## 1civea2021002 ## Source details **Canonical URL:** [1civea2021002](https://www.imf.org/-/media/files/publications/cr/2021/english/1civea2021002.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2021/english/1civea2021002.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2021/english/1civea2021002.pdf.json) --- ### A. Key governance milestones and institutional reforms since 2012 - Motivation and context - Côte d’Ivoire aspires to reach emerging market status; policy focus since 2012 shifted toward making the private sector the main engine of growth. - 2012–15 NDP: strengthen security and rebuild post-conflict economy. - 2016–20 NDP: develop the private sector; improving institutions and governance is the first pillar. - Governance improvements noted in government effectiveness and regulatory framework (areas: starting a business, construction permits, getting credit, paying taxes, enforcing contracts); rule of law and voice and accountability indices remain further from EM levels. - As of 2016, "three fourth" of Ivorian businesses reported corruption as a major constraint. - Selected milestones (2012–2019) - 2012: Ratified the UN convention against corruption; created anti-corruption brigade at the Inspection Générale des Finances. - 2013: Established the High Authority for Good Governance (reformed in 2015); launched decentralization process; adopted law on access to information. - 2013–2015: Instituted Tribunal of Commerce; National Secretariat of the Fight Against Corruption; adopted mining code aligned with the Transparency Initiative; adopted law on code of transparency in public finances; adopted law on competition; adopted laws on e-commerce and against cyber-criminality. - 2016–2019: Progressed in e-government (electronic filing/payment, online VAT case management, procurement dematerialization platform); installed Cour des comptes in 2018 and reinforced it in 2019; extended asset-declaration requirements; adopted law creating Court of Cassation and Council of State in 2018 and established Court of Cassation in 2019; established Superior Council of Magistrature in 2016; adopted consumer protection law in 2016; adopted integrated IT system SIGFAE in 2017; modernized post office with mobile money in 2016; 2019: law creating National Statistics Development Fund; national observatory on quality of financial services; published first citizens’ guide to 2019 budget; strengthened procurement regulations. ### B. Governance in delivery of public services — main findings - Digitalization and PFM - Digitalization of tax administration improved business environment and is associated with reduced corruption perception and increased trust in tax officials (Ouedraogo and Sy, 2020). - STIN assignment started but interconnection across tax, customs, social security, financial institutions incomplete. - Transition to Single Treasury Account, Integrated PFM system, and e-procurement in progress; "most government payments remained cash-based three years into the 2016–20 NDP" (World Bank, 2019a). - PEFA (2019): Côte d’Ivoire fares well in procurement and payroll controls (surpassing EM average); matches EM average on legislative scrutiny of audit reports and public asset management; lags EM average on audit practices, transparency, and non-salary expenditure controls. - Open Budget Survey (2019) score: 34 out of 100. - Tax administration and incentives - Individual income taxes mix schedular and global regimes; in practice closer to schedular due to compliance/enforcement challenges. - Erroneous cross references in tax legislation generate inconsistencies. - Some tax incentives (e.g., investment code conventions) allow discretion and introduce vulnerabilities to corruption. - Procurement and PPPs - Procurement rules and PPP procedures relatively well aligned with international best practice but apply to few PPP projects. - New contracting and bid methods published December 2019; secondary decrees and full dematerialization procedures still needed. - Share of PPPs attributed through competitive calls for tender: 20 percent (based on amounts of contracts awarded in 2020). - Large share of PPP contracts bypassing regular procedures reportedly are extensions/renewals with existing contractors. - Payroll, civil service ethics, budget transparency - Payroll management system functions relatively well. - New civil service code of ethics and discipline envisaged in 2016–20 NDP; as of April 2021 not yet submitted to Parliament. - Citizen’s guide to the budget published since 2019; since 2020 a statement on fiscal risks annexed to the draft budget presented to parliament annually. - Recommendations: public pre-budget debate; publish key contract data; mandate timely publication of SOE financial statements; create PPP database. ### C. SOE, public banks, external audit, and sector governance - SOE monitoring and governance - Large SOE managers increasingly required to sign performance contracts, though contracts are not public. - Authorities agreed to integrate the 20 largest SOEs in the debt sustainability analysis and are gathering relevant information to capture liabilities outside the central government budget perimeter. - 2014 SOE governance circular lacks guidance on board composition; Institute (Institut National des Administrateurs de Côte d’Ivoire) delivers a CASP certificate for SOE board members since 2019. - External audit, arrears, and cash management - Cour des comptes created in 2000, installed in 2018; PEFA noted inadequate funding hindered efficiency; capacities reinforced in 2019. - WAEMU directive (transposed by decree): 90 days of non-payment should be counted from liquidation rather than from verification of payment demand. - Short-term cash management should include high-frequency revenue and spending forecasts to ensure timely contractor payments and avoid arrears. - Public banks and privatization - Public bank boards shifting toward two thirds government representatives and one third independent members; more progress needed to fully comply with Basel Core Principles for Effective Supervision. - Board structures should include audit, risk oversight and remuneration committees with experienced non-executive members. - Public banks’ restructuring relied on public social security institutions (CGRAE and CNPS involved in all asset/equity sale operations of public banks in 2019); proper due diligence needed. - 2019 renationalization of a privatized public bank due to new owner failing to satisfy privatization agreement raises questions about due diligence and privatization framework. - Sector governance and AML/CFT - Côte d’Ivoire joined main international AML and CFT treaties but faces implementation challenges. - Basel Institute Governance AML report ranks Côte d’Ivoire 18th out of 125 countries in AML-CFT risks. - US Department of State considers Côte d’Ivoire a medium risk country in AML assessment due to legislative gaps. - Energy and mining transparency improved (EITI, 2019): transparency provisions, hydrocarbon and mining codes, allocation of revenues to local governments, online cadaster. - Agriculture improvements: electronic phytosanitary certificate applications improved Enabling the Business of Agriculture 2019 index. - Cocoa and coffee sector 2017 audit identified governance vulnerabilities; subsequent regulation stipulated conditions for removal of agreement to operate/export; CCC board composition: six government representatives and six representatives of cocoa, coffee and banking sector. - Rule of law and anticorruption - HAGG established 2013, reformed 2015; asset-declaration compliance rose from 64 percent in 2017 to 79 percent in 2018, but declarations remain unpublished and HAGG lacks mandate to enforce compliance or prosecute. - Eight anticorruption agencies exist with limited coordination; sanctions regime inconsistent. - Council of State and Superior Council of Magistrates instituted by law in 2018; Court of Cassation established in 2019; High Court of Justice not in place. - World Justice Project (2019): judicial system relatively ineffective at restraining government powers compared to EMs; relatively more corrupt and subject to government influence in criminal justice. ### D. Implications and governance reform priorities (synthesized) - Digitalization and information systems - Complete STIN assignment for all firms and interconnect tax, customs, social security, and financial information systems. - Finalize and operationalize Single Treasury Account, Integrated PFM system, and full e-procurement to reduce cash-based payments and corruption vulnerability. - Tax and revenue administration - Correct erroneous cross references in tax law; reduce discretionary tax incentives to improve transparency and reduce corruption risk. - Implement e-invoicing and e-cadaster; finalize STIN assignment; implement electronic cross-checking of tax and payment declarations. - PFM, procurement, and PPPs - Address PEFA-identified weaknesses in audit practices, transparency, and non-salary expenditure controls. - Adopt remaining secondary decrees and fully implement procurement dematerialization procedures. - Increase competitive tendering for PPPs beyond current 20 percent share. - Strengthen external and internal audits; improve public dissemination of budgetary information; institutionalize pre-budget public debate; mandate timely publication of SOE financial statements; create PPP database. - Rule of law, anticorruption, and civil service ethics - Strengthen judicial institutions (Cour des comptes, Court of Cassation, Council of State, Superior Council of Magistrature) to close rule of law gap with EMs. - Strengthen enforcement capacities of anticorruption entities, including prosecutorial powers; transpose WAEMU code of ethics for elected officials into national legislation. - Submit and implement upgraded civil service code of ethics and discipline; enforce extended asset-declaration requirements. - Banking sector and privatization governance - Structure public bank boards according to Basel Core Principles, including audit, risk oversight and remuneration committees. - Avoid recourse to social security funds to support ailing public banks; review privatization regulatory and legal framework following renationalization episode. - Property rights and AML/CFT - Undertake significant reforms