Côte D'ivoire Mali

COUNTRY REPORT

Côte d’Ivoire Mali At a glance: 2001-02

OVERVIEW Despite pressure from the Organisation of African Unity, General Guéï has refused to delay the presidential election any further. It is to be held on October 22nd. General Guéï has announced that he will stand as a candidate. An attack on his residence in September prompted a purge of the military and government. Generals Lassana Palenfo and Abdoulaye Coulibaly have taken refuge in Nigeria after a warrant was issued for their arrest in connection with the attack. Both are suspected of supporting the RDR leader, Alassane Dramane Ouattara. All political activities have now been banned until the official election campaign begins on October 7th. Key changes from last month Political outlook • The presidential election will be held on October 22nd. It is now clear that General Guéï will do everything he can to remain in power. It is therefore unlikely that the contest will be fair or transparent. The outcome of the election may be challenged as a result. Discontent and division are likely to persist in the army, posing a constant threat to the country’s stability. Economic policy outlook • The risk of fiscal slippage will remain extremely high. Discussions with the IMF will not resume before next year. Economic forecast • Activity in both the private and public sectors has remained depressed, and real GDP is now forecast to contract by 1.5% in 2000. It will grow by 3% in 2001 and 5% in 2002, assuming external assistance is resumed. • The exchange rate is now estimated to average CFAfr703.4:US$1 in 2000.

October 2000

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Contents

3 Summary

Côte d’Ivoire

5 Political structure 6 Economic structure 6 Annual indicators 7 Quarterly indicators 8 Outlook for 2001-02 8 Political outlook 10 Economic policy outlook 10 Economic forecast 13 The political scene 19 Economic policy 20 The domestic economy 20 Agriculture 23 Infrastructure 24 Foreign trade and payments

Mali

25 Political structure 26 Economic structure 26 Annual indicators 27 Quarterly indicators 28 Outlook for 2001-02 28 Political outlook 29 Economic policy outlook 29 Economic forecast 31 The political scene 33 Economic policy 34 The domestic economy 36 Foreign trade, aid and payments

List of tables

11 Côte d’Ivoire: international assumptions summary 12 Côte d’Ivoire: forecast summary 23 Côte d’Ivoire: export crop production, final estimates 30 Mali: forecast summary 34 Mali: national accounts

37 Mali: current account

List of figures

7 Côte d’Ivoire: exchange rate 7 Côte d’Ivoire: foreign reserves 13 Côte d’Ivoire: gross domestic product 13 Côte d’Ivoire: real exchange rates 27 Mali: exchange rate 27 Mali: exports 31 Mali: gross domestic product 31 Mali: real exchange rates

EIU Country Report October 2000 © The Economist Intelligence Unit Limited 2000 3

Summary

October 2000

Côte d’Ivoire

Outlook for 2001-02 The presidential contest, which the EIU still expects to be held on time despite the current crisis, are likely to be marred by procedural and voting irregularities in favour of General Robert Guéï. There is a strong possibility that the outcome of the election will be challenged as a result. This will fuel social unrest and may delay the legislative election. The current government has failed to implement the IMF’s recommended measures during the transition period and the risk of fiscal slippage is extremely high. Discussions with the IMF are not expected to resume before a legitimate civilian government is back in place in 2001. Activity in both the private and public sectors has remained depressed and real GDP is now forecast to contract by 1.5% in 2000, but is forecast to return to positive growth rates of 3% in 2001 and 5% in 2002. The current- account deficit will hit 8.6% of GDP this year, falling to 6.1% of GDP in 2001 and 4.1% of GDP in 2002, largely reflecting higher exports.

The political scene The new constitution has been approved in a popular referendum with 87% of the vote in a 58% turnout. General Robert Guéï has announced that he will run in the presidential election, which has been postponed until October 22nd, as an independent candidate. Most of the main candidates seeking to contest the election have had their eligibility challenged, in particular the RDR leader, Alassane Dramane Ouattara. Soldiers mutinied in July. An attack on General Guéï’s residence in September also prompted a purge in the army and a government reshuffle. General Guéï has rejected the OAU’s call to postpone the presidential election further.

Economic policy The IMF raised concern over fiscal slippage and poor governance in its last mid-year review. Progress with structural reforms has been mixed. The state- owned cotton ginnery, CIDT-Nouvelle, has been sold to the main farmers’ co- operative. The call for bids for a 37% stake in the oil refinery, SIR, has been unsuccessful.

The domestic economy The transitional government announced new reforms of the cocoa and coffee sector in advance of the 2000/01 marketing season (October-September). Leading exporting groups have continued to invest in new upcountry cocoa bean warehouses and pre-export treatment plants. The US commodities giant, Archer Daniels Midland (ADM), has bought a majority stake in the ailing Ivorian group Sifca, in which it already held a 30% stake. An Anglo-Dutch consortium, led by