The March 13 attack in Ivory Coast highlights the expanding regional operability of Al-Qaeda in the Islamic Maghreb (AQIM). Propelling fears of additional incidents across West Africa, this has reinforced the urge to bolster regional counterterrorist efforts. But the outlook for the Ivorian economy will remain positive so long as its growth-enhancing sectors are unaffected by future attacks.
Last Sunday’s attack in the beach resort of Grand-Bassam is a first for Ivory Coast but the third in West Africa in the past five months. Raising the spectre of further terrorist plots, West African governments have reiterated the need to bolster their cooperation in counterterrorist efforts. There are fears that countries such as Senegal, Ghana, Niger or Chad could be next.
For its part, the Ivorian economy will remain largely unscathed by the attacks carried out just 40km southeast of its commercial capital Abidjan. The rapid deployment of security forces proved to be crucial in limiting the death toll and the handling of the situation by the Ouattara government has been praised. Investors and the expatriate community have been reassured by the hasty securing of at-risk commercial infrastructure, transport corridors and public leisure areas.
Assuming that no further attacks will be carried out, the tourist sector might witness a temporary fall in revenue in the coming quarter but the biggest revenue-generating sectors of Francophone Africa’s biggest economy will continue to drive growth at around 7% in 2016. The increasing inflow of foreign direct investment (FDI) since the peaceful October 2015 election should remain steady so long as the agricultural, manufacturing and services sectors are not affected by future attacks.
Expanding AQIM
The last three major incidents claimed by Al-Qaeda’s Sahelian affiliate reaffirm the group’s expansion and consistent modus operandi. The recurrence of attacks and assaults in tourist locations frequented by foreigners is likely to raise alarm in countries with sizeable tourist resorts like Senegal or Ghana.
The statements released by the group in the wake of their attacks have all pointed to a common denominator: retaliation towards those supporting the French-led counterterrorist campaign in the wider Sahel. This suggests that countries like Chad and Niger could also be victim of future attacks given that they both host strategic (French) military bases.
The porosity of borders continues to be another pressing issue, especially as it is allows for the infiltration of AQIM beyond its usual operational remit. This has urged the Sahel G5 countries to bolster their efforts in patrolling critical border areas, particularly along the southern Malian corridor, where Ivorian security forces have been intercepting incursions into their territory by AQIM-affiliated armed men.
French authorities have already pledged to station a force of elite gendarmes in the Burkinabé capital in order to react more swiftly to future attacks akin to those witnessed in Bamako, Ouagadougou and Grand-Bassam. This is in addition to its 3,500-strong Operation Barkhane and increasing cooperation with US Special Forces and Sahel G5 military units.
In addition, the dubbed US-led Flintlock military exercise held last February in Senegal and Mauritania could be a test case for multinational efforts to combat terrorist groups in the region. With more than 1,700 military personnel participating, its aim was to focus on training, information-sharing and increasing counterterrorist-force deployment across the region.
Site of Grand-Bassam attack. Source: The Guardian.
Regional spillovers
With the Grand-Bassam attack raising the alarm in other West African countries susceptible to similar incidents, national governments have been called upon to upend security in tourist locations frequented by foreign expatriates, such as Saly in Senegal or Labadi beach in Ghana. The latter might be particularly vulnerable following the October 2015 reports of Ghanaians joining the ranks of the Islamic State (IS).
There is a consolidating trend that AQIM’s preferred (and cost-effective) strategy is the targeting of open air locations of leisure with light or inexistent security. The fact that assailants tend to be no more than half a dozen armed men points to the group’s limited capacity to carry out attacks against large (and highly secured) infrastructural or commercial assets.
Consequently, although a repeat of the 2013 In Amenas gas plant attack in Algeria (carried out by the AQIM-affiliated al-Mourabitoun) cannot be fully discarded, the likelihood remains low. AQIM’s seeming endeavour to reassert itself against the rise of IS in North Africa is coming at the expense of spreading itself thinly.
This comes in the wake of increased multinational counterterrorist efforts following the launch of Operation Serval in early 2013. The French-led operations largely contributed to the immediate decline in AQIM incidents and fatalities (which bottomed out in 2014). But they are seemingly on the rise again.
Mitigated economic impact
In contrast to the January attacks in Ouagadougou, the swiftness with which the Ivorian security forces responded to the attacks proved to be crucial in neutralising the assailants. Although largely attributable to the proximity of the incident to Abidjan (where large military contingents are stationed), the rapid manner in which the Ouattara government stabilised the situation boded well for reassuring investors, as well as the diplomatic community.
Most importantly, the visit of the French foreign and interior ministers last Tuesday brought about promises to bolster Paris’ logistical support to the Ivorian military, notably facilitated by the presence of French armed forces stationed in an Abidjan base.
With an average of 250,000 tourists visiting Ivory Coast every year, receipts from the tourism sector will indubitably fall temporarily in the months to come. Given the concentration of this sector in and around Abidjan’s coastal areas, it represents about 1.6% of GDP and 4.2% of total employment in the country. Although not negligible, it remains small in relation to other sizeable sectors, particularly as infrastructural development for hotel resorts continues to fall short of its potential.
With this in mind, the Grand-Bassam attacks will not have a significant impact on the economy. So long as the major growth-enhancing sectors (agriculture, manufacturing and services) remain unaffected, Cote d’Ivoire’s economic outlook for 2016 remains buoyant.
Macroeconomic outlook
At the time of writing, FDI into the Ivorian economy will continue to grow and is unlikely to stall as a result of the ongoing terrorist threat. The agricultural sector continues to attract a sizeable portion of FDI, with foreign companies like Singapore’s Olam investing $75 million in the cocoa industry; which accounts for about a fifth of the country’s share of GDP.
With growing capital investments in infrastructure – notably the Chinese-backed expansion of the Abidjan port – Ivory Coast is poised to boost exports of its leading cash crops; which together bring an estimated 70% of foreign exchange earnings.
In spite of the slide in global commodity prices, the rapid expansion of the agricultural and mining sectors has cushioned the deterioration in the terms of trade while the enlargement of its secondary and tertiary sectors have acted as economic catalysts.
With the IMF’s extended credit facility (ECF) in the past years, Ivory Coast’s prospects to boost capital expenditure through international loans and credit lines has improved its capacity to invest in growth-enhancing economic sectors. Indeed, the services sector (particularly telecoms and banking) are growing at fast rates while the mining sector is expected to triple within the next ten years. This bodes well for the economy’s diversification and ability to weather exogenous price shocks.
Finally, with relatively low fiscal and external account deficits, Ivory Coast will be able to tap international capital markets at more favourable rates than peers with sizeable twin deficits like Ghana.
Should the Ivorian authorities manage to wholeheartedly contain any future terrorist attacks, the economy will remain on track to attain emerging market status by 2020.
