Republic ofCôte d'Ivoire WT/TPR/S/2
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III. TRADE-RELATED ASPECTS OFINVESTMENT POLICIES
1. Therevival ofprivate investment inCôted'Ivoire isapriority fortheGovernment. Tothat
end,theauthorities haverevised thelegislation inforce andadopted anewdraftInvestment Code at
themeeting oftheCouncil ofMinisters heldon20January 1995.1ThisCode, liketheoneitreplaces,
isdesigned toattract national andforeign investment bymeans oftaxandtariff exemptions which
increase withthesuminvested. Ontheother hand, thesystem of"establishment agreements" under
which potential investors were guaranteed market shares bydecree, hasbeen abolished. Since
independence thatsystem hadbeenacontributory influence onthestructure ofproduction andthelevel
ofcompetition within theIvorian economy.
2. Liketrade policy, Ivorian legislation hassince independence beenparticularly favourable to
direct investment, soas"toarouse private enterprise andguide ittowards industrial investments".2
Development strategy isbased on"apartnership withforeign enterprises orinvestors thatalready have
some grasp ofmore diversified markets".3Theexisting industrial fabric istoaverygreat extent the
result ofthislegislation.
3. Since 1959, Côted'Ivoire hastreated Ivorians andforeigners exactly alikesofarasinvestment
isconcerned. Furthermore itguarantees therepatriation ofearnings ofalldescriptions oninvested
capital, including dividends andtheproceeds ofliquidation oftheinvestment, totheinvestor 'sState
ofresidence. Thisstability hasoften beendescribed asakeyfactor inthegrowth ofdirect investment
inCôted'Ivoire.
4. Thelegislation inforce between 1959 and1994 enabled afewenterprises which metcertain
conditions tobeassigned priority bytheIvorian Government, thusobtaining tariffandtaxprivileges.
Inaddition,enterprisesestablishedpursuanttoanestablishmentagreementreceivedprivilegesnegotiated
according totheirspecific needs. Theprivileges were frequently accompanied byataxagreement
determining theamount oftaxes payable forperiods upto25years. Thechief measures included:
exemption fromimport duties onimported inputs forperiods upto10years; monopolies onimports
ofcertain products (forexample wheat); monopolies ondomestic marketing; andmonopolies on
production. This legislation resulted inmanifest impediments tocompetition andsubstantial
discrimination against newcomers.
5. AsChart III.1shows, theflows ofdirect foreign investment havefallen short ofthedividends
repatriated since 1985. Furthermore allthedirect investment made between 1988 and1992 is
reinvestment ofearnings andnotfreshcapital. Thissuggests thatthelegislation inforce hashadlittle
effect onflows ofdirect foreign investment: investment inCôted'Ivoire washeavy during aperiod
(1960-1980) when itwasprofitable toinvest irrespective ofthemeasures being applied; thereafter,
macroeconomic disadvantages (thefallincommodity prices andunduly highrates ofexchange)
discouraged fresh influxes ofcapital after1985 despite thepossibility ofexclusive production and
distribution agreements provided forbytheCode.
1Thisproject hasbeen submitted forexamination totheNational Assembly, which hadnotadopted itby
March 1995.
2Ministry ofIndustry andTrade, Investir enCôte d'Ivoire -Code desInvestissements.
3Ministry ofIndustry andTrade, Investir enCôte d'Ivoire -Facilités d'investissement enCôte d'Ivoire -
Partenariat PME/PMI.WT/TPR/S/2 Trade Policy Review Mechanism
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(1) Draft Investment Code of1995
6. ThenewdraftInvestmentCodeanditsimplementingdecreereflecttheGovernment'sdisposition
toimprovemarketoperationwhilepreservingthefundamentalprinciplesofequalityoftreatmentbetween
nationals andforeigners (theprinciple ofnational treatment) andnon-discrimination.4There isnolimit
totheproportion ofcapital heldbyforeign nationals. ThenewCode, likeitspredecessor, guarantees
thetransfer ofearnings ofalldescriptions oninvested capital.
