Cote d'ivoire Poised for Comeback

• Author: Holger Fabig, IMF African Department, and Bruno de Schaetzen
• Position: IMF Policy Development and Review Department
• Pages: 92-93

Page 92

Côte d'Ivoire is set for a comeback. GDP growth should double to 3 percent in 2008 and return to a 5-6 percent path in a few years. Private sector confidence is returning as the country emerges from years of political instability that culminated in civil war in late 2002.

International support-including from the IMF-has been key to the nascent recovery, but many challenges remain. The seeds of the conflict were planted during two decades of flawed economic management, immigration and struggles over land, and a difficult transition to democracy. If Côte d'Ivoire succeeds in overcoming the conflict's damage, it could become once again a driving force of the region.

A star that lost its shine

For 20 years after independence in 1960, Côte d'Ivoire was an economic miracle. With growth rates of 7 percent a year and a dominant position as a cocoa, coffee, and cotton producer, it was widely expected to be the first sub-Saharan African country to emerge as developed. Sudden losses in terms of trade combined with overly ambitious public investment and external borrowing abruptly collapsed this dream in the mid-1980s.

Efforts to put the economy back on its feet were considered too little, too late, until the CFA franc devaluation in January 1994. By then, just after the death of President Houphouet-Boigny, the country was struggling with the transition from autocracy to democracy, one element of which was that one-quarter of the population was of recent immigrant origin. Tensions over land ownership were exacerbated by high unemployment and gave rise to the concept of Ivoirité-a set of beliefs about who is a true Ivoirien and who is not. Its exploitation for political aims made ethnicity a new factor in Ivoirien politics.

The civil war broke out in September 2002 and, after a few months of fighting, the country split into two: the north was held by the rebel Forces Nouvelles and the south by the government headed by President Gbagbo. Despite intermediation by the international community, the next four years saw little progress toward reunification. A turning point came in March 2007 with the Ouagadougou Accord, which established a transition government and set a road map for disarmament, redeployment of public administration in the north, identification of the population, and elections in 2008.

The years of conflict and instability exacted a high toll: almost a million persons were displaced, several millions were pushed into poverty, and social indicators...