91595 IDA at Work Côte d’Ivoire—Emerging from Crisis C ôte d’Ivoire is the world’s top exporter of cocoa and raw cashew nuts, a net exporter of oil, and has a sizeable manufacturing sector. It is the largest economy in the West African Economic and Monetary Union (WAEMU), accounting for 40 percent of the Union’s GDP. The country’s influence on the sub-region is also significant due to its size (19 million people), its relatively high income per capita (US$960 in 2007), and its role in transit trade for landlocked neighboring countries. While the country boasts enormous potential, years of crisis, eco- nomic mismanagement and poor governance have taken a heavy toll on the economy and social outcomes, transforming the once- model African nation into a fragile state blighted by high levels of poverty (reaching nearly 50 percent in 2008 compared to 10 percent in 1985), a breakdown in key institutions and social capital, and the slow deterioration of basic social and economic infrastructure. Country Indicators 1995 2008 Real GDP growth (%) –0.1 (1997–2007) 2.3 GNI per capita (US$) 660 960 (2007) Poverty incidence (%, national threshold) 21 48.9 Gross primary school enrollment rate (%) 37 56 Under-five child mortality (per 1,000) 143 125 (2005) Maternal mortality (per 100,000) 690 (2000)* 810 (2005) Access to improved water source (% population) 71 61 Population (million) 15 19.3 Sources: World Development Indicators 2009, World Bank; Côte d’Ivoire National Institute of Statistics 2008 Household Survey; *WHO Country Health Systems Fact Sheet 2006 . In 2004, two years after the internal armed conflict that triggered the country’s crisis, the International Development Association (IDA), the World Bank’s fund for the world’s poorest countries, suspended its operations in Côte d’Ivoire when the country fell into payment arrears. Today, two years after the signing of the 2007 Ouagadougou Political Accords that established a road map for the country’s recovery, and a year after IDA resumed financial support to the government, Côte d’Ivoire stands once again to become a driving force in the region provided there is continued progress with the peace process, elections, and national unification—as well as reforms to improve the management of public resources and investment in people. n n n COUNTRY ACHIEVEMENTS of the CNW, an uncertain situation emerged with neither outbreak of war nor, peace. From a Leader to Fragile State The conflict claimed hundreds of lives and For 20 years after independence in 1960, thousands more were displaced. Government Côte d’Ivoire was an economic force. With revenues fell, and with them investment growth rates of 7 percent per year, fueled and social spending, as scarce resources by cocoa, coffee, and cotton exports, it was were directed to military purposes. Donor widely expected to become one the most support was suspended while domestic and developed sub-Saharan African countries. external arrears mounted. Capital flight rose substantially; many key members of the But in the mid 1980s, the miracle collapsed business community left the country; and following a decline in the terms of trade, an private investment dropped. Governance overvalued exchange rate, financial difficul- deteriorated and corruption flourished as ties resulting from ambitious public invest- individuals took advantage of lawlessness ments and large external borrowing. and a dysfunctional judiciary. Roadblocks and racketeering by armed groups which extorted Notwithstanding the 1994 CFA franc devalua- payments from the population and further tion and a short period of economic recovery depressed trade and commerce. in the mid-1990s, the country continued to grapple with the emerging impact of years The years of conflict and instability took a of economic mismanagement, unregulated heavy toll on social indicators, and several immigration, conflicts over land ownership, million people were pushed into poverty. and a difficult transition from autocracy to Infrastructure and basic services for health democracy following the death of President and education, once well above regional Houphouet-Boigny in December 1993. standards, declined, especially in the CNW zone. Although the economy showed some The September 2002 armed conflict that resilience to the crisis due to sustained cocoa split the country into two, with the center- and expanding cashew production, in addition north-west (CNW) zone occupied by the rebel to an increase in oil production, Côte d’Ivoire Forces Nouvelles (FN), deepened the crisis. had by 2004 become more of a risk to regional With the government unable to regain control stability than the region’s engine of growth. 2 The road to recovery The national identification program has enrolled some 6.5 million eligible voters to The signing of the Ouagadougou Political participate in presidential elections planned Accords (OPA) in 2007 established a transition for late 2009. Although the figure falls short government and set a new roadmap for demo- of the original enrollment target of 8 mil- bilization and disarmament. It also called lion, all political parties have agreed for for the redeployment of the civil service in these elections to proceed. In addition, the the CNW zone; identification of a group to security situation has improved steadily and resolve nationality issues; and for elections roadblocks and racketeering have been sig- to be held in 2008. nificantly reduced. A new transition government, with FN leader Strengthening economic governance and Guillaume Soro as prime minister, was formed creating fiscal space for greater investment in April 2007. Adherence to the peace process in people. As the political normalization paved the way for Côte d’Ivoire