7. The1995Investment Code provides fortwodifferent investment regimes, thatofdeclaration
andthatofapprovalofinvestment,whichareappliedwithoutprejudicetothebodyofincentivesprovided
bytheGeneral TaxCode andtheCustoms Tariff ortothose arising outoftreaties oragreements
concluded between Côted'Ivoire andother States. Thedeclaration regime applies toallsectors of
economic activity except thefollowing: tradeandtransport, bothofwhich aresubject totheapproval
regime; building andpublic works; andbanking andfinancial services. Theduration oftheadvantages
ranges fromfivetoeightyears according togeographical area,plusthetimerequired tocarry outthe
investment programme. These advantages are:exemption fromprofits tax5andexemption fromthe
taxonpatents andlicences.
4Thearticle oflawonthissubject hasnotyetbeen passed bytheAssembly.
5Theexemption istotaluptotheendofthethird from lastyearoftheperiod ofexemption, thenattherate
of50percentand25percentofthetaxes normally dueinthepenultimate andlastyearrespectively ofenjoyment
oftheadvantages.Republic ofCôte d'Ivoire WT/TPR/S/2
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8. Theapproval regime provides advantages which increase withtheamount invested; criteria
oflower andupper thresholds, theamounts ofwhich arefixed bydecree, determine thescope ofthe
benefits granted:
- exemption from import (fiscal andcustoms) duties onimports ofalltheequipment
needed toeffect theinvestment, including thefirstbatch ofspare parts, foranamount
equal toorabove theupper threshold (CFAF 2billion, orabout US$4 million in1995);
forinvestment amounts between thelower threshold (CFAF 500million) andtheupper,
asoleimport dutyof5percentisapplied except onbuilding materials, movable
property andprivate (motor) cars,onwhich thefullamount ofimport duties ispayable
irrespective ofthesuminvested;
- exemption from VAT onexpenditure onequipment, utility vehicles andspare parts
foraninvested sumequal toorabove thelower threshold, withtheexception ofbuilding
materials, movable property andprivate (motor) cars;
- exemption from profits tax;
- exemption from thetaxonpatents andlicences; and
- inthecaseofinvestments equal toorabove theupper threshold, exemption fromthe
estate taxonbuilt-on property.
9. Anenterprise wishing toenjoy theadvantages provided bytheapproval regime isrequired
tofulfil, among others, thefollowing obligations:
- toemploy Ivorian managers, foremen andother workers andtoprovide them with
training inaccordance withtheregulations inforce andinparticular theprovisions
concerning theoperation oftheVocational Training Development Fund;
- tomeet thenational orinternational quality standards applicable tothegoods and
services which arethesubject ofitsactivity;
- nottoimpair ecological conditions, inparticular theenvironment; and
- tocomply withtheregulations concerning thedeposit ofagreements andcontracts
relating totitles toindustrial property ortheacquisition oftechnology (Article 14).
10. Theapproval regime isapplicable toalleconomic activities except building, public works and
financial services. Investments infinancial services aresubject tothelawregulating banking in
Côted'Ivoire6andthedecrees giving effect toit.Investments noteligible fortheapproval regime
orthedeclaration regime aresubject totheordinary lawonthesubject, inparticular theGeneral Tax
Code andtheCustoms Code.
11. Itismandatory todeclare alldirect investments andtheliquidation thereof totheMinister for
theEconomy, Finance andPlanning andtoBCEAO within 20days.7
6LawNo.90-589 of25July1990.
7Upto20percentofthecapital,purchasesofsharesinaquotedcompanyarenotregardedasdirectinvestment.WT/TPR/S/2 Trade Policy Review Mechanism
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12. Intheevent ofadispute withtheState, thepersons concerned mayhaverecourse tovarious
arbitration procedures (Article 24);ortobilateral agreements ifany;ortotheConvention of18March
1965 ontheSettlement ofInvestment Disputes drawn upunder theauspices oftheWorld Bank and
ratified byCôte d'Ivoire; ortotheInternational Centre fortheSettlement ofInvestment Disputes
(ICSID).
