COTE D’IVOIRE SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE: COUNTDOWN TO 2030 SCD UPDATE Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 © 2022 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbankgroup.org Some rights reserved . This work is a product of the staff of The World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Examples of components can include, but are not limited to, tables, figures, or images. 3 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 TABLE OF CONTENTS Abbreviations and acronyms …………........................................................……………………………………………………………5 Acknowledgments …………........................................................……………………………………………………………………….……6 Executive Summary …………........................................................……………………………………………………………………….…7 PART I : Introduction and Framework…………..........................…………………...……………..........................…..15 Countdown to 2030 : Recent Economic Developments and Trends in Poverty Reduction………………….15 The analytical framework of the SCD……........................................................………………………………………...............23 PART II : Cross-cutting and Foundational Areas ………….........................…………………...…………..................27 Cross cutting areas: gender equality, climate change, digitalization, and fragility will shape development .…27 Foundational priority: strengthen institutions and governance for inclusive growth ……………………………………36 III : Three Main Pathways …….........................…………………...………….....……..........................…………………...43 Main pathway I: improving agricultural productivity and boosting rural development ……................................43 Main pathway II: job creation through private sector–led growth ……........................................................…………54 Main pathway III: human capital development through better social spending ……...........................................64 Knowledge Gap……........................................................…………………………………………….............................................74 Policy matrix……........................................................……………………………………………..................................................74 Appendix 1 - WBG Team....................................................……………………………………..........…………...............…78 References..........…………..........………….........……..........…………..........…………..........………….............79 4 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 ABBREVIATIONS AND ACRONYMS ARTCI Telecommunications/ITC Regulatory Authority of Côte d'Ivoire ACLED Armed Conflict Location and Event Data Project AFOR Rural land agency (Agence foncière rurale) CFAF CFA Franc CMU National health insurance scheme (couverture maladie universelle) COVID-19 Coronavirus pandemic DFS Digital financial service EHCVM Harmonized household living conditions survey FASI Solidarity Fund and the Informal Sector Support Fund FDI Foreign direct investment GDP Gross domestic product GFW Global forest watch GHG Greenhouse gas emissions GSM Global System for Mobile HCI Human capital index ICT Information and communication technology IDA International development association IFC International finance corporation IT Information technology LPI Logistics performance index NEA National Environmental Agency NDC Nationally determined contribution (Paris Agreement) PND Plan National de Développement 2021-2025 PNSFR National Rural Land Tenure Security Program (Programme National de Sécurisation du Foncier Rural) R&D Research and development SCD Systematic country diagnostic SMEs Small and medium enterprises SOE State-owned enterprise TVET Technical and vocational education and training TFP Total factor productivity USSD Unstructured Supplementary Service Data VAT Value added tax WAEMU West African Economic and Monetary Union 5 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 ACKNOWLEDGMENTS This report was prepared by a multisector team from the World Bank Group (WBG) led by Saidou Diop (Lead Public Sector Specialist, TTL), Franck M. Adoho (Senior Economist, co-TTL), Alexa Tiemann (Senior Economist, co-TTL) and Nathalie Picarelli (Senior Economist, co-TTL). Members of the extended team are listed in Appendix 1 by sector. The report was finalized under the collective guidance and leadership of Coralie Gevers, WB Country Director; Olivier Buyoya, IFC Country Manager; Cheick Kante, Operations Manager; Andrea Coppola, Arnaud Braud, El Hadj Adama Toure, and Waly Wane, Program Leaders; Practice Managers Theo Thomas, Johan Mistiaen, Gael Raballand, Former Practice Manager Alexandre Arrobbio; External Affairs Officer Enoh Nguessan N’dri, and Communications Consultant, N’dri Marie-Ange Francisca Memel. The report benefited from feedback provided at different stages by the following peer reviewers: Vincent Palmade, Madhur Gautam, Obert Pimhidzai, Michel Mallberg. Logistical assistance and administrative support during the preparation of this report was ably provided by Theresa Adobea Bampoe, Micky O. Ananth, Oumou Kassi-Coulibaly, Haoua Diallo. Robert Zimmermann (an independent consultant) edited the report. The report was designed and typeset by Joseph Anoh. Finally, the team would like to thank everyone at the WBG who contributed towards making the completion of this report a successful exercise. 6 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 EXECUTIVE SUMMARY Countdown to 2030: New and persistent challenges for sustained and inclusive growth Côte d’Ivoire experienced strong growth over the last decade. As a top performer in the region real economic growth averaged 8.2 percent during 2012–19 period (5.7 percent in per capita terms). Political stability and new sources of growth have sustained those high growth rates. Growth accounting analysis shows that increases in both capital accumulation and total factor productivity (TFP) account for most of the economic growth, reflecting infrastructure developments, and a dynamic economic environment. For the next ten years, the Government has set ambitious targets, including reaching emerging market status by 2030. This would require maintaining a fast growth path to double gross domestic product (GDP) per capita. To achieve this and make economic growth more inclusive, the National Development Plan (2021- 2025) sets out the main guiding principles and strategic pillars of development: attracting greater private investment and transforming the economy toward greater productivity and value addition, while ensuring inclusiveness and regional equity. Economic success has been associated with a sharp decline in poverty, and a moderate expansion of the middle class. The economic rebound ignited in 2012 reversed a 25-year decline in well-being, and the incidence of poverty has fallen from 55.3 percent in 2011, to 39.4 percent by 2018.1 The relative decline in poverty and inequality has been coupled with an increase in the middle class (from 34.6 percent of the population in 2015 to 36.5 percent in 2018), driven by the expansion of the service and commerce sectors. Although the poverty rate declined substantially, it remains high, as does inequality (with a Gini of 0.35 in 2018), and disparities within the country are concerning. Progress toward poverty reduction has been uneven across the country, with poverty incidence declining by 6.9 percentage points (from 31.6 to 24.7) in urban areas while remaining high, around 55 percent in rural areas.2 Most of the progress in poverty reduction has been concentrated in Abidjan, the country’s economic hub. Poverty also declined rapidly in the regions along the eastern border with Ghana while living conditions significantly worsened along the western border with Liberia and Guinea. Western regions stand out as lagging regions regarding poverty mass and severity. In some areas, particularly those where cash crop production (cocoa, rubber, and palm oil) is prevalent, living conditions have worsened over the 2015-19 period. The global COVID-19 pandemic had a significant impact on the economy, with the swift response helping to mitigate the impact. The economy was affected in the first half of 2020 through disruptions in trade and reduced foreign financing flows. As of January 2022, the Ministry of Health and Public Hygiene had confirmed 78,669 cases (3072 per million population) and 747 deaths (a mortality rate of 0.95 percent). The country entered the crisis in a position of strength, with a dynamic economy, moderate debt, a budget deficit in line with the regional target of 3 percent, and low inflation. The strong fundamentals and swift response limited the negative impact to the economy, with real GDP growth decelerating markedly in 2020 but remaining positive, at 2 percent. The volatility in global demand and commodity prices resulted in lower exports, while foreign direct investment (FDI) and external financial flows declined. On the supply side, agriculture showed some resilience, but several service and industrial sectors were affected in the first half of the year. 1   Amid civil and political conflict, it is estimated that the share of Ivorians living below the national poverty line may have increased, from around 10 percent in 1985 to 55 percent by 2011. 2   Rural poverty incidence decreased by only 1.7 percentage points from 56.4 in 2015 to 54.7 in 2018. 7 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The pandemic also had a significant impact on poverty and livelihoods. The restrictive measures implemented to slow the outbreak mostly affected wage and nonwage employment, revenue, and consumption during the first 6 months of 2020. Formal private enterprises cut jobs by 22.5 percent, and job losses in the informal sector and among small and medium enterprises (SMEs) were also significant, although the second half of 2020 saw a rebound in employment supported by the economic response plan. While the economy recovered swiftly, the impact on vulnerable populations could be more lasting, including the impact on human capital development through the closure of schools, the interruption of public service delivery, and lower household incomes. Based on recent elasticities and per capita growth estimates, 2020 poverty incidence pre-COVID was projected to decline to 37 percent. However, the post-COVID poverty incidence is estimated to have increased to 38.7 percent resulting in an additional 445,0000 poor people in 2020. As the country exits the COVID-19 crisis with limited fiscal space, it needs to renew its emphasis on structural reforms. The country is coming out of the crisis with limited fiscal space and higher public debt, restricting its ability to continue pursuing high public investments and ensuring adequate levels of social spending. The impact of COVID-19 on advanced economies may also mean a sustained decline in FDI inflows. Many global trends that were already underway are likely to accelerate because of the crisis. The automation of manufacturing jobs or the switch to greener technologies are a few examples. The amplification of these trends will have important implications for the long-term drivers of growth in developing economies. In the post-COVID-19 world, Côte d’Ivoire needs to continue building the foundations of a competitive, diversified, and more inclusive economy. The National Development Plan (PND) (2021-2025) and the Vision 2030 sets the country’s strategy to achieve those objectives. The analysis of this SCD Update indicates that Cote d’Ivoire will need to continue to remove market frictions, sustain investment in infrastructure and human capital for higher-productivity and long- term growth. Although, the report is prepared in a complex global economic context with geopolitical tensions, a climate emergency, and rising regional security risks, the fundamental challenges to inclusive growth and poverty reduction have not significantly changed since the 2015 SCD. The key policy challenges and opportunities to promote shared prosperity and reduce poverty are structured along three pathways (figure ES.1): (1) Improving agricultural productivity and rural incomes; (2) Creating jobs through private sector– led growth; and (3) Enhancing service delivery and public spending to accelerate human capital development. Governance and institutional reforms to improve the public administration of service delivery remain a foundational priority. The three pathways include a perspective on challenges in key sectors and are aligned with the commitment of government to the Abidjan Declaration3 to formulate plans for economic recovery, job creation, and investment in human capital and to address the health, social, and economic implications of the Covid-19 pandemic. In addition, a separate chapter is dedicated to crosscutting constraints and drivers, including women’s empowerment, climate change, digitalization, and fragility risks. 3   African leaders met in Abidjan on July 15, 2021. See IDA (2021). 8 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Figure ES.1. Development depends on progress in governance and on three pathways to inclusive growth Shared prosperity & Inclusive growth Pathway 1 : Improving Pathway 2 : Job creation Pathway 23: Human Capital agricultural productivity and though private-sector led Development through 3 Pathways rural incomes growth improved service delivery towards • Agricultural productivity • Manufacturing & and better social spending developement • Agri-value chains integration diversification • Health • Boosting non-farm rural • Services, self- • Eduction incomes employment and SMEs • Social Protection Fragility, insecurity and spatial disparities Cross-cutting Digital development and ICT constraints and drivers Enviromental sustainability and climate change Gender equality and female empowerment Strengthening Governance & institution • Efficiency, effectiveness and set-up of the public administration (including its modernisation; Foundations SOE governance; transparency and accountability aspects) of Growth • Decentralization as a key driver of territorial developement • Increasing domestic resource mobilization Source: World Bank. Three pathways, foundational challenges and cross-cutting constraints. Improving agricultural productivity and rural incomes is necessary for structural transformation and inclusive growth. Agriculture provides employment to almost half of the population, accounts for 22 percent of GDP and 50–70 percent of total export earnings. However, the sector is held back by multiple constraints. First, the lack of access to markets (including infrastructure, markets, storage, inputs) is linked to weak rural infrastructure and ineffective territorial development policies. Second, productivity is constrained by small farm size, limited skill levels, and slow technology take-up among farmers, which highlights the need for funding, capacity building, and institutional reforms. Third, limited access to financing among farmers is a key constraint to productivity and rural job creation in farm and nonfarm activities. Digital skills and fintech solutions have helped close some of these gaps, especially among women entrepreneurs and farmers, but this needs to be reinforced and scaled up; new lending instruments and formal credit expansion would also help. Agriculture will also need to become more sustainable and would benefit from governance reforms, including those that promote private sector participation. Population growth and economic growth have put enormous pressure on natural resources, including land and forests, which is exacerbated by the effects of climate change. To make the sector more sustainable, ongoing efforts to curb deforestation, streamline land use, and promote agroforestry will have to be stepped up, especially in implementation strategies (notably, for cocoa as a key crop that has come increasingly under international scrutiny because of the links to deforestation and child labor). Recognizing and accelerating reforms in land rights will be a key part of this 9 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 effort, with positive effects also on social cohesion, investment, and productivity. In governance, strategic plans would benefit from clearer prioritization in the face of limited funding, and more transparency is required in the criteria used for the redistribution of funds for the improvement of productivity. Boosting the role of private stakeholders, while scaling back and decentralizing the role of public agencies (where appropriate) would reinforce ownership and support reform implementation. To achieve the country’s growth ambitions, the private sector will have to become the primary engine of development. Many procedures, land acquisition processes, regulations, and uneven taxation weigh down on enterprise competitiveness, as do the weaknesses in competition policies. Thanks to significant investment, the availability of transport, electricity, and industrial land has much improved. However, more rapid growth will require more such investment. Logistics services (including in trade through the country’s ports) are costly, slow, and often low in quality. The government has invested in industrial zones, but progress has been slow, pointing to the urgency of reviewing and improving investment promotion policies and zone management. Despite a reasonable number of banks, access to finance at longer maturities, and the small number of instruments available are among the most binding constraints. The expansion of digital financial services (DFSs), but also reforms in the regulation of banking and nonbanking financial services, could help deepen local and subnational bank and capital markets. Investing in human capital and reducing skill mismatches through better service delivery and social spending will be important to reinforce labor supply and productivity. Many firms cannot find on the labor market the skills that they require. Improving education, both in schools and on-the-job, is essential to addressing this bottleneck and making Côte d’Ivoire more attractive to investors, while creating more jobs and opportunities for the population in higher valued-added sectors. Côte d’Ivoire lags regional peers in terms of education and health outcomes. Significant progress has been made through sizable public investment in infrastructure, but the expansion and qualifications of the work force (in health and education) have not kept pace, and governance challenges constrain efficient service delivery. Besides maintaining investments in infrastructure, notably, in rural areas, it is essential to strengthen human resource policies in these areas to make recruitment, training, continuing education, and labor standards more competitive and efficient, while establishing positive incentives among workers. Ensuring efficient public spending in human capital is required, especially given the budget constraints. The government has made substantial fiscal efforts to support education but access remains an issue, and the quality and relevance of programs are a challenge. First, climate change has become a more important development constraint, given the country’s dependence on agricultural commodities, coastal exposure, and large share of vulnerable population Strengthening resilience, health and social buffers remain paramount objectives. The government made commendable progress in recent years by launching a social safety net program and increasing health care coverage, but these only cover a small part of the population. Expanding the social safety net, and making it more adaptable to shocks, and improving coordination across different programs could enhance the coverage for all groups and meet their specific needs (including informal entrepreneurs, women, and young people). The health care scheme would benefit from a review of the services offered and their financing mechanisms to ensure that a growing share of the population has better access to the appropriate package of essential services, including targeted measures for vulnerable groups, such as girls and women. Support is also needed to strengthen health systems and finance the procurement and deployment of essential services, like vaccines. Good governance is a key foundation of growth and a prerequisite for the successful implementation of reform.4 Since 2015, the government has implemented legal and regulatory reforms to promote the digitalization of public administration. Going forward, policy coordination and general capacity—financial 4   This includes macroeconomic stability, including fiscal and debt sustainability, associated with good governance. 10 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 and in terms of skills—need strengthening. Beyond strategies and on-the-book reforms, implementation is slow or uneven, and mechanisms for evaluation, monitoring, and auditing should be reinforced to improve effective implementation. Widening the tax base requires an expansion of formal economic activities but would also benefit from tax policy and tax administration reforms to enforce compliance. Finally, urban-rural inequalities are a key burden impeding growth and equity. More power for decentralized agencies is required to ensure that policies effectively meet local needs. This should entail legal empowerment, but also greater funding for quality human resources. Corruption and lack of accountability are endemic in many areas. To increase trust in government administration and foster social cohesion, controls and accountability must be strengthened, and transparency must be enhanced. Four cross-cutting constraints represent major opportunities and drivers growth and shared prosperity. First, while growth has been strong and the government’s social programs have helped improve living standards, the rural poverty rate remains substantial, and women continue to be particularly disadvantaged, leaving an enormous economic and social potential largely untapped. Second, past growth has eroded natural resources, and the country is insufficiently prepared for growing climatic risks. Third, the digital economy and digital services have expanded in the private and public sectors, but the cost of services is still relatively high, and greater use is constrained by the shortage of digital skills and expertise. Fourth, fragility of the social contract remains a concern. The benefits of growth have mostly centered on Abidjan. This leaves parts of the population behind, which may raise social and political tensions if growth does not become more inclusive. Moreover, insecurity in neighboring Sahel countries is mounting, and the risk of conflict spilling across the border is growing. The priorities proposed represent an attempt to address the most critical growth constraints and leverage the inherent opportunities to promote shared prosperity and achieve poverty reduction (table ES.1): Table ES.1. Key policy options to promote shared prosperity and achieve poverty reduction Policy options Cost of inaction (or Reform keeping the status objectives Short-term (1 -2 years) Medium-term (3years) quo) Foundational Priority: Strengthening governance and institutions • Improve regulatory • Modernize public - Overlaps and Enhance processes through more administration at ineffective government transparent and effective all levels through implementation of effectiveness strategic planning, increased digitization public policies and for improved monitoring and evaluation of service delivery, regulations. service delivery (M&E), coordination and payments, and public - Poor quality services cooperation. procurement to citizens Strengthen • Expand the tax base (i.e. • Enhance digitization - Revenue leakage and fiscal policies corporate income tax, of the tax system to tax evasion. and increase property tax, and value promote voluntary - Reduced fiscal space domestic added tax [VAT]), including compliance (e-filling, for investment resource by removing exemptions on e-payments of tax…). and pro-poor mobilization certain products and sectors. expenditures. 11 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 • Promote anticorruption • Reform justice system - inefficient public Improve measures, sanctions, and for more efficiency and expenditures transparency, greater transparency independence. management. accountability, in public resources • Strengthen technical - lack of trust in the and management. and financial oversight judicial system. anticorruption of state-owned - increase in mechanisms to enterprises (SOEs), corrupt practices promote social especially in Coffee/ undermining service cohesion Cocoa and water delivery. sectors; and manage - weak social cohesion fiscal risks (including and break in social contingency liabilities). contract. Promote • Improve transparency • Pursue programs - Poor local service decentralization and predictability of fiscal to tackle regional delivery. as a key driver transfers. disparities and - Higher number of of territorial • Build and strengthen promote local lagging regions. development capacity of local and governance addressing and addressing deconcentrated staff. the drivers of fragility regional and insecurity, disparities including spillover risks from the Sahel region. Pathway 1: Improving agricultural productivity and rural incomes • Adopt a strategy to maintain • Expand information - Poor access to market Strengthen rural roads, including and communication and global value infrastructure through PPP and Road Fund. technology (ICT) chains. investments • Implement government coverage and - Loss of opportunities and policies strategy to enhance the diversification and revenues for that close gaps national food safety and to support the famers. in access to food quality system. development of - Increased poverty in markets and real-time market rural areas. global value information and other chains e-agriculture services. • Strengthen the capacity of • Expand public - Low agricultural Strengthen the National Agricultural investments in productivity. technology Research Center and the technology generation - Use of outdated adoption and National Agency for Support and advisory services and inefficient close the skills to Rural Development for by widening and technologies. gap improved services delivery to upgrading extension farmers. services. • Expand the coverage • Foster digital financial - Loss of opportunities Improve access of the government’s service (DFS) usage, and revenues for to financial Partial Guarantee Fund access and reduce cost famers. services and to agricultural lending by in rural areas. - Missed opportunities insurance financial institutions. for financial institutions in agriculture sector. 12 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Promote • Implement the Regional • Expand sustainable - Disappearance of sustainable Standards for Sustainable forest management. forest cover management Cocoa (ISO 2019ARS • Mainstream climate- - Rising land conflicts of natural 1001, 1002, and 1003) for smart technologies, - Severe water crisis. resources and sustainable production and financing, and policies. - Inefficient agriculture strengthen including a traceability sector expenditure policy and system with measures to management. governance in tackle deforestation, child agriculture labor, and ensure cocoa quality and full payment of farm gate price and certification premiums to farmers ). • Enhance the security of land rights. Pathway 2: Job creation through private sector-led growth • Review of investment • Improve the quality - Reduced private Promote promotion and and cost of key sector and investment infrastructure implementation policies, services, such as development. investment to boost the availability of transport, logistics, - Limited development and efficient industrial zone land and energy and ICT. of startups industrial foster agglomeration effects. ecosystem. policies • Strengthen supervision of • Support capital - Reduced private financial institutions and market development sector and investment Expand access the availability and range of and easier access to development. to finance and DFSs. finance in underserved - Limited development deepen capital • Promote financial literacy sectors. of SMEs and startups markets ecosystem. • Promote platforms • Improve land - Reduced private Expand targeted for coordination and acquisition. sector and investment supports to communication between • Enhance competition development. SMEs and firms public and private for markets and in - Limited development stakeholders on topics such markets, especially in of SMEs and startups as labor regulations, skills upstream sectors. ecosystem. development, promoting on- - Weak job creation the-job training. and high youth unemployment. 13 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Pathway 3: Human capital Development through improved service delivery and better social spending • Expand education and health • Deliver vocational and - Increased skills Improve quality through investments in life skills training to mismatch; lower and access to human resources, material young women cognitive skills health and and physical buildings. • Set up a Foundational attainment; increased education • Increase access to ID platform to provide inequality and services, Health services through a universal and free scarring on the especially operationalization and unique ID number poor from shocks, among girls, expansion of National including climatic women, and Health Insurance Scheme • Introduce a shocks (i.e. with no poor and (Couverture Maladie performance-based adaptive SP system. vulnerable Universelle (CMU) coverage. financing mechanism - Limited potential for households • Improve targeting of and complete the key further development in remote resources and the expansion reforms to establish of human capital. locations of social safety nets, a quality assurance including through the system in both operationalization of the Education and Health Social Registry, ensuring sectors. adequate coverage and regular updates. Improve the • Implement strategic • Develop a prospective - Poor quality of allocation and purchasing in the public and school mapping health and education efficiency of private health sector. system for expansion outcomes. public spending • Develop an accountability of the school network - Inefficient use of on health care mechanism for spending and the allocation of public expenditures. and education at all primary schools resources. - Limited potential for services and health centers using further development scorecards. of human capital. Crosscutting constraints and drivers to make growth more inclusive, innovative and sustainable • Set up safe spaces • Support women - Increased Promote the for adolescent girls to entrepreneurs to vulnerability to role of women provide them with life and access finance and poverty. in the economy technical skills and sexual markets. - Higher fertility rates. and reproductive health knowledge. • Strengthen the capacity of • Support - Failure to meet Strengthen the the National Environment implementation its Nationally sustainable Agency (Agence Nationale of adaptation Determined use of natural de l’Environnement) and strategies for Contribution (NDC) resources the Ivorian Antipollution activities with commitment. Centre (Centre Ivoirien adverse climate - Increased negative Antipollution). impacts in energy, impacts of GHG. • Update environmental water, roads, - Poor development regulations agroforestry sectors. impact and outcomes. • Operationalize the public • Increase use of - Low dividend from Expand backbone National e-services in public the Digital Economy. availability and Broadband Network administration. - Poor service delivery. use of digital • Improve regulation to - High cost of services. services promote competition and price reduction. 14 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 PART I: INTRODUCTION AND FRAMEWORK Countdown to 2030: Recent Economic Developments and Trends in Poverty Reduction Doubling its GDP per capita by 2030 is Côte d’Ivoire’s ambition for the next decade. Cote d’Ivoire is the largest economy within the West African Economic and Monetary Union (WAEMU). Following a period of civil war in 2002–04 and a postelection crisis and armed conflict from late 2010 to April 2011, the country experienced a growth acceleration, becoming one of the top-performing countries in the region and ranking among the fastest growing economies in the world. As the country solidifies the gains of the recent decade and embarks on a new growth agenda underpinned by its National Development Plan - with the aim of doubling its GDP per capita by 2030 – new and persistent challenges remain. The path to 2030 entails deepening the structural transformation of the economy by enhancing productivity growth and value addition to support the creation of more and better jobs. Growth will have to become more inclusive and sustainable through stronger, wider social safety nets and reversing the depletion of natural capital. Poverty reduction has been driven by a decade of growth and supported by pro-poor programs, but the COVID-19 pandemic has challenged recent gains. Household survey data measuring the progress in poverty reduction are scarce and beset by comparability challenges. Nonetheless, poverty incidence declined from around 55 percent in 2011 to about 39 percent in 2018, corresponding to close to 10 million Ivorians living below the national poverty line of CFAF 345,520 (US$1.00 = CFAF 570). However, the burden on enterprise and household incomes imposed by COVID-19 lockdowns and the (temporary) economic slowdown have led to rising poverty. The pandemic shocks to employment income have had a significant impoverishing effect. The drop in household consumption suggests that the number of the poor rose by approximately 500,000. The government’s crisis response, including the strengthening of social safety nets (cash transfers and the beginning of the rollout of universal health care) helped mitigate the fallout. When the SCD Update analysis was concluding, Côte d’Ivoire and the global economy appeared poised for a strong recovery. Yet, uncertainties abound. Although the Ivorian economy has shown resilience, suggesting that the pandemic was mostly a temporary shock, longer-term impacts are possible (box 1). Box 1. The COVID-19 pandemic impact on the economy and livelihoods highlighted the need to strengthen resilience The pandemic outbreak was relatively limited, because of the relative youth of the population and government containment policies. An initial surge in COVID-19 cases in spring 2020 led to a swift and comprehensive response from the government. As a result, the pandemic stabilized at relatively low levels. As of January 2022, the Ministry of Health and Public Hygiene had confirmed 78,669 cases (3072 per million population) and 747 deaths (a mortality rate of 0.95 percent). The government- imposed border restrictions and social distancing opened new testing centers during the summer of 2020, and case numbers mostly fluctuated at low levels of around or below 50 cases per day, with a few spikes during holiday travel periods. The authorities regularly reinforced the capacity of the health system by raising the number of health workers and the quality of health care facilities, while promoting good hygiene and social distancing through extensive media campaigns. 