to emerge process continued in 2008, the economy from the crisis and normalize relations with registered a modest recovery. Output growth the international community. Vital elements in 2008 was estimated at 2.3 percent, driven in the country’s stabilization will be the hold- by an increase in oil output, an improving ing of free and fair elections; disarmament investment climate, and the reunification of and demobilization; full reunification; the the country. strengthening of state institutions; and a return to the rule of law. The government also restored discipline to budget preparation and adoption, with Consolidating peace and reunification. the 2008 budget adopted by presidential Despite some delays, progress has included ordinance in December 2007 and the 2009 the establishment of an integrated command budget before end-December 2008. Signifi- center for the army and FN forces, appoint- cant revenue collection efforts and overall ment of prefects for all districts, and judges expenditure restraints resulted in a modest for nationality identification hearings. In primary basic surplus in 2007 (0.6 percent of addition, the majority of local government GDP) and 2008 (0.3 percent). Social sector representatives, mayors, préfets and sous- spending targets were met for 2008, although préfets, have returned to their positions, they continue to be modest. notably in the CNW zone. In addition, the government made important Disarmament and demobilization began in progress by clearing its arrears to most exter- 2008 and has mainly consisted of regroup- nal creditors, including to the World Bank ing FN troops in the CNW. By October 2008, Group in early 2008 and to the African Devel- more than 11,000 of the estimated 36,000 opment Bank (AfDB) group in March 2009. FN combatants had been regrouped, though Both institutions resumed their operations in disarmament and demobilization has moved the country. more slowly than expected. 3 Most importantly, Côte d’Ivoire reached the million in undisbursed commitments for edu- HIPC Decision Point in March 2009, a critical cation, transport and rural development. In milestone toward reducing external debt and fiscal year 2009, IDA provided a US$150 million freeing up resources for poverty reduction budget support grant for economic governance and growth spending. Upon reaching the HIPC reforms, and the Board approved a US$50 Completion Point, Côte d’Ivoire will qualify million IDA grant for an Urgent Electricity for relief under the Multilateral Debt Relief Rehabilitation Project. Initiative, which is expected to include a reduction in the nominal debt service (prin- IDA is supporting government efforts in three cipal and interest) to IDA and the African strategic areas: (i) to help stabilize the situa- Development Fund by US$1,692.6 million and tion and assist the authorities to address key US$311.6 million, respectively. conflict factors; (ii) to assist war-affected populations through community rehabilita- IDA CONTRIBUTIONS tion and the provision of basic social services; and (iii) to accelerate economic recovery and The establishment of a transitional govern- reform by focusing on economic governance ment to implement the Ouagadougou Politi- reforms and institution building. cal Accords paved the way for IDA to reengage with Côte d’Ivoire. On April 1, 2008, IDA’s Stabilizing the situation and Board discussed an 18-month Interim Strategy assisting the government to for Côte d’Ivoire covering FY2008-2009, and address key conflict factors. approved a US$308 million development policy grant, of which US$273 million financed IDA’s support through the PCAP project has the country’s back payments due to IDA (Côte provided technical and financial support d’Ivoire also paid US$241 million in overdue for the reintegration of ex-combatants and debt service to IDA). youth-at-risk. As of May 2009, some 3,200 people have found quick employment in labor- Prior to the clearance of IDA arrears, a series of intensive works or have had access to training small grants from trust funds for fragile states and services geared to self-employment. allowed IDA to offer assistance on strategic and sensitive matters such as the reintegration The PCAP is also supporting a comprehensive of child soldiers, community rehabilitation in program to safeguard and modernize the civil the FN-controlled zone, and the employment registry, in partnership with the European of youth-at-risk. In 2007, IDA’s Board approved Commission. Civil registry offices will soon on an exceptional basis a US$120 million grant be equipped with new computerized systems for a Post-Conflict Assistance Project (PCAP). to ensure that births, citizenship, property, marriage, and other life events are properly Following the clearance of IDA arrears, the recorded, stored and available for the gov- Board approved another US$127 million in ernment to provide adequate services to grant financing for emergency urban infra- citizens (615,000 records have been entered structure, HIV/AIDS and economic governance electronically). The first ever National Civil support, and reactivated a portfolio of US$104 Registry Archives is now under construction and will serve to safeguard precious records 4 and information, and help prevent recur- Assisting war-affected populations. rence of the abuses that contributed to the outbreak of the crisis. In addition to creating jobs for youth and ex-combatants as part of the reintegration Through another component of the PCAP, process, IDA grants are financing community offices for local government officials are being rehabilitation and local development plans rehabilitated to facilitate the redeployment to help restore basic social services, such as of the civil