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Côte d’Ivoire: Robust growth under the looming threat of climate change impacts

MD Staff

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According to the Economic Update for Côte d’Ivoire, published today, the short- and medium-term outlook for the Ivorian economy remains positive. The economy is expected to maintain a steady trajectory, with GDP growth of 7 to 7.5% in the coming years. Titled “So Tomorrow Never Dies: Côte d’Ivoire and Climate Change,” the report highlights the urgent need to implement measures to ensure that climate change impacts do not imperil this economic progress and plunge millions of Ivorians into poverty.

“The solid performance of the Ivorian economy, which registered growth of almost 8% in 2017, is essentially due to the agricultural sector, which experienced positive climate conditions. The economy also benefited from a period of calm after the political and social instability of the first half of 2017 and from more favorable conditions on international markets,” said Jacques Morisset, Program Leader for Côte d’Ivoire and Lead Author of the report. “The Government also successfully managed its accounts, with a lower-than-expected deficit of 4.2% of GDP, while continuing its ambitious investment policy, partly financed by a judicious debt policy on financial markets.

However, the report notes that private sector activity slowed in 2017 compared with 2016 and especially 2015, which may curb the pace of growth of the Ivorian economy in the coming years. Against the backdrop of fiscal adjustment projected for 2018 and 2019, it is critical that the private sector remain dynamic and become the main driver of growth. This is particularly important in light of the uncertainty associated with the upcoming elections in 2020, which could prompt investors to adopt a wait-and-see approach.

As economic growth in Côte d’Ivoire relies in part on use of its natural resource base, the authors of the report devote a chapter to the impact of climate change on the economy. They raise an alarming point: the stock of natural resources is believed to have diminished by 26% between 1990 and 2014. Several visible phenomena attest to this degradation, such as deforestation, the depletion of water reserves, and coastal erosion. According to the Intergovernmental Panel on Climate Change (IPCC), climate change could reduce GDP across Africa by 2% to 4% by 2040 and by 10% to 25% by 2100. For Côte d’Ivoire, this would correspond to a loss of some CFAF 380 billion to 770 billion in 2040.

This report sounds an alarm in order to spark a rapid and collective wake-up call,” said Pierre Laporte, World Bank Country Director for Côte d’Ivoire. “Combating climate change will require prompt decisions and must become a priority for the country to maintain accelerated and sustainable growth over time.”

The report pays special attention to coastal erosion and to the cocoa sector, which represents one third of the country’s exports and directly affects over 5 million people. With 566 km of coast, Côte d’Ivoire now boasts a coastal population of almost 7.5 million people, who produce close to 80% of the national GDP. Two thirds of this coast is affected by coastal erosion, with severe consequences for the communities and the country’s economy.

The Ivorian Government, which is already aware of this challenge and has prepared a strategy to confront it, must expedite its implementation. This would have the two-fold effect of developing a “green” economy and creating new jobs.

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Economy

A future of work based on sustainable production and employment

Simel Esim

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On the first Saturday of July each year, the international community celebrates the International Day of Cooperatives. This year’s theme, Sustainable consumption and production of goods and services is timely, as the ILO works towards a future of work that is based on sustainable production and employment models.

As head of the ILO’s Cooperative Unit, I have witnessed firsthand the positive impact of cooperatives’ commitment to sustainable consumption and production.

In Northern Sri Lanka, for instance, after years of civil war, I saw how cooperatives helped build the resilience of local communities.

A rapid assessment at the start of the ILO’s Local Empowerment through Economic Development project (LEED) indicated that cooperatives were the only “stable” structures present in Northern Sri Lanka before, during, and after the conflict. Since 2010, the project has been supporting agriculture and fishery cooperatives by securing fair trade certification for their products and helping them establish market links.

I’ve also listened to inspiring stories from other parts of the world of how cooperatives have joined forces to contribute to sustainable consumption, production and decent work – often through cooperative-to-cooperative trade.

Some of these stories were shared at a recent meeting in Geneva of cooperative and ethical trade movements.

We heard how Kenyan producer cooperatives’ coffee has found its way on the shelves of Coop Denmark and how biological pineapples from a Togolese youth cooperative are being sold in retail cooperatives across Italy. We heard how consumer cooperatives in East Asia have developed organic and ecolabel products, while educating their members about the working conditions of producers and workers, as well as on reducing food waste and plastic consumption. We also shared ILO experiences in supporting constituents in the field.

