Côte d'Ivoire: Financial Sector Profile
Côte d’Ivoire is the largest economy in the West African Economic and Monetary Union (WAEMU), accounting for 40 percent of the region’s total GDP. It enjoys a relatively high income per capita (USD 960 in 2007) and plays a key role in transit trade for landlocked neighboring countries. The country is the largest exporter of cocoa in the world, and its level of total goods exports is the fourth largest in sub-Saharan Africa (after South Africa, Nigeria and Angola).
However, the civil war in 2002-03 and subsequent years of stalemate in the peace process have taken a heavy toll on the economy. In the period from 2000 to 2006, average economic growth turned negative, to -0.4 percent, and was well below the rates in the rest of WAEMU (4.1 percent) and sub-Saharan Africa (4.9 percent). The partition of the country disrupted trade, with falling export volume growth, and diminished Côte d’Ivoire’s role as a regional hub. Foreign direct investments took a major hit and many foreign businesses closed or significantly scaled down their operations awaiting a permanent resolution of the crisis.
As prospects for political settlement improved in 2007 with the introduction of new transitional government, Cote d’Ivoire began to experience an economic recovery which accelerated in 2008 as GDP growth rose to 2.3 percent. Inflation also increased, however, from 1.9 percent in 2007 to 6.3 percent in 2008, reflecting the mid-year surge in world food and oil prices. The value of exports is also estimated to have increased by 8.3 percent in 2008, after declining by 5.7 percent the previous year.
Since 2007, government efforts to clear arrears with domestic finance suppliers and donors have improved the outlook and confidence for the financial sector. Through the end of 2008, the government had repaid CFAF 41.6 billion of claims. The government also reactivated the Treasury Committee and strengthened coordination with the Monitoring Committee of Government Securities and Financing (COSTEIF) to further improve confidence.
The Ivorian financial sector has remained functional, but has heavily suffered from the political and civil crises. All 19 bank branches in the Center–North-West region were closed after 2002, and the quality of bank loans portfolios declined.
As of 2007, 20 commercial banks and three non-bank financial institutions operated in the country.
The banking sector consists of 19 banks, five of which are domestic-owned. Domestic banks account for 21 percent of total assets and for their great majority liquidity levels remain below prudential levels. The government has been heavily involved in the sector, in an effort to prop up these institutions since the beginning of the conflict in 2002.
Progress has been recently made in restructuring undercapitalized banks and strengthening the banking system. Two of the five domestic banks, which had negative net worth at the end of June 2008, formulated recapitalization plans approved by the Banking Commission. One bank is currently under interim administration and the remaining two are being taken over by the government through conversion of illiquid deposits into share capital.
As part of the WEAMU, Cote d’Ivoire shares an interbank market with all countries in the Union; similarly, bank licenses are valid for all of WAEMU’s countries.
The provision of financial services in rural areas, to small and medium sized enterprises, as well as the mobilization of long-term savings and the financing of long-term investment is still deficient. The microfinance sector, in particular, has been severely affected by the lasting conflict and related lack of smooth funding flows. Approximately 90 percent of credit and savings activities are concentrated in just two cooperative networks, which currently face difficulties, and constitute a systematic risk for the microfinance sector.
To reverse this trend, the Ministry of Finance issued a National Microfinance Policy at the end of 2007 along with a detailed Strategy and Action Plan for 2007-2015 aiming at achieving a viable, integrated and diversified microfinance sector with penetration over the whole country by 2015.
The mobile market in Cote d’Ivoire is very competitive and fragmented. In December 2008, Orange Cote d’Ivoire launched its new mobile money product, Orange Money. MTN also has plans to launch its product, Mobile Money in West Africa, in the near future.
The Bourse Régionale des Valeurs Mobilières (BRVM), headquartered in Abidjan, serves as the regional stock exchange for member countries of the West African Economic and Monetary Union (WAEMU). Trading is minimal despite 45 company listings.
The stability and the viability of the country’s insurance sector and the public pension funds are at risk. The insurance sector suffers from under pricing and difficulty in settling damages, low minimum capital requirements, and lack of strong regulation that facilitates prompt liquidation of failed companies. As for pension funds, both the CNPS (private sector) and the CGRAE (public sector) incur sizable deficits and recent actuarial studies highlighted the need for urgent reforms.
Unprecedented prices for cocoa throughout the economic downturn have contributed to the Ivorian economy’s remarkable resilience to the global economic downturn. However, the global crisis continues to pose risks to Cote d’Ivoire’s economic outlook due to delays in anticipated foreign direct investment and lower export levels.
Financial Sector Links
|Private Credit/GDP (%)||14||13||13||13||14|
|Stock Market Cap/GDP (%)||11||12||14||19||32|
|Liquid Liabilities (2000 USD ml)||2,179||2,305||2,361||2,483||2,977|
|Net Interest Margin (%)||6||6||6||5||4|
|GDP (USD ml, current prices)||13,764||15,501||16,392||17,383||19,824|
|Branches per 100,000 inhabitants||n.a.||n.a.||n.a.||n.a.||n.a.|
For statistical coherence and comparability purposes, the FSDIs are extrapolated from a limited number of sources (AfDB, IMF, OECD, WB), where a common data collection methodology was applied to all countries surveyed. For additional data from other sources, please refer to the Documents section.