The West African miracle in danger?
The nation has had consistent growth in recent years thanks to its diverse economy and strong manufacturing, agriculture, and service sectors. To sustain the nation's economic progress, the Ivorian government must take more steps to ensure the country is prepared for extreme weather events, regional conflict zones, and financial pressures.
Côte d'Ivoire has long been recognised as one of West Africa's richest nations. After only 20 years of independence, the fledgling country has established its status through its first economic miracle. The nation has had consistent growth in recent years thanks to its diverse economy and strong manufacturing, agriculture, and service sectors. To sustain the nation's economic progress, the Ivorian government must take more steps to ensure the country is prepared for extreme weather events, regional conflict zones, and financial pressures.
Agriculture, which generates about 30% of the country's GDP and employs around two-thirds of its workforce, is the backbone of the Ivorian economy. The nation also exports substantial amounts of coffee, palm oil, and rubber in addition to being the world's top producer of cocoa. The government has made significant investments in the industry in recent years, putting reforms in place to boost production, promote diversification, and aid smallholder farmers. Since 2010, the sector has grown by an average of 3.8% per year, demonstrating its importance but also exposing a vulnerability. Such an industry is particularly sensitive to extreme weather events which have been measured to have a high probability of occurrence.
As such the Ivorian administration also must address how climate change is affecting the nation's economy. Changing rainfall patterns and rising temperatures can negatively impact agriculture and other sectors. Reforestation and sustainable land use are just two of the climate resilience measures the government has put in place, but more must be done to ensure that the nation is ready to face the challenges that lie ahead.
Furthermore, the Sahel region, which encompasses all of West Africa, has been engulfed in a conflict for more than 10 years. Extremist organisations like Boko Haram and Al-Qaeda, as well as political unrest and economic disparity, have all contributed to the conflict. As a result of the region's unrest, there has been a considerable flow of weapons and ammunition, as well as an uptick in transnational crime and terrorism. Due to its borders with Burkina Faso and Mali, the Ivory Coast is particularly vulnerable to the spillover effects of these conflicts.
Because of the possible effects on the Ivory Coast's economy, the Sahel conflict zone poses a concern for economic security. Considering the Ivory Coast is an economic powerhouse in West Africa, any disruption there would have repercussions throughout the region. Due to the border closures and disruption of cross-border trade, the Sahel crisis has already had an effect on the nation's economy. In addition, the country's efforts to draw in foreign investments may be hampered by the heightened risk of terrorism and other forms of violence. In order to confront the security problems brought on by the Sahel conflict and other factors, it is imperative that the Ivorian government collaborate closely with both its neighbours and the international community to reduce security risks.
Despite recent years of excellent economic progress, the nation still depends largely on commodity exports, particularly cocoa, which accounts for more than a third of the GDP. The Ivorian economy is significantly exposed to the volatile nature of commodities prices and the global economic climate. Smallholder farmers in the cocoa industry would be greatly affected by price changes caused by extreme weather conditions or changes in demand for cocoa.
A major financial risk for the nation is also its large public debt. Although the government has made efforts to manage the nation's debt, including seeking debt relief and cutting the fiscal deficit, there is still a chance that the debt could become unsustainable, reducing investor confidence and making it harder to attract foreign investment. A significant source of financial risk in the Ivory Coast is its lack of financial inclusion. A sizable section of the populace still lacks a bank account and has only limited access to financial services. This restricts their capacity to invest, save, and contribute fully to the national economy. Also, it renders them more susceptible to monetary shocks like unexpected increases in food prices, which can significantly lower their standard of living. The Ivorian government has taken action to broaden access to financial services after realising the value of financial inclusion, particularly by promoting mobile banking and microfinance.
Although the Ivory Coast has made significant economic progress over the past 20 years, there remains a large financial risk factor. The foundation of the nation's economy, the agriculture sector, is susceptible to extreme weather conditions and climate change. The security and economic stability of the nation are also seriously threatened by the continuous violence in the Sahel region. Due to the nation's reliance on exporting raw materials, particularly cocoa, as well as its substantial public debt, it is also susceptible to changes in the price of raw materials globally and financial shocks.
The Ivorian government must keep working to control these risks and keep the nation moving in the direction of sustainable economic growth. This entails boosting security measures to counter the potential of regional insecurity, investing in climate resilience initiatives, and expanding the economy beyond commodity exports. Furthermore, increasing access to financial services and promoting financial inclusion might lessen the impact of financial shocks on society's most vulnerable citizens. The Ivory Coast can maintain and expand on its economic gains and give its people a more secure and prosperous future by ensuring effective action is taken to tackle these issues.
Written by Antonio Brunetti