The emerging consensus from the meeting was that cooperative-to-cooperative trade can help lower the costs of trade, while ensuring fairer prices and better incomes for cooperative members and their communities. Opportunities exist not only in agricultural supply chains, but also in ready-made garments and other sectors.

Cooperatives at both ends of the supply chain have been joining forces to shorten value chains, improve product traceability and adopt environmentally-friendly practices. At the ILO we have been working with our constituents to improve the social and environmental footprint of cooperatives around the world.

As the ILO continues to promote a future of work that is based on sustainable production and employment models, a priority for us in the coming years is to facilitate the development of linkages between ILO constituents and cooperatives. The aim is to encourage joint action towards responsible production and consumption practices, the advancement of green and circular economies and the promotion of decent work across supply chains.

Source: ILO

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Mongolia’s Growth Prospects Remain Positive but More Efficient Public Investment Needed

MD Staff

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Mongolia’s economic performance has improved dramatically with GDP growth increasing from 1.2 percent in 2016 to 5.1 percent in 2017 and 6.1 percent in the first quarter of 2018. While short- and medium-term economic prospects remain positive, Mongolia faces core structural vulnerabilities that hinder its potential, according to Mongolia Economic Update, the latest World Bank report on Mongolia’s economy launched here today. The report also highlights the importance of improving efficiency of its public investment programs given extensive consequences from the overambitious and unrealistic investment programs implemented in the past.

“Last year was a good year for Mongolia with favorable commodities prices and the successful implementation of the government’s economic recovery program,” said Dr. Jean-Pascal N. Nganou, World Bank Senior Economist for Mongolia and Team Leader of the report. “This resulted in improved fiscal and external balances, triggering a slight decline of the country’s public debt.

The recovery is expected to accelerate with a GDP growth rate averaging more than 6 percent between 2019 and 2020, driven by large foreign direct investments in mining. Other than agriculture, which was severely affected by harsh weather conditions during the winter, most major sectors including manufacturing, trade, and transport are expected to expand significantly. On the back of increasing exports and higher commodity prices, economic growth will continue to have a strong positive impact on government revenue, contributing to the reduction of the fiscal deficit.

The unemployment rate dropped to 7.3 percent in the last quarter of 2017, compared to 8.6 percent a year earlier. Still, it increased to 9.7 percent in the first quarter of this year, reflecting Mongolia’s highly seasonal employment patterns due to difficult working conditions in the winter, especially in construction, agriculture, and mining.

The report highlights possible short- and medium-term risks including political risks, regional instability, climate shocks, and natural disasters. The most critical risk identified is a sudden relaxation of the government’s commitment to full implementation of its economic adjustment program supported by development partners.

In addition, the economy remains vulnerable to fluctuations in global commodity prices and a productivity gap. The best long-term protection against these two vulnerabilities is the diversification of the Mongolian economy.

To create a strong buffer against economic vulnerabilities, the government and donors should give a high priority to economic diversification that helps counter the ups and downs of the mining sector. Investing in human capital and strengthening the country’s institutions are the best way to support diversification, together with sound investments in crucial infrastructure,” said James Anderson, World Bank Country Manager for Mongolia.

The report takes a closer look at public investment programs implemented over the past five years, which surged until 2015, contributing to large increases in public finance deficits and the public debt. Mongolia needs to review and reshape its public investment policies and decision-making processes to improve efficiency of public spending, including clear project selection and prioritization criteria, as well as proper maintenance of existing assets.

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Dubai’s Economy is melting like a Glacier in the Desert

Mir Mohammad Ali Khan

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Exactly on December 12, 2016, I wrote an article predicting that Dubai is going to see its economic fall. I even gave the dates that it may happen by 2018. Here we are in 2018 and Dubai’s economy has started to melt like an ice cone in a hot summer day near Jumeirah beach.

Let’s examine how? Dubai is a city where I have lived for several years. Established and ran businesses in. I understand the economic environment and its financial structure. The financial structure is connected to its economic structure in the strangest manner, a phenomenon not found in many cities of the world. The phenomenon of “I OWE YOU and will pay you later”.

