Côte d’Ivoire Economic Update
Are Women the Key to Unlocking Economic Emergence in Côte d’Ivoire?
When, in the Ivoirien cult film Bal poussière, an international success in the 1980s, the first wife of the village chief Demi-Dieu sadly says to him that she would have left him if she had been to school, the message pointed to discrimination against women. More than 30 years later, the status of women has not really improved in Côte d'Ivoire. Women continue to face inequalities at school, in access to health care and in the labor market. Côte d'Ivoire is ranked among the lowest in all the international gender equity indicators:152nd out of 155 countries by the United Nations and 43rd out of 56 African countries by the African Development Bank.
Gender equity is not just a human and social goal but also an economic goal. At a time when Côte d'Ivoire is seeking to achieve economic emergence, reducing discrimination against women could generate benefits in the neighborhood of US$6 billion to US$10 billion, or between one third and half of the country’s current revenues. The fifth report on the economic situation in Côte d'Ivoire focuses on this opportunity.
The report begins with an analysis of recent economic developments and the economic outlook for Côte d’Ivoire. The second part focuses on the issue of gender equity, putting forward a series of proposals to accelerate the implementation of this agenda.
PART 1: Economic situation in Côte d'Ivoire
After five years of strong growth, the Ivoirien economy is starting to show signs of flagging. In 2016, the GDP growth rate was 7.7 percent, and this deceleration seems to have continued in the early months of 2017, with several economic indicators trending downward, including credit to the private sector, construction and imports of capital goods.
This slowdown is reflected in the gradual eroding of the catch-up effects that prevailed following the end of the political crisis in 2011 and a deterioration of the internal and external environment. The deceleration is relative, however, to the extent that the rate of growth of the Ivoirien economy was the second highest on the African continent after Ethiopia and was still between three and four times the continental average in 2016.
The Ivoirien economy continued to benefit from favorable terms of trade in 2016, despite lower cocoa prices and higher oil prices on the international markets. The prices of most of Côte d’Ivoire’s exports rose, including the prices of cotton, rubber, and coffee. Moreover, the decline in the price of cocoa was offset by an exceptional harvest, which is expected to bring 2016/17 revenues almost up to the levels reported in 2015/16. However, it is fair to say that these fluctuations have sent shockwaves through the Ivoirien economy, affecting fiscal policy management in particular, with the elimination of the export registration duty, and these adverse developments could become more serious in the long term.
The government’s fiscal position deteriorated in 2016. The deficit rose from 2.9 percent of GDP in 2015 to 4 percent in 2016, and the authorities reduced spending on infrastructure in favor of administrative and policy spending in 2016. This break from the trend observed in recent years explains the smaller contribution of the public sector to economic growth. The effort to mobilize domestic revenues also slowed, recording a growth rate of 6.9 percent, which is some three times slower than the rate reported in 2015. The public debt increased by around 0.5 percent of GDP, particularly owing to increased borrowing on the regional market, and totaled 48 percent of GDP at the end of 2016.
The BCEAO monetary policy remained prudent, focusing on controlling expansion of the money supply to hold inflation down to moderate levels. This goal was achieved as the inflation rate stood at just 0.7 percent in 2016. However, owing to the rapid expansion of credit, particularly to the government, the BCEAO had to reduce its external assets. In part for this reason, the monetary authorities tightened their policy stance in December 2016, with tighter refinancing conditions for commercial banks, which in turn reduced their liquidity and therefore the growth of their lending. The governments in the region, including Côte d'Ivoire, found it more difficult to borrow on the regional market in early 2017.
The external current account deteriorated slightly, but the capital account was most affected, as foreign capital inflows were insufficient, leading to a loss of central bank reserves. This loss was controlled, but justified the above-mentioned change in the monetary policy stance. The second development of note was the simultaneous decline of exports and imports, largely owing to falling oil prices in the early part of 2016.
The economic outlook for Côte d'Ivoire remains favorable, but care should be taken owing to the many external and internal risks. The country remains vulnerable to external shocks and appears to be exposed to a risk of social and political instability given the demands made by part of the civil service and by the military in January and May 2017.
The baseline scenario calls for GDP to grow 7.0 percent in 2017 and then converge around 6.5 percent in 2018-19. The services sector (energy, communications, transportation, banks, and commerce) is expected to remain the engine of growth, driven by urbanization and regional integration, in which Côte d’Ivoire is playing a pivotal role. In the industrial sector, manufacturing should grow although the rate of growth of construction is expected to decline. The primary sector should expand around 2-3 percent per year, with some fluctuation owing to its vulnerability to climate conditions and international prices.