15 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 In macroeconomic terms, the pandemic had a significant, but temporary impact. The country entered the crisis in a position of strength, with a dynamic economy, moderate debt, a budget deficit in line with the regional target of 3 percent, and low inflation. Nonetheless, real GDP in 2020 was severely affected by the pandemic, and growth slowed to 2 percent, instead of the nearly 7 percent expected before COVID-19. The volatility in global demand and commodity prices resulted in lower exports, while foreign direct investment and external financial flows declined. On the supply side, agriculture showed some resistance, but several service and industrial sectors were greatly affected. The lockdowns highlighted the need to accelerate digitalization, including in public administration. Implementing procedures that did not depend on physical contact or physical media was challenging in many functions because of a lack of information technology (IT) equipment suitable for working remotely, poor internet connectivity or speed, and the capacity of workers to switch to a remote mode to participate in meetings at a distance and other online procedures. Several services made advances in the digitalization of paper-based procedures (such as export and import documentation), but more must be done to support greater efficiency in the performance of administrative tasks on a larger scale. The pandemic underlined the vulnerability to shocks and the need to strengthen resilience.a The restrictive measures implemented to slow the outbreak affected wage and nonwage employment revenue and consumption. The pandemic had an impact on jobs in both the formal sector and the informal sector in the first half of 2020. Formal private enterprises cut jobs by 22.5 percent, and job losses in the informal sector and among SMEs were also significant. However, the second half of 2020 saw a rebound in employment. At the national level, the pandemic shocks to employment translated into a potential rise in poverty. An analysis of the impact of the drop in household consumption on the poverty rate suggests that urban households were more highly affected than rural households. The impact was softened by the government’s pandemic support program, including financial help for enterprises and cash transfers for the most vulnerable households. Nonetheless, efforts to reduce poverty again will have to be renewed, and the crisis has also highlighted the need to strengthen resilience, especially among the poorest segments of the population. a. The data used to assess the socioeconomic impact of COVID-19 are derived from three rounds of nationally representative phone surveys. The surveys were fielded in April, August, and October 2020. Each round collected information from approximately 1,500 households, 700 household microenterprises, and 400 formal businesses. The 2018–19 Harmonized Household Living Conditions Survey (EHCVM) and the 2017 informal sector survey were used as benchmarks for comparison. The last comprehensive Systematic Country Diagnostic (SCD) was conducted in 2015 (World Bank 2015). The 2015 SCD examined key constraints and opportunities in accelerating poverty reduction and boosting shared prosperity. Two main pathways contributing to the achievement of these objectives were identified: (1) promoting job creation through private sector–led development and the country’s large agricultural sector and (2) improving human capital development and the efficiency of social spending. These two strategies were to be underpinned by substantial improvements in economic governance and land rights, which had previously been identified as cross-cutting constraints. This SCD Update provides a review of the previous SCD and its findings and builds on the premise that key challenges—jobs, private sector competitiveness, and human capital—remain relevant; while new ones have become more prominent. At the same time, this update incorporates new, important developments, including emerging trends cutting across increasingly pressing challenges, notably climate 16 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 change and rising insecurity risks; and the impact of COVID-19. Climate change has become a more important development constraint, given the country’s dependence on agricultural commodities, coastal exposure, and large share of vulnerable populations. At the same time, the security situation in neighboring Sahel countries has been deteriorating, the risk that conflict will spill across the border is increasing, and the fragility of Côte d’Ivoire may be increased by the wide internal disparities between urban areas and the border regions where living standards are much lower. The SCD focuses on the goals of sustained poverty reduction and shared prosperity and reviews the progress to date and the major constraints according to the latest data and most recent developments. It also supplies recommendations on policy priorities. It builds on recent evidence on Côte d’Ivoire, including the Poverty Assessment (2022), the Country Private Sector Diagnostic (2020), the Country Economic Memorandum (2021), the Digital Economy 4 Africa Diagnostic (2021), the Human Capital Project (2021), and a series of Economic Updates, and the input reports to support the country’s Vision 2030 (see, respectively, IFC 2020; World Bank 2020b, 2021c). This SCD Update is also informed by external consultations with the government, civil society, the private sector, development partners, and the academic community. It is intended as a concise report to summarize key findings and provides a discussion of key issues, instead of covering all areas in depth, and references other sources for detailed sectoral analyses. To achieve this objective, this section provides a review of the recent economic development as well as the dynamics behind social inclusion and poverty reduction. 1. Sustaining the growth acceleration and deepening the structural transformation will require greater productivity growth Côte d’Ivoire was one of the most rapidly growing countries in sub-Saharan Africa in 2015–19. Annual real GDP growth averaged 6.9 percent a year (figure 1).5 This economic performance was driven by a rapid expansion of services and industry on the supply side, and private consumption and investment on the demand side. Services accounted for almost half the growth in 2012–2019, followed by industry, largely reflecting a construction boom. Structural factors, particularly infrastructure and credit growth, have reinforced growth, partly reflecting the progress Côte d’Ivoire has made in infrastructure development. Sound macroeconomic policies also supported growth. However, the catch-up effects are dissipating, and public spending will be constrained by the more limited fiscal space as the country exits the COVID-19 pandemic with a larger public deficit and higher external debt levels. Getting to the next stage, will require (1) creating the foundations for the private sector to become the primary engine of growth and (2) accelerating structural reforms to shift the economy toward higher value-added activities. However, growth has been concentrated in Abidjan and is not sufficiently inclusive. The government’s social program, PSGouv, which includes a new social safety net system and a universal health care scheme, has helped redistribute some of the gains of growth to the wider population. Furthermore, supported by government investments, rural areas have experienced improvements in infrastructure. However, significant disparities in income, access to services (including public services), and economic opportunities persist. While poverty incidence declined prior to COVID-19 and is forecasted to decline again from 2021 onward as economic growth resumes, progress has been uneven. Poverty rates have remained high in rural areas across many regions. The country’s growth model ought to become more inclusive by providing better income- generating opportunities to the wider population. 5   The rate would be 5.9 percent if 2020 is included. The government conducted a rebasing exercise in early 2020, changing the base year for its national accounts from 1996 to 2015. The rebasing was mostly driven by services, and increased nominal GDP by more than 30 percent over the period. 17 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Figure 1. High growth was led by increasing private consumption and investment Contribution to to Contribution GDPGDP Growth: Growth: Demand Demand side side Contribution Contribution GDP to to Growth: Growth: GDP Supply Supply side side 20,0 20,0 16,0 16,0 14,0 14,0 15,0 15,0 12,0 12,0 10,0 10,0 10,0 10,0 8,08,0 5,05,0 6,06,0 4,04,0 0,00,0 2015 2016 2015 2016 2017 2018 2019 2017 2018 2019 2020 2021 2020 2021 2,02,0 -5,0 -5,0 0,00,0 -2,0 2015 -2,0 2015 2016 2017 2018 2016 2017 2018 2019 2020 2021 2019 2020 2021 Private Private Consumption Consumption Government Government Consumption Consumption Agriculture Agriculture Industry Industry Government Government investment investment Private Private investment investment Services Services taxes NetNet taxes Export NetNet Export in Inventories ChgChg in Inventories Gross Gross domestic domestic Product Product Gross Gross domestic domestic Product Product Source: World Bank estimates based on government data. Data as of February 2022. Quality job creation requires greater productivity. Growth was previously supported by labor productivity gains, including in manufacturing, but labor recently shifted from low-productivity agricultural activities to low-productivity services, such as commerce, retail, and informal transport. Job creation has not kept pace with demographic change and an increasing population of young people, and high unemployment rates have limited the growth potential. Constraints exist on the labor demand side and the supply side: There are not enough jobs for the growing population, but also the work force has limited skills and often the wrong type of skills to meet the requirements of the private sector. The government and stakeholders have made significant progress in improving the business environment, but allocative inefficiencies need to be addressed. While the country has been one of the top reformers of the business climate until 20196, key barriers to entry—access to industrial land, the higher cost of transport and logistics, limited access to finance, especially among SMEs, and the large size of the informal sector must be addressed. New firms are less productive than older firms, and the most productive firms have not always raised their market shares because of barriers to competition, lack of competitive neutrality, or lack of access to credit (World Bank 2022). Structural reforms will be essential in promoting more rapid private sector–led growth. Côte d’Ivoire’s economy was relatively resilient to the 2020 COVID-19 shock partly because of a strong track record of sound macroeconomic policies. The country entered the crisis from a position of strength, with a dynamic economy (+6.2 percent growth), moderate debt (41.2 percent of GDP), a fiscal deficit (2.3 percent of GDP) below the regional target of 3.0 percent, and low inflation (0.8 percent). Nonetheless, real GDP in 2020 was severely affected by the pandemic, decelerating to 2.0 percent. Swings in global demand and commodity prices led to lower exports, while foreign direct investment and other financial inflows shrank. Household consumption grew by 1.9 percent, only a third of the growth in recent years. On the supply side, agriculture production was resilient, but services and industrial subsectors were hit hard. Inflation increased 10 10 5 6  5Doing Business Data (dashboard), International Finance Corporation and World Bank, Washington, DC, https://www.doingbusiness.org/ en/data. 0 0 Abidjan Abidjan Other Other urban urban Rural Rural National National Decile Decile 1 vs. 1 vs. 10 10 Quintile Quintile 1 vs. 1 vs. 5 5 18 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 moderately mainly because of higher food costs. Traditionally a backbone of the economy, with 20 percent of value added, export revenue supported the country’s resilience and an only moderate widening of the current account deficit in 2020. To mitigate the economic shock faced by people and firms, the government implemented a COVID-19 crisis response package, driving up the fiscal deficit to 5.6 percent of GDP in 2020. The response package included cash transfers for vulnerable households, temporary tax cancellation and tax deferrals that benefited vulnerable households and enterprises, emergency funds to provide financing to the private sector, and specific support for key sectors and state-owned enterprises (SOEs). Poverty rose during the pandemic on account of severe COVID-induced income losses among many households. However, government support and a rebound in growth are expected to put poverty back onto a downward trajectory starting in 2021. The economy is set to recover to its pre-pandemic levels in 2021-22 thanks to the satisfactory implementation of stimulus plans and the continuation of fiscal and monetary support measures. Real GDP is estimated at 6.7 percent in 2021. High-frequency data show several indicators, including trade, manufacturing, telecommunications, and business, rebounding strongly, despite temporary disruptions in electricity supply caused by climate-related factors. The recovery is supported by the extension of the central bank's accommodative monetary policy measures and fiscal support package of the government that continued in 2021, coupled with the easing of mobility restrictions following a substantial progress in the vaccination campaign. Inflation, however, has risen to 4.2 percent in 2021, outpacing the regional target of 3 percent mainly driven by food prices caused by a poor rainfall. The fiscal deficit decline by 0.5 ppt to 5.1 percent of GDP in 2021 on the back of stronger than expected revenue performance. Total Public debt rose to 52.6 percent of GDP, as a result of heightened financing needs to address further urgent security and health needs, as well as lower than expected energy revenues. The outlook remains positive in the medium term with growth expected to remain at potential in the next few years underpinned by the National Development Plan (2021-2025). Creating fiscal space to finance adequately expenditure and ensure inclusive and sustainable growth will hinge critically on strong tax policy reforms in the medium term. Despite this relatively favorable outlook, the downside risks are significant. Côte d’Ivoire may yet face a new, more severe domestic wave of COVID-19 outbreaks if new strains become more prevalent or vaccine access takes longer than expected to materialize. The slow recovery globally and the risk of new waves could depress export prices and demand, while slowing the recovery of foreign direct investment. Following presidential and parliamentary elections in 2020 and 2021, both won by the incumbent government, there is an opportunity for deeper structural reform. The pandemic has also highlighted the need to strengthen the country’s resilience through a more inclusive growth model that is more environmentally sustainable and more robust to outside shocks. 2. Reducing inequalities is the next challenge to capitalize on the gains in poverty reduction The incidence of poverty has declined steadily in Côte d’Ivoire since 2011, but COVID-19 is estimated to have pushed about 500,000 people back into poverty. Following a decade of civil and political conflict, the share of Ivorians living below the national poverty line—CFAF 345,520 per person per year in 2018—peaked at an estimated 55 percent in 2011. As the Ivorian economy caught up after the lost decade, poverty incidence declined to 39.4 percent by 2018 and was projected to decline to 36.9 percent by 2020. The COVID-19 induced a slowdown in economic growth instead and reversed the gains of recent years. This may have resulted in 445,000 additional poor during 2020. High-frequency survey data collected in April and October 2020 suggest that many households experienced substantive declines in income because of job losses and falling incomes among self-employed informal workers.7 Indeed, some estimates suggest the number of additional poor might have been closer to 918,000 in August 2020 following the lockdown measures and then dropping to 7   The data used to assess the socioeconomic impact of COVID-19 are taken from the three rounds of a phone survey (see box 1). 19 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 534,000 by October 2020 after restrictions were eased and government support programs were rolled out. However, these are estimates, and the scale and depth of the impact, including of government programs, will become more well understood through the analysis of the forthcoming 2021–22 household survey. The COVID-19 pandemic eroded two years of the gains in the fight against poverty, and the challenges ahead in recapturing and improving on the gains in poverty reduction are substantial. Favorable labor market outcomes contributed to poverty reduction in 2015–18. Employment opportunities expanded, particularly to the benefit of women and urban dwellers, in 2015–18. The ratio of the employed in the working-age population rose nationwide from 70.3 percent in 2015 to 76.4 percent in 2018. The rise was substantial among women, from 63.7 percent to 75.2 percent in 2015–18. Returns to education and the working experience also improved during the period. A strong, significant relationship was observable between the level of education and earnings; however, salaries were still unequal depending on sex and location. Progress was made in nonmonetary dimensions of well-being, though some gaps in access were widening. Access to electricity, clean water, health services, and primary and secondary schools improved, as did the ownership of modern assets, such as mobile phones, televisions, computers, and motorcycles. Accessibility to roads and markets also improved across all types of households in 2015–18. Nonetheless, many of the improvements were less pronounced among poorer rural residents. For example, access to piped water increased from 36 percent in 2015 to 50 percent in 2018; yet, Abidjan had nearly universal access, at a rate of 93 percent, whereas only one rural resident in three had access in 2018. In addition, access improved in many respects more quickly among the upper 60 percent of households (as measured by household income) and more slowly among the bottom 40 percent, thus revealing widening gaps. There are significant disparities between urban and rural areas in terms of access to education, health care, public services, electricity, water, and, more generally, economic opportunities. The gap between the poorest and richest varies across the country. Areas of high poverty incidence are common. Western regions bordering Guinea and Liberia exhibit a high incidence of poverty, above 60 percent. The same is true of central landlocked regions. Poverty incidence in Abidjan and in Yamoussoukro and along the eastern border with Ghana is among the lowest in the country. Geographically targeted antipoverty programs aiming to reach the maximum number of poor people should focus on the southern and western regions where poverty density is greater (map 1). The western regions of Guémon, Haut-Sassandra, Poro, and Tonkpi stand out as lagging regions in poverty incidence and severity. Corresponding to about 4 million people, 40 percent of the poor in Côte d’Ivoire reside in the autonomous district of Abidjan and in the western regions of Goh, Guémon, Haut-Sassandra, Nawa, Poro, and Tonkpi. Moreover, 40 percent of the extreme poor are concentrated in the western regions of Guémon, Haut-Sassandra, Poro, and Tonkpi. This is ground zero in the battle against extreme poverty in Côte d’Ivoire. 20 5,0 6,0 4,0 0,0 2015 2016 2017 2018 2019 2020 2021 2,0 -5,0 Cote d’Ivoire 0,0 Systematic Country -2,0 2015 2016 2017 2018 2019 n o s t i c 2021 D i a g2020 Update: Countdown to 2030 Private Consumption Government Consumption Agriculture Industry Government investment Private investment Services Net taxes Net Export Chg in Inventories Gross domestic Product Gross domestic Product Map 1. Poverty is especially prevalent in rural areas, notably the north and west of the country, 2018 a. Incidence of poverty b. Distribution of the poor Contribution to GDP Growth: Demand side Contribution to GDP Growth: Supply side 20,0 16,0 14,0 15,0 12,0 10,0 10,0 8,0 5,0 6,0 4,0 0,0 2015 2016 2017 2018 2019 2020 2021 2,0 -5,0 0,0 -2,0 2015 2016 2017 2018 2019 2020 2021 Private Consumption Government Consumption Agriculture Industry Government investment Private investment Services Net taxes Net Export Chg in Inventories Gross domestic Product Gross domestic Product Source: World Bank estimates based on EHCVM 2018/19. 10 Inequality is also substantial in Côte d’Ivoire, which may have limited an inclusive recovery from the crisis. 5 Measured by the Gini index, inequality was 0. 35 in 2018–19. Consumption gaps between the poorest 20 percent and the richest 20 percent of the population are high. In 2018, the average consumption of an individual in the top 20 percent of the income or welfare distribution was six times higher than the average 0 consumption of Other20 an individual in the bottom Abidjan percent (figure 2). Such urban a high level of inequality Rural poses a great National risk for the potential of an inclusive recovery from the COVID-19 crisis. It is well established that greater of 10 Decile 1 vs. inequality is linked with the lower responsiveness Quintile poverty 1 vs. 5 to economic growth. Figure 2. Spending power disparities persist in cities and between rural and urban areas ratio of average per capita consumption, by income group 10 5 0 Abidjan Other urban Rural National Decile 1 vs. 10 Quintile 1 vs. 5 Source: World Bank estimates based on EHCVM 2018/19. 21 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Unequal economic opportunities and limited social mobility contribute to maintaining inequality at a high level. Inequality of opportunity in labor incomes in 2018 is estimated at 16.7. This means that 16.7 percent of the total inequality in labor incomes is linked to circumstances over which an individual has no control, such as sex at birth or parental educational attainment. In addition, there are substantial barriers to socioeconomic mobility. Data from 2018 suggest that children in households in which the main adult man has no formal education have a 70 percent chance of not receiving any education, while the corresponding share is 66 percent in households in which the main adult woman has no formal education. Only 8.9 percent of children reach secondary or higher education if the main adult man has not attended school. The corresponding share is 10.0 percent if the main adult woman has no formal education. Rural agricultural workers constitute most of the poor population of Côte d’Ivoire. More than 56 percent of Ivorians depend on agriculture for their livelihoods, making the sector the country’s leading employer and the key to poverty reduction, especially in rural areas. Nearly 50 percent of rural households grow cocoa. This represents approximately 5 million people who are directly involved in cocoa bean production. Most of these people live in the midwestern and southwestern regions, which account for the highest number of the poor. The high level of poverty in the southwestern regions can be partly explained by the drop in farmgate prices for cocoa by 25 percent in 2015–18 (map 2). Generally, 30 percent of rural households rely solely on agriculture with no other income source. The poor are more likely to work in agriculture: 34.3 percent of poor rural households earn no nonfarm income. They tend to live in large households with high dependency ratios and to have low educational attainment.8 Access to health care is often constrained by the distance to the nearest facility, the quality of facility services, and the money to pay for the care. Map 2. Poverty in rural areas is associated with crop types occupation of agricultural land, by crop Source: World Bank estimates based on EHCVM 2018/19. 8   The dependency ratio is the ratio of the number of economically inactive individuals to the number of working-age individuals. An inactive person ages less than 15 or more than 65. 22 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Urbanization and labor migration out of agriculture are creating pressure on urban job markets, with a significant impact on the urban poor. Urbanization has been fueled by demographic change, including a relatively high fertility rate (4.6 children per woman in 2018), combined with a declining mortality rate, but also the attractions of the higher incomes in cities. Given the low productivity of agriculture, city activities, such as manufacturing and services, have added to the pull of cities, but, because of insufficient job creation, many workers end up in (often informal) service jobs. The pressure on urban job markets (notably, in Abidjan) has increased steadily, and, despite the rise in the employment ratio among the working-age population in 2015–18, many people find themselves in the informal sector with no social protection and with greater vulnerability, especially among women. As a result, urban poverty (which is exacerbated by high rental costs) is characterized by low educational attainment and limited access to basic services and transportation. Urban poor households usually do not have the money to access health care and therefore rely on self-medication. Informal enterprises provide livelihoods to important segments of the population and might thus play a role in reducing poverty. Based on recent data, three major groups of relevant informal enterprises have been identified. The top performers represent 17.9 percent of the sector and show relatively high productivity and incomes. Their monthly productivity, that is, turnover per worker, is estimated at about CFAF 165,000. They represent larger firms at physical locations. The owners have higher educational attainment or have received professional training. The midlevel performers (the gazelles) account for most of the informal sector. They do not have premises for their businesses and are often women traders with no education or professional training. Monthly productivity is lower, at less than CFAF 71,000. The bottom performers (23 percent) are the survivalists and have even less financial power and are less well educated, less likely to register their businesses, and less likely to be involved in a business association. Policies to address urban poverty should be tailored to these three groups and their needs and characteristics. The analytical framework of the SCD This SCD Update assesses the key policy challenges and opportunities in the promotion of shared prosperity and the achievement of poverty reduction. The 2015 SCD identified constraints and opportunities associated with the achievement of the twin goals of ending extreme poverty and improving shared prosperity. It focused on two main pathways as prerequisites for growth: (1) promoting private sector– led development and creating better jobs and (2) building better human capital, coupled with reforms in land rights and governance (World Bank 2015). This SCD Update assesses the key policy challenges and opportunities in the promotion of shared prosperity and the achievement of poverty reduction. These are structured along three pathways (figure 3). 23 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Figure 3. Growth depends on progress in governance and along three main pathways Shared prosperity & Inclusive growth Pathway 1 : Improving Pathway 2 : Job creation Pathway 23: Human Capital agricultural productivity and though private-sector led Development through 3 Pathways rural incomes growth improved service delivery towards • Agricultural productivity • Manufacturing & and better social spending developement • Agri-value chains integration diversification • Health • Boosting non-farm rural • Services, self- • Eduction incomes employment and SMEs • Social Protection Fragility, insecurity and spatial disparities Cross-cutting Digital development and ICT constraints and drivers Enviromental sustainability and climate change Gender equality and female empowerment Strengthening Governance & institution • Efficiency, effectiveness and set-up of the public administration (including its modernisation; Foundations SOE governance; transparency and accountability aspects) of Growth • Decentralization as a key driver of territorial developement • Increasing domestic resource mobilization Source: World Bank. In addition, since the publication of the 2015 SCD, the regional and global landscape has changed in several ways, which could have considerable impact on Côte d’Ivoire’s growth trajectory. First, climate change has become a more important development constraint, given the country’s dependence on agricultural commodities, coastal exposure, and large share of vulnerable populations. Second, the security situation in neighboring Sahel countries has been deteriorating, the risk that conflict will spill across the border is increasing, and the fragility of Côte d’Ivoire may be increased by the wide internal disparities between urban areas and the border regions where living standards are much lower. Third, the new SCD should take more explicitly into account the role of women’s empowerment and women’s role in the economy. Fourth, digitalization has become a key driver in raising the economy’s competitiveness and in the operation of the public sector. Box 2: Consultations with a range of stakeholders inform the results and priorities of the SCD Update Consultations and outreach activities were conducted through virtual meetings with key stakeholders and outreach to the population through an online survey and radio programs. Given the constraints imposed by COVID-19, the team pursued two main avenues. First, separate virtual meetings were organized with representatives of government agencies, private sector entities, civil society organizations, research entities, academia, and other donor agencies. Second, the World Bank and Radio Côte d’Ivoire presented a week-long series of programs, coupled with an online survey and social media marketing, to solicit feedback from the population and give Ivorians a voice in the process. Virtual meetings with selected stakeholders highlighted that the SCD was relatively comprehensive, and the prioritization of challenges and reform opportunities was adequate. 24 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Key themes that were frequently mentioned included (1) the importance and efficiency of agricultural value chains with the challenges in infrastructure, financing, skills, technology take-up, and government support for all of these; (2) the challenges in education and skills from the demand side (lack of good jobs for young people), but also the supply side (insufficient numbers of qualified labor), and especially the need to improve schooling and on-the-job training; and (3) constraints in governance, including the overall capacity of public administration, the presence of widespread corruption, which represents a crosscutting burden on efficiency and limits the trust of the population in the administration, and the need to promote decentralization for more equitable (territorial) development. The SCD team organized a series of radio programs over the course of one week dedicated to specific questions and themes to reach out to the population, including in more remote regions of Côte d’Ivoire. More than 70 people called in or posted on Facebook on a variety of topics. The program on digitalization and rural and agricultural development received the largest number of responses. Rural and agricultural development also emerged as the most frequently mentioned concern across all programs. Callers flagged the challenges around producer prices and inflation, the nature of value chains that leave little revenue to farmers and create constraints among farmers seeking to integrate and upgrade into value chains, and the limited capacity of public agencies to support extension services. The second most frequently mentioned theme across all programs was the challenges facing young people, the lack of jobs, the lack of skills, and the constraints in the education system. “To reduce poverty and make sure that growth benefits all, we must build factories for processing local products in each region to create jobs and fight unemployment,” said one caller. Corruption, coupled with public sector efficiency, was the third most popular topic, alongside many comments on the quality of governance, but also the links to social cohesion and trust in the state. “Decentralized structures must advocate for the well-being of individuals,” said a caller. “So, it is important to improve the management of our structures, that is to say, listening to the people. Good governance is good management; it is democracy.” The team also proposed themes chosen from the crosscutting topics of this report to highlight the importance of these theme. Digitalization was the topic that received the most responses, and many callers highlighted the benefits of using more ICT in agriculture and the many opportunities to boost digitalization in this sector, followed by the need to digitize public administration. Regarding measures to protect the environment, callers emphasized the need to make the public more aware of this topic and the state’s role in accomplishing this. On women’s empowerment, many commenters flagged the constraints facing women in agriculture, notably, the lack of access to finance. This constraint also affects women entrepreneurs in general. Comments on ways to improve social cohesion focused on more equitable territorial development, political tensions, and reconciliation (including for political prisoners). The World Bank propagated an online survey along lines similar to the radio program. Feedback was forthcoming from 202 respondents. The questions included open questions, multiple choice questions, and questions involving a need to rank priorities. The most important actions identified for overall development were (1) fighting corruption (a priority among 146 respondents), (2) education reforms (124 respondents), and (3) improving health care sector services (101 respondents). The focus on corruption mitigation also came out as the most important measure for improving governance, notably, through the digitalization of public services, which was considered a priority by 155 respondents. The key obstacles to poverty reduction perceived by respondents were unemployment (55 respondents), followed by access to public services (health care, education, utilities). Responses to open questions, for example, on how to promote social cohesion, were much more varied and diverse. Frequently mentioned issues were the liberation of political prisoners, strengthening access to justice for all, sharing the benefits of growth more equitably, and promoting a national identity that also acknowledges cultural diversity in daily life, whether in families, businesses, or schools, to educate the new generation, because Côte d’Ivoire is diversity. 