Between cocoa and democracy.. Côte d’Ivoire tests investor confidence | policy

All eyes are on Côte d’Ivoire, the world’s largest cocoa producer, as the presidential elections scheduled for October 25 approach.

Despite the local nature of the entitlement, its repercussions extend beyond the country’s borders, affecting regional and international financial markets, in light of increasing interest from global investors.

Candidates: a settled race or a symbolic competition?

Current President Alassane Ouattara, 83, is running for a fourth term in the absence of political heavyweight rivals.

Although there are four candidates facing him, including two former ministers and a spokesman for former President Laurent Gbagbo and his ex-wife Simone Gbagbo, none of them has significant party support, making the race closer to a “referendum on Ouattara” than to a real electoral competition.

What is striking about this session is the exclusion of prominent figures such as Laurent Gbagbo, who is still popular in some circles, and Tidjane Thiam, a well-known banker and former CEO of Credit Suisse, whose candidacy was rejected because he holds French citizenship, which contravenes Ivorian law.

Ouattara, who was educated in the United States and previously worked at the Central Bank of West African States and the International Monetary Fund, presents himself as a guarantor of stability in the face of what he calls “security, economic and monetary challenges,” ignoring concerns related to his age and health.

Why do investors care about this election?

Côte d’Ivoire is one of the fastest growing economies in West Africa, and it has succeeded in attracting the interest of international investors thanks to the performance of its sovereign bonds, which are considered among the best on the continent.

This performance has prompted the government to expand its financial tools through innovations such as the “debt for education” agreement last December.

The government also issued regional bonds in local currency last March, and environmentally certified Japanese “Samurai” bonds last July. The first sustainability-linked loan in Africa was obtained last month.

These steps reflect Côte d’Ivoire’s desire to diversify funding sources and position itself as an attractive investment destination on the continent.

But the elections represent a critical test of the country’s commitment to democracy, which is a key factor in assessing political risks for investors.

Is there a risk of electoral violence?

Côte d’Ivoire’s electoral record is full of tensions. The 2010 elections, which brought Ouattara to power, led to a short civil war that claimed the lives of about 3,000 people, after Gbagbo refused to concede defeat.

The 2020 elections witnessed the death of about 85 people following protests against Ouattara’s candidacy for a third term, despite there being a constitutional limit of two terms.

One of the prominent opposition leaders, Tidjane Thiam, described the upcoming elections as a “coronation” for Ouattara, considering the exclusion of opponents “an abandonment of democracy.”

Although seasoned investors in African markets may be better able to absorb shocks, newcomers to the Côte d’Ivoire market may feel anxious in the event of unrest.

However, some market participants believe that any potential unrest will be limited and will not spiral out of control, given the country’s experience in containing political crises.

The economic challenges that await the next president

Despite economic growth, Côte d’Ivoire faces structural challenges, most notably in the cocoa sector, which is the backbone of the economy.

Production has declined due to climate change, aging trees, the spread of agricultural diseases, and random mining that destroys agricultural lands.

The country is also facing external pressures, most notably an anti-deforestation law passed by the European Union, which will require importers to prove that their products do not cause deforestation, which could affect cocoa exports.

In addition, there are security concerns about the expansion of the activity of armed groups in Mali, Burkina Faso and Niger into Côte d’Ivoire, which may threaten economic and investment stability.

The bottom line is that Côte d’Ivoire’s elections are not just a local entitlement, but rather a political and economic test with regional and international repercussions.

Between a veteran president seeking to extend his rule, a dispersed opposition, and a promising economy facing environmental and security challenges, investors and observers stand before a complex scene, in which politics and markets, and democracy and finance, are intertwined.