(Ecofin Agency) - The World Bank's 14th economic analysis of Côte d’Ivoire highlights the challenges and opportunities tied to the country’s climate ambitions. Despite robust growth, Abidjan struggles to secure the necessary financing for its climate actions.

In its report released on June 28, the World Bank assesses the state of climate financing in Côte d'Ivoire. Although the country has shown significant resilience to various shocks, it continues to face substantial difficulties in this area.

To meet its Nationally Determined Contribution (NDC) targets, estimated at $22 billion by 2030, Côte d'Ivoire could benefit from a carbon tax. This fiscal tool directly links greenhouse gas (GHG) emissions to a tax, encouraging businesses and consumers to reduce their emissions. According to the World Bank, a well-designed carbon tax could generate significant socio-economic benefits, increase tax revenues, and support inclusive growth while mitigating the effects of climate change.

"Fossil fuels enjoy significant and widespread tax exemptions in Côte d'Ivoire, keeping consumer prices well below the level corresponding to the externalities associated with fossil fuels. Implementing upstream carbon taxes on fossil fuels would ensure that prices correctly reflect the actual costs of using these fuels, thus helping to mitigate climate change. Moreover, carbon taxes involve low administrative costs, are easier to collect and control than direct taxes, offer few opportunities for evasion, and could cover the large informal segment of the country's economy," the institution notes. "If used properly, the revenues generated by carbon taxation should support the government's social and economic agenda and contribute to growth and human well-being."

The report comes at a critical time as climate forecasts paint a bleak future if climate financing is not adequately secured by 2050. Models predict temperature increases of 1 to 4°C, a 30 cm rise in sea levels, and irregular precipitation. These changes could reduce agricultural yields by up to 30% in a country where agriculture is the largest employer and foreign exchange earner. Economic losses related to climate change could reach 13% of GDP in 26 years, preventing 1.63 million people from escaping poverty.

Marie-Chantal Uwanyiligira, World Bank’s Country Director for Côte d'Ivoire, Benin, Guinea, and Togo, emphasizes that Côte d'Ivoire is well-positioned to become a leader in the green transition. "Despite the challenges, Côte d'Ivoire is well placed to transition to a low-carbon economy and position itself as a champion of the green transition. The country must continue its carbon tax and credit policies and also bring the private sector on board to invest in green initiatives," she said during the report's launch in Abidjan, highlighting the encouraging prospects for the Ivorian economy.

To maximize its potential, the World Bank recommends regulatory and institutional reforms to effectively manage climate impacts. However, Côte d'Ivoire cannot achieve its goals without increased support from the private sector and major global polluters. Despite promises to finance climate adaptation in poor countries to the tune of $100 billion per year, these commitments have yet to be fulfilled.