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City case studies Foreign Direct Investment in the Abidjan-Lagos Corridor

Abidjan receives a majority of inward FDI in the Abidjan-Lagos Corridor which comprises nearly 75% of economic activity in the ECOWAS region
© Guillaume Mignot/flickr
Due to its dependency on the cocoa crop, Cote d’Ivoire was adversely affected by the 25% drop in world prices in 2016
© Kouassi Gilbert Ambeu

Through research of existing studies and interviews at different levels of the economic community within Abidjan, this study attempts to provide a better understanding of the economic and foreign direct investments in Abidjan, the economic capital of Cote d’Ivoire and the Abidjan-Lagos Corridor. The interviews shed light on the underlying perceptions of the attractiveness of the city and the perspectives and challenges in attracting FDI and have resulted in a set of recommendations for consideration by city managers, policy makers and other stakeholders. Within the West African Economic and Monetary Union (WAEMU) region, Abidjan receives a majority of inward FDI of the Abidjan-Lagos Corridor which comprises almost 75% of the economic activities in the ECOWAS region. The Autonomous Port of Abidjan (PAA) constitutes a major infrastructure asset and logistical hub of the Ivorian economy. It also serves nearby land-locked economies such as those of Burkina Faso, Mali, and Niger.

Abidjan accommodates investment inflows from different sectors, but real estate and the hydrocarbon extractive industry account for more than half of the total FDI (Wall, 2017). Recent developments in the city, notably fluvial transportation and sea port infrastructure, strengthen the city’s position as a hub in the Western African region in terms of port volumes and maritime traffic.

The Ivorian economy is highly dependent on the export of its cocoa cash crop, but Cote d’Ivoire is seeking to diversify its agricultural portfolio. Recently, production of cashew nuts and rice has increased. Also, the government aims to stimulate in-country processing of agricultural products and by 2020, take more advantage of the entire agricultural supply chain. Its target is to locally process at least 50% of the main agricultural products and produce more added value by 2020 (see Map 1).

Whereas FDI represents a substantial part of the country’s total investment (73% in 2016), the Ivorian government, to support its local processing policy, is aiming for a participation of USD60 billion from private sector investments which would account for 62% of the total investment plan (National Development Plan (NDP)).

Cote d’Ivoire is a member of various regional communities, including the Economic Community of West African States (ECOWAS), the West African Economic and Monetary Union (WAEMU) and the Mano-River Union in which several institutions are framed to support regional trade integration and allow for international companies to take advantage of the whole regional market. A critical arrangement in this is the upcoming Economic Partnership Agreement (EPA) envisaged to liberalize at least 75% of the regional market. Some challenges still need to be addressed, however, such as regional harmonization of taxation and customs duties. Regional synchronization and recovery of Value Added Tax (VAT) also remain challenging. The provision of equity capital through an inclusive regional stock market is expected to address problematic low bank-debt provisions. Regional electricity grid interconnection and other infrastructural developments are also being undertaken to attract more investors.

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About Cities Today

The State of African Cities 2018 is published by IHS-Erasmus University Rotterdam and UN-Habitat in partnership with the African Development Bank. The aim of the report is to contribute to development policies that can turn African cities into more attractive, competitive and resilient foreign direct investment (FDI) destinations. Attracting global FDI is highly competitive and crosses various geographic scales, therefore regional cooperation by cities and nations is critical. But FDI is not a panacea since it has both positive and negative effects and careful choices need to be made by cities in their pursuit of FDI, if it is to lead to inclusive economic growth. This report aims to provide guidance on these choices and to facilitate understanding of the complexity of global investment in Africa.