Archive for the 'Cote d’Ivoire' Category
December 22nd, 2011 by Tom Minney
The International Finance Corporation (www.ifc.org), a member of the World Bank Group, on 20 Dec agreed to invest some CAD1,250,000 (Canadian dollars, equivalent to US$1.2million) in nickel and copper exploration. Sama Resources Inc (www.samaresources.com) will use the funds raised to advance the Samapleu project in eastern Côte d’Ivoire, near the border with Guinea, which it hopes will provide future jobs and government revenues to Côte d’Ivoire. The transaction is set to close in December.
The country has significant mineral resources but development of the mining sector has been hampered by political and military crisis during the past decade. IFC’s support to the Samapleu project will help promote good environmental and social standards in the country’s mining sector and send a positive signal for future foreign direct investment in the country.
IFC will work with Sama to ensure that exploration and any subsequent mine development is carried out in an environmentally and socially sustainable manner.
Dr. Marc-Antoine Audet, President and CEO of Sama, said in a press release (search “samapleu” on IFC website): “Sama is pleased to welcome IFC as a shareholder and partner on the Samapleu project. We look forward to drawing from IFC’s expertise to help ensure that the progress at Samapleu follows global best practices for the mineral exploration industry, the environment, and for working with local communities.”
Tom Butler, IFC Global Head for Mining, added: “We are excited to be making IFC’s first mining investment in Côte d’Ivoire through Sama, a company we believe has the leadership and resources to make the Samapleu project a success. This investment aligns with our strategy to support early-stage exploration companies with financing and advice.”
IFC offers mining clients in developing countries a broad range of financial and advisory services throughout the mining life cycle. Its early-equity investment programme is to help exploration-stage companies, such as Sama, with financing and advice on best practice in environmental and social management.
IFC is the largest global development institution focused only on the private sector. In fiscal 2011, investments climbed to an all-time high of nearly $19 billion.
IFC is acquiring 3,968,254 units, each of 1 common share and 1 warrant, out of 5,105,539 units offered by Sama to IFC and 2 other investors in a private placement. Each warrant entitles the holder to purchase 1 common share of Sama at an exercise price of CAD0.4725 per common share for a period of 4 years, subject to Sama’s right to accelerate the expiration of the warrant.
The issue price per unit is CAD0.315 Canadian dollars. It is expected that after completing the subscriptions to IFC and the other 2, there will be 66,013,174 Sama common shares outstanding and IFC will directly hold approximately 6.01% of the outstanding share capital and approximately 11.34% of the outstanding share capital if it exercises all its warrants
About Sama Resources
Sama is a growth-oriented resource company focused on exploring and developing nickel-copper-sulphide and laterite resources in West Africa. Its goal is to become the first poly-metallic producer in the region along side its joint venture partner SODEMI (Société pour le Développement Minier de Côte d’Ivoire – www.sodemi.ci). Its key assets are Samapleu project in Côte d’Ivoire and Lola project in Guinea, both in exploration phase. Future production from Samapleu will be managed by a joint venture controlled 66⅔% by Sama Nickel Corporation, a wholly-owned subsidiary of Sama, and 33⅓% by SODEMI. The licence encompasses 449 square kilometres and hosts nickel-copper and nickel-cobalt rich laterite deposits, and the newly discovered massive chromites occurrences.
The Lola project is 100% owned by Sama and encompasses 1,212 square kilometres adjacent to the Samapleu project. The Lola project has strong potential for nickel and copper mineralization and nickel-cobalt rich laterite.
October 20th, 2011 by Tom Minney
Moving back to Cote d’Ivoire may be on the agenda for the African Development Bank (www.afdb.org), according to an interesting story on the website www.devex.com (you may have to sign in to read it?). The bank fled from Abidjan in a rush in 2003, as rebels advanced on Abidjan in the brutal and all-encompassing civil war. Now the new Cote d’Ivoire President Alessane Ouattara wants it back. and it was on the agenda at the bank’s AGM in June in Lisbon, although it may take up to 3 years before this happens.
The article also notes that the bank is increasingly important and playing a bigger role as an African institution in channeling funding to African projects.
In January 2011, the bank lived through Tunisia’s jasmine revolution, although one bank staff member told me that it did not much affect the area around their building, as street action was mostly concentrated in other parts of town. They did miss a few days work, before bosses had them back in action.
