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Ivory Coast - ECONOMY




Ivory Coast - The Economy

Ivory Coast

SINCE ACHIEVING INDEPENDENCE from France in 1960, Côte d'Ivoire's primary economic objective has been growth. During the 1960s, growth was accomplished by expanding and diversifying agricultural production, improving infrastructure, and developing import substitution industries. Implicit in this strategy was the emergence of an expanding domestic market to support budding consumer goods industries. Income redistribution and Ivoirianization (replacement of expatriates with Ivoirian workers) were made subordinate to growth. Although these goals were politically desirable, redistribution and Ivoirianization would be impossible without growth, according to policymakers. Using revenues generated from agricultural exports, the government financed improvements to infrastructure--roads, ports, railroads, power generation, and schools. To finance increased agricultural production and industrial development, the government turned to foreign investment and imported technology. Much of the manual labor was supplied by non-Ivoirian Africans.

Paramount in this planning was the maintenance of economic links to France that were almost as extensive as the preindependence ties. Before independence, French public and private capital helped to support the government, ensured the internal and external convertibility of the currency, financed most major commercial enterprises, and supported the country's banking and credit structure. French enterprises in Côte d'Ivoire were a major employer of Ivoirian labor, and France purchased--often at rates higher than market value--most of the country's exports. In addition, French managers held most of the key positions in business, and French advisers occupied important posts in many government ministries.

Côte d'Ivoire's ties to France grew even stronger after independence. Between 1960 and 1980, the total French population in Côte d'Ivoire nearly doubled, from about 30,000 to close to 60,000, forming the largest French expatriate community. In the mid-1980s, four out of five resident French had lived in Côte d'Ivoire for more than five years. French citizens filled technical and advisory positions in the government (albeit in diminishing numbers) and were also evident throughout the private sector. Until 1985 Côte d'Ivoire also had the highest number of French-controlled multinational businesses in all of Africa, had the largest percentage of French imports to and exports from Africa, and, along with Senegal, received the largest French aid package in Africa.

Economic development in Côte d'Ivoire has passed through three phases. During the first phase, from 1965 to 1975, the economy grew at a remarkable pace as coffee, cocoa, and timber exports increased. Surpluses from exports speeded growth in the secondary (industrial) and tertiary (services, administration, and defense) sectors. Gross domestic product (GDP) grew at an average annual rate of 7.9 percent in real terms, well ahead of the average annual population growth rate of approximately 4 percent.

During the second phase, from 1976 to 1980, external changes in the world economic system reverberated within Côte d'Ivoire. Coffee and cocoa prices peaked in the 1976-77 period as a result of poor harvests in Latin America, but two years later prices declined rapidly. GDP continued to grow at an average rate of 7.6 percent per year; within the period, however, the growth rate varied from 2 percent in 1979 to 11.5 percent one year later. The government, which had responded to the boom phase by vigorously expanding public investment, was by 1979 forced to rely on foreign borrowing to sustain growth. At the same time, the declining value of the United States dollar, the currency in which Côte d'Ivoire's loans were denominated, and rising prices for imported oil adversely affected the country's current accounts balance. By the end of the second phase, Côte d'Ivoire was at the brink of a financial crisis.

During the third phase, from 1981 to 1987, the economy deteriorated as terms of trade declined, interest rates increased, the prospects of new offshore oil development evaporated, and agricultural earnings dropped. Following a record 1985-86 cocoa harvest, the economy rebounded briefly; however, falling cocoa prices quickly eroded any gains the country had hoped to achieve, and by 1987 President Félix Houphouët-Boigny had halted further payments on foreign debt. Subsequently, Côte d'Ivoire was forced to adopt a structural adjustment program mandated by the International Monetary Fund (IMF) that limited imports, subsidized exports, and reduced government spending.

Ivory Coast

Ivory Coast - GROWTH AND STRUCTURE OF THE ECONOMY

Ivory Coast

By the end of the first decade of independence, the government's strategy for economic growth and development appeared remarkably successful. Agricultural output of cash crops expanded, and, as evidence of diversification, the relative importance of unprocessed coffee, cocoa, and timber diminished as that of bananas, cotton, rubber, palm oil, and sugar grew. Using revenues from commodity sales, the government upgraded roads, improved communications, and raised the educational level of the work force. Local factories were replacing some imports by producing a wide variety of light consumer goods.

During the 1970s, the government's economic objective of growth remained unchanged. Agriculture--coffee and cocoa in particular-- remained the mainstay of the export economy and the largest component of GDP until it was overtaken by the service sector in 1978. But while agriculture provided about 75 percent of export earnings in 1965, that total had shrunk by 20 percent by 1975. Between 1965 and 1975, agriculture's share of GDP also declined by almost 20 percent. Industrial GDP, derived primarily from import substitution manufacturing and agricultural processing, increased by 275 percent from 1970 to 1975, while industry's share of export earnings increased from 20 percent in 1965 to 35 percent in 1975. The fastest-growing sector of the economy was services, which as a share of GDP increased by more than 325 percent from 1965 to 1975.

At the same time, problems that arose during the previous decade required adjustments. To reduce production costs of manufactured goods, the government encouraged local production of intermediate inputs, such as chemicals and textiles. The government also shifted some public investment from infrastructure to crop diversification and agricultural processing industries to improve export earnings. Meanwhile, work on such major projects as the Buyo hydroelectric generating station continued. Foreign donors, attracted by Côte d'Ivoire's stable political climate and profitable investment opportunities, provided capital for these endeavors. Until 1979, when coffee and cocoa prices plummeted and the cost of petroleum products rose sharply a second time, virtually every economic indicator was favorable.

Over the same twenty years, however, structural contradictions in Côte d'Ivoire's economic strategy became apparent and presaged the serious problems that became manifest in the 1980s. First, the emergence of a domestic market large enough to allow manufacturers of import substitutes to benefit from economies of scale required a wage for agricultural workers--the largest segment of the labor force--that was high enough to support mass consumption. But because the government relied on agricultural exports to finance improvements to infrastructure, commodity prices and wages could not be allowed to rise too high. Second, the government's focus on import substitution increased demand for intermediate inputs, the cost of which often exceeded that of the previously imported consumer goods. Moreover, Côte d'Ivoire's liberal investment code encouraged capital-intensive rather than labor-intensive industrial development. Consequently, industrial growth contributed little to the growth of an industrial labor force or a domestic market, and prices for consumer goods remained high, reflecting the high costs of production and protection. The investment code also permitted vast funds to leave Côte d'Ivoire in the form of tax-free profits, salary remittances, and repatriated capital. Decapitalization, or the outflow of capital, led to balance of payments problems and the need to export more commodities and limit agricultural wages. (As a result, the domestic market remained small, and consumer goods remained expensive.) By the start of the 1980s, as surpluses from commodity sales dwindled, the government continued to depend on foreign borrowing to stimulate the economy. Inexorably, the external debt and the burden of debt service grew.

