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Côte d’Ivoire

Executive Summary

Côte d’Ivoire offers a fertile environment for U.S. investment, and the Ivoirian government is keen to deepen its commercial cooperation with the United States.  The Ivoirian and foreign business community in Côte d’Ivoire considers the 2018 investment code generous with incentives and few restrictions on foreign investors.  Côte d’Ivoire continues structural reforms to improve the business climate, including by executing major projects under the 2016-2020 National Development Plan (NDP) and the 2019-2020 social program (PSGouv).  But the ongoing COVID-19 pandemic will affect current and future investments, causing delays and postponements, cost increases, and logistics issues.

U.S. businesses operate successfully in the following Ivoirian sectors:  oil and gas exploration and production; agriculture and value-added agribusiness processing; power generation and renewable energy; IT services; digital economy; banking; insurance; and infrastructure.  In 2019, Côte d’Ivoire improved in the World Bank’s Doing Business ranking of 190 countries, moving from 122 to 110.  Improvements in the business environment included the implementation of a single taxpayer identification number system for business creation, introduction of an online case management system to process cash refunds of Value Added Tax, and making contract enforcement easier by publishing reports on commercial court performance and progress of cases.

Economically, Côte d’Ivoire is among Africa’s fastest growing economies and is the largest economy in francophone Africa.  Also home to the headquarters of the African Development Bank, Côte d’Ivoire attracts regional migrant labor and a significant expatriate professional community.  The IMF initially projected GDP growth to continue at 7.3 percent in 2020, led by growth in the industrial and service sectors. With the negative effects of COVID-19 on the country’s economic output, however, the IMF revised its projection to 2.7 percent, though still positive.

Despite improvements, doing business with the government remains a significant challenge.  The government has awarded a number of sole source contracts without competition and at times disregarded objective evaluations on competitive tenders.  An overly complicated tax system and a slow, opaque government decision-making process hinder investment.  Other challenges include weak access to credit for small businesses, corruption, and the need to broaden the tax base to relieve some of the tax-paying burden on businesses.

Following a credible and peaceful election in 2015 in which President Ouattara was overwhelmingly re-elected to a second term, the country adopted a new constitution in 2016 and established an upper legislative house (Senate) in April 2018.  Fraud and violence in certain locations marred legislative and municipal elections in 2018.  The lack of consensus in the composition of the Independent Electoral Commission, controversial reforms to the electoral code and amendments to the constitution, and the judicial exclusion of major opposition candidates from the 2020 presidential race, have aggravated the country’s internal political divisions.  On the other hand, President Ouattara’s announcement that he will not seek a third term – which, he argued, he could have done because of the new constitution – could contribute to institutionalizing democracy.

Côte d’Ivoire suffered a terrorist attack in March 2016 in the popular tourist town of Grand Bassam.  Al-Qaeda in the Islamic Maghreb claimed responsibility for this attack and continues to pose a major terrorism threat on the northern borders.  Côte d’Ivoire has since improved its domestic and international coordination efforts to combat the increasing the terrorist/violent extremist threat from the Sahel, and contributes to the United Nations peacekeeping mission in Mali.

Ivoirian women are not legally prohibited from starting businesses, acquiring credit, or buying property.  They nonetheless have historically faced discrimination, including lack of access to credit, that has hindered women’s business ownership.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 106 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 110 of 190 http://www.doingbusiness.org/
en/rankings
Global Innovation Index 2019 103 of  129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 -$261 https://apps.bea.gov/international/
factsheet/
World Bank GNI per capita 2018 $1,600 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

Ethiopia

Executive Summary

Ethiopia’s economy is in transition. Coming off a decade of double-digit growth, fueled primarily by public infrastructure projects funded through debt, the Government of Ethiopia (GOE) has tightened its belt, reducing inefficient government expenditures and attempting to get its accounts in order at bloated state-owned enterprises (SOEs). Just in the last year, the GOE has also introduced a new and more liberal investment code, started the privatization process for the telecommunications monopoly, and eliminated numerous burdensome regulations. The IMF put the growth of the Ethiopian economy at 9 percent for FY2018/19, driven by manufacturing and services. While recent growth estimates have been revised downward due to the COVID-19 pandemic, growth prospects for Ethiopia remain better than those for most Sub-Saharan African nations. Ethiopia is the second most populous country in Africa after Nigeria, with a population of over 110 million, approximately two-thirds of whom are under age 30. Low-cost labor, a national airline with well over 100 passenger connections, and growing consumer markets are key elements attracting foreign investment.

