Over the second half of the 20^th century, Côte d’Ivoire was one of the most prosperous West African countries with strong exports of cash crops such as cocoa, coffee and palm oil supported by excellent transport infrastructure. However, a military coup at the end of the millennium followed by roughly a decade of political turmoil and civil war dampened Côte d’Ivoire’s economic development and led amongst others to a reduction in economic growth, less foreign direct investment and a deterioration of transport infrastructure.

Now, after the elections of 2010 and the post-election crisis with an elected government headed by Alassane Ouattara in place, real growth in GDP for 2012 was forecasted at 8.1% if the situation normalizes (Encyclopædia Britannica, 2013). The hope is that the country can return to being the economic powerhouse of the region and some experts argue that entrepreneurship may play an essential role in this (Black & Castaldo, 2009).

To aid entrepreneurs in assessing the potential for starting a business in Côte d’Ivoire, this article provides information on the economics and demographics and a detailed view of the present state of the country. Subsequently, particular attention is paid to the ease of doing business in Côte d’Ivoire.

1           A general introduction of Côte d’Ivoire

Côte d’Ivoire is located in Western Africa with a maritime border in the south to the Northern Atlantic Ocean and terrestrial borders to Burkina Faso, Ghana, Guinea, Liberia and Mali. The country has an area of 322,463 km² and an estimated population of 22,400,835 citizens as of July 2013, with roughly 60% under the age of 25. In 2006, 42% of the population lived below the poverty line and for 2012 overall GDP per capita was estimated at US$ 1,700. Côte d’Ivoire is home to 60 native dialects, and the official language is French. The national currency is the Communauté Financiere Africaine francs (XOF) (The World Factbook, 2013). The administrative capital and third biggest city in Côte d’Ivoire is Yamoussoukro and the largest city, de facto capital and centre of business of the country is the port city of Abidjan (Encyclopædia Britannica, 2013).

1.1         Economy

The Ivoirian economy is heavily dependent on agriculture, which contributes 31.2% to GDP (AfDB, OECD, UNDP, UNECA, 2012) and employs 68% of the labor force (The World Factbook, 2013). While much subsistence farming to meet rural needs is performed, Côte d’Ivoire also produces many cash crops for export. The country is the world-leading exporter of cocoa, with a production of approximately 1.5 million tons in 2010/2011. However, given that Côte d’Ivoire lost much of its natural forest due to farming, including that of cocoa, the government recently decided to cut down on production of cocoa from protected forests, so that the upcoming years will show whether the Ivoirian position in the global cocoa business can be sustained (Reuters, 2013). Next to cocoa, Côte d’Ivoire also produces coffee in the southeast mainly for the French market and palm oil in the southwest. In the northeast, livestock raising plays an important role particularly to meet local needs. Fishing is practiced on a commercial basis in the south  with Abidjan being the largest port handling tuna in Africa. In addition to agricultural produce, Côte d’Ivoire also exports gold and receives considerable export revenue from the exploitation of offshore oil and gas. The manufacturing sector is mainly focused on refining the products from agriculture and mining/drilling (Encyclopædia Britannica, 2013).

1.2         Infrastructure

Infrastructure in Côte d’Ivoire has traditionally been built in accordance with international standards, and as regards telecommunications infrastructure, service providers are available and service is good with several long distance lines and internet access. In addition, there is growing demand for and supply of mobile telephony services (AfDB/OECD, 2006). Thus, in terms of telecommunications infrastructure, Côte d’Ivoire seems to present a favorable environment to business.

As regards transport infrastructure, Côte d’Ivoire has an inter-city road network of 80,000 km, of which 10 percent are part of the urban road network and roughly 6,500 km are paved. Before the political turmoil, roads were in good condition but since then the situation has dramatically deteriorated. Road service is generally considered to be poor and roughly 63% of the paved road network need repair. In addition, 170,000 km of dirt road exists, which are often interrupted or hardly passable. Next to roads, the country offers 27 airfields, 14 regional airports and three international airports (Abidjan, Bouaké and Yamoussoukro), with the airport of Abidjan playing the most important role accounting for 90 percent of the traffic. In addition, there exists a single railway line operated by SITARAIL connecting Abidjan to Ouagadougou in Burkina Faso [no information is currently available on the train schedule and performance of SITARAIL]. Furthermore, Côte d’Ivoire has two deep-water ports in Abidjan and San-Pedro, with the former being the largest port of the country (AfDB/OECD, 2006). Finally, inland waterways are supposed to be of low value for transport due to low water levels during summer. Given the current situation of transport infrastructure it can thus be recommended that entrepreneurs locate close to demand and assess whether demand that can easily be reached with existing transport modes is sufficient. Obviously, Abidjan seems to be a promising location for business offering potential for both large local demand and the opportunity for shipment via various modes.

2           Entrepreneurs in Côte d’Ivoire

The brief introduction of Côte d’Ivoire and the review of Ivoirian infrastructure directly link to the assessment of the ease of doing business in the country that shall be presented next. Thereby, entrepreneurs can pursue one of two routes in starting their business in Côte d’Ivoire, either in the informal or the formal business.