The monetary policy and inflation should continue on their recent trajectories on the assumption that the BCEAO will maintain its prudent stance. The external current and capital accounts should settle around the balances achieved in recent years, and the level of reserves is expected to remain stable.
The real challenge for the Ivoirien authorities will be successfully completing their fiscal adjustment. To achieve a deficit of 3 percent of GDP in 2019, which is the WAEMU target, the government will need to correct its deficit by 1.5 percent of GDP in two years. The government deficit could rise to 4.5 percent of GDP in 2017 owing to the adjustments that had to be made in response to the events that have affected Côte d'Ivoire in recent months. The first was the drop in cocoa prices, which was partially absorbed by the government’s suspension of the registration duty on cocoa exports (equivalent to a loss of CFAF 45 billion). The second involved the rebound of oil prices and the government’s decision to reduce oil taxes in order to maintain the margins in the sector and spare motorists (for a loss that could total CFAF 160 billion in 2017). Finally, the third event involved the demands of the military and part of the civil service, which increased the government’s current expenditures by around 0.6 percent of GDP. These pressures on the government budget were partially offset by a reduction in domestically financed capital expenditure announced in May 2017. The anticipated deficit for 2017 will be financed largely by the new bond issue that took place on the international markets in June 2017.
The projected fiscal adjustment in 2018 and 2019 will require a mobilization of domestic resources and expenditure control. This two-pronged approach will have to be implemented in the political context of a presidential election campaign. Moreover, there are contingent risks related to the precarious financial position of the energy sector, some public banks and the cocoa sector.
If the government fails to deal with its fiscal deficit, the risk could spread to the public debt burden and its servicing, which could place an excessive burden on the government accounts. Although the amount of the debt remains reasonable in relation to GDP (around 48 percent in 2016), its servicing (including amortization) already absorbs a quarter of the government budget, leaving little room for productive and social spending.
The fiscal adjustment will require compromise, as it is expected to reduce the contribution of the public sector to economic growth. This decline was already evident in 2016 and is likely to continue even if the authorities are able to achieve efficiency gains by spending better. It will therefore be essential to optimize the engine of growth, i.e., the private sector.
It is in this context that Côte d’Ivoire’s opportunity to introduce a gender equity policy should be seen.
PART 2: Gender equity can help Cote d'Ivoire achieve economic emergence
If Côte d'Ivoire is able to improve gender equity, its economy could reap benefits on the order of US$6 billion to US$10 billion in the long term, i.e., once most discrimination against women has been eliminated. The stakes are thus high, as many international studies and experience have shown in recent years. The success of the industrial countries and a number of emerging economies is partially explained by the elimination of inequalities affecting women.
Côte d'Ivoire is one of the countries in the world with the highest levels of discrimination against women. Despite legislative efforts, the reality remains that women face discrimination on the labor market, in education, in access to health care and in the lack of family planning.
On the labor market, women are on average paid half what men are paid. Although it is true that they already work a great deal outside the home, this is mainly owing to poverty, which forces them to take on multiple responsibilities and tasks. Ivoirien women spend three to four hours more per day than men on domestic tasks such as child care and cooking. This juggling of responsibilities prevents them from focusing on their professional careers.
Wage inequality between men and women is explained by the differences in education levels, but also by other discrimination. For example, an Ivoirien woman with the same education as a man is less likely to find formal employment and, if she does, is paid 30 percent less on average. These inequalities are found in the civil service, where women represent only one third of the staff, mostly concentrated in the lower grades. They also exist in the private sector, including modern sectors, and in agriculture. A closer look at the latter shows that the productivity differences between men and women result from their unequal access to modern inputs and equipment, financing, and commercial networks. They are also explained by the heavy work burden on women, which is often out of their personal control.
In the education system, the inequalities between men and women are flagrant. The gap between illiterate women and men is larger now than it was in the early 1980s. Girls continue to attend school less than boys, and this gap grows over their school careers. While the majority of African countries have achieved gender parity at the primary level, Côte d’Ivoire has not. Discrimination against girls is in part related to family decisions to give preference to the education of boys when financial constraints arise. The choice in favor of boys reflects their hopes that their sons will be able to secure better jobs and thus provide better for the family’s needs in the future. Discrimination is also deeply rooted in behavioral patterns such as early marriage and pregnancy. It is estimated that one third of young women between the ages of 15 and 19 have had at least one pregnancy.