The Government of Ethiopia (GOE) in September of 2019 unveiled its “Homegrown Economic Reform Plan” as a codified roadmap to implement sweeping macro, structural, and sectoral reform, with a focus on enhancing the role of the private sector in the economy and attracting more foreign direct investment. The ambitious three-year plan prioritizes growth in five sectors, namely mining, ICT, agriculture, tourism, and manufacturing. In December of 2019, the IMF approved a three-year, 2.9 billion U.S. dollar program to support the reform agenda. The program seeks to reduce public sector borrowing, rein in inflation, and reform the exchange rate regime.

The challenges remain vast. Ethiopia’s imports in the last three years have experienced a slight decline in large part due to a reduction in public investment programs and a dire foreign exchange shortage. Export performance remains weak, declining due to falling primary commodity prices and an overvalued exchange rate. The acute foreign exchange shortage (the Ethiopian birr is not a freely convertible currency) and the absence of capital markets are choking private sector growth. Companies often face long lead-times importing goods and dispatching exports due to logistical bottlenecks, high land-transportation costs, and bureaucratic delays. Ethiopia is not a signatory of major intellectual property rights treaties.

All land in Ethiopia is administered by the government and private ownership does not exist. “Land-use rights” have been registered in most populated areas. The GOE retains the right to expropriate land for the “common good,” which it defines to include expropriation for commercial farms, industrial zones, and infrastructure development. Successful investors in Ethiopia conduct thorough due diligence on land titles at both the regional and federal levels and undertake consultations with local communities regarding the proposed use of the land.

The largest volume of foreign direct investment (FDI) in Ethiopia comes from China, followed by Saudi Arabia and Turkey. Political instability associated with various ethnic conflicts could negatively impact the investment climate and lower future FDI inflow.

Table 1
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 96 of 180 https://www.transparency.org/
country/ETH
World Bank’s Doing Business Report “Ease of Doing Business” 2020 159 of 190 http://www.doingbusiness.org/rankings
Global Innovation Index 2019 111 of 129 https://www.globalinnovationindex.org/
gii-2018-report#
U.S. FDI in partner country (M USD, stock positions) 2018 $676 http://www.investethiopia.gov.et/
World Bank GNI per capita 2018 $790 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

Morocco

Executive Summary

Morocco enjoys political stability, a geographically strategic location, and robust infrastructure, which have contributed to its emergence as a regional manufacturing and export base for international companies.  Morocco actively encourages and facilitates foreign investment, particularly in export sectors like manufacturing – through dynamic macro-economic policies, trade liberalization, investment incentives, and structural reforms.  Morocco’s overarching economic development plan seeks to transform the country into a regional business hub by leveraging its unique status as a multilingual, cosmopolitan nation situated at the tri-regional focal point of Sub-Saharan Africa, the Middle East, and Europe.  The Government of Morocco implements strategies aimed at boosting employment, attracting foreign investment, and raising performance and output in key revenue-earning sectors, such as the automotive and aerospace industries.  Morocco is increasingly investing in energy, boasting the world’s largest concentrated solar power facility with storage near Ouarzazate.

According to the United Nations Conference on Trade and Development’s (UNCTAD) 2019 World Investment Report, Morocco attracts the fourth-most foreign direct investment (FDI) in Africa, rising from $2.7 billion in 2017 to $3.6 billion in 2018.  Morocco continues to orient itself as the “gateway to Africa” for international investors following Morocco’s return to the African Union in January 2017 and the launch of the African Continental Free Trade Area (CFTA) in March 2018.  In June 2019, Morocco opened an extension of the Tangier-Med commercial shipping port, making it the largest in the Mediterranean and the largest in Africa.  Tangier is connected to Morocco’s political capital in Rabat and commercial hub in Casablanca by Africa’s first high-speed train service.  Morocco continues to climb in the World Bank’s Doing Business index, rising to 53rd place in 2020.  Despite the significant improvements in its business environment and infrastructure, high rates of unemployment (particularly for youth), weak intellectual property rights (IPR) protections, inefficient government bureaucracy, and the slow pace of regulatory reform remain challenges.