25 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The selection of key priorities for this report relies on a thorough review of the evidence, an internal scoring process, and consultations with national stakeholders. Internally, recent analytical work provides the basis for identifying new perspectives on binding constraints and corresponding reform pathways, which were internally scored by considering their potential impact on the twin goals of reducing poverty and expanding shared prosperity, as well as their feasibility. In addition, the World Bank carried out extensive consultations with the government, the private sector, and civil society (box 2). Feedback was used to calibrate the choice of policy priorities, which fall into three categories (table 1). Governance remains a foundational priority for the government in carrying out its ambitious reform agenda. Pathway priorities are linked to the most important themes and sectors and aim to address the most binding constraints so progress may be achieved in each topical area. The transversal priorities identified relate to the emerging drivers of threats and opportunities and highlight key actions. Table 1. Key policy priorities in Côte d’Ivoire’s trajectory to becoming an emerging market economy Strengthen government effectiveness by increasing the quality-of-service delivery, public policy making and the coordination of public institutions, Foundational priority promoting decentralization and greater public accountability, and mobilizing domestic resources. Strengthen agricultural productivity and rural development through infrastructure investments and policies that close gaps in access to markets Pathway 1 and global value chains, the availability of financial services, and capacity building among farmers and public support institutions that is underpinned by a greater focus on sustainability standards. Enable the economy’s transformation to make the private sector the primary engine of growth and to accelerate job creation by promoting infrastructure Pathway 2 investments and efficient industrial policies, improving financial sector depth and stability, and expanding targeted support measures for small and medium enterprises (SMEs) and entrepreneurs. Improve human capital and living standards by prioritizing the quality-of- service delivery through governance reforms, while expanding social safety Pathway 3 nets and access to health care and education with continued investment in infrastructure. Make growth more inclusive, innovative, and sustainable by (a) empowering women to make take advantage of their rights and play a greater role in the economy; (b) focusing more on policy sustainability, energy efficiency, forest- Transversal priorities preservation, and climate smart agriculture; (c)  expanding the availability and use of digital services; and (d) promoting social cohesion and inclusive development in rural areas through targeted and decentralized strategies also to address the drivers of fragility and security risks. 26 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 PART II: CROSS-CUTTING AND FOUNDATIONAL AREAS Cross cutting areas: gender equality, climate change, digitalization, and fragility will shape development This section explores emerging trends that may become threats to or opportunities to growth. Some of the emerging trends already identified by the 2015 SCD could become major drivers of growth or major risks to growth. First, the government and other stakeholders must ensure that the gains of growth are distributed equitably across the country and different groups in the country, including residents of rural and remote areas and women, girls, and young people, who are disadvantaged in many ways. Second, the government and other stakeholders must address deforestation and embed climate adaptation and mitigation measures into policy choices urgently to ensure that climate change does not endanger wealth accumulation and create more vulnerability. Third, to make the economy more dynamic and innovative, the government could use digitalization as a bigger lever for growth. This would mean putting digital infrastructure, e-platforms, fintech, and financial literacy closer to the heart of development strategies. Fourth, social cohesion is fragile. This is a legacy of the conflict a decade ago. Persistent inequalities across society and the deteriorating security situation in the subregion may endanger stability and growth. Reinforcing social cohesion and addressing inequalities to build trust and resilience The drivers of fragility, conflict, and violence in the country, highlighted in the 2015 SCD persist. The economic performance of the country was favorable; the growth rates were impressive; and poverty reduction was sustained after 2012, but the government still faced challenges. The 2015 SCD referenced the following root causes to conflict: (1) national identity, (2) a deficit in youth integration and the syndrome of the lost generation, and (3) land reform. In addition, the 2015 SCD highlighted three factors at the core of the civil conflict that had been mentioned during the stakeholders’ consultations process: (1) lack of an adequate focus on development challenges in rural areas, (2) difficulties in establishing a homogenous and cohesive nation state, and (3) a difficult business environment. The SCD also identified the lack of access to justice as an important constraint affecting social stability in the country. Most of the challenges and priority policies identified in the 2015 SCD are still relevant. In particular, the SCD highlighted two prerequisites that have been deemed critical in supporting the country’s recovery from the conflict and the transition toward peace and stability: (1) land reform and (2) governance. There has been some progress on these areas, but fragilities remain as follows: Asymmetric access to assets, such as land, continue to divide the population and contribute to persistent inequality, notably reflected in geographical disparities. One of the main challenges facing the country is the challenge of making growth more inclusive through higher incomes rather than through redistribution. Severe inequality in the delivery of basic services and the low quality of these services exacerbate grievances. This is especially true in the north and northwest, where the gaps are more pronounced, and between rural and urban areas. Land is among the most controversial and sensitive topics in Côte d’Ivoire. It is a driver of tensions and violence, especially because land issues are profoundly linked to the notion of identity. 27 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The government has demonstrated its commitment to accelerate rural land registration and has recently taken steps to enact regulatory reforms in this sense, but implementation is only starting. Rural, urban, and forest lands are governed by different laws and ministries which complicates property rights. Further, the implementation of the Rural Land Law No. 98-750 has been complicated by the differential access to land titles according to nationality stipulated by the law, which may lead non-Ivoirians to question the nature of their land rights. To accelerate land reform, in 2016, the Government established a Rural Land Agency (Agence Foncière Rurale – AFOR) under the Ministry of Agriculture and Rural Development to entrust rural land registration to a single entity through a streamlined and simplified National Rural Land Tenure Security Program (Programme National de Sécurisation du Foncier Rural – PNSFR). Despite the progress, Côte d’Ivoire still has one of the most costly customary land certification processes in the region, and implementation of the 1998 Rural Land Law has been limited and largely dependent on donor support. Only about 4,000 land certificates had been issued from 1998 till 2018 out of an estimated 1 million rural plots (0.34%). The Rural Land Agency -established in 2017- has significantly improved the situation by registering 14,500 additional parcels in the two last years despite the pandemic. Women’s access to land also remains constrained by their lower levels of legal awareness and conservative customary norms that preclude women from owning land independently of their male relatives, even though there are no legal restrictions. Centralized and spatially concentrated governance feeds weak social cohesion and lack of trust, as exemplified by tensions in the run-up to the 2020 elections. Bad governance practices and perceived unfairness in the way the government manages resources and revenue are a major source of tensions in Ivorian society. They exacerbate grievances and undermine the social contract and trust between the state and its citizens. Governance structures in Côte d’Ivoire are heavily centralized. Decision-making is mostly concentrated in the large urban economic and political centers along the coast. Remote from the economic capital and the center of decision-making, residents in communities in the northern regions tend to experience perceptions of exclusion. At the origin of these perceptions are typical characteristics of fragility, including insufficient state presence, lower access to basic services and markets, and lack of voice and insufficient participation and representation in decision-making processes. These perceptions exacerbate the vulnerability of the northern areas and may undermine state legitimacy in the north. Côte d’Ivoire is affected by the new patterns of political violence and potential spillovers from the violence in the Sahel. These interact with tensions in many poorer, border areas of the country. Along with other risks, structural factors of fragility linked to disputes over land, and politico-economic grievances because of socioeconomic inequalities, the deteriorating security situation could destabilize Côte d’Ivoire. Perceptions of exclusion exacerbate the vulnerability to external threats. Thus, jihadist groups operating in the Sahel have repeatedly promised to expand their operations and attacks into the Gulf of Guinea.9 These promises seem credible because of recent attacks in Grand-Bassam (March 2016) and in the north (Kafolo attacks in June 2020 and March 2021). These groups also deliberately exploit individual and collective grievances, such as the grievances of excluded youth. Since 2012, the Sahel has experienced adverse spillovers from the conflict in Libya and the rebellion and political crisis in Mali, contributing to the spread of violent extremism throughout the region and toward the Gulf of Guinea, in particular Côte d’Ivoire (map 3). 9   On March 13, 2016, the first al-Qaeda attack and the first major incident of violence in the country since the end of the second civil war in 2011 occurred in Côte d’Ivoire (Hinshaw 2016). 28 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Map 3. Conflict is rising in the Sahel, underlining the need to address fragility in Côte d’Ivoire Source: ACLED (Armed Conflict Location and Event Data Project) (dashboard), Robert S. Strauss Center for International Security and Law, Austin, TX, http://www.acleddata.com/. 400 000 350map Note: The 000 shows violent events from January to March 2020. 300 000 Tree cover loss (ha) 250 000 Given the structural dynamics of the fragility, conflict, and violence cycles and the new patterns of violence, addressing inequalities and strengthening social cohesion to improve resilience and the 200 000 foundations of growth are essential. To accomplish this would require accelerating the decentralization 150 000 process for basic public service delivery, while restoring trust and social cohesion, strengthening local 100 000 and enhancing the security of land tenure to reduce intra- and intercommunity conflict and government, introduce potential sources of revenue for local authorities. To reduce perceptions of exclusion, promoting 50 000 a more balanced policy process is needed, focusing on lagging and disadvantaged regions in investment, 0 private sector development, and quality of and access in basic social services. This should be supported by the 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 adoption of regionally coordinated, people-centered solutions to address exclusion among socioeconomic groups, such as youth, women, migrants, and people with disabilities. Disenfranchised groups should be empowered by fostering more meaningful participation in local government. 60 50 Empowering40 women to enhance their contribution to development 30 Despite 20the progress achieved in upholding gender equality, women are disadvantaged in Côte d’Ivoire. 10 This includes limitations on their ability to realize enhancements in human endowments through access to 0 education and high-quality maternal and reproductive health care, but also through access to Vietnam good jobs, assets, voice, Upper OECD middle decision-making. and political Lower middle Senegal They are Morocco also often subject Cote d'Ivoire Ghana to gender-based violence income members income and sexual harassment. Gender gaps across these areas are associated with costs in lost economic growth. Profit tax (% of commercial profits) 2019 Total tax and contribution rate (% of profit) 2019 Tax revenue (% of GDP) 2018 29 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Recent evidence on other countries in the region indicates that the potential GDP gains from a demographic transition are significant, including because lower fertility rates raise the share of the working-age population in the short term. This highlights the impact of keeping girls in school to promote education and reduce fertility rates (World Bank 2019c, 2019d, 2020a). Progress has been achieved in closing gender gaps in access to health care and in enrollment and completion in basic education. This has been driven by greater government investment in the construction of new schools across the country, including schools specifically for girls; a growing number of scholarships for girls in science, technology, engineering, and mathematics; and the ratification of a law in 2015 that makes schooling compulsory for all boys and girls until ages 16. In maternal and reproductive health, the progress has been supported by government investments in infrastructure, including in lagging regions. The share of births attended by skilled health personnel rose from 59 percent to 74 percent in 2012–16. In 2015, the government established a national program for maternal and child health. However, gender gaps between urban and rural areas are substantial, and women are generally at a disadvantage. For example, the maternal mortality rate is high, at 617 deaths per 100,000 live births. Considering the strong correlation between age and birth complications among women, the 27 percent early marriage rate may be a contributing factor.10 HIV also continues to be a significant issue among women who represent 66 percent of adults living with HIV. Constraints related to women’s time, mobility, and decision-making on health care play in these outcomes and are especially pressing in the case of younger women (World Bank 2015, 2017a). In terms of women’s economic empowerment, progress has been made in agriculture, but self- employment remains an important survival strategy. A 2019 legal reform gave married men and women equal rights to own and manage property, which is a key source of collateral and income generation. The gender gap in agricultural productivity shrank by a third in 2008–1611, thanks to increased women’s access to inputs, especially nonlabor inputs (e.g. pesticides) that have especially benefited women farming export crops (Donald, Lawin, and Rouanet 2020). However, the gender gaps are larger in food-crop farming, where labor rather than nonlabor inputs are more important, and among woman-headed households in the bottom half of the productivity distribution. Still, lots of women remain active in low-productivity self-employment (Christiaensen and Premand 2017). With few other options and in the presence of restrictive sociocultural norms, a lack of gender-sensitive services, low educational attainment, and limited access to finance, household microenterprises are less productive if they are owned by women than if they are owned by men. Findex data show a recent widening of the gender gap in access to formal finance, though this has been partially offset by a significant expansion in women’s access to mobile money.12 In terms of voice and agency, women are underrepresented, despite some positive progress in certain areas. Women continue to be underrepresented in politics and government: they hold 20 percent of ministerial positions and 11 percent of the seats in Parliament. In 2019, the government passed a law requiring that women account for 30 percent of the electoral lists of political parties. This was not implemented in the elections in March 2021. Efforts have also focused on improving women’s access to the justice system, including through decrees on the decentralization of legal aid and attempts in 2016 to increase access to justice by women in rural areas and the establishment of a national committee to combat sexual violence related to the conflict. Initiatives to address the gender gaps in human capital and encourage the demographic transition could focus on keeping girls in school, especially secondary school. Evidence suggests expansion of the access to education among girls is especially responsive to costs, distance, measures to protect girls from child marriage, and health conditions (Evans and Yuan 2019). Costs, for example, can be addressed directly 10   The early marriage rate is the number of women ages 20–24 who married or were in unions before age 18 in the total number of women ages 20–24. See Childinfo (database), United Nations Children’s Fund, New York, http://www.childinfo.org/index.html; Child Marriage (dashboard), United Nations Children's Fund, New York, http://data.unicef.org/child-protection/child-marriage.html; Data (database), DHS Program (Demographic and Health Surveys), ICF International, Rockville, MD, http://www.dhsprogram.com/Data/; MICS (Multiple Indicator Cluster Surveys) (dashboard), United Nations Children's Fund, New York, http://mics.unicef.org/; other nationally representative surveys. 11   The research finds that the continuing gender gaps are even larger if measured by the gender of the plot owner or manager, indicating that the results of the work are not simply picking up the particular vulnerabilities of woman-headed households. 12   Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex.worldbank.org/#data_sec_focus. 30 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 through conditional cash transfers or indirectly through programs that pay for school supplies, such as uniforms (Duflo, Dupas, and Kremer 2015). While any customary or religious marriage of children ages under 18 is prohibited by law in Côte d’Ivoire, around 33 percent of girls are married by age 18, and 10 percent are married by age 15 (Fenn et al. 2015). Child marriage often triggers a cycle of deprivation and disempowerment among girls, entailing lower educational attainment, additional health risks tied to early pregnancies, and exposure to gender-based violence (Save the Children 2017). Given the slower progress in Côte d’Ivoire in addressing adolescent fertility relative to the progress in raising girls’ access to schooling, efforts should also focus on influencing broader social norms around women’s roles beyond formal education, such as in jobs and life skills training (Bandiera et al. 2020).13 In terms of raising incomes, women would benefit from support to help them increase their productivity whether within or outside agriculture. Because of the many constraints they face, women are frequently active in farming food crops despite the lower revenue potential. Helping more women shift into export crops, increasing the access to labor opportunities among the least productive women in food-crop farming (for example, through cash or credit facilities, childcare services, gender norms around domestic tasks) and strengthening women’s land rights (for instance, by subsidizing land titles conditional on allowing women spouses to share in property titles) could all help empower women (Carranza et al. 2017; Cherchi et al. 2019). Efforts to support women’s productivity as entrepreneurs are equally relevant but would require research on country-specific gender constraints that impede women’s home-based enterprises in Côte d’Ivoire. Efforts that address the time and capital constraints pushing women toward smaller home-based businesses in less profitable sectors that require lower capital investments and are more consistent with social norms around women’s roles could be especially relevant. This might involve secure savings mechanisms or mobile money to address women’s more limited household bargaining power and help women maintain greater control over their business revenues (Aker et al. 2016; Carranza et al. 2020). To promote a change in cultural values, cultural norms, and role perceptions, progress in human capital and economic opportunities should help. It also requires engaging with men as spouses and local leaders in discussions around social norms and women and men’s roles in society is critical and has been shown to boost outcomes across a range of domains. Making growth more sustainable by promoting green policies Côte d’Ivoire is one of the economies most vulnerable to climate change, the impact being larger on the country’s agriculture, water, and health systems. The country ranks 142 in most extreme climate vulnerability among 181 countries because of its substantial exposure to climate risks, its weaknesses in adapting to the negative impact of climate change, and its limited ability to attract investments in climate adaptation.14 The 2015 SCD highlighted that, rising temperatures are expected to render certain agricultural areas less suitable or even completely unsuitable for their current crops. Production patterns will have to shift, and alternative crops will need to be identified. Droughts are expected to become more frequent and severe and increase the risk of food insecurity. Flooding because of sea level rise is threatening coastal communities and their agricultural production. These risks cannot easily be managed through infrastructure. The SCD also noted that the country’s public health situation is likely to be affected by climate change because the population is exposed to many diseases that are influenced by climate parameters. This includes malaria, which is the leading cause of morbidity and mortality. The SCD recommendations covered the support needed in agriculture in adjusting and preparing for climate change through improved agricultural practices, crop diversification, agroforestry, curbing deforestation, and creating more natural buffer zones. A section on environmental risk management emphasized the need to upgrade the regulatory framework and the capacity of stakeholders to assess and implement better policies. 13   Successful model projects include the Sahel Women’s Empowerment and Demographic Dividend Regional Project and PRO-Jeunes, which targets young people in urban and rural Côte d’Ivoire. 14   See ND-GAIN Country Index (University of Notre Dame Global Adaptation Index) (dashboard), University of Notre Dame, Notre Dame, IN, https://gain.nd.edu/our-work/country-index/. 31 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The government and stakeholders have made progress in domestic and international climate-related policy making, but most of the policies have been directed at forest management. The 2015 SCD noted that coastal erosion was significant; the average land retreat was 1–2 meters a year. The government subsequently adopted Law 2017-378 (June 2, 2017) to strengthen the protection and management of coastal areas. A pilot project was implemented to strengthen the population’s resilience. More needs to be done to address this challenge. Under the Paris Agreement, the government submitted its Nationally Determined Contribution (NDC) in October 2016.15 In the NDC, the government committed to several climate adaptation and mitigation measures, including decoupling agricultural production and deforestation through the promotion of intensive agricultural practices that have a reduced impact on the environment, improving cropping schedules and production techniques, and promoting techniques for enhancing soil fertility and soil conservation. The government recently established standards for the sustainable production of cocoa, which include requirements to restrict deforestation and climate change, but enforcement of this standards need to be strengthened. It also works closely with the Partnership for Carbon Market Readiness to evaluate options in environmental tax policy based on carbon pricing. It joined the Coalition of Finance Ministers for Climate Action, which seeks to promote measures that result in effective carbon pricing. Reducing deforestation and forest degradation and promoting agroforestry, afforestation, and reforestation are at the core of Côte d’Ivoire’s NDC (figure 4). In 2017, the government developed a national strategy for participation in Reducing Emissions from Deforestation and Forest Degradation in Developing Countries with the objective of reducing deforestation by 80 percent in protected areas and replenishing 5 million hectares of degraded land by introducing trees in agricultural and rural landscapes (REDD+ Côte d’Ivoire 2017). The government prepared an Emission Reduction Program Document on the country’s southwest, encompassing the Taï National Park, a key carbon reservoir of global significance and the most heavily pressured by deforestation (FCPF 2019). It also signed agreements to incentivize local communities, along with protected area management institutions, to engage in long-term sustainable forest management. The government likewise adopted a new 2019 Forest Code, along with a number of implementation decrees. These provide a regulatory framework for the implementation of the Forest Preservation, Restoration, and Extension Strategy, which was adopted in 2019. The strategy is aimed at achieving more restoration and expansion in agroforestry initiatives, but strategy implementation has underlined the challenges in ensuring food security and reducing poverty among affected populations. Figure 4. Forest cover loss has been staggering 400 000 350 000 300 000 Tree cover loss (ha) 250 000 200 000 150 000 100 000 50 000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sources: Enerdata (dashboard), Enerdata, Grenoble, France, https://www.enerdata.net/research/; GFW (Global Forest Watch) (dashboard), 60 Institute, Washington, DC, https://www.globalforestwatch.org/. World Resources 50government controls, electricity prices in Côte d’Ivoire are much lower than the average among countries in the region and Note: Because of globally. 40 30 20 10 15   See NDC (Nationally Determined Contribution) Registry (dashboard), United Nations Framework Convention on Climate Change, Bonn, 0 Germany, https://www4.unfccc.int/sites/NDCStaging/Pages/All.aspx. Vietnam Upper middle OECD Lower middle Senegal Morocco Cote d'Ivoire Ghana income members income Profit tax (% of commercial profits) 2019 Total tax and contribution rate (% of profit) 2019 Tax revenue (% of GDP) 2018 32 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Incentives for energy efficiency should be strengthened. The legal framework to promote energy efficiency was established in 2020, but new financial incentives may be required to encourage households, enterprises, and the public sector to invest in energy efficient machinery, other equipment, or building materials and put the country on a lower carbon growth path for years to come. A Climate Change and Development Report will be undertaken by the WBG in 2023 to help define options towards a low-carbon growth path. Progress has also been limited in terms of disaster and pollution management, partly because of limited stakeholder capacity. A framework to manage coastal degradation was established in Law 2017- 378 (June 2, 2017). The government also passed a decree to improve air quality. Côte d’Ivoire is reforming its Environmental Code; a new version has been submitted to Parliament for approval in early 2022. The emergence of new ecological challenges and approaches have required a full revision of the current Environmental Code, adopted in 1996. The new version places front and center the fight against climate change, both mitigation and adaptation, the protection of biodiversity, the promotion of the green and the blue economies (including integrated coastal zone management), and the mobilization of new sources of financing for the environment. In particular, the development of environmental taxation, the limitation of greenhouse gas emissions, the fight against coastal erosion, the involvement of local authorities, the private sector and environmental protection associations are now being included as part of the regulatory framework. Improving coordination and knowledge among key stakeholders, including government authorities and local nongovernmental organizations, remains important to reduce the fragmentation of the institutional framework. Efforts to address climate change should focus on the most vulnerable sector, notably agriculture. To address the technology and skills gap, greater investment in climate-smart agricultural research and development (R&D) and extension services could significantly enhance marginal productivity and adaptation to climate change. Financing constraints in agriculture could be partially addressed by establishing new financial mechanisms, including climate insurance and microcredit, to facilitate adaptation (World Bank 2019b). While addressing the market access gap, the government must ensure that infrastructure is constructed in a climate- resilient manner, especially roads, which are susceptible to flooding and sea level rise (World Bank 2018c). Social protection systems should be designed to strengthen the climate resilience of vulnerable households in the current global context of increased climate risks and exposure. Any approaches and responses to climate change should be adapted to the specific needs of vulnerable populations, such as the identification of sensitive ways to promote the take-up of agricultural tools and capacity building. Environmental management urgently requires more attention and the strengthening of stakeholder agency capacities. The limited attention the issue receives, the shortage of specialized human resources, the inadequate information systems, the limited staff training, and the ineffective collaboration among agencies and ministries are a systemic problem that requires attention to support other changes, such as the establishment of legal revisions and a centralized strategy. This includes budgets for infrastructure (IT systems), hiring and training qualified staff in key agencies, such as the Agence Nationale de l’Environnement (National Environment Agency) or the Centre Ivoirien Antipollution (Ivorian Antipollution Centre), and creating more effective collaboration platforms and, possibly, a permanent technical structure for coordination, monitoring, and evaluation of the intersectoral and interinstitutional management of the environment. This could become the basis for updating the legal framework and launching initiatives to improve environmental policies, strengthen environmental, social, and corporate governance, including in public sector projects, and, in the medium run, change minds and attitudes to address the lack of understanding or awareness among decision-makers and civil society. 33 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Using digitalization to accelerate growth and development Digital development is a key to economic growth and the country’s transformation. In 2015, only 47 percent of the population had access to mobile phones, while 18 percent of the population had access to mobile broadband. The SCD noted the widespread availability of phone networks, but also the limited access to mobile internet and broadband and the rural-urban disparities. The SCD flagged the potential of digitalization to transform the efficiency of public services and other sectors of the economy, including agriculture and banking, and noted that widespread IT use would require an improvement in the digital literacy of the population. The ICT sector has recorded dynamic growth and expansion in coverage since 2015. The sector contributed 7 percent to GDP and provided around 2,500 direct jobs and more than 100,000 indirect jobs (Abidjan.net 2018; ARTCI 2019; CCILCI 2018). Access to mobile phones and broadband increased substantially to reach, respectively, 51 percent and 38 percent.16 An improving enabling environment—expanding the fiber backbone, spectrum neutrality, mobile number portability, infrastructure sharing—has improved coverage and service quality and led to falling prices.17 On the fixed broadband market, progress was less significant: only 4.8 percent of households had fixed broadband connections in 2020, compared with 9.0 percent in the Africa region.18 Since 2015, the government has implemented the digitalization of several public services, such as e-procurement, e-taxation, e-payments, e-government, and digital citizen engagement platforms, to improve governance, transparency, and anticorruption standards. Despite these improvements, the government and stakeholders are not capturing the full potential of the digital economy in long-term sustainable growth: ICT remains expensive, and inequalities persist. On the mobile connectivity index of the GSM Association, Côte d’Ivoire performed moderately well compared with other African countries, but was ranked 129 among 170 countries globally.19 The scores lag aspirational peers, such as Kenya and Morocco, particularly in local content, services, and affordability. Neighboring countries also do better on cost. A 1GB mobile broadband plan cost 2.59 percent of gross national income per capita in Côte d’Ivoire in 2020, far above neighboring Ghana (1.36 percent).20 On the digital financial services (DFSs) front, progress has been slower in Côte d’Ivoire than in East Africa; in the former, only 34 percent of the population use mobile money, compared with 73 percent in Kenya.21 Most of the transactions in Côte d’Ivoire are still associated with digital payments rather than more advanced DFSs, such as credit or insurance. Spatial (rural/urban) and sex (women/men) digital connectivity gaps remain important. Mobile ownership is lower among women than men, and the gap is wider in rural areas than in urban areas: the urban gender gap is 6 percent, while the rural gender gap is at 12 percent (GSMA 2019). The recent digital economy diagnostic of Côte d’Ivoire highlights policy priorities to accelerate progress across five foundational pillars (World Bank 2021a). These include digital infrastructure, digital platforms, digital finance, digital entrepreneurship, and digital literacy. This would require a concerted effort among stakeholders and the government, including the sector regulator, the Telecommunications/ITC Regulatory 16   See “Unique Mobile Subscribers” at GSMA Intelligence (dashboard), Global System for Mobile Communications (GSM Association), London, https://www.gsmaintelligence.com/data/. 17   Population coverage: 97 percent at 2G, 94 percent at 3G, and 60 percent at 4G (ARTCI 2021). 18   See Statistics (dashboard), International Telecommunication Union, Geneva, https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default. aspx. 19   The index is compiled each year based on four enabling dimensions (infrastructure, affordability, consumer readiness, and content and services) using numerous indicators, such as network coverage and performance, digital literacy and basic skills, and local language content. See GSMA Mobile Connectivity Index (database), Global System for Mobile Communications (GSM Association), London, https:// www.mobileconnectivityindex.com/#year=2019&globalRankings=overall&globalRankingsYear=2019. 