Ivory Coast Has `No Fear' of Euro Peg, Maintains Growth Targets

Daniel Kablan Duncan

Daniel Kablan Duncan, prime minister of Ivory Coast.

Photographer: Jose Cendon/Bloomberg
  • China slowdown won't prevent economic expansion of 10 percent
  • Government committed to peaceful October presidential election

Ivory Coast’s economy has benefited from the stability of a currency pegged to the euro and has so far escaped any fallout from the economic slowdown in China, Prime Minister Daniel Kablan Duncan said.

“There is no fear” about any major pressures being exerted on the CFA franc, the currency used by Ivory Coast and 13 other smaller African economies, Duncan said in an interview in Abidjan, the commercial capital, on Monday. The common currency “is beneficial for our economies. Those who have tried their own money have had some ups-and-downs with some difficulties.”

The stability from the common currency has made it easier to keep investors in Ivory Coast, avoiding the sell-off in emerging market assets sparked by the surprise decision by China to devalue its yuan in August. The move, which fueled concern authorities are struggling to combat a slowdown in the world’s second-largest economy, prompted Kazakhstan to abandon its currency peg and intensified speculation that African nations would do the same.

China is the nation’s third-largest trade partner, after Nigeria and France.

The CFA franc has depreciated 7 percent against the dollar this year, compared with the 24 percent decline in the Ugandan shilling and 29 percent plunge in the Zambian kwacha, Africa’s worst performers.

Double-Digit Growth

Ivory Coast’s economy is forecast to expand 10 percent this year and the next, Duncan said.

With elections scheduled for October, the government is committed to avoiding the upheaval that rocked the 2010 vote. Then-President Laurent Gbagbo refused to concede defeat to Alassane Ouattara, who won the vote. More than 3,000 people were killed over five months and Ivory Coast defaulted on debt before the crisis ended with the capture of Gbagbo, who is facing trial at the International Criminal Court in The Hague. Ouattara is running for re-election next month.

Investors have shown their confidence in Ivory Coast, where the nation’s bonds are outperforming its peers, said Duncan. 

The yields on Ivory Coast’s $1 billion of international bond due July 2024 have risen 74 basis points to 6.84 percent since the end of April, about half the increase of Ghana’s $1 billion, 2023 Eurobonds. Ivory Coast’s dollar debt has fallen 3.8 percent in that period, compared to a 2.4 percent loss for emerging markets, according to data compiled by Bloomberg.

“The figures related to the Eurobond speak for themselves,” said Duncan, 72. “I can understand that some people fear for the coming election, but we have taken the necessary steps for that and we’ll have an open, transparent and peaceful election next October.”

Ivory Coast will produce about 1.7 million metric tons of cocoa in the season that ends on Sept. 30, he said. The nation produced 1.74 million tons last season. The regulator will raise farmgate prices paid to farmers above the 850 CFA francs for this season, he said. He declined to say by how much.

Ivory Coast is open to resolving a maritime border disagreement with neighboring Ghana, Duncan said. The disputed area is close to Ghana’s largest oil field, Jubilee, which is operated by Tullow Oil Plc and pumps about 100,000 barrels per day. Ouattara and Ghana’s President John Dramani Mahama met in May and pledged to cooperate on the boundary issue.

"We want to solve the problem," he said. "The sooner the better."

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