The figures for economic growth are putting some swagger in Côte d’Ivoire’s stride, but business leaders and oppositionists say the hard work has not even begun. Big infrastructure projects are underway all over the country, although local companies are struggling to access credit.
It appears like an mirage: on the way out of Yamoussoukro, a newly marked and asphalted road dives into the valleys of Côte d’Ivoire’s country side, which the season’s rains have covered with a shimmering green.
For a few months now, the longawaited high way linking the Ivorian capital to Abidjan, the country’s biggest city and economic powerhouse, delivers the same message to its visitors: Côte d’Ivoire is back.
By Olivier Monnier in Abidjan, additional reporting from Baudelaire Mieu
Infrastructure is one way to build a bridge over troubled water in Côte d’Ivoire. Photo©Olivier for TAR
Three years after President Alassane Ouattara was sworn into office following a disputed 2010 election that turned into five months of violence, Côte d’Ivoire’s economy is humming.
After contracting about 5% in 2011 because of the post-election crisis, the Ivorian economy grew 9.8% in 2012 and 8.7% in 2013.
The government says it expects 10% growth in 2014 and 2015. International rating agencies say the potential for political instability ahead of the 2015 elections, coupled with weak institutions, could present a threat to growth.
Aside from the highway – the West African country’s first toll road – infrastructure projects have been multiplying.
A third bridge spanning Abidjan’s Ebrié Lagoon is to be completed by the end of the year. A large number of roads have been rehabilitated in Abidjan and in the rest of the country, for instance in Bouaké, the country’s second-largest city, and on the Abidjan-San Pédro coastal route.
The bank is back
The return to Abidjan later this year of the African Development Bank, which relocated to Tunis in 2003 after a failed coup split Côte d’Ivoire into a rebel-held north and a government-controlled south, also boosted investments in infrastructure.
The Ivorian authorities spent 33bn CFA francs ($68m) to renovate a 28-floor building in Le Plateau, Abidjan’s central business district.
Raising money is crucial to the government’s plans. It issued a $750m euro-bond in July, and Moody’s awarded the government a rating of B1 – the same as Senegal and Kenya – in preparation for the bond’s launch.
This will be the first time Côte d’Ivoire goes to the international market since it defaulted on a $2.3bn eurobond in 2010 amid the political stand-off.
Local fundraising conditions have weakened since the beginning of the year. After most of its issues were over-subscribed on the West African regional market, the government sold bonds of just 61bn CFA francs after seeking 120bn CFA francs in May.
The benefits of economic growth are not widely shared. Christoph Wille, Africa analyst at risk analysis group Control Risks, tells The Africa Report: “The challenge for the government will be to make this growth more inclusive and pro-poor. Unemployment rates, particularly among the low-income segments of the population, remain extremely high.”
Some improvements have been made though. The minimum guaranteed price for cocoa set by the government two years ago as part of a vast reform of the industry is respected on the ground and rose to 750 CFA francs per kilo this season, up from an average of 670 CFA francs before the reform. The government expects record production of 1.6m tonnes this year.
Although the growth is still mostly driven by public investment, the share of foreign investment is growing. Annual private investment in the Ivorian economy doubled in 2013 to 513bn CFA francs, the government says.
According to Maja Bovcon, a West Africa analyst at risk consultancy Maplecroft: “The adoption of the new investment code in 2012 has attracted private investment by providing several incentives, including tax reductions and targeted exemptions from value-added taxes, for private investors.”
Companies are also getting more confident in the stability of the country. For example, chocolate and coffee maker Nestlé’s unit in Côte d’Ivoire has invested more than 10bn CFA francs over the past two years to recover from the war.
Like many businesses, Nestlé closed its production sites and sales offices during the post-election violence. After two years of losses, Nestlé Côte d’Ivoire returned to profit in 2013.
“We are recovering from this chapter of Côte d’Ivoire’s history,” country director Patricio Astolfi told The Africa Report. “We are putting the company back on track. I’m extremely confident.”
Larger multinationals are having an easier time than smaller local companies. “We are seeing a big shortcoming in credit in the Ivorian market. Banks rarely loan to companies. Interest rates – which vary from 7 to 12% – are not encouraging for business,” says Kader Toure, the director of a small telecoms business.
Governance issues are dissuading many investors, say analysts and economists. “Huge operational hurdles persist, presenting major barriers to business,” says Control Risks’ Wille, citing “a burdensome bureaucracy, institutional deficiencies and high levels of corruption”.
Fiscal pressure
The authorities say they are working to improve the business climate. The government has set up commercial courts, and trade minister Jean-Louis Billon has revived the competition commission.
The security situation in Côte d’Ivoire is primarily undermined by the incomplete disarmament
Wille says, nonetheless, that “discussions with government officials are highly personalised, and political interference con- tinues to be regularly reported.”
Lakoun Ouattara, an Abidjan-based businessman, explains: “There is a lot that remains to be done about the heavy fiscal pressure that companies face. There are high customs costs and delays in importing goods. The government’s acceptance of ad hoc bidding leads to unfair competition and causes corruption.”
The government says it has reduced ad hoc contracts and waiting time.
The security situation has improved, especially in Abidjan and Bouaké, but the west of the country remains unstable amid land disputes, ethnic tension and attacks near the Liberian border.
Since January, at least two raids killing about 20 people were reported. “The security situation in Côte d’Ivoire is primarily undermined by the incomplete disarmament, demobilisation and reintegration programme and the delayed implementation of the security sector reform,” notes Maplecroft’s Bovcon.
The political challenges are also numerous. A year ahead of the next presidential election scheduled for October 2015, 72-year-old Ouattara, leader of the Rassemblement des Républicains (RDR), has said he will seek re-election despite the illness that kept him away from international summits in April.
Ouattara’s supporters in the RDR could try to win without the Parti Démocratique de Côte d’Ivoire (PDCI), which supported Ouat- tara in the run-off in 2010 and is part of the ruling coalition. The PDCI has not said if it will present a candidate or support Ouattara in 2015.
After three years of electoral boycotts, the Front Populaire Ivoirien (FPI) is back in the game. The Ivorian authorities made it clear they want to see the FPI participate so as to appear more democratic.
The government has authorised FPI meetings, and since August 2013 the justice system has released more than 150 allies of ex-President Laurent Gbagbo, including FPI president Pascal Affi N’Guessan.
Despite these measures, the FPI has called for a boycott of the long-overdue population census, reviving identity issues and suggesting that reconciliation still has a long way to go.
Trust slow to build
The Commission Dialogue Vérité et Réconciliation, which has been renewed for one year, started hearings for victims of the nearly decade-long political crisis in March, two years after being set up. The body has not convinced Ivorians that it will bring about reconciliation in society.
A military source who requested anonymity explains: “Ouattara still does not trust the former members of the defence and security forces who are pro-Gbagbo. He prefers to rely on the former commandants de zone [comzones, or ‘zone commanders’] of the rebellion that were all integrated into the new army. The protection of Ouattara’s regime depends on the comzones and the men who surround them.
“They hold strategic positions in the army and in the administration to better protect the regime. The former combatants around the comzones are still armed. Ouattara has the same problem in the RDR, where the absence of leaders and a replacement stop him from stepping down.”
With growth roaring into 2015, President Ouattara’s skills will be tested by the demands of an economy that requires deeper reforms.
On the political front, he will try to control the political forces that brought him to power and deal with the oppositionists wary of a political system that does not encourage reconciliation or the impartial application of justice.