Morocco has ratified 71 bilateral investment treaties for the promotion and protection of investments and 60 economic agreements– including with the United States and most EU nations– that aim to eliminate the double taxation of income or gains.  Morocco is the only country on the African continent with a Free Trade Agreement (FTA) with the United States, eliminating tariffs on more than 95 percent of qualifying consumer and industrial goods. The Government of Morocco plans to phase out tariffs for some products through 2030.  The FTA supports Morocco’s goals to develop as a regional financial and trade hub, providing opportunities for the localization of services and the finishing and re-export of goods to markets in Africa, Europe, and the Middle East.  Since the U.S.-Morocco FTA came into effect bilateral trade in goods has grown nearly five-fold.  The U.S. and Moroccan governments work closely to increase trade and investment through high-level consultations, bilateral dialogue, and the annual U.S.-Morocco Trade and Investment Forum, which provides a platform to strengthen business-to-business ties.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 80 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 53 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 74 of 126 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2017 $412 http://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2018 $3090 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

Senegal

Executive Summary

Senegal’s stable political environment, favorable geographic position, strong and sustained growth, and generally open economy offer attractive opportunities for foreign investment. The Government of Senegal welcomes foreign investment and has prioritized efforts to improve the business climate, although significant challenges remain. Senegal’s macroeconomic environment is stable. The currency – the CFA franc used in eight West African countries – is pegged to the euro. Repatriation of capital and income is relatively straightforward, although the regional central bank has recently tightened restrictions on the use of “offshore accounts” in project finance transactions. Investors cite cumbersome and unpredictable tax administration, bureaucratic hurdles, opaque public procurement, a weak and inefficient judicial system, inadequate access to financing, and a rigid labor market as obstacles. High real estate and energy costs, as well as high factor costs driven by tariffs, undermine Senegal’s competitiveness. The government is working to address these barriers.

Since 2012, Senegal has pursued an ambitious development program, the Plan Senegal Emergent (Emerging Senegal Plan, or “PSE”), to improve infrastructure, achieve economic reforms, increase investment in strategic sectors, and strengthen the competitiveness of the private sector. Under the PSE, Senegal has enjoyed sustained economic growth rates, averaging 6.5 percent from 2014 through 2019. With good air transportation links, a modern and functional international airport, planned port expansion projects, and improving ground transportation, Senegal also aims to become a regional center for logistics, services, and industry. Special Economic Zones offer investors tax exemptions and other benefits that have led to increased foreign investment in the manufacturing sector over the past several years.

The GOS continues to improve Senegal’s investment climate. Since 2007, Senegal has dramatically reduced the average number of days it takes to start a business. The government continues to expand its “single window” system offering one-stop government services for businesses, opening a new service centers in various locations and projecting to have at least one service center in each of the country’s 45 regional departments by 2021. Property owners can apply for construction permits online.  In 2019, the GOS made tax information and some payment options available online. Senegal’s state information agency ADIE has an ambitious SMART Senegal plan to increase access to WiFi and digitize more services onto a national hub. Senegal’s ranking in the World Bank’s Doing Business index improved from 141 in 2018 to 123 in 2019, spurred by improvements in the ease of paying taxes and access to credit information.

The government made progress in operationalizing the new Commercial Court, prioritizing the resolution of business disputes. Although companies continue to report problems with corruption and opacity, Senegal compares favorably with many countries in the region in corruption indicators. The Millennium Challenge Corporation (MCC) compact, signed in December 2018 and currently in pre-implementation prior to entry-into-force in 2021, aims to decrease energy costs by modernizing the power sector, increasing access to electricity in rural Senegal, strengthening the electrical transmission network in Dakar, and improving governance of the power sector.

Despite these improvements, business climate challenges remain. Because the informal sector dominates Senegal’s economy, legitimate companies bear a heavy tax burden, although Senegal is making progress in broadening the tax base.  Some U.S. companies complain about delays and uncertainty in the project development process.

