpose of the Bloomfield Intelligence department of the rating agency, through this study, is to establish a mapping of the country risk of Côte d'Ivoire, highlighting its strengths, opportunities and weaknesses in order to shed light on the better investment decisions and development policies. Côte d’Ivoire is the largest economy in the West African Economic and Monetary Union (WAEMU). Covering an area of 322,462 km2, it has the appearance of a quadrilateral limited to the north by Burkina Faso and Mali, to the west by Guinea and Liberia, to the east by Ghana and to the south by The Atlantic Ocean. In 2014, the National Institute of Statistics (INS) estimated its population at 22.7 million inhabitants, unevenly distributed across the country. The Autonomous District of Abidjan, the economic capital, is home to around 20.8% of the population. Its climate, relatively hot and humid, has mixed characteristics between the equatorial and tropical climate, favorable to agricultural activity. Its relief is low; it is made up of plains and plateaus and a mountainous region rich in natural resources. The coastline of the Ivory Coast stretches over 520 km and offers it an opening onto the Gulf of Guinea and the Atlantic Ocean. With 44% of UEMOA's exports (of goods) in 2018, it stands out as the main facilitator of foreign trade in the sub-region. With two seaports, Côte d'Ivoire is also establishing itself as a transit platform for several landlocked 4 ECONOMIC ENVIRONMENT Table 1: Evolution of the growth rate in percentage (%) 2016 2017 2018 2019 Economic Growth Primary sector -4 3,3 5,3 3,6 Secondary sector 5,3 15,4 10,7 10,4 The Ivorian economy has remained among the most Tertiary sector 11,8 5,5 1,2 6,6 dynamic economies in the world over the past duties and taxes 1,9 20,3 6,7 8,4 GDP 7,2 7,4 6,8 6,9 1 decade. After the catching up observed between 2012 and 2015 following the post-election crisis, the Source : MEF / DGE / DPPSE / NSI economy continued to grow at a significant level, despite the various shocks that occurred both • Primary sector nationally and internationally. Economic growth