Obviously much potential lies in informal businesses, tackling the high unemployment rate as young, jobless entrepreneurs start their own businesses and cater to the bottom of the pyramid in their local surrounding, i.e. people who cannot afford industrially produced or imported products but can well afford the locally produced substitutes. A prime example for this is Mrs Clarisse, who started her own business by producing and selling soap in Abidjan (MakingItMagazine.net, 2010). However, two problems exist for such entrepreneurs, which is the access to capital and the access to skills or rather entrepreneurship training. While capital can be obtained from microfinance banks, the most promising venue for such entrepreneurs seems to be the ‘Employment Chain’ program of the United Nations Industrial Development Organization (UNIDO), which together with local government agencies and other partners offers training and financing to micro-projects (Hribernigg, 2013).

Next to informal businesses, entrepreneurs can also choose starting a registered business, though various obstacles exist. The ‘Doing Business’ survey conducted by the International Finance Corporation and the World Bank is of particular value in assessing these hindrances as it allows us to compare Côte d’Ivoire to other countries in the region and the world. In detail, the survey measures the ease of doing business based on ten sets of indicators such as starting a business and getting credit, over enforcing contracts to resolving insolvency. It becomes obvious that it is quite difficult for small- and medium-sized enterprises to start and operate their business with a rank on the ‘ease of doing business’ of 177 out of 185 countries, overall scoring worse than the comparator economies and the regional average (see Figure 1). An overview of the Ivoirian rank on all indicators is presented in Figure 2, whereby it shall be emphasized that Côte d’Ivoire ranks best against comparator economies for the ease of resolving insolvency. For a detailed presentation of the ease of doing business in Côte d’Ivoire a visit to the ‘Doing Business’ website is strongly recommended.

Figure 1: How Côte d’Ivoire and comparator economies rank on the ease of doing business. From World Bank. (2013). Economy Profile: Côte d’Ivoire. In Doing Business 2013 (10th ed.), p.7. Retrieved from:

http://www.doingbusiness.org/~/media/giawb/doing%20business/documents/profiles/country/CIV.pdf

Figure 2: How Côte d’Ivoire ranks on Doing Business topics. From: World Bank. (2013). Economy Profile: Côte d’Ivoire. In Doing Business 2013 (10th ed.),p. 8. Retrieved from:

http://www.doingbusiness.org/~/media/giawb/doing%20business/documents/profiles/country/CIV.pdf

Given the results presented in the ‘Doing Business’ survey it becomes obvious that entrepreneurs wishing to start their business in Côte d’Ivoire need to overcome several hurdles, which can be grouped into four categories, i.e.

“(a) regulatory barriers including taxes, corruption practices or problems related to obtaining investment benefits, (b) market constraints arising from insufficient demand or competition of imports, (c) infrastructure including a lack of business support services and the deficient provision and pricing of public utilities, and (d) financial constraints including primarily the availability of credit” (Sleuwaegen & Goedhuys, 2002, p. 130).

Thereby, experts and Ivoirian entrepreneurs alike state that the access to capital posed the most important obstacle to the successful creation and growth of start-ups. Several organizations support this process of creation and growth such as the Ivorian national business development fund (Fonds Ivoirien pour le Dévelopement de l’Entreprise Nationale), the Ivorian business institute (Institut Ivoirien de l’Entreprise) and the management centre, (Centre de Gestion Agrée). Capital and other financial services can be obtained from an SME guarantee fund, the Fonds de garantie aux PME (FGPME) (AfDB/OECD, 2006), which

“[…] is active in the sphere of all economic activities and offers a guarantee to financial institutions of 70 per cent of the project cost to a limit of 150 million CFA francs. Credit lines in secondary banks exist as an alternative to financing from international institutions. Access to banking services remains difficult, however.” (AfDB/OECD, 2006, p. 240)

In addition, training and financial support can also be obtained by the abovementioned ‘Employment Chain’ program of UNIDO.

3           Conclusion

While the situation for start-ups in terms of the ease of doing business presented above seems rather bleak it is of utmost importance to emphasize that Côte d’Ivoire over the past couple of years already began the process of facilitating the procedure for entrepreneurs wishing to start and grow their businesses (World Bank, 2013) and now that the political situation has become stable it can well be expected that government initiatives with the help of international institutions will remove more obstacles for entrepreneurs within the upcoming years. Already at the present moment are many young entrepreneurs with the help of programs such as that of UNIDO overcoming the hurdles and starting their own businesses. Particular opportunities for young entrepreneurs seems to exist in catering local demand and helping to meet needs that due to high prices of industrially produced or imported goods were so far unmet (MakingItMagazine.net, 2010). Other entrepreneurs build their start-ups in the domain of the traditionally strong agricultural sector and find ways for additional value creation out of by-products of existing value chains. Together, these projects can contribute to fighting poverty and unemployment and regaining the Ivoirian position as the commercial center of the region.

References