Institutions react to Cote d’Ivoire crisis

Markets are reacting quickly to the news that Laurent Gbagbo was sworn in as president of Cote d’Ivoire on Saturday (4 Dec). The World Bank (www.worldbank.org) and African Development Bank (www.afdb.org) on Sunday said in a joint statement on the crisis: “The African Development Bank and the World Bank, longstanding multilateral development partners of Côte d’Ivoire, view with great concern and frustration the events unfolding in Côte d’Ivoire in the aftermath of the long-awaited elections which were supposed to usher in peace, stability and a basis for improved governance and inclusive growth that reflects participation of all of Côte d’Ivoire.
“We therefore share the serious concerns expressed by the United Nations, the African Union, Economic Community of West African States and other international partners who have supported Côte d’Ivoire’s development efforts.”
The two institutions are reported on Reuters to be reviewing their lending programmes. They provide loans and grants to support programmes fighting poverty. The World Bank has tied the cancellation of $3 billion of Ivory Coast’s external debt, estimated at $12.5 billion, to the elections. Cote d’Ivoire is the world’s top grower of cocoa – the unrest is pushing up prices – and has a popular $2.3 billion Eurobond on which the yield had not moved much before the election but Reuters reports that it is now up to 11.67%, from 10% after the first election round.
Opposition leader, Alassane Ouattara, was named winner of the vote by an Election Commission and the UN endorsed the results showing him gaining the required 10% lead. Then the Constitutional Council over-ruled this after rejecting hundreds of thousands of votes from Northern areas and gave the election to former president Gbagbo.
Both men have declared themselves president and formed governments and the African Union has sent Thabo Mbeki in Abidjan as mediator. Ouattara warned there was a risk of throwing the country back into a north-south conflict which had for decades paralyzed what previously been a promising economy.
The banks said a prolonged crisis in Ivory Coast would plunge more Ivorians deeper into poverty and hurt stability and economic prosperity throughout the region. “We wish to continue working with the people of Côte d’Ivoire in the fight against poverty but it is difficult to do so effectively in an environment of prolonged uncertainty and tension. Accordingly, in line with our policies, we will continue to closely monitor developments and reassess the usefulness and effectiveness of our programs given the breakdown in governance.”
The African Union, the Economic Community of West African States (ECOWAS), the United Nations, the United States, France and the European Union all rejected Gbagbo’s claimed electoral victory.
Australia’s largest gold mining company Newcrest Mining Ltd., based in Melbourne, has suspended operations at its Bonikro mine in Ivory Coast, reported Bloomberg. The mine is near Hire, about 250 kilometres north-west of Abidjan. Newcrest said in a statement to the Australian Stock Exchange that it produces about 120,000 ounces of gold annually. The company said: “Plans are in place to recommence operations as soon as possible,” the company said. “A detailed security plan is in place and includes provision for temporary evacuation of employees should the situation deteriorate.” previous unrest had forced the AfDB to relocate to Tunisia and many international companies to leave.
Newcrest acquired the Bonikro operation as part of the takeover of Lihir Gold Ltd. that completed this year.

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