In the 1980s, a combination of drought, low commodity prices, and rapidly rising debt costs exacerbated the structural weakness of the Ivoirian economy. Between 1977 and 1981, both cocoa and coffee prices fell on world markets, the current accounts balance dropped precipitously, and debt servicing costs rose, compelling the government to implement stabilization policies imposed by the IMF. The economy sagged even more when a drought during the 1983-84 growing season cut agricultural and hydroelectric output at the same time that rising interest rates on international markets increased the debt burden. No sector of the economy was untouched. Between 1981 and 1984, GDP from industry dropped by 33 percent, GDP from services dropped by 9 percent, and GDP from agriculture dropped by 12.2 percent.

Between 1984 and 1986, a surge in commodity prices and output, coupled with increased support from Western financial institutions, provided a momentary economic boost. The record 1985 cocoa crop of 580,000 tons, combined with improved prices for coffee and cotton, bolstered export earnings and confidence in the economy. Following both the 1984-85 and the 1985-86 growing seasons, the government again increased producer prices for cocoa and coffee, resumed hiring civil servants, and raised some salaries, all of which led to a rise in consumption. Food production also increased during this period, allowing food imports to drop. Similarly, a reduction in the cost of oil imports helped the country to attain a large commercial surplus by the end of 1986, thus considerably easing the balance of payments difficulties experienced earlier in the decade. These factors, combined with the rescheduling of foreign debt payments, gave the government some flexibility in handling its debt crisis and allowed it to begin paying its arrears to domestic creditors, including major construction and public works firms, supply companies, and local banks.

The economic resurgence turned out to be short lived, however. In 1987 the economy again declined. Compared with the first six months of the previous year, sales of raw cocoa fell by 33 percent, and coffee exports plummeted by 62 percent. GDP declined by 5.8 per cent in real terms, reflecting the slide in local currency earnings from exports. The trade surplus fell by 49 percent, plunging the current account into deficit. Trade figures for the first half of 1987 revealed a 35 percent drop in the value of exports in comparison with the same period in 1986.

In May 1987, the government suspended payments on its massive foreign debt and appealed to official government lenders (the Paris Club) and commercial lenders (the London Club) to reschedule debt payments. The Paris Club acceded in December 1987; the London Club, in March 1988.

As negotiations were proceeding, lenders pressured the government to introduce fiscal reforms. In January 1988, the government implemented a series of revenue-raising measures, which extended the value-added tax to the wholesale and retail trades and increased import tariffs, stamp duties, and tobacco taxes. In addition, the government initiated programs to privatize most state enterprises and parastatals (companies under joint government and private ownership) and to give a "new orientation" to industry.

Privatization was not a new measure. In 1980 the state made divestment an official policy and offered for sale many state corporations and the state's shares in jointly owned enterprises. Because the response to divestment was sluggish, the government proposed innovative alternatives to outright denationalization, such as leasing arrangements and self-managing cooperatives. By 1987, however, only twenty-eight of the targeted enterprises (in agribusiness, trading and distribution, public works, and tourism) had been sold. Moreover, the state still accounted for 55 percent of direct investment in the country.

The structural adjustments required by the World Bank in 1987 gave a new impetus to the divestment process. The government placed 103 industries in which it had holdings up for sale, although several companies considered to be of strategic importance to the country were later taken off the market. Included in this category were the Commodity Marketing and Price Control Board (Caisse de Stabilisation et de Soutien des Prix de Production Agricole--CSSPPA), the Petroleum Operations Company of Côte d'Ivoire (Petrole de Côte d'Ivoire--PETROCI), the Ivoirian Maritime Transport Company (Société Ivoirienne de Transport Maritime-- SITRAM), and the Ivoirian Mining Company (Société pour le Développement Minier de Côte d'Ivoire--SODEMI).

Divestment was a mixed success at best. Although Ivoirians took over more than half of the companies, those enterprises in which Ivoirians held a majority of the capital were very small--three- quarters were capitalized at less than CFA F50 million (for value of the CFAF)--and their rate of return was substantially lower than that of foreign-owned and state enterprises. In general, the larger the capital of an enterprise, the smaller the proportion owned by Ivoirians.

Ivory Coast

Ivory Coast - The Economy - ROLE OF GOVERNMENT

Ivory Coast

In spite of its reputation for having liberal, noninterventionist economic policies, the Ivoirian government played a pivotal role in the domestic economy. Acting primarily through the Ministry of Planning and the Ministry of Finance, the government directed fiscal and monetary strategies over the long term and intervened in the short term in response to changing market conditions. The Ministry of Planning was responsible for coordinating long-term development projects, while the Ministry of Finance was responsible for financing annual investment. The technical ministries, such as the Ministry of Mining, the Ministry of Trade, and the Ministry of Industry, were responsible for preparing and implementing projects. The Ministry of Planning played the central role. It mediated between the technical ministries and the public enterprises on the one hand and the Ministry of Finance and the government (in its role as the formulator of economic objectives) on the other hand. The Ministry of Finance translated the government's policy objectives into a set of long-term output and investment targets and an aggregate investment package. The Ministry of Planning and the technical ministries then used the guidelines to undertake those projects that were deemed feasible and would most contribute to achieving the plan's output and investment targets.

Beginning in 1960, the Ministry of Planning prepared a series of ten-year projections. Subsequently, these were replaced by a series of five-year plans that had built into them a three-year "rolling" program called the Loi Programme. The five-year plans formulated the overall objectives, set priorities, and provided a macroeconomic framework for the country's development. The threeyear overlapping Loi Programmes examined individual projects, taking into account progress toward implementation, annual changes in costs, and political impact.

Public Investment

In addition to its planning role, the government was the largest single investor in the economy. Following independence, the government embarked on an ambitious capital spending program. Much of the capital for government intervention came from the CSSPPA, which fixed producer prices, operated a reserve price stabilization fund, and extracted profits for the state. Much of this investment went toward developing infrastructure and was one of the state's more positive economic contributions in the 1960s.

By the 1970s, although there was no official change of economic policy, the state intervened more directly in the economy, primarily through the creation of parastatals. This surge in the number of parastatals reflected the government's desire to stimulate growth in those areas where the private sector was considered insufficiently active, to create employment for Ivoirians, and to encourage Ivoirians to invest locally. In the case of agricultural parastatals, the state wanted to lessen income disparities between the north and the south, decrease food imports, provide rural employment, and diminish the importance of foreign investment in agriculture. In some instances, social or political objectives superseded the profit motive, as appears to have been the case with parastatals like the Bandama Valley Authority (Autorité du Vallée du Bandama--AVB), which promoted regional development, and the Sugar Development Company (Société de Développement Sucrier--SODESUCRE), which was also responsible for creating jobs and building schools and medical clinics in the savanna region.

All of the parastatals enjoyed relative financial autonomy, although their technical and financial operations were in theory supervised by the government. In fact, there was often little supervision by, or coordination of activities with, other government agencies, perhaps reflecting the fact that top-level managers of some parastatals were often politically well connected. In many instances, the parastatals withheld or otherwise could not produce crucial financial data for planners. Given the absence of governmental oversight and the sometimes vague social and political objectives of the parastatals, they performed badly and in some cases--notably the housing sector--were rife with fraud.