20   This SCD draws on analytical work conducted by the World Bank in recent years that often compares the country’s performance with peer countries (especially within WAEMU) as well as aspirational peer countries globally. Definitions vary in the underlying analytical reports, but frequently include Kenya, Morocco, and Vietnam, which provide useful policy and development precedents for aspiring emerging market economies. The information on Ghana cited here is from Mobile Broadband Pricing: Data for 2020 (dataset), Alliance for Affordable Internet, World Wide Web Foundation, Washington, DC, https://a4ai.org/extra/baskets/A4AI/2020/mobile_broadband_pricing_gni. 21   Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex.worldbank.org/#data_sec_focus 34 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Authority of Côte d'Ivoire, and would benefit from an overarching, coherent digital strategy that defines roles and responsibilities and clearly prioritizes the various dimensions of policy reform. The ongoing efforts to expand access, address inequalities in access (spatial and social), and promote competition to bring down costs are important. The government could strengthen recent gains in the ICT sector by finalizing as soon as possible the management contract to operationalize the public backbone National Broadband Network, under the supervision of the Agence Nationale du Service Universel des Télécommunications-TIC (National Universal Service Agency for Telecommunications-ICT), thereby reducing the digital connectivity divide by stimulating investments in rural areas and fostering competition in the fixed broadband market. The telecommunications regulator is rethinking the obligations of mobile operators in fostering national coverage from a population perspective and a geographic perspective, thus efficiently ensuring connectivity across the entire country. Significant progress has been made in public digital platforms, but there is a lack of institutional coordination and no interoperability across the platforms. The achievements in recent years could be strengthened through the development of an overarching national strategy for the digital economy, the creation of a master plan for the existing platforms, and the creation of a common gateway on platforms for government e-payments given the crosscutting needs, such as personal data privacy and cybersecurity. National priorities have been identified in e-health, e-education, and e-ID. Côte d’Ivoire is one of the largest digital finance markets in Africa; however, the market has not reached expected levels of maturity in adoption and service offerings. Major bottlenecks in innovation are linked to the lack of flexibility around the regulatory framework and the cost of the services. Stakeholders and the government could take steps to realize a second generation of DFS products with flexible know-your- customer procedures to enroll part of the population and clear guidance and rules to access USSD codes and messages, especially among nonmobile operator DFS providers. This would be achieved by adopting key legal and regulatory reforms to boost the usage of DFS and by improving the financial infrastructure (for instance, financial interoperability systems) to broaden the expansion of DFSs. In digital entrepreneurship, the start-up ecosystem is embryonic. Given the nascent status of the Ivorian startup ecosystem, the bulk of the technical and financial support needs especially concern the pre-seed and seed stages. The government could continue and scale up support for Entrepreneurship Support Organizations (ESOs), such as startup incubators and accelerators. Countries such as Israel, Singapore, and Finland have catalyzed successful startup ecosystems through government-led assistance to startup programs. The development of digital skills is far too slow to support the country’s transformation in digitalization. Beyond weak basic literacy skills, the low internet connectivity in educational establishments impedes the capacity of the education sector to accelerate progress in acquiring digital skills. Digital skills training is offered at lower- and upper-secondary schools, but is ineffective because of public-private, spatial, and gender inequalities, poor instructor expertise, and outdated equipment. The government could prioritize a smart and agile workforce development strategy and support the necessary investment to democratize digital skills learning, especially among young Ivorians. This should also include e-inclusion specifically for vulnerable populations (especially women) to ensure that the benefits of the digital economy are shared by all for a more inclusive society. 35 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Foundational priority: strengthen institutions and governance for inclusive growth This section presents a status update on the progress achieved since 2015 and on the main binding constraints and possible policy priorities in governance. It cuts across several dimensions, including (1) the public administration, (2) domestic resource mobilization, (3) decentralization to foster equitable regional development, and (4) the fight against corruption to promote social cohesion. The key priorities in attempting to strengthen public administration and overall governance that were identified in the 2015 SCD remain relevant. These include (1) establishing strong leadership in public policy implementation and monitoring; (2) enhancing public financial management and public administration though enforcement of the public procurement code, strengthening the capacity of audit bodies, and modernizing tax administration; (3) establishing structured public-private dialogue to foster sustainable private sector–led growth; (4) improving the access to the judicial system; (5) reducing extralegal immunity from prosecution and enhancing anticorruption measures; and (6) strengthening statistical capacity and data production to support evidence-based policy making. Positive institutional and regulatory advances after 2015 included an enhanced accountability framework in public financial management and procurement. The governance framework has been strengthened through (1) the establishment of new accountability institutions, such as the three supreme judicial Institutions (Court of Auditors, Court of Cassation, and Council of State); (2) enhancement of the role of the anticorruption agency, the Haute Autorité pour la Bonne Gouvernance, which was launched in 2018 to monitor the asset declarations of high public officials; and (3) the authorization for the procurement regulatory authority, the Autorité Nationale de Régulation des Marchés Publics, to recommend sanctions on companies found guilty of committing irregularities in procurement. A new procurement code was adopted to introduce the principle of electronic procurement (e-procurement). Other government ministries and agencies also adopted digital platforms to facilitate access and interaction. A public-private consultation committee, the Comité de Concertation État–Secteur Privé, has been created to address private sector development concerns. Also, in 2020, the government introduced performance-based management in public administration through the adoption of program-based budgeting, which is expected to strengthen the focus on performance, rationalization, and optimization in public expenditure and greater budgetary discipline, control, and transparency. The government has made significant strides in the digitization of key public sector payment flows, including civil servant salaries, pensions, public school fees, social cash transfers, and several tax streams. Despite significant progress, the effectiveness of public administration remains constrained by lack of transparency and implementation capacity. For example, coordination among agencies and transparency through the publication of documents and information remain relatively weak in many areas, including in dealings with the private sector, which has translated into limited accountability and participation and a weaking of the feedback loops that help improve service delivery. Decentralization suffers from the limited incentives for high skill civil servants to locate outside Abidjan, which results in persistent regional inequalities. The judiciary and many public services are considered weak in enforcement and politically biased, undermining social cohesion and accountability. Building consensus for reform and withstanding the pressures exerted by vested interests to soften the reforms also require strong political leadership. While the government improved regulatory quality and the effectiveness of the public sector, important deficiencies persist in voice, accountability, rule of law, and the control of corruption. The comparisons made possible using Worldwide Governance Indicators reveal that, across all dimensions, much ground must be covered to catch up with aspirational peers and emerging market economies. The weak performance of the judicial system and other actors involved in supporting the rule of law has allowed extralegal immunity and corruption to fester. This has had a crippling effect on (1) the business environment, which is crucial to private sector–led economic development and investor trust, and (2)  public sector performance, which 36 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 is critical for quality service delivery, improving the business climate, and confronting the challenges in infrastructure renewal, logistics, and transport services for citizens. These issues can be addressed more efficiently if government effectiveness and integrity are strengthened Institutional capacity is improving albeit low. The Quality of Public Administration score was 3.0 in 2018– 19, below other countries in the region like Benin or Senegal.22 However, it has improved in 2020 and 2021 to 3.5. While Côte d’Ivoire’s open budget index score (24) was slightly lower than the Sub-Saharan average (24.6) in 2017, it improved to 34 in 2019, above the Sub-Saharan Africa average (31).23 The ranking on five Worldwide Governance Indicators among six is higher in Côte d’Ivoire than the Sub-Saharan African average.24 Efforts to combat state capture are starting to pay off, despite the remaining challenges. Reports on corruption ranking, including the Ibrahim Index of African Governance and the World Bank Worldwide Governance Indicators, also show progress. Cote d’Ivoire ranks 16th out 54 countries on 2020 Mo Ibrahim Index for “Anti-Corruption” with a score of 44.4 out 100. While the level of corruption remains relatively high, improved transparency in public procurement, the adoption of anti-corruption legislation, and impact of social media and other public scrutiny seem to be bearing some fruit. The weaknesses in the governance framework undermine and slow development progress. The direct functions of the public administration are undermined. Outputs are less than desirable in, for example, raising tax revenue, providing public goods, fighting corruption, and addressing market distortions. The resulting deficits in addressing issues of poor service provision, youth unemployment, insecure land tenure, and access to justice exacerbate exclusion, grievances, social discontent, and horizontal inequalities. The tensions before and during the October 2020 presidential elections highlighted that the root causes of the conflict were unresolved despite notable efforts by the government to confront the problems, which were also related to disparities across the country’s regions in access to services and economic opportunities and the lack of inclusiveness of the country economic performance model, including because of poor redistribution of the benefits of development, leading to more inequality. Strengthening citizen engagement and the government’s accountability before citizens are essential in fostering social cohesion and trust, which are essential in turn in maintaining the peace and stability required for continued growth and poverty reduction. To create the necessary environment for inclusive growth, governance and institutions must therefore be improved. The capacity of agents to cooperate and coordinate to achieve socially desirable goals could be improved in Côte d’Ivoire, for example, by including more stakeholders, giving a greater role to existing stakeholders, such as the private sector, local authorities, and civil society organizations, and dealing with the vested interests that block reform. Citizen engagement at the local level will be necessary to promote greater transparency and accountability and alter perceptions of exclusion and the lack of social cohesion, especially in remote areas. This can help identify and meet local needs. These elements are linked with the formal framework and efficiency and capacity of public administration. Strengthening policy coordination and the institutional capacities of public administration Limitations in the formulation, coordination, and implementation of public policies and regulations are a major constraint on more dynamic and equitable development in Côte d’Ivoire. According to the Worldwide Governance Indicators, the country’s regulatory quality percentile ranking slightly declined, from 46.15 in 2018 to 43.27 in 2019.25 The restrained implementation of the policy priorities identified in the 2015 22   CPIA Africa (Country Policy and Institutional Assessment Africa) (dashboard), World Bank, Washington, DC, http://datatopics.worldbank. org/cpia/. 23   OBI (Open Budget Index) (dashboard), International Budget Partnership, Washington, DC, http://survey.internationalbudget.org/#map/. 24   WGI (Worldwide Governance Indicators) (dashboard), World Bank, Washington, DC, http://info.worldbank.org/governance/wgi/#home. 25   WGI (Worldwide Governance Indicators) (dashboard), World Bank, Washington, DC, http://info.worldbank.org/governance/wgi/#home. 37 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 SCD explains why the priorities of 2015 remain largely relevant in 2020. The priorities are rooted in deeper governance challenges related to the ability of elite actors to influence the policy-making and regulatory process and to block reform. Better coordination is needed to monitor the implementation of various and competing strategic vision documents, such as the National Development Plan 2021–2025 and Côte d’Ivoire’s Vision 2030. The main mechanisms for policy coordination include the Office of the Prime Minister, the General Secretariat of the government, and the Ministry of Development and Planning. Compared with similar systems elsewhere, the coordination mechanisms in Côte d’Ivoire are weak. The roles and authority supporting the performance of the mechanisms across line ministries are not clearly defined, leading to poor implementation. It is crucial to enhance the predictability and quality of the policy-making and regulatory processes by enabling more effective coordination and cooperation in public policy and regulatory formulation, application, and evaluation. The efficiency and quality of public administration and the delivery of services must be improved while maintaining costs at a fiscally affordable level and contributing to a healthy business environment. Some efficiency gains were made after the publication of the 2015 SCD through digitalization and the introduction of e-services. The goal of raising efficiency was endorsed through the Public Administration Reform Strategy 2020. With the assistance of development partners, some progress was also made in streamlining government operations and conducting some public administration procedures digitally.26 However, greater progress is needed if the government and stakeholders are to achieve improvements in service delivery without increasing wage costs unsustainably. The COVID-19 pandemic has also underlined the necessity to undertake the shift from face-to-face and paper-based procedures to more efficient models of operation. Recruitment for most civil service posts is competitive, though career advancement is not always merit-based. The public sector is able to attract and maintain strong talent because of the relative weakness in private sector job creation, though this is likely to change as the private sector develops and begins to play a strong role in job creation. The public sector pay regime is occasionally unable to motivate effort within public service. To strengthen performance and results, a culture of performance in public administration should be created and maintained through proper enforcement of performance contracts and the digitalization of public administration procedures. Public financial management reform focused on more effective controls to maintain fiscal discipline but fell short of using budgets strategically in support of sector reform and public service delivery. In past years, the government undertook major reforms in public finance management through the implementation of the WAEMU harmonized public financial management framework. Public budgets have been reliable overall, and deviations have been kept at manageable levels. Important progress has been achieved in commitment control by initiating the Système Intégré de Gestion des Opérations des Marchés Publics, an e-procurement system for public procurement processes, and the Système Intégré de Gestion des Opérations Budgetaires de l’Etat, a new integrated budget information system. The authorities have continued to strengthen internal financial control and external audits in the public sector through the Inspection Générale des Finances and the Inspection Générale d’Etat, inspectors general for, respectively, governmental financial issues and governmental operations and functions. However, measures to improve the strategic allocation of budgets in social sectors for improved service delivery have had only limited impact, as reflected in the weak performance indicator on service delivery in the Public Expenditure and Financial Accountability assessment.27 Public expenditure efficiency should be raised through (1) the effective implementation of program-based budgeting and (2) strict compliance with the new Procurement Code and implementation of the e-procurement reform. 26   For example, see the citizen platform “Miliê,” at Portail du Citoyen “Miliê” (web portal), Ministry of Public Service and Administrative Reform, Abidjan, Côte d’Ivoire, https://www.milie.ci/index.php?page=reclamation.Accueil. See also Le portail de l’Administration ivoirienne (web portal), Observatoire du Service Public, Ministry of Public Service and Administrative Reform, Abidjan, Côte d’Ivoire, https://servicepublic. gouv.ci/. For more information, see Portail Public des Démarches Administratives (dashboard), Agence Nationale du Service Universel des Télécommunications-TIC, Abidjan, Côte d’Ivoire, https://ansut.ci/fr/portail_public/. 27   2017 data of PEFA (Public Expenditure and Financial Accountability) (assessment pipeline), World Bank, Washington, DC, https://www. pefa.org/assessments. 38 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The public-private sector relationship should be strengthened. Poor governance is a major reason why infrastructure projects fail to meet time frames, budgets, and service delivery objectives. Poor accountability and poor governance of SOEs limit private and public investment in infrastructure projects and breed inefficiency. The 2015 SCD identified constructive public-private dialogue as a priority. This topic is still relevant given that the public-private consultation committee, the Comité de Concertation État–Secteur Privé, has not had a concrete impact on the business environment yet. As of June 30, 2020, the portfolio of SOEs monitored by the Direction Générale du Portefeuille de l’Etat (Directorate General of Government Portfolio Investments) consisted of 41 SOEs, including 27 in which the government owned the majority of shares. Meanwhile, SOEs operating in critical sectors such as coffee and cocoa, energy, and water are supervised by the Direction Générale du Portefeuille de l’Etat, raising transparency and accountability issues, such as the public-private partnership in the water sector that was renewed in 2007. The public-private relationship should be strengthened through (1) structured and sustained public-private sector dialogue, (2) enhanced SOE governance, and (3) efficient management of public investments and public-private partnerships. Strengthening domestic resource mobilization to increase fiscal space Domestic resource mobilization has been a challenge in the past decade because of the large size of the informal sector, the limited capacity of the tax administration, and the suboptimal tax policies. Reforms undertaken since 2015 have established information-sharing protocols and computerized parts of administration, the tax400 000 but the electronic payment of taxes awaits a wider rollout. The assignment of a single tax identification number has progressed. In tax policy, the government adopted a plan to rationalize VAT 350 000 exemptions in 2019, but implementation was delayed. Tax revenues improved slightly, from 12.0 percent of GDP in300 000 to 12.6 percent of GDP in 2020, far below the WAEMU target of 20 percent of GDP. Recent tax 2018 Tree cover loss (ha) measures, including (1) the elimination of VAT exemptions on imports of mobile phones and computer tablets, 250 000 (2) an increase in the tobacco excise tax rate, and (3) an increase in the corporate tax rate for individuals from 200 000 20 percent to 25 percent, had only a limited effect on tax revenue. Meanwhile, tax policy is not yet fully aligned 150 000 directives, for example, on excise taxes and VAT exemptions. As a result, revenue performance with WAEMU 100 000 since 2015, but the performance is below that of many peers and insufficient to sustain planned has improved expenditures in the long run. The country has a relatively low tax rate on profits, but the overall burden is still 50 000 among the highest across the comparators, suggesting that there are imbalances in the tax system (figure 6). 0 Figure 6. Tax revenue and 2004 2001 2002 2003 tax burden 2005 2006 do not 2007 provide 2008 a level 2009 2010 playing 2011 2012 field 2013 2014 2015 2016 2017 2018 2019 2020 Tax burden on enterprises, 2018–19 60 50 40 30 20 10 0 Vietnam Upper middle OECD Lower middle Senegal Morocco Cote d'Ivoire Ghana income members income Profit tax (% of commercial profits) 2019 Total tax and contribution rate (% of profit) 2019 Tax revenue (% of GDP) 2018 Sources: International Monetary Fund, Washington, DC, WDI (World Development Indicators) (dashboard), World Bank, Washington, DC 39 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 As the country exits the COVID-19 crisis with limited fiscal space, reforms in both tax policy and tax administration are needed, even if they are politically challenging. Indirect taxation is constrained in two ways. First, the large informal economy leads to a narrow tax base; second, numerous exemptions are provided at significant fiscal cost. Direct taxation is likewise limited by the informal economy in the case of enterprises, and property and capital taxation on individuals is hampered and would benefit from an overhaul, especially given the boom in real estate and ongoing reforms in property and land rights. Environmental taxes could be a potential option to explore to increase resources and also help incentivize more sustainable investments and behaviors. VAT exemptions are often inefficient (regressive), thereby providing opportunities for inclusive tax policy reform. Among indirect taxes, the VAT and its exemptions would be one of the most promising avenues for reform, which could raise domestic revenue without burdening the most vulnerable population. Many sectors, activities, and products are exempt from the VAT, and the policies are not aligned with the harmonized WAEMU approach. Because VAT reimbursements have been significantly improved, many exemptions have become unjustified. The expansion of the VAT base would be useful by bringing in more sectors, such as construction and potentially also agriculture, pending the incidence proper analysis. Exemptions could be streamlined for specific products. Excise taxes could be raised to the WAEMU target, notably, on products that are damaging to health (alcohol and tobacco). The system of direct tax revenues would benefit from a fundamental reform that would change rates, while enlarging the tax base. Direct tax revenues accounted for 3.3 percent of revenues in 2020 but are relatively complex and rely on a small base of formal enterprises and incomes. The current architecture of direct taxation of individuals combines, in principle, a tax schedule for capital taxes with a general income tax, accompanied by exemptions only partially overlapping those provided in the schedule, rendering the system complex and opaque. To establish economic neutrality and equity in direct taxation, the personal income tax could evolve into a dual tax, combining a single proportional rate (neutrality factor) and a moderate ratio of income from mobile factors (capital) and a simplified progressive scale (equity factor) for income from low mobility factors (work). The government should also implement a withholding system to enforce tax compliance. Moreover, the introduction of a separate tax system for all corporate income, through a corporate tax, would promote greater transparency and provide a more level playing field to support private sector competitiveness. Despite recent progress, more could be done to address the weaknesses in revenue administration that have led to low compliance. Thanks to a digitalization program and the introduction of a single tax identification number for companies, Côte d’Ivoire has become more attractive for business. Nonetheless, the government tax authority, the Direction Générale des Impôts, faces severe capacity constraints and organizational shortcomings. Weak revenue administration contributes to the narrow tax base deriving from low taxpayer registration capacity and to low tax compliance ratios. Because of the weak integration of IT systems, the tax authority is often unable to match and analyze data by source. The ongoing tax administration reform program will require significant investment to overhaul tax operations, upgrade and integrate the tax IT system (software and hardware) and raise the capacity of staff. To strengthen the tax administration’s capacity, authorities should (1) improve taxpayer compliance through the digitalization of filling and payments and (2) control and pursue tax fraud and corruption, notably, by adopting digital solutions and more systematic controls. 40 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Promoting decentralization as a key driver of more equitable territorial development Although a decentralization framework has been instituted, three main constraints prevent effective devolution of public service delivery functions and authority to lower levels of government. For example, many governments and service delivery functions, such as health care, education, transport, the environment, and justice, have been devolved de jure to local government, but financing for these functions has not been transferred. The lack of financial and human resources accompanying the devolution process has created ambiguities in responsibilities, spending inefficiencies, and unpredictability in service delivery. The legislative framework has put the administrative decentralization process in motion, but, in many areas, the actual devolution of responsibility and financial discretion has not been completed. Territorial development relies on strengthening institutions across the board because institutions are the crosscutting foundation behind many economic development initiatives. Without a real effort at implementing decentralization and empowering local and regional governments, territorial development will be hamstrung. First, ambiguities in the mandates of the various levels of subnational government persist. Although progress has been made in delegating responsibilities for service delivery, the decentralization framework relies on legislation that exhibits contradictions and overlapping mandates, leading to confusion between national ministries and local governments on financing and implementation arrangements. For example, Law 2003-208 (July 7, 2003), which identifies the distribution of functions and authorities across levels of government, is based on the old structure of administrative divisions, with five levels of decentralization. With the new local government structure, the law on the devolution of competencies is no longer adequate. There is an urgent need to address the internal contradictions in the legal and institutional framework by harmonizing laws that are at odds with the decentralization policy adopted in 2011. Second, the volume and predictability of the local government resources available for investment and service delivery are insufficient. Local government fiscal resources are grounded mainly on transfers from shared fiscal revenue. These are taxes that are administered and collected by the national tax administration and subsequently retroceded to decentralized entities. The volume of these transfers can fluctuate. Only a few taxes are directly earmarked for decentralized bodies, for instance property taxes and license and permit fees, but these are particularly limited in remote or rural areas with less economic activity, thus adding to the financial constraints on these already disadvantaged regions. Moreover, the allocation and disbursement of transfers to local government do not follow criteria that are established formally and transparently. As a result, there are consistently large gaps between needs and financial means in rural areas and secondary cities. To achieve progress in decentralization and empower local governments, authorities would have to develop new, more equitable allocation mechanisms. Third, subnational government entities lack qualified staff. Only a small number of civil servants are assigned to local governments according to their technical skills. Civil servants are usually assigned by the Ministry of the Interior and occupy senior administrative and technical positions. In contrast, staff recruited by the local authority and local contractors tend to have lower educational attainment and limited skills, typically the equivalent of secondary school, which effectively means they are frequently underqualified for their roles. Given the lack of financial resources, local governments are unable to recruit and retain senior officials with the required experience and competencies, and there is no investment in human development or even in training opportunities. To ensure effective decentralization, local authorities must be given the means to carry out their own recruitment and training of competent senior officials and have discretion in financial matters. Improving transparency, accountability, and anticorruption mechanisms to promote social cohesion The Ivorian justice system is characterized by a perceived lack of independence, a shortage of human resources, and poor infrastructure. First, a lack of adequate enforcement and a perceived political bias in decisions by the judiciary, partly reflecting the authority of the president to appoint the heads of judicial institutions without approval by Parliament, give rise to an accountability gap. Moreover, the justice system 41 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 lacks mechanisms to monitor the performance of judicial staff and managers. Second, qualified personnel, training, and equipment are lacking in the justice system, including in the prison system, partly because the National Legal Training Institute (Institut national de formation judiciaire) is outdated, not fully operational, and not effectively structured. Third, the number of courts is inadequate, notably, in the Greater Abidjan and southern regions, where the caseloads are the highest, and procedures mostly rely on paper, not digital media, generating long delays and sometimes even the loss of case files. As a result, citizens have little confidence in their judicial institutions. Investments in court infrastructure, digitalization, and staff education will be necessary to improve capacity and render the system more efficient, reliable, and accessible. An overarching issue is the need to reinvigorate the fight against corruption. The 2019 corruption perceptions index ranks Côte d’Ivoire 106 in the world, with a score of 35, a slight decline from a score of 36 and a rank of 103 in 2018.28 Côte d’Ivoire ranks 21 among 54 countries in Africa on transparency and accountability on the 2020 Ibrahim index, with a score of 44.4 in 100.29 Several decrees, ordonnances, and laws on fraud, corruption, and executive accountability have been issued or adopted by Parliament over the years. Nonetheless, implementation and compliance with the requirements of a comprehensive legal framework remain a challenge. Factors that weaken governance in Côte d’Ivoire include (1) the concentration of decision- making among relatively few players based in Abidjan, (2) the fragmentation of sectoral responsibilities, and (3) the political nature of the appointments of high officials, which reduces incentives for bureaucratic responsiveness and performance. This situation has impacted the pace of implementation of the legislative framework, including, for example, the newly introduced asset declarations. Meanwhile, corruption and favoritism remain endemic and routine, from petty bribery among traffic police to the granting of major concessions or procurement contracts. Given that citizens encounter evidence of these shortcomings every day, it is important to take steps to fight corruption credibly and forcefully not only because corruption imposes a cost on citizens and enterprises, but also to restore confidence and social cohesion. 28   CPI (Corruption Perceptions Index) (dashboard), Transparency International, London, http://www.transparency.org/research/cpi/ overview. 29   IIAG (Ibrahim Index of African Governance) (database), Mo Ibrahim Foundation, London, http://mo.ibrahim.foundation/iiag/. 