A U.S.-Senegal Bilateral Investment Treaty has been in effect since 1990. According to UNCTAD data, Senegal’s stock of foreign direct investment (FDI) increased from $3.4 billion in 2015 to $6.4 billion in 2019. France is historically Senegal’s largest source of foreign direct investment, but the government wants more diversity in its sources of investment. U.S. investment in Senegal has expanded since 2014, including investments in power generation, industry, and the offshore oil and gas sector. Although the IMF reports (see table below) U.S. FDI stock in Senegal was approximately $91 million in 2018 (up from $25 million reported in 2017), anecdotal information suggests the amount is significantly more. China has also become a significant foreign investment partner. Other important investment partners include the United Kingdom, Mauritius, Indonesia, Morocco, Turkey, and the Gulf States. In addition to the developing petroleum industry, other sectors that have attracted substantial investment are agribusiness, mining, tourism, manufacturing, and fisheries.

Investors may consult the website of Senegal’s investment promotion agency (APIX) at www.investinsenegal.com for information on opportunities, incentives and procedures for foreign investment, including a copy of Senegal’s investment code.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 66 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2020 123 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 96 of 126 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2018 $91.0 million http://data.imf.org/
?sk=40313609-F037-48C1-84B1-E1F1CE54D6D5&sId=1390030341854
World Bank GNI per capita 2018 $1,410 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

Note on Impact of COVID-19

The 2020 COVID-19 epidemic heavily impacted Senegal’s economy. According to June 2020 government estimates, GDP growth for 2020, initially projected to reach 6.8 percent, will fall to 1.1 percent or less. Major oil and gas projects may be delayed at least a year. Although economy-wide employment figures are unreliable, it is clear the slowdown, combined with the GOS’s initial stringent outbreak containment measures, led to significant job losses, primarily in Senegal’s dominant informal sector. A May 2020 survey of 800 Senegalese businesses found that 65 percent had suffered a significant negative impact from COVID-19 and 40 percent had ceased operations. Diaspora remittances, representing 10 percent of GDP, have fallen sharply due to the pandemic’s effects on the world economy.

In the wake of the COVID-19 crisis, the GOS enacted one of the region’s most ambitious fiscal stimulus and social assistance packages. Dubbed “Force COVID-19,” the initiative sought to inject $1.7 billion – about 6 percent of GDP – into the economy. The GOS acknowledged the program will result in an increase in Senegal’s fiscal deficit, which is expected to grow from just above 3 percent (nearing the country’s target under ECOWAS convergence criteria) to more than 6 percent. According to the African Development Bank, Senegal’s public debt will rise from 65 percent to 68 percent of GDP, pushing the limits of the 70 percent threshold established by the Economic Community of West African States (ECOWAS). Nevertheless, in June 2020, the IMF assessed Senegal’s risk of debt distress as “moderate,” and the government continued to access regional credit markets at competitive rates.

Although the government won praise for its aggressive fiscal response, some have expressed concern over its intervention in labor markets, including a decree prohibiting employers from laying off or reducing salaries of workers during the COVID-19 crisis. The government’s efforts to implement the stimulus plan have drawn mixed reviews. While the government successfully increased funding to shore up its health care system, the rollout of social assistance programs was plagued by allegations of inefficiency, insider dealing, and corruption. Long delays plagued the implementation of programs to assist businesses and preserve employment, with many firms reporting they had still not received promised grants and loans months after the program launch. As of July 2020, the outbreak was still progressing in Senegal, with cases, deaths, and positivity rates still rising. Long-term effects of COVID-19 on Senegal’s economy and investment environment will depend on how long the outbreak lasts and how deeply the regional and world economies are affected.

Togo

Executive Summary

Togo’s strong economic growth in 2019 was driven by major reforms that improved the business climate and increased investment.  In the last two years, Togo rose by more than 50 places in the World Bank’s Doing Business report and now ranks 97th – the highest ranking in West Africa.  Agriculture remains one of the engines of economic growth in Togo.  In 2019, Togo became the top exporter of organic products to Europe in the Economic Community of West Africa States (ECOWAS) and the second in Africa after Egypt.  The export volume of these organic products (mainly soybeans and pineapples) more than doubled, from 22,000 tons in 2018 to 45,000 tons in 2019.

