No quick fix for the economy

COTE D'IVOIRE: No quick fix for the economy

Photo: Anthony Morland/IRIN

Vegetable stall at Treichville market, Abidjan

ABIDJAN, 15 September 2011 (IRIN) - When banks and ports in Côte d’Ivoire reopened some five months ago it was a blast of oxygen for the economy, but many in the commercial capital Abidjan are seeing jobs vanish and food prices soar.

Higher food and transport costs coupled with the fallout of unprecedented post-election violence and economic stagnation mean it will be some time before relative political stability translates into better living conditions.

Pauline Brou and her family cannot afford to eat meat more than twice a month. “Milk and sugar prices have been rising all year,” the mother of four told IRIN. She said the price of a 50kg sack of rice has gone up twice since January, from the equivalent of US$29 to $35. Meanwhile her civil servant husband’s pay has stayed at $200 a month for the past four years.

“It’s really unbearable. I don’t sleep well at night for worrying about it.”

From June 2010 to June 2011 rice, sugar and beef prices rose by 11 percent, 44 percent and 20 percent respectively, according to the National Institute of Statistics.

The government in August ordered a reduction in the price of rice, but many traders have not applied it. Deco, a sugar supplier in Abidjan’s Abobo District, said the state’s influence in applying price changes will be limited without an overhaul of the entire sector. “When the government asked us to reduce [prices], they don’t cut taxes. So of course traders are not going to comply. We are not in business to lose money.”

Along with efforts to ease price hikes, the Alassane Ouattara government is struggling to attract investors needed to restore the economy, as companies continue to shut down and private investors are holding back. Industry and Commerce Minister Moussa Dosso told reporters on 5 September that Côte d’Ivoire would ease paperwork and other formalities for new businesses.

Big debt, no credit

Companies supplying services to the government have been closing at a rate of at least two a day since February, said Faustin Gré, president of a federation of small- to medium-sized companies that supply services to the government

“It’s a daily struggle for businesses to remain open,” Gré told IRIN. “On paper, many companies are rich, but without guaranteed state credit lines commercial banks aren’t interested in lending.” The government has promised it would disburse 40 billion CFA francs ($83 million) to member companies, he said. “But for now it’s just talk; we can’t do a thing till we’ve got the money in our hands.”

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He said many bosses are asking their employees to stay at home till companies can ensure payment of salaries. “But people come to work anyway because they’re scared of losing their job altogether.”

The government owes some 900 billion CFA francs ($1.8 billion) to companies and creditors, a Finance Ministry official told reporters on 31 August.

“Our boss stopped turning up to work [after the banks closed]. We were told to return once the situation normalized, but we haven’t heard from him since. We’ve not received any compensation, and we’ve been searching high and low for work since,” said Koné Kader, a 38-year-old port worker in Abidjan.

He said the lack of income was driving many youths to join the troops that brought Ouattara to power “because at least they can shake people down and make money that way”.

Alleged abuses by the pro-Ouattara soldiers (now the government army) and the slowness in restoring the rule of law and proper police and gendarme services, are also hitting the economy.

Economic migrants

As bad as things are in Abidjan, many people from other harder-hit parts of Côte d’Ivoire are flocking there to seek work. Aboubacar Ouédraogo, 27, a tailor in Sinfra, 230km west of Abidjan, is one.

“I found work for 10 days with a bricklayer before [the boss] admitted he wouldn’t be able to pay my salary because of problems with creditors. We all wanted to come to Abidjan because we heard big companies would be opening here, but that’s not at all the case.”

He added: “Some cousins here are feeding me and lodging me. I feel like a burden, but I don’t even have the bus fare to return [to Sinfra].”

The International Monetary Fund reckons the country's economy will contract 7.5 percent in 2011. A $6.3-billion government-approved budget will come mostly from international donors.