Main political risks in Ivory Coast
After a year in office, Ivory Coast President Alassane Ouattara is betting a rapid revival of the West African nation’s economy will help heal lingering divisions following a decade of political deadlock and armed conflict.
The results so far have been impressive, with faster-than-expected recovery following the months of fighting that erupted in the wake of former president Laurent Gbagbo’s refusal to accept Ouattara’s 2010 poll victory.
Key economic reforms are under way. Donors, confident in his stewardship after the stagnation of the Gbagbo years, are throwing their weight behind Ouattara, and investor confidence is rising.
Progress on a host of key issues, from justice and political reconciliation to security sector reform, has lagged, however, and still threatens to undermine political stability in the years to come.
Here are the main factors to watch:
Ouattara’s RDR party consolidated power with a landslide victory in December parliamentary polls, taking 127 of the National Assembly’s 255 seats. He has so far satisfied the expectations of both his political allies and the northern rebels whose military support allowed him to take office.
Former rebel leader Guillaume Soro was in March elected speaker of parliament, becoming the second in line to the presidency. Ouattara appointed Jeannot Ahoussou-Kouadio, a veteran politician from the PDCI, to the post of prime minister, honouring an agreement that saw the party’s first-round presidential candidate, Henri Konan Bedie, throw his support behind Ouattara before the 2010 run-off.
What to watch:
- Political reconciliation. Gbagbo’s FPI have shunned several overtures from Ouattara’s administration to rejoin the political mainstream, including an offer last year of posts in the new government, underscoring how far Ivory Coast remains from an inclusive political system.
- FPI leaders walked out on an attempt to launch talks between the government and opposition in April, sticking to a position that the release of Gbagbo from the International Criminal Court and of other party leaders currently in custody must be a precondition for dialogue.
- With the new parliament now in session, lawmakers must tackle some delicate issues at the heart of the Ivorian crisis, including revising controversial laws on nationality and land ownership.
- The FPI’s decision over whether or not it should take part in regional and municipal elections set for November will be a measure of progress towards reconciliation.
- Ouattara’s ability to deliver on promises of even-handed justice for crimes committed during last year’s fighting. So far, only members of Gbagbo’s camp have been arrested.
Efforts to restore the rule of law are starting to take effect but security remains a concern. A new military police force has had some success in reducing the level of harassment of civilians by soldiers, including cutting roadblocks.
Ouattara has yet to convince all Ivorians he can restore law and order and is unlikely to do so until the rebels have been properly integrated into Ivorian society. A gradual process of recruiting them into the regular army has begun.
What to watch:
- Military reforms. Diplomats are pressing Ouattara to disarm former rebels and slim down the array of security agencies. Success will hinge on his ability to break up fiefdoms and bring former foes into disciplined units.
- Security in the far west. Gunmen still operate in a region which provides a fifth of cocoa output and is rife with inter-ethnic conflict and awash with guns.
- Pro-Gbagbo elements, including youth militia leader Charles Ble Goude, remain in hiding in neighbouring Ghana, though they are not an imminent threat. The greater risk remains the porous western border. Armed pro-Gbagbo fighters were among tens of thousands of refugees who fled into Liberia during last year’s violence. They are suspected of carrying out three deadly cross-border attacks since September.
- United Nations voted in April to maintain an embargo on weapons imports despite government arguments that new arms stock were needed to help it react to potential security threats.
ECONOMY AND INVESTMENTS
Strangled by the crisis and foreign sanctions, the economy contracted by 4.7 percent in 2011. The IMF estimates 2012 output at 8-9 percent. Further growth will depend on the successful implementation of key reforms.
Ivory Coast received the equivalent of 5 percent of GDP in aid in 2011 and spending is geared to “big project” reconstruction. A third bridge over Abidjan’s lagoon will be built by France’s Bouygues, at a cost of 227 million euros, to ease congestion.
The government has plans to invest $500 million in power generation by 2015 and is making efforts to woo mining companies, mostly gold producers.
Ivory Coast produced a record 1.5 million tonnes of cocoa in 2010/2011. This season started well but weekly volumes have started to drop due to unfavourable weather and the 2011/12 total is seen falling short of 2010/2011 on what is expected to be a weak April-to-September mid-crop harvest.
The government has announced its intention to return to a price-regulated system to guarantee minimum prices to farmers – a key condition for its hopes of winning IMF-backed debt relief. It launched forward-sales as part of that reform on Jan. 31 but the process has been dogged by exporter concerns and boycotts.
Foreign investors remain cautious and many will want to wait to see if stability can stick.
What to watch:
- Cocoa. The planned re-regulation is a fundamental overhaul of the sector which could help define its fate, and help it avoid what some predict will be a slow decline. While buyers are now participating in daily auctions, major questions concerning pricing scales and quality assurance remain.
- Debt relief. Some 42 percent of Ivory Coast’s budget spending goes on servicing its debt. Ivory Coast is aiming to secure an IMF-backed accord on debt relief, and, despite some initial delays linked to slow progress with cocoa reform, the Fund has said it is now on track for a decision by the end of June.
- Eurobond. With a deal on debt relief secured, Ivory Coast is expected to resume repayment of its $2.3 billion bond which has been in default since late January 2011. Diby says Ivory Coast will resume paying coupons this year but investors are still waiting for clarity on arrears.
- Tax collection. Former rebels are still collecting taxes in parts of the north they have run since the 2002-03 war. Loosening their control of diamond mines and key routes used for smuggling other goods throughout the region will be crucial.
- Mining. The mines minister has said gold production capacity will almost double to 13 tonnes a year by 2013 from current annual output of 7 tonnes, and pledged to make it much easier to obtain exploration permits. The government is required to draw up a new mining code as a precondition for debt relief.
- Oil. Five to seven exploratory drillings are currently planned, after a decade of stagnation. The country currently pumps 40,000 bpd, but is thought to have vast untapped reserves offshore. A revised petroleum code could attract new companies to the under-exploited sector and possibly weed out a number of inexperienced operators who used political connections to acquire stakes during the Gbagbo years.
- Bourse. West Africa’s franc-zone BRVM bourse has returned to Abidjan after being forced to close during the crisis. The exchange lists stocks with a market capital.Reuters