VZCZCXYZ0004
PP RUEHWEB

DE RUEHAB #0716/01 3310908
ZNR UUUUU ZZH (CCY TEXT ADX: E2DDDA MSI7563 TMC)
P 270908Z NOV 09 ZDK
FM AMEMBASSY ABIDJAN
TO RUEHC/SECSTATE WASHDC PRIORITY 5555
INFO RUEHZK/ECOWAS COLLECTIVE PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY

UNCLAS ABIDJAN 000716 
 
SENSITIVE 
SIPDIS 
 
C O R R E C T E D  C O P Y  (ADDING PARA 7) 
 
E.O. 12958: N/A 
TAGS: ECON EAGR EFIN PGOV IV
SUBJECT: NORTH-CENTRAL COTE D'IVOIRE AWAITS ECONOMIC 
TRANSITION 
¶1. (SBU)  Summary.  Poverty in northern Cote d'Ivoire has 
worsened during the seven-year political/military crisis. 
The Forces Nouvelles (FN) still exert substantial control over 
the northern economy, levying significant taxes on some 
 
sectors.  Additionally, businesses in the north have 
experienced increased transportation costs resulting from FN 
barricades and poor road conditions.  Bank presence has 
increased, but bankers remain wary of extending credit until 
elections take place.  After a long hiatus, northerners are 
now required to pay for water and electricity.  Some elements 
of the GOCI administration are now carrying out their 
functions in the north; but in some cases official taxes 
duplicate--rather than replace--unofficial FN levies.  Other 
GOCI agencies have not yet resumed activity (e.g., customs 
enforcement).  Businesspeople in the region hope for quick 
elections and completion of the reunification process so 
business projects can get underway.  While the end of the crisis 
will almost certainly help the economy of the north, many in 
the region will lose their source of income as the GOCI 
resumes more of its official functions.   End summary. 
 
-------------------- 
POVERTY IN THE NORTH 
-------------------- 
 
¶2. (SBU) On a week-long trip to north-central Cote d'Ivoire 
in mid-November, econoff and economic assistant observed 
first-hand the high level of poverty.  At almost every 
barricade, men dressed in plain clothes stopped the embassy 
vehicle and asked for money even though the car bore 
diplomatic license plates--a practice that is quite rare in 
Abidjan.  A relatively undeveloped region of the country, 
north-central Cote d'Ivoire has experienced economic 
deterioration over the past seven years.  According to Cote 
d'Ivoire's 2008 Poverty Reduction Strategy Paper, poverty 
rates in Bouake and Korhogo are 57 percent and 77 percent, 
respectively, compared to 21 percent in Abidjan. 
 
¶3. (SBU)  The fact that Cote d'Ivoire's real GDP has 
continued to grow (on average 1.0 percent per year from 2002 
 
to 2009) during a time when the entire northern half of the country 
has been isolated from the official economy is one indication 
of the relative lack of economic development in the north. 
The nation's revenue-generating products are largely found in 
the south:  hydrocarbons (all offshore), cocoa (some 85 
percent in the south), coffee, timber, tuna, pineapples, 
bananas, rubber, and palm oil.  Key services such as port 
operations and telecommunication services are almost 
exclusively located in the south. 
 
------------------------------------------- 
DIFFICULTIES OF DOING BUSINESS IN THE NORTH 
------------------------------------------- 
 
¶4. (SBU)  The FN still exerts significant control over the 
northern economy.  According to Bright Kone, assistant to the 
president of the Confederation of National Federations of 
Livestock and Meat Sectors of West African Economic and 
Monetary Union Member States, the FN charges livestock 
dealers 111,000 CFA (USD 253) for each rail car of cattle and 
125,000 CFA (USD 285) for each rail car of sheep that passes 
through the FN-controlled region (typically en route from 
Burkina Faso to Abidjan).  Each month approximately 60 
trainloads of livestock, with 10 to 20 cars on each train, 
pass through the FN zone.  Kone also reported that similar 
fees paid for livestock shipments by truck total 
approximately USD 165,000 per month. 
 
¶5. (U)  Roads in the north-central region are generally in 
poor condition.  On the stretch between Ferkessedougou and 
Ouangolodougou, portions of the road that at one point were 
paved appeared to be nothing more than dirt roads.  The state 
of the roads and the proliferation of barricades have 
increased the cost of doing business in the north--especially 
for perishable commodities such as mangos and corn.  They 
also make the region's exports--such as cotton--less 
competitive on world markets. 
 
