Is Ivory Coast on the Road to Being a Developed Country?

By Andy Kemmer

Ivory Coast is a small country in west Africa home to 24 million people.[1] The country lived under French rule from 1893 until 1961 and the country’s first president, Felix Houphouet-Boigny, kept it stable for most of his presidency.[2] However, the country experienced political unrest at the turn of the century, leading to civil war. In 2010 the citizens democratically elected Alassane Ouattara to be the next president, but prior president Laurent Gbagbo had to be forcibly removed; the resultant fighting left 3,000 people dead and 500,000 displaced.[3] Even through the turmoil Ivory Coast remained the world’s largest exporter of cocoa beans,[4] and today the country is rebounding strongly.[5]

                In 2015 Ivory Coast was West Africa’s second-largest economy,[6] and in 2016 the International Monetary Fund (IMF) named Ivory Coast Africa’s fastest growing economy.[7] By 2020 President Ouattara wants the country to be considered an “emerging economy” such as South Africa and Nigeria, rather than the less impressive “frontier market” title.[8] The African Development Bank moved its headquarters to Abidjan, Ivory Coast’s economic capital, in 2014, and the bank has helped finance a massive bridge project connecting the north and the south side of the city.[9] The country has seen a ten percent growth in power demand for each of the last five years, and it has the natural resources to create hydropower and thermopower for itself.[10] The government is also working on providing electricity for all residents by installing an initial meter for free. Despite the good news, only forty percent of Ivoirians have electricity and almost half of the population still lives in poverty.[11]

Can Cocoa Lift Ivory Coast From Developing to Developed?

                Agriculture is the main source of production for Ivory Coast’s economy, and cocoa is the country’s biggest export.[12] In 2010 the country exported about 2.5 billion dollars of cocoa.[13] Ivory Coast is also the largest cocoa producer in the world,[14] and between Ivory Coast and the second largest producer in the world, neighboring Ghana, there are two million farms that produce sixty percent of the world’s supply of cocoa.[15] However, 40% of the price paid for Ivoirian cocoa goes to the government rather than to the farmers,[16] and farmers ultimately earn only 6.6% of the sales price (about 67 cents per day).[17] On top of that, the global chocolate market is worth over 100 billion dollars.[18] That makes the 2 billion dollars that Ivory Coast exports feel like a paltry sum in comparison. Nestle makes more on sales alone than the combined GDPs of Ivory Coast and Ghana.[19] Meanwhile, many of those two million farms in Ivory Coast and Ghana are small scale operations where the workers are making less than $1.25 a day, creating poverty conditions that incentivize cheap labor, i.e., child labor.[20]  Thus, market swings in chocolate can have great consequences both the country’s economy and for a large number of very poor citizens. Cocoa could be a dangerous product for the country to hang its future on, as prices have fallen due to increased supply and climate change could make the country too hot for the trees to continue growing there. [21]

                Nonetheless, climate change notwithstanding, Ivory Coast can take some steps to ensure economic prosperity both for the country and for its citizens. First, the country can cut taxes on buying and exporting of cocoa.[22] The country would then raise the minimum that buyers are allowed to spend on cocoa because they could afford to pay more for the cocoa.[23] It considered this alternative before the start of the growing season last October, but presumably chose not to do it because cocoa producers have been smuggling cocoa into Ghana.[24] Ivory Coast lowered its price per ton of cocoa in response to a global decline in value and Ghana did not, which means that producers can be paid more for their cocoa in Ghana.[25] That brings me to my second point, which is to partner with Ghana for the good of both countries. Ivory Coast lost the profit of 125,000 tons of cocoa this growing season because its prices were less than Ghana’s. The smuggling is not good for Ghana either, where the agency that buys cocoa beans barely has enough money to pay for Ghanaian beans, meaning that Ghanaian farmers are not getting paid for their product.[26] While smuggling has historically happened, the difference in price between the two countries is making it worse.[27] The countries recently agreed to the “Abidjan Declaration” to work together on weathering the cocoa market and improving prices for farmers.[28] The agreement includes “harmonizing their cocoa marketing policies” and collaborating on research into cocoa plants and diseases that affect them.[29] The agreement also includes a commitment to processing cocoa within their own borders,[30] which leads to my third point. As demonstrated above, there is far more money in the chocolate business than there is in the cocoa business. Chocolate is an affordable luxury among the burgeoning middle class in Ivory Coast.[31] As such, Ghanaian and Ivoirian brands of chocolate are popping up that are made from their own cocoa beans.[32] Ivory Coast currently processes about a third of its cocoa beans and plans to increase that to 50% by 2020.[33] The country already has “introduced tax breaks for cocoa grinders and chocolate producers,” allowing the world’s third-largest grinder to open in the Ivoirian city of San Pedro and providing Ivory Coast the production capacity to become the leading processor in the world.[34] There are already local Ivoirian chocolates such as Instant Chocolat that are being sold locally and to clients as big as Air France and Citibank.[35] The notion of buying locally is in vogue in the United States and is a notion that should have power in a nation which has a history so rooted in cocoa.