In spite of these shortcomings--or perhaps because of them--the government support of parastatals steadily increased. By 1974 it amounted to more than half of the entire investment budget. Over the same fourteen years, the proportion of investment spending covered by net public savings fell to 37 percent. This imbalance forced the government to borrow extensively from foreign sources to maintain an even level of investment and growth. Between 1965 and 1975, foreign loans rose from 41 percent to 65 percent of investment in parastatals. Moreover, the outstanding debt figures of the public enterprises and the amount of foreign borrowing, which in theory should have been cleared by the National Amortization Fund (Caisse Autonome d'Amortissement--CAA), were not disclosed until an end-of-year report. This process effectively precluded government attempts to control parastatal finances.

Budget

Public spending was handled under two different budgets: the Ordinary Budget (Budget Ordinnaire) for current government expenditures, which were generally covered by domestic revenues, and the Special Investment and Capital Equipment Budget (Budget Special d'Investissement et d'Equipement--BSIE), which partly depended on foreign investment. The BSIE had two parts: the BSIETreasury (BSIE-Tresor or BSIE-T), which was financed by surpluses from the Ordinary Budget, levies on business profits and farm incomes, and borrowing through bonds issued by the CAA; and the BSIE-CAA, which was funded by foreign borrowing.

The size of each budget reflected the state of the economy. The Ordinary Budget grew by an average of more than 20 percent from 1976 to 1980 and then by an average of about 11 percent per year in 1980, 1981, and 1982. By 1983, however, the deteriorating economy and consequent decline in tax receipts prompted the government to implement a series of austerity measures. Cuts were initially limited to the BSIE, which fell from CFA F277.6 billion in 1980 to CFA F239.1 billion in 1984 and then fell dramatically to 101.8 billion in 1985. In 1984 the government cut the Ordinary Budget for the first time, by 1.5 percent from the previous year. The government reduced the number of foreign technical assistants, froze civil service salaries, and sold one-quarter of the official fleet of 12,000 automobiles.

In 1986, after three years of severe austerity, higher commodity prices increased revenues and, in turn, allowed both budgets to expand. Budgeted expenses rose by 8.6 percent, with most of the increase in the BSIE, where allocations were increased by 13.7 percent. More than a third of these allocations went toward a road building plan cofinanced by the World Bank. Agricultural diversification was the second largest beneficiary. A 3.7 percent increase in the Ordinary Budget again permitted civil service promotions following a protracted wage and hiring freeze.

The period of budgetary expansion, however, was brief. In 1987 coffee and cocoa prices again dropped, resulting in a 5.2 percent cut in the 1987 BSIE and an additional 19.8 percent cut in the 1988 BSIE. For the second year in a row, the BSIE did not receive any funds from the CSSPPA, the agency that marketed the bulk of Côte d'Ivoire's coffee and cocoa. In 1987 the largest share of BSIE funding, amounting to CFA F85.8 billion, came from multilateral donor agencies (CFA F44 billion). Bilateral creditors--including France, Japan, Britain, the United States, and the Federal Republic of Germany (West Germany)--provided CFA F16.2 billion, and commercial creditors provided CFA F25.6 billion. Meanwhile, domestically generated revenue for the BSIE was set to increase from the 1987 level of CFA F38.8 billion to CFA F 57.8 billion in 1988. The increase, however, represented only the inclusion of funds previously classified as extrabudgetary.

The 1987 overall budget increased by a modest 4.8 percent and the 1988 budget by 2.6 percent. These increases were primarily the result of an increase in revenue from taxes on income, imports, fuel, agricultural products, and municipality receipts. But because of an annual inflation rate of approximately 7 percent, it was expected that real spending in 1988 would fall. Debt rescheduling agreements did not affect the budget because the government considered debt service to be outside the main budget calculation.

Banking and Finance

Côte d'Ivoire's banking system developed during the colonial period as an extension of the French financial and banking systems. In 1962 Côte d'Ivoire, along with seven other francophone nations, became a member of the West African Monetary Union (Union Monétaire Ouest Africain--UMOA). The UMOA established the Central Bank of West African States (Banque Centrale des Etats de l'Afrique de l'Ouest--BCEAO), which issued the African Financial Community (Communauté Financière Africaine) franc (CFA F), the unit of currency for the member states, and established policies governing interest rates. Also in 1962, France and the members of the UMOA signed an agreement that guaranteed the convertibility of the CFA F to French francs and established operations accounts for each country with the French treasury in order to centralize their reserves. The signatories also agreed to the free circulation of capital within the union. Since 1962 the UMOA has modified its system gradually to grant greater monetary autonomy to the African member states. For example, the UMOA reduced the share of French votes on the board of directors from one-third to one-seventh, transferred the headquarters of the BCEAO from Paris to Dakar, Senegal, and in 1975 introduced changes to increase the managerial presence of Africans in their national economies and to help the member states make better use of their resources.

Domestically, Côte d'Ivoire had the second most sophisticated banking system in sub-Saharan Africa, after South Africa. In 1988 it had twenty-one credit and loan banks (including fifteen commercial banks and six specialized credit banks), nine foreign bank offices with limited activity, sixteen registered credit or leasing institutions, and seven organization similar to credit unions. More than half of bank ownership remained in foreign control: six of the fifteen commercial banks were branches of foreign banks (including three American institutions). Of the fifteen banks with some domestic ownership, Ivoirians (publicly or privately) owned no more than 48.4 percent.

In the late 1980s, the banking system was especially hard hit by the fall in cocoa earnings and the subsequent liquidity crisis. In 1987 the Ivoirian Bank for Construction and Public Works (Banque Ivoirienne de Construction et de Travaux Publics--BICT) and the National Savings and Loan Bank (Banque Nationale d'Epargne et Credit--BNEC) were closed by authorities. In early 1988, the National Agricultural Development Bank (Banque Nationale pour le Développement Agricole--BNDA), which provided credit to peasant farmers, and the Côte d'Ivoire Credit Bank (Crédit de la Côte d'Ivoire--CCI), an industrial development bank, suspended operations. In the case of the BNDA, a politically well connected borrower who owed the bank as much as US$78.9 million was unable to account for the funds he had borrowed.

Ivory Coast

Ivory Coast - LABOR

Ivory Coast

Most Ivoirians were members of a traditional agrarian society and virtually all able-bodied adults worked. Just over one third were subsistence farmers who raised little beyond their immediate needs. In 1982 the economically active population numbered approximately 4.3 million, of whom about 47 percent were women. Approximately 85 percent of this population engaged in farming, herding, fishing, or forestry, as opposed to nearly 90 percent in 1962. At independence, agriculture accounted for 45 percent of all wage earners; 40 percent were employed in industry, commerce, and services, and 15 percent were government employees. In 1960 unskilled workers constituted approximately 67 percent of the entire labor force; skilled workers and technicians, 19 percent; white-collar workers, 11 percent; and executive and managerial positions, 3 percent. In 1982 unskilled workers made up about 80 percent of the work force; skilled workers, 17 percent; and managerial and professional workers, 3 percent. According to a 1985 census, the largest employer was the government, which employed 110,670 people (not including the armed forces), or approximately 7 percent of the nonagricultural work force. Of these workers, 81,561 were in the civil service, and the rest were in state-owned companies.