to property rights for land assets (convert customary land to private property where appropriate). - Swiftly adopt and implement AML/CFT legislation to mirror international treaty commitments. ### E. Monitoring SOEs and public accountability (PEFA, 2019 highlights) - Performance contracts for large SOEs increasingly required but not public. - Authorities agreed to integrate 20 largest SOEs into debt sustainability analysis; gathering data to include liabilities outside central government budget. - Institut National des Administrateurs delivers professional Certificate for SOE board members (CASP) since 2019. - Cour des comptes’ efficiency previously hindered by inadequate funding; capacities reinforced in 2019. --- ### Growth performance, structural transformation, and sustainability (2012–19 diagnostic) - Recent growth performance - Growth averaged 8.2 percent per year over 2012–19. - Real GDP per capita growth averaged 5.5 percent over 2012–19 (roughly 41 percent rise in average income levels over the period). - Current level of GDP per capita stated as $2,271 USD. - Composition and drivers of growth - TFP growth drove a large part of growth since 2012 but is slowing; TFP contribution in 2019 about 1 percent. - High-growth comparators sustained average TFP growth rates of 2½ percent in later years of spells. - Physical capital accumulation contribution is growing; private investment growth consistently high at about 2½ percent real growth annually. - Public investment contribution declined in 2018–19 due to fiscal consolidation. - Macroeconomic environment and external sector - Fiscal deficit kept in line with comparators over 2017–19; comparator groups averaged budget deficits below 3 percent of GDP in later years. - Revenue-to-GDP ratio is significantly weaker in Côte d’Ivoire; tax-to-GDP ratio virtually unchanged over last 8 years. - Debt-to-GDP currently lower than long-term levels observed in high-growth comparators (benefiting from HIPC external debt relief over 2009–12) but trend is upward in Côte d’Ivoire. - Domestic savings rate compares well to comparators but shows signs of declining since 2015. - FDI inflows to comparators averaged 3.5 percent of GDP in later years; FDI to Côte d’Ivoire shows little upward trend. - Growth accompanied by very low inflation and relatively competitive real exchange rate, aided by WAEMU membership and CFA franc peg to the euro. - Structure of production and exports - Structural transformation tentative: modest growth in industrial sector; contraction in manufacturing. - Manufactured goods made up 10 percent of total merchandise exports in 2019 (decline from previous years). - Human capital and inclusion - Adult literacy rate: 47 percent in 2018. - Access to electricity more widespread than comparator early-growth levels; infant mortality compares favorably; life expectancy remains below comparators in later years. - High Gini index and lower female-to-male school enrollment ratio than high-growth comparators. - Education quality weak (PASEC results; see human capital section). - Key takeaways and policy implications - Urgent needs: boost productivity (TFP), invest in human capital, accelerate structural transformation toward industry/manufacturing, improve revenue mobilization to finance public goods, reverse upward debt trend while expanding fiscal space for public investment, raise/stabilize savings and attract higher FDI inflows (comparators averaged 3.5 percent of GDP). - Maintaining strong private investment growth and creating fiscal space for public investment are key to generating productivity gains and sustaining high growth rates. ### Econometric evidence on sustained growth spells (global sample 1950–2018) - Benchmarking methodology - Sustained growth episode definition: (i) ≥ 10 consecutive years of positive real per capita growth; (ii) average annual per capita growth > 2 percent; (iii) no subsequent reversal of GDP per capita. - Sample restricted to non-fuel exporters with starting GDP per capita < $3,996 (2018 USD). - Algorithm identified 52 sustained comparator growth episodes (median duration 16 years; median average annual per capita growth 4.6 percent); comparator grouping by "high growth" vs "low growth" relative to 4.6 percent. - Main econometric findings (selected) - External environment: global real growth in years 1–5 is negatively associated with spell duration (Global real growth, t1: -0.171*** (0.038)); global real growth in years 6–9 positively associated (Global real growth, t2: 0.194*** (0.037)). Baseline propensity of a sustained growth episode roughly 40 percent. - Public finance: lowering fiscal deficits in years 6–9 associated with longer spells (Δ Fiscal balance, t2: 2.940*** (0.974)). Public saving and increases in public saving positively associated with sustained growth (Public saving, t1: 1.056** (0.526); Δ Public saving, t2: 2.476** (1.054)). - External debt: higher initial external debt reduces likelihood of sustained growth (External debt, t1: -0.194** (0.075)); increases in external debt in later years also negative (Δ External debt, t2: -0.346*** (0.095)). - Savings/investment and competitiveness: Δ Domestic Saving, t2: 1.324*** (0.426); Δ Investment, t2: 1.124* (0.709); REER trend deviation, t1: -0.065** (0.025) (overvaluation harmful). - Production structure: Δ Manufacturing VA, t2: 0.050***; Capital growth, t2: 0.160***; TFP growth, t2: 0.095***; initial FDI positive (FDI, t1: 1.347*). - Human development: Gini, t1: -0.015***; Literacy improvements Δ Literacy, t2: 5.533***; Infant mortality, t1: -0.003*** and Δ Infant mortality, t2: -0.014**. - Interpretation - Sustained growth episodes characterized by rising manufacturing share, export diversification, low inequality, improvements in health and basic education over time, capital accumulation and TFP improvements, and prudent fiscal/debt management. ### Policy implications from econometric and diagnostic analysis - Fiscal policy: rely on higher tax revenues for productive/inclusive spending; increase public saving; avoid late-period fiscal imbalances. - Debt management: limit external debt accumulation. - Investment: promote private investment and FDI; sustain rising investment shares. - Competitiveness/structural transformation: avoid REER overvaluation; support manufacturing expansion and export diversification. - Human capital/spending efficiency: urgently upgrade human capital (adult literacy 47 percent in 2018); improve public spending efficiency in health and education. --- ### Infrastructure, public investment efficiency, and human capital diagnostics - Infrastructure indicators and growth predictors - Δ Fixed telephone lines, t2: coefficient = 0.016** (significant predictor of sustained growth). - Other infrastructure indicators (mobile subscriptions, electricity access) generally insignificant in the regressions. - Public investment efficiency (quantitative and perception) - Public capital stock above WAEMU country average, but outcomes below WAEMU average and well below FM and EM countries; far from the efficiency frontier. - WEF perception indicators (2019): overall quality of infrastructure rank: 116 (Frontier Markets average 97; Emerging Markets average 71). Air transport and ports close to EM averages; road and railroad networks below EM averages. - PIMA (2017): quantitative measures place Côte d’Ivoire slightly below SSA average when accounting for technology; qualitative measures indicate a PIMA score close to 1 for perceived infrastructure quality. - 2019 electrification example: more than 900 villages/year in 2019–2020 versus 260/year over 2011–2018. - Human capital outcomes and constraints - Human Capital Index rank: 149 out of 157 countries. - A child born in Côte d’Ivoire today will be only 35 percent as productive when she grows up as she could be with complete education and full health. - 22 percent of children are stunted. - Expected years of school for a child who starts at age 4: 4.2 years. - Education quality: PASEC 2019 — only 3 percent of grade 6 students high competency in mathematics (83 percent not competent); reading: 22 percent highly competent (60 percent not competent). - Share of end-of-primary students with at least one parent illiterate rose from 66 percent in 2014 to 77 percent in 2019 (PASEC). - Education spending: government allocates about one fifth of public expenditure to education; education expenditure as share of GDP 3.3 percent in 2018 (Frontier Market 4 percent; Emerging Market 4.3 percent in 2018). - Tertiary receives over 20 percent of education expenditure; primary about 40 percent over 2016–18. - Health: public spending in health more than doubled in real terms over the last decade but remains low as a share of GDP; maternal mortality decreased by 6 percent between 2015 and 2018; under-5 mortality decreased by 10 percent over same period. - DEA findings: Côte d’Ivoire one of the least efficient health systems; second worst performer on average over last two decades; health spending efficiency deteriorating since 2015. - Universal health coverage enrollment increased by more than fifty percent in 2020 to reach 2.9 billion persons (PSGouv achievement noted). - Recommendations on public investment and human capital - Rebalance spending mix toward primary education; prioritize primary level. - Exploit room for efficiency gains in health and education rather than only scaling up spending. - Strengthen public investment management: program budgeting (2020), systematic cost/feasibility analyses, improve coordination between local and central government, implement missing decrees for decentralization. - Standardize PPP procedures, review reliance on exceptional PPP procedures (2018: 85 percent of PPP value granted through exceptional procedures). - Improve public procurement implementation (e-procurement, training, IT tools); contain payment delays during transition. - Increase prepayment and pooling in health financing to reduce out-of-pocket spending; buttress health capacity to serve universal health coverage enrollees. ### Overall prioritization and policy agenda - Use NDP 2021–25 to jumpstart structural reforms to reach emerging market status: maintain sound macroeconomic policies, accelerate structural transformation, invest in high-quality human capital. - Fiscal consolidation following COVID-19 related relaxation: gradually consolidate to ensure public debt sustainability and restore buffers. - Strengthen domestic revenue mobilization: widen tax net, reduce informality, reform tax policy to level playing field, reduce tax exemptions, broaden tax base, and strengthen tax administration. - Improve business environment to attract private investment: easier trading across borders, streamlined construction permits, digitalization of public services, improved access to electricity, better protection of minority investors. - Targeted sectoral policies: transparent, budget-minimizing vertical policies where appropriate; review tax-incentive-heavy approaches for agrobusiness, cocoa and cashew transformation. - Export diversification and competitiveness: prioritize higher value-added exports; address structural bottlenecks; reduce non-tariff barriers; implement regional integration agreements. *Source: INTERNATIONAL MONETARY FUND — CÔTE D’IVOIRE (content unit 1civea2021002).