¶6. (SBU) While at least six banks operate in Bouake and 
Korhogo (BIAO, BICICI, BCI, SGBCI, Ecobank, BOA), they are leery 
of extending credit before elections take place.  Managers of 
Filiature et Tissage de Gonfreville (FTG), a cotton spinning 
and weaving company, complain that because of the 
political/security climate, the company has not been able to 
secure financing for replacement parts and new equipment for 
several years.  Branches of the Central Bank of West African 
 
States (BCEAO) in Bouake and Korhogo have not yet re-opened. 
 
¶7. (SBU)  While customQpersonnel hQe returned to the 
region, they have not been able to perform their duties.  The 
lacy of customs enforcement has made it difficult for officially 
protected sectors, such as cotton, to compete with cheaper 
imports.  In fact, a senior manager at FTG said counterfeit 
goods and lack of enforcement of import duties represented 
his greatest challenge.  FTG, which employed approximately 
1,500 workers in 2002, now employs only 400. 
 
--------------------------------------- 
BREAKS OR NORTHERNERS COMING TO AN END 
--------------------------------------- 
 
¶8. (SBU)  Northerners have enjoyed some economic advantages 
over southerners during the crisis.  With no official GOCI 
presence there, they have paid no taxes on autos (a 17 
percent tax) or motorcycles (a tax ranging from USD 160 to 
USD 200 per motorcycle).  That savings came to an end in 
February 2009, however. Residents of the north have not paid 
for electricity or water during the crisis.  Those benefits 
have also ended, as the national utility companies (SODECI 
and CIE, both owned by the French industrial group Bouygues) 
began billing northerners in April 2009. 
 
¶9. (SBU)  Fuel remains less expensive in the north.  Unleaded 
gasoline in Korhogo was selling for 600 CFA (USD 1.36) per 
liter, compared to the official price of 694 CFA (USD 1.58) 
per liter in GOCI-controlled areas.  The price of diesel in 
Korhogo was 500 CFA (USD 1.14) per liter, versus 571 CFA (USD 
1.30) in GOCI-controlled areas.  Fuel smuggled from Burkina 
Faso--albeit of poor quality--escapes official taxes, 
allowing for lower prices at the pump. 
 
----------------------------- 
RETURN OF GOVERNMENT SERVICES 
----------------------------- 
 
¶10. (SBU)  Prefecture officials resumed their positions in 
Bouake, Korhogo, and Ferkessedougou in 2007.  In meetings 
with embassy staff they reported that public schools and 
hospitals were open and operating, although schools in 
Korhogo were still using many volunteer teachers.  In Bouake, 
a local official maintained that his city is now more secure 
than Abidjan, citing the fact that Bouake pharmacies are open 
through the night without protection--a practice unheard of 
in Abidjan.  Nevertheless, the official noted that rural 
areas and villages are much less secure, with uncontrolled FN 
members committing violent acts against the population.  He 
said judges were present but did not have full operational 
powers due to the lack of police and gendarmes. 
 
 
¶11. (SBU)  Prefecture officials reported that the consolidation 
of the national treasury ("unite de caisse" in French) had not 
taken full effect, though the GOCI had begun to collect taxes 
on cars and motorcycles in Bouake (but not Korhogo).  FN 
members, who demand a portion of customs revenue and 
ultimately aspire to become regular customs officials, 
continued to prevent regular customs officials from 
performing their duties. 
 
¶12. (SBU)  In Bouake, the secretary general of the prefecture 
and a local bank executive reported that businesses were 
paying taxes to GOCI treasury officers while still paying 
unofficial taxes to the FN.  Thus, the return of the GOCI has 
generally resulted in more costs (electricity, water, and 
taxes) but little help for businesses (in the form of customs 
enforcement, relief from unofficial FN taxes, or better 
credit terms). 
 
------- 
COMMENT 
------- 
 
¶13. (SBU) There is clearly a greater urgency to move to 
elections among businesspeople in the north than in the 
south.  This is understandable as they currently experience 
both the disadvantages of the crisis and some of the costs of 
the return of government.  While elections are likely to 
bring a more secure environment, increasing credit flows and 
economic growth, the area has been historically 
disadvantaged, and a robust recovery capable of providing 
income to former FN soldiers and others will take time. 
 
¶14. (SBU)  The ragged, gaunt FN members at barricades 
virtually begged emboffs for food or cash.  Though some 
 
reinsertion programs are in place, it is clear that there 
will be a difficult transition for those who have profited 
from the crisis, once the return of the government is 
complete, since even now there are many who are barely 
managing to survive. 
NESBITT