State of the economy: Performance strong before the COVID-19 pandemic but likely to weaken as a result of the health situation
With GDP growth estimated at 6.9% in 2019 (or 4.2% in per capita terms), Côte d'Ivoire continued to be one of the best performing economies in Sub-Saharan Africa, driven in particular by the expansion of the middle class, which supported demand in all sectors. Prior to the COVID-19 health situation, the outlook for 2020 remained favorable, with projected growth of about 7%. This figure has been revised downwards, following the slowdown in exports and the introduction of COVID-19 containment measures, which put a brake on economic activity in the first half of 2020. GDP growth is now expected to be around 1.8%.
Figure 1: Growth in Côte d’Ivoire and the region in 2016–2019
Containment measures had a significant impact on Ivorian businesses
Entitled Taking Stock and Looking Ahead: Cote d’Ivoire and the COVID-19 Pandemic, the report – based on survey data collected in April - finds that the COVID-19 epidemic has had several direct repercussions on businesses: reduced working hours, lower sales and revenue, and even partial or total shutdown. Overall, 37.7%of businesses were forced to close (2.4%permanently and 35.3%temporarily). However, the report notes that the business closure rate was higher among microenterprises (43%) than among small and medium-sized enterprises (about 30%). Nearly 35% of export firms and 54% of majority foreign-owned firms closed their doors.
The pandemic has had a particularly sharp impact on sales across all types of businesses and in all sectors. Up to 94.1% of companies experienced a decline in sales in the first 30 days of the pandemic. Only 0.6% of companies reported revenue growth, and the increases were generally small.
Economic growth for 2020 is expected to slow to around 1.8%, due to the major impact of COVID-19 households and businesses
Estimated impact on sales over the last 30 days prior to the survey
The global pandemic has led to significant income losses for households and for those in the informal sector
Based on the results of a survey of 800 households conducted in April 2020, the report notes that 71% of households saw their income decrease and were unable to meet their basic living expenses. Only three out of ten households have enough savings to pay for regular expenses such as rent, water and electricity bills, and food. The survey data clearly show that the impact has been greater and more widespread than anticipated and has worsened the living conditions of already vulnerable households. In the short term, many households will have trouble covering this income gap, and the government’s support program will therefore be essential to mitigate the shock.
Impact of COVID-19 on wages and incomes
If the epidemic remains under control locally, Côte d’Ivoire could resume its strong performance in 2021
The Ivorian economy should gradually recover in 2021–2022, thanks to a rebound in services and renewed productivity in industry and agriculture. If investment picks up again it would help restore productivity growth in the manufacturing and food industries. This could subsequently boost exports and fuel private consumption, which could return to pre-pandemic levels and contribute to GDP growth of 5% in 2021. A potential recovery in late 2020 or 2021 will depend on many factors, however, in particular the speed of government aid disbursements, the management of domestic budget pressures, and uncertainties related to the current political situation and new exogenous shocks, such as a deterioration in key commodity prices and a global recession.
The report presents a set of policy recommendations that could help save lives, preserve livelihoods, and safeguard the future. In particular, it recommends that the government should use the implementation of the emergency cash transfer program to accelerate the development of an adaptive social protection system. As a first step, the government could develop a management information system (MIS) that would list all emergency program beneficiaries and track cash transfers. Post-pandemic, the MIS could form the foundation for the Single Social Registry (RSU) launched in 2019 to improve the coordination, effectiveness, and efficiency of social safety nets and poverty reduction programs.
The establishment of the Informal Sector Support Fund offers an opportunity to develop basic tools to support the informal sector. For example, the authorities could put together a profile of the actors in the informal sector in order to identify the main constraints they face, and design tailored measures and services to increase productivity in the sector. These services might include better access to financial services and market information, training opportunities (technical and managerial), and social protection instruments adapted to the informal sector (unemployment insurance, old-age pensions, etc.).
Finally, the report recommends operationalizing the Credit Guarantee Fund for Small and Medium-sized Enterprises (FGCPME) to enable it to offer suitable products as part of the economic recovery, and thus relieve access to finance constraints. The government could also review changes to customs procedures to increase the efficiency of trade.