President Ouattara caps commodity prices and subsidizes fuel at the risk of offending liberal orthodoxy. A costly but essential strategy for the preservation of social peace.
The effort is substantial. The State of Côte d’Ivoire (Ba3 by Moody’s and BB- by S&P and Fitch) has granted subsidies of around 500 billion CFA francs (USD 778 millions) , since the beginning of 2022, for the fuel component alone. This was revealed by President Alassane Ouattara on Saturday August 6, 2022, as part of the commemoration of the 62nd anniversary of the independence of Côte d’Ivoire. Specifically, he says, “for each liter of diesel that you buy at 615 CFA francs, the State of Côte d’Ivoire provides a subsidy of 469 CFA francs. For the super, the state subsidy is 285 FCFA for each liter purchased at the pump at 735 FCFA”. These substantial efforts on fuel, an essential component of prices, allow the first economy of West African Economic and Monetary Union (WAEMU) to attenuate the inflationary spiral. “I can tell you that it is thanks to this state subsidy that the prices of petroleum products in Côte d’Ivoire are among the lowest in the sub-region,” said the head of state.
In addition, Côte d’Ivoire has temporarily capped the prices of several basic food items such as refined palm oil, sugar, milk, rice, concentrated tomato, beef and pasta. In the long term, the focus is on increasing local production of rice, cassava, plantain, sorghum, maize and soybeans. For the economist Ouattara, it is a question of stimulating supply to meet growing demand and thus lower prices.
In the long term, the objective is to achieve accessible food sovereignty, that is to say “to feed our populations essentially with Ivorian agricultural production and at affordable prices”. It remains to be seen whether Abidjan will succeed in overcoming the difficulties inherent in such a policy, linked in small measure to access to land, financing and the low productivity of factor costs in general, which had plagued the policies of industrialization by import substitution 60s and 70s ?