13. Enterprises which invested before theentry intoforce ofthenewCode continue tobegoverned
bythe1984 and1973 lawsfortheduration oftheinvestment.
14. Theauthorities point outthatthenewCode nolonger fixes theminimum threshold of
CFAF 40million needed toobtain theadvantages available under theoldsystem; thedeclaration regime
isaccessible irrespective oftheamount involved. Nevertheless, theexistence of"minimum investment
thresholds" under theapproval regime confirms apreference forlargeinvestments, while theexemptions
provided bythatregime tendtoencourage capital intensity andtheuseofimported equipment rather
thanlabour-intensive production techniques.
(2) Investment formalities
15. Until recently, thecostincurred andthetimespent inmaking aninvestment inCôted'Ivoire
could besubstantial, involving asmany as70stages andcreating anurgent need forreform.
Administrative formalities mayincrease thecostofaninvestment tothepoint where itceases tobe
profitable,especiallyifitisonamodestscale.TheSectoralAdjustmentandCompetitivenessProgramme
(PASCO)providesfortheestablishmentofa"single-window"systemintendedtoserveasamulti-service
window forthecompletion oftheadministrative formalities required forthefounding ofan
enterprise-authorization, registration, etc.Thiswindow became operational atthebeginning of1995.8
16. Anewsystem wasinstituted inJanuary 1995 under theresponsibility oftheCentre forthe
Promotion ofInvestments inCôted'Ivoire (CEPICI):
- Enterprises wishing toinvest under thedeclaration regime arerequired tofileaform
dulycompleted withCEPICI, which issues anattestation offiling within twodays.
Theapplication foreligibility isthentransmitted tothevarious departments concerned,
andinparticular theGeneral Directorate ofTaxes (DGI). Notime-limit islaiddown
fortheprocedure asawhole.
- Undertheapprovalregime,enterprisesarerequiredtoapplyforapprovaltotheMinistry
ofIndustry andTrade; tobelegally constituted; tosubmit afiscal declaration oftheir
existence; toprovide aproject description inapredetermined form; andtoproduce
anexhaustive listoftheequipment andspare partswhich mayqualify fortherelevant
advantages. Inthecaseofregulated occupations theymust inaddition supply an
authorization topractice oroperate .Thefilecomposed ofthese items isaddressed
toCEPICI, which transmits ittotheDirectorate ofIndustrial Development within four
working days. TheDirectorate prepares areport forthemembers oftheTechnical
Commission onInvestments. Theapplicant isnotified oftheCommission 'sdecision
within notmore than45daysafterthedateofdeposit ofthefile.
17. Certain formalities mustbemetinorder toconstitute theentity applying foreligibility under
thedeclaration orapproval regimes. According totheauthorities, recent reforms havesimplified and
speeded upthese formalities, which arethefollowing:
8Republic ofCôted'Ivoire, Office ofthePrime Minister (1995), Formalités relatives àlaviedesentreprises.Republic ofCôte d'Ivoire WT/TPR/S/2
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(i) Theestablishment ofabranch ofaforeign company issubject toprior declaration to
theMinistry oftheEconomy andFinance. Thisdeclaration isrequired tocontain thefollowing
items ofinformation:
- name andnationality oftheinvestor;
- nature oftheinvestment;
- amount oftheinvestment;
- modes offinancing andtime-limit forcompletion;
- purpose andincidence oftheproposed investment.
(ii) Thestatutes ofthecompany orbranch areregistered bytheregistration department
oftheDGI. Theregistration feesareasfollows:
- uptoCFAF 5billion, 0.6percentoftheregistered capital; and
- overCFAF 5billion, 0.2percent.
Inaddition ataxstamp ofCFAF 1,000 mustbeaffixed toeachpageofthestatutes.
(iii) Twocopies ofthestatutes must befiledwiththecompetent court sothattheymay
begiven anumber.
(iv) Anotice offoundation ofacompany must bepublished inthenewspaper
Fraternité-Matin, towhich asummary ofthestatutes mustbesupplied. Thecostofinsertion
isCFAF 8,625 perline.