42 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 PART III: THREE MAIN PATHWAYS This section presents the three main pathways for inclusive economic growth and poverty reduction. The SCD Update proposes two separate pathways for agricultural productivity and private sector development, given that the latter encompasses many areas and is expected to be one of the key drivers of growth for the next decade, while the former – agricultural productivity - is a cornerstone for achieving more inclusive and sustained growth and deserves its own analysis. Indeed, boosting the role of the private sector in the economy and developing investment opportunities will generate the growth and jobs needed for Côte d’Ivoire to reach its potential. Strong growth in agricultural production and incipient diversification of agricultural exports (fruits and cashew nuts, rubber) is key to lift a large share of the population out of poverty. Agriculture, which accounts for 23 percent of Côte d’Ivoire’s GDP and almost 45 percent of employment (73 percent in rural areas), contributes nearly two-thirds of the country's exports. The third pathway concerns strengthening human capital. Low human capital formation is limiting inclusive growth. Measured by the Human Capital Index, children born in Côte d’Ivoire in 2020 will only be 38 percent as productive growing up as they could be if they enjoyed complete education and full health.30 This figure is 67 percent in Vietnam, 52 percent in Kenya and 50 percent in Morocco. Côte d’Ivoire urgently needs to upgrade the human capital of its workforce to achieve better and more inclusive growth. Main pathway I: improving agricultural productivity and boosting rural development Policy priorities in rural development and agriculture should aim to address gaps in (1) market access and territorial development, (2) skills gaps and technology upgrading, (3) access to financing among farmers, (4) the sustainability of agriculture, and (5) crosscutting challenges in governance and strategic reform. Findings of the 2015 SCD and recent developments The 2015 SCD identified six major challenges to agriculture productivity that affect the country’s economic growth and social welfare. The quality of employment in agriculture is poor, and low productivity constrains direct incomes and downstream value chain employment generation in agribusiness activities. Agriculture is the single most important source of income in the country, amounting to 21.5 percent of GDP, and is also the basis of exports. Nonetheless, productivity growth has been sluggish for decades, driven by several key constraints identified in the 2015 SCD, including gaps in skills and technology, rural land tenure, physical infrastructure, policy support, finance, and climate change. Significant investments and reforms have been undertaken since 2015, driven by a new National Agricultural Investment Plan, but the fundamental challenges remain the same. First, skills constraints represent a main obstacle to improving job quality and job access outcomes. In skills and technology, the main constraint identified in the 2015 SCD was low educational attainment. Two- thirds of the farming population have never been to school, and only 25 percent of the rural population is literate. In addition, the lack of technical, behavioral, and soft skills impedes the ability of farmers to improve productivity and move up in value chains, partly because it limits the take-up of extension services and new financial mechanisms, such as mobile payment, climate insurance, microcredit, and e-agriculture. The national agricultural education and training system lacks sufficient resources to ensure skills development. Key policy 30   Human Capital Index 2020, World Bank. 43 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 actions identified in the 2015 SCD were aimed at increasing human capital to encourage greater take-up of improved agricultural technologies and innovations. They included raising the investments in R&D and in partnerships with the private sector, institutional reform, and strengthening educational and vocational systems. Access to basic education in rural areas has significantly increased thanks to public investments, but the quality of education remains low, and education targeted on agricultural practices is too limited. Second, the lack of well-defined customary rights in rural land tenure and the pressure on land because of a growing population and migration led to land conflicts. Successive sociopolitical crises have exacerbated tensions over land in some rural areas and are reflected in intrahousehold and intercommunity conflicts. The 1998 Rural Land Law was developed to transition from traditional to formal land tenure arrangements, reduce land conflicts, and secure access to land, but implementation was constrained by the ambiguity of the legal framework and the complexity and cost of procedures. The SCD proposed reforms to the legal framework and institutional arrangements, including land registration, but the system remains complex, and land registration still takes a long time, which means that land tenure is insecure in many areas. Third, Côte d’Ivoire’s relatively dense road system had fallen into disrepair by 2011 and rehabilitation is not keeping up with the pace of development, preventing access to markets. This constrains the movement of agricultural output toward domestic, regional, and global marketplaces, but also the access of farmers to inputs and services. Significant investments in rural roads in recent years have helped, but, given the magnitude of the needs, the effects and impacts are not perceptible, highlighting also deficits in institutional management and the lack of strategic planning. Other infrastructure, such as storage facilities and electricity generation, is also limited. Fourth, growth in the agricultural sector was constrained by ineffective fiscal policies, including high taxation on agricultural export commodities and low public expenditures. The policy actions recommended in the 2015 SCD to fill the gaps involved reducing the taxation of agricultural exports to a maximum of 10 percent–15 percent (particularly cocoa) and increasing public expenditures in agriculture. Nonetheless, public expenditures to support investments in the agricultural sector have remained low and were estimated in 2017 at 3.1 percent of GDP, which is far less than the target of the Maputo Agreement, 10.0 percent of GDP. Fifth, the lack of access to formal credit holds back agriculture productivity growth and is a serious constraint on farmers. Greater availability of credit can help farmers procure better inputs, diversify products, access storage facilities, and diversify to nonfarm activities. The priorities in the effort to expand credit in the agricultural sector included (1) preparation and regular updates of a comprehensive agricultural finance diagnostic, (2) establishment of a supportive legal and regulatory framework, (3) the design and implementation of effective government support mechanisms, (4) a renewal of financial infrastructure, and (5) capacity building among financial institutions and their clients. The government conducted a systematic diagnostic for agricultural finance in 2017 and have undertaken numerous reforms since then. Building on this diagnostic, the government has promoted mobile banking, launched new financial instruments, and expanded the role of microfinance institutions and private sector stakeholders, such as retailers and processors. Sixth, the 2015 SCD recognized the importance of managing the impact of climate change on agricultural growth. Climate change is expected to affect the country’s major export crops adversely, including cocoa and coffee, through rising temperatures and shifting rainfall patterns. The 2015 SCD recommended that the government and stakeholders explore proactive adjustments and response policies, including (1) the use of more adaptable agricultural systems or research into more resilient crop varieties, (2) producer organizations to assist smallholders in accessing new markets, (3) the implementation of climate-smart agricultural practices, (4) diversification to nonfarming activities, and (5) establishing new financial mechanisms, such as climate insurance and microcredit, to facilitate adaptation.31 31   The government has since become involved in a multi-country effort coordinated by the World Bank to develop a national climate- smart agriculture investment plan that would prioritize the investments and actions needed to boost crop resilience and enhance yields among more than 2.2 million beneficiaries and their families. 44 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Despite the progress achieved since 2015, accelerating reform will be essential in unlocking agriculture’s potential for growth and job creation. In 2020, the primary sector contributed 21.5 percent to GDP. Over 2012–18, the annual average growth in production per worker increased at an estimated pace of 2.9 percent a year (figure 7). The targeted rates of above 5 percent will require a significant increase in productivity, which has improved in the last decade but still needs to recover the ground lost since the early 2000s. Figure 7. Productivity per worker and per hectare increased, but lags peer economies a. Productivity per worker and per hectare b. Value added per hectare 3,5 3,5 1 000,0 1 000,0 Production (constant 2010 US$) Production (constant 2010 US$) Agricultural value added per ha Agricultural value added per ha 33 800,0 800,0 2,5 2,5 (constant 2010 US$) (constant 2010 US$) 600,0 600,0 22 1,5 1,5 400,0 400,0 11 200,0 200,0 0,5 0,5 0,0 0,0 00 1990-1999 1990-1999 2000-2011 2000-2011 2012-2018 2012-2018 Côte Côte d'Ivoire d'Ivoire Ghana Ghana Agricultural Agricultural production production per per hectare hectare ofof agricultural land agricultural land Ethiopia Ethiopia Kenya Kenya Agricultural Agricultural production production per per worker worker Western Western Africa Africa Sources: World Bank calculations; Resnick, Diao, and Tadesse 2020. Additional pressureToo will Toomuchbe much competition by demographic change and urbanization in the next few years. exerted competition First, by 2050, Côte d’Ivoire’s Lack Lack ofof clientele will double, and the urban population will grow from 50 percent of clientele population Difficulties Difficulties the inin the supply supply raw ofof raw materials materials the total to 66 percent. Although the rural population will grow in absolute terms, migration of youth to urban Lack Lack ofof space, space, suitable suitable premises premises areas will imply a need Power Power increase tooutage outage problems mechanization. Government programs have given women greater access problems to productive inputs in recent Difficulty Difficulty accessing years, accessing credit contributing to a reduction in the gap in crop yields between women credit and men farmers, but Too significant Toomany many regulationsgender constraints persist (Donald, Lawin, and Rouanet 2020). This not regulations only impedes poor Problemsrural Problems ofof women’s access access toto livelihoods, but also reduces overall agricultural productivity and thus the electricity electricity Problems Problems potential relating relating of the toto other other country infrastructure infrastructure to achieve (water…) (water…) higher economic growth. The expanding population will put pressure on Problems Problems related related toto insecurity insecurity available land, particularly in the south, where the remaining natural forests will be under increasing threat. Water resources, although still plentiful, 0 0will also1010 come 2020 more pressure under 3030 40 from40 the greater 50 60 50 application 60 in irrigation. 0,10 0,10 Closing 100,0 100,0 the market access gap and promoting rural development % of respondents % of respondents 80,0 80,0 0,08 0,08 60,0 60,0 0,06 0,06 40,0 40,0 Enhancing access to markets is critical to integrate producers efficiently into global value chains, 20,0 20,0 0,04 0,04 diversify production to meet demand, and raise farm incomes and climate resilience. Major steps 0,0 0,0 toward this objective would include (1) the adoption of a strategy 0,02 to maintain rural roads based on a public- 0,02 private partnership and financed through a dedicated share of the Road Fund and the mobilization of private 0,00 0,00 sector resources produced through greater value chain efficiency; (2) the expansion of ICT coverage and diversification to support the development of real-time market information and other e-agriculture services productivity, to improve OtherOtherfunding funding efficiency in agricultural last mile activities (farmer registration, procurement, Sales Sales of of goods goods and and services services traceability, and so Commodity Commodity on) levies and levies and and social producer producer service access; and (3) the Borrowed organizations organizations implementation Borrowedtoto start, operate, start, of operate, oror expand a government a farm expand oror a farm strategy to business business age (%(% 15+) age 15+) national enhance the Donors Donors andand food safety development development banks banksand food quality system. Government Government Borrowed Borrowed toto start, operate, start, oror operate, expand a farm expand oror a farm business, business, female female (%(% age age 15+) 15+) Borrowed Borrowed start, toto start, operate, operate, oror expand expand a farm a farm oror business, business, young young adults adults (%(% age age 15-24) 15-24) 45 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The limited coverage and high costs of transport and logistics infrastructure in rural areas weigh on incomes. The lack of transportation infrastructure is a key impediment to multiple job outcomes in agriculture. A national strategy for road maintenance was drawn up in 2015, but has not yet been adopted, and the rural road network is inadequate for meeting the country’s ambitions. Truck transport is dominated by small informal operators who rely on intermediaries to locate freight, which creates higher costs. High transport costs also penalize farmers in the northern regions, whose main markets are in the southern regions, including exports from the port at Abidjan. Adequate marketing and logistics infrastructure— assembly points, wholesale markets, storage—is lacking in production areas and consumption centers, and existing markets do not provide the sanitary conditions required for public health, all of which contribute to postharvest losses. The limited value chain infrastructure, including transport, a cold chain, storage facilities, and so on, is a general barrier that also constrains climate-smart agriculture investments in Côte d’Ivoire (World Bank 2019b). Investments in roads, markets, storage, and other value chain infrastructure, including the technologies required to promote climate-smart agricultural expansion, should become substantial priorities. Despite significant improvement in recent years, the quality of ICT services in rural areas is limited by supply and demand constraints. Connectivity performance has improved, but still lags in rural areas. Almost half the country’s 8,500 localities, overwhelmingly rural, were not covered by mobile services in 2018. In 2019, 53.6 percent of urban dwellers accessed the Internet on a regular basis, compared with 16.1 percent of rural residents.32 On the supply side, the northern regions of the country receive less investment by telecommunication operators because of the low population density, coupled with the lower economic potential, relative to the southern regions, which offer higher returns on investment. The cost of last mile connectivity is prohibitive in sparsely populated areas, which limits the supply by operators. On the demand side, the use of digital services in rural areas is severely limited by poverty, affordability, and illiteracy, particularly among women. For example, among rural residents, 88 percent of women versus 73 percent of men report that they do not use the internet at all, while 12 percent of rural women versus only 2 percent of rural men report that they never use mobile phones.33 The national food safety and food quality control infrastructure suffers from critical gaps that need to be addressed to ensure public food safety and meet the increasing quality requirements of the domestic and export markets. The governance of the national food safety system is constrained by the lack of an institutional framework responsible for coordinating and updating the system in line with the multidisciplinary “One health” approach at the intersection of human, animal, and environmental health. The government decided in 2016 to create the National Food Security Agency to coordinate the national food safety system, but the agency has not yet become operational. Moreover, the ability of stakeholders to meet the food safety, sanitary, and phytosanitary requirements is weak as revealed by the restricted access to European markets of some domestic vegetable commodities because of the substantial presence of chemical residues and microorganisms. More generally, the shortage of nonfarm income opportunities constrains the potential of rural areas to contribute to inclusive growth In rural areas, 51.7 percent of households derived their income solely from farming activities, and only 13.0 percent of households earned off-farm business incomes, reflecting the lack of employment diversification in rural areas (Allen, Heinrigs, and Heo 2018). Respondents involved in some of the small number of nonfarm enterprises in rural areas complain about competition (52.6 percent), while 43.7 percent lack customers, and 32.0 percent face difficulties in obtaining inputs (figure 8). Lack of demand for products, unhealthy competition, and the irregular supply of inputs restrict movement out of farm labor into nonfarm activities and thus slow the structural transformation process and hinder rural development (box 3). The economic success of rural villages and cities could help promote economic agglomeration, 32   See Statistics (dashboard), International Telecommunication Union, Geneva, https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default. aspx. 33   Côte d'Ivoire (dashboard), Afrobarometer, Accra, Ghana, https://afrobarometer.org/countries/c%C3%B4te-divoire-0. 46 3,5 1 000,0 Production (constant 2010 US$) Agricultural value added per ha 3 800,0 2,5 (constant 2010 US$) 600,0 2 Cote d’Ivoire 1,5 400,0 Systematic Country Diagnostic Update: 1 200,0 Countdown to 2030 0,5 0,0 0 1990-1999 2000-2011 2012-2018 Côte d'Ivoire Ghana Agricultural production per hectare of agricultural land Ethiopia Kenya Agricultural production per worker Western Africa narrow the market access gap, and generate more employment opportunities, but this will require that all the infrastructure gaps and governance challenges be addressed and resolved, particularly job creation. Figure 8. Rural off-farm enterprises face many constraints, and this holds back rural development Too much competition Lack of clientele Difficulties in the supply of raw materials Lack of space, suitable premises Power outage problems Difficulty accessing credit Too many regulations Problems of access to electricity Problems relating to other infrastructure (water…) Problems related to insecurity 0 10 20 30 40 50 60 Source: World Bank calculations based on EHCVM 2018/19. 100,0 0,10 80,0 3. Development strategies are crucial to agglomeration Box and better living standards in the % of respondents 0,08 60,0 areas rural 0,06 40,0 20,0 There are untapped opportunities to use secondary cities0,04 to stimulate the economies of rural 0,0 areas through regional integration and territorial development. 0,02 Secondary cities are cities of medium size that provide multiple services and facilities, such 0,00 as distribution centers for agricultural and manufactured products. They also offer nonfarm employment opportunities. They thus connect rural economies to national and international markets that provide prospects for income growth and Other funding However, the formulation of adequate strategies for the development of such poverty reduction. Sales ofin cities is lacking Côte goods d’Ivoire. Employment policies are designed and services Borrowedto respond to start, to operate, or sectoral expand and national a farm or Commodity levies and producer organizations are not needs and Donors coordinated and development banks with initiatives in education, social welfare, health, and manufacturing. business (% age 15+) agricultural productivity alone will not translate into Increasing Government Borrowed wider toemployment start, operate, or expand a farm or creation and poverty business, female (% age 15+) reduction if there is no clear integrated strategy for employment promotion. Borrowed to start, operate, or expand a farm or business, young adults (% age 15-24) A key approach to boosting development in regions, particularly in lagging cities, would involve strengthening rural-urban links that would build the appropriate density of economic activities to stimulate nonfarm livelihoods. The appropriate density would be expected to reduce the cost of engaging in economic activities, such as the transformation of agricultural products through value addition. For instance, there may be opportunities for value addition by locally transforming some agricultural commodities, such as mangoes, into processed products. However, tapping into these opportunities will require the establishment of an enabling environment to offer incentives to the private sector, including public investment in basic infrastructure such as electricity, access to water, road networks, and so on. The government has designed regional development tools represented by growth poles, but implementation has been slow. In 2018, in line with the National Agricultural Investment Plan II, the government adopted the idea of creating growth poles to stimulate local development through integrated value chain activities and the promotion of public-private partnerships. The partnerships were intended to support investment in physical, economic (market), and social infrastructure, such as road infrastructure, food processing initiatives, electrification, improved water sources, and the establishment of agroindustrial zones to spur agricultural transformation and economic development in the regions. Yet, few steps have been taken to operationalize this development tool, and benefits for remote areas have not materialized.a 47 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The implementation of the government’s growth poles would help integrate activities along value chains, creating employment opportunities beyond the farm and unleashing the potential of the agricultural sector as a major engine of growth in secondary cities. The major city in the lagging northern regions is Korhogo, but there are smaller cities—Bouna, Boundiali, Ferke, Odienne, Tengrela) that could support economies of agglomeration through investments in physical and human capital. a. Only one growth pole has attracted investments, which were financed by the African Development Bank. The World Bank is supporting the construction of an agroindustrial zone in Bondoukou, in the northeast, that would be focused on the cashew value chain with the potential to create 4,000 jobs, of which 60 percent would be for women. Living standards and income opportunities are significantly less restrained in urban areas than in rural areas, particularly rural areas in the northern regions, which argues for a more strategic approach to territorial development. The number of deaths among children under 5 per 1,000 live births is half as much in Abidjan (64) as in the northern regions (125). A similar pattern emerges in school infrastructure: On average, 73.6 percent of schools have no electricity, but the share is 14.2 percent in Abidjan and 95.7 percent in Béré, a western region. The government should continue its investment strategy, accelerate decentralization, and adopt policies that promote territorial development, particularly rural development. Strengthening value chains is critical in the lagging regions of the country, especially in boosting nonfarm, value-added economic activities. Attracting the private sector will be important to the effort to generate investment and create jobs. There will also be a need to balance economic efficiency by creating density through investment in secondary cities, reducing spatial inequality, and supporting human capital improvements. Closing the skills gap and strengthening technology adoption to help farmers catch up Correcting the weaknesses of the national system for technology development and dissemination should be a priority, alongside building the skills to upgrade productivity. Access and take-up of technologies are critical to improving productivity and output and raising farmer incomes, but they are hindered by the small size and low capacity of farmers and the lack of capacity and funding in key public support agencies. Progress would entail (1) strengthening funding and management capacity to enable the National Agricultural Research Center and the National Agency for Support to Rural Development to become more responsive and deliver better services to farmers, (2) complement public services with private sector providers to expand networks, and (3) prioritize the use of digital technologies in all extension services, including climate-smart technologies. To promote more intensive farming practices, the general and agricultural technical education systems must be reformed. This should include strengthening basic education (primary education and, notably, the education of girls), but also (1) scaled programs among rural youth involving well- targeted, short-term technical and entrepreneurial training and (2) rehabilitating the national agricultural education and training system to build the stock of competent agricultural knowledge providers. Agricultural R&D has been expanding, but the relevant spending has been stagnating. Spending on agricultural R&D is low in Côte d’Ivoire compared with peers; it is half the level in Ghana (figure 9). This is coupled with the National Agricultural Research Center’s internal management problems (heavy bureaucracy, top-down decision-making with little autonomy among research centers), and the center is also underfunded. The national coverage of extension services by the National Agency for Support to Rural Development is limited, 48 Côted'Ivoire Côte d'Ivoire Ghana Ghana Agriculturalproduction Agricultural perhectare productionper hectareof ofagricultural agriculturalland land Ethiopia Ethiopia Kenya Kenya Agriculturalproduction Agricultural perworker productionper worker WesternAfrica Western Africa Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Toomuch Too competition muchcompetition Lackof Lack clientele ofclientele Difficultiesin Difficulties thesupply inthe supplyof rawmaterials ofraw materials Lackof Lack space,suitable ofspace, premises suitablepremises at 10 percent, well below Power Power the outagetarget outage problems problemsof 30 percent. Agricultural advice is also provided by nongovernmental Difficultyaccessing Difficulty organizations and agro-industrial accessing credit credit companies on cotton, rubber, oil palm, and sugar, but outcomes are mixed. Toomany Too regulations manyregulations Private companies are perceived to be mostly interested in monitoring the use of fertilizer and agrochemicals Problemsof Problems accessto ofaccess electricity toelectricity and recovering credit rather than providing effective technical advice. Problemsrelating Problems relatingto otherinfrastructure toother (water…) infrastructure(water…) Problemsrelated Problems relatedto insecurity toinsecurity Figure 9. Public funding for agricultural R&D is declining, and borrowing among farmers is limited 00 10 10 20 20 30 30 40 40 50 50 60 60 a. Government funding for agricultural R&D b. Borrowing for a farm or business, 2017 100,0 100,0 0,10 0,10 respondents of respondents 80,0 80,0 0,08 0,08 60,0 60,0 0,06 0,06 40,0 40,0 20,0 20,0 0,04 0,04 0,0 0,0 % of 0,02 0,02 % 0,00 0,00 Otherfunding Other funding Salesof Sales goodsand ofgoods services andservices Borrowedto Borrowed tostart, start,operate, operate,or orexpand farmor expandaafarm or Commoditylevies Commodity andproducer leviesand organizations producerorganizations business(% business age15+) (%age 15+) Donorsand Donors developmentbanks anddevelopment banks Government Government Borrowedto Borrowed start,operate, tostart, orexpand operate,or farmor expandaafarm or business,female business, female(% age15+) (%age 15+) Borrowedto Borrowed tostart, start,operate, operate,or orexpand farmor expandaafarm or business,young business, adults (% youngadults age15-24) (%age 15-24) Source: World Bank calculations; Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex. worldbank.org/#data_sec_focus; World Bank 2021c. The limited skills of individuals, especially women, and the small size of household farms constrain productivity. An estimated 50 percent of farms rely only on traditional extensive systems, and no more than 10 percent practice truly intensive systems. As a result, yields of individual crops are smaller compared with peers, such as Vietnam, in the case of rice, maize, and coffee, and Ghana, in the case of yams.34 Women provide more than 50 percent of the labor force in agriculture, but their productive activities are constrained even more than men by limited access to education, land, occupational segregation, custom and social values, care duties, and poor access to critical inputs and services. It is therefore important to support women in transitioning to productive sectors to accelerate the economic transformation. Government support for women’s wider inclusion in agricultural programs has boosted women’s access and helped squeeze the productivity gap, which narrowed from 31 percent in 2008 to 21 percent in 2016 (Donald, Lawin, and Rouanet 2020).. Still, more needs to be done to overcome sex-specific constraints and promote access to education, labor, inputs, and services among women. Studies in other countries suggest that training to empower women in soft skills (perseverance, initiative) can also help strengthen women’s role in the household and encourage women to become more ambitious and pursue higher-revenue export crops. Additional actions might include engaging with men to change role perceptions, intrahousehold resource allocations, and work-sharing for the benefit of women. 34   2020 data of FAOSTAT (dashboard), Food and Agriculture Organization of the United Nations, Rome, http://faostat3.fao.org/. 49 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The sector is characterized by human capital constraints because of poor agricultural education and lack of government expenditures on relevant education. The rural literacy rate among adults is low, at 25 percent. The gender inequality gap is striking in access to education in rural areas. The education system is poorly equipped to prepare youth for work in agriculture. The public budget for education and training in agriculture is small, less than 15 percent of the total funding for technical education. This translates into a lack of adequate facilities and teaching staff. Although young people may be interested in modern technologies, new concepts, such as climate-smart agriculture and digital agriculture solutions, exhibit low penetration because of the limited capacity of farmers and technical experts.35 Closing the financing gap in agriculture will be essential Bridging the financial gap affecting agricultural producers is a necessary condition for the development of the sector. Credit financing is essential if farmers are to upgrade operations and diversify income sources. Relevant measures on the supply side might include (1) expanding physical access through greater outreach by microfinance institutions and digital finance; (2) expanding the coverage of the government’s Partial Guarantee Fund to agricultural lending by financial institutions; (3) providing technical assistance to financial institutions for the development of products tailored to the needs of the agricultural sector, including targeted instruments to promote climate-smart agriculture); and (4) improving the regulatory environment, including measures to pave the way for useful new products, such as leasing.36 On the demand side, financial literacy is important; education should thus be provided to farmers on loan access, lending products and costs, and risk management; and the lack of identification among farmers should be addressed, possibly through the West Africa Unique Identification for Regional Integration and Inclusion Project funded by the World Bank. Since 2015, the government has taken steps to address the deficiencies in rural market financing and lending along agricultural value chains, but not quickly enough. Credit is still concentrated. Among peers, Côte d’Ivoire stands out for the small share of credit going to the private sector. Access to financial services is particularly limited among agricultural producers. Agriculture contributes around 22 percent of GDP, but accounts for only around 10 percent of bank lending. Bank credit to the sector goes nearly exclusively to large companies in the cash crop sector (cocoa, rubber, oil palm, and cotton), largely through short-term loans for marketing. Driven by mobile money, financial inclusion has been expanding recently, but access to financial services is marked by strong rural-urban and sex disparities. Only 13 percent of rural adults had access to a financial account in 2017, compared with 41 percent nationwide. The gender gap in financial inclusion is even greater. Only about 10 percent of women have accounts at financial institutions, against 19 percent of men.37 At both the farm and national scales, poor access to finance is a major hindrance to the take-up and scale-up of climate-smart agriculture (World Bank 2019b). Persistent constraints on access to financial services arise on both the supply side and the demand side. On the supply side, credit availability is hindered by the limited bank presence in rural areas and by the reluctance of banks to lend to farmers because of the high cost of managing small loans and the higher perceived risks (income seasonality and lack of collateral and credit history). Leasing solutions are not available for agricultural equipment in Côte d’Ivoire because of the lack of collateral and of secondary markets for agricultural equipment. On the demand side, farmers lack financial literacy. Women face particular constraints in gaining access to financing because of low literacy and the nature of their farming 35   2020 data of Digital Agriculture Maps (dashboard), Mobile for Development, Global System for Mobile Communications (GSM Association), London, https://www.gsma.com/r/digital-agriculture-maps/. 36   Some fintech companies may propose disruptive solutions to smallholder financial gaps. African markets, such as in Kenya, Nigeria, and Senegal, have seen the emergence of solutions relying on alternative data sources for farmer credit scoring or offering crowdfunding dedicated to farmer financing. See Kenya: Alternative Credit Scoring for Smallholder Farmers (dashboard), FarmDrive, Nairobi, Kenya, https:// farmdrive.co.ke/; Nigeria: farmcrowdy (dashboard), Farmcrowdy Limited, Lekki, Nigeria, https://www.farmcrowdy.com/; Senegal: BaySeddo (website), BaySeddo, Dakar, Senegal, https://www.crunchbase.com/organization/bayseddo. 37   Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex.worldbank.org/#data_sec_focus. 50 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 activities. Mobile banking could help address some supply-side gaps by enabling farmers to access banking services digitally. Improved access to mobile money has been partly filling the widening gender gap in access to accounts at financial institutions. Compared with the 38 percent among men, 30 percent of women now report that they have access to mobile money accounts, up from 28 percent and 20 percent, respectively, in 2014.38 However, mobile account transactions are limited to payments and cash transfers. A wider range of DFSs could help address the constraints on credit and insurance as well. Promoting the sustainable management of natural resources Rapid population growth and extensive agricultural development have severely degraded the country’s rich natural resources. Pressure on cultivable land has risen steadily, including in protected areas, making conflicts over land more likely. Pressure on the land has also led to a spectacular rate of deforestation. In the last 50 years, the forest cover has declined by close to 80 percent, one of the highest rates in the world. This is exacerbating the effect of climate change. A critical challenge is therefore maintaining healthy economic growth in agriculture, while preventing the irreversible depletion of natural capital. The government must drastically step up efforts to improve forest management, particularly in light of the international pressure to enhance the sustainability of cocoa. The erosion of natural resources has a significant impact on the economy, exacerbated by the risks of climate change that will have to be mitigated. The government should adopt the new International Standard for Sustainable and Traceable Cocoa (ISO 2019). It should also implement a national traceability program and measures for the sustainable management of priority classified forests and protected areas. In addition, it should scale up the activities undertaken under the Cocoa and Forests Initiative.39 This would include those activities to be supported by the upcoming Cocoa Integrated Value Chain Development Project funded by the World Bank. General forestry management would benefit from a clarification of the current laws and regulations concerning tree tenure security in rural areas and a review of logging concessions and fiscal policies to promote sustainable reforestation by private actors (communities and logging companies). Issues around the populations living in the forests would need to be addressed to find a long-term solution to their situation and the preservation of the forests. Deforestation, especially driven by cocoa production, is a major risk to sustainable development; addressing it should be a policy priority. The great speed of deforestation in the past 30 years has been driven especially by pressures on the land and the expansion of cocoa production (map 4). Illegal plantations inside forest reserves are estimated to cover 1.5 million hectares and account for about 40 percent of total production. Addressing this issue permanently could have a significant social impact because populations currently living in classified forests will need to modify their agricultural practice and shift to agro-forestry or move, to enable the forest to become reestablished and for replanting activities to have a meaningful effect. Agroforestry, afforestation, and reforestation of degraded forestlands and mangrove habitats have strong potential in climate change mitigation, as acknowledged by the NDC. In addition, national parks make an important contribution to the national economy, including (1) through the high biodiversity value and in regulating climate through the large carbon reservoir of parklands; (2) by providing clean water for the half- million people in the Taï National Park watershed, for example; and (3) through the ecotourism potential. 