service across the country as part access to water and education. The educa- of the reunification process. Contracts to tion and training project includes textbooks rehabilitate 22 local government offices have for primary school children, teacher training, been signed and the civil works have begun. and construction of 300 classrooms. The new In addition, the IDA-financed Rural Land textbooks will include stories illustrating the Management Project is supporting efforts to importance of birth certificates (needed to clarify land rights, facilitate conflict resolu- obtain a primary school diploma), thus linking tion, and identify land management and to the program on civil registry moderniza- development options, as well as to offer tion. In response to the food crisis of 2008, protection from gender-based violence and the project also provided school meals to 400 assistance to survivors. schools in coordination with the World Food Programme. A transport sector project was restruc- tured to focus on reestablishing and IDA is currently financing a US$20 million improving road access across the country, project to support the national response to with a particular attention to the CNW, HIV/AIDS. Cote d’Ivoire has the highest HIV where road maintenance was suspended prevalence rate in West Africa at 3.9 per- during the crisis. The project also focuses cent. on improving road access for farmers and productive communities in order to boost IDA-supported analytical work on human commercial activities. development includes: (a) a country status report on education, which forms the basis Analytical work to address conflict factors for a new education sector program that has included: (a) the preparation of a country envisages an Education for All/Fast Track social assessment to ensure that community Initiative (EFA-FTI) grant; (b) a study mapping rehabilitation is responsive to socio-economic out responses and gaps in the national HIV/ concerns and social risks resulting from the AIDS strategy; and (c) a country health status crisis; (b) a stocktaking of decentralization report. efforts, which had started before the crisis, and challenges involved in a full roll-out; (c) Assisting economic recovery and reform a market study on employment opportuni- ties for ex-combatants and youth-at-risk; Through two development policy operations, (d) a study on the social economic impact of IDA has helped the government restore fiscal roadblocks; and (e) a poverty diagnostic to and debt sustainability and sustain incipi- support the preparation of the PRSP. ent economic recovery through structural 5 reforms in the financial, energy, and cocoa budget cycle; (b) enhance capacity for bud- sectors—the latter two being key generators get/MTEF preparation and improve budget of exports and public revenues. classification and execution (which will help identify and track poverty-related spending Progress includes (a) improved budget in the context of HIPC); (c) develop an inter- execution to reduce discrepancies between face between budget execution, procure- approved budgets and actual expenditures; ment, treasury, accounting and payroll; and (b) a modern computerized public finance (d) accelerate deconcentration of the budget management system (SIGFIP), which is being execution system to the country’s remaining extended to the whole country and was 10 departments. already deployed in the CNW areas as part of the unification process; (c) a government These efforts are complemented by govern- commitment to more transparency in the ment measures to improve revenue, which management of oil and gas revenues by join- include (a)  improving tax and customs ing the Extractive Industries Transparency administration, including in the CNW zone; Initiative in 2008; and (d) four commercial (b) enhancing the revenue contribution from banks with negative equity submitted recapi- national oil/gas companies; (c) reducing tax talization plans to the Banking Commission exemptions; and (d)  ensuring that public (two of which were considered acceptable). enterprises transfer to the treasury all social contributions on wages. Regarding efforts to normalize relations with international financial institutions, the IDA has also financed energy audits in support government has remained current on its debt of the EITI process as well as a major review service to IDA and has also settled its arrears of the cocoa sector, and a country environ- to the African Development Bank (AfDB). mental assessment. Analytical work in poverty reduction and PARTNERSHIPS economic management has included a Pub- lic Expenditure Management and Financial IDA works closely with other technical and Accountability Review (PEMFAR), carried financial partners in Côte d’Ivoire on stabi- out jointly by IDA, the IMF, AfDB, and the lization and peace-building. These partners European Commission (EC) and completed include the African Development Bank, in May 2008. The PEMFAR identified critical European Commission, French Agency for shortcomings in the areas of budget com- Development, IMF, UN agencies, and USAID. prehensiveness and transparency, budget preparation and execution, dissemination, Given the fragility of the recovery process, the controls, and procurement. The PEMFAR also Bank has played an important role in ensuring provided recommendations for policy reforms close coordination of development partners and institutional development. in support of the government’s recovery and governance reform program—including help- On the basis of PEMFAR, the government ing to define the arrears clearance plan and has adopted a public financial management the HIPC debt relief process. action plan designed to (a) sustain the normal 6 As IDA deepens its