* ### 1. Key Governance Milestones Implemented Since 2012 ___________________________________ 4 ### 1. Key Governance Milestones Implemented Since 2012 ### A. Motivation and context - Côte d’Ivoire aspires to reach emerging market status in the foreseeable future; this paper assesses its governance framework and processes against such standards. - Policy focus since 2012 shifted toward making the private sector the main engine of growth: - The 2012–15 national development plan (NDP) focused on strengthening security and rebuilding the economy from a post-conflict situation. - The 2016–20 NDP targeted developing the private sector and made improving institutions and governance its first pillar. - Governance reforms since 2012 have helped improve governance perceptions, notably in: - Government effectiveness and the regulatory framework (reflected in overlaps with EM confidence intervals in Figure 1). - Areas improved include regulations on starting a business, dealing with construction permits, getting credit, paying taxes, and enforcing contracts. - Persistent gaps: - The rule of law and the voice and accountability indices remain further from EM levels. - As of 2016, "three fourth" of Ivorian businesses reported corruption as a major constraint to their operations. - Cross-country evidence noted: - Governance (corruption perceptions) is positively (negatively) correlated with per capita GDP in SSA and the rest of the world (Hammadi and others, 2019). - Corruption undermines the efficiency of public spending and can depress growth, implying potential payoffs from improvements across multiple governance dimensions. ### B. Key governance milestones implemented since 2012 (selected, from Box 1) - Under the 2012–15 NDP: - Ratified the UN convention against corruption in 2012. - Created the anti-corruption brigade at the Inspection Générale des Finances in 2012. - Instituted the Tribunal of Commerce and strengthened judicial capacities via recruitment and training. - Established in 2013 the High Authority for Good Governance and reformed it in 2015. - Instituted the National Secretariat of the Fight Against Corruption. - Adopted a new mining code aligned with the Transparency Initiative. - Adopted a law on the code of transparency in public finances. - Launched a decentralization process in 2013 to strengthen governance in municipalities. - Adopted a law on access to information in 2013 and created the Commission d’Accès aux Documents d’Interêts Publics in 2015. - Adopted a law on competition. - Adopted laws on e-commerce and against cyber-criminality. - Under the 2016–20 NDP (first strategic axis: strengthen quality of institutions and governance): - Progressed in e-government: electronic filing and payment system; on-line case management for VAT cash refunds; all ministries connected to the platform for dematerialization of public procurement procedures. - Installed the Cour des comptes in 2018 and reinforced it in 2019. - Extended asset-declaration requirements to elected local officials and senior civil servants. - Adopted the law creating the Court of Cassation and the Council of State in 2018 and established the Court of Cassation in 2019; under amendments to the constitution adopted on March 19, 2020 these entities will have the same status as the Court des comptes; organic laws implementing this reform have been adopted by the council of ministers. - Established the Superior Council of Magistrature in 2016. - Adopted in 2016 a law on consumer protection. - Adopted an integrated IT system to manage the civil service SIGFAE in 2017. - Modernized the post office by introducing mobile money in 2016. - Adopted in 2019 the law creating the National Statistics Development Fund. - Created in 2019 a national observatory on the quality of financial services. - Published in 2019 the first citizens’ guide to the 2019 budget. - Strengthened regulations on procurement in 2019. ### C. Governance in the delivery of public services — main findings - Digitalization of public services - Digitalization of the tax administration has improved the business environment and is associated with reduced corruption perception and increased trust in tax officials across Africa (Ouedraogo and Sy, 2020). - Progress needed: - Assigning each firm a single tax identification number (STIN) has started, but interconnection of information systems across public administrations (tax, customs, social security, financial institutions) remains incomplete. - Digitalization of government payments has proceeded more slowly: transition to a Single Treasury Account system, deployment of an Integrated Public Financial Management system, and implementation of e-procurement are in progress, but most government payments remained cash-based three years into the 2016–20 NDP (World Bank, 2019a), increasing vulnerability to corruption. - Tax administration and tax structure - Taxes on individual income are a mix between schedular and global taxation; in practice the system operates closer to schedular due to compliance and enforcement challenges. - Erroneous cross references in tax legislation generate inconsistencies. - Some tax incentives (e.g., conventions under the investment code) leave room for discretion that can introduce uncertainty and vulnerabilities to corruption. - Public Financial Management (PFM) - PEFA (2019) results: - Côte d’Ivoire fares well in procurement and payroll controls, surpassing the EM average. - Matches the EM average for legislative scrutiny of audit reports and management of public assets. - Lags the EM average on audit practices, transparency, and non-salary expenditure controls. - Specific PEFA indicators (scale 0 to 7) discussed include: Central government operations outside financial reports; Transfers to subnational governments; Performance information for service delivery; Public access to fiscal information; Fiscal Risk reporting; Public investment management; Public asset management; Legislative scrutiny of budgets; Expenditure arrears; Payroll controls; Procurement; Internal controls on nonsalary expenditure; Internal audit; Financial data integrity; External audit; Legislative scrutiny of audit reports. - Procurement and Public-Private Partnerships (PPPs) - Procurement rules and PPP procedures are relatively well aligned with international best practice, but apply to very few PPP projects. - New contracting and bid methods were published in the Journal Officiel in December 2019; secondary decrees and full dematerialization procedures still need adoption and implementation. - Share of PPPs attributed through competitive calls for tender is currently 20 percent (based on amounts of contracts awarded in 2020). - A large share of PPP contracts bypassing regular procedures reportedly are extensions or renewals with existing contractors. - Payroll management and civil service ethics - The payroll management system functions relatively well. - The 2016–20 NDP envisaged a new code of ethics and discipline to upgrade the 2012 civil service code of ethics; as of April 2021 this new code had not yet been submitted to Parliament. - Budgetary transparency and accountability - Improvements noted: regular publication of a citizen’s guide to the budget since 2019; since 2020 a statement on fiscal risks has been annexed to the draft budget presented to parliament annually. - Progress underway on transition to accrual accounting and shift to program budgeting in line with WAEMU directives. - Open Budget Survey (2019) score: 34 out of 100 (mediocre); significantly below Benin (49) and Senegal (46), the top performers in WAEMU. - Recommendations to improve public dissemination and accountability include: organizing a public debate ahead of budget adoption; publishing key data on contracts between government and businesses; mandating timely publication of financial statements of state-owned enterprises (SOEs); and creating a database of PPPs. ### D. Implications and areas for further reform (synthesized from assessment) - Continue and accelerate digitalization: - Complete STIN assignment for all firms and interconnect information systems across tax, customs, social security, and financial institutions. - Finalize and operationalize Single Treasury Account, Integrated PFM system, and full e-procurement to reduce cash-based payments and corruption vulnerability. - Strengthen tax legislation and administration: - Correct erroneous cross references in tax law and reduce discretionary tax incentives to improve transparency and reduce corruption risk. - Advance PFM reforms and transparency: - Address weaknesses in audit practices, transparency, and non-salary expenditure controls identified by PEFA. - Increase public access to fiscal information and institutionalize pre-budget public debate and timely publication of SOE financial statements. - Enhance procurement and PPP governance: - Adopt remaining secondary decrees and fully implement dematerialization procedures. - Increase competitive tendering for PPPs beyond the current 20 percent share. - Reinforce rule of law and judicial capacity: - Continue strengthening judicial institutions (Cour des comptes, Court of Cassation, Council of State, Superior Council of Magistrature) to close the rule of law gap with EMs. - Strengthen civil service ethics and asset disclosure: - Submit and implement an upgraded code of ethics and