After five years of suspended animation, Côte d’Ivoire has achieved a breakthrough. Though the second round of the elections will occur after The Africa Report goes to press, the strong first-round showing of both incumbent president Laurent Gbagbo and challenger Alassane Ouattara outside their strongholds suggests the country has moved beyond the electoral ethnic straitjacket.
The incoming government is left with a long list of tasks to entice investors. Key among them are upgrading ageing infrastructure (see p. 168) and clearing up the racketeering that drains the economy. Record cocoa prices helped absorb the negative impact of falling oil production, political demonstrations and electricity blackouts.
Still, the boost to the coffers of the world’s biggest cocoa producer has yet to translate into investment that would reverse declining yields and structural mismanagement. The government’s main hurdle is to qualify for debt relief from the IMF and World Bank. The government has missed six election dates since President Laurent Gbagbo’s mandate expired in 2005.
The 80% turnout shows how committed Ivorians are to progress. Now the key to future stability will rest on how the new team intends to address the economic divisions that contributed to a 2002 armed uprising and the de facto division of the country into northern and southern zones. Poor organisation in the opposition coalition, the Rassemblement des Houphouétistes pour la Démocratie et la Paix, allowed Gbagbo to dictate terms in the run-up to elections.
The four-party coalition is fragile. Henri Konan Bédié will be regretting not having campaigned harder; despite an pre-electoral pact with Ouattara, Gbagbo’s lieutenants were campaigning throughout November to attract elements of Bedié’s Parti Démocratique de la Côte d’Ivoire. Sporadic outbursts of protests marked the path to the polls.
Future stability will be dictated by how the winner – and especially the loser – behaves in the 28th November run-off. Though the atmosphere has cooled in recent years, in February, Gbagbo dissolved the electoral commission, alleging that its director had attempted to inflate the electoral -roll with opposition supporters. The decision triggered two weeks of riots that left 13 people dead.
Still, opposition divisions and fast-acting government forces have largely contained serious violence. Should Gbagbo win, a power-sharing arrangement with a runner-up could further reduce tensions. In August, the UN Mission to Côte d’Ivoire took the unprecedented step of recommending that the Security Council ease an arms embargo it has imposed since 2004.
Defence Minister Michel Amani N’Guessan argued that the security forces needed to purchase crowd-control and anti-riot equipment. The government repeated the refrain in September when US Federal Bureau of Investigation officials in New York arrested an Ivorian army colonel who was attempting to buy arms and ammunition worth $3.8m. As The Africa Report went to press, the embargo was still in place.
The Forces Nouvelles (FN) rebels are another potential source of friction. Under a 2007 peace deal, government forces have slowly been redeployed to the north, but the rebels maintain effective control of the area. Prime Minister Guillaume Soro resigned from his post as FN secretary general in July 2010, saying he wanted to concentrate on organising credible elections.
He will be eligible to run for the presidency in two years. Although it has displayed little political interest in going to the ballot box, the FN has softened its hard-line tone in recent months. It has not ruled out entering the political arena in the future.
The economic picture is mixed. Political stagnation continues to dampen investor interest. A French-run scheme that shared the risk of bank lending was halted after the February crisis. In May, the African Development Bank held its annual meeting in its former seat in Abidjan, signalling its intention to return if the country stabilises. Inflation reached 2% in 2010 and government revenue is projected at $4.6bn.
The IMF projects a real growth rate of 3% in 2010, rising to 4% in 2011. The rise should help offset the number of people who live below the poverty threshold, which increased from 39% of the population in 2001 to 49% in 2008. The IMF says that external debt of $12.5bn remains “unsustainable”.
Paris Club creditors cancelled $845m of debt in 2010, but a failure to hold elections and delays in implementing cocoa reforms are holding up some $3bn of debt relief from the IMF and the World Bank. Despite praise for maintaining broad macro-economic stability and increased budget transparency, the IMF withheld a third credit-facility loan in September, citing imbalances in the electricity sector, an unsustainable government wage-bill and corruption in the judiciary. The government has put critical cocoa reforms on hold in the face of the delayed elections.
Changes demanded by the IMF and World Bank include a new regulatory framework and the imposition of taxes that are no higher than 22% of the international market price. Some reforms are under way: in October, cocoa authorities set the main export tax for the 2010-11 season at 14.6% of the world market price, the first time since liberalisation in 1999 that the levies would not be applied as a fixed total. The government will also apply a new levy to fund other reforms.
The tax will finance the implementation of a forward-selling system that will cushion the government’s coffers should world prices drop. Planners expect the main cocoa crop for 2011 to drop by 10% from 2010’s 1.2m tonnes, which was level with the 2009 crop, itself the worst harvest in five years. Ageing trees, outdated farming methods and disease-prone crops continue to reduce output from the country’s 700,000 smallholdings.
Government attempts to address the swollen-shoot virus have been lacklustre and hampered by corruption. With Ghana planning to boost output to 1m tonnes by 2015, Côte d’Ivoire’s position as top cocoa grower could be in danger. In 2010, Ghana and Côte d’Ivoire bickered following the discovery of deepwater oil deposits on both sides of the maritime border. The governments decided to create a joint committee to resolve future disputes.
Petroleum output is forecast at 17.9m barrels by year-end, down from 21.9m in 2009. The mining sector is the focus of a push to diversify away from cocoa and oil. The state aims to increase the mining sector’s contribution to GDP to 10% by 2020, up from the current level of 1.5%.
The government issued about 200 of the current 260 mining permits in the past two years. Gold production is forecast to triple to 20tn annually by 2015, up from around 7tn, as new mines come into operation in the north. The government has also asked for a UN-backed ban on the sale of diamonds to be lifted. The mines, all in rebel-held territory, produce around 300,000 carats annually, generating tax revenues of $20m.
West Africa’s former economic star is pouring money into ambitious plans to revamp the highways and cities that are crumbling after decades of neglect. While a visiting IMF delegation praised the country’s progress in late September, on a different floor in the finance ministry, Kuwait was signing a $11.3m loan, one of a dozen loans to build a freeway linking Yamoussoukro to Abidjan. A $180m loan from the World Bank will fund a project to upgrade the road network.
Meanwhile, a third mainland bridge planned almost a decade ago to ease Abidjan’s traffic load has yet to materialise. Shaken by protests after three months of power outages, the government is looking to upgrade the power sector. Urgent overhauls to the electricity sector will be completed with $50m from the World Bank. Gestoci, the parastatal petroleum-stocking company, plans to invest $400m over the next five years to double capacity to 680,000tn. The port at Abidjan is also undergoing renovation. A seven-year bond launched in April raised $500m to modernise tracking technology, create a centre for treating liquid waste and build specialised quays. Tariff and tax cuts are also needed to develop a regional competitive edge