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Côte d'Ivoire Infrastructure Report Q4 2009Published by: Business Monitor International Published: Sep. 2, 2009 - 54 Pages Table of Contents
AbstractCôte d'Ivoire has the potential to deliver significant economic growth in coming years. The steps towardpeace and elections, and international financial support for those efforts, now under way give Coted’Ivoire the best chance in almost a decade to resume its pre-conflict path. But nobody shouldunderestimate the obstacles.BMI is sticking to its forecast of real GDP growth of 2.1% this year, a marginal increase from the 1.9%expansion in 2008. The pace of growth will accelerate in 2010 and continue to do so through 2013. Weare more cautious about 2009 than the International Monetary Fund, forecasting 3.7% growth, in partbecause of the lacklustre performance of the cocoa industry and the ongoing - although diminishing -concern about the political situation. Cote d’Ivoire is the world’s largest producer of cocoa and reliesheavily on its export earnings. The June dock workers strike in Abidjan didn’t help, reducing exports andcustomers revenues. Nov. 29, when elections are expected, is the date to watch. President Laurent Gbagbo has been governingwithout a mandate since 2005. The latest quarter has brought talk of another election delay amiddifficulties registering voters. International organizations have warned Cote d’Ivoire that such a delaycould undermine the goodwill the country has built up during the peace process. If the country canmanage to hold the elections as scheduled, and if the aftermath of those elections includes stability andpolicy continuity, investors are likely to look more favourably on this one-time French colony. If things go well over the next year, there will be practically no external debt and that will release lots ofresources for other things like schools, health and general infrastructure, IMF Managing DirectorDominique Strauss-Kahn said in May The Paris Club of creditor governments agreed in May to immediately cancel US$845 mn of debt, DowJones reported. The agreement is the latest step in a procedure to get the country out from under itsunmanageable debt burden. The IMF had already agreed in April to write off US$3bn of debt and pledgedUS$565.7mn under its Poverty Reduction and Growth Facility. The country had owed the IMFUS$12.8bn before the agreement. The World Bank has begun talks on a country assistance programme aimed at providing a track fordevelopment assistance from 2010 to 2013. The infrastructure component of the programme will dealwith repaving roads, expanding the electricity grid and improving water supply. Country Assistance is thefirst step to accessing financing from the International Development Association and the InternationalBank for Reconstruction and Development. The World Bank is expected to discuss the cancellation of its portion of the country’s debt as well.BMI’s forecast for the value of the construction industry reflects the optimism about the country’s future.We have revised up our forecasts for construction spending growth, and now expect real growth of26.77% y-o-y in 2009. This will push construction’s share of GDP up a half percentage point, to 3.56%this year. Industry value growth in the sector will slow however in 2010. Several relatively small industrial infrastructure projects announced in the latest quarter demonstrate theconfidence about the future. Switzerland’s Nestle is investing in cocoa and coffee processing and SIFCA,with financial backing from outside the country, is putting more than US$80mn in palm oil processing. Like many African countries, Côte d'Ivoire needs many infrastructure improvements. Goldman Sachseconomist Dambisa Moyo estimates that Africa’s 12 key economies will need US$1trn in infrastructureinvestment over the next four decades. BMI puts Côte d'Ivoire at the bottom of its Africa rankings for business environment. The constructionsector has very low capital investment and modest government investment, although both areexperiencing a big improvement in 2009. The labour market makes it tough to find workers, the bankingsector makes it tough to find finance, and the shortage of electricity makes it difficult to run newbuildings efficiently. The government should improve the transparency of its tendering process and could do more to increasethe number of companies operating in the country. Corruption is also a problem. BMI forecasts exports will slump by more than US$2bn, to US$7.75bn this year. Imports are alsoexpected to fall. For a country that relies on customs duties for a significant share of its budget, such aslowdown in trade could be painful. One big project could go a long way to proving the country’s ability to get infrastructure projects movingsmoothly. In March, the government was in talks with Venezuela’s Arevenco about a US$7bn refinery,with plans to complete in five years. But there has been no subsequent report of progress, raising doubtsabout the five-year ambition and even the project itself. Major indigenous and foreign companies with a presence in Côte d’Ivoire’s infrastructure sector includeBouygues, China Geo-Engineering Corporation, Saipem, Solel Boneh International Ltd., Technipand Vinci. Get Full Details About This Report >> |
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