And this comes in the form of a “Post Dated Cheque”. Nobody asks you before gladly receiving that cheque from you, what would happen 8 months from today if your business has collapsed or sees a cash crunch. How will you honor your cheque. You are not dealing with a bank that you have given the cheques to, with a huge ability of financial sustenance.

Your cheques are mostly to other businessmen who write cheques to their creditors based on your postdated cheques. I owe you on top of I owe you multiplied by the umpteenth factor. No economy can develop and sustain on this principle. Simple as that. One business man in the chain defaults, the entire chains is broken. The biggest of the companies can face a downturn and their cheques can bounce. And the strangest thing is that if your cheque bounces you are not given a chance to even negotiate the payment with a little more time. A complaint is lodged and the businessman arrested. Or to avoid the arrest, the businessman flees Dubai leaving the entire business to collapse and not a single chance of recovery for the receivers of the cheques.

Abraaj Capital had a $48 million dollar cheque bounce two weeks ago.

You think that’s was a big cheque. Wait till you read this. From January 2018 to the end of May 2018, 26 billion dirhams worth of cheques have been bounced. 1.2 million cheques in total. Or 39.3% of the total number of cheques issued in 2017 which were to come due in 2018. They came due and they bounced. 39.3% is not an amount to be taken lightly, neither is the number of checks that is 1.2 million nor the amount of 26 billion dirhams, that’s $7 billion dollars in just 6 months of 2018. In the coming months of 2018 from July to December this can become the trigger for a disaster in the making to be dealt by the authorities with no recourse. And the reason I said no recourse is because you need to see by researching other related clues in order to establish if the people who have written the cheques are still in Dubai or most of them have fled the city.

You need to look at two things if you want to do related research to establish the above point if the people have fled Dubai or not. First, if their phones connections are cancelled. And Second, if they have fled with their families. Best thing to look at to see the second part is to see as to how many children have been withdrawn from their schools. Let’s look at the biggest phone carrier of Dubai, Etisalat and its data. 32,000 phone connections were cancelled between March and April of 2018. Just in 38 days in total. 28,000 children were withdrawn from schools without registering themselves for the end of summer sessions. Meaning those families do not plan to come back.

I wish it ended here. I wish the signs were not as obvious. But they are. Dubai property that used to be sold at 2300 dirhams per square foot is selling at less than 600 dirhams per square foot. Or in simple words, it’s selling at 25% of its value.

Gold Souk has empty stores for the first time in 35 years. You could not find a single empty store to rent or buy earlier. Arabian Center, Sunset Mall and Al Ghurair have stores shutting down every week. Emirates Towers with the most chic restaurants is witnessing a closure upon closure of restaurants. Hotels have cut their average price to 30% of what they used to charge and last month alone 18 hotels shut down including Savoy, Ramada, Richmond, Crest, Jarmond and the list goes on. Lamcy plaza, one of the busiest malls had a fire and was supposed to be opened in August 2017 and it’s still closed down. Bur Juman and Wafi Mall have the highest vacancy rates of shops. The list can go on and on and I can pen down more signs of an economic meltdown than you can read.

Abraaj Capitals’ collapse is a nail in the financial system coffin of Dubai. The biggest confidence eroding incident ever to have taken place in the history of Dubai’s financial system.

The point is not to sit and laugh at what has happened. That is cruel and arrogant. Livelihoods have been lost and families have been ruined. The point is for other counties in the GCC to stop this postdated cheque based economic model immediately before they face the same fate. And for the businessmen the lesson is to develop a sustainable business model where your freedom is not hinged upon one bounced cheque. Because anybody’s cheques can bounce unintentionally and based on unforeseen circumstances. With the OECD restrictions, Anti-Money Laundering initiatives around the world. FATF watching. Counter Terrorism financing watchdogs sifting through every transaction. The biggest appeal of Dubai will be dead as well. The appeal of having unquestioned transactions for the world’s corruptly earned funds.

This is a bad cycle that Dubai is going through and in my humble opinion we have yet to see its bottom. What is happening right now is only a glimpse of what is yet to come. With media censorship and controlled release of any and all news, you will not even hear these stories in Dubai. Unless you want to be a journalist who loves jail food.

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