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Francophone West Africa Business Forecast Report Q3 2014

  • May 2014
  • -
  • Business Monitor International
  • -
  • 48 pages

Political risk will remain elevated across Francophone West Africa. We expect the situation in the Central African Republic to remain anarchic. With the exception of Senegal, we believe that all regional states will remain fragile over the long term. Francophone West Africa's Franczone currency arrangement is widely criticised, but a lack of appealing alternatives means that the system is unlikely to be significantly changed over the coming five years. Reform of some kind is, however, inevitable over the longer
term. We expect headline economic growth in Côte d'Ivoire to remain around the 8.0-9.0% level over the medium term due to robust levels of public investment, an improving investment climate and buoyant consumer spending. The country's political situation, however, will remain tense.

Higher oil production and rising investment spending will cause real GDP growth in Cameroon to accelerate to 5.1% in 2014. While the economy's performance is improving, we believe that the government's target of 6.0% annual growth is unreasonably optimistic. The authorisation of an expanded UN peacekeeping mission provides no immediate solution to the crisis in the Central African Republic, which we expect to worsen over the summer months. The mission may improve the situation in early 2015, but we doubt that any gains will be lasting. Real GDP growth in Chad will reach 9.6% in 2014, but this is the result of a brief increase in oil production rather than any underlying change in the economy. Headline growth will subsequently fall as production stagnates. Reforms boosting trend growth are unlikely. Stagnating energy production, weak consumer spending, and costly imports will cause Equatorial Guinea's economy to shrink by 1.6% (in real terms) in 2014 and a further 3.8% in 2015.

Gabon's government will continue to announce policies aimed at reducing poverty in the oil-rich country, especially in the run-up to presidential elections in 2016. These efforts may boost consumption spending, but they will also weigh on an already stretched fiscal balance. The resignation of Mali's prime minister, who called the current
administration 'dysfunctional' and 'incompetent', is an embarrassing setback for the country's president. The new premier, a youthful former planning minister, will struggle to rebuild Mali's shattered state institutions. Senegal has secured US$7.8bn in donor pledges following recent meetings in Paris. The funds will boost economic activity in the West African economy, though we are maintaining our current forecasts until a timeline is given and projects begin to be implemented.

Table Of Contents

Francophone West Africa Business Forecast Report Q3 2014
Executive Summary . 9
Chapter 1: Regional Outlook 11
Political Outlook . 11
Enduring Fragility Across Francophone West Africa .11
The sixteen states that make up Francophone West Africa have a variety of political systems, but - with the notable exception of
Senegal - all are characterised by weak institutions, poor governance, and a history of unconstitutional transfers of power. Given the
substantial security, economic, and demographic challenges faced by regional states, BMI predicts that political risks are likely to remain
elevated across much of the region. Threats to political and social stability are likely to be highest in the impoverished Sahel region and
in Central African states ruled by aging autocrats.
TABLE: Political overview ..12
Economic Outlook . 15
The Franczone: Unloved, But Difficult To Replace ..15
Africa's Franczone currency arrangement is widely criticised, but a lack of appealing alternatives means that the system is unlikely to be
significantly changed over the coming five years. Reform of some kind is, however, inevitable over the longer term.
Chapter 2.1: Political Outlook - Côte d'Ivoire .. 19
Domestic Politics .. 19
Recent Violence Underscores Cautious Political Outlook ..19
Despite the more conciliatory rhetoric espoused by the Ivorian government and the Front Populaire Ivoirien, the main opposition party,
in late 2013, recent developments reinforce our view that meaningful political rapprochement in Côte d'Ivoire will remain elusive over the
near term at least.
Chapter 2.2: Economic Outlook - Côte d'Ivoire .. 21
Economic Activity . 21
Growth Momentum Strong, But Political Risks Rising ..21
We expect headline economic growth in Côte d'Ivoire to remain around the 8.0-9.0% level over the medium term as the country benefits
from robust levels of public investment, an improving investment climate and a buoyant consumer segment.
Chapter 2.3: 10-Year Forecast - Côte d'Ivoire .. 23
The Ivorian Economy To 2023 23
A Bright Decade Ahead, But Fragilities To Persist ..23
While growth over the next 10 years is expected to improve on the last decade, political uncertainty continues to exert a downward pull
on the country's potential. In our view, high poverty levels and a frail business environment will represent the main obstacles to growth
over the longer term.
TABLE: Long-Term Macroeconomic Forecasts .23
Chapter 2.4: Business Environment - Côte d'Ivoire . 25
Business Environment Outlook 25
Institutions . 25
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS 25
Table: BMI LEGAL FRAMEWORK RATING .26
Infrastructure 27
Table: LABOUR FORCE QUALITY ..27
TABLE: AFRICA - ANNUAL FDI INFLOWS 28
Market Orientation . 29
TABLE: TOP EXPORT DESTINATIONS .29
Operational Risk . 30
Chapter 3: Country Reports . 31
Cameroon . 31
Economic Activity . 31
Growth Ticking Up .31
Higher oil production and rising investment spending will cause real GDP growth in Cameroon to accelerate to 5.1% in 2014. While the
economy's performance is improving, we believe that the government's target of 6.0% annual growth is unreasonably optimistic.
TABLE: GDP By Expenditure .31
Central African Republic 35
Political Risk . 35
UN Mission Will Not End Crisis .35
The authorisation of an expanded UN peacekeeping mission provides no immediate solution to the crisis in the Central African Republic,
which we expect to worsen over the summer months. The mission may improve the situation in early 2015, but we doubt that any gains
will be lasting.
Chad . 37
Economic Activity . 37
Oil-Fuelled Boom, Economic Deceleration Thereafter ..37
Real GDP growth in Chad will reach 9.6% in 2014, but this is the result of a brief increase in oil production rather than any underlying
change in the economy.
TABLE: GDP By Expenditure .37
Equatorial Guinea 39
Economic Activity . 39
A Submerging Market? ..39
Stagnating energy production, weak consumer spending, and costly imports will cause Equatorial Guinea's economy to shrink by 1.6
%(in real terms) in 2014 and a further 3.8% in 2015.
TABLE: GDP By Expenditure .39
Gabon . 42
Domestic Politics .. 42
President Pledges To Share Oil Wealth ..42
Gabonese President Ali Bongo will continue to announce policies aimed at reducing poverty in his oil-rich country, especially in the runup
to presidential elections in 2016.
Mali .. 44
Domestic Politics .. 44
Premier's Resignation A Blow To President .44
The resignation of Mali's prime minister, who called the current administration 'dysfunctional' and 'incompetent', is an embarrassing
setback for President Ibrahim Boubacar Keïta.
Senegal .. 45
Fiscal Policy .. 45
Donor Pledges Offer Encouragement For Sall's Reforms 45
Senegal has secured US$7.8bn in donor pledges following recent meetings in Paris.
TABLE: GDP By Expenditure .46
Chapter 4: BMI Global Assumptions .. 47
Global Outlook . 47
Growth Increasingly Polarised ..47
Table: Global Assumptions ..47
Table: Developed States, Real GDP GrowtH, % 48
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, % .. 48
Table: Emerging Markets, Real GDP Growth, % ..49

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