In 1968 the government created the Office for the Promotion of Ivoirian Enterprise (Office de Promotion de l'Enterprise Ivoirienne--OPEI) to reduce--or appear to reduce--the country's dependence on foreign entrepreneurial expertise. The OPEI was to help develop or improve the efficiency of Ivoirian commercial, industrial, and agricultural enterprises by providing studies, statistics, administrative assistance, and training for local entrepreneurs. In fact, the OPEI focused only on small-scale entrepreneurs, such as bakers, carpenters, tailors, plumbers, and electricians. These efforts could not--and apparently were not intended to--produce the high-level managerial expertise that would reduce the country's dependence on expatriate initiative, skills, and technology.

Until the mid-1980s, non-Africans--mostly French--still dominated the managerial and professional cadres. In 1973 the government set up the National Commission on Ivoirianization to encourage the appointment of Ivoirians to managerial posts throughout the economy. Although Ivoirianization of management was the announced purpose of the commission, Ivoirianization was not to be implemented at the expense of efficiency. Consequently, most Ivoirianization programs in commerce and industry were voluntary and produced only modest results. According to official figures, in 1979 Ivoirians held only 23 percent of senior management positions and 44 percent of junior management posts in all private, public, and parastatal enterprises. By 1982 the percentage of Ivoirians in senior management positions had actually dropped slightly to 21 percent; for junior-level management posts, the percentage had risen to 52 percent. Among the country's 300 largest companies, Ivoirians still filled only 29 percent of top management posts, compared with 67.4 percent that were filled by non-Africans. The remaining 3.6 percent were filled by non-Ivoirian Africans. In addition, many Europeans worked as mechanics, technicians, and shop owners, underscoring Côte d'Ivoire's continued reliance on foreign initiative and skills.

The government also employed a large number of European teachers and technical experts known as coopérants. Most were recruited by the French Ministry of Cooperation, but others were hired directly by the Ivoirian government through private, usually French, firms on a contract basis. The Ivoirian government was responsible for 80 percent of the total cost of those hired under official cooperation agreements and for 100 percent of the cost of those hired under private contract. Pressures for Ivoirianization and the economic recession of the early 1980s prompted a gradual reduction in the number of coopérants from a peak of 4,000 in 1980 to 3,200 in 1984. Over the next two years, as economic conditions worsened and as more Ivoirian university graduates took over teaching jobs in secondary schools, this number fell by 1,000.

The privately recruited foreign experts were employed mainly as technical advisers in government ministries and in state enterprises. As part of a series of austerity measures, the IMF insisted that 585 of the 650 foreign experts on government payrolls be let go. Those foreign experts allowed to stay were in highly specialized areas, such as the petroleum sector and computer technology. Despite the IMF dictum, by the end of 1987 there were still 425 privately recruited foreign experts, costing the government CFA F11 billion annually. In November 1987, the government recommended that these experts be retained only if their presence was "indispensable in certain high technology areas not yet mastered by nationals."

Côte d'Ivoire also depended on foreigners for unskilled labor. Since the early twentieth century, poor migrants from Burkina Faso, Mali, and other parts of West Africa had worked in Côte d'Ivoire as agricultural and construction laborers. Because immigration has been largely uncontrolled, estimates of the number of immigrants have varied by as much as 100 percent, ranging from 1 million to 2 million, and accounted for 70 percent to 80 percent of the unskilled labor force in the rural sector. According to official figures for 1974 (the most recent year for which they were available in 1988), 81.8 percent of the salaried positions in the primary sector (agriculture and raw materials) were filled by nonIvoirian Africans, while only 16.9 percent were filled by Ivoirians. The figures, however, were skewed somewhat by the fact that most Ivoirians in the primary sector were self-employed or were working for family members. The labor force shifted easily between regions and occupational sectors. Surveys have shown that half the migrant farm laborers changed their employment every two months, and even the more permanent wage earners moved freely from job to job in search of higher pay and more attractive working conditions. The greatest movement occurred between the traditional and the modern sectors of the economy, as farmers from subsistence areas took temporary wage employment to meet specific cash needs. This mobility contributed to the lack of training and skills and the low productivity among nonagricultural workers.

Labor Unions

In the 1980s, approximately 100,000 full-time workers, mostly professionals, civil servants, and teachers, belonged to unions. Virtually all unions were under the umbrella of the General Federation of Ivoirian Workers (Union Générale des Travilleurs de Côte d'Ivoire--UGTCI), which was tightly controlled by the party and, by extension, the government. Consequently, the leadership of the UGTCI invariably supported the government in its efforts to promote unity and development, often at the expense of labor. As a political force, the UGTCI exercised little clout.

Ivory Coast

Ivory Coast - Wages and Income Distribution

Ivory Coast

For several reasons, it is difficult to compare rural incomes with urban incomes. Agricultural workers earned income predominantly from the production of goods, rather than from the sale of labor. Much of this production was not marketed, and cash crops that were marketed were sold at prices that were, in effect, taxed by the government because of its pricing policies. By contrast, urban incomes were pretax incomes, and unadjusted comparisons exaggerate the difference between the two. In addition, urban workers often benefited from supplementary nonmarket sources of income, such as subsidized housing, access to credit on favorable terms, and rental income.

According to Ministry of Planning figures for 1974 (the most recent figures available in 1988), the group of workers whose salaries fell in the bottom 40 percent in the private sector received about 14 of total salary payments; the middle 40 percent received about 33 percent; and the top 20 percent received about 53 percent. Figures for workers in the public and parastatal enterprises (excluding the civil service) were similar: the group of workers whose salaries fell in the bottom 40 percent received 12 percent, the middle 40 percent received 32 percent, and the top 20 percent received 56 percent. In both sectors, the highest salaries were paid to expatriates, and the lowest incomes went to nonIvoirian Africans. For the civil service, the income distribution was considerably more balanced: the lowest 40 percent received 27 percent of income payments, and the top 20 percent received 35 percent. Regionally, incomes in the north lagged behind those in the south.

Salaries earned by non-Africans ranged from about twenty times the average African salary in the primary sector, to ten times the average in the secondary sector, to five times the average in the tertiary sector. In money terms, non-Africans usually received two to three times as much income as Africans in the same job classification; in addition, expatriates benefited from generous housing, travel, and educational allowances.

Since 1932 minimum wage and other worker compensation standards have been fixed. The Labor Code of 1952 established guaranteed minimum wages and working conditions, and the Advisory Labor Committee, composed of an equal number of employers and workers chosen by their representative bodies, was set up to recommend appropriate standards. The committee based its recommendations on the cost of living and the minimum subsistence requirements of various segments of the population. The committee then elaborated two minimum wage standards: the Guaranteed Minimum Agricultural Wage (Salaire Minimum Agricole Garanti--SMAG) and the Guaranteed Minimum Interprofessional Wage (Salaire Minimum Interprofessionel Garanti--SMIG).

Minimum wages have increased faster for nonagricultural workers. The SMIG rose from CFA F40 per hour in 1962 to CFA F58 per hour in 1970 and increased an additional 58 percent to CFA F93 per hour by 1974. In 1982 the SMIG was raised to CFA F191.4 per hour. By contrast, the SMAG rose only 20 percent to CFA F25 per hour between 1970 and 1974. In 1982 the SMAG was CFA F30 per hour. Most workers received wages substantially higher than the legal minimum based on scales determined by collective bargaining agreements or, in the absence of such agreements, by the government.