38   2014 and 2017 data, Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex. worldbank.org/#data_sec_focus. 39   Cocoa and Forests Initiative (dashboard). World Cocoa Foundation, Washington, DC, https://www.worldcocoafoundation.org/ initiative/cocoa-forests-initiative/. 51 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Map 4. Deforestation has been accelerating in Côte d’Ivoire a. Forest cover, 1990 b. Forest cover, 2000 c. Forest cover, 2015 Source: The change in forest cover in 1990–2015 accounts for over 85 percent of the total change. By 2015, forest cover had almost disappeared in the southwest except for the Taï National Park and the N’Zo Partial Faunal Reserve. A new forest code provides a high-level regulatory framework for better managing natural resources, but implementation on the ground has been slow. The government’s engagement in Reducing Emissions from Deforestation and Forest Degradation in Developing Countries was undertaken in 2011, while the Cocoa and Forests Initiative was launched in 2017 to promote zero cocoa deforestation and restore forests. The preservation, restoration, and extension strategy, digital forest monitoring tools, and partnership protocols with private cocoa companies have also supported sustainable forest management (World Bank 2019a, 2021a). More sustainable forest management should also be targeted at benefiting local populations by, for example, promoting agroforestry training and income diversification. However, implementation has been slow, for example, in updating and publishing determinations on different types of forests and the dissemination of information on permitted uses among the population. A national standard for sustainable and traceable cocoa has been delayed, and there is no national traceability system for cocoa or other key crops. Improving water governance and management and optimal land use practices are critical to maintaining service delivery for various water uses. A recent study shows that climate change is likely to affect groundwater recharges because of changes in precipitation and temperatures (Soro et al. 2017). Moreover, the intensive use in industrial plantations of fertilizer and pesticides on some export commodities, such as oil palm, creates serious concerns about underground water pollution. As the experience of a severe water crisis that affected the city of Bouaké in 2018 demonstrates, water resource monitoring and watershed management are essential to maintaining service delivery in the context of climate change. Better planning is needed to help diversify the sources of water and build long-term supply capacity for multiple uses, including rural water supply, agriculture, and hydroelectricity. Preventing the contamination of water resources is also a matter of public health, which raises the issue of the lack of adequate sanitation and treatment solutions. In addition, preserving a good intermediate density of tree cover in the surroundings of water catchment areas 160 optimal is necessary to ensureTracking groundwater recharge and sustain water availability among local populations. & tracing Domestic credit to private sector by banks 4 140 Additional strategies to manage water and adapt to climate change in agriculture should include water saving 120 technologies such as efficient 3 irrigation. Quality of Quality of logistics 100 infrastructure 2 services Since 2016, the government 1 has undertaken major land reforms 80 to build the prerequisite for massive (% of GDP) land registration, but geographical coverage is still limited. 60 Historically, land is among the most 0 controversial and sensitive topics in Côte d’Ivoire and remains an 40 important driver of tensions, violence, and community conflict. Disputes over land Scheduled or use and ownership arise20 Competitively around customary versus more recent land rights formal expected time and titles, but also migration from neighboring countries, priced shipments 0 and these persistent conflicts Cote Senegal Kenya Morocco Vietnam d'Ivoire Customs clearance process Domestic credit to private sector by banks (% of GDP, 2019) Cote d'Ivoire 2014 Cote d'Ivoire 2018 Vietnam 2018 Account ownership (fin. institution or mobile-money, % of population, 2017) 52 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 have fueled the presence of armed groups. A Rural Land Agency was established in 2016, and a Land Policy Statement was released in early 2017 that provides clear objectives and guidelines to facilitate the design and implementation of relevant field operations. Coupled with donor support, this has resulted in surveys of the boundaries of 4,000 villages and the systematic registration of land rights in six regions. A land observatory is being launched and will perform an evaluation of the implementation of land policy. However, coverage of the land tenure security program is still limited (6 of the 32 regions of the country), and expansion will require more effort and time to address the underlying inequalities in access, including gender differences and differences between Ivorians and immigrants. The implementation of the national program for land tenure security should be accelerated. Additional regulatory changes will be required to adjust the legal framework to meet the needs of all the actors equitably and to facilitate the official recognition of the land rights of vulnerable groups. This will involve reducing the difficulties in obtaining documentation, including land title certificates, facilitating transactions and other processes among people who do not possess official certificates, and lowering the cost of procedures. Although there are no current legal restrictions on women’s ability to own land or transact in land, the social and economic constraints on women’s access to the registration of land rights will have to be removed. Recent research offers promising options, including the provision of economic incentives to increase the sharing of land titles between spouses to promote women’s access to land (Donald et al. 2020). More investments in new technologies, such as land information systems, continuously operating reference stations, new field survey equipment, and drones, would also help foster effective land operations. Strengthening policy and governance in agriculture Governance in the agriculture sector - in terms of the actors involved, the regulations, taxation, and expenditures - constrains progress and fosters the inefficient allocation of funding. In 2015, a new agricultural framing law, the Loi d’Orientation Agricole (Law 2015-537, July 20, 2015), was adopted and, in 2017, a new National Agricultural Investment Plan (2017–23) followed. Nonetheless, public spending on agriculture, 3.1 percent of GDP in 2017, remained far below the Maputo target of 10.0 percent. Meanwhile, scarce resources were being stretched to support a multitude of regulatory bodies, including for specific value chains in which many activities might be more efficiently managed by private sector stakeholders. In the face of limited funding, governance must be strengthened to improve the allocation and efficiency of public expenditure, while mobilizing the private sector to greater effect. This will have to occur in step with decentralization and a greater role for local authorities in targeting policies on local needs. The strategic plans in agriculture lack effective prioritization, and decentralization is weak. The strategic plans typically propose comprehensive lists of challenges and interventions, but these are not effectively prioritized, and the resources allocated are not adequate for the thoroughgoing response called for. Moreover, the sector-specific strategies and regulations are not effectively adapted to address the challenges. For example, new regulations and reforms are required to deal with child labor, deforestation, and poverty among farmers in the cocoa sector. A more effective role for the regional directorates is required to coordinate reforms and promote sustainable agriculture, while engaging local institutions, professional agricultural associations, and cooperatives and ensuring that they will credibly improve the rules of the game. Local governments generally will need more freedom, funding, and authority to adjust policies to local needs. Efforts at decentralization have been ongoing in recent years, but progress has been hampered by (1) an incomplete and contradictory legal framework and (2) budget and human resource capacity constraints. Addressing these constraints will be a precondition to enabling local authorities to take on a stronger role in managing local agricultural affairs and instituting policies that address local needs and promote local development. 53 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Reforms to strengthen governance in agriculture should focus on revising incentives and taxation and on allocating funds more efficiently to maximize the effect. The taxation on agricultural export commodities is high, although the government has also provided incentives through reduced taxation on cashew and cocoa value chains to increase agro-processing and boost the competitiveness of export crops. A processing subsidy of CFAF 400 per kilogram (US$723 per ton) was introduced in 2016 on processed kernels for export and several fiscal breaks have been granted for the primary processing of cocoa. However, the export tax on cocoa industry is still high, around 20 percent of cost, insurance, and freight outlays. A living income differential was established during the 2020–21 crop season to raise the incomes of cocoa farmers, but because of the decline in the demand for cocoa accompanying COVID-19, cocoa companies are reluctant to pay the extra fee. This may lead to higher environmental taxation through, for instance, new laws on pesticide use and tax schemes that would incentivize sustainable cocoa production. It should also be allocated more efficiently and complemented by mobilizing private sector investment. Levies on agricultural exports are being redistributed for sectoral improvements. However, the allocation formula is unclear. This is an argument for greater transparency in funding allocation mechanisms to maximize public expenditure efficiency. Child labor, especially in cocoa production, is a specific governance challenge that could put the entire sector at risk, given the global trend toward enhanced production standards. Child labor is still widespread. Approximately 790,000 children are involved in child labor in the country, of whom around 90 percent are exposed to hazardous forms of labor in cocoa production (Sadhu et al. 2020). Significant progress has been made in Côte d’Ivoire over the last ten years in the fight against child labor. However, progress in the fight against the worst forms of child labor (WFCL) has been too slow and a recent analysis Report (NORC - University of Chicago, 2020 report) indicated that 38 percent of the total number of children living in Ivorian agricultural households were still engaged in child labor, most of them performing hazardous child labor, although there were very few instances of forced labor or WFCL). Under the new National Sustainable Cocoa Strategy, the Government aimed at increasing effort through systematic collaboration and coordination among all stakeholders increase funding for to tackle root causes of child labor on cocoa farming an achieve stricter enforcement of existing laws and regulations. Systematic collaboration and coordination among all stakeholders must be encouraged to finalize the relevant public-private partnership and the government’s white paper and achieve stricter enforcement of existing laws and regulations. Main pathway II: job creation through private sector–led growth This section summarizes the progress in private sector development and job creation since 2015, and analyzes binding constraints and the corresponding policy priorities. Given the objective announced by government authorities to enable the transformation of the economy to make the private sector the primary engine of growth and accelerate job creation, the policy priorities could be to (1) promote infrastructure investment and efficient industrial policies, (2) improve financial sector depth and stability, and (3) expand targeted support measures for SMEs and entrepreneurs. Findings of the 2015 SCD and recent developments The 2015 SCD identified the creation of more and better jobs through private sector–led development as a core pathway in development. The 2015 SCD highlighted key obstacles, notably, in agricultural productivity and value chain development in agribusiness. The critical constraints in 2015 have been partially addressed, and private sector growth has been supported. Overall, the reforms have buttressed job creation in the formal and informal sectors, but rapid population growth has meant that job creation has not kept pace with the rate at which young people have entered the labor market. Because of ongoing demographic change, creating employment opportunities has become more important in making growth inclusive and preserving 54 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 social cohesion and stability. Most Ivorians work long hours, without earning an income that would allow them to enjoy a decent standard of living. In 2015, the average monthly income was CFAF 97,266 (U$197), lower than the average in SSA. Structural transformation has not been productivity-enhancing, and the economy is struggling to apply resources in activities with higher value added in agriculture, industry, and services. Logistics, transport, and trade facilitation have been improved. Since 2015, the government and the private sector have invested over US$2 billion in upgrading and rehabilitating transport infrastructure, following more than a decade of underinvestment. This has improved the routes between major cities and isolated regions in the hinterland. Since 2013, the government has been seeking to streamline and automate customs operations, including by establishing one-stop service windows with a view to simplifying and accelerating import and export procedures. The improved results on the logistics performance index (LPI) reflects these efforts.40 The country’s score rose from 2.76 in 2014 to 3.08 in 2018, out of total possible of 5. Access to Industrial land is an issue. In 2012, the government launched a program to develop special economic zones to alleviate congestion in existing production areas, support manufacturing, and promote regional integration and territorial development. The Agency for Industrial Land Management and Development was created in 2013 to exercise responsibility, but its operations are not sufficiently efficient. The zones would benefit from reforms to make investment promotion and zone management more dynamic and responsive to private sector needs. After obtaining funding in 2018, the authorities undertook the rehabilitation of older zones in Koumassi and Vridi and the development of the new PK24 industrial zone near Abidjan. In November 2019, a first development agreement for PK24 was signed between the government and Afreximbank. Significant progress has been achieved in access to electricity at relatively low prices. The government’s decision to privatize a portion of the electricity sector in 1993 paved the way for success in the application of energy solutions. Following the clearance of arrears, price adjustments, and regulatory changes, private sector involvement and complex financial packages led to the development of appropriate infrastructure (World Bank 2018a). Benefiting from low-cost gas and hydropower generation capacity, the electrification of urban localities is nearly complete and close to 69 percent of the population has access to electricity. With an installed capacity of almost 2,230 megawatts, the utility meets domestic demand and exports the surplus to the subregion, about 10 percent of the output, although the 2021 energy crisis demonstrates that the space for dealing with supply shocks is limited.41 The low cost of electricity benefits the private sector but may represent an adverse incentive for energy efficient behavior or investment. Access to finance is a significant issue despite systemic improvement. The financial sector has been expanding. Domestic credit going to the private sector rose by 18.7 percent in 2015–19 but lags regional peers on key indicators. Although there has been positive change since 2015 through bank restructuring, bank supervision, enhanced financial infrastructure, and firm-level support, many microenterprises and SMEs are still experiencing difficulties in accessing credit. In 2017, 61 percent of manufacturing firms and 71 percent of service firms considered access to finance as a key constraint. The country is one of the largest mobile money markets in Africa, representing 39 percent of the overall number of accounts in the WAEMU (77 million). However, this positive market trend mostly involves digital payments rather than second-generation DFSs, such as digital credit or insurance. More generally, nonbanking financial services are still relatively limited and used by only a small part of the population only: nonbank deposit-taking and insurance companies represent 2 percent and 10 percent, respectively, and pension funds account for 7 percent. Major bottlenecks in innovation are linked to the lack of flexibility in the regulatory framework and the cost of the service. Weak education constrains labor supply, while rigid labor market regulations hold back labor demand. The government has made substantial fiscal efforts to support education. Access remains an issue, and the quality and relevance of programs are a challenge. College graduates face considerable difficulty finding jobs. 40   LPI (Logistics Performance Index) (dashboard), World Bank, Washington, DC, http://lpi.worldbank.org/. 41   A combination of low water levels in the hydropower system and an outage at a major power plant led, in 2021, to a severe shortage of electricity, which resulted in load-shedding over several months. 55 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Employers question the quality of many tertiary programs. Fiscal constraints, system inertia, a lack of qualified teachers, and problems establishing a strategic vision and a role for the private sector explain the persistence of the issue. Labor regulations are a barrier: 16.6 percent of Ivorian firms and 32.3 percent of firms with more than 100 employees report that they face issues with labor regulations. However, the regulations are also politically sensitive, which largely explains the limited progress. The environment and sustainable development initiatives have become a source of jobs. These sectors have contributed to the creation of millions of jobs globally and in Côte d’Ivoire, where the majority of such jobs are in water and waste treatment and management. Indeed, there are nearly 4 million green jobs, including trades in other sectors, such as construction, health care, insurance, transport, marketing, tourism, energy, chemistry, and industry, but which require specific environmental skills. Promoting more sustainable growth could take advantage of this potential but will have to be tied to the development of appropriate skills and the creation of the proper incentives. Promoting structural transformation and diversification As the catch-up effects observed since 2012 dissipate, economic growth is at a risk of decelerating unless structural reforms accelerate the country’s structural transformation and promotes private sector–led growth. Averaging 12 percent of GDP in 2015–18, private sector investment lags in Côte d’Ivoire relative to many peer economies and the Sub-Saharan African average (16 percent), indicating that the country is not sufficiently competitive and attractive, especially in light of the ambition to turn Côte d’Ivoire into an emerging market economy. The economy still faces substantial issues in the business environment. Its financial system does not support sufficient microenterprises and SMEs. Transport and logistics remain problematic. Digital connectivity is underdeveloped. Human resources are still weak. All of these barriers stand in the way of a dynamically growing private sector and more highly paid jobs among a wider share of the population through formal employment in larger enterprises, thriving microenterprises and SMEs, or self- employment. Côte d’Ivoire has significant potential in the development of higher value-added activities in agriculture and agrobusiness, manufacturing, and services, which could also promote tighter integration in the global economy (figure 10). Manufacturing sectors with a potential for job creation include cocoa, fruits, and nuts. Several service areas have been growing dynamically, notably, construction and transport, but the labor shift has more frequently occurred from agriculture to low-productivity informal services. Diversifying service activities and upgrading quality by promoting entrepreneurial skills in microenterprises and SMEs will increasingly require a second pillar of structural change and job creation if growth is to become more inclusive. To reap the full benefit of trade, foster investment, create decent jobs, and develop these sectors, the government and stakeholders will have to address major crosscutting challenges, some of which have not changed much since 2015. Key crosscutting constraints and gaps identified by comparing business environments across aspirational peer countries, such as Morocco and Vietnam, are evident in transport and logistics, access to finance, digital connectivity, the skills of the workforce, and the business environment (IFC 2020). 56 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Figure 10. Export growth highlights the country’s potential in food, chemicals, cosmetics, and plastics Source: Atlas of Economic Complexity (dashboard), Growth Lab, Center for International Development, Harvard University, Cambridge, MA, https://atlas.cid.harvard.edu/. 160 Tracking & tracing Domestic credit to private sector by banks 4 140 3 120 Quality of Quality of logistics Naturalinfrastructure resources and, notably, 2 forestry could services contribute more 100 and more sustainably to growth. The sector to GDP averaged about 0.25 percent80 contribution of thwe forest 1 in 2013–18. The enabling environment (% of GDP) for private investment in forest plantations, whether among 60 farmers or large-scale operators, has smallholder 0 been unfavorable, putting thousands of skilled formal sector jobs at risk. 40 A successful reforestation strategy could create 2.7 or Scheduled permanent jobs per hectare of land reforested. This 20 Competitively does not include supporting activities, such as expected research,timeplanning, and the production of planting material. The priced shipments 0 government is also working to realize Cote Senegal Kenya Morocco Vietnam the potential of protected areas, which could generate benefits for local populations. For example, nontimber d'Ivoire forest products, such as nut, honey, medicinal plants, and mushrooms, constitute a source of household shea clearance Customs incomes among rural populations, process notably, women. Domestic credit to private sector by banks (% of GDP, 2019) Cote d'Ivoire 2014 Cote d'Ivoire Account ownership (fin. institution or mobile-money, The country’s competitiveness is2018 Vietnam constrained by2018 a challenging business environment, % of population, 2017) which also contributes to the economy’s high degree of informality. Reforms have improved have improved the business environment, although operating and formalizing businesses are still challenges because of cumbersome procedures for licenses and tax compliance. Regulatory burdens constrain small firms from formalizing and create incentives for firms to remain small. They also hinder the entry of new firms. In 2006– 18, the average firm creation rate in Côte d’Ivoire was less than half the rate in Ghana and Vietnam. This limits competition. Corruption, lack of enabling policies, the suboptimal allocation of resources, and the poor enforcement of contracts are cited by businesses and firms as key reasons for the inability to grow and create jobs. New firms face more constraints than established firms, and established firms encounter problems in surviving and growing in the difficult business environment. 57 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Structural transformation will require that competition be promoted in markets and for markets. Recent analytical work presents evidence that market-based competition in several sectors is restricted because of the role of SOEs or state-controlled enterprises, the presence of a few large operators in many key markets, and weaknesses in the competition regulation framework and enforcement (World Bank 2021c, 2021d). The government still holds substantial interests in many firms, including in petroleum refining, public transport, and airlines (IFC 2020). To improve the business environment fundamentally, a new, more strategic, and more coherent approach to doing business reform is needed. First, institutions are competing over regulatory mandates and the reform agenda, and many have limited capacity in financial resources and expertise. Second, while consultation platforms with the private sector exist, the capacity for ex ante impact assessments is restricted, and reforms are often implemented in an ad hoc manner. Taking stock of all regulations affecting firms and creating a regulation repository accessible to the private sector could lead to an improvement in the business environment that would support formalization and private sector investment and reduce corruption. Stronger and more institutionalized mechanisms for collaboration and consultation with the private sector— for example, regulations on lobbying and review mechanisms during the preparation of new laws—could help increase the likelihood of acceptance of reforms by the private sector. As the private sector grows and matures, the obstacles to competition must be examined by considering the role of SOEs and by strengthening regulation in major sectors, such as telecommunication. However, in the longer run, competition institutions must be supported in facilitating and enforcing a more level playing field. Expanding essential infrastructure and utility services for the private sector To attract more private sector investment, the government will have to provide better physical infrastructure and access to key inputs. First, transport infrastructure has improved, but the cost of logistics services is high, and quality is often low. Second, similar constraints are evident in ICT and digital services, where infrastructure expansion will have to be coupled with regulatory reform to reduce costs. Third, progress is closely tied to the challenges around land rights, which impact the availability of industrial land and provide the kind of tenure security and connectivity that enterprises need. A major impediment to private sector development is the lack of a land registry relying on unique land parcel identification numbers. While land regulations are generally better in Côte d’Ivoire than in the rest of Sub-Saharan Africa in number of procedures, time, cost, and the quality of the land registry, the quality of land regulations is below the quality in more advanced economies. Unique identifiers for land have been prepared, but implementation has not yet been completed, and associated problems with procedures on land remain more complex everywhere except Abidjan. The government has approved reforms to create a land registry, but the platform is not yet operational. This impedes the acquisition of land for private sector development and delays other interventions aimed at increasing economic activity, such as the establishment of industrial zones to promote private sector development. These shortcomings are closely linked with problems in more general access to quality infrastructure, including industrial land in the context of sustainable urban development. To address this and related issues, the government has launched a program to develop special economic zones to alleviate congestion in existing zones and support manufacturing and territorial development. However, the public-private partnership approach that has been adopted has been slow in achieving progress, and investment promotion policies are often inefficient because of problems in land acquisition and a complex political economy involving many interest groups. The recent reform in the managing entity, the Agency for Industrial Land Management and Development should mitigate against this problem, with a needed review of investment promotion and implementation policies that could help boost the availability of industrial zone land and foster agglomeration effects. This should include a stronger approach to monitoring and evaluating costs 58 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 and the impact of investment promotion measures, including through special economic zones. The better management and promotion of industrial land outside Abidjan would also foster more balanced territorial development in more remote regions. The transport sector in Côte d’Ivoire is one of the most developed in West Africa. It is also important to neighboring, landlocked Burkina Faso and Mali. The sector has benefited from large investments since 2015. Partly reflecting these developments, Côte d’Ivoire’s LPI score was 3.08 in 2018, a much better performance than that of Senegal (LPI of 2.25), but still below the score of aspirational peer Vietnam (LPI of 3.27) (figure 11). Key challenges include operational inefficiencies at the Abidjan Autonomous Port. Border compliance costs are high, and congestion in and around the port is still significant.42 Poor road network maintenance, substantial differences among regions in rural connectivity, market distortions in the trucking industry (which leads to high transportation costs), and a lack of security and reliability all make logistics a complicated and expensive matter. In addition, while the government has successfully carried out transport projects under a public-private partnership and concession arrangements, the regulatory framework for public-private partnerships may need refinement (IFC 2020). Figure 11. Access to infrastructure and credit are among the most binding constraints on growth a. Logistics performance index b. Credit for the Private sector 160 160 Tracking & tracing Tracking & tracing Domestic credit to private sector by banks GDP) sector by banks 4 4 140 140 3 3 120 120 Quality of of Quality Quality of logistics Quality of logistics 100 100 infrastructure infrastructure 2 2 services services 80 80 1 1 (% of GDP) private 60 60 0 0 40 40 to of Domestic credit(% 20 20 Scheduled or or Scheduled Competitively Competitively expected time expected time priced shipments priced shipments 0 0 Cote CoteSenegal Kenya Senegal Morocco Kenya Vietnam Morocco Vietnam d'Ivoire d'Ivoire Customs clearance Customs clearance process process Domestic Domestic credit credit to private to private sector sector by banks by banks (% (% of of GDP, GDP, 2019)2019) Cote d'Ivoire Cote 2014 d'Ivoire 2014 Cote d'Ivoire Cote 2018 d'Ivoire 2018 Vietnam Vietnam 2018 2018 Account Account ownership institution (fin. (fin. ownership or mobile-money, institution or mobile-money, population, % of % 2017) of population, 2017) Sources: LPI (Logistics Performance Index) (dashboard), World Bank, Washington, DC, http://lpi.worldbank.org/; WDI (World Development Indicators) (dashboard), World Bank, Washington, DC, https://datatopics.worldbank.org/world-development-indicators/. A reduction in transport and logistics costs could support firm competitiveness and productivity and improve the reliability and security of shipments. For example, creating a transparent freight market, such as by eliminating middlemen or creating a virtual freight exchange, would lead to a reduction by US$0.13 per kilometer in transport costs on the Ivorian section of the Abidjan-Ouagadougou corridor. A reduction would also be important in supporting an upgrade in rolling stock, which would require formalization of the informal transport sector. Operational efficiency at the Port of Abidjan could be improved through reforms in infrastructure and procedures, including customs operations, that could boost value chain integration. The ICT sector has expanded steadily in the last few years, contributing around 10 percent of GDP (versus 3.3 percent of GDP in Senegal) and has created around 5,400 jobs directly and more than 100,000 jobs indirectly. Based on international rankings, the ICT sector in Côte d’Ivoire is performing moderately well. 42   Doing Business Data (dashboard), International Finance Corporation and World Bank, Washington, DC, https://www.doingbusiness. org/en/data; LPI (Logistics Performance Index) (dashboard), World Bank, Washington, DC, http://lpi.worldbank.org/. 