                Ivory Coast is a nation that is on the upswing, and if it implements the right policies and takes advantage of the potential chocolate industry that it has, it has the potential to stay as one of the top economies in Africa for a long time. At one time the country was a stabilizing influence on West Africa and I for one would like to see that again. Who would not want to see an African country come back from the ashes and be a leader, perhaps for the entire continent? I believe we all want to see a success story out of Africa.  

[1] World Population Review, Ivory Coast Population 2018, http://worldpopulationreview.com/countries/ivory-coast-population/ (last visited Mar. 28, 2018).

[2] Our Africa, Ivory Coast, http://www.our-africa.org/ivory-coast/history-politics (last visited Mar. 28, 2018).

[3] BBC News, Ivory Coast Country Profile, http://www.bbc.com/news/world-africa-13287216 (last visited Mar. 28, 2018).

[4] Id.

[5] Earl Nurse & Katy Scott, Ivory Coast: Powering Africa’s Fastest Growing Economy, CNN (Nov. 29, 2017), https://www.cnn.com/2016/10/26/africa/marketplace-africa-ivory-coast-economy/index.html.

[6] Lily Kuo, Photos: After Years of Civil War, Ivory Coast is Booming, Quartz Africa (Sept. 30, 2015), https://qz.com/513034/photos-after-years-of-civil-war-cote-divoire-is-booming/.

[7] Nurse & Scott, supra note 5.

[8] Kuo, supra note 6.

[9] Nurse & Scott, supra note 5.

[10] Id.

[11] Id.

[12] Our Africa, Ivory Coast: Economy & Industry, http://www.our-africa.org/ivory-coast/economy-industry (last visited Apr. 1, 2018).

[13] Baudelaire Mieu, Ivory Coast Lost 125,000 Tons of Cocoa to Smuggling, Bloomberg (Feb. 27, 2018), https://www.bloomberg.com/news/articles/2018-02-27/ivory-coast-is-said-to-lose-125-000-tons-of-cocoa-to-smuggling.

[14] Baudelaire Mieu, Ivory Coast Lost 125,000 Tons of Cocoa to Smuggling, Bloomberg (Feb. 27, 2018), https://www.bloomberg.com/news/articles/2018-02-27/ivory-coast-is-said-to-lose-125-000-tons-of-cocoa-to-smuggling.

[15] Akinyi Ochieng, The World’s Two Largest Cocoa Producers Want You to Buy Their Chocolate, Not Just Their Beans, Quartz Africa (May 12, 2017), https://qz.com/981562/ghana-ivory-coast-are-marketing-more-chocolate-to-the-world/.

[16] Our Africa, Ivory Coast: Economy & Industry, http://www.our-africa.org/ivory-coast/economy-industry (last visited Apr. 1, 2018).

[17] Id.

[18] Katy Barnato & Luke Graham, Future of the Chocolate Industry Looks Sticky, CNBC (Mar. 24, 2016), https://www.cnbc.com/2016/03/24/future-of-the-chocolate-industry-looks-sticky.html.

[19] Ochieng

[20] Barnato & Graham

[21] Id.; Ochieng, supra note _

[22] Baudelaire Mieu & Ekow Dontoh, Ivory Coast Weighs Cocoa Tax Cuts to Lift Farmer Pay, Bloomberg (Sept. 5, 2017), https://www.bloomberg.com/news/articles/2017-09-05/ivory-coast-is-said-to-weigh-cocoa-tax-cuts-to-lift-farmer-pay.

[23] Id.

[24] Mieu, supra note _

[25] Mieu, supra note _

[26] Ekow Dontoh, Cocoa Prices Have Crashed But Smugglers are Still Making Money, Bloomberg (Sept. 20, 2017), https://www.bloomberg.com/news/articles/2017-09-20/cocoa-prices-have-crashed-but-smugglers-are-still-making-money.

[27] Id.

[28] Fred Dzakpata, Ghana and Ivory Coast Sign Major Agreement on Cocoa, Africa Feeds (Mar. 27, 2018), https://africafeeds.com/2018/03/27/ghana-and-ivory-coast-sign-major-agreement-on-cocoa/.

[29] West Africa: Ghana, Cote d’Ivoire Sign “Abidjan Declaration” on Cocoa, AllAfrica (Mar. 26, 2018), https://allafrica.com/stories/201803270763.html.

[30] Id.

[31] Ochieng, supra note _

[32] Id.

[33] Id.

[34] Id.

[35] Id.