Côte d'Ivoire's return to peace heralds new investments

3 July 2014

Bloomberg

Construction foreman Hilaire Adou doubled his staff to meet a September deadline to build 45 houses in Abidjan, Côte d'Ivoire 's commercial capital, for employees of the African Development Bank.
"The pressure comes from all over to finish the works," he says, while checking whether the walls of a four-room house are straight. "The people from the African Develop ment Bank (AfDB) arrive soon and we have to fulfil our commitment."

The world's largest cocoa producer is shaking off more than a decade of political instability and violence, paving the way for Carrefour to open its first store in the city of about 6-million people and the Tunis-based lender to return to its original headquarters after an 11-year absence.

President Alassane Ouattara has lined up $19bn in pledges for infrastructure projects and he says that the economy will expand at an annual rate of more than 10% this year and next, almost double the average in sub-Saharan Africa.

Carrefour, France's largest retailer, will open a supermarket next year and Air France-KLM will begin flying the world's largest commercial plane, Airbus Group's A380, to Abidjan in October. Casino Guichard-Perrachon will partner with Bollore to run the e-commerce site Cdiscount in the country.

The AfDB has started moving more than 1,400 employees and their families from Tunis, Tunisia, where it relocated in 2003 from Abidjan after the start of a civil war.

The bank was founded in 1964 to fund development projects and fight poverty. It has about $60bn in pledged capital to fund projects from sanitation to health to education in sub-Saharan and North Africa. The AfDB has spent €133m since last year to facilitate the return to Abidjan, the bank said.

Mr Ouattara, a former deputy MD of the International Monetary Fund, has convinced investors that he has control of the entire country, Rand Merchant Bank country risk analyst Ronak Gopaldas said in Johannesburg.

Those firms will be watching next year's presidential election to make sure there is not a repeat of 20 10 post-voting violence that left at least 3,000 dead and led to bond default, he said.

Mr Ouattara says he will seek re-election. The United Nations has been reducing its staff, including peacekeepers, from a high of about 12,000 as the situation in the country improves.

"This was the locomotive of West Africa in the 80s," Mr Gopaldas says. "If there is a successful election and we don't see systematic violence then the country is set to take off.

"For the AfDB to return, it shows you they believe in the direction of the country."

In 2003, the AfDB moved its workers to Tunisia after a failed coup split Côte d'Ivoire into a government-held south and rebel-controlled north. Former president Laurent Gbagbo's refusal to recognise his defeat in a 2010 presidential vote, sparked five months of turmoil.

He was arrested in April 2011 and sent to the International Criminal Court where he is awaiting trial on charges of crimes against humanity. Mr Ouattara was sworn in into office in May 2011.

The inflow of 100 staff members a month looking for housing has fuelled price increases for housing and the pressure has eased as more units have become available, the AfDB says.

The AfDB's arrival "is a symbol of the revival of the Ivorian economy after a decade of recession," the bank says.

There is concern that the investments in real estate and infrastructure are not benefiting the poorest residents of Abidjan and that some contracts were not awarded in a competitive bidding process, London-based Control Risks Group Africa analyst Christoph Wille says.

"The return of the AfDB is reflective of the bro ader economic recovery Côte d'Ivoire has seen since the crisis years.

"There is also a perception that some of the investments seen in Abidjan in the past two years have been made in obscure and potentially corrupt ways."

Côte d'Ivoire has worked to improve transparency by reducing the average time in awarding contracts to 88 days from 322, Bruno Kone, spokesman for the government, said on Monday.

"The criticism has often been made," he said. "By locking everyone in a precise time line, we improve the transparency."

The economy contracted 4.7% in 2011 and the government defaulted on more than $2bn of Eurobonds after the electoral crisis. The country plans to sell as much as $500m in Eurobonds before the end of this month.

The yield on the dollar bond due in December 2032 has dropped 124 basis points, or 1.24 percentage points, to 6.25%.

Investors have responded to Mr Ouattara's steps to improve security and the AfDB's return will convince other major companies to relocate, Souleymane Ouattara, an Abidjan-based economist says.

"A dynamic is unfolding and the return of the AfDB is contributing a lot to this. The country is reunified and the security situation has improved."

The government spent 33-billion West African CFA francs ($6.8m) to renovate a building in the business district of Plateau that the bank will use as offices and about 9-billion francs to restore the Jean Mermoz International High School, which was shut in 2004 during anti-French riots.

The American high school, which housed United Nations peacekeepers in 2011, has also reopened.

"Ivory Coast is making great sacrifices for the return of the AfDB ," Lancine Diaby, general-director of planning for the government said in an interview in Abidjan. "The return of the African Development Bank to Abidjan means the crisis is totally behind us. This is the return of Ivory Coast on the international stage."

Original article by Olivier Monnier

Category: General