59 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The performance of the ICT sector is ranked in the upper quarter relative to all other Sub-Saharan African countries according the 2020 mobile connectivity index.43 However, the same international ranking highlights that the ICT sector in Côte d’Ivoire is ranked globally at 129 among 170 countries, suggesting that more effort is required to develop the digital economy. The Chamber of Commerce and Industry is active in advocacy campaigns, while there are about 300 high-technology firms, including 50 start-ups and several coworking spaces and incubators (IFC 2020). In digital entrepreneurship, despite initiatives and considerable potential, the start-up ecosystem is embryonic. Start-ups and new enterprises face constraints that are similar to those faced by established firms, but the magnitude is more severe. The start-up ecosystem still faces challenges because of (1) specific weaknesses in the entrepreneurship culture, (2) the difficult access to domestic markets characterized by limited size, (3) inadequate financing options, and (4) the need for institutional, regulatory, and tax framework improvements. The government could take impactful action, such as strengthening entrepreneurship support organizations, easing access among local start-ups to public procurement, and establishing seed financing mechanisms. Promoting new firms through appropriate incentives will also help create new jobs and raise the productivity and earnings associated with existing jobs. Still, there is a digital connectivity gap in both mobile and fixed internet access. Estimates suggest that the penetration rate of unique subscribers in 2020 was around 50 percent in mobile telephony and 38 percent in mobile internet, at par or above regional comparators.44 There are major rural-urban and gender gaps in ICT usage, however. In 2019, 53.6 percent of urban dwellers accessed the internet on a regular basis, compared with 16.1 percent of rural residents, and 12 percent of women versus 2 percent of men reported that they had never used a mobile phone.45 Despite recent progress, digital connectivity is still expensive, and download speeds are slow (figure 12). The cost of the least-expensive plan is about 11 percent of income per capita for mobile telephony, well above the cost in Ghana (2 percent) and Vietnam (2.5 percent), and 25 percent for fixed broadband. This stems from various factors, including limited price competition in the retail market, significant wholesale costs, and sector-specific taxation. Figure 12. The quality and usage of digital technologies have grown, but remain low a. Digital financial service use, Côte d’Ivoire b. Mobile download speeds, January 2021, Mbps 250250 Mobile download speeds (mbps) Mobile download speeds (mbps) Credit card Credit ownership card ownership 200200 Debit Debitcard ownership card ownership 150150 Used Used phone aa phoneoror internet toto internet access anan access account inin account the past the year past year 100100 Sent Sent received oror domestic received remittances: domestic remittances: through a mobile through phone a mobile phone 50 50 Mobile Mobilemoney moneyaccount account 0 0 0%0% 20% 20% 40% 40% 2017 2014 2017 2014 of of %% population (age population 15+) (age 15+) Sources: Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex.worldbank.org/#data_sec_ focus; Speedtest Global Index (dashboard), Ookla, LLC, Seattle, https://www.speedtest.net/global-index. 0,7 0,7 43  0,6 GSMA Mobile Connectivity Index (database), Global System for Mobile Communications (GSM Association), London, https://www. 0,6 0,5 mobileconnectivityindex.com/#year=2019&globalRankings=overall&globalRankingsYear=2019. 0,5 44   GSMA Mobile Connectivity Index (database), Global System for Mobile Communications (GSM Association), London, https://www. 0,4 0,4 mobileconnectivityindex.com/#year=2019&globalRankings=overall&globalRankingsYear=2019. 0,3 45   0,3 Côte d'Ivoire (dashboard), Afrobarometer, Accra, Ghana, https://afrobarometer.org/countries/c%C3%B4te-divoire-0; Statistics 0,2 0,2 (dashboard), International Telecommunication Union, Geneva, https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx. 0,1 0,1 0 0 Chad Sudan Burkina Faso Burundi Zambia Vietnam Niger Congo, Dem. Rep. Rwanda Ethiopia Benin The Namibia China Sierra Leone Ghana Cote d'Ivoire Mauritania BurkinaUganda Gambia,Malawi Liberia Tanzania Gabon Morocco Kenya Seychelles Mozambique Africa Thailand Mali Nigeria Madagascar Botswana Senegal Zimbabwe Cameroon Chad Sudan Faso Burundi Zambia Vietnam Congo, Dem. Rep. Rwanda Ethiopia Benin The Niger Namibia China Sierra Leone Ghana Malawi Liberia Cote d'Ivoire Mauritania Uganda Tanzania Gabon Morocco Kenya Seychelles Mozambique Senegal South Africa Thailand Mali Nigeria Madagascar Botswana Zimbabwe Cameroon Gambia, South 60 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Expanding access to finance and deepening capital markets Access to finance is one of the most severe constraints on private sector growth and job creation. The limited availability of financing constrains enterprise creation and growth, product upgrading and diversification, and resilience during exogenous shocks, such as the COVID-19 pandemic, which highlighted all these constraints. As a result, access to finance also has a direct impact on job creation, especially among SMEs and individual entrepreneurs, which still account for a large part of the labor force. The availability and range of DFSs must be fostered; financial literacy must be promoted to encourage take-up; and gender gaps must be addressed to empower women. The formal financial sector and capital markets must be strengthened through regulatory reform and the institution of a wider range of financial services and instruments. The financial sector is reasonably well developed by regional standards but is too highly concentrated and limited to keep pace with development needs and ambitions. There are 29 active banks, 2 financial establishments, 45 microfinance institutions, and 13 e-money issuers.46 However, one-third of the financial institutions control nearly 80 percent of the credit market, and bank lending is mostly directed toward a few large customers. Overall, the penetration of banking services is low. In 2018, 21.6 percent of adults had accounts at formal financial institutions. Capital market activity is limited. The fixed income market is dominated by government bonds, while the regional equity market is thin and illiquid (IFC 2020). As a result, domestic credit to the private sector, which increased from 16.7 percent of GDP to 19.6 percent in 2015–19, is still well below comparators and the Sub-Saharan African average (see figure 11). Among the population, 34 percent use mobile money, ranking Côte d’Ivoire fifth in the world in the share of the population using mobile money.47 The overall usage of DFS has grown considerably over the years. The mobile money penetration rate was 20 percent in 2014. However, the majority of the transactions are still in basic services. These include cash-in cash outs, person-to-person transfers, safe money keeping, and airtime purchases. A 2017 survey showed that the majority (6 in 10) of Ivorians would be interested in using a digital credit product, depending on interest rates, fees, repayment plans, speed of disbursement, size, provider trust, convenience, and privacy, all of which are relevant features for service providers to consider in product development (Riquet-Bamba and Zetterli 2018). Women’s access to finance is particularly low. Only 10 percent of women have an account at a financial institution.48 The gender gap has been narrowed by a recent increase in women’s access to mobile money accounts: 30 percent of women now have access to such accounts (compared with 38 percent of men), up from 20 percent in 2014. There is also a gender gap in access to credit. Only 5 percent of women borrow to start, operate, or expand a farm or business, down from 9 percent in 2014 and significantly lower than the 8 percent reported among men. Recent evidence suggests that efforts to make business finance more effectively address women’s needs could include efforts to give women greater access to higher financing volumes than are typically available through microcredit loans. The latter have been shown to have limited transformational impacts on business growth. Efforts to provide credit products with lower collateral requirements would help women who otherwise have less access to credit (Alibhai, Buehren, and Papineni 2018; Alibhai et al. 2018; J-PAL and IPA 2015). Efforts to increase women’s access to finance could also focus on giving women greater privacy and control over their business incomes, such as through mobile money or dedicated business bank accounts (Aker et al. 2016; Campos, Goldstein, and McKenzie 2015). Key constraints on more development of the financial sector and an increased impact on the private sector and job creation include (1) low deposit mobilization, (2) poor financial inclusion, (3) weak credit information infrastructure, (4) underdeveloped local capital markets, and (5) limited availability and access to second-generation DFSs. 46   2021 data of Paysage Bancaire (dashboard), Central Bank of West African States, Dakar, Senegal, https://www.bceao.int/fr/content/ paysage-bancaire. 47   Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex.worldbank.org/#data_sec_focus. 48   Global Findex (Global Financial Inclusion Database), World Bank, Washington, DC, https://globalfindex.worldbank.org/#data_sec_focus. 61 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Many microenterprises and SMEs are still experiencing difficulties in accessing credit. In 2017, the finance gap affecting these enterprises in Côte d’Ivoire was estimated to be US$2.35 billion or about 7.4 percent of GDP (IFC 2017). Getting credit often requires high collateral, which amounts on average to about 156 percent of the value of a loan. Interest rates are often higher than the average rate of return on the investments. Access to credit is particularly limited in the agricultural sector. Banks are reluctant to provide loans to rural small-scale farmers because the farmers are considered too risky, given their low capitalization, unstable revenues, lack of formal credit history, and lack of collateral, such as land titles (World Bank 2018b). Developing more well targeted instruments to serve SMEs and farmers, such as credit guarantee funds, could help alleviate the bottlenecks, but this would also require strong monitoring and evaluation of cost and benefits, notably, if subsidies are involved. A well-functioning regional capital and financial market would also contribute to the financing of government and companies. Such a market could play a major role in the provision of long-term financing by increasing the availability of long-term financial instruments and reducing roll-over risks. A wider range of instruments (leasing, insurance products, private equity) would also help manage risks and increase the resilience of enterprises. To foster capital market development, revising asset allocation rules for pension funds and insurance companies, building the expertise and capacity of regional financial sector regulators, and encouraging the development of new instruments will be important. Major bottlenecks to innovation are linked to the lack of flexibility in the regulatory framework (simplified know your customer, clear guidance for accessing USSD codes, interoperability). Many decisions and instruments must be approved or passed as laws at the WAEMU level, a time-consuming process with limited influence on the government agenda. To improve access to finance will require financial deepening and innovation in and upgrading of fintech and the microfinance sector. To achieve these goals, the supervision of decentralized financial services should be strengthened, and capital market development should be promoted on the institutional side. Even more importantly, digital finance could go a long way to easing access to finance and making the banking sector more dynamic. It would also improve the usefulness of microfinance institutions as a financing instrument among smaller firms and support growth, inclusion, and technology upgrading. There is no specific regulatory framework for fintech despite the take-up. The lack of guidance and regulation is slowing the emergence of new business. Critical legal and regulatory reforms should be adopted to improve access conditions and boost the use of DFSs by individuals, microenterprises, and SMEs, while paving the way for fintech across the country. Promoting more efficient labor markets Insufficient skills and skills mismatches remain a major constraint for the private sector and Ivorian labor markets. Established and new firms alike report that lack of skilled workers is an impediment for growth of businesses. A lack of work experience, business and behavioral skills and skills transferability are some constraints among workers in the private sector firms. There have been significant efforts to support the sector, the share of public spending on education in Côte d’Ivoire is about 3.6 percent of GDP and 20.7 percent of government expenditures on average between 2015 and 2018. Still, this is below what countries such as Senegal (respectively, 5.0 percent and 21.9 percent) and Ghana (respectively, 4.2 percent and 21.1 percent) were doing over the same period. Beyond basic competencies, youth often lack the specific skills (soft and hard) needed to be more productive in the workplace, including as self-employed. University and technical and vocational education and training (TVET) are still the weakest links of the Ivorian education system. Employers do question the quality of many tertiary programs, especially the two- year Brevet de Technicien Supérieur vocational program. There is a slow development of digital skills, especially those that foster value creation in emerging and traditional industries. The low connectivity to internet in public universities, TVET establishments and public libraries impedes the capacity of the education sector to accelerate progress on digital skills. Digital skills training is offered at both lower and upper secondary levels but are ineffective due to public-private, spatial and gender inequalities, poor instructor expertise and 62 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 outdated equipment. There are considerable disparities in the quality of education to which students have access, with large differences between the public and the private sector, but also rural areas and cities. For citizens to acquire digital skills– the ability to analyze, select, and critically evaluate digital information to solve problems and develop collaborative knowledge – the government could prioritize a smart and agile workforce development strategy, support young Ivorians’ interest in learning digital skills, and equip citizens with general and specialized digital skills through public, private and industry learning systems. Furthermore, it is essential for the government to incorporate up-to-date scientific pedagogy and leverage opportunities in public policy, investments, and programs, which provide fertile ground for activities that enhance digital skills. Low levels of education are particularly an issue for women and are thought to underpin women’s limited access to good quality jobs, low earnings and higher concentration in low-productivity self-employment (with average monthly earnings per worker of only US$129), especially household microenterprises, compared to men who are better represented in wage work (where average monthly earnings per worker are US$523), as well as their lower remuneration and lower profits within the same sectors (e.g. in nonagricultural wage work men earn 32 percent higher wages than women) (Christiaensen and Premand 2017). In terms of addressing gender gaps in business performance through programs focused on human capital, recent evidence suggests that business training programs that focus on noncognitive skills (such as perseverance and initiative) may be more effective than traditional business skills training programs at improving the performance of small enterprises, especially for those owned by women (Campos et al. 2017). Beyond skills gaps, other issues holding back the productivity of women as workers and entrepreneurs include their lower access to finance (see above) gender norms such as occupational segregation and disproportionate domestic responsibilities, including childcare. Addressing women’s childcare burden could be especially significant, by giving them greater ability to look beyond home-based microenterprises which have been found to have especially low productivity. Labor regulations remain an issue but are also politically sensitive. In 2016, 16.6 percent of Ivorian firms reported facing issues with labor regulations. These numbers are roughly twice the average for Sub-Saharan Africa. On top of labor costs, rigid complex labor regulations such as legal holidays and restrictions on hiring and firing, collective wage agreement still affect the labor market (Mbaye and Gueye 2018). Improving the quality of education and reforming labor laws are challenging topics to tackle – but essential if growth is to be sustained. The private sector will not be able to grow dynamically without skilled personnel – and without growth, will not be able to create more jobs that are urgently needed. These challenges are also discussed (in more detail) in Pathway 3 on human capital development. However, one key link with this chapter will be getting the private sector more involved in skills development, promoting on-the- job training, and giving the private sector a voice in the development of curricula. This will require stronger platforms for coordination and communication between public and private stakeholders – a topic that is also recurring in many other policy areas. Although it will be challenging to reform basic institutions (such as private-public coordination or labor laws), the government should make an effort of finding ways of tackling these portfolios (and their political economy implications) to ensure continued reform progress. 63 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Main pathway III: Developing human capital through improved service delivery and better social spending This section focuses on human capital outcomes, a priority for growth going forward. Improving human capital and living standards will be essential and should include (1) continued investments in infrastructure to improve access to health care and education, (2) prioritizing the quality of services delivery through governance reforms in these two sectors and (3) expanding social safety nets to ensure that growth is inclusive and becomes more resilient. More efficient social spending in a context of limited fiscal space and competing priorities has been reinforced in the current global fragile environment. Findings of the 2015 SCD and recent developments 250 Mobile download speeds (mbps) Credit card ownership The 2015 SCD identified human capital development as a key 200 challenge for Côte d’Ivoire, and despite notable progress in some Debit card ownership areas, the shortcomings in the quality and efficiency of services remain significant, especially for a country at this level of income. Children 150 born in Côte d’Ivoire today will only Used a phone or internet to access an be 38 percent as productive as they could have been if they had enjoyed complete education and full health account in the past year 100 (World Bank 2021b). Human capital outcomes in Côte d’Ivoire have improved over the last decade, leading Sent or received domestic remittances: to an increase in the country’s human capital index (HCI) score, a reflection of the accumulated knowledge, through a mobile phone 50 skills and health over one’s lifetime – from 0.30 to 0.38 between 2010 and 2020. However, with a low HCI of 0.38, CôteMobiled’Ivoire money account one of the worst performing countries in terms of human capital outcomes, remains 0 both globally and among low and lower-middle income Sub-Saharan African countries (figure 13). Most of the country’s peers, including0% Kenya, Ghana20% and Senegal 40% recorded substantially higher levels on the HCI in 2017 2014 2020 (0.55, 0.45, 0.42, respectively). % of population 49 (ageimportance, Given its 15+) the topic was presented as one of two primary Pathways for development at the time. Figure 13. Human capital remains far below that of peers and even below low-income countries 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 Chad Sudan Burkina Faso Burundi Zambia China Vietnam Niger Congo, Dem. Rep. Rwanda Ethiopia Benin Gambia, The Ghana Namibia Sierra Leone Liberia Cote d'Ivoire Mauritania Uganda Malawi Tanzania Mozambique Senegal South Africa Gabon Morocco Kenya Seychelles Botswana Thailand Mali Nigeria Madagascar Zimbabwe Cameroon Source: World Bank 2021b. 49   Ghana, Kenya, and Senegal are good comparators for Côte d’Ivoire. Kenya scored highest among lower- and lower-middle-income countries in Sub-Saharan Africa. Ghana and Côte d’Ivoire have populations and economies that are similar in size, and Ghana is a main economic competitor and partner in the region. As in the case of Côte d’Ivoire, Senegal is a francophone country with similarly structured education and health care systems. 64 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 The 2015 diagnostic highlighted challenges in access to and quality of education and health care – mostly due governance weaknesses in these public sectors. Overall, as this chapter will show, the government has consistently increased investments in the social sectors over the past five years and the rural-urban gap in access (to hospitals, health care, schools, social safety nets) has been narrowed. Nonetheless, progress has been slow, particularly in terms of improvements in the quality-of-service delivery in education and health care. This is partly related to the fact that governance reforms in the public administration have not yet been initiated or are being poorly implemented – a reform agenda that should be prioritize moving forward. For the health sector, key policy priorities in 2015 focused on expanding access to comprehensive, equitable, and quality health care services. More specifically, priorities included (1) the establishment of a National Health Insurance Scheme (Couverture Maladie Universelle, CMU) to expand access and affordability of health care; (2) enhance domestic resource mobilization for the sector, with the aim to redirect more resources toward underserved geographic areas (North and the West parts) and to critical and more efficient services (primary and secondary health care services, and public health); and (3) move toward strategic purchasing through the introduction of a performance-based financing mechanism. The performance-based financing program aimed to enhance the quality (structural and process) of health service delivery, improve governance and the resilience of the sector, and consequently increase utilization rates. The program also aimed to enhance the efficiency and quality of the government’s targeted free health care policy.50 Policy priorities in the education sector identified in the 2015 SCD similarly aimed to improve access to and quality of education. Although overall public expenditure is relatively high, it is primarily focused on higher education, but insufficient in earlier stages of education, thus requiring a change in the allocation of expenditure. Other priorities included (1) reforms to strengthen accountability of key actors for enhanced learning and labor market outcomes, (2) institutional reforms in TVET, and (3) reviewing the management and financing of tertiary education. The need to strengthen social protection was the third big topic under the human capital development agenda, alongside a crosscutting challenge to reduce gender disparities and strengthen the social status of women and girls. Recommendations included (1) to address poverty and the needs of vulnerable populations by introducing cash transfers (including its foundations such as a national registry, Management Information System (MIS), various instruments) and (2) strengthen overall service delivery for the poor – all of this in the face of budget constraints. Regarding gender equality, improved access to girls’ education; enhanced access to a package of health services, especially for women and girls, and family planning; and increased labor market opportunities for women were highlighted as key priorities. Continuing to improve access to health care and education Since 2015, there has been a significant increase in access to health services, driven by consistent pro-poor expenditure by authorities. In 2014, the CMU system was instituted, and the national Health Insurance Agency (Caisse Nationale d’Assurance Maladie) was established. The CMU aims to provide an essential package of health services to the entire Ivorian population through two schemes: a contributory basic general scheme for those employed in the formal sector (Régime Général de Base) and a noncontributory, government-subsidized medical assistance scheme for targeted vulnerable groups (low-income or destitute persons, pregnant women, under-5-year-olds) (Régime d’Assistance Médicale). Since 2015, an estimated 3.1 million people were enrolled in the CMU ( about 10.7 percent of the population (CNAM 2021).51 Moreover, the government rehabilitated 268 health facilities and constructed 79 health facilities (MSHP 2015). The number 50   In April 2011, the government introduced a free health care for all scheme that was subsequently restructured to a targeted free health care scheme because of budget constraints. While the scheme increased utilization of services, it is now nonfunctional. Out-of-pocket spending is high. Patients pay for services that should be free. Since 2013, the government has been redefining the policy to incorporate it in the CMU program. 51   The estimated population of Côte d’Ivoire is 28.3 million. 65 Cote d’Ivoire 250 Systematic Country Mobile download speeds (mbps) Diagnostic Update: Credit card ownership Countdown to 2030 200 Debit card ownership 150 Used a phone or internet to access an account in the past year 100 Sent or received domestic remittances: through a mobile phone 50 of people living within a 5-kilometer radius of a public health facility increased from 67 percent to 69 percent in 2015–18 (MSHP 2019). Mobile money Accessibility to clean water, another important account 0 driver of the population’s health, also improved overall. 0% 20% 40% Government expenditure likewise 2017 2014 supported % of population access to education (notably for girls) and an expansion (age 15+) of the social protection system. An estimated 2,743 primary schools were built by the government; over 148 community colleges (Colleges de proximité) were constructed in rural areas; and 56,900 new students enrolled in lower-secondary education. The share of the population declaring that they had access to primary and secondary schools within a 5 kilometer radius increased by 20.4 and 46.7 percent, respectively, between 2015 and 2018 (2015 and 2018 EHCVM). The number of years of schooling has increased from 6.3 to 7.4 since 0,7 2015 (World Bank 2021b). Improvement in service delivery has significantly benefited girls: between 2015 and 0,6 0,5 the gender parity index for secondary enrollment improved from 70 percent to 77 percent, while the 2018, 0,4 parity index for lower secondary completion improved from 69 percent to 76 percent. gender 0,3 However, 0,2 inequalities of access for women, poor households, and rural populations remain high. Coverage 0,1 of low-cost, high impact health services remains low, especially for women and children. According to the0 most recent data available, only 52 percent of pregnant women attend four antenatal care visits, Chad Sudan Burkina Faso Burundi Zambia Vietnam Rwanda Niger Congo, Dem. Rep. Ethiopia Benin Gambia, The Namibia China Sierra Leone Ghana Liberia Cote d'Ivoire Mauritania Uganda Malawi Mozambique Tanzania Gabon Morocco Kenya Seychelles Senegal South Africa Thailand Mali Nigeria Madagascar Botswana Zimbabwe Cameroon including more than 80 percent of the rich and only 30 percent of the poor (figure 14).52 A third of women gave birth at home and at least 20 women die every day due to complications of pregnancy or delivery (MSHP 2020). Only 40 percent of 2-year-old Ivorian children are fully immunized (2016), including less than a third of children in the north (18 percent) and northwest (20 percent). Figure 14. Many basic health services are more likely to be available to wealthier households Source: 2019 data of HEFPI (Health Equity and Financial Protection Indicators) (database), World Bank, Washington, DC, https://datacatalog. worldbank.org/dataset/hefpi. Water and sanitation services are key contributors to the development of human capital in Côte d’Ivoire, but improving outcomes will require improved governance of the water utility company. Access to clean water has a direct impact on the disease burden, contributing to poor human capital outcomes in health and education, notably for children. There is growing evidence about the linkages between improved access to water and sanitation and a decline in childhood stunting. 53 One Ivorian child in five is stunted, and children in poor households are three times more likely to be stunted than those in rich households (prevalence among the poorest is 30 percent while it is 8.7 percent among the richest).54 Infrastructure development and 52   MICS (Multiple Indicator Cluster Surveys) (dashboard), United Nations Children's Fund, New York, http://mics.unicef.org/. 53   This is a critical loss considering that children who are not stunted are more likely to survive, stay in school and learn better. Moreover, children who are not stunted are 33 percent more likely to escape poverty as adults and become productive individuals earning incomes that are up to 50 percent higher than those of their stunted peers (Shekar et al. 2017). 54   MICS (Multiple Indicator Cluster Surveys) (dashboard), United Nations Children's Fund, New York, http://mics.unicef.org/. 66 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 rehabilitation in the water and sanitation sector, in parallel with promotion of good hygiene practices, need to be strengthened especially at schools and health centers. Delivery of water services in urban areas in Côte d’Ivoire has been contracted out to a private sector company (Société de Distribution d’Eau de Côte d’Ivoire). Only 70 percent of the urban population has access to piped water and only 17 percent of rural households have access to safely managed drinking water.55 Historical underinvestment and high population growth have led to severe deficits in water production throughout the country. There is a need to improve the operational and financial performance of the sector and reform its current contractual framework. Priority needs to be given to the introduction of incentive mechanisms in the current lease contract, expiring in 2022, and the implementation of contract monitoring and regulation mechanisms. It is also important to strengthen the capacity of the Office National de l’Eau Potable, responsible for sector development, asset management and monitoring of service delivery. Regional comparison also shows that despite significant public spending there are significant geographic and gender disparities in terms of the number of years of schooling. The government spent 18.3 percent of total expenditure on education in 2018 – more than Vietnam (14.5 percent) and other lower- middle-income countries (16.8 percent) at a similar level, such as Ghana and Kenya (18.6 percent and 19 percent, respectively), but outcomes are not in line with spending. The poorest regions have approximately two years of schooling less that the richest regions and there is a 3.8 years of schooling gap between a child from the richest 20 percent of households and a child from the poorest 20 percent. Meanwhile, the average number of years of schooling is 6.5 years for girls and 7.5 years for boys and is mostly driven by gaps at the secondary level. There is lower transition rate for girls from primary to lower secondary (although increasing in recent years) and from lower secondary to upper secondary, which remains large (World Bank 2020b). This is partially due to lack of access to secondary schools in rural areas and lack of boarding facilities for girls in secondary schools, as well as household financial constraints. Recent progress on keeping more girls in school has not yet translated into similar improvements in adolescent fertility rates, and 32 percent of girls marry before the age of 18 even though the legal age for marriage is 18 for women.56 Gender-based violence in schools is also a factor and reflects the wider issue of gender-based violence throughout society, with over 41 percent of women believing it is acceptable for a husband to beat his wife.57 To expand education, it is estimated that up to 3,000 new schools would have to be built every year – in parallel to hiring and training more teachers, and providing also more and better materials and equipment for schools. It will be important to continue expanding access to health services, while focusing even more on decreasing inequalities. To address the remaining access gaps and prepare for the increased social needs due to population growth in the coming years, the government would need to move forward with the operationalization and expansion of CMU coverage to comprehensive health care for all Ivorians, especially the most vulnerable (women of reproductive age, children ages under 5, and the indigent population).58 The government plans to invest in increasing the number of health facilities constructed over the next few years, however, this should be coupled with investments in equipment, materials (including essential medicines) and the training and incentivization of human resources for health, so that health service delivery provided through the CMU network is of good quality. Priority should be given to underserved geographical areas and high population growth areas. Lastly, the government should pursue its plan to reorganize health service delivery into networks and introduce innovations in IT (for instance, digital health platform for monitoring and evaluation, and telemedicine) to improve patient management, quality and continuity of care. 55   2021 data of WDI (World Development Indicators) (dashboard), World Bank, Washington, DC, https://datatopics.worldbank.org/world- development-indicators/. 56   MICS (Multiple Indicator Cluster Surveys) (dashboard), United Nations Children's Fund, New York, http://mics.unicef.org/. 57   MICS (Multiple Indicator Cluster Surveys) (dashboard), United Nations Children's Fund, New York, http://mics.unicef.org/. 58   This should include (a) the essential benefits package to incorporate health prevention, health promotion and public health services and primary health level of care for the entire Ivorian population, including those who do not currently quality for the Régime General de Base and Régime d’Assistance Médicale schemes; (b) to consolidate all existing schemes in the public sector under the CMU, to enhance cross-subsidies across risk pools (schemes), and to improve equity and efficiency; and (c) to harmonize the CMU and performance-based financing programs to strengthen strategic purchasing. 67 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Infrastructure expansion would also benefit from more explicit strategies to reduce inequalities and remove barriers to access. Improving schools’ facilities and availability of school kits for girls, as well as promoting specific teaching practices for girls and hiring more female teachers could also help to close gender gaps. Given that several challenges are linked to each other around girls’ adolescence (early marriage, early childbearing, school drop-out), efforts should be well coordinated across sectors59. These include engaging influential actors at the household and community level on norms around girls’ schooling, gender-based violence, and women’s empowerment; engaging young men through future husband clubs; using safe spaces for delivering vocational and life skills training to young women; and connecting young women to economic opportunities. This would also help the country move toward a demographic dividend, whereby the potential increase in overall productivity as the large youth population enter their productive working years would support a smaller child dependent population. Prioritizing quality of services delivery in health care and education Although the low level of quality of education and health care services was acknowledged as a key constraint to development in 2015 by authorities and the 2015 SCD, few fundamental reforms were undertaken. Both sectors suffer from very similar challenges on two main fronts, notably (1) inefficient spending and allocation of expenditure and (2) governance challenges in the way these sectors (and their public employees) are managed. Despite a wealth of analytical work and technical assistance, progress in these areas has been slow, reforms only rudimentary and as a result, education outcome indicators have further deteriorated in some areas, and health care service delivery also lags behind many peer economies. In the field of education, limited reforms in the TVET and tertiary education sector were undertaken to improve quality, and none for primary and secondary education, a response not up to the urgency of the quality issue. For the primary and secondary sector, education quality is not addressed in a systematic manner. Donor funded projects are providing some responses for certain segments of the population (children in cocoa fields, a number of schools in lagging areas), and there is an attempt to consolidate the national strategy on education quality with the Assises de l’Education. Still, lack of accountability in a challenging sector with strong vested interests remain a key concern. For tertiary education, the reform to switch to the License-Master-Doctorate system and to align with international standards is under way. The reform entails several and sensitive measures. For TVET, the government is introducing a reform to enhance apprenticeship in training centers and with close participation of the private sector to increase employability. 