The government also determined other work rules. In 1988 the maximum work period was 40 hours a week for nonagricultural labor and 2,400 hours a year for agricultural labor. By law, all employers carried worker's compensation insurance. The labor code regulated labor practices, recruitment, contracts, the employment of women and children, and general working conditions such as paid holidays, sick leave, and medical care. The code also provided for collective agreements between employees and trade unions and for special courts to settle labor disputes.

As in most developing countries, measuring employment and unemployment was difficult because relatively few people were employed in the modern or formal economy, in which enumerating workers is easier; in the traditional economy, the concept of unemployment was almost meaningless. It was also difficult to determine the percentage of the population that was active in the labor force. In spite of these methodological problems, the rate of unemployment in the early 1980s was calculated to be 9 percent, with the highest rates in the Abidjan area.

By the end of 1987, the national unemployment rate was estimated to be 11 percent; the rate in urban areas was as high as 30 percent. The actual number of unemployed persons was estimated to be 600,000, although only 86,000 were officially registered with the Employment Office of Côte d'Ivoire (Office de la Main d'Oeuvre de Côte d'Ivoire--OMOCI). Contributing to the high rates of unemployment were a sharp increase in the number of high school and university graduates with inappropriate skills, migration of young people from rural areas, a continued high rate of immigration from neighboring countries, and reduced recruitment levels in the public, parastatal, and private sectors. Significantly, these problems were becoming more acute because the economically active population was growing 4 percent a year and was expected to reach 7.5 million by 1992.

Ivory Coast

Ivory Coast - AGRICULTURE

Ivory Coast

Agriculture was the foundation of the economy and its main source of growth. In 1987 the agricultural sector contributed 35 percent of the country's GDP and 66 percent of its export revenues, provided employment for about two-thirds of the national work force, and generated substantial revenues despite the drop in coffee and cocoa prices. From 1965 to 1980, agricultural GDP grew by an average 4.6 percent per year. Growth of agricultural GDP from coffee, cocoa, and timber production, which totaled nearly 50 percent of Côte d'Ivoire's export revenues, averaged 7 percent a year from 1965 to 1980. Contributing to this impressive performance were an abundance of fertile land, cheap labor, the collective efforts of many farmers cultivating small plots, relatively favorable commodity prices, and a stable political environment.

Success in the 1960s and 1970s overshadowed major problems developing in the agricultural sector. By the late 1980s, despite efforts to diversify its crops, 55 percent of Côte d'Ivoire's export earnings still came from cocoa and coffee. Moreover, highly volatile world markets for both commodities caused sharp fluctuations in government revenues and made development planning difficult. In addition, Côte d'Ivoire was not yet self-sufficient in food production and imported substantial quantities of rice, wheat, fish, and red meat. Finally, despite an enormous increase in the volume of agricultural output since independence, there was little improvement in agricultural productivity. To achieve higher production figures, traditional farmers using traditional technologies simply cleared more and more land.

To overcome Côte d'Ivoire's excessive dependence on coffee and cocoa (the prices for which were set by consumers), on timber (the supply of which was nearly exhausted), and on imported food, the government in the mid-1970s embarked on a series of agricultural diversification and regional development projects with the hope of boosting agricultural production by 4 percent per year. The plan, estimated to cost CFA F100 billion per annum (with just over 50 percent coming from foreign lenders) would allow the country to become self-sufficient in food (with the exception of wheat) and expand the production of rubber, cotton, sugar, bananas, pineapples, and tropical oils.

In spite of these efforts, the agricultural sector appeared unable to adapt to changing conditions. Distortions in the system of incentives reduced the comparative advantage of alternative crops. The vast revenues collected by the CSSPPA were often spent on marginally profitable investments, like the costly sugar complexes or expensive land clearing programs. Finally, some diversification crops, like coconut and palm oil, faced new threats as health-conscious consumers in the United States and Europe began turning away from tropical oils. Consequently, the future for Ivoirian agriculture remained cloudy.

<>Land Use
<>Cocoa
<>Coffee
<>Timber
<>Diversification Crops
<>Food Crops

Ivory Coast

Ivory Coast - Land Use

Ivory Coast

Resources

Of the total land area of more than 322,000 square kilometers, 52 percent was considered agricultural land, or slightly over 3.6 hectares per capita. Total land area fell into one of two distinct agricultural regions: the forest region (about 140,000 square kilometers) in the south and the drier savanna region (about 180,000 square kilometers) in the north, where economic growth has generally been slower. The forest region, which had higher and more reliable rainfall and better soils, produced most export crops. Rainfall in the savanna averaged about two-thirds of that in the forest region and was unreliable from year to year. In addition, the soils were generally light and ranged from medium to poor quality. As a result, agricultural yields were low and opportunities for using labor-saving technology were limited.

The prevailing system of cultivation for both cereals and féculents (starchy foods) was known as shifting agriculture, or bush fallow. Fields were cultivated for three to four years, after which they were left fallow for periods of up to ten years to restore their fertility. To maximize their return on a given plot, farmers first cultivated a more exigent crop like yams, followed it in subsequent years with less demanding crops like corn, and finally planted cassava, after which the plot was left untilled. In Côte d'Ivoire, as elsewhere in Africa, population pressures forced farmers to reduce the fallow period, leading to diminished soil fertility and productivity. The use of chemical fertilizers was not common; annual consumption of fertilizers in 1982 was 51,800 tons, or only 8.5 kilograms per hectare.

As in most of sub-Saharan Africa, farm labor was usually manual, without the aid of animals or mechanization. In 1982 there were 3,200 tractors and 40 harvester-threshers in the country, nearly all of which were on large private or government-owned plantations. Nearly all agriculture relied on natural rainfall or, in the case of paddy rice, rudimentary, gravity-fed irrigation systems. Under the 1976-78 development plan, the government constructed dams on the Bandama River at Taabo and on the Sassandra River at Buyo for irrigation.

Tenure

Land tenure systems differed among the various ethnic groups; nevertheless, most systems were based on the concept of communal ownership of land. At the same time, individual families were granted rights to cultivate a specific area (which included fallow areas), and these rights included some form of inheritance within the family. Unused lands reverted to the community. In 1902 the French introduced the concept that individuals or corporations could hold legal title to land with exclusive rights; this law, however, had little impact in the rural areas. After independence, Ivoirian law on landownership provided for surveys and registration of land, which then became the irrevocable property of the owner and his or her successors.

Ivory Coast

Ivory Coast - Cocoa

Ivory Coast

In 1988 Côte d'Ivoire led the world in cocoa production with more than 500,000 tons. Cocoa was grown mainly on small family-owned farms with labor supplied principally by immigrants from other African countries. Production growth averaged 6 percent to 7 percent a year throughout the 1965-74 period and accelerated as the plantings of the late 1970s and the early 1980s entered their prime. The total area of cocoa cultivation more than doubled from 1973 to 1983, from 611,000 hectares to 1,398,900 hectares.

