Debt, Elections, and Growth: WAEMU’s High-Stakes Year Ahead

Despite lingering fiscal pressures and political uncertainty, the region continues to show resilience—positioning itself as one of Africa’s fastest-growing investment zones.

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The West African Economic and Monetary Union (WAEMU or ‘UEMOA’ in French) has entered 2025 with strong momentum, fueled by robust GDP growth, controlled inflation, and a resilient stock market.

Despite lingering fiscal pressures and political uncertainty, the region continues to demonstrate economic resilience, positioning itself as one of Africa’s fastest-growing investment zones.

Economic Growth: A Faster Pace in 2025

UEMOA’s economy expanded by 6.0% in 2024, an improvement from 5.3% in 2023, according to the Central Bank of West African States (BCEAO). The strong performance was largely driven by Niger, Benin, Togo, and Mali, where agricultural output and industrial production exceeded expectations.

Niger recorded the region’s highest growth at 8.8%, benefiting from a 14.2% increase in food crop production and strong crude oil exports. Benin’s 6.7% expansion was supported by rising cotton production, while Togo’s economy gained from increased manufacturing activity.

For 2025, GDP growth is forecast to accelerate to 6.3%, propelled by the scaling up of hydrocarbon production in Côte d’Ivoire, Senegal, and Niger and a further boost in gold mining and agriculture. However, growth in Côte d’Ivoire and Senegal is facing downward pressure due to continued challenges in the cocoa sector and delayed gas production.

Inflation Control: A Positive Development

Inflation moderated to 3.6% in 2024, a slight improvement from 3.7% in 2023, as increased food supply from a strong agricultural season helped ease price pressures. The BCEAO held its benchmark interest rate at 3.50% throughout 2024, maintaining monetary stability while supporting economic expansion.

The trend is expected to continue in 2025, with inflation projected to decline further to 3.0%. The easing price pressures are attributed to stable global food and energy prices and a continued improvement in domestic supply chains. With inflation falling within the BCEAO’s target range of 1.0% to 3.0%, there is now some room for potential monetary easing if economic conditions demand it.

Trade and Fiscal Deficit: A Sharper Focus on Fiscal Discipline

UEMOA’s trade balance improved significantly in 2024, with the trade deficit shrinking from FCFA 1,590.6 billion in Q3 2023 to FCFA 296.6 billion in Q3 2024. The reversal was driven by a 19% surge in exports, which reached FCFA 7,206.3 billion, fueled by strong sales of cocoa (+23.8%), gold (+28.8%), and petroleum products (+45.6%). Imports, meanwhile, declined by 1.9%, benefiting from lower energy (-8.6%) and food (-5.4%) costs.

The budget deficit narrowed slightly to 4.5% of GDP in 2024, from 4.8% in 2023, supported by higher tax revenues and disciplined public spending. Governments in the region relied on a mix of regional debt issuance and external financing to cover the shortfall. The World Bank, the French Development Agency, and the African Development Bank provided a combined FCFA 1,219 billion in funding.

In 2025, further fiscal consolidation is expected, with the deficit projected to shrink to 3.0% of GDP. Governments are implementing tax collection reforms and spending controls, while higher oil and gas revenues are expected to contribute to improved public finances.

Debt Markets: Higher Yields Amid Investor Caution

Government borrowing costs rose across UEMOA in 2024, reflecting investor concerns over sovereign risks. Treasury bill yields climbed from 6.12% in 2023 to 7.20% in 2024, while long-term bond yields increased from 6.87% to 7.24%.

The region’s public debt stock reached FCFA 77,439.4 billion by the end of 2024, representing 58.9% of GDP. Côte d’Ivoire, Benin, and Senegal tapped the Eurobond market, raising a combined FCFA 2,482.9 billion but at significantly higher interest rates compared to previous issuances.

Stock Market: BRVM Extends Its Bull Run

The Bourse Régionale des Valeurs Mobilières (BRVM) posted its fourth consecutive year of gains in 2024, as the BRVM Composite Index surged 28.89% and the BRVM 30 Index climbed 28.64%. The market benefited from strong corporate earnings and rising investor confidence.

Sonatel, the BRVM’s most actively traded stock, dominated volumes, while Orange Côte d’Ivoire emerged as the year’s best-performing stock, jumping 60.55%. Other notable gainers included SAPH CI (+76.17%) and BICI CI (+86.92%). On the downside, CFAO Motors CI and Air Liquide CI were among the worst performers, with losses of 28.57% and 39.76%, respectively.

Investor sentiment remains optimistic heading into 2025, with expectations of continued earnings growth and liquidity inflows. However, Côte d’Ivoire’s October presidential election could introduce short-term volatility, as political uncertainty tends to spook markets.

Commodities and Currency: Gold Shines While Oil Struggles

Commodity prices saw mixed performances in 2024. Brent crude oil ended the year at $74.6 per barrel, down 3.12% year-to-date, as global supply concerns eased. Gold, however, emerged as the standout performer, rallying 27.47% to $2,641 per ounce, reflecting heightened global economic uncertainty.

Currency fluctuations played a crucial role in shaping the economic landscape. The CFA franc depreciated against the US dollar, ending the year at 631.4 XOF/USD, down 6.36% year-to-date. Meanwhile, the euro-XOF exchange rate remained stable at 655.957, reflecting the currency’s peg to the euro.

2025: A Year of Opportunity and Caution

UEMOA enters 2025 in a position of strength, with faster economic growth, improved fiscal discipline, and a thriving stock market. The region is emerging as one of Africa’s most attractive investment destinations, drawing attention from both institutional and retail investors.

The energy sector is set to play a key role, with Senegal’s oil production expected to jump from 34,000 barrels per day to 84,000 barrels per day, while Côte d’Ivoire’s offshore developments could nearly double the country’s crude output. Meanwhile, agriculture and financial services remain critical pillars of the economy, offering stable growth opportunities.

However, risks remain on the horizon. Côte d’Ivoire’s presidential election in October 2025 could introduce market volatility, as political uncertainty often triggers capital outflows. The region also remains exposed to global macroeconomic shifts, particularly monetary policy decisions in the US and Europe, which could impact capital flows into African markets.

The region is on an upward trajectory but not without its challenges. For investors willing to navigate the complexities, UEMOA continues to offer one of Africa’s most compelling growth stories, with opportunities spanning equities, fixed income, and commodities. The coming months will test the region’s ability to balance economic expansion with political stability, making it a market to watch in 2025.