discipline for the civil service; enforce extended asset-declaration requirements. *Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1civea2021002.pdf* ### 13. The framework to monitor State Owned Enterprises (SOEs) is being reinforced (PEFA, ### 13. The framework to monitor State Owned Enterprises (SOEs) is being reinforced (PEFA, 2019). ### SOE monitoring and governance - Large SOE managers are increasingly required to sign performance contracts, although these contracts are not public. - The authorities have agreed on the principle of integrating the 20 largest SOEs in the debt sustainability analysis and are gathering the relevant information to integrate the liabilities currently outside the perimeter of the central government budget. - The 2014 circular for the governance of SOEs does not include guidance on the composition of their boards, whereas international best practices (such as OECD SOE principles) typically recommend board composition rules guided by the objective of allowing the exercise of objective and independent judgement. - Since 2019, the Institut National des Administrateurs de Côte d’Ivoire has been delivering a specific professional Certificate for SOE board members (CASP) to strengthen the skills of SOE board members. ### External audit, arrears definition, and cash management - The Cour des comptes, created in 2000 and finally installed in 2018, assesses public accounts and the quality of public financial management. - The latest PEFA deemed that the Cour des comptes’ efficiency was hindered by inadequate funding; authorities reinforced its capacities in 2019. - The WAEMU directive, transposed into Ivorian law by decree, indicates that 90 days of non-payment should be counted from the liquidation rather than from when the demand for payment is verified by the government. - Short-term cash management should include accurate high frequency revenue and spending forecasts and allow checking cash flow availability to ensure the timely payment of contractor invoices and avoid arrears. ### Asset protection, access to finance, and land rights - Côte d’Ivoire improved greatly over 2011–19 in property registration, contract enforcement, and insolvency resolution, moving it closer to average EM scores (World Bank). - The creation of a national credit bureau—covering as of today over 3 million individuals and corporations—strongly factored into improvement in Côte d’Ivoire’s ranking. - Progress was slower for minority shareholder protection and access to land: converting customary land into private property remains complex due to legal ambiguity and costly village demarcation procedures. ### Governance of public banks and restructuring practices - Public banks’ boards are gradually shifting to a composition comprising two thirds of government representatives and one third of independent members from the private sector and civil society, in line with best international practices. - More progress is needed to fully comply with the Basel Core Principles for Effective Supervision, which require that Board membership include experienced non-executive members where appropriate. - Board structures should include audit, risk oversight and remuneration committees with experienced non-executive members, commensurate with the public banks’ risk profile. - Public banks’ restructuring plans have relied excessively on public social security institutions’ support: the two public social security institutions (CGRAE and CNPS) were involved in all the asset and equity sale operations of public banks in 2019. - While those transactions were approved by the institutions’ respective boards and represented a small share of their overall assets, proper due diligence is needed to: contain transfer of financial risk from one public entity to another; ensure improvement of banks’ profitability going forward; and allow a level playing field for purchases by private shareholders. ### Privatization process concerns - The renationalization of a privatized public bank in 2019 occurred because the new owner failed to satisfy the terms of the privatization agreement. - This episode raises questions about the due diligence process performed during the privatization; authorities might need to review the procedural framework and its implementation. ### AML/CFT and other sector governance improvements - Côte d’Ivoire joined the main international AML and CFT treaties but faces implementation challenges. - The Basel Institute Governance AML report ranks Côte d’Ivoire 18th out of 125 countries in terms of AML-CFT risks. - The US Department of State considers Côte d’Ivoire a medium risk country in its AML assessment due to legislative gaps; the key concern is slow development of national legislation following adoption of international treaties. - Energy and mining transparency improved: EITI (2019) notes introduction of transparency provisions, hydrocarbon and mining codes, allocation of revenues to local governments, and publication of an online cadaster improving transparency between PETROCI, SODEMI, and the state. - Agriculture regulatory improvements include electronic applications for phytosanitary certificates, improving Côte d’Ivoire’s ranking in the World Bank’s Enabling the Business of Agriculture 2019 index. - Governance vulnerabilities identified in a 2017 audit of the cocoa and coffee sectors included: CCC board failures to address financial and operational risks; exporter selection not following technical committee decisions; and export volume assignments uncorrelated with exporters’ financial capacity. - The audit recommended increasing financial guarantees by exporters, instituting a board-like committee independent from the cocoa export sector, instituting internal controls and audits, and better enforcing rules of operations. - A regulation was subsequently issued to stipulate conditions for removal of the agreement to operate and/or export in the cocoa or coffee sector. - The CCC board remains comprised of six government representatives and six representatives of the cocoa, coffee and banking sector. - The communication to the council of ministers referred to on the CCC web site is not publicly available. ### Rule of law, anticorruption, and judiciary - Anticorruption institutions and legislation lack effectiveness despite a comprehensive framework. - The High Authority for Good Governance (HAGG) was established in 2013 and reformed in 2015; public official asset declarations increased from 64 percent in 2017 to 79 percent in 2018, but HAGG lacks a strong mandate to enforce compliance and has no capacity to prosecute corruption cases. - Declarations remain unpublished despite a publication objective stated in the 2016–20 NDP. - Anticorruption efforts are undermined by the large number of anticorruption agencies (eight) and absence of proper coordination between them. - Cooperation between anticorruption and enforcement agencies is limited and the sanctions regime suffers from inconsistencies. - The WAEMU directive to institute a code of ethics for elected officials has not yet been transposed into the Ivorian framework. - Judicial strengthening and expansion: - The Council of State and the Superior Council of Magistrates were instituted by law in 2018; a Court of Cassation was established in 2019. - Publication of reports on commercial court performance and case progress improved transparency. - The High Court of Justice, envisaged in the 2016–20 NDP, is not in place. - The World Justice Project (2019) reports that Côte d’Ivoire’s judicial system is relatively ineffective at restraining government powers compared to EM countries, relatively more corrupt, and subject to government influence in criminal justice. ### Policy recommendations (summary) - Continuous institutional and legal upgrades: - Strengthen institutions, policy frameworks and their application with strict monitoring of compliance and adequate sanctions to bridge the governance gap with emerging market countries. - Revenue administration and digitalization: - Implement e-invoicing and e-cadaster. - Finalize assigning a STIN to each taxpayer. - Implement electronic cross-checking of tax and payment declarations across different branches of the public administration. - Review tax laws to ensure simplicity and consistency and minimize discretion. - Public financial management (PFM): - Accelerate digitalization of government payments. - Modify regulations where needed to enable national public institutions to connect to the PFM system. - Accelerate implementation of a full-fledged TSA. - Adopt and implement an upgraded code of conduct for civil servants. - Apply competitive calls for tender to most PPP contracts and strengthen public dissemination of budgetary information. - Strengthen external and internal audits and controls and buttress governance of SOE boards according to best international practices. - Banking sector governance: - Structure public bank boards according to the Basel Core Principles for Effective Supervision, including committees for audits, risk oversight and remuneration. - Resist recourse to social security funds to buttress ailing public banks going forward. - Review the regulatory and legal framework for privatization and its implementation following the recent renationalization episode. - Property rights and AML/CFT: - Further strengthen asset protection and undertake significant reforms to property rights for land assets. - Swiftly adopt and implement AML/CFT legislation to mirror Côte d’Ivoire’s commitments towards international treaties. - Agriculture and extractives: - Finalize implementation of the cocoa sector audit recommendations as swiftly as possible. - Continue transparency and governance improvements in energy and mining sectors. - Rule of law and anticorruption enforcement: - Strengthen enforcement capacities of anticorruption entities, including by allowing anti-corruption entities to prosecute corruption cases and imposing more transparency about violations. - Transpose the WAEMU code of ethics for elected officials into national legislation. - Rapidly implement all pending reforms envisaged in the 2016-20 NDP. *Source: CÔTE D’IVOIRE, INTERNATIONAL MONETARY FUND (extracted from provided content)* ### 1. Côte d’Ivoire was one of the fastest growing economies worldwide in the eight years ### 1. Côte d’Ivoire