Access to health care is also difficult for women, particularly during pregnancy and childbirth. As a result, the maternal mortality rate is 10 times higher than that reported in middle-income countries. Family planning is deficient owing to a lack of information and resources, helping to explain why the fertility rate in Côte d’Ivoire is declining only marginally over time and is still, at 4.9 children per woman, among the highest in the world.
The Ivoirien authorities should focus their attention on a gender equity policy. To be effective, the fifth report argues, such a policy must be sufficiently ambitious in: (i) identifying the content of the most urgently needed reforms; (ii) identifying champions who could defend these reforms; and (iii) minimizing the adjustment costs or frictions that could hamper the implementation of the reforms over the long term.
In terms of the content of the reforms, priority should be given to education. Without education, it is difficult to achieve equal opportunities. A good education is also essential for finding a productive job and improving health and nutrition. It is the cornerstone of a good family policy, as a better educated woman is more likely to educate her children. While various approaches are possible, programs in support of adolescents have proven to be effective in various regions of the world, including Africa. A number of examples are provided in this report.
The priority given to education must, of course, be accompanied by actions to modify behavior, particularly in the labor market, in access to health care and in the area of family planning. To counteract the discrimination that women face in finding employment, the public sector could lead by example by initiating a program to promote gender equity and create momentum for change. Improving access to health care and family planning begins with information campaigns and easy access to contraceptives and maternal care. Increasing the number of health care personnel and improving their quality are also necessary.
Beyond the content of the reforms, champions must be identified who can defend the reforms and break down the resistance. Experience has shown that raising men’s awareness must be accompanied by better representation of women in institutions, businesses, and families. In Côte d’Ivoire, this representation is still marginal. Although the increased participation of women in political institutions is an accepted principle, the fact of the matter is that this principle is not entirely applied in practice, particularly the further one moves from the central authority. In 2017, women made up 20 percent of government ministers (6 out of 28), but just 11 percent of members of parliament, 5 percent of mayors and 3 percent of regional prefects. It is therefore urgent to increase the representation of women in political institutions in Côte d’Ivoire to better defend women’s rights and combat the discrimination they suffer.
In businesses, the participation of women in decision-making processes is also rare, and, although it may be controversial to say so, the role of women in the household is also affected by discrimination. Beyond the philosophical concept, there is agreement that physical violence against women is unfortunately a widespread reality in Côte d’Ivoire. Women also have less access to means of production, such as land, which affects their financial independence and participation in household decisions. This discrimination can be a cultural heritage and is anchored in the mechanisms for the transmission of the family wealth. But the participation of women is important in families. When they have greater control over the means of production, they participate more in decision making within the family, often to the benefit of the children.
Identifying and taking action is essential in breaking down the barriers faced by women and thus promoting gender equity. However, even if successful, there may be other obstacles to be faced along the way. The focus in this report is on the economic frictions, which can take at least two forms.
The first is that increasing the participation of women in the labor market will require a redistribution of tasks within the family. Although this redistribution will in part take place as a result of changes in individual behavior and the changing economic context, the government’s intervention may be necessary in the form of (i) the development of parallel infrastructures such as day care or domestic services to enable women (and men) to delegate these tasks; (ii) more flexible access to the labor market with more accommodating rules, such as flextime and part-time work; (iii) assistance with women’s domestic work in the form of improved infrastructure (electricity, safe drinking water); and (iv) the reduction of virtual and physical distances through the expansion of transportation and communications networks. All of these options aim to influence the allocation of women’s time, at both the individual and family levels.
The second friction relates to the relative inelasticity of the labor supply, particularly in the formal sector, which can result in an increase in unemployment or under-employment and/or lower wages in the event of the poorly controlled arrival of many women on the labor market. On the demand side, individual choices need to be better controlled so that the decision to enter the labor market is made with a maximum of preparation. A better educated woman with adequate training will be more likely to find productive employment. It will also be important to guide women to subsectors with the maximum potential. On the supply side, actions should promote self-employment and family businesses, where the majority of women’s jobs are found. Women entrepreneurs suffer from a lack of recognition of their rights, including a lack of access to means of production and assets. It is also important to develop their access to financing while offering them opportunities to develop their knowledge through integrated assistance programs.
The promotion of gender equity has the potential to help Côte d’Ivoire successfully transition to economic emergence, but the road ahead is full of obstacles. First, the necessary effort must be invested in eliminating the many existing profound inequalities. Even if this is successful, the adjustment costs must then be managed to avoid a backlash. However, in the end, there is no doubt that the results will be worth the effort.
