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publication February 21, 2019

Côte d’Ivoire Eighth Economic Update: Key Messages

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  • February 2019

The most developed countries in the world are also the most urbanized, including those that were initially dependent on agriculture. This has been corroborated by two winners of the Nobel Prize in Economics, R. Lucas and P. Romer, who have described the close correlation between urbanization and the start of the industrial revolution in Europe and the United States. The industrial revolution in fact created conditions conducive to agglomeration, which fostered skills development and technological innovation. Rapid urbanization also explains, to some degree, the success of the Asian tigers and dragons in recent decades. 

Côte d’Ivoire is, in turn, following this economic and social development path. More than half of its population already lives in cities, mainly in Abidjan, and by 2050 this number will increase to two-thirds of Ivorians. While the link between urbanization and economic development is real, it is far from automatic, and the country must therefore be capable of seizing this opportunity. Cities must, in particular, guarantee households and enterprises a certain degree of mobility. Transport already poses a major challenge in a city such as Abidjan where, in some households, spending in this area accounts for more than 30% of their income. Furthermore, traffic jams, unsafe roads, and air pollution affect the daily lives and health of the over five million residents of Abidjan.

In line with previous issues, this Eighth Economic Update for Côte d’Ivoire analyzes the macroeconomic situation and outlook as 2019 begins, and then goes on to focus on the challenges of urbanization, in particular urban mobility.

Economic Situation and Outlook

After seven years of rapid and uninterrupted economic expansion, GDP growth is slowing gradually, falling from 8.8% to 7.7% between 2015 and 2017 and will likely stand at 7.4% in 2018. However, the Ivorian economy remains one of the most dynamic in the world.

Several indicators seem to confirm this slight slowdown during the first eleven months of 2018. Growth sectors such as finance, extractive industries, energy, and telecommunications have been less dynamic, although the transport and construction sectors continue to perform well. While government expenditures have also been better managed during this period, the trade balance has deteriorated owing to negative terms of trade and weaker performance of agricultural exports. Lastly, the public and external sectors have been less supportive of growth and the contribution of the private sector has been more uneven.

The short- and medium-term outlook nonetheless remains favorable. The growth rate over the next few years is expected to be roughly 7%, provided that the global environment remains fairly stable and the Government continues its efforts to promote the private sector and foster more inclusive growth. The marked improvement in Côte d’Ivoire’s ranking in the 2018 Doing Business report (up 17 spots) is encouraging, though a greater effort needs to be made to simplify the rules and boost competition in the priority sectors of the economy. The Government will also have to strengthen the public accounts by reducing its budget deficit from 4% to 3% of GDP, although this could prove difficult in a context of electoral uncertainty linked to the upcoming presidential elections scheduled to take place around end-2020. The authorities will have to boost tax revenue collection and improve the efficiency of public expenditure, in particular through better management of investment projects, especially those involving their own funds, as well as expenditure on the poorest households. These initiatives will need to be complemented with more transparent management of public funds, particularly payment and public procurement procedures.

Côte d’Ivoire should not only improve the quality of its economic growth but should also make it more inclusive. Higher productivity is essential for private enterprise development and wage increases for workers, particularly in the major employment sectors such as agriculture, agribusiness, construction, and trade. Despite a narrowing of the gap since 2012, the productivity of Ivorian workers is plateauing at its 1995 level and is below the roughly 20% to 30% level seen in emerging economies. Similar productivity gains would help support production factor accumulation in the areas of investment and employment, which have traditionally been the drivers of growth in Côte d’Ivoire. The country would therefore be able to follow the growth path of the East Asian countries, where productivity gains have been the main engine of growth in recent decades.  

Although the poverty rate has fallen for the first time since mid-1980s, the recent economic growth episode must, however, be also better redistributed if it is to be sustainable.  In 2015, close to 46% of Ivorians still lived on less than CFAF 750 a day. While this certainly represents progress relative to 2011, it remains inadequate given the 80% increase in the revenue of the Ivorian economy during the same period. More inclusive growth is essential to ensure social and political stability and maintain strong economic growth. Households that lift themselves out of poverty consume and invest more, thereby stimulating aggregate supply and demand.

Efficient urbanization can help generate better quality and more equitably distributed growth. In fact, compared to rural areas, it can help the country’s enterprises become more productive and improve the living standards of its households by providing them with employment and educational opportunities as well as better health care. These positive effects have driven the economic success of many countries, as demonstrated by economic theory and the historical experience of twentieth century industrialized countries and, in recent decades, emerging economies.

The opportunity to rapidly urbanize Côte d’Ivoire is therefore one that should be quickly seized so that spatial organization can be achieved, and agglomeration effects maximized while the population density of the city of Abidjan is relatively low compared to most other big African cities. 

Contribution of cities and urban mobility to development

A moving city is a booming city. To benefit from economies of scale, enterprises must be able to gain access to markets. If workers, suppliers, and clients are concentrated in an urban area, their commuting difficulties and delays can, however, wipe out these gains. Unfortunately, this is already the case in Abidjan for households that spend a great deal of money and time every day on transport or for the poorest, who can get around only on foot. 

Although the residents of the city of Abidjan are all aware of the urban mobility problem, it is helpful to quantify it. On a daily basis, more than 10 million trips are made within Abidjan and each household spends on average CFAF 1,075 and “loses” more than three hours in commuting time. In other words, more than CFAF 4 billion is spent daily (in terms of money and opportunity cost)—the equivalent of CFAF 1,200 billion per year. This expenditure ranks third in household budgets (after food and housing) and accounts for roughly 4-5% of GDP. 

