Al Qaeda’s attack on Cote d’Ivoire may threaten its status as Africa’s top investment destination

Cote d’Ivoire’s resorts may be empty for a while following the Grand Bassam attack.
Cote d’Ivoire’s resorts may be empty for a while following the Grand Bassam attack.
Image: Reuters/Luc Gnago
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On Sunday, March 13, an attack on a beach resort area in Grand Bassam, Cote d’Ivoire shook the country. The attack, the first by Al Qaeda in the Islamic Mahgreb (AQIM), an Islamist militant group operating in the Sahel, on Cote d’Ivoire, left a total of 22 dead, six of them being assailants.

Cote d’Ivoire’s security apparatus will need to determine how it failed to prevent the tragedy. But another key issue is whether the attacks will scupper Cote d’Ivoire’s impressive economic growth and progress over the past five years.

Since 2000, Cote d’Ivoire has emerged from two civil wars (the most recent ended in 2011) to become one of Africa’s fastest growing economies. With a projected GDP growth rate of 8.4% this year, the world’s top cocoa exporter has seen a boom in private sector activity as faith in the nation’s recovery and stability has steadily increased.

As a result, Cote d’Ivoire has toppled Nigeria, Africa’s largest economy, as the leading investment prospect in Africa, according to the most recent Nielson report (pdf). This rise, according to the research firm, was due to “its stable economic growth and inflation climate and recent elections” all of which “provide a fertile investment environment.”

Fears over security may alter the rosy outlook on Cote d’Ivoire. After the attack, Cote d’Ivoire’s Eurobonds fell and yields rose several points higher. Even though its attacks cost African lives, AQIM is known to primarily target tourist destinations with a significant foreign population. This obvious tactic by AQIM could create a plunge in Cote d’Ivoire’s tourism industry which contributed 4.4% of the national gross domestic product (GDP) in 2014 and was expected to rise by 7.1% last year according to a 2015 report (pdf) by the World Travel and Tourism Council.

While a dip in the influx of tourists and weakened bonds are an instant reaction to the attacks, the possibility of sustained loss of investor confidence is a long term concern. That may happen if additional attacks target commercial interests and strategic infrastructure such as banks that have enabled the country’s high growth rates, according to Ryan Cummings, director at Signal Risk, a travel security management firm.

For now, Cumming says a drop off in investor sentiment is unlikely. “A one-off, albeit high value attack, in the country should not have a pronounced impact,” he tells Quartz. Cummings says the Ivorian forces, which Alassane Ouattara, president of Cote d’Ivoire, praised for reacting quickly to the Grand Bassam attack, must look to fix any security gaps that may empower more attacks.

“With AQIM demonstrating both the intent and operational capacity to execute attacks in Cote d’Ivoire, the onus will be on the country’s security apparatus to proactively address any security deficiencies which could see more attacks occurring,” Cummings says.