The government of Togo implemented various business reforms and completed several large infrastructure projects over the last five years to attract investment.  In 2018, the government launched its five-year National Development Plan (PND) with three major axes.  The plan’s first goal is to leverage the country’s geographic position by transforming Lome into a regional trading center and transport hub.  Togo has already completed hundreds of kilometers of refurbished roadways, expanded and modernized the Port of Lome, and inaugurated in 2016 the new Lome international airport that conforms to international standards.  The second goal is to increase agricultural production through agricultural centers (Agropoles) and increase manufacturing.  The third goal is improving social development, including electrification of the country.  The government is searching for private sector investment to fulfill these PND goals.

In September 2017, the government established the Business Climate Unit (CCA).  Since its establishment, the CCA has coordinated economic reforms and played a key role in improving the business climate for the private sector.  The CCA is composed of a national coordination body and three committees dedicated to the public and private sectors and civil society.  The CCA has improved the ease of doing business in Togo and starting a company in Togo is straightforward.

Nevertheless, Togo must face a number of challenges to maintain this momentum.  Challenges include a weak and opaque legal system, lack of clear land titles, and government interference in various sectors.  Corruption remains a common problem in Togo, especially for businesses.  Often “donations” or “gratuities” result in shorter delays for obtaining registrations, permits, and licenses, thus resulting in an unfair advantage for companies that engage in such practices.  Although Togo has government bodies charged with combatting corruption, corruption-related charges are rarely brought or prosecuted.

The 2019 Investment Code provided a legal framework to attract more investment and promote the economic and social development policy of Togo.  With an improving investment climate and modern transportation infrastructure, Togo’s steadily improving economic outlook offers opportunities for U.S. firms interested in doing business locally and in the sub-region.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 130 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 97 of 190 http://www.doingbusiness.org/
en/rankings
Global Innovation Index 2019 126 of 129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2018 N/A http://apps.bea.gov/international/
factsheet/
World Bank GNI per capita 2018 USD 660 http://data.worldbank.org/indicator/
NY.GNP.PCAP.CD

Tunisia

Executive Summary

Tunisia continued to make progress on its democratic transition and successfully held its second round of parliamentary and presidential elections since the 2011 revolution in September and October 2019, which led to the formation of a new government on February 27, 2020.  In 2019, Tunisia’s economy experienced a GDP growth of 1 percent.  The country still faces high unemployment, high inflation, and rising levels of public debt.

In recent years, successive governments have advanced much-needed structural reforms to improve Tunisia’s business climate, including an improved bankruptcy law, an investment code and initial “negative list,” a law enabling public-private partnerships, and a supplemental law designed to improve the investment climate.  The Government of Tunisia (GOT) has also encouraged entrepreneurship through the passage of the Start-Up Act.  The GOT also passed the “organic budget law” to ensure greater budgetary transparency and make the public aware of government investment projects over a three-year period.  These reforms will help Tunisia attract both foreign and domestic investment.

Tunisia’s strengths include its proximity to Europe, sub-Saharan Africa, and the Middle East, free-trade agreements with the EU and much of Africa, an educated workforce, and a strong interest in attracting foreign direct investment (FDI).  Sectors such as agribusiness, aerospace, renewable energy, telecommunication technologies, and services are increasingly promising.  The decline in the value of the dinar over recent years has strengthened investment and export activity in the electronic component manufacturing and textile sectors.

Nevertheless, substantial bureaucratic barriers to investment remain.  State-owned enterprises play a large role in Tunisia’s economy, and some sectors are not open to foreign investment.  The informal sector, estimated at 40 to 60 percent of the overall economy, remains problematic, as legitimate businesses are forced to compete with smuggled goods.

The United States has provided more than USD 500 million in economic growth-related assistance since 2011, in addition to loan guarantees in 2012, 2014, and 2016 that enabled the GOT to borrow nearly USD 1.5 billion at low interest.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 74 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2019 78 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 70 of 129 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2019 USD 320 million https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2019 USD 3,360 http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD
Investment Climate Statements
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