According to the article, AfDB president Donald Kaberuka said uncertainty over the permanent location of the bank had a “significant effect” on morale, frustrated “horizon planning” and was difficult for the human resources department. Some bank staff may be happy to leave Tunis, others not.
Ouattara, who got into power in April 2010 after being blocked by his predecessor, Laurent Gbagbo who disputed the election result, is moving fast to re-establish Abidjan as the financial hub for West Africa and has been lobbying hard for the bank. It is not sure what the criteria for the move are, but it is possible they will need to see at least another successful multi-party election and a period of stable government.
The AfDB attended Ouattara’s inauguration and was a leader in an accelerated package of loans to help the new administration and initial renovation has started for the bank’s headquarters in Plateau district, according to the article.
New confidence, bigger role going forward
Then bank also led multilateral lenders to sign of $1 billion in loans to Tunisia’s new administration. Kaberuka, a former finance minister from Rwanda, reportedly says that after the political shocks, swift intervention can limit collateral damage. The African Development Bank is credited for its role after the 2008 global financial crisis in encouraging African states to apply fiscal restraint but to ease potential economic disruption through investment in infrastructure, and many countries are praised for successful countercyclical interventions.
The article also argues that the bank is increasingly the biggest and best bet for Western donors who are its principal shareholders. Experienced author Mark Ashurst writes: “As the bank’s loan book grows bigger and more diverse, donors, including the United States, Germany and the United Kingdom, are keen to devolve the task of managing their African exposure to an African institution.” He adds that the bank has done a skilful job of developing a terminology that avoids words such as “conditionalities” and uses “policy-based lending” and success in developing the skilful balancing acts required to work with nations. It also reflects aspirations for greater African voices in international development policy and it is likely that more international financial institutions could devolve administrative work to the AfDB.
In 2010 the African Development Bank passed the World Bank and became the leading source of multilateral financing for new African infrastructure. The same year, the bank’s sixth general capital increase included pledges to treble the bank’s reserves to $100 trillion by 2021, signalling new confidence. The bank’s loan book is stsill less than the sum of China’s resources-for-infrastructure swaps but the AfDB is much more closely involved than other lenders in African institutions such as the African Union and the Economic Commission for Africa and has a unique standing in the regard with which it is seen in Africa.
The article goes on to argue about the bank’s changing role as growth of 5% a year or more becomes the norm in Africa for coming years. This includes work to support bond and capital markets and leveraging private capital (20%), infrastructure (40%), budget support (20%), industries, including mining and manufacturing (20%). It is well worth reading Mark’s article in full here.
May 13th, 2011 by Tom Minney
West Africa’s Bourse Regionale des Valeurs Mobilieres (www.brvm.org) regional stock exchange is still trading in Bamako this week, but next Monday (16 May) the market will reopen trading operations ino Abidjan, Cote d’Ivoire’s commercial capital. The market had moved operations and started trading in Mali on 1 March because of the violent crisis in Cote d’Ivoire (see our earlier report).
Senior management were already back in Abidjan and banks and stockbrokers were reopening on Monday (9 May) when AfricanCapitalMarketsNews phoned.
According to a report on Bloomberg, Abdelkader N’Diaye information systems director of the BRVM said trading was picking up as situation improved in Abidjan and banks in the city reopened. Former president Laurent Gbagbo was arrested on 11 April and Alessane Ouattara, recognized internationally as winner of last November’s election, was sworn in on 6 May. Forces supporting him had swept through the country in a swift campaign in early April after waiting months for successful international intervention, including from the African Union.
The BRVM smuggled senior management out of Cote’Ivoire in February after security forces loyal to ex-President Laurent Gbagbo occupied the BRVM on 11 February. In an amazing piece of Business Continuity Planning, the BRVM management had all systems including support systems running within 18 days. In March Bloomberg quoted BRVM head Jean-Paul Gillet saying: “We managed to restart the operations of the bourse after we reconstructed the system and the environment. The volume of transactions has been a bit affected, but the prices haven’t dropped as there has been no haste in selling.”
Most banks in Cote d’Ivoire closed about the same time and their branches were taken over. Without the usual custodians and stockbrokers, trading in Mali saw much lower volumes than in Abidjan.