In Côte d'Ivoire, cocoa became a cash crop only in 1912, when colonial authorities forced Africans to cultivate it. Cocoa, like coffee, was a forest crop; it required ample rainfall, partial shade, and shelter from wind, all of which occurred only in the southern forest zone. Cocoa trees produced pods, which grew on the trunk and older branches, beginning at four or five years, and continued producing for twenty to thirty years. The pods were harvested from June through August and from November through January, although some pods ripened throughout the year. After harvest, the beans and pulp were extracted from the pods and allowed to ferment for six or seven days and then dried. Yields averaged 220 kilograms per hectare. The bulk of the crop was produced on small plots of one or two hectares.

Côte d'Ivoire's success as a cocoa producer has been a mixed blessing. In September 1987, cocoa prices fell to their lowest levels since 1983. In December prices were even lower following forecasts that the world surplus for the 1987-88 season would be substantially higher than the previous season's, marking the fourth successive year of a world cocoa surplus. In September 1987, talks aimed at restoring the price support mechanisms of the International Cocoa Organization ended in failure when producers and consumers were unable to agree on the price level to be defended.

Ivory Coast

Ivory Coast - Coffee

Ivory Coast

Côte d'Ivoire ranked third in world coffee production after Brazil and Colombia. Introduced as a cash crop during the colonial period, coffee was cultivated throughout the forest zone, with the heaviest production in the denser forests of the east and along the margin of the forest moving westward from Dimbokro to Man. The bulk of the crop consisted of robusta varieties, which were more bitter and less expensive than arabica varieties and therefore were used in blends to reduce costs.

Coffee trees were started in nurseries. After about a year, before the rains in May, they were transplanted to permanent sites. After two years they were pruned to a maximum height of two meters to make harvesting easier, and they were kept pruned to improve yields. Trees began bearing at above five years and continued to produce for ten to twenty years. Trees flowered several times throughout the year; however, the main harvests took place in August and November through January. Yields averaged 250 kilograms per hectare, or about 25 percent of the yields in Colombia and Brazil, where trees received better care. Following the harvest, the berries were hulled, peeled, dried, and sorted before being shipped or processed locally.

Prior to independence, production grew at a rate of 10 percent per year. By the late 1950s, however, expansion slowed, and between 1965 and 1984 annual coffee production averaged 252,000 tons. By the mid-1980s, 60 percent of the coffee trees in the country were more than fifteen years old and producing well below average yields. Attempts by the government to encourage the planting of new coffee trees were largely unsuccessful, and production in the aging plantations continued to drop.

Ivory Coast

Ivory Coast - Timber

Ivory Coast

Timber exports ranked third in importance behind cocoa and coffee; but by 1980 this industry was declining because of overcutting. From 1965 to 1975, the period of peak timber exploitation, log and sawed wood exports contributed an average of 23 percent of foreign exchange earnings annually. In the early 1980s, timber exploitation averaged an annual 4 million cubic meters of logs and accounted for 9 percent of the agricultural GDP. By contrast, in 1984 exports of logs and sawed wood had declined to 2.1 million cubic meters and represented only 12 percent of exports.

Overexploitation through the 1960s and mid-1970s almost depleted forest resources. Côte d'Ivoire's forest shrank from 15 million hectares in 1960 to less than 3 million in 1987. Deforestation continued at a rate of 300,000 to 500,000 hectares a year, while annual plantings averaged only 5,000 hectares. The government's response to this ecological disaster was halfhearted: in 1985 the government-owned Forest Development Company (Société pour le Développement des Forêts--SODEFOR) initiated an industrial reforestation program designed to produce some 6.6 million cubic meters of wood in thirty-five years. The SODEFOR program will have little impact on timber production through at least the year 2000, however, and until then, producers will continue to exploit shrinking natural forests. As a follow-up on the SODEFOR program, the government declared 1988 "the year of the Ivoirian forest" and approved a CFA F1.3 billion tree-planting program to plant a total of 25,000 hectares. This represented only 0.2 percent of the forest land lost since 1960. Finally, the government announced a novel scheme to create agricultural belts around the remaining wooded areas, making those who were allocated plots responsible for policing the forests. Despite these gestures, the government insisted in 1985 that timber exports would cease only when the country's financial situation stabilized or when substitute exports could be found, neither of which had occurred by 1988.

Ivory Coast

Ivory Coast - Diversification Crops

Ivory Coast

In the mid-1970s, the government undertook major efforts to diversify export crops and end its dependence on cocoa and coffee. In the forest zone, diversification products were palm oil, coconut oil, and rubber, all of which enjoyed a comparative advantage on the international market. In the 1980s, Côte d'Ivoire had become the largest palm oil exporter in Africa, and the 1987 harvest of 215,000 tons made Côte d'Ivoire one of the world's largest producers. In 1985 an expansion program called for planting 65,000 additional hectares of oil palms and constructing four new industrial plantations. With some 15,000 hectares of new plantings each year, production was expected to continue its rise. At the same time, production costs in Côte d'Ivoire were high, perhaps reflecting the fact that individual holdings were small and often located on less productive land.

In 1987 Côte d'Ivoire's rubber production totaled 38,700 tons, and there were plans to increase production to 80,000 tons a year by 1990. This increase would place the country ahead of Liberia, then the largest African producer of natural rubber. The number of hectares under rubber cultivation increased sixfold from 1960 to 1984, from 7,243 to 43,634 hectares.

In the north, or savanna zone, cotton and sugar were the chief diversification crops. Cotton was first introduced during the colonial period by the French Textile Development Company (Compagnie Française de Développement des Textiles--CFDT), which at independence became the Ivoirian Textile Development Company (Compagnie Ivoirienne de Développement des Textiles--CIDT). Cotton became economically important only after independence. In 1965 there were some 12,000 hectares of cotton, and by 1979, these were 123,000 hectares. Production leveled off in the early 1980s but picked up again between 1981 and 1984. Cotton (fiber and cottonseed) production in 1986-87 set a new record of 213,506 tons, compared with (fiber and cotton seed) the previous season's 190,000 tons and the country's previous record of 205,000 tons in 1984-85, making Côte d'Ivoire the third largest cotton producer in Africa, after Egypt and Sudan. Cotton fiber production over the same period amounted to 91,000 tons (1987), 75,000 ton (1986), and 88,000 tons (1985). Côte d'Ivoire exported about 80 percent of its crop.

Côte d'Ivoire was Africa's eighth largest sugar producer, with a yield of nearly 144,000 tons in 1987, more than half of which was exported. Industrial sugar production began only in the early 1970s with the creation of SODESUCRE, a parastatal that constructed and operated six large industrial sugar refineries located at Ferkéssédougou (Ferké I and Ferké II) and four smaller towns in the savanna region (By 1987 two of the factories had been closed.) In 1982 these complexes contributed about 3 percent of the agricultural GDP.

The colonial government introduced bananas for export in 1931, and by 1961 the fruit was the second largest earner of foreign exchange. The principal production areas lay between Aboisso and Divo. Exported varieties, which are larger and sweeter than native fruits, were harvested year round. French settlers owned the first plantations; by 1961 holdings by Africans amounted to about onethird of the 6,500 hectares under cultivation for export. By the mid-1980s, the fraction in land or in corporations held by foreigners dropped to less than 10 percent. Production for 1985 came to 163,000 tons, of which only 105,000 tons were exportable. In the mid-1980s, Côte d'Ivoire routinely fell short of its allotted export quota to Europe, in part because labor shortages adversely affected the quality of the fruit.