Furthermore, transport expenses have a negative effect on enterprise competitiveness. Traffic jams also make roads more unsafe and increase air pollution. These problems are expected to worsen with the growth of the urban population in Abidjan, which is expected to climb to roughly 10 million by 2040.  According to United Nations projections, two in three Ivorians will live in an urban center in 2050.

Mobility challenges in Abidjan are attributable to three main factors. The first is linked to transport infrastructure deficiencies. Although the city has more roads than most big African cities, they are unevenly distributed and deteriorate rapidly. Traffic jams are concentrated around a number of bottlenecks, a situation that is exacerbated by the morphology of the city with its lagoon, as well as poor traffic management.

The second factor is the virtual absence of public transport in Abidjan, which accounts for fewer than one in ten trips (generally by bus)—approximately four times less than in a city of comparable size in Europe. Currently, as is the case in the main European cities, roughly 40% of trips are on foot. The difference is that in Côte d’Ivoire, this is more a requirement than a choice, given the financial constraints faced by the poorest households. In the case of motorized travel, commuters have access to independently-owned (informal) transport such as minibuses (gbakas) and shared taxis (woro-woro) or individual taxis. While this private system offers the advantage of filling a need not met by the Government and provides approximately 100,000 jobs, it does have a number of disadvantages. First, it contributes to traffic congestion and thus to traffic jams, as well as to unsafe conditions and pollution. Second, its geographic coverage is uneven as priority is given to the most commercially profitable routes. Lastly, for many poor households, it is relatively expensive or inaccessible.

The third and final factor driving urban mobility problems is the failure to follow rules, with a high number of traffic code violations for which penalties are rarely imposed. Many vehicles also pollute the air more with oil than with gas fumes, despite the annual inspections required by the authorities. 

These factors notwithstanding, weak governance and fragmented responsibilities are partially responsible for urban mobility problems. Better management of the city would alleviate the problem of inadequate road infrastructure, the lack of public transport, and the violation of rules. Although several examples are provided in the main part of this report, it bears noting here that high construction costs are often the result of uncompetitive and non-transparent procurement procedures. It is also a well-known fact that the violation of rules by users and drivers often stems from the failure to impose penalties.

What action can therefore be taken by the public authorities? The Ivorian Government is already cognizant of the fact that the development of a connected city is a priority not only for the city of Abidjan but also for Côte d’Ivoire, if it is to achieve emerging economy status. Ensuring the rapid development of enterprises and improving the living conditions of residents who, more and more, are concentrated in the country’s urban centers is a priority, particularly in the case of Abidjan. To achieve this, Côte d’Ivoire could draw on the approach adopted by other cities, including those in developing countries such as Colombia or those of East Africa.

Three approaches, intended to both fuel the discussion and support the work being done by the authorities, are proposed in this report. The first is the formulation of an urban transport vision that fits into the area’s overall development plan, both within and around the city of Abidjan. The master plan for the city, adopted in 2016, already provides an outline of this vision. It proposes two main corridors: a North-South corridor and an East-West corridor. This first phase must be followed by the adoption of more detailed plans for neighborhoods in order to ensure its implementation. International experience, particularly in a city such as Medellin, has also demonstrated that this vision must be supported by an institutional framework that facilitates coordinated and streamlined decision making by the different actors working on organizational issues. It currently remains difficult to delineate the responsibilities of the central, regional, and municipal authorities in Abidjan and thus to properly coordinate activities.

The second approach is aimed at better integration of the transport system. The current fragmentation is not only costly but also inefficient. Households and enterprises must be able to use several means of transport depending on their route, budget, distance, or the urgency of a situation. A worker must, for example, be able to get to work by combining walking with a bus or taxi ride. In Abidjan, two major shortcomings prevent this integration of the transport system. First, the supply of public transport must be increased along the main corridors in order to meet growing demand and offer reasonable fares. Metro rail projects (which are expected to be completed in 2022) along the North-South corridor and the Bus Rapid Transit (BRT) line project along the East-West corridor will be critical in this regard. However, even if these public transport options are in place, users must be able to get to them easily from their homes. This calls for more developed and better organized neighborhood transport networks. In fact, an individual decides on a trip depending on the accessibility of the first kilometer. Priority should therefore be given to the reorganization and improved coordination of informal transport systems (taxis and minibuses) as well as SOTRA buses.

The third and final approach entails promotion of the use of new technologies that will shape the future city. In choosing public and individual means of transport to be developed, Côte d’Ivoire should ensure that it takes advantage of this technological revolution that will allow it to optimize travel within the city of Abidjan without worsening its carbon footprint. Management of the flow of persons and goods can be improved in real time through the use of electronic sensors, which would permit the authorities to manage traffic (and traffic lights) on roads and to make optimal use of strategic locations for parking. Lastly, the transport system can become more accessible to users through virtual information sharing and electronic payment methods. The lives of families would be improved if they could make their decisions by checking their mobile telephones to determine beforehand the schedule of available transport, review routes, and pay for their tickets. The recent introduction of WiFi-enabled taxis in Côte d’Ivoire represents a step in the right direction. However, more would have to be done by introducing a public transport electronic ticketing system and smart cards that would make it possible to sanction or reward drivers.

The Ivorian Government will therefore have to outline its own urban mobility vision and obtain the resources to implement it so as to provide better transport conditions to its citizens. This report calls for urgent action, as history has demonstrated that urban spaces can be more easily managed before the population density becomes too high and because it is better to avoid having to destroy in order to rebuild at an extremely high cost.