The BRVM lists 39 securities and acts as the regional exchange for 8 countries as an African innovation when it opened in 1998. Sonatel, based in Senegal and including France Telecom as a shareholder, is the biggest listed company with CFA 1.65 trn in market capitalization. Other listings include 8 banks, including SGBCI (Societe Generale SA) and Ecobank Transnational Inc. Ivorian companies make up 33 of the 39 listings, according to BRVM website, and the BRVM Composite Index peaked at 174.89 on 11 Jan, but was 151.46 at close of trading today (13 May) after edging down all week. Michael Barnes, Head of Sales and Trading for Securities Africa said on Monday that much of the pent-up buying and selling had already gone through.
March 31st, 2011 by Tom Minney
Rebel Republican Forces have made a swift advance through Cote d’Ivoire yesterday (30 March) taking the capital Yamassoukro and San Pedro, a key cocoa exporting report according to reports on Bloomberg and Reuters. They have been meeting very little resistance, as soldiers loyal to incumbent president Laurent Gbagbo have either joined them or retreated to Abidjan.
The RF have launched a military offensive to support the claim of Alessane Ouattara, who is internationally acknowledged to have won last November’s presidential election but was then blockaded in a hotel and protected by UN peacekeepers after Gbagbo refused to accept the result.
Meite Sindou, spokesman for Ouattara’s prime minister, Guillaume Soroare said the RF about 90 kilometres north of Abidjan, in a town called Adzope. Bloomberg this morning quotes an interview with Young-jin Choi, the head of the United Nations mission that the advance has been “much more rapid than expected,” and the troops are within “striking distance” of Abidjan.
Fighting in Abidjan, formerly a top West African commercial centre, has already been fierce and the final showdown could be violent. One million people are reported to have fled their homes. Gbagbo is calling the Young Patriots youth militia to boost his troops. Reuters reports: “The army called on Gbagbo’s often violent youth wing to enlist in the military. They have been fired up with anti-French, anti-foreigner and anti-U.N. propaganda, and on Wednesday, the army started openly handing out weapons to them. They have set up roadblocks all over town and have attacked U.N. staff and killed several West African immigrants and suspected Ouattara supporters, Human Rights Watch says.” Amnesty International on 29 March said armed forces from both sides had committed atrocities.
The international and African communities have not intervened militarily and many civilians have been killed – at least 470 deaths reported – and tens of thousands have fled to neighbouring countries. However, there have been many meetings to discuss the crisis and yesterday the UN Security Council voted to step up pressure on Gbagbo.
Bloomberg says the markets hope the 4-month political crisis may end soon. CI has a €2.3 Eurobond which is in default since missing interest payments on 1 February. On 30 March the bond rallied 7% to 42.688 cents on the dollar, according to data compiled by Bloomberg, breaking out of its range of 36-40 cents for recent weeks. Bloomberg adds that prices of cocoa for May delivery fell to $70 (2.3%) to $2,987 per metric ton by 5:20 p.m. in New York, their lowest in 10 weeks, on hopes that a quick victory could pave the way for a renewal of exports.
There is an international arms embargo in place and on 2 March the UN apologized to Belarus for wrongly saying it had supplied Gbagbo with an attack helicopter – the CI airforce used to have Russian Mi-24 attack/transport helicopters.
March 30th, 2011 by Tom Minney
Rebel advances in Cote d’Ivoire are boosting the price of the country’s €2.3 bn Eurobond, which are in default since 1 Feb, in London trading. According to Bloomberg today (30 Mar), the advance boosted the dollar-denominated bonds to their highest in at least 2 months on 29 March as they climbed 4.2% so their price was 39.875 % of face value last night. The yield fell 31 basis points to 8.6%, according to data compiled by Bloomberg.
The country seems to be moving back in civil war, and the Republican Forces, loyal to presidential contender Alessane Ouattara, have taken at least 5 towns this week and moved to within 240 kilometres of Abidjan. The RF stepped up their military campaign in the past month, mainly in the western cocoa- producing region, taking the towns of Duekoue, Guiglo and Daloa in the past few days, and the eastern town of Abengourou on 29 March.
Reuters reports that heavy fighting has flared in the northern Abidjan suburb of Abobo, under control of the Republican Forces. Forces loyal to Gbagbo were accused of shooting civilians again yesterday, adding to a toll in which 460 people are already reported to have been killed. Up to 1 million Ivorians have now fled fighting in Abidjan alone, according to the U.N. refugee agency and more across the country. At least 112,000 have crossed into Liberia to the west.