Pineapples have been raised commercially only since 1950. In 1961 less than 600 hectares were cultivated; Africans owned approximately one-half the area. By 1986, under the impetus of government encouragement and support, 438,000 hectares were under cultivation. Production amounted to approximately 250,000 tons, up from 195,000 tons a year earlier, of which 180,000 tons were exported as fresh fruit. The remainder of the harvest was canned locally. The major producing area was near Abidjan.

Ivory Coast

Ivory Coast - Food Crops

Ivory Coast

In 1987 the staple food crops made up about 38 percent of the value of agricultural production. The principal food crops in Côte d'Ivoire were the féculents, or starches (yams, plantains, cassava, and taro), which made up 76 percent of the value and 60 percent of the bulk of staples output. Gross production per annum amounted to approximately 4.5 million tons. Gross production of cereals (paddy rice, maize, sorghum, and millet) amounted to about 1 million tons per year; however, cereals, which occupied a larger cultivated area than did the féculents, had a higher of value total protein. Food crop production increased by approximately 3.4 percent per annum between 1965 and 1984, with cereals having a slightly higher rate of growth. At the same time, food crop productivity per rural family increased by about 1 percent per year, well under the rate of population growth. This shortfall, along with a preference on the part of much of the population for imported rice and bread over indigenous foodstuffs, increased rice and wheat imports to a high of 590,000 tons in 1983, or about 40 percent of national cereals consumption. Cereal imports dropped to 150,000 tons in 1985 after prices for imported foodstuffs had increased, good rains had ended the drought, and the government had inaugurated a food self-sufficiency campaign. In 1987 imported cereals amounted to about 14 percent of the national diet, as compared with 20 percent earlier in the decade.

Measured by area cultivated and tonnage, yams were the leading food crop, especially in the region east of the Bandama River. A number of varieties of yams grew in Côte d'Ivoire, differing by size of tubers, moisture requirements, and length of growing season. Yams had stringent soil needs, however, and demanded far more labor to plant and harvest than the other root crops required. In addition, roughly one-quarter of the crop had to be reserved to seed the next crop. Seed yams were planted near the top of conical mounds, usually two to four feet high and three to four feet apart, and formed from finely cultivated soil. Usually other crops such as corn, beans, tomatoes, or peas were planted on the sides of the mounds. Providing support for the yam vines (which could reach as high as twenty feet) were either stakes or liana--long, climbing vines--which hung from dead, leafless trees purposely left standing in the yam fields in the forest zone. Depending on the variety, the yam tubers, which varied in weight from a kilogram or less to as much as forty kilograms, were ready for harvest after about eight months. The best yields in the Bouaké region were about 12.4 tons per hectare. In the more humid south, the yield was higher, and further north it was lower. The heaviest yam-producing areas were around Bouaké, Séguéla, and Korhogo.

West of the Bandama River, rice was the principal food crop although rice cultivation was spreading across Côte d'Ivoire wherever conditions were suitable. Local farmers had cultivated a native variety of rice for centuries. In the twentieth century, however, French colonial administrators introduced more prolific Oriental species of both upland (dry) rice and paddy rice. Dry rice predominated, probably because it required less technology, matured more quickly, and could be interplanted with other crops. Dry rice matured in about three months and yielded about 560 kilograms per hectare, compared with a five- to six-month maturation period for wet rice and yields averaging 786 kilograms per hectare.

Among cereals, maize followed rice in tonnage harvested. It was planted throughout the country; however, except in the northwest where most maize was produced, it was subsidiary to other crops. Local varieties of maize matured in as little as two months, making it particularly suited to the north, where it could be planted after the first rains in May and harvested during the period when old yam stocks were depleted and the new yams were not yet mature. In the south, two crops per year were common. Because maize depletes the soil, farmers often interplanted it with other crops such as yams, beans, and gourds or cultivated it in fertilized household gardens. Yields, which were low by Western standards, averaged nearly 1.3 tons per hectare, reflecting the absence of both fertilizers and mechanized farming practices. As was true for other crops, insects, rodents, and, in the south, moisture, made maize storage difficult.

Other important food crops were plantains and cassava. The plantain, which is of the same genus as the banana, followed yams in annual tonnage harvested. Because it required sustained rainfall, production was limited to the south, where it was often interplanted with cocoa. Plantains were raised from shoots removed from the base of a mature tree. The shoot formed a stalk (about three meters high) that bore a single cluster of fruit ready for harvest after twelve to fifteen months. After the plantains were harvested, the stalk was cut off at ground level, and a new shoot was allowed to sprout. After five or six years, the old root system was removed, and a new tree was planted. Harvesting continued throughout the year; yields varied with soil conditions but averaged just under five tons per hectare.

Manioc, which served as a hedge against famine, was third in importance after yams and plantains. Cassava was also a root crop that was easy to cultivate, resisted pests and drought, and took little from the soil, yet still produced fair yields. Because cassava was propagated by stem cuttings, the entire crop could be used for food. The growing period was from six to fifteen months, but even after the roots matured, they could be left in the ground for several years without damage. In the south, where two plantings per year were common, cassava was often interplanted with other crops and held in reserve or planted as a final crop before a field was abandoned for fallow. In the north, only a single planting per year was possible. Estimates of yields ranged from about five tons to just under ten tons per hectare. These figures were unreliable, however, because roots were harvested only when needed.

Other food crops included taro (in the south) and varieties of millet and sorghum (in the north). Individual households raised garden vegetables, including okra, tomatoes, peanuts, and eggplant, in small plots near dwellings or interplanted among field crops. Tropical fruit trees, both wild and domestic, produced sweet bananas, avocados, oranges, papayas, mangoes, coconuts, lemons, and limes. Oil palms and shea trees provided cooking oils.

Even in the best of years, Côte d'Ivoire imported vast quantities of wheat, rice, meat, and milk. To achieve food selfsufficiency , the agricultural recovery program proposed by the Council of Ministers sought to increase production of rice, maize, peanuts, and the newly introduced soybeans, all of which were grown primarily in the northern savanna zone. In addition, the government intended to revamp the Food Marketing Bureau (Office pour la Commercialisation des Produits Vivriers--OCPV) to streamline the marketing of such food crops as yams, plantains, and manioc. Finally, the Council of Ministers also inaugurated a project to achieve self-sufficiency in animal proteins.

Ivory Coast

Ivory Coast - MANUFACTURING

Ivory Coast

At independence, Côte d'Ivoire manufactured little more than timber by-products, textiles, and food processed from local agricultural products. Little was exported. The lack of an indigenous, skilled labor force, inexperienced management, and low domestic demand limited industrial growth.

At that time, there was little direct state involvement in manufacturing. Nearly all industrial companies were financed by private--mainly foreign--capital. On the strength of its growing domestic market and, in the 1960s and 1970s, the development of regional markets under the aegis of the West African Economic Community (Communauté Economique de l'Afrique Occidentale--CEAO), Ivoirian industrialization flourished.

