For countries emerging from conflict, regaining market trust is a long and arduous process. Weary investors need to be constantly reassured, multilateral institutions patiently wooed, and projects subjected to endless cost analysis.
Yet in Côte d’Ivoire, a country that continues to recover from its bitter 2011 civil war following the refusal of then incumbent President Laurent Gbagbo to accept disputed election results, the government remains undeterred. Last month, President Alassane Ouattara (who was declared the winner of the poll) urged private donors to stump up around $7.6bn towards his country’s ambitious five-year, $51bn development plan. Far from being repelled, investors are ready to grant him a hearing.
“The country has the credibility to make it happen because they have taken a lot of measures to improve the macroeconomic environment … we see the legal and fiscal environment as much more attractive than five years ago”, says Laureen Kouassi-Olsson, investment director in the Ivorian office of French private equity firm Amethis.
While dominant West African economies such as Nigeria and Ghana suffer minimal growth, compounded by a commodities slump and the fallout from erratic policy choices, previously unfancied Côte d’Ivoire is quietly emerging as an investor darling. Last year’s elections were peaceful and the IMF projects that the economy will grow by 8.5% in 2016, boosted by a stable currency pegged to the euro and an ambitious public works programme designed to replace the country’s conflict-ravaged infrastructure.
New roads, ports and bridges are taking shape across the country and these are visible signs of a peace dividend that could keep a lid on the political tensions that stoked all-out war between supporters of Ouattara and Gbagbo.
Yet if the country’s impressive growth momentum is to be maintained, analysts acknowledge that the government needs to widen its sources of funding and avoid the fiscal free-for-all that has characterised Ghana’s fall from favour in recent years.
“Now that there’s stability, there’s gradually a pick-up in FDI, but most of this is borrowing from China, bond issuance and also bilateral loans,” says Gaimin Nonyane, senior macroeconomist at Ecobank. “They can afford it because debt levels are moderate. The only problem is that they really need to invest these flows in a productive way in order to pay debt in the medium to long term”.
Key to widening that investor base will be overturning a reputation for entrepreneurial obstruction. The country’s ranking in the World Bank’s 2016 Doing Business index remains stubbornly low at 142 out of 189 economies, an improvement of just two places from last year. Kouassi-Olsson praises the avowedly pro-market government, led by former IMF official Ouattara, for slashing the time it takes to open a business. But whether it is a lack of protection for minority investors, the bureaucratic nightmare of arranging construction permits or dealing with the country’s Byzantine tax system, Côte d’Ivoire continues to offer one of the most challenging business environments in Africa.
In some industries, this inability to attract new investment and nurture competition has led to a steadily worsening status quo. At the beginning of May, Ouattara, prompted by public fury over escalating electricity tariffs, announced that the government will urgently seek to open up the power and water sectors, both dominated by private monopolies.
The bid to increase competition in key utilities echoes a wider privatisation drive, first mooted in 2013, involving the sale of stakes in 15 state entities. The government confirmed in April that it will sell stakes in banks, industrial and agricultural producers, and a 74% stake in Côte d’Ivoire Engineering, according to Reuters.
“I think it could be done quickly. Major banks are in the process of privatisation and will come to the market,” says Edoh Kossi Amenounve, chief executive of the Bourse Régionale des Valeurs Mobilières (BRVM), the regional stock exchange that serves Côte d’Ivoire and seven other West African nations.
“In terms of the big companies like Côte d’Ivoire Telecom, that can take up to three years. But two or three companies this year or next year is the reality.”
Others are less certain that Abidjan’s calcified industries, hostage to vested interests, can be ushered into private hands at short notice.
“There’s a concern that if you privatise utilities, it will lead to tariff increases and protests in the street. Government is hesitant and lacks capacity to see the whole process through. It will happen, but there’s likely to be a lot of delays,” says Ecobank’s Nonyane.
It is not only privatisation which exposes Ouattara’s government to the ebb and flow of political popularity. Even though Ouattara won 2015’s polls with a crushing 84% of the vote, a low voter turnout of only around 55%, compared to 80% in 2010, suggests that significant sections of the population have withheld their support.
“The political stability is the main weakness of the country,” says Kouassi-Olsson.
“The current president is doing perfectly well from an economic standpoint, but from a political standpoint the legacy remains to be won.”
Reaching out to vanquished political foes – particularly Gbago’s former supporters – will be essential if the government is to achieve national unity and inclusive growth. Any outreach could be complicated by pending criminal cases against leading figures in the previous government.
In late May, the wife of former president Gbagbo was due to go on trial in Abidjan for crimes against humanity, while her husband is on trial at the International Criminal Court on similar charges.
Increased investment could be the solution, but if the government is to appeal to voters beyond its heartlands, long-term infrastructure projects may not be enough, suggests Nonyane.
“Government spending is concentrated on infrastructure. For the next two years that will remain the priority, but there is a risk of social unrest if the poor feel left out.”
Furthermore, Ouattara will be 78 at the end of his current term, and a succession plan within his government has yet to be worked out. Nevertheless, investors remain confident that progress on that front will lead to a continuation of the economy’s upward trajectory.
“If there is a stable and clear succession plan, the country will be in for major economic growth,” says Kouassi-Olsson.