The problem stems from a stand-off after incumbent president Laurent Gbagbo refused to leave after a Constitutional Court ruling disallowed hundreds of thousands of votes, meanwhile using the military to blockade Ouattara in a hotel where he is protected by UN peacekeepers. Although ECOWAS and the African Union promised strong measures in December and January, they have been unable to muster support for a military intervention to remove Gbagbo and recently the RF started its advance. Last week there were renewed international calls for intervention, wondering what the difference is between Libya and Cote d’Ivoire. The previous civil war was brutal and yesterday Amnesty International already said “All parties to the conflict have committed serious human rights violations including unlawful killings and rape and sexual violence against women.”
Observers seem to hope that the Republican Forces can drive out Gbagbo in a quick campaign and this is the reason for the rising bond prices. The Eurobond was created after Cote d’Ivoire reneged on $3.5bn of “Brady bonds” in 2000. These were fixed-income securities created as part of a debt restructuring plan for developing countries and named after former U.S. Treasury Secretary Nicholas Brady. It issued Eurobonds in April 2010 as part of its debt restructuring at a yield of 10.181%. The default was declared after a 30-day grace period after the country was unable to pay a $29m coupon interest payment due on 31 December.
Cote d’Ivoire’s financial sector had been in chaos since January. The region’s central bank, BCEAO, shut its offices on 27 January in the commercial capital, Abidjan, after finance ministers of the West African Economic and Monetary Union (WAEMU) ordered it not to give Gbagbo access to national funds. Cocoa exports were also halted. Gbagbo ordered the nationalization of foreign banks which had closed during February.
March 17th, 2011 by Tom Minney
West Africa’s regional stock market the Bourse Regionale des Valeurs Mobilieres (www.brvm.org) has started trading from a new base in Bamako, Mali, after leaving Cote d’Ivoire because of the political crisis. Trading restarted in the new office on 1 March, reports Bloomberg news agency, but volumes are much lower.
The bourse suspended operations on 11 February, after security forces loyal to incumbent Cote d’Ivoire president Laurent Gbagbo seized its main offices in Abidjan to prevent it relocating. Once senior personnel were safely out, the BRVM managed to move enough of the settlement and clearing operations to start operating in the new offices. At least 10 commercial banks in Cote d’Ivoire closed and Gbagbo’s forces “nationalized” them.
Bloomberg says that it is only operating for foreign investors since most of the stockbrokers were based in Cote d’Ivoire and their offices were part of the closed banks. However stockbroker Securities Africa says that only locals can trade. Clearing and settlement would also require banks, although the BRVM has an associated regional central depository Dépositaire Central/Banque de Règlement S.A.
The political crisis in Cote d’Ivoire is getting closer to civil war. International bodies including regional grouping ECOWAS and the African Union says that opposition leader Alassane Ouattara, won a 28 November presidential election and is the legal president of the country, but Gbagbo refuses to accept the verdict. The United Nations says that almost 400 people have been killed and tens of thousands have fled. The economy has virtually stopped, with all financial systems, and Cote d’Ivoire’s €2.3 billion Eurobond went into default on 30 January.
The BRVM lists some 39 securities and acts as the regional exchange for 8 countries as an African innovation when it opened in 1998. Bloomberg reports BRVM head Jean-Paul Gillet saying that the value of trading on 15 March was CFA 86 million (US$182,300), down from a daily average of CFA 200 mn to CFA 500 mn in 2010: “We managed to restart the operations of the bourse after we reconstructed the system and the environment. The volume of transactions has been a bit affected, but the prices haven’t dropped as there has been no haste in selling.
“Given the situation in the country, Ivorian companies face difficulties in taking part in trading, so we mostly have international clients at the moment. Companies can’t work from Abidjan because members of their staff are missing or their offices are closed.”
Stockbroker Securities Africa lists the market capital of the BRVM at CFA 3.5 trillion CFA francs. Sonatel (SNTS), Sonatel, based in Senegal and including France Telecom as a shareholder, is the biggest listed company with CFA 1.65 trn in market capitalization. Other listings include 8 banks, including SGBCI (Societe Generale SA) and Ecobank Transnational Inc. Ivorian companies make up 33 of the 39 listings, according to BRVM website, and the BRVM Composite Index peaked at 174.89 on 11 Jan, but has since fallen 7.5%, in line with many emerging markets indices.