was one of the fastest growing economies worldwide in the eight years preceding the Covid-19 pandemic ### Recent growth performance and context - Growth averaged 8.2 percent per year over 2012-19. - Real GDP per capita growth averaged 5.5 percent over 2012–19, translating into a roughly 41 percent rise in average income levels over the period. - Côte d’Ivoire’s current level of GDP per capita is stated as $2,271 USD. - Historical comparators: Thailand last had Côte d’Ivoire’s current level of GDP per capita in 1988; by 2018 Thailand’s GDP per capita had grown to $6,500 USD. Malaysia surpassed Côte d’Ivoire’s current income level in 1966 and posted GDP per capita of $12,486USD in 2019. ### Policy agenda and challenge to reach emerging market status - Authorities’ program focused on creating a stable and growth-enabling macroeconomic environment, improving the business climate, and more recently ramping up policies to make growth more inclusive. - Conclusion: It will take decades of continuous growth to reach the ranks of emerging countries (examples: Thailand and Malaysia took about 30 years to triple income from Côte d’Ivoire’s current level). ### Benchmarking methodology - Definition of “sustained growth episode” used for comparators (global sample spanning 1950–2018): - (i) At least 10 consecutive years of positive real per capita growth; - (ii) Average annual per capita growth during that period exceeds 2 percent; - (iii) No subsequent reversal of GDP per capita has occurred. - Sample restricted to non-fuel exporters whose GDP per capita at the start of the growth episode is below $3,996 in 2018 US dollars. - The algorithm identified 52 sustained comparator growth episodes with: - Median duration of 16 years; - Median average annual per capita growth rate of 4.6 percent. - Comparator grouping: “high growth” and “low growth” based on whether average growth during the spell is above/below 4.6 percent. ### Composition of growth - Total Factor Productivity (TFP) growth drove a large part of Côte d’Ivoire’s growth since 2012 but is slowing down. - TFP contribution to growth in Côte d’Ivoire in 2019 was about 1 percent. - High-growth comparators sustained average TFP growth rates of 2½ percent in the later years of their sustained growth spells. - Physical capital accumulation contribution is growing in Côte d’Ivoire. - Private investment growth has been consistently high in Côte d’Ivoire at about 2½ percent real growth annually. - Public investment contribution declined in 2018–19 due to fiscal consolidation. - Methodology note: Contributions computed with a growth accounting framework assuming a constant-returns-to-scale Cobb-Douglas production function (Solow, 1957). ### Macroeconomic environment - Fiscal: - Côte d’Ivoire’s fiscal deficit was kept in line with comparators over 2017–19, with comparator groups averaging budget deficits below 3 percent of GDP in later years. - Revenue-to-GDP ratio is significantly weaker in Côte d’Ivoire; the tax-to-GDP ratio has remained virtually unchanged over the last 8 years. - Debt: - Côte d’Ivoire’s debt-to-GDP ratio is currently lower than long-term levels observed in high-growth comparators, benefiting from HIPC external debt relief over 2009–12. - Trend is upward in Côte d’Ivoire, unlike downward trends in comparators; lower revenue exacerbates debt service-to-revenue ratios. - Savings and investment: - Domestic savings rate compares well to comparators and has been significantly above rates observed in the early years of comparator spells. - Savings rate shows signs of declining since 2015; comparators raised savings over time to finance higher investment. - FDI inflows to comparators averaged 3.5 percent of GDP in later years; FDI to Côte d’Ivoire shows little upward trend. - External sector: - Expansion accompanied by a relatively small current account deficit tied to an idiosyncratic trade surplus and relatively lower domestic investment. - Price and exchange rate environment: - Growth accompanied by very low inflation and a relatively competitive real exchange rate (relative to trend), aided by membership in the West African Monetary Union and the CFA franc peg to the euro. ### Structure of production - Structural transformation is tentative: - Côte d’Ivoire started with a significantly lower share of agriculture and a higher share of services than comparators. - Only modest growth in the relative size of the industrial sector since 2012 and a contraction in manufacturing. - Exports: - Exports are relatively diversified but primarily consist of non-processed agricultural products. - Manufactured goods made up only 10 percent of total merchandise exports in 2019, a decline from previous years. - Comparator countries generally started with almost double the share of manufactures in exports and increased this share over time. ### Social inclusion and human capital - Income distribution and opportunity: - Côte d’Ivoire has a higher Gini index and a lower ratio of female to male school enrollment than high-growth comparators in early and later years, and than low-growth comparators in later years. - Access to services and health: - Access to electricity is much more widespread in Côte d’Ivoire today than in comparator countries during their early growth years, credited in part to the government social program (PSGouv). - Infant mortality compares favorably; life expectancy remains below comparator levels in later years. - Education and skills: - Adult literacy rate was 47 percent in 2018, substantially below comparator starting levels (around 60 to 70 percent). - Primary and secondary school enrollment rates improved, but PASEC scores indicate weak quality of primary schooling (see SIP on spending efficiency). ### Key takeaways and policy implications - Côte d’Ivoire’s recent growth episode shares some early features of sustained growth episodes elsewhere but faces urgent needs in: - Boosting productivity (TFP contribution is slowing and was about 1 percent in 2019 versus 2½ percent in high-growth comparators in later years). - Investing in human capital (adult literacy 47 percent in 2018; lower starting level than most comparators). - Accelerating structural transformation toward industry and manufacturing (manufacturing 10 percent of exports in 2019 and contracting). - Improving revenue mobilization (tax-to-GDP virtually unchanged over last 8 years) to finance public goods and investments. - Reversing the upward debt trend while expanding fiscal space for productive public investment. - Raising and stabilizing savings and attracting higher FDI inflows (comparators reached on average 3.5 percent of GDP FDI in later years). - Maintaining strong private investment growth and creating fiscal space for public investment are emphasized as key to generating productivity gains and sustaining high growth rates. - Urgency: The analysis highlights that limited structural change and lower human capital relative to comparators are important constraints and that accelerating progress in these areas is imperative for sustaining growth and reaching emerging market status. *Prepared by IMF staff; contents reflect benchmarking and analysis of Côte d’Ivoire’s 2012–19 growth episode as presented in the source document.* ### 23. Overall, Côte d’Ivoire’s recent growth spell shares some promising features of the ### 1civea2021002 - 23. Overall, Côte d’Ivoire’s recent growth spell shares some promising features of the ### Summary - Côte d’Ivoire’s recent growth was kickstarted by strong TFP growth and accompanied by buoyant private sector investment. - Over 2012–18, Côte d’Ivoire ran smaller budget and current account deficits, exhibited a stronger savings rate and had lower inflation and debt ratios than identified comparators in the first seven years of their growth spell. - Key headwinds: TFP growth is showing signs of slowdown, FDI and overall investment remain relatively low, low literacy (proxy for human capital), limited signs of structural transformation, and a low revenue-to-GDP ratio that may constrain sustainable financing of public goods and services. ### Econometric methodology - Objective: Identify which factors predict the occurrence of sustained growth episodes (lasting 10 years or longer) versus non-sustained growth spells (lasting 5 to 9 years) in a global sample covering 1950-2018. - Sample construction notes: - 285 growth spells (excluding Côte d’Ivoire’s since 2012), of which 118 last 10 years or longer. - The median duration of growth spells is 9 years. - 49 growth spells ongoing in 2018 but lasting less than 10 years were dropped. - 51 growth spells were dropped for lack of comparable early year GDP per capita. - Regression framework: linear probability model - Pr(Duration_s ≥ 10) = β0 + β1 X_s,t1 + β2 ΔX_s,t2 + μ_s - X_s,t1 = averages over years 1 to 5 of the spell - ΔX_s,t2 = difference between averages in years 6 to 9 and years 1 to 5 (for flow variables measured as percent changes, the average over years 6 to 9 is used instead) - Controls: initial GDP per capita and external shocks (real world economic growth); models are relatively parsimonious given sample size. - Caveat: potential reverse causality in β2 since higher growth in years 5–9 may drive changes in explanatory variables rather than the reverse. - Robustness tests: cutoffs of 8 years and 12 years produce mostly stable results with some differences in statistical significance (notably private investment, external and overall debt ratios, and FDI coefficient behavior). ### Results — External Environment - Global conditions: - Growth spells that begin when global growth is strong are less likely to last. - Stronger global growth in years 5–9 helps extend spells. - Global financial conditions (proxied by US interest rate) and terms of trade do not influence the probability of sustained growth. - Table 1 (selected coefficients and statistics): - Initial GDP per capita: -0.001 (standard error 0.002) - Δ Terms of trade, t1: 0.007 (0.006) - Global real growth, t1: -0.171*** (0.038) - US interest rate, t1: 0.008 (0.012) - Δ Terms of trade, t2: 0.007 (0.006) - Global real growth, t2: 0.194*** (0.037) - Δ US interest rate, t2: 0.011 (0.014) - Constant: 0.327~ (0.211) - Adjusted R-squared: 0.102 - Observations: 243 - Interpretation: sustained growth is unlikely to be attained simply as a result of benign