Following years of crisis, Côte d’Ivoire has been eager to recapture its former crown as the most dynamic economy in West Africa, and with the benefits of both stability and headline growth, the prospects are encouraging. After decades of chronic under-investment by the public and private sectors alike, much of Côte d’Ivoire’s economic fabric and infrastructure has been severely degraded. Years of political turmoil have, moreover, delayed many of the institutional advances needed to promote a modern, investor-friendly business environment. Having once been a leader in West Africa, Côte d’Ivoire now ranks 177th out of 185 economies on the World Bank’s Doing Business Index, far behind neighbouring Ghana, for instance, which came in at 64.

As the 2010-11 conflict recedes, the socio-political situation has stabilised and the economy has rebounded strongly. Indeed, if the country is able to remain on its current track, political stability and economic development may form a virtuous circle. However, the Ivoirian authorities are keenly aware of the challenges they face. Guy M’Bengue, the CEO of the Export Promotion Association of Côte d’Ivoire and chief negotiator for the Millennium Challenge Corporation, told OBG, “The country is working to improve its ‘Doing Business’ ranking and results will begin materialising in the business climate shortly.” The authorities have put an ambitious investment drive at the heart of the 2012-15 National Development Plan (Plan National de Développement, PND). From a relatively low level of 8.2% of GDP in 2011, the government’s goal is to increase the investment rate by a factor of three, to 23.4% of GDP, by 2015.

A NEW PLAN: The government aims to mobilise public and private sector resources to deliver on the plan, including funding infrastructure projects, upon which its success hinges. “Côte d’Ivoire must ensure that public tenders are transparent and clear, to ensure that the country has the opportunity to select the best provider. Not doing so, as has happened on occasion, could raise questions as to the operational capacity of bidders and is also representative of a challenging business environment,” Dominique Gouvernayre, the managing director for West Africa at Société Générale de Surveillance), told OBG. It is envisaged that 59% of the CFA11trn (€16.5bn) PND will be financed from private investors.

To meet these goals, the government is pursuing a two-pronged approach: introducing a series of measures to improve the business environment and organising a vast array of projects for completion through public-private partnerships (PPPs). The projects include plans for a waste management centre and hospital in Abidjan, educational facilities, the refurbishment of highways and an urban tramway, among other things.

EASING CONCERNS: Political uncertainty in the run-up to the 2015 presidential elections and security issues continue to act as brakes on private sector investment, both foreign and domestic, with many firms adopting a wait-and-see stance. Political unrest is a concern in Côte d’Ivoire’s west and in some border regions, which poses problems for the agricultural and extractive sectors. However, the government has introduced measures to mitigate these risks: creating a police unit to combat racketeering and harassment on the roads; adopting a National Police Code of Conduct to fight corruption; and rehabilitating the legal system. Implementation is crucial and the country still has a long way to go in terms of tackling corruption. Both the reputation of the judicial system and police force have been tainted by some officials who accept bribes.

MAINTAINING STABILITY: At the macro level, the government is committed to maintaining stable economic growth, low inflation, bolstering public finances and balanced external accounts as key pillars of an improved investment climate. The country’s economic performance since late 2011 gives reason for optimism on this front. Sustained public investment is improving the quality and quantity of infrastructure. New phases at the Azito and Ciprel thermal plants, for example, along with the new power plant at Bingerville and the new hydroelectric dam at Soubré, should all help to further secure the energy supply. Azito was granted a CFA219bn (€328.5m) loan from the West African Development Bank, IFC and French Development Agency subsidiary Proparco for the commissioning of a combined-cycle power generation plant which will increase power from 296 MW to 436 MW. With an investment of CFA178bn (€267m), Ciprel is set to get an additional 220 MW of power upon the establishment of a fifth turbine, which will be operational between 2014 and 2015.

NEW LAW: In 2012 two developments occurred to improve the investment climate: the promulgation of a new Investment Code and the establishment of a one-stop shop for founding a business. The new Investment Code was adopted in June 2012, updating the 1995 code, and was designed to promote productive, environmentally sustainable and socially responsible investment in the country. The new code guarantees equal treatment for foreign investors; freedom to access foreign currency; protection of intellectual property, patents and trademarks; protection of property rights; access to domestically produced primary products; freedom to appoint a board of directors and senior management without interference; work and residency visas for foreign management and shareholders; the right of foreign employees to repatriate earnings; secure access to industrial zones, agricultural land and areas of touristic interest; and due process in the Ivoirian courts. In total, the new code grants 16 fundamental rights to investors, up from three in the previous version.

The code also sets out obligations for investors, such as their respect for Ivoirian laws; preferential treatment for domestic suppliers and sub-contractors; the prioritisation of hiring Ivoirian nationals; and maintaining transparency. The code also outlines the procedures for the declaration of investment projects to the authority, the range of sectors for which declaration is mandatory and the advantages that declaration confers, differentiated across the three geo-economic zones into which the country is divided for the purpose.

Some advantages are very attractive: no tax on profits for five to 15 years, depending on the economic zone; exemption from patent and licensing fees; and up to 90% exemption from employers’ social security contributions, depending on the zone. Some activities may be approved for further incentives, such as exemptions from value-added tax, reduced Customs duties and a series of fiscal advantages, depending on the economic zone and the size of the investment. Finally, the code confers more generous advantages on small and medium-sized enterprises (SMEs). For instance, SMEs are granted lengthier exemptions from taxes on profits, again depending on the economic zone, and preferential pricing for water and electricity.

FACILITATING BUSINESS: The second major innovation of 2012 was the establishment of the Investment Promotion Agency of Côte d’Ivoire (Centre de Promotions des Investissements en Côte d’Ivoire, CEPICI), a one-stop shop for setting up a business locally. It was established in September 2012 with the aim of consolidating and rationalising the government’s investment promotion and private sector development efforts. CEPICI provides free advisory services to investors, domestic and foreign alike, guiding them through the administrative hurdles to setting up a business and benefitting from the advantages afforded by the new Investment Code. The aim is to reduce the cost of setting up a business and streamlining the process so that it takes no longer than 48 hours. A new Single Window also enables entrepreneurs to all complete company creation procedures in one place by bringing together the four necessary administrative branches. The National Committee for Remote Sensing and Geographic Information is working with CEPICI on this initiative. The committee’s secretary-general, Edouard Fonh-Gbei, told OBG, “We are working with the CEPICI on their single window project by helping them map industrial zones and other areas available for investors, given that clear and effective territorial and land management is crucial for successful projects.”

IN PRACTICE: Notwithstanding important advances in recent times, and ambitious plans for future reforms, the business environment remains challenging, particularly for foreign investors unfamiliar with African norms and business practices. Despite recent progress, for example, there are still 32 steps to creating a company. The country has come a long way in a short period of time, but still has a long way to go to achieve its stated aim of becoming the most attractive business environment in Africa. There is a range of new laws, and several more in the works, but as ever, the proof of the pudding is in the eating: implementation and enforcement are crucial, and still leave something to be desired. The dedicated commercial court, which opened its doors in Abidjan in 2012, may help in this regard.

Construction and public works, driven by government investment, could prove the most resilient sectors in the medium term. Recent agro-industrial reforms and government support to move the country up the value chain should ensure investment in the transformation of raw materials. Over the long term, transport, telecoms and general services are likely to prove the most important drivers of investment and growth.