February 1st, 2011 by Tom Minney
Cote d’Ivoire has formally reneged on $2.3 billion of Eurobonds, becoming the first nation to default since Jamaica in January 2010. The default comes after the strife-torn West African nation could not pay $29 million of interest which had become due on 31 December, and after a 30-day grace period had expired. However, the market appears to have faith the crisis will eventually end.
The problem stems from a stand-off following an election which all international and African observers say was won by Alassane Ouattara. However, the previous president Laurent Gbagbo has refused to step down and got an internal ruling to disallow hundreds of thousands of votes, meanwhile using the military to blockage Ouattara in a hotel where he is protected by 700 UN peacekeepers.
African states had earlier threatened force to remove Gbagbo, but more recently seem to be settling onto the usual compromise of a shared administration as demonstrated in Zimbabwe and Kenya. This is what Gbagbo seems to have been gambling on from the start, according to his early statements. Meanwhile Cote d’Ivoire hangs on the brink of renewed civil war, hundreds have died and thousands have fled into neighbouring countries.
According to a report on Bloomberg, Alcide Djedje, foreign affairs “minister” in Gbagbo’s administration, said in Addis Ababa, at the African Union summit: “We will be making the payment. We do have the money of course. We have been paying civil servants. I don’t have a date yet but we will definitely pay.”
Bloomberg cites an email from Thierry Desjardins, the Paris-based chairman of the London Club group of commercial bank creditors and vice-president of sovereign debt restructuring at BNP Paribas SA, which said they had not received the debt and this was an “event of default”. The trustee for the bond is Robert Rywkin, the New-York based trustee at Law Debenture Trust Co., and Bloomberg says he said his firm would send out a notice of an event of default “not more than a couple of days later,” once it has assessed the situation.
Surprising price bounce
Meanwhile the bonds price bounced back up. They were 36.25 cents for each $1 of nominal value in trading on Monday (31 January) but up to 40 cents by 4pm today (Tue 1 Feb), according to bid prices quoted on Bloomberg. This may be because the bonds will now trade including any interest that has been accumulated which the buyer can claim, according to Stephen Monks of London stockbroker Exotix Ltd. Bloomberg quotes Aviva Werner, general counsel at the New York Emerging Markets Traders Association said the bonds should, unless otherwise agreed, trade “flat”, which means the buyer doesn’t pay for accrued interest separately from the purchase price of the bonds: “It takes into account they might pay in the next week, month, year, so it’s an all-in price; the buyer is due to all past interest.”
Central bank closed
The region’s central bank, also known by its French acronym BCEAO, said it shut its offices on 27 January in the Cote d’Ivoire’s commercial capital, Abidjan. The Finacne Ministers of the West African Economic and Monetary Union had ordered it not to give Gbagbo access to national funds.
If the situation eases and a new government have access, then Cote d’Ivoire, which exports a third of the world’s cocoa, has sufficient reserves there to pay the interest. Most investors believe there will be funds to repay the bond.
Felix Domaus, of Erste Sparinvest KAG in Vienna which holds the debt in its portfolio fo developing market assets, is reported by Bloomberg: “This coupon is a small payment, it shouldn’t be any trouble to Ivory Coast’s cash flow in a normal situation. Investors will give Ivory Coast the benefit of the doubt, professional Ivory Coast investors are used to the necessity of being patient with this country.” However, he warned that patience could run out: “There will be some point in time when we investors will do something, accelerate payment or whatever.”
Standard Bank Plc in London noted “After some further downside, we believe Côte d’Ivoire 32s will be the best-performing sovereign Eurobond in 2011,” in its African Markets Revealed report on 17 Jan.
Origins of the debt
In 2000, Cote d’Ivoire reneged on $3.5 billion of “Brady bonds”, which were fixed income securities created as part of a debt restructuring plan for developing countries and named after former U.S. Treasury Secretary Nicholas Brady. It issued Eurobonds last April as part of its debt restructuring at a yield of 10.181%, according to Desjardins and data compiled by Bloomberg.