global conditions. ### Results — Domestic Macroenvironment - Public finance and fiscal policy: - Declining fiscal deficits and debt ratios and higher public savings rates are associated with sustained growth episodes. - A higher deficit in the first five years does not affect the chance of lasting beyond 10 years, but lowering deficits in years 6 to 9 is associated with longer spells. - Countries whose governments save more are more likely to grow for over a decade. - External debt: - Spells that start with relatively high levels of external debt are less likely to last. - A 1 percentage point higher external debt-to-GDP ratio during the first five years reduces the likelihood of growing for 10 years or longer by roughly 5 percent. - Revenue-to-GDP: - The revenue-to-GDP ratio is not significant in predicting sustained growth episodes, though its change over years 5 to 9 enters with a positive coefficient. - Given Côte d’Ivoire’s low education levels and sub-optimal public spending efficiency (particularly in health and education), the country will likely need higher revenue, greater private investment, and spending efficiency gains to support growth. - Table 2 (selected coefficients and statistics): - Fiscal balance, t1: -0.476 (1.169) - Δ Fiscal balance, t2: 2.940*** (0.974) - Public saving, t1: 1.056** (0.526) - Δ Public saving, t2: 2.476** (1.054) - Debt, t1: -0.098 (0.145) - Δ Debt, t2: -0.383** (0.150) - External debt, t1: -0.194** (0.075) - Δ External debt, t2: -0.346*** (0.095) - Government Revenue, t1: -0.217 (0.370) - Δ Government Revenue, t2: 1.243 (1.052) - Controls for initial GDP and global growth: Yes - Adjusted R-squared ranges by specification (examples): 0.132, 0.142, 0.137, 0.159, 0.097 - Observations vary by specification: 165, 168, 142, 180, 169 - Baseline propensity of a sustained growth episode is roughly 40 percent. ### Results — General Macroenvironment - Savings, investment, competitiveness, and inflation: - Higher domestic savings rates and increasing investment are common characteristics of sustained growth episodes. - The initial level of investment is not significant, but growing investment shares (including private investment) in years 6–9 are associated with sustained growth. - Exchange rate overvaluation (relative to trend) and high initial inflation appear harmful to growth sustainability. - Trade openness, financial openness, and private credit to GDP do not predict the length of growth episodes. - Table 3 (selected coefficients and statistics): - Log of inflation, t1: -0.046~ (0.036) - Log of inflation, t2: 0.050 (0.038) - REER trend deviation, t1: -0.065** (0.025) - Δ REER trend deviation, t2: -0.046** (0.019) - Domestic Saving, t1: 0.353~ (0.222) - Investment, t1: 0.034 (0.505) - Δ Domestic Saving, t2: 1.324*** (0.426) - Δ Investment, t2: 1.124* (0.709) - Private investment, t1: -0.012 (0.569) - Δ Private investment, t2: 1.202~ (0.792) - Controls for initial GDP and global growth: Yes - Adjusted R-squared examples: 0.083, 0.109, 0.126, 0.096, 0.237, 0.140, 0.197 - Observations vary by specification: 277, 203, 248, 220, 83, 186, 113 ### Results — Structure of Production - Manufacturing, export diversification, capital accumulation, TFP, and FDI: - An increasing share of manufacturing in GDP and more diversified exports predict more sustained growth. - Both the initial share of manufacturing in GDP and its change over time are significant predictors. - Countries that sustain growth do so through both capital accumulation and TFP growth; while initial TFP growth and capital accumulation do not predict longer duration, both variables are highly significant and positive in years 5 to 9, with a particularly strong role for capital accumulation. - Greater initial FDI inflows also predict sustained growth. - ICT imports and patents per capita are not significant. - Interpretation: capital accumulation, particularly when driven by the private sector, plays a key role in sustaining growth in the medium term. ### Policy implications and considerations for Côte d’Ivoire - Fiscal policy and public finances: - Aim to rely on higher tax revenues to finance more productive and inclusive spending rather than relaxing fiscal deficit targets. - Increase public saving and avoid accumulation of fiscal imbalances, especially in later years of growth spells. - Debt management: - Limit external debt accumulation given its negative association with growth spell duration. - Investment and capital accumulation: - Promote private sector investment and policies that sustain rising investment shares of GDP over time. - Encourage FDI inflows, which predict sustained growth. - Competitiveness and structural transformation: - Avoid real effective exchange rate overvaluation relative to trend to preserve external competitiveness. - Support structural transformation toward a larger manufacturing share in GDP and diversify exports. - Human capital and public spending efficiency: - Address low literacy and improve human capital accumulation. - Increase revenue-to-GDP ratio and improve public spending efficiency, particularly in health and education, to support long-term, inclusive growth. *Source: INTERNATIONAL MONETARY FUND.* ### 38. Of the limited indicators available to measure infrastructure, an increase in fixed ### 1civea2021002 - 38. Of the limited indicators available to measure infrastructure, an increase in fixed telephone lines per capita is the only significant predictor of sustained growth ### Infrastructure and business environment — empirical findings - Fixed telephone lines: - Δ Fixed telephone lines, t2: coefficient = 0.016** (significant predictor of sustained growth). - Fixed telephone lines, t1: coefficient = -0.003 (insignificant). - Note: A measure of the number of mobile telephone subscriptions per capita was insignificant. - Electricity access: - Electricity access, t1: coefficient = -0.001 (insignificant). - Δ Electricity access, t2: coefficient = -0.007 (insignificant). - Interpretation: Overall electricity access does not enter significantly, but this does not imply that energy infrastructure for the industrial sector is unimportant. - Governance indicators in relation to growth spells: - Polity2 score, t1: coefficient = 0.001 (insignificant). - Δ Polity2 score, t2: coefficient = 0.003 (insignificant). - WGI, t1: coefficient = -0.066 (insignificant). - Δ WGI, t2: coefficient = 0.298 (positive but imprecisely estimated; data series available only starting in 1996). - Baseline context for interpreted probabilities: - The baseline propensity of a sustained growth episode is roughly 40 percent. - Table note on magnitudes: - A coefficient of 0.01 means that all else equal, an increase of 1 unit in the explanatory variable raises the probability of a sustained growth episode by 1 percentage point. ### Production structure and productivity — empirical findings (selected coefficients) - TFP and capital: - TFP growth, t1: coefficient = -0.025* (negative, possibly reflecting business cycle dynamics or unsustainable catch-up). - TFP growth, t2: coefficient = 0.095*** (positive and highly significant). - Capital growth, t2: coefficient = 0.160*** (positive and highly significant). - Manufacturing and exports: - Manufacturing VA, t1: coefficient = 0.009* (positive). - Δ Manufacturing VA, t2: coefficient = 0.050*** (positive and highly significant). - FDI, t1: coefficient = 1.347* (positive). - Interpretation: - Rising share of manufacturing, greater export diversification, and improving TFP and capital accumulation over time are associated with higher probability of sustaining growth spells. ### Human development and social inclusion — empirical findings - Inequality and civil liberties: - Gini index, t1: coefficient = -0.015*** (highly significant negative effect on sustained growth probability). - Δ Gini index, t2: coefficient = -0.024 (negative but not significant). - Civil liberties, t1: coefficient = 0.046* (positive). - Δ Civil liberties, t2: coefficient = -0.080~ (negative with marginal significance). - Health and education: - Infant mortality, t1: coefficient = -0.003*** (higher initial infant mortality reduces probability). - Δ Infant mortality, t2: coefficient = -0.014** (reductions in infant mortality increase probability). - Literacy: - Literacy, t1: coefficient = 0.206 (insignificant). - Δ Literacy, t2: coefficient = 5.533*** (large positive and highly significant). - Primary enrolment: - Primary enrolment, t1: coefficient = 0.260 (insignificant). - Δ Primary enrolment, t2: coefficient = 0.721* (positive and significant). - Secondary and tertiary enrolment: coefficients generally insignificant. - Female-to-male enrollment ratio: coefficients positive but imprecisely estimated. - Interpretation: - Lower infant mortality and improvements in basic education and literacy over time are strongly associated with sustained growth. High initial inequality strongly hampers growth sustainability. ### Macro-fiscal and private sector role - Fiscal and private investment patterns during sustained spells: - Sustained growth episodes are associated with improving budget balances, falling debt ratios, and increasing private investment relative to non-sustained spells. - Global conditions: - Strong global growth can temporarily kick-start and prolong growth spells, but spells that start during global booms are, ceteris paribus, less likely to last. - Policy emphasis: - Sound macroeconomic and structural policies are necessary to generate conditions for long and sustained growth. ### Key takeaways from the econometric exercise - Structural transformation, human capital, and social inclusion are vital for achieving sustained growth. - Spells that reached year 10 and beyond were characterized by: - Rising share of manufacturing. - Greater export diversification. - Low inequality. - Improvements in health and education over time. - These areas remain key challenges for Côte d’Ivoire. ### Policy implications and recommendations (from the source) - National Development Plan (NDP) 2021-25: - Use the NDP 2021-25 as an opportunity to jumpstart structural reforms to reach emerging market status. - Maintain sound macroeconomic policies, accelerate structural transformation, and invest in high-quality human capital. - Fiscal policy and revenue mobilization: - Gradually consolidate the fiscal position