Cote d'Ivoire Business Forecast Report Q2 2009

Peace Process Hanging In The Balance The long awaited elections scheduled for November 30 2008 have been postponed again, and a new date has yet to be set. While both the government and opposition seem committed to an eventual free and fair poll, a significant delay would bring into question the credibility of the democratisation project. BMI believes that mid-2009 is the earliest possible date for the election, and even that could be ambitious. In our view, severe funding shortages pose a major risk to the voter registration process, potentially leading to a renewed delay well beyond mid-2009. On the economic front, while we believe that economic growth will stay in positive territory over the coming years, we have become more cautious since our last Business Forecast Report, mainly on the basis of a deteriorating external environment, the ongoing uncertainty surrounding the elections (hampering investor confidence) and falling agricultural production.

While a free and fair vote would be a historic milestone, it is only one step towards permanent democracy and pacification. Assuming the initial result holds, the achievement of true societal and economic reintegration will take many years. Yet given the worsening poverty situation, there is no time to lose. According to a recent government study, almost half of the population now survive below the poverty threshold of US$1.25 per day, the worst situation in about 20 years. In our view, any future unity government will face a major task in reducing poverty levels in the north, while, at the same time, avoiding accusations of favouritism from the southern population.

Although the fiscal deficit is comparatively small as a percentage of GDP (a forecast 4.0% in 2009), the recent non-payment of arrears owed to the African Development Bank in Q408 has raised renewed concerns about the government's fiscal position and highlighted the need for further reform going forward. In particular, tax revenue capture remains somewhat erratic and too low at around 19.4% of GDP, and is heavily dependent on customs and excise duties, indirect taxes from the cocoa sector, and royalties from petroleum activity. On the other hand, receipts from personal income tax and corporation tax are inadequate, reflecting poor collection capacity and a culture of non-payment.

In the World Bank's Doing Business in 2009 Report, Cote d'Ivoire ranked 30th overall out of the 46 Sub-Saharan African countries surveyed. While the official policy stance towards private sector involvement in the economy was higher than some competitor countries, the overall ranking was dragged-down by poor scores relating to corruption and administrative failings.

• Executive Summary
  • Peace Process Hanging In The Balance
• Chapter 1: Political Outlook
  • SWOT Analysis
  • BMI Political Risk Ratings
  • Domestic Politics
  • Finding An Election Date Is Not The Only Hurdle
  • The latest target date of November 30 2008 for a general election was missed and a new date has yet to be set
  • Tab le: Cote divoire Political Overview
• Chapter 2: Economic Outlook
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Introduction
  • Donors Keeping the Faith, At Least For Now
  • Cote dIvoire continues to benefit from the strong goodwill of the international financial agencies and donors
  • Economic Activity
  • Waiting For a Peace Dividend
  • Considering the traumas of recent years, the economy has proved remarkably resilient
  • table: ECONOMIC ACTIVITY
  • Monetary Policy
  • Disinflation On The Cards
  • table: MONETARY POLICY
  • On the back of collapsing commodity prices, Cote dIvoire will experience a significant decline in domestic price
  • pressures in 2009
  • Exchange Rate Policy
  • Still Comfortable With The CFA Franc Peg
  • While posing risks to export competitiveness over the past few years, the CFA francs peg against the euro provides
  • significant macroeconomic stability amid global economic turmoil
  • table: EXCHANGE RATE POLICY
  • Regional Investment Climate
• Chapter 3: 10-Year Forecast
  • The Ivorian Economy To 2018
  • Economic Recovery Contingent On Political Stability
  • Banking On L-T Commodities Growth
  • Barring a collapse in political stability, we believe that Cote dIvoires economy is likely to recover noticeably over
  • the next ten years, thanks to the countrys dominant primary sector
  • table: COTE DIVOIRE Long-Term Macroeconomic Forecasts
• Chapter 4: Special Report
  • China
  • A Seismic Upheaval In 2009?
  • One of the biggest and least discussed wild cards that could rear its head in 2009 is dramatic political
  • upheaval in China
  • United States
  • Europe
  • Big Trouble For European Banks In 2009
  • The deteriorating global macroeconomic outlook, high levels of leverage, and a broken business model will combine
  • to spell trouble for the financial services sector in 2009
  • table: Banks Leverag e Ratios
  • table: Assets As % of Home Country GDP
  • table: Assets As % of Home Country GDP When Eurozone Is Considered Home Country
  • table: Exposure As % of Total Exposure To Region
  • table: Banks Foreign Exposure (US$ mn)
  • TABLE: Exposure As % of National GDP
• Chapter 5: Business Environment
  • SWOT Analysis
  • BMI Business Environment Risk Ratings
  • Business Environment Outlook
  • TABLE: BMI BUSINESS AND OPERATIONAL RISK RATINGS
  • Institutions
  • TABLE: BMI LEGAL FRAMEWORK RATINGS
  • Table: Middle East & Africa Annua l FDI Inflows
  • Infrastructure
  • Market Orientation
  • Table: BMI Trade Ratings
  • TABLE: TOP EXPORT DESTINATIONS
  • Operational Risk
• Chapter 6: BMI Global Assumptions
  • Global
  • TABLE: GLO BAL ASSUMPTIONS
  • Table: GLO BAL AND REGIONAL REAL GDP GRO WTH, % chg y-o-y
  • Economic Activity
  • TABLE: DEVELO PED STATES, REAL GDP GRO WTH FORECASTS
  • TABLE: EMERGING MARKETS, REAL GDP GRO WTH FORECASTS
  • TABLE: DEVELO PED MARKET EXCHANGE RATES
  • Monetary Policy
  • TABLE: EMERGING MARKET EXCHANGE RATES