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Francophone West Africa Business Forecast Report Q2 2014

  • February 2014
  • -
  • Business Monitor International
  • -
  • 51 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.
Inflation will stabilise at a low level across the Union Economique et Monétaire Ouest-Africaine (UEMOA). We predict that annual inflation will average 2.6% in 2014, well below the bloc's 3.0% convergence target. Economic growth will remain high, supported by a strong performance from Côte d'Ivoire.
Integration efforts among the six nations of the Communauté Économique et Monétaire de l'Afrique Centrale (CEMAC) will make little progress in 2014. The refusal of Gabon and Equatorial Guinea to abide by a freedom of movement treaty signifies that there is little political will for a closer union.
Political reconciliation will be a slow process in Côte d'Ivoire, but we expect the country's economy to continue picking up speed; expanding by an average of 8.9% annual between 2014 and 2018. Pro-market reforms will continue to spur foreign investment. Political tensions in Burkina Faso are rising due to fears that longserving President Blaise Compaoré will amend the constitution and seek another term in office. Former members of the ruling party have joined long-time political opponents in forming a new opposition party, and we believe that the 2015 election could be marred by violent protests.
E conomic growth in Cameroon will be slightly faster than that in its CEMAC peers, but declining oil production poses a serious threat to macroeconomic stability. Capital spending will be a major growth driver.
T he appointment of a new transitional administration in the Central African Republic is a positive step, but it does not address the causes of the country's political crisis. We doubt that President Catherine Samba-Panza will succeed in restoring state authority, and expect the French intervention to be extended. Equatorial Guinea's economy will contract in 2014 due to stagnating exports and high import demand. The government's controversial investment programme will have little effect on the domestic economy, but an LNG project planned for 2018 will provide a boost to growth later in our forecast.
The growth of Gabon's non-oil sector is accelerating, and this has led us to upgrade our medium-term economic forecast for the country. Declining oil production still poses a serious economic risk. M ali's economy is rapidly recovering after the country's 2012-2013 political crisis. Political reconciliation, however, will be a slow process, and further political reforms will be needed. E conomic growth is picking up in Senegal, and this will reduce the country's wide fiscal deficit. Even so, we stress that Senegal's budget shortfall will remain sizeable over the coming years.

Table Of Contents

Francophone West Africa Business Forecast Report Q2 2014
Executive Summary 9
Chapter 1: Regional Outlook 11
Long-Term 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.
table: Political Systems 12
Monetary Policy 15
UEMOA Inflation Stabilising But Remaining Contained 15
The latest inflation data for West Africa's franczone reinforce the disinflationary trend seen through the latter half of 2013, with year-onyear
(y-o-y) price growth slowing to 0.7% in November.
Economic Outlook 16
Key Obstacles To Economic Integration In Central Africa 16
Economic integration in Central Africa will continue to be hamstrung by interstate disputes, overlapping regional institutions, and a lack
of political leadership.
Chapter 2.1: Political Outlook - Côte d'Ivoire 19
Domestic Politics 19
Significant Reconciliation Unlikely In 2014 19
The Ouattara administration has put political reconciliation at the top of the agenda in Côte d'Ivoire in 2014.
Table: Political Overview 19
Chapter 2.2: Economic Outlook - Côte d'Ivoire 21
Economic Activity 21
Economic Growth To Remain Strong In 2014 21
We believe that Côte d'Ivoire's economy will continue to grow rapidly over the coming years, with real GDP growth averaging 8.9
%between 2014 and 2018.
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.
TABLE: Long-Term Macroeconomic Forecasts 23
Chapter 2.4: Business Environment - Côte d'Ivoire 25
Business Environment Outlook 25
Institutions 25
Infrastructure 27
Market Orientation 29
Operational Risk 30
Chapter 3: Country Reports 31
Cameroon 31
Economic Activity 31
A Difficult Economic Transition 31
Economic growth in Cameroon will remain slightly above that in the country's Central African peers, but declining oil production and a
difficult business environment will prevent economic expansion from reaching the levels seen elsewhere in Africa.
table : bmi countr y - GDP BY EXPENDITURE 31
Central African Republic 35
Domestic Politics 35
New President, Same Political Crisis 35
The appointment of a new transitional president in the Central African Republic is a positive sign, but it does not mark the end of a
political and social crisis which has been described by UN officials as pre-genocidal.
Equatorial Guinea 37
Economic Activiy 37
Medium-Term Forecast Grim 37
The construction of a new liquefied natural gas project will boost economic growth in 2016, but we expect that Equatorial Guinea's
troubled economy will contract in 2014 and 2015.
Gabon 40
Economic Activity 40
Data Revision Leads To Forecast Upgrade 40
Updated historical data indicate that Gabon's non-oil sector is expanding more rapidly than we had previously anticipated, and this has
led us to upwardly revise our 2014 real GDP growth forecast from 5.5% to 6.8%.
Mali 42
Economic Activity 42
Economic Recovery, Lasting Political Fragility 42
Mali's economy is recovering following the country's 2012-2013 political and security crisis, and we expect real GDP growth to reach
6.1% in 2014.
Senegal 44
Economic Activity 44
Fiscal Deficit Reduction To Slow 44
BMI forecasts that economic growth will pick up in Senegal over the next two years.
Burkina Faso 46
Domestic Politics 46
New Political Party Poses Challenge To CDP 46
The apparent aim of long-serving President Blaise Compaore to alter Article 37 of Burkina Faso's constitution - that which limits heads
of state to serving two terms - has led to the formation of a new political party in the West African state.
Chapter 4: BMI Global Assumptions 49
Global Outlook 49
Fairly Benign Prognosis... With Risks 49
Table: Global Assumptions 49
Table: Developed States, Real GDP GrowtH, % 50
Table: Emerging Markets, Real GDP Growth, % 51

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