Following independence, light industry became one of the most rapidly growing sectors in the economy. Between 1960 and 1980, manufacturing grew at the rate of 13 percent per year, and its contribution to GDP rose from 4 percent in 1960 to 17 percent in 1984. The number of firms rose from 50 at independence to more than 600 in 1986. Expanding most rapidly were import substitution industries like textiles, shoes, construction materials (such as cement, plywood, lumber, ceramics, and sheet and corrugated metal), and industries processing local agricultural raw materials (such as palm oil, coffee, cocoa, and fruits).

Although agricultural processing plants used locally produced inputs, import substitution industries--as well as firms manufacturing or providing chemicals, plastics, fertilizers, and engineering services--imported their raw materials (50 percent of intermediate inputs were imported). In many instances, these costly intermediate inputs raised the price of completed products far above the price of comparable imported goods. Consequently, the government promoted and protected local industry by imposing tariffs and incentives.

The system of industrial tariffs and incentives, however, proved to be shortsighted. These measures avoided quantitative import restrictions and included a tariff schedule that protected all industrial activities, whether threatened by imports or not. By assigning tariffs according to the degree of processing and by exempting some inputs that could be produced locally and less expensively, the government discouraged domestic production of intermediate inputs.

Additional efforts to promote industry, and particularly smalland medium-scale enterprises, were equally inadequate. Management personnel often lacked skills and experience, political connections often influenced policy, and there was little coordination among state bureaucracies responsible for assisting the struggling firms. In response, the government promulgated a new investment code in 1984 (subsequently altered in 1985) by providing bonuses for exports and by reforming tariffs, which served to shelter elements of an already overprotected and inefficient industrial sector.

In 1987 the government adopted additional measures originally proposed by the United Nations Industrial Development Organization (UNIDO) to expand exports and make industry more efficient. This new policy proposed modernizing import substitution industries, manufacturing new products with high added value for export, and expanding the existing range of agriculture-based, export-oriented industries. The new exportable agricultural products were to include processed food (maize, cottonseed, fruits, vegetables, cassava, yams, and coconuts), textiles (spinning and weaving, ready-to-wear clothing, and hosiery), and wood (paper and cardboard). The new, nonagricultural exports were to include building materials, such as glass and ceramics; chemicals, such as fertilizers and pharmaceuticals; rubber; agricultural and cold storage machinery; and electronics, such as computers. As part of the reform package, UNIDO also insisted that credit restrictions be eased, domestic savings potential be tapped, and funds held abroad by Ivoirians be repatriated. Under pressure from the World Bank, the government cut its levy on pretax bank transactions from 25 to 15 percent.

The process of modernizing import substitution industries and increasing exports included measures to reduce the high level of customs protection accorded local industries and to extend export subsidies. In November 1987, the government began a five-year program to reduce import duties and surcharges progressively to an eventual 40 percent of value added for the entire industrial sector. In addition, the government extended export subsidies to the entire manufacturing sector in order to compensate for comparatively high local production costs in the agroindustrial sector (oils and fats, processed meat, fish, chocolate, fruits, and vegetables) and for such industrial goods as textiles, carpets, shoes, chemicals, cardboard, construction materials, and mechanical and electrical goods. As of early 1988, the reforms had not yet yielded the desired results, partly because export subsidies were granted on an ad hoc basis with no assurance that they would be renewed and partly because the reforms were financed from customs receipts, which, under the government's pledge to reduce tariff protection, were diminishing.

<>Oil
<>Natural Gas

Ivory Coast

Ivory Coast - Oil

Ivory Coast

By far the most important mineral in Côte d'Ivoire was petroleum. Petroleum was first discovered in the early 1970s on the continental shelf off the coast of Jacqueville, west of Abidjan. A short time later, a second field was discovered off Grand-Bassam, east of Abidjan. The discovery and development of the two fields coincided with the collapse of world cocoa and coffee prices in the late 1970s and was seen by many as the means by which the country could continue moving toward prosperity, although the fields, named Espoir and Bélier, were relatively small, geologically complex, and located in deep water. The Espoir field was developed by United States-based Phillips Petroleum. (PETROCI had a 10 percent share.) Espoir began operations in August 1982 with an output of 18,000 to 20,000 barrels per day (bpd). Because of technical problems, output declined the following year to 15,000 bpd. By 1988 production had fallen to 10,000 bpd.

The Bélier field, developed by Exxon, did not begin producing oil until 1980 because of technical difficulties. Output reached 10,000 bpd in 1981 and then fell to 6,000 bpd by 1986 in spite of a US$50 million investment by Exxon on a water injection program to maintain output and prolong the field's life.

Agip of Italy and Tenneco of the United States drilled exploratory wells elsewhere along the coast, but neither found sufficient reserves to continue exploration. In 1985, as world oil prices dropped and projected yields from Côte d'Ivoire's fields were reduced to more realistic levels, both Phillips and Exxon had halted exploratory and development drilling in their oil fields. Moreover, production in the existing fields failed to attain projected output, and the government's target of achieving selfsufficiency in oil production was never reached. Total oil production declined a further 5 percent in 1986 to less than 20,000 bpd, while national consumption exceeded 30,000 bpd. By the end of 1988, Exxon had halted production from the Bélier field and capped its wells.

In 1965 the Ivoirian Refining Company (Société Ivoirian de Raffinage--SIR) completed construction on a refinery at Vridi with a capacity of 700,000 tons per year. When petroleum prices surged in 1979, demand dropped substantially, and output fell to only 50 percent of capacity. Contracts with Chevron Oil of the United States to process crude oil from other African countries (primarily Nigeria) raised output to near capacity and, along with a financial recovery plan, led to a net improvement in the profitability of SIR. In 1986 capacity was increased to 3.2 million tons, making SIR the major source of refined petroleum products for West Africa. It also became Côte d'Ivoire's leading industrial plant and the thirdranking enterprise in French-speaking Africa, with revenues surpassing CFA F200 billion in 1986.

Ivory Coast

Ivory Coast - Natural Gas

Ivory Coast

The exploratory oil wells revealed large reserves of natural gas, some of which were associated with the oil fields. In 1987 estimates of the Espoir and Foxtrot gas reserves off the coast of Abidjan amounted to 3.5 billion cubic feet, or enough to produce 55 million cubic feet a day for twenty years. Apart from reducing the country's dependence on fuel oil, the government sought to use the gas to generate electricity--thus justifying its purchase of four large gas-powered turbines during the drought of 1983-84--and to produce fertilizer. In late 1987, the government and Phillips Petroleum were still trying to negotiate an acceptable price for the gas. Start-up costs for drilling two producer wells and constructing a sixty-kilometer gas pipeline to the thermal power station at Vridi were estimated at US$150 million in 1986.

Ivory Coast





CITATION: Federal Research Division of the Library of Congress. The Country Studies Series. Published 1988-1999.

Please note: This text comes from the Country Studies Program, formerly the Army Area Handbook Program. The Country Studies Series presents a description and analysis of the historical setting and the social, economic, political, and national security systems and institutions of countries throughout the world.


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