ABIDJAN, August 31, 2010—A decade of political deadlock once stalled Cote d’Ivoire’s business climate, sending 35 percent of the country’s private enterprises out of business. Today, this African nation is emerging from crisis and making revitalization of its private sector a key goal, fueling high hopes in the business community.
Business leaders are eager to see Ivorian firms regain their envied position within the West African Economic and Monetary Union (WAEMU), where Cote d’Ivoire once accounted for 40 percent of total economic activity.
Estimates indicate that the Ivorian private sector is dominated by small and medium-sized enterprises (SMEs), micro-enterprises and a vast informal sector. Although it is difficult to establish precise figures, SMEs contribute about 18 percent to Côte d'Ivoire’s gross domestic product. They employ up to 23 percent of the country’s formal workforce.
The climate of uncertainty created by the protracted crisis has severely impacted the private sector. Racketeering, for instance, causes annual shortfalls for the national treasury of about US$220 million, according to a recent World Bank study. Furthermore, Cote d’Ivoire occupies an unenviable position in the Doing Business index, which ranks countries around the world on the ease of conducting business. (Cote d’Ivoire ranked 168th out of 183 countries listed in the 2010 survey).
The Engine of Job Creation
The idea of providing substantial support to the Ivorian private sector took shape in 2008, following the World Bank’s reengagement in Cote d’Ivoire. In October 2009, the Bank’s Board of Executive Directors approved a US$15 million (7.5 billion CFA francs) grant to help bolster the Ivorian private sector. The funds are drawn from the International Development Association, the branch of the World Bank Group that provides assistance to low income countries.
A few weeks later, at a Doing Business forum held in Abidjan, a retrocession accord was signed, transferring management of the project to a private sector entity. The Association for the Promotion of Exports of Cote d’Ivoire (APEX-CI) was chosen to pilot the project over a period of four years. This is how the Enterprise Revitalization and Governance Project (PARE/PME, following its French acronym) was launched on July 21, 2010 in the presence of World Bank officials, representatives of the Ivorian Government, the private sector, and local government officials.
The objective of the PARE/PME is to enhance the performance of SMEs as well as improve the business environment. The project has three components: providing financial and nonfinancial services to strengthen the capacity of existing small businesses, improving the business environment, and ensuring proper institutional support to achieve those objectives. The project will reinvigorate at least 1,000 SMEs and create or maintain at least 10,000 jobs over the next four years, according to Guy Mbengue, head of APEX-CI. “Cote d’Ivoire has potential that allows it not only to get back on track but also to stay on track,” says World Bank Country Director Madani M. Tall. This is why, he adds, strengthening the private sector is one of the four pillars of the World Bank’s partnership strategy with the country.
Equally optimistic about Cote d’Ivoire’s future is Industry and SMEs Minister Dossou Moussa who says that proper investments are needed in agricultural processing. He says although Cote d’Ivoire is the world’s top cocoa producer (about 1.5 million tons per year), only one percent of total output is transformed locally. The same goes for coffee and cashew nuts, the country’s other main agricultural exports, of which less than 10 percent is processed locally. To help address the gap, the Bank has issued two studies, specific to Cote d’Ivoire, on timber processing and local transformation of agricultural products.
Challenges to the potential success of the project—and perhaps to the country’s long-term prospects as well— still remain, including the possibility of extended political gridlock.
According to Jean Kacou Diagou, chairman of the General Confederation of Enterprises of Côte d’Ivoire (CGECI), the business community has done its part to put the country back on solid footing. Without small and medium enterprises, he says, the effects of the prolonged political crisis would have been disastrous. Now it is up to politicians to surpass their differences and help drive the country forward. “Politicians need to ‘get real’,” Diagou said.
Sr Private Sector Development Spec.