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Last Updated: Tuesday, 20 June 2006, 23:00 GMT 00:00 UK
Ivory Coast faces worst economic crisis
Abidjan skyline
Abidjan's business district is a shadow of its former self


James Copnall reports from Ivory Coast, where civil war has brought flows of international aid into the country to a halt.

Ivory Coast's standing with the international financial community is at its lowest-ever ebb - much like the country's economy and political scene.

The African Development Bank, which has its headquarters in the Ivorian economic capital, Abidjan, has temporarily moved to Tunisia.

The ADB's gleaming tower, just one of the high-rises that make up "West Africa's Manhattan", now stands all but empty, a powerful image of Ivory Coast's declining reputation.

Worse still, the ADB has suspended its dealings with Ivory Coast, which has defaulted on repayments.

The World Bank has also suspended its disbursements, because Ivory Coast has not kept up its loan repayments.

The situation is similar for AFD, the French development agency, and many bilateral partners.

Miracle marred

The explanation is, on the face of it, simple: Ivory Coast has been cut in half by a civil war since September 2002, which has triggered an unprecedented economic crisis.

Ivory Coast was once known as the "West African miracle", when its stability and relative economic prosperity shone out in one of the poorest regions on earth.

President Laurent Gbagbo of Ivory Coast
President Gbagbo's administration is seeking a solution

The country is still the biggest cocoa producer on earth, and a big coffee producer too.

But Ivory Coast's vaunted political stability was shot to pieces when rebels known as the New Forces took control of the north of the country nearly four years ago.

The government says that the resulting economic downturn explains Ivory Coast's poor standing with international financial institutions.

Everyone accepts that the situation is shameful for Ivory Coast, given its former reputation as an economic model.

Wrong priorities?

Some people suspect that politics, more than economics, explains Ivory Coast's failure to pay its debts.

For example, Ivory Coast owes the World Bank $310.3m as of 15 June - a relatively small amount in proportion to the Ivorian economy.

Basically, the international community does not trust President Gbagbo
Unnamed Western diplomat

The Ivorian government may simply have had other priorities. A string of reports by NGOs has alleged that President Laurent Gbagbo's camp stocked up on weapons in the early years of the war.

There has been no serious fighting since November 2004 and the country is now under an arms embargo.

"The war is over," President Gbagbo has said, "and now we just need to find our way out of the crisis."

But the usual priorities of a country in the developing world - health, education, rural development, infrastructures - are still on hold.

For example, the World Bank has $105m worth of money left to complete projects in those sectors on hold until its arrears are paid.

The new government of national unity, led by a former banker, Prime Minister Charles Konan Banny, has promised to pay off the debts to the World Bank by the end of June.

Aftermath of war

All the same, in Ivory Coast, the focus is firmly on conflict resolution.

About 50,000 combatants, rebels and loyalists alike, will need to be dealt with by a Disarmament, Demobilisation and Reintegration program.

Gen Mangou Philippe, chief-of-staff of forces loyal to President Gbagbo, and Gen Soumahila Bakayoko, chief-of-staff of the rebel New Forces
Government and rebel forces are still negotiating terms

DDR has stalled as often as it has started, as conflicting political agendas overrule the national interest.

Once it does begin in earnest, soldiers will receive about $900 each and will need to be lodged and fed for a substantial period of time.

Earlier this year, Prime Minister Banny went cap in hand to Paris, Brussels and Washington to ask for funds.

The World Bank says it has agreed to provide a grant for $80m, with other institutions, including the EU, stumping up the remaining $25m.

Until the political crisis in Ivory Coast is resolved, it is difficult to imagine the international financial institutions daring to consider much more than that sort of band-aid approach.

"Basically, the international community does not trust President Gbagbo, and will not consider the country stable while he is still in power," explains one Western diplomat.

Stalemate persists

Ivory Coast is also at a preliminary stage in obtaining debt relief through the Heavily Indebted Poor Countries (HIPC) initiative.

However, the lack of political stability and accusations of poor financial governance mean that debt relief, too, has become another casualty of the Ivorian civil war.

The news is not all bleak. Despite the crisis, the Ivorian economy grew by 1.8% in 2005.

With petrol, telecommunications and cocoa all performing better than expected, there is hope of an economic revival.

But Ivory Coast's economy is caught in the same stalemate as every other sector of public life.

Until the political crisis is resolved, investors will shy away, the international financial institutions will be cautious, and the economy will never take off properly.

The debt relief that could so help Ivory Coast, and its suffering millions, will also remain tantalisingly out of reach.

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