Cocoa Prices
The European Cocoa Association and Federation of Cocoa Commerce Ltd. said there is a “significant slowdown” in flows from the country. World cocoa prices have hit one-year highs.
The previous sovereign debt default was in January 2010 when Jamaica defaulted on its domestic bonds, citing falling tourism and remittances because of the global recession.
January 5th, 2011 by Tom Minney
This afternoon (5 Jan) the yield on the Cote d’Ivoire US dollar-denominated sovereign bonds climbed back up 60 basis points to 15.68% as of 3:49 p.m. in Abidjan, according to a report on Bloomberg, after reaching 16.19% on 4 January. The price fell 4.1% to 40.76 cents on the dollar from a close of 42.5 cents yesterday (falls in bond prices area linked to rising yields), as news came that there is no let-up in the political crisis.
Yields had fallen earlier after an African Union envoy claimed the former president Laurent Gbagbo had honoured his pledge to lift a blockade on the hotel where the country’s president-in-waiting Alessane Ouattara is protected by United Nations troops. Prices fell this afternoon as it became clear it had not been lifted.
The country, now in danger of renewed civil war, has $2.3 billion of 2.5% Eurobonds due in 2032. It missed a payment of coupon interest totalling $29 million to bondholders on 31 December. The Gbagbo regime also failed to pay public-sector employees in December and it is likely these would be paid before bondholders. The CFA-zone central bank has withdrawn signatory powers after international and regional opinion that Gbabgo had lost an election last year but he refused to relinquish power.
Another report on Bloomberg quotes Thierry Desjardins, vice president in charge of sovereign debt restructuring at BNP Paribas SA, as saying there is a 30-day grace period to make the payment on the bond and no action can be taken by creditors until 31 Jan.
The bonds had been created in the enthusiasm for high-yielding frontier market debt, after Cote d’Ivoire defaulted in 2000 on $1.24 bn of Brady bonds and $1.03 bn of debt denominated in French francs and the yield climbed as high as 49%, according to Bloomberg data.
The news agency quotes David Damiba, London managing director for Renaissance Asset Managers (of Moscow-based Renaissance Group), who does not hold the bonds, as saying that a yield above 20% “is probably where you can start seeing some specialist buyers come in potentially to look at opportunities. 15%, considering what’s going on down there, is actually not pricing risk in my view. Should the situation move a little bit I could participate.”
December 27th, 2010 by Tom Minney
Markets are nervous about the Cote d’Ivoire bond, worried that the country may not meet a payment deadline. Reuters reports today (27 December): “Ivory Coast’s $2.3 billion bond due in 2032 fell to a record low last week as investors worried the country would not meet a $30 million bond payment.”
Chaos and civil war is threatening as 3 West African presidents flew in to tell former president Laurent Gbagbo that he should leave or the country’s neighbours could use “legitimate force” to shift him. He retaliated by warning of war this morning, according to a VOA report. The 28 November election was internationally held to be won by Alassane Ouattara but a crisis was sparked on 21 December as Gbagbo supporters over-ruled the results and he refused to go. Outtara is in a hotel, protected by UN peacekeeping troops who have refused Gbagbo’s threat and stayed on in the country.
There have already been clashes which have left 200 dead and death squads and kidnappers are targeting Ouattara supporters.
The West African central bank for the CFA zone last week cut Gbagbo from Ivorian accounts, making it hard for him to continue paying the wages of the military, a key in his bid to cling to power at all cost to his countrypeople and the region.
The World Bank has frozen some $800 million in committed financing. Turmoil has pushed cocoa prices to 4-month highs, disrupting export registrations and raising fears that fighting could block transport and shipping.
By 21 December, the dollar-denominated 2.5% bonds had fallen for a 4th day as investors bid 44.25 cents on the dollar, down from a close of 46.06 on 20 December, according to data compiled by Bloomberg. It was the lowest since the bonds were issued and the yield hit a record 14.479% from 13.943%.
Stuart Culverhouse, chief economist at brokerage Exotix Ltd. (www.exotix.co.uk) told Bloomberg: “People are just getting a little bit anxious” on 21 December, forecasting that the bond could fall as low as 42 cents on the dollar, raising the yield to about 15%, with the prospect of a rebound if there is an indication that Gbagbo will step down: “If there is some positive noise and some action, then the bonds will recover to the low 50s.”
December 6th, 2010 by Tom Minney
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.