following COVID-19 related fiscal relaxation to ensure public debt sustainability, avoid crowding out the private sector, and restore buffers. - Strengthen domestic revenue mobilization to finance public goods and services and enhance inclusiveness. - Actions include improving revenue administration, widening the tax net by reducing informality, reforming tax policy to level the playing field, reducing tax exemptions, broadening the tax base, and strengthening tax administration. - Business environment and private investment: - Further improve the business environment to attract private investment and accelerate structural transformation. - Specific focus areas: easier trading across borders, streamlined construction permits, digitalization of public services, improved access to electricity, and improved protection of minority investors. - Accelerate reforms to strengthen economic governance and foster development of the financial sector and access to financial services for small and medium enterprises and low-income households. - Promote policies to boost domestic savings. - Targeted sectoral (vertical) policies: - Use targeted, transparent, and budget-minimizing vertical policies where appropriate. - Review tax-incentive-heavy approaches (e.g., for agrobusiness, cocoa and cashew transformation) to ensure alignment with best practices. - Export diversification and competitiveness: - Prioritize export diversification towards higher value-added products through greater competitiveness. - Identify and address structural bottlenecks in sectors targeted for transformation, encourage intra-industry competition, and diversify away from cocoa and cashew. - Reduce non-tariff trade barriers and implement regional agreements (e.g., African Continental Trade Agreement) to aid regional trade integration and expand export markets. *International Monetary Fund — Côte d’Ivoire chapter excerpt* ### 50. Côte d’Ivoire urgently needs to upgrade the human capital of its workforce, as it ### 50. Côte d’Ivoire urgently needs to upgrade the human capital of its workforce, as it ### Key diagnostic: human capital shortfalls and risks to growth - Côte d’Ivoire "consistently falls short in measures of education and health outcomes." - Without a concerted effort to fill these gaps quickly, human capital will be "a major constraint to growth," because the labor force "will lack the basic skills required to support the growth of high-value added industries." - Improving basic education and health is also expected to "narrow social inequalities and boost the population’s resilience in the face of shocks such as the COVID-19 pandemic." - The government’s social program (PSGouv) "has been instrumental in the improvement of social indicators in recent years," and can be built upon to continue implementing social policies to increase human capital and promote inclusive growth. ### Public spending composition and recent trends - Productive spending emphasis since 2011: - Public investment rose "from 13 to 25 percent of total expenditure between 2011 and 2019." - Health spending "increase is less sharp, from 4.4 percent of GDP in 2011 to 5.1 percent of total expenditure in 2018." - Education spending "recently declined somewhat as a share of public expenditure." - As the share of total expenditure in the total economy has risen, "as a share of GDP the rise of productive public spending is sharper." - Comparisons to peers: - "Public investment and education spending in percent of total expenditure are close to peers." - "Health expenditure remains low" relative to emerging markets, though "it is close to WAEMU and frontier market countries." - The health gap is "even sharper when considering health expenditure as a share of GDP." ### Efficiency question and analytical approach - Central question: "Is the government getting the best of these increased allocation?" - Emphasis on efficiency because scaling up spending can "challenge government capacities." - Analytical method: construct an "efficiency frontier" relating spending inputs to outcomes across countries to quantify potential efficiency gains. - Box 1 — Measuring efficiency using frontier methods: - Efficiency frontier identifies best observed outcomes F(X) for each level of spending X. - Output inefficiency: distance between country P's achieved outcome Y0 and the better outcome achieved by a more efficient country D at the same spending. - Input inefficiency: distance comparing spending levels that achieve the same outcome. - Data Envelopment Analysis (DEA) is used to estimate the frontier; analyses can use multiple inputs and outputs. - For public investment, PIMA-style approach uses two inputs: "the public capital stock as a measure of money spent and GDP per capita to approximate the access to technology." - This paper focuses more on "output inefficiency" because "high public service needs suggest that efficiency gains should be geared toward improving outcomes rather than cutting spending." ### Public investment efficiency (summary of approach) - Public investment efficiency is assessed by "comparing public investment spending and outcomes." - Outcomes include quantitative measures (e.g., "length of road networks") and perceptions of infrastructure quality. - The frontier methodology is applied to public investment, and later to education and health spending, to identify how much outcomes could improve given current spending. ### Policy implications and priorities (as framed in the text) - Rebalance spending mix toward primary education. - Exploit "substantial room that exists on spending efficiency both in health and education." - Prioritize "higher, but above all, better spending on basic education and health" to: - Reduce social inequalities. - Increase resilience to shocks such as the COVID-19 pandemic. - Provide the basic skills required for higher value-added industry growth. - Build on the experience of PSGouv to continue implementing social policies necessary to increase human capital and promote inclusive growth. *Source: Content unit 1civea2021002* ### 8. Based on quantitative output measures, the efficiency of public investment is ### 1civea2021002 - 8. Based on quantitative output measures, the efficiency of public investment is ### Public investment efficiency — quantitative output measures - Public capital stock is computed as the accumulated value of public investment over time adjusted for depreciation; depreciation is similar across countries. - Quantitative analysis links public investment spending and capital stock per capita to a “physical output index” combining infrastructure measures: length of road network, electricity production, access to water; and social infrastructure: number of secondary teachers and hospital beds. - The analysis reflects an average efficiency level of past investments over a long period of time and may not capture recent progress (example: electrification of more 900 villages per year in 2019 and 2020 versus 260 per year over 2011-2018). - Despite a public investment stock above the WAEMU country average, outcomes are below the WAEMU average and substantially below FM and EM countries, and generally very far from the “efficiency frontier”. ### Public investment efficiency — qualitative (perception) indicators - World Economic Forum (WEF) perception indicators (2019) complement quantitative measures because they are timely, measure quality, and reflect private-sector decision-makers’ views; caveats: potential urban/firm bias and subjectivity. - Key perception findings: - Côte d’Ivoire ranks 116th on the WEF overall quality of infrastructure. - Average rank for Frontier Markets (FMs) is 97. - Average rank for Emerging Markets (EMs) is 71. - Quality of air transport and ports is close to EM perception averages—reflecting high quality for international trade. - Perceptions on road and railroad networks are below EM averages and close to WAEMU and FM averages. - Based on qualitative measures, infrastructure output quality is slightly above emerging market average even if the capital stock level is well below. - Identified area for improvement: domestic transportation network (road and railways). - The WEF survey suggests potential productivity gains by targeting road and railroad investments toward less economically developed regions to enhance inclusiveness. ### Accounting for development level — PIMA results - The 2017 Public Investment Management Assessment (PIMA, Fouad et al. 2017) provides a complementary assessment by accounting for access to technology approximated with GDP per capita. - Using quantitative output measures and accounting for technology, Côte d’Ivoire’s efficiency score is slightly below the sub-Saharan Africa average. - Using qualitative infrastructure measures, the PIMA reports an efficiency score close to 1—the maximum—suggesting satisfactory perceptions given the degree of access to technology. - The PIMA highlights strong provision of trade transport infrastructures and lagging provision of social infrastructure, especially hospitals. - Conclusion from PIMA-based analysis: some room to improve efficiency with particular focus on social infrastructure. ### Scope for policies to improve public investment efficiency - Strengthen public investment management (based on the last PIMA): - Authorities have followed some PIMA recommendations on regulatory framework and multi-year programming; implementation gaps remain. - Implementation of program budgeting in the 2020 budget provides opportunity to clarify public investment allocation. - Remaining issues: sizeable differences between planned spending in the multi-year investment program and the draft budget law; coordination between local and central government could be improved; decrees missing to implement the 2003 decentralization law. - Recommendation: systematic cost analysis and feasibility assessments for new projects to improve targeting. - Public-Private Partnerships (PPPs): - Authorities increased reliance on PPPs to fill infrastructure needs; PPPs can help improve efficiency if accompanied by strong governance to manage risks and avoid unexpected costs. - In 2018, 85 percent of the value of PPPs granted in Côte d’Ivoire was attributed through exceptional procedures. - Recommendation: review processes to reduce the share attributed through exceptional