(v) Inscription inthetrade register entails theprior purchase offiveprinted forms ofthe
Trade Register which areavailable from CEPICI. These forms, dulycompleted, aretobe
filedwiththeclerkofthecompetent court together withthreelegalized copies ofthenewspaper
Fraternité-Matin sothatatrade register number maybeallotted.
(vi) Thefiscal declaration ofexistence ismade tothetaxesservice oftheDGIbyobtaining
anddepositing aform ofdeclaration ofexistence andpaying thefeetoobtain alicence
declaration. Withthefiscal declaration ofexistence itispossible toobtain ataxpayer 'saccount
number under which theenterprise willpaythetaxes levied onit.
(vii) Foreign trade registration isessential when anenterprise istocarry oncommercial
transactions withforeign countries. Registration iseffected attheMinistry ofTrade which,
afterexamining thefile(which mustinclude thereceipts fortheformalities previous completed),
willassign animport codeandataxcode.
(viii) Registration withtheNational Social Insurance Fund iseffected intwostages: first
registration ofthecompany andthenregistration ofthestaff. Thisformality isessential for
theregulation ofthesocial contributions duefrom employers andstaff.
(ix) Acopyofthehouse rulesofthecompany mustbefiledwiththeLabour Inspectorate.
According totheauthorities, theseformalities, which usedtotakeuptosixmonths under theoldsystem,
havesince theintroduction ofthesingle window beencompleted within 30days.9
9Article 21ofOrder No.23of12December 1994 concerning theorganization andoperation ofCEPICI.WT/TPR/S/2 Trade Policy Review Mechanism
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(3) Other investment-related measures
18. TheGeneralTaxCodecontainsanumberofprovisionsdesignedtoencourageprivateinvestment.
Inparticular, capital gains onthetransfer ofassets areexempt from profits taxiftheenterprise
undertakes toreinvest asumatleastequal totheoriginal price oftheassettransferred. Theamount
oftheexemption maybededucted fromtheenterprise 'staxesoverthreeyears. Furthermore enterprises
which reinvest allorsome oftheirprofits inCôted'Ivoire mayobtain areduction inprofits taxin
accordance withcertain procedures (Article 84oftheGeneral TaxCode). These fiscal measures, unlike
those prescribed bytheInvestment Code, donotaffect thenature orstructure ofenterprises.
19. Inaddition ataxcredit deductible fromthetaxes payable byemployers varies withthewage
billpaidtoIvorian permanent staff.
(4) Direct investment trends andprospects inCôted'Ivoire
20. According totheavailable statistics, thefiscal andinvestment measures wereatfirstfollowed
byamarked increase indirect investment inCôte d'Ivoire (Chart III.1). Inpractice, however, an
increasing partofthese flows consisted ofreinvested localearnings, thusresponding totheincentives
forthereinvestment ofprofits. Acollapse ofdirect investment inCôted'Ivoire hasbeenobserved
since 1990, reflecting thelossofthecomparative advantages associated withthefallincommodity
prices.
21. The1994economic revival programme counted largely onaresumption ofprivate investment
toattain theobjective of6percentgrowth inGDP in1995 and1996. Inthatconnection thechange
intheparity oftheCFA franc andtheriseinrawmaterial prices wereexpected torender production
forexport more attractive andthuscontribute totherevival ofdirect investment.
22. Other factors likely tohaveafavourable influence ondirect investment include thecurrent
liberalization ofairandmaritime transport. Similarly theprocess ofliberalizing imports should result
inasubstantial reduction ininput costs, which should beaccessible toallenterprises irrespective of
sizewithout thenecessity ofconcluding agreements withtheauthorities, which wasthepractice up
to1955.
23. Theissueofsecurities tocover thepublic anddomestic debtisalsocalculated toimprove the
economic climate andtoreduce uncertainty, which isunfavourable toinvestment. Theagreements
signed in1994concerning therescheduling ofcommercial debt, which ceased tobeserviced in1987,
should helptorestore theconfidence offoreign investors.