59   For example, through the Sahel Women’s Empowerment and Demographic Dividend Regional Project, a variety of high-impact, evidence-based interventions has been undertaken to increase the empowerment of women and adolescent girls and the access of these individuals to quality reproductive, child, and maternal health services. 68 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Map 5. Spatial distribution of years of schooling Source: 2013–19 data of the Directorate of Protection of Population Health; 2014–19 data of Programme d’Analyse des Systèmes Educatifs de la CONFEMEN. 100 As a result of the lack of action regarding the quality of education services, many indicators 80 deteriorated. From 2014 to 2019, the percentage of children at the end of primary school that did not have 60 the sufficient level in mathematics and reading increased from 73.1 percent to 82.8 percent and from 52 percent40 to 59.6 percent, respectively (figure 15). Although the government has hired new teachers, this can 20 up with population (and thus student) growth, and the quality of teaching remains often low. barely keep For example, in grades 1–3, between 27 percent and 61 percent of teachers gave classes for less than the 0 official standard duration (depending on subject and grade), and 15 percent to 19 percent had not prepared Benin Burkina Faso Cameroon Côte d'Ivoire Senegal Togo adequately for their course (World Bank 2020b). In 2017–18, secondary-school teachers provided, on average, Reading 2014 Reading 2019 Mathematics 2014 Mathematics 2019 17 hours of lessons per week against the mandated 21 hours. This means that 136 hours of lessons are lost for high school students. At the same time there are few controls in place to limit or sanction teacher absenteeism, but also no support in terms of training or ongoing education for teachers. 69 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Figure 15. Students not meeting the competency threshold in reading and mathematics 100 80 60 40 20 0 Benin Burkina Faso Cameroon Côte d'Ivoire Senegal Togo Reading 2014 Reading 2019 Mathematics 2014 Mathematics 2019 Source: 2013–19 data of the Directorate of Protection of Population Health; 2014–19 data of Programme d’Analyse des Systèmes Educatifs de la CONFEMEN. Similar challenges persist in health care, where the sector’s governance, lack of spending and inefficiency of spending all contribute to access lagging far behind other countries’ standards. According to the health care access and quality index, Côte d’Ivoire has the 187 lowest quality of care among 195 countries (Barber et al. 2017). Côte d’Ivoire satisfies World Health Organization norms for the number of medical doctors (general practitioners), nurses and midwives per capita at the national level on average.60 However, the majority are concentrated in Abidjan and urban areas, leaving the rural population with limited access to health personnel (MSHP 2018). The uneven distribution of staff is exacerbated by issues with retention, especially in rural, hard-to-reach and remote areas, mostly due to the lack of implementation of financial and nonfinancial incentives targeting retention. In addition, there is insufficient initial and on-the-job training of health personnel, particularly to keep up with construction of new facilities, and low institutional capacity of the Ministry of Health in terms of regulating and governing the workforce. Added to that, the system is not sufficiently functional to ensure access to basic inputs for all facilities: essential medicines and services are often not available, to treat basic complaints like sepsis or provide basic procedures (including for maternal and neonatal care). According to a 2016 survey, only 42 percent of facilities had workers trained in infant health and only 71 percent workers trained in HIV testing and counselling. The prevalence of these problems suggests that there are systemic challenges contributing to the availability of staff and inputs that are required to be addressed to fundamentally improve results. Human resources management of education services does not allow for the provision of high-quality services: staff is unevenly distributed across the country; training is neither regular nor adequate and absenteeism is high. The ratio students per teacher varies from 32 to 47 across regions, with a national average of 42. In the education sector, the teacher’s training capacity remains below the country’s needs and the quality is still low with a significant part of the resources devoted to catering for trainees (to the detriment of pedagogical training).61 In addition, teacher supervision and continuing education are rare. Also, although teacher academic levels, experience, and pay are relatively high compared to other countries, their ability to translate these characteristics into learning is relatively limited (PASEC 2019). Finally, absenteeism of personnel is high, and as a result, a great proportion of students do not receive the number of days and hours of instruction necessary or mandated. For health care sector staff, the capacity to train new personnel is likewise insufficient given the recent infrastructure expansion, the current framework of tasks for different roles could be revised to facilitate services delivery and there are few incentives to relocate staff to more rural areas. 60   For instance, the ratio for doctors was in line with the World Health Organization standard in only 8 of 20 medical districts in 2018. 61   2018 data of the Ministry of National Education, Technical Education, and Vocational Training. 70 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Considering the degradation of learning outcomes over the last five years, a national strategy for improving the quality of education should be defined with a clear action plan. Providing the population with good skills and health is not just an objective in itself but closely linked to the second Pathway in this SCD on promoting private sector competitiveness. Low skills (coupled with relatively high labor costs) are a key obstacle for attracting investments, accelerating structural transformation and improving Côte d’Ivoire’s competitiveness in global markets, and the foundations must be laid now to sustain growth over the next decade. Only a support at the highest level of government can bring change to the sector and outweigh the existing status quo. The strategy should include a revision of curricula, plan for the provision of adequate teaching materials, monitor pupils and students learning outcomes, monitor graduates’ employment. The priority should be given above all to basic education and quickly followed up by the secondary and tertiary level. As part of this, it will be essential to improve human resource management in education. In the education sector, (1) the selection criteria and process to enter in teacher training centers, (2) the recruitment and assignment process of new teachers, (3) the mechanisms for teacher evaluation and career promotion all need to be reviewed and reformed, and (4) coaching and supervision for teachers pre- and in-service training need to be improved. An integrated teacher policy needs to be developed to expect changes in the mid-term. Finally, as most jobs require basic digital skills and this need will substantially increase in the future, the government should consider how to sustainably strengthen digital literacy at each layer of the education system for both students and teachers. In the health sector, reforms should likewise include fundamental reforms to human resource management, in addition to improving the efficiency of public expenditure. There is a need to (1) expand training positions both for undergraduate, postgraduate and internship positions for human resources for health; (2) implement reforms to address the distribution of human resources for health and incentivization schemes; (3) review and modify the scope of work for each cadre of the health system, based on observed local needs and best practices in lower-middle-income countries; (4) develop, adopt, and implement a task- shifting policy based on review; (5) scale up the coverage of community health worker; and (6) incentivize recruitment and retention of human resources for health in rural areas. Improving the allocation and efficiency of spending and human resources management in health care and education An analysis of financing for the education and health sectors shows that in both cases key functions are under-financed. Côte d’Ivoire is allocating as much or more on education (out of total expenditure) than peer countries, but outcomes are lagging behind. This points to inefficiencies in spending and the sector’s governance. The trend is opposite in the health sector financing where expenditure does not yet meet international standards despite recent increases. The share of the government budget devoted to the health sector was 4 to 5 percent between 2010 and 2018 (MSHP 2018).62 In 2018, the government committed to increasing public health spending by 15 percent annually until 2030, which it did in 2019 and 2020 but this commitment is at risk considering the macro-economic situation under the COVID-19 crisis. In both sectors, key functions are under-financed. The health sector has a high level of out-of-pocket expenditure that has limited equitable access and quality health care. In 2016, 64 percent of all spending at the hospital level, 45 percent of spending at the PHC level and, notably, 97 percent of spending on drugs and medical supplies was financed by households (Duran, Sieleunou, and Özaltin 2020). The Ivorian population is at increased risk of financial catastrophe and impoverishment due to out-of-pocket spending. The education sector has limited margin of maneuver because of a large salary bill and an unbalanced distribution across 62   2019 data of Global Health Expenditure Database, World Health Organization, Geneva, https://apps.who.int/nha/database. 71 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 subsectors (the share for higher education being comparatively high). As a result, only 4 percent of the budget is dedicated to pedagogical equipment (World Bank 2017b). In addition, out of pocket expenditures are also important in the education sector. In the education sector, most national funding goes toward higher education whereas most primary schools do not receive any financial resources from the national budget (only in kind- supplies), so in case of financing needs, the school management committees (Comité de gestion scolaire) asks for parents’ contribution. The government is planning to change this practice and allocate national funding to all primary schools, but this has not been implemented yet. Funding for higher education also does not sufficiently favor and promote studies and skills that would be needed for national development, such as agricultural studies, engineering, or IT degrees. Inefficiency in public spending in the education and health sector is high and is a cost that Côte d’Ivoire cannot afford considering the limited fiscal space. The more the government will be capable of increasing the quality of service with the money spent, the least resources it will need to invest. A recent study found that Côte d’Ivoire could have attained the same level of health with half of the total health spending (WHO 2018). For example, primary health care provides the most cost-effective treatment for the majority (>80 percent) of the population; however, it was not prioritized sufficiently by the government. In education, Côte d’Ivoire offers only 1.6 years of schooling for each 1.0 percent of GDP spent, while the average efficiency in a sample of 40 countries of comparable level of development is 2.7 years of education for each 1 percent of GDP (World Bank 2017b). There is an urgent need to increase allocation and efficiency of spending in the education sector in the context of COVID 19. Fiscal space will be doubly constrained in the upcoming years, by the generally low domestic resource mobilization as well as fiscal consolidation efforts required after the COVID-19 pandemic. It is therefore critical that the government of Côte d’Ivoire focuses on improving the allocative and technical efficiency of domestic resources. In the education sector, it is urgent to establish new criteria and procedures for budget allocation to public tertiary education institutions and build the capacities of public tertiary education institutions to increase their revenues. Also, to increase efficiency, the government should introduce a performance-based financing mechanism and complete the key reforms to establish a quality assurance system. The same constraints – and renewed urgency – apply to health care and clean water provision. In the health sector, the government should prioritize sustainable financing solutions for Primary Health Care and respect its commitment to increase spending by 15 percent per year as well as set up a mechanism to track the proportion of nonwage resources that are directed to primary health sector. Also, it should scale up strategic purchasing to public and private health sector (this includes, but is not limited to, performance- based financing) and operationalization of program-based budgeting in the sector. Finally, there is a need for the health sector to develop and implement a public finance management and governance strategy. Infrastructure development and rehabilitation in the water and sanitation sector, in parallel with promotion of good hygiene practices (including menstrual hygiene management), need to be strengthened especially at schools and health centers, which are critical facilities for impacting human capital, through reduction in stunting and associated long-term learning and cognitive deficits. Strengthening the resilience of vulnerable households and adaptability of households The 2020 response to COVID-19 highlighted some weaknesses of the Ivorian health and social protection system to respond to shocks and to prevent a deterioration in human capital. To manage the outbreak of COVID-19, the government supported the health care sector with a CFAF 95 billion package, expanded facilities as well as the capacity for testing, tracking and tracing cases. Overall, the pandemic impact was felt more on the economic side than in the health care sector. Faced with a loss of income during the pandemic confinement, many households had to resort into their limited savings, support from family and friends, or cutting expenditure on essentials (such as food). The government organized the social response 72 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 by setting up two funds (the Solidarity Fund and the Informal Sector Support Fund – FASI). In Dec. 2020, 170,000 vulnerable households benefited from the Solidarity Fund and 12,000 informal production units had benefited from the FASI. Despite the strong commitment by all levels of the government to operationalize these funds, the delivery of benefits to the most vulnerable and affected was slow and faced many challenges. The implementation challenges were mainly due to the lack of preparation and of systems in place that could facilitate the identification of eligible households (or individuals), the management of the information, and the payment of benefits. It is likely that the occurrence and impact of shocks will increase in the short to medium term, making the resilience of households and the adaptability of the system essential. Poor people are often more exposed and almost always more vulnerable to shocks, such as pandemics or climate change (Hallegatte et al. 2016). For example, climate change could push an additional 2 percent to 6 percent of households into extreme poverty by 2030 (World Bank 2018c). Climate and health related shocks directly impact the health and education of children and households.63 The shocks have an immediate impact on the well-being of households and their level of capital, which prevents them from participating in the country’s economic growth. In addition, poor households lack resources which limits their coping strategies. In the longer term, recurrent shocks weaken households, which increases their probability of falling into chronic poverty and in turn makes the new generations more vulnerable. On the other hand, the response to shocks regularly causes large cuts in the state budget and consumes a considerable share of development aid, resources that could serve development and prevention objectives. The progress of the government in implementing social protection programs is a step in the right direction to increase the resilience of vulnerable population but is not enough: extension in coverage and improvement in delivery are needed. The CMU has been rolled out, and an estimated 3.0 million people have enrolled in the CMU since 2015 ( about 3 percent of the population). This is still a small share of the population, and the scheme’s long-term financial viability as well as service provision will have to be reviewed. A productive safety net project was launched in 2016 and is now benefiting 225,000 poor households across the country, contributing to raising the resilience to shocks among poor and vulnerable households. Despite being one of the largest productive safety net programs in the region (in terms of number of beneficiaries), it only covers 13 percent of poor households. In 2022, the government institutionalized and expanded the productive safety nets program to reduce its volatility. Also, the government adopted a regulatory framework to develop a social insurance mechanism for the informal sector workers and is launching a pilot of the scheme in 2021. Also, key building blocks of an adaptative social protection system need to be set up. To be able to respond to shocks, the social protection system should rely on tools that empower the government to deliver benefits quickly and to the right people. With this in mind, the government should implement the following activities in the near future: (1) operationalize the Social Registry and ensure adequate coverage and regular update; (2) set up a Foundational ID platform to provide a universal and free unique ID number to facilitate access to services, regardless of legal or migratory status; and (3) develop standard policies and procedures to manage emergency cash transfers programs (with an agreed institutional framework, payment system mechanism and management information system) that can be used and easily adapted in case of shocks. Given the increasing impact of climate change, these could be coupled with measures to better address climate shocks, such as using climate change data to inform assessments of vulnerability or developing early warning systems for climate-related shocks to plan when social assistance may be needed. An operational RSU and improved governance of social protection interventions could also support more effective services delivery. Roles and responsibilities are also ambiguous in the social protection sector where multiple Ministries have mandates to deliver services. The horizontal distribution of service delivery responsibilities across Ministries is unclear, weakening the relation between functions and financing. 63   Of the poorest quintile, 13 percent were affected by drought or irregular rains against only 4 percent of the richest quintile (2018 EHCVM). 73 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 One Ministry (of Jobs and Social Protection) has the most substantial staff and infrastructure footprint in its local social centers whilst another Ministry (of Solidarity and Cohesion) implements the most significant non- contributive social protection program while it lacks the footprint required for its implementation. Thus, in addition to a lack of functional delegation to lower levels of government, limiting the autonomy in regions and departments, a more optimal horizontal distribution of functions across Ministries would thus also make more efficient use of the existing local implementation infrastructure (e.g. social centers). Costs for social protection interventions are not effectively forecasted, and the government lacks the tools to manage interventions. Knowledge Gap This SCD Update identifies the following key knowledge gaps in Côte d’Ivoire. Continuing to fill these gaps would strengthen the knowledge base to understand the key priorities and help identify policy actions to address these constraints. • Political economy analyses. One of the key bottlenecks to reforms are political economy constraints. The World Bank needs to develop a better understanding of such constraints to specific reforms in order to address them. To that end it would be useful to analyze how previous World Bank ’s advisory and operations’ work has been affected by and has responded to such constraints. These lessons should be complemented by analyses of the political economy of specific big-ticket reforms to address them more effectively. • Climate-smart paths for economic development, need to be more holistically assessed, including the financing requirement within a macroeconomic framework. The expected Climate Change and Development Report (CCDR) is expected to inform policy options in this area. • Drivers of high costs constraining private sector development, with more disaggregated data, and volume, cost, particularly those that are structural e.g., on competition in the telecoms and logistics sectors and those related to the cost of finance or regulatory burden impeding investments. • Spatial development. The uneven geographic distribution of income and welfare with pockets of persistent poverty concentrated in specific regions of the country highlights the importance of a coherent strategy to improve the welfare of the populations in lagging regions. A better understanding of the monetary and nonmonetary returns to different types of public investments at the local level would be needed. That assessment should be evaluated against the returns on facilitating internal migration to opportunities, which is the natural alternative to spatial development and lagging regions-based policies. • Agricultural policies review. This would suggest conducting a thorough review of Côte d’Ivoire agricultural policies/expenditures to better understand drivers of costly, distorting and major environmental impact policy options and their consequences on the poor performance in the sector. Matrix of Recommended Priorities The selection of key priorities for this report relied on a thorough review of the evidence, an internal scoring process, and consultations with national stakeholders. Internally, recent analytical work provided the basis for updated binding constraints and corresponding reform pathways, which were internally scored, considering their potential impact for the twin goals of reducing poverty and shared prosperity, as well as their feasibility. In addition, the Bank carried out extensive consultations (see box 2) with the government, the private sector, and civil society. Feedback was used to further calibrate the choice policy priorities (table 2). These fall into three categories: (1) governance remains a foundational priority for Côte d’Ivoire to carry out its ambitious reform agenda; (2) pathway priorities are linked to the most important themes and sectors and aim to address the most binding constraints to progress in each topical area; and (3) transversal priorities relate to the emerging drivers of threats and opportunities and highlight key actions that would help to strengthen their consideration across the other priorities. 74 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Table ES.1. Key policy options to promote shared prosperity and achieve poverty reduction Policy options Cost of inaction (or Reform keeping the status objectives Short-term (1 -2 years) Medium-term (3years) quo) Foundational Priority: Strengthening governance and institutions • Improve regulatory • Modernize public - Overlaps and Enhance processes through more administration at ineffective government transparent and effective all levels through implementation of effectiveness strategic planning, increased digitization public policies and for improved monitoring and evaluation of service delivery, regulations. service delivery (M&E), coordination and payments, and public - Poor quality services cooperation. procurement to citizens Strengthen • Expand the tax base (i.e. • Enhance digitization - Revenue leakage and fiscal policies corporate income tax, of the tax system to tax evasion. and increase property tax, and value promote voluntary - Reduced fiscal space domestic added tax [VAT]), including compliance (e-filling, for investment resource by removing exemptions e-payments of tax…). and pro-poor mobilization on certain products and expenditures. sectors. • Promote anticorruption • Reform justice system - inefficient public Improve measures, sanctions, and for more efficiency and expenditures transparency, greater transparency independence. management. accountability, in public resources • Strengthen technical - lack of trust in the and management. and financial oversight judicial system. anticorruption of state-owned - increase in mechanisms to enterprises (SOEs), corrupt practices promote social especially in Coffee/ undermining service cohesion Cocoa and water delivery. sectors; and manage - weak social cohesion fiscal risks (including and break in social contingency liabilities). contract. Promote • Improve transparency • Pursue programs - Poor local service decentralization and predictability of fiscal to tackle regional delivery. as a key driver transfers. disparities and promote - Higher number of of territorial • Build and strengthen local governance lagging regions. development capacity of local and addressing the and addressing deconcentrated staff. drivers of fragility and regional insecurity, including disparities spillover risks from the Sahel region. Pathway 1: Improving agricultural productivity and rural incomes • Adopt a strategy to • Expand information - Poor access to market Strengthen maintain rural roads, and communication and global value infrastructure including through PPP and technology (ICT) chains. investments Road Fund. coverage and - Loss of opportunities and policies • Implement government diversification and revenues for that close gaps strategy to enhance the to support the famers. in access to national food safety and development of - Increased poverty in markets and food quality system. real-time market rural areas. global value information and other chains e-agriculture services. 75 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 • Strengthen the capacity of • Expand public - Low agricultural Strengthen the National Agricultural investments in productivity. technology Research Center and technology generation - Use of outdated adoption and the National Agency and advisory services and inefficient close the skills for Support to Rural by widening and technologies. gap Development for improved upgrading extension services delivery to farmers. services. • Expand the coverage • Foster digital financial - Loss of opportunities Improve access of the government’s service (DFS) usage, and revenues for to financial Partial Guarantee Fund access and reduce cost famers. services and to agricultural lending by in rural areas. - Missed opportunities insurance financial institutions. for financial institutions in agriculture sector. Promote • Implement the Regional • Expand sustainable - Disappearance of sustainable Standards for Sustainable forest management. forest cover management Cocoa (ISO 2019ARS • Mainstream climate- - Rising land conflicts of natural 1001, 1002, and 1003) for smart technologies, - Severe water crisis. resources and sustainable production financing, and policies. - Inefficient agriculture strengthen and including a traceability sector expenditure policy and system with measures to management. governance in tackle deforestation, child agriculture labor, and ensure cocoa quality and full payment of farm gate price and certification premiums to farmers ). • Enhance the security of land rights. Pathway 2: Job creation through private sector-led growth • Review of investment • Improve the quality and - Reduced private Promote promotion and cost of key services, sector and investment infrastructure implementation policies, such as transport, development. investment to boost the availability logistics, energy and - Limited development and efficient of industrial zone land ICT. of startups industrial and foster agglomeration ecosystem. policies effects. • Strengthen supervision of • Support capital market - Reduced private financial institutions and development and sector and investment Expand access the availability and range easier access to finance development. to finance and of DFSs. in underserved sectors. - Limited development deepen capital • Promote financial literacy of SMEs and startups markets ecosystem. • Promote platforms • Improve land - Reduced private Expand targeted for coordination and acquisition. sector and investment supports to communication between • Enhance competition development. SMEs and firms public and private for markets and in - Limited development stakeholders on topics such markets, especially in of SMEs and startups as labor regulations, skills upstream sectors. ecosystem. development, promoting - Weak job creation on-the-job training. and high youth unemployment. 76 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 Pathway 3: Human capital Development through improved service delivery and better social spending • Expand education and • Deliver vocational and - Increased skills Improve quality health through investments life skills training to mismatch; lower and access to in human resources, young women cognitive skills health and material and physical • Set up a Foundational attainment; increased education buildings. ID platform to provide inequality and services, • Increase access to a universal and free scarring on the especially Health services through unique ID number poor from shocks, among girls, operationalization and including climatic women, and expansion of National • Introduce a shocks (i.e. with no poor and Health Insurance Scheme performance-based adaptive SP system. vulnerable (Couverture Maladie financing mechanism - Limited potential for households Universelle (CMU) coverage. and complete the key further development in remote • Improve targeting of reforms to establish of human capital. locations resources and the a quality assurance expansion of social safety system in both nets, including through the Education and Health operationalization of the sectors. Social Registry, ensuring adequate coverage and regular updates. Improve the • Implement strategic • Develop a prospective - Poor quality of allocation and purchasing in the public school mapping system health and education efficiency of and private health sector. for expansion of the outcomes. public spending • Develop an accountability school network and the - Inefficient use of on health care mechanism for spending allocation of resources. public expenditures. and education at all primary schools - Limited potential for services and health centers using further development scorecards. of human capital. Crosscutting constraints and drivers to make growth more inclusive, innovative and sustainable • Set up safe spaces • Support women - Increased Promote the for adolescent girls to entrepreneurs to vulnerability to role of women provide them with life access finance and poverty. in the economy and technical skills and markets. - Higher fertility rates. sexual and reproductive health knowledge. • Strengthen the • Support - Failure to meet Strengthen the capacity of the National implementation of its Nationally sustainable Environment Agency adaptation strategies Determined use of natural (Agence Nationale de for activities with Contribution (NDC) resources l’Environnement) and the adverse climate commitment. Ivorian Antipollution impacts in energy, - Increased negative Centre (Centre Ivoirien water, roads, impacts of GHG. Antipollution). agroforestry sectors. - Poor development • Update environmental impact and outcomes. regulations • Operationalize the public • Increase use of - Low dividend from Expand backbone National e-services in public the Digital Economy. availability and Broadband Network administration. - Poor service delivery. use of digital • Improve regulation to - High cost of services. services promote competition and price reduction. 77 Cote d’Ivoire Systematic Country Diagnostic Update: Countdown to 2030 APPENDIX 1 – WBG team Global Practice/Cross Cutting Practice Managers Focal Points Solution Area/Other Infrastructure Digital Development Michel Rogy Xavier Decoster, Rita Oulai Energy and Extractives Kwawu Mensan Gaba Arnaud Braud, Thierno Bah Transport Ibou Diouf Alphonse Soh Sustainable Development Jeanne Epse Coulibaly, El Hadj Adama Agriculture and Food Chakib Jenane Toure, JP Tre, JP Chausse Natalie Weigum, Gillian Cerbu, Vaaruni Climate Change Emilia Battaglini Eashwar Climate Change Fiscal Chiara Bronchi Dirk Heine/Keisuke Iyadomi Salimata Follea, Brigitte Monbogol, Environment, Natural Resources Maria Sarraf Yasmina Oodally, Manuela Ravina da & Blue Economy Silva, Alphonse Emadak Anush Bezhanyan, Aly Krystina Bishop, Alexandra Niesslein, Social Development Rahim Salamata Bal, Elaine Chee En Hui Water Yogita Mumssen Fadel Ndaw Mahine Diop, Aanchal Anand, Andre Urban, Disaster Risk Sylvie Debomy Teyssier, Vivien Deparday, Alexandra Management, Resilience and Land le Courtois Equitable Growth, Finance and Institutions Finance, Competitiveness & Sarah Zekri, Laurent Gonnet, Maria Consolate K. Rusagara Innovation Pagura, Maria Kim. Alexandre Arrobbio, Gael Saidou Diop, Yousif Elfadil, Jain Governance Raballand Holtheimer Andrea Coppola, Alexa Tiemann, MTI Theo Thomas Nathalie Picarelli, Markus Kitzmuller, Hermann Djedje Poverty & Equity Johan Mistiaen Franck Adoho Human Development Education Meskerem Mulatu Waly Wane, Patrick Ramanantoanina Opope Tshivuila Matala, Adama Health, Nutrition & Population Gaston Sorgho Traore Social Protection Jehan Arulpragasam Solene Rougeaux, Raphaela Karlen Jobs and Development Consolate K. Rusagara Maria Kim, Jean Michel Marchat Cross Cutting Solution Area  Fragility, Conflict, and Violence Xavier Devictor Catherine Marie Rose Defontaine Gender Markus P. 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