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The political turmoil in Côte dIvoire in 2010 hit vehicle sales hard. We estimate they dropped 73.6% over the year. The failure to hold credible elections in November 2010 and the eruption of a violent political crisis owing to Laurent Gbagbos refusal to accept defeat in the countrys November 28 presidential election badly damaged foreign investor confidence.
Côte dIvoire was already suffering from chronic underinvestment following years of conflict and civil war. The poor transport infrastructure, deteriorating road networks and high number of military checkpoints have had a negative impact on foreign investment.
However, we forecast that Côte dIvoire will enjoy GDP growth of 7.4% in 2012 as it recovers from post-election violence that caused an economic contraction we estimate at 4.8% in 2011. Long-term economic expansion should be boosted by a unification dividend.
This will affect auto sales. We expect annual vehicle sales growth to average 5.95% between 2011 and the end of our forecast period in 2016. In December 2011 Ford India announced it had extended its exports of the popular Figo model to 32 countries, one of which was Côte dIvoire.
Cote dIvoires physical infrastructure is inadequate, mainly because of long-term underinvestment and civil war-related damage. This is likely to continue. While it certainly fares better than some of its regional peers, such as Liberia and Sierra Leone, it lags significantly behind Ghana and Nigeria.
According to official figures, Cote dIvoire has 80,000km of highways (of which only 6,500km are paved) and 660km of railway. With 25% more landmass than Ghana, its eastern neighbour, this compares poorly with Ghanas 8,496km of paved roads and 953km of railway.
Encouragingly, the government has started several infrastructure projects, such as expanding the rural transport network and increasing the capacity of the countrys main sea port, in Abidjan, which will improve the relative lack of physical infrastructure. In July 2011 President Alassane Ouattara announced that a new bridge will be built over the lagoon in the capital Abidjan, which we see as a strong sign of the governments intention to bring its road and rail infrastructure back to health.
Côte dIvoire has the potential to become a significant gold miner over the coming years. Several projects are set to come online that will transform the mining sector. Although we do not expect it to become a major centre of gold output, the projects will significantly boost the regions output and have a substantial impact on Côte dIvoires macroeconomic outlook.
However, while growth over the next 10 years is expected to improve on the last 10, political uncertainty continues. In our view, high poverty levels and a fragile business environment will be the main obstacles to growth, and therefore auto sales, over the longer term.
The private sector will be particularly wary of whether President Ouattara can maintain political stability and head off potential challenges to his administration. Neglect of road infrastructure also continues to drive up transport costs and threatens to alienate ongoing business operations. Risks of sudden and unpredictable violence are also high.
Click for Report details:Cote d'Ivoire Autos Report Q2 2012