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Ivory Coast’s Global Influence
Ivory Coast is a member of a number of trade organisations. In particular, it is a member of the world trade organisation (WTO) and the general agreement on trade (GATT). It joined the organisation in January 1995. WTO is an intergovernmental organisation that is responsible for regulating global trade. The organisation has various functions that govern trade among its members. Being a developing country, Ivory Coast will benefit from the organisation if various requests pushed by LCDs are adopted. The developing countries push some requests to ensure fair trade, especially in agricultural products.
Ivory Coast is a member of regional blocs that have been established for the economic prosperity of the member states. The most significant trade bloc is the community of Sahel-Saharan States (CEN-SAD) that is aimed at creating a free trade for countries. The bloc was established in 1998 by six countries. The membership has since grown to 27. Ivory Coast joined the organisation in 2004. In addition, Ivory Coast is a member of the Economic Community of West African States (ECOWAS). It was established in 1975, and Ivory Coast was a founding member. It aims at achieving economic integration of the member states. The members aim at creating a trade block in the region. Ivory Coast is also a member of the West African Economic and Monetary Union. This is a union of countries in the ECOWAS that share the CFA Franc as their currency. Ivory Coast was a founding member in 1997. The bloc has various functions that aim at integrating the economies of member states. The bloc aims at harmonising fiscal policies and creating a common market for the member states.
Similar to many other developing countries, Ivory Coast depends on agriculture. The presence of Ivory Coast in the world trade is felt by the vast export it makes. The country is ranked 82nd world largest exporter. It is a major exporter of cash crops. In fact, it is among the largest exporter of cocoa beans, coffee and palm oil. The country supplies cocoa to the world’s largest processors of cocoa products. The country also produces and exports other crops such as palm oil, cashew nuts, cotton and coffee. The country is also an exporter of forest products such as timber and other wood products. It has some of the world’s best type of wood products. Ivory Coast is among the top exporters of these agricultural commodities due to its favourable climatic conditions that allow production. The country has a wealth of mineral resources. The resources have not been fully exploited due to conflicts. Recently, the mining of oil started in the country and the industry is growing steadily. According to the World Bank, Cote d’Ivoire is one of the most complex economies in the world.
Major Trade Partners
Ivory Coast has many trade partners around the world. The country exports its products and imports goods and services from these trade partners. The partners import agricultural goods, oil and gas, and wood from Cote d’Ivoire. European Union countries are the state’s major trading partners. The European Union entered into a partnership with the ECOWAS members, which Ivory Coast is a member of. The countries supply up to 80 percent of the European Union import market. The Netherlands, Germany and France are some of the major state’s partners within the European Union. The Netherlands depends on cocoa from Ivory Coast due to the fact that the Netherlands is the world’s largest cocoa processor; thus, trade partnership with Ivory Coast is important for its businesses. The Netherlands and Germany are also the main consumers of palm oil and palm kernel. The United States is another major trade partner. Ivory Coast benefits from the AGOA programme of the United States. The export of agricultural production is high between the two countries. In addition, Ivory Coast benefits from imports from the United States. The goods are mainly manufactured products.
Some of the main trade partners are the countries within the ECOWAS. Ghana and Nigeria are major trade partners to Ivory Coast. The top ten traded goods on export include cocoa that accounts for over 35 percent of the total exports, oil and mineral fuels, precious stones, ship and boats, cotton, rubber, wood, fats and oil. The country imports industrial machinery, cereals, electrical machinery, plastics and motor vehicles, and parts from its import trade partners. They include Nigeria, China, France United States, Bahamas, India, Thailand, the Netherlands and Italy. In 2015, Nigeria was the largest import partner representing over 20 percent of the country’s total import. France was the second largest import partner representing over 12 per cent. China was the third largest import partner representing over 8 percent of the total import. Ivory Coast has a special trade partnership with France. Many France companies have invested directly in the economy of Ivory Coast. Companies from France run the national electricity utility and water utility in Abidjan. Another company runs the country’s airport facilities. Obviously, French companies have invested heavily in Ivory Coast.
International Investment Opportunities in Ivory Coast
Ideal Market for Foreign Investments
There are significant investment opportunities in Ivory Coast following the liberalisation of the economy. The government disembarked from production activities and privatised most of corporations. The country’s government realised that collaboration with the private sector will lead to efficiency in the economy. Most sectors of the economy have not been fully exploited. The exploitation of these areas will lead to increased productivity. The country has been improving its infrastructure and legal framework to accommodate private investments.
