Deep in debt from a decade of economic stagnation and years of civil war, Côte d’Ivoire cannot do it alone. That is why its government, led by former International Monetary Fund (IMF) economist Alassane Dramane Ouattara, is working to woo private partners to rebuild the resource-rich West African nation. Over the past 10 years, Côte d’Ivoire has seen a series of crises, making it difficult to complete the many projects that it had embarked on in its boom years. Recognising that infrastructure is key to enabling economic growth, the government is now committing investments of close to CFA2.82trn (€4.23bn) to the infrastructure and transport sectors. Private involvement is important if the country is to rise again quickly. Côte d’Ivoire is one of 42 nations (of which 34 are African) that is seeing part of its debt written off under the IMF and World Bank’s Highly Indebted Poor Countries programme.
PLANNING AHEAD: President Ouattara said that the government would require roughly CFA11.1trn (€16.65bn) to carry out its 2012-15 National Development Plan (Plan National de Développement, PND), of which CFA6.5trn (€9.75bn) is expected to be financed by the private sector and CFA2.1trn (€3.15bn) will be provided by the state, with the remainder to come from donors, loans and bond issuances.
However, earning the confidence of the private sector is no small task for a country ranked that is 177th out of 185 in the World Bank’s “Doing Business” report, and 130th out of 176 in Transparency International’s ranking measuring the perception of corruption. While the country now enjoys relative peace and stability following the 2010-11 crisis, it is still feeling the effects of a decade of political upheaval and economic stagnation. Many multinational firms incurred losses during that period that they have not recovered.
PRIVATE GAINS: As Côte d’Ivoire looks to attract more private investment, one advantage the country has is a good pre-crisis track record regarding public-private partnerships (PPP). According to a 2010 World Bank report, “Côte d’Ivoire’s Infrastructure: A Continental Perspective”, there were PPP deals in the water, power, information and communications technology, and transport sectors between 1994 and 2000 that improved operational performance and funding for investments. While there has been a significant retreat of the private sector since, the report states that, “given the consistency and success of private sector participation in the past, Côte d’Ivoire should have the potential to reactivate private investment.”
Indeed, the country has demonstrated an ability to bounce back in the past. During a recent conference, the president of the Côte d’Ivoire General Confederation of Businesses, Jean Kacou Diagou, reminded his audience of the Ivoirian economy’s resilience, having grown by 2.5% two years after the crisis of 1999, 3.6% after the crisis of 2004 and 8.5% after the post-election crisis of 2010-11. Diagou also lauded the government for creating a centralised procedure through the Investment Promotion Agency of Côte d’Ivoire that cuts down on bureaucracy and business registration times. A commercial tribunal tasked with settling disputes among businesses has also been set up, and companies now pay a tax rate of 25% on profits instead of 35%.
BUILDING UP: In its push to become a regional hub, Côte d’Ivoire’s investment in its ports, specifically the Port of Abidjan, stands out among other initiatives being pursued. Prior to the 2002 unrest, a World Bank infrastructure report stated that Côte d’Ivoire was well on its way to becoming a commercial centre for the sub-region. Through Côte d’Ivoire, companies had access to landlocked countries such as Burkina Faso, Mali and Niger, effectively expanding the target market. As the 2002 crisis unfolded, international maritime companies started to favour Spanish and North African ports to serve the West African market.
In early 2013, the Port of Abidjan made national and international headlines after a consortium made up of France’s Bolloré Africa Logistics won a controversial bid to build a second terminal. Bolloré already runs the first terminal through a build-operate-transfer deal, so this would give the consortium a monopoly on port business in Abidjan. Goods traffic at the port jumped more than 87% in the first half of 2012, compared to the same period in 2011, which was marked by political unrest.
Côte d’Ivoire’s National PPP Unit announced that there is also an ongoing study for the construction of a dry port in Ferkessedougou in the north, which will serve as a trans-shipment station from the Port of Abidjan by rail. Meanwhile, the Port of Abidjan is expected to be reinforced by the planning of a free trade zone in nearby Île Boulay. There are also plans to modernise the port of San Pédro, which historically received most of the country’s coffee and cocoa output for export.
GOING FURTHER: The government is also turning its attention to Abidjan’s Félix Houphouët-Boigny International Airport, run by French firm Egis-Avia, as well as the country’s 20 other airports. Contracts to operate most of these facilities have yet to be awarded.
A series of railway projects are also under way, including a link between the port city of San Pédro and Mount Nimba, a region near the Guinean border rich in iron and nickel ores. Furthermore, a new passenger line is to connect Anyama and Port Bouet by train, for which Côte d’Ivoire has called for a proposal. Several other rail projects are also planned, including the rehabilitation and extension of the Abidjan-Ouaga-Kaya line.
In the transport sector, Côte d’Ivoire has called for the construction of an urban rail system. A new consortium was formed for the project, consisting of Canada’s Bombardier, South Korean firm Samsung, and French firms Bouygues, Alstom and Systra. There are also plans to build a series of modern bus terminals.
Côte d’Ivoire is also pursuing several road work projects, including the Northern Highway (Autoroute du Nord), which connects Abidjan, the country’s commercial capital, to Yamoussoukro, the administrative capital. The programme was begun in the 1970s, and the second phase of the highway, running from Singrobo to Yamoussoukro, is now nearing completion. Another new highway is being built from Abidjan to Lagos, with the Abidjan-Bassam segment currently in progress.
GEARING UP: Much still needs to be done to help support investment, particularly given that many firms are still well aware of the losses they suffered during the periods of political unrest over the past decade. Major efforts must be made to restore investor confidence and make investments as easy and secure as possible, including digital services to improve efficiency and independent bodies that can enhance transparency.
Indeed, competition is the best form of regulation, as it can help to reduce prices and expand access, provided that it is fair. Some initiatives to protect the fairness of the selection process include the establishment of the independent Market Tenders Authority, to which unsatisfied bidders may appeal if they believe they lost unfairly in a bid. An automated online system also tracks the public offer process and is hosted by the state-owned IT company.
Beyond building infrastructure, Côte d’Ivoire needs to address inefficiencies that cost the country about $477m annually. According to a 2010 World Bank report, “The main areas where the country could gain in efficiency is in improving its ability to recover costs, especially in the electricity sector.” Indeed, Côte d’Ivoire would benefit from improving its infrastructure portfolio, streamlining delivery and making the most of its existing infrastructure while continuing to build up.
Read More from OBG