procedures and streamline procedures while building capacity across public administration and private sector. - Public procurement reform: - Reform aligned with WAEMU procurement directives aims at facilitating e-procurement and strengthening transparency, including by establishing a person in charge in each ministry. - Implementation needs careful monitoring: switching to e-procurement requires effective IT tools and adequate training. - Recommendation: contain payment delays during the transition to the new public procurement law. ### Public investment in human capital — rationale - To reach emerging market status, infrastructure investment needs to be paired with investment in education and health to accumulate human capital. - Human capital underpins growth through capacity to absorb and adapt new technology, innovate, and diversify the economy. - Spending in human capital is critical in amount and efficiency at delivering high outcomes. ### Human capital — key outcomes and constraints - Côte d’Ivoire ranks 149 out of 157 countries in the Human Capital Index (composite index measuring amount of human capital a child born today can expect to attain by age 18). - Selected indicators: - A child born in Côte d’Ivoire today will be only 35 percent as productive when she grows up as she could be if she enjoyed complete education and full health. - 22 percent of children are stunted. - Expected years of school for a child who starts school at age 4 are 4.2 years. - By end of primary school, young Ivorians read and calculate less well than young Burundians or Senegalese. - An Ivorian child spends on average half the time in school than one in emerging countries. - Education outcomes are even lower for women. - These constraints are significant because critical productivity-affecting skills are generally acquired at school. ### Structure of public education expenditure - Government allocates about one fifth of public expenditure to education—close to the Frontier Market average and above the Emerging Market average. - Education expenditure as a share of GDP in Côte d’Ivoire is 3.3 percent in 2018; this is below Frontier Market (4 percent in 2018) and Emerging Market (4.3 percent in 2018) averages. - Composition concerns: - Over 2016-18, over 20 percent of education expenditure went to tertiary education and about 40 percent to primary. - Côte d’Ivoire spends significantly more per student in tertiary than other WAEMU and EMDEs and substantially less than EMDEs in primary. - Historical comparisons: Thailand and South Korea in the early 1980s at similar per capita income prioritized primary education; Malaysia spent a substantially larger share of GDP in primary and secondary education. - Recommendation: ensure sufficient resources for adequate quality primary and secondary schooling. ### Enrollment and quality challenges - Enrollment trends: - Gross enrollment in primary schools increased by over 20 percentage points since 2000, reaching 100 percent in 2018. - Net primary enrollment reached 90 percent in 2018. - Enrollment in secondary remains low: more than half of eligible children not attending secondary schooling in 2018. - Increased enrollment presents challenges to education quality (e.g., pupil-teacher ratio if teacher supply does not keep up). ### Education spending efficiency and learning outcomes - Learning core competencies focus: reading and mathematics. - PASEC 2019 and other measures show poor competency: - Only 3 percent of grade 6 students with high level of competency in mathematics, and 83 percent not competent in 2019. - In reading, 22 percent are highly competent, and 60 percent are not competent. - Large gaps by household wealth and location (2014 test scores): - Among rich households, 35 percent of children achieved high competency and 35 percent are not competent. - Among poor households: 63 percent of girls and 71 percent of boys are not competent. - Among poor households: 12 percent of girls and 8 percent of boys are highly competent. - Results substantially lower in rural areas. - Deterioration over time: - PASEC 2019 shows worse outcomes in mathematics and reading compared to 2014. - Share of end-of-primary students with at least one parent who is illiterate increased from 66 in 2014 to 77 in 2019 percent in the PASEC survey. - Comparative efficiency: - Côte d’Ivoire fares poorly on World Bank harmonized test scores (using 2014 PASEC data): spends more than WAEMU countries without higher results on average. - Example: Burkina Faso spends twice less than Côte d’Ivoire and obtains the 2nd highest test score among WAEMU countries. - Kenya achieves significantly higher education outcomes close to the frontier with only slightly more spending per capita. ### Health spending efficiency and outcomes - Public spending in health more than doubled in real terms over the last decade; growth rate in health spending faster than in FM and EM groups, but health spending as percent of GDP remains very low compared to these groups. - Selected outcome changes between 2015 and 2018: - Maternal mortality rate decreased by only 6 percent. - Under-5-year mortality rate decreased by 10 percent. - These decreases are far below the 30 to 50 percent targeted in the authorities’ Health National Development Plan (PNDS, 2016–20). - Contextual data: - About 60,000 children are dying before the age of 5 each year in Côte d’Ivoire, versus 137 reported Covid-19 deaths in 2020. - Comparative examples: - Rwanda: maternal and under-5-year mortality rates are twice smaller with less per capita public health spending. - Sri Lanka: at the frontier with even better results and slightly lower spending. - Data Envelopment Analysis (DEA) findings: - Côte d’Ivoire has one of the least efficient health systems. - On average over the last two decades, Côte d’Ivoire is the second worst performer in this DEA. - Health spending efficiency has been deteriorating since 2015, suggesting higher spending without corresponding gains. - DEA uses maternal and under-5-year mortality rates as proxy outcomes and adds external health spending to public health spending; controls include private health spending and access to improved water and sanitation facilities; 5-year averages of inputs (3 years for last subperiod) are associated with subsequent outcomes. - Access and financing issues: - Only one fifth of health expenditure is public. - Share of out-of-pocket health expenditure is higher than in frontier or emerging markets. - Consequence: health services may be unaffordable for a large part of the population, leading some to forego care or fall into extreme poverty after health shocks. - Recommendation: increased prepayment and pooling to achieve efficiency gains through enhanced bargaining power of purchasers. - PSGouv achievements: - Building school latrines in rural areas and accelerating deployment of a universal health coverage scheme. - Enrolled population in the universal health coverage scheme increased by more than fifty percent in 2020 to reach 2.9 billion persons. - Recommendation: buttress health capacity to ensure enrolled population can effectively benefit from services. ### Conclusion and prioritization - Without improvement in productive public spending efficiency—particularly urgent for education and health—reaching emerging market status will remain difficult. - Public capital investment efficiency appears appropriate relative to development level, but there is potential for improvements compared to FM and EM peers. - Spending efficiency notably lags peers in education and health. - A well-targeted approach would enhance inclusiveness by better targeting public services to those most in need: - Public investment needs: road and railway connections toward the hinterland. - Education needs: prioritize primary level. - Health needs: improve access for low-income households. - Strengthening productive spending efficiency can yield a double dividend: boosting productivity and reducing inequality. *IMF staff summary based on chapter content.* ### 27. This diagnostic should be followed by a careful design of efficiency enhancing policy ### 27. This diagnostic should be followed by a careful design of efficiency enhancing policy measures. ### Policy options and public finance management recommendations - Strengthen public finance management policies, including stronger governance. - Enhance public investment management through: - spending plans, - regional allocation, - cost/feasibility assessments. - Standardize PPPs procedures. - Improve public procurement. - Transition to program budgeting in 2020 to: - improve spending classification transparency, - develop performance-related tools, - better link spending to policy objectives (Wiest et al., 2019). - Produce more systematic public reports with improved quality and timeliness to strengthen incentives to fix inefficiencies. - Design sectoral policy reforms urgently in education and health, in collaboration with international agencies where appropriate. ### Information, diagnostics, and capacity - Decision makers need appropriate information to identify spending inefficiencies. - Data limitations restrict a complete picture: much analysis requires internationally comparable data which occasionally is available only with a lag. - More recent changes to the efficiency of public spending may not be reflected in this analysis due to these lags. ### Authorities' planned policies and sectoral priorities - National development plan objectives include: - increasing schooling enrollment rates, - creating new classrooms, - recruiting teachers. - Education efficiency measures to be pursued: - improve governance, - recruitment, training, monitoring, and evaluation of teachers, - recruit monitoring staff, - rely on new technologies. - Health sector objectives include: - increasing life expectancy, - reducing maternal and infant mortality rates. - Health sector measures to be pursued: - increase the share of health spending in government spending, - build new infrastructures, - reduce health personnel coverage disparities between regions, - promote innovative digital technologies to support the health system, - strengthen the program for universal access to health care. *Source: IMF country diagnostic excerpt.* --- _Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1civea2021002.pdf_