Information technology is one of the largest contributors to the economy of Ivory Coast today. It has created employment opportunities and contributes to around 7 percent of the country’s GDP. The sector is important to the development of the country’s economy as it impacts all sectors of the economy. Due to its importance, the government gives priority to the investment in the sector. The Internet requires substantial investment so as to elicit the full potential of technology. The areas of investment include the fibre optic expansion programme that is open to foreign investors. Investments will offer new opportunities for various sectors such as healthcare, banking and education.
The agricultural sector is another area of investment. The sector has many of its areas underperforming. The cocoa production has not reached the full potential, and investors can make a significant impact on its further development. There are opportunities for the processing of cocoa so as to add value. Value addition will ensure good returns to investors and the economy of Ivory Coast. Along with that, coffee as a cash crop is not fully exploited. The country has seen trends of reduction in production of coffee. The good climatic conditions will allow good production and revamp the sector in full. There are opportunities in value addition, which involve processing of coffee. Other processing areas include cashew nuts. There are also investment opportunities in the cotton sector. At the same time, palm oil production is a sector that offers an investment opportunity. The need to boost the ageing farms to increase productivity calls for private sector investments. Investments can be made to modernise the traditional ginneries. The rubber industry presents a potential for future development. The opportunities lie in the processing units. The current are few and are not diversified. The government wants to compete with countries such as Thailand that produce in tones.
Ivory Coast is rich with mineral deposits. The mining sector has been growing since 2012. The United Nations Security Council allowed the export of diamonds in the same year after a long ban. There are investment opportunities in such spheres as the mining of diamonds and other precious stones. Oil and gas are other areas that require investments. The country aims to increase its capacity from the current 35,000 barrels per day to 100,000 bpd. To achieve this, a partnership with the private sector will be inevitable.
Successful Foreign Direct Investment in Ivory Cost
Foreign direct investment is an investment from one country to another mostly made by companies and not governments. It involves activities such as acquiring stakes in foreign companies, establishing operations or acquiring income generating assets. Ivory Coast has been a beneficiary of foreign direct investment. In 2010, foreign direct investment in Cote d’Ivoire amounted to $6.6 billion. The foreign direct investment represented more than 28% of the year’s gross domestic product. France is the major investor in Ivory Coast followed by other countries of the European Union. The country has also diversified into other countries such as India, Lebanon, Morocco and Singapore.
French companies have ventured into various areas such as construction and service industry. A company such as Bouygues has built bridges and is also partnering with the government in the construction of light railways. Air France is a major air carrier in the two countries. China companies have financed the expansion of the port of Abidjan. Companies from Kuwait have invested in the airport logistics services. In fact, the emerging amount of investors come from Morocco. The companies have invested heavily in the infrastructure. Morocco signed 26 partnerships with Ivory Coast in the 2011-2013 period. The partnerships have had great impact on the economies of both countries. The largest bank in Morocco, Attijarawafabank opened its branch in Abidjan in 2010. The bank has taken the opportunity of the big market that exists in Ivory Coast. The large number of SMEs and other start-ups that require financing create new opportunities for the bank. The CIMAF Company, which is a cement manufacturing company, invested in the country in 2013. The company contributes to the infrastructure and housing construction. The company increased its production by more than a half in the first year of operation. Along with that, companies from South Korea have also partnered with the Government of Ivory Coast for the construction of light rails.
The political turmoil of the in early 2000 to 2011 had impact on the foreign direct investment in the country. The economy failed to reach the anticipated growth rates. Many businesses, especially small and medium enterprises invested by French investors, collapsed as a result of the political turmoil. The economy recorded negative economic growth in 2003 and 2004. Many French investors had to relocate their businesses. More than 150 SME businesses were destroyed and closed down during the 2004 upheaval. Some were affected by looting due to the violent attacks. Companies’ performance worsened as a result of the attacks. Some companies were completely damaged, and others were partially affected. The investors opted to wait for the presidential election in 2005. This was the result of the effects of 2004 violence that wiped all their gains. The cost of production was high as a result of high cost of oil. In 2004-2005, the banking sector was not profitable. This was caused by high unemployment and move by the government to introduce an agricultural finance corporation to cushion farmers. Banks merged, and microfinance institutions closed. In 2004, the vibrant cocoa production was affected by the long and costly transportation. There were constraints on labour as workers fled the fields for their safety. The investors incurred losses in the business as a result of the instability.