Cote d'Ivoire Business Forecast Report Q4 2009

All Eyes On The November 2009 Elections Although the Ivorian government has announced November 29 2009 as the new date for presidential elections, serious doubts remain as to whether the authorities will be able to conduct peaceful and credible polls later this year. For sure, development assistance from the IMF and prospects for HIPC debt relief provide powerful incentives for all parties involved to speed up preparations and stick to the approved timetable. However, deep-rooted structural problems present powerful obstacles to those, both in the government and ex-rebel camps, who are genuinely working towards Cote d'Ivoire's democratic future and economic development. In our view, Cote d'Ivoire's economy undoubtedly has significant upside potential over the coming years - after all, until the mid-1990s it was West Africa's economic powerhouse. Yet ongoing uncertainty over its political future raises serious questions over its medium-term growth prospects.

The successful completion of the presidential elections will only be the first step towards political normalisation and economic recovery. Even if the government and the former rebels finally manage to overcome this hurdle, the reality is that Cote d'Ivoire has no track record of stable, multiparty democracy. This is not to say that Cote d'Ivoire's polity is incapable of mastering this task, yet it will require immense political will, discipline and vision to jointly work towards full political and economic reunification. In our view, the de-militarization and development of former rebel territories will be key to long-term stability.

With Cote d'Ivoire potentially reaching the HIPC debt relief completion point by the end of 2011, the nation could see a significant boost to its sovereign credit rating over the next three years, assuming that the government and the former rebels have managed to hold peaceful elections by then.

Already, the nation has reached the HIPC decision point in March 2009 and received US$850mn in debt cancellations by the Paris Club in May 2009, a development which increased investors' confidence that the country is on the right track to improve its international creditworthiness. As outlined by the IMF, Cote d'Ivoire could obtain debt relief to the tune of US$3.0bn, which would decrease its public external liabilities to US$7.9bn (30.5% of GDP) by end-2011.

Strikes by dock workers led to significant disruptions at the port of Abidjan in June 2009. Aside from causing a decline in real cocoa exports and customs revenues, the fact that inbound ships had to dock at neighbouring ports led to a shortage of food supplies. While the strike, which started over a pay dispute, was resolved at the end of June and activity in the country's main port has since returned to normal, a resumption could lead to a significant shortfall in cocoa exports for the 2008/09 season. The International Cocoa Organisation already forecasts Cote d'Ivoire's total cocoa output for the 2008/2009 season will decline by 11.5% y-o-y to 1.22mn tonnes, from 1.38mn tonnes in the previous season.