The remarkable turnaround in the Cote d’Ivoire’s finances is in large part down to Charles Koffi Diby’s astute management of the financial crisis
Charles Koffi Diby strides into the room and taps his watch: “I’m early,” he tells Emerging Markets with a broad smile. Cote d’Ivoire’s finance and economy minister is a man trying to do things by the book, in a country where politicians miss repeated deadlines with the electorate, and any talk of reform looks hasty.
In particularly unpromising circumstances, Diby has pushed through a number of reforms, which have seen arrears with the international finance institutions cleared, bilateral relations re-established, and the country admitted into the Heavily-Indebted Poor Countries Initiative (HIPC).
“Since the start of the socio-political crisis, Cote d’Ivoire was no longer an attractive place to do business, and outside institutions were reluctant to get involved because they didn’t trust us to respect our side of any deal,” says Jean-Louis Billon, president of the Ivorian Chamber of Commerce and Industry and also Chairman of the Sifca Group, one of West Africa’s biggest companies. “The minister Charles Koffi Diby turned out to be the right man to handle the situation.”
As IMF managing director Dominique Strauss-Kahn pointed out during a visit to the country last year, the Cote d’Ivoire was one of the rare countries actually to grow faster in 2009 than the previous year.
The country was hardly touched by the world financial crisis, registering growth of 3.8% – the first per capita growth rise since 1998. In between those dates, the country stumbled from one crisis to the next, shedding a reputation for growth and stability as it lurched from a coup d’état, to disputed elections and finally a full-blown armed rebellion in 2002.
“Slowly but surely we’re getting back our growth. In the next five years, we’re targeting annual growth of 8%,” Diby says. He has the unenviable task of being the neutral finance minister in a power-sharing government frequently pulling in different directions. “I try to be fair,” he says. “The other ministers have missions just as important as mine; I need to find the resources to help them do their job. I don’t see them as members of a political party but as people with a job to do just like me.”
Despite the fact that taxes and customs still only apply in the southern 40% of the country, a crackdown on fraud and an effort to widen the tax base have helped sustain a primary fiscal surplus, while inflation has declined rapidly.
But Diby’s key mission and perhaps his greatest success has been debt relief.
For at least two decades that weight of external debt reduced investment to a minimum. Before the country’s accession to the HIPC process in March 2009, debt servicing accounted for a third of the state’s budget: “We didn’t have any room to move!” Diby says.
HIPC entry was quickly followed by a debt-rescheduling agreement with the Paris Club, and almost all bilateral agreements have been signed with creditors. Six defaulted Brady bonds were exchanged in April, in what one analyst called, “one of the most successful sovereign distressed-debt exchanges ever”.
The final push from the man who wrote a book on African public service has been for greater transparency: quarterly budget statements, inscription into the EITI (Extractive Industries Transparency Initiative) scheme, new computer systems to control expenditure and annual presentations of the budget to civil society.
Of course, if the politicians continue to delay elections – the world’s most expensive ever per capita – economic growth will remain stunted. But when they do happen, the economy has a strong foundation constructed at the tail end of a military-political crisis.