'Restoration' appears to be the leitmotiv of the administration under former deputy managing director of the International Monetary Fund (IMF), now president of Côte d'Ivoire, Alassane Ouattara.

The popular uprising in the west African nation, following the presidential election results disputed by former president Laurent Gbagbo in November 2010, was a clear sign that liberal democracy was the accepted form of the country's political system. All attempts to thwart the political landscape in favour of a result which was not reflective of the will of the people through the ballot box were met with stiff domestic and external resistance. But the social transformation which was taking place - with the mobilisation of spiritual leaders, individuals, loyalist forces and rebel groups - came at a high price, with the loss of over three thousand lives, the internal displacement of a million residents, the erosion of confidence in the security apparatus and the investment climate, and the concomitant downturn in the economy. Thus, approaching his sixth month of leadership, it is critical for Côte d'Ivoire and the West Africa sub-region that Ouattara and his administration make democratic legitimacy a reality, through the restoration of security, institutions, confidence and the economy, though challenges do remain.

The interplay between politics and economics was visible in Côte d'Ivoire in the months following the election result announcement in November 2010. The fight for political control between Gbagbo loyalists and Ouattara supporters plunged the country into crisis mode. Cocoa, the country's main export which makes up forty percent of world supply, was embargoed by the Ouattara government, stifling government revenue and pushing cocoa futures to an all-time high in February 2011. At the same time, the European Union placed an embargo on the Port of Abidjan and the Port of San Pedro, and imposed sanctions on various public companies and Gbagbo loyalists who were seen to be obstructing peace. Nearly all the commercial banks were closed for business - apart from the state-owned banks - for at least two months because the situation was simply far too insecure, impacting negatively on households and businesses. Thousands of small and medium-sized enterprises could not survive and folded up under the hostile condition. Commercial property and factories were pillaged and Abidjan suffered heavy attack. The insecurity of the situation led to the displacement of over one million people, and the burden of chaos was also shared with some of Côte d'Ivoire's neighbours which hosted some 100,000 refugees. The government estimates that the losses incurred to the private sector as a result of the crisis amount to twenty percent of GDP.

Ouattara has taken over as president with a titanic task ahead of him, but so far, the man credited with strong economic management credentials has hit the ground running. Known to be punctual, he demands the very same from his ministers. Some insiders have reportedly described the shake up as no less than shock therapy. Indeed, all ministers will be subject to a grading system every three months. Time is of the essence and the central objective of the new dispensation is to normalise the socio-political environment and to kick-start the economy. According to the official forecasts by the ministry headed by the internationally lauded finance minister, Charles Koffi Diby, it is anticipated that the economy will contract by 5.6 percent in 2011. This is the cumulative effect of the international sanctions imposed earlier on in the year, the economic crisis and meagre oil and gas production levels.

The 2011 budget is premised on the notion of economic recovery, covering the period from April 26 2011 - marking the date when the Banque Centrale des Etats d'Afrique de l'Ouest (BCEAO) re-opened its bureau in Abidjan - to the end of the year. Government spending is higher than last year, reflecting the impacts of the socio-economic crisis, the necessary improvements to security and crucial support of the private sector. The overall budget deficit is estimated at 8.5 percent of GDP, so the need to raise capital is clear. Oil minister Adama Toungara is optimistic that greater stability in the country will encourage the drilling of seven new wells by the end of this year, which should provide a boost to government revenue, in contrast to suspended activities in recent years. The aim is to hit 300,000 barrels a day by 2020, up from the current production levels of 40,000.

But whether the government will manage to narrow the gap between revenue and expenditure, much through bilateral official and private external financing, is somewhat dubious, given the current crisis in the Eurozone and the priorities of traditional donor nations elsewhere. However, the implementation of an economic framework to transition the Ivorian economy from recovery to sustained growth as agreed with the IMF in August/September this year could see IMF support amounting to 640 million dollars under the Extended Credit Facility. The IMF's Executive Board will examine the Ivorian government's request for ECF support in November.

Prior to the most recent Ivorian crisis, for the majority of businesses questioned through the World Bank's Entreprise Survey, the most consistent preoccupation was political instability. The 2009 survey was taken from a representative sample of small, medium and large-sized businesses across various sectors. For the medium to large sized firms, political stability was the chief concern, while among smaller companies access to finance was most worrying, followed closely by political instability. Now, as Côte d'Ivoire seeks to restore confidence, stabilising the legislature through the first set of parliamentary elections since 2000 is a priority. The mandates of parliamentarians expired in 2005 but since then, salaries have still been drawn even though parliament has not been sitting. Ouattara appears intent on pushing ahead with the polls, which will likely lead to the drafting of a new constitution. The elections are likely to bring about new dynamics, and questions are being posed as to whether the ruling Rassemblement des Houphouetistes pour la Democratie et la Paix (RHDP) coalition comprising the Rassemblement des Republicaines (RDR), the Parti Democratique de la Côte d'Ivoire (PDCI), the Union pour la Democratie et la Paix (UDPCI), and the Mouvement des Forces d'Avenir (MFA) will last. Though Ouattara's RDR holds the lion's share of portfolios within the government led by Prime Minister Guillaume Soro, all the other parties within the coalition also hold positions, with Henri Konan Bedie's PDCI holding eight, the UDPCI with two and the MFA with one post. If the smaller parties in the coalition consider that they have gained little from being associated with the president's camp, we could see splits emerging. Already, the party of former president Gbagbo, the Front Populaire Ivoirien (FPI), appears to be on the verge of disintegrating after the senior figure Mamadou Coulibaly and parliamentary speaker left to form new party Liberte et Democratie pour la Republique (LIDER), taking some FPI moderates and youth members with him.

But liberal democracy is more than the holding of elections; a secure environment where institutions can be left to carry out their tasks of regulating and carrying out checks and balances is primordial. The issue of military integration under a single command is a very real threat to cohesion and stability. Informal systems and structures which were in place during the crisis have not been fully dissolved, with ex-rebel warlords ('Com Zone Commanders') still reportedly extorting money from within Abidjan and transferring it to the north to maintain an unofficial guerrilla movement there. The west of the country is the most insecure region, with Ouattara forces now holding sway where Gbagbo loyalists once did, leaving the area exposed to the threat of revenge attacks from Gbgabo loyalists and mercenaries from across the border in Liberia. Securing the entire 716km border between the two countries must be a priority, while the southern town of Toe Town is a particular flash point.

Tackling unemployment is crucial in the fight to keep Côte d'Ivoire secure and to prevent the youth from backsliding into militia movements. The government has put aside 22 million dollars to address the root causes of unemployment, notably through a civil service programme and the national rehabilitation and a community reinsertion programme. The government strategy is also aimed at attracting private sector growth, but the country's low ranking in the World Bank's 2011 'Doing Business' report shows that critical improvements are required in order to boost the business environment. The government has enunciated a plan to temporarily cut tax rates for businesses, to help the smaller firms in particular weather the storm of this challenging operating environment.

The contraction of the Ivorian economy in 2011 has been a rude awakening for a country clamouring to reposition itself as an economic power of West Africa. But the social fabric - which rapidly unravelled when perceived injustice was accompanied by calamitous scenes of violence and disorder - is tentatively taking shape once again. The gentle pulse of a country eager to move on from its past and embrace change is made manifest in the competent technocrats who stand out in government, the growing investor interest, the re-engagement of commercial activities and the gradual return of refugees to their homeland. But the sine qua non of peace and stability is security, and this remains the biggest challenge yet to the Ouattara administration. The organisation of elections by the end of this year is arguably a testament to the government's aim of bringing legitimacy to the legislature, but also presents a threat for political stability in a fledgling democracy, particularly as the government is constantly challenged by indiscipline and mixed allegiances within the security apparatus.

(Kissy Agyeman-Togobo is Partner and Co-Founder of Songhai Advisory LLP, a bespoke business intelligence consultancy focusing on Sub Saharan Africa.)

 

 

 

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