engagement in Côte leaders, associations of women and youth, d’Ivoire, new opportunities for harmonization civil society, security forces, farmers, private have emerged, including preparation of the sector operators, and development partners. PEMFAR and the Education Country Strategy The final strategy was validated in a national Report (CSR), which were prepared jointly workshop on January 5, 2009 and approved by government and development partners. by the Cabinet in February 2009. Additional IDA is exploring opportunities for establish- workshops were organized with these stake- ing pooled or basket funds and using country holders in July and August 2009 to refine the financial management systems. PRSP action plans. Civil society and the private sector are The PRSP proposes a strategy to significantly also critical stakeholders with whom IDA is reduce poverty—to 33 percent by 2013— and strengthening its engagement, in support boost average growth rates to 6 percent over of demand-side governance. A new Country the long term, to pave the way for Côte d’Ivoire Assistance Strategy (2010–2013) currently to become an emerging economy and to ensure under preparation will support Côte d’Ivoire’s the social well being of all its citizens. priorities as laid out in the Poverty Reduc- tion Strategy Paper (PRSP), and will be an The government’s first challenge is to com- opportunity to scale-up implementation of plete the implementation of the Ouagadougou the partnership principles laid out in the Paris Accords, and emerge from the socio-political Declaration. and military crisis. With the national identifi- cation program well underway, the remaining CHALLENGES challenge is to hold peaceful, free and fair elections, complete the demobilization, dis- The government’s new PRSP, adopted in March armament and reintegration process, includ- 2009, discusses the country’s main challenges ing the unification of the two armed forces and targets six strategic objectives: into one national defense and security force, and restore a sense of national cohesion. • consolidating peace and social stability, • promoting good governance, Once peace is consolidated and institutions • stabilizing the macroeconomic and fiscal of law and order are functioning more effec- frameworks, tively, additional resources will need to be • promoting agriculture productivity and invested in human development and produc- private sector job creation, tive activities, particularly for the benefit of • improving access to basic services, pre- the youth. It is estimated that 50 percent of serving the environment, and promoting the population are younger than 15 years old gender equality and social protection, and and those aged 15-39 represent another 40 • promoting regional integration. percent of the total population. According to official statistics, there are about 4 million The PRSP was prepared based on extensive youth unemployed or underemployed. consultations in March and April 2008 across the entire country, involving local govern- A second challenge is to improve governance ment officials, religious and traditional and public institutions to not only deliver 7 critical services but also restore credibility fered from a lack of investment over the past in the government and the confidence of 20 years. Investing in infrastructure is critical private sector investors. This will include to help unleash the country’s economic and completing the redeployment of the civil social potential, whether by rehabilitating service, ensuring that key public institutions energy services or roads that connect farmers function properly and transparently, thus and markets and children with their schools. reigning in impunity and corruption, and It also entails improving education and health improving transparency in the management services that collapsed during the crisis. of public resources. Government will need to Beyond investments by the government and ensure that revenues are invested in priority development partners, private financing will social services to improve social indicators go a long way to helping meet this challenge, and human development, consistent with the making improvements in governance and the (PRSP). Reforms should also aim to improve investment climate critical. the business climate. Given the rapid rate of population growth, A third challenge is to broaden the economic estimated at 3 percent, the country also base to reduce the economy’s reliance on faces a demographic challenge, which, if primary commodities which are vulnerable left unattended, will make progress on both to price and demand fluctuations, and to economic and social indicators (especially improve agricultural quality and productivity. Millennium Development Goals) much harder (Oil accounts for 28 percent of Côte d’Ivoire’s to achieve. The government will need to total export revenue and 18 percent of public accelerate implementation of measures to revenues, and cocoa accounts for 25 percent address issues of equity and opportunity for of export revenues and roughly 17 percent girls and women. of public revenues.) Promoting agricultural productivity and adding value to exports— To ensure Côte d’Ivoire’s progress toward including cocoa, cotton, cashew nuts, pine- long-term stability and growth, the govern- apple, bananas, palm oil and rubber—will ment will need to sustain its commitments have a significant beneficial impact on the to the PRSP goals, which in turn will require two-thirds of the population employed in a concerted and harmonized response from agriculture. development partners. A fourth challenge is to rehabilitate infra- August 2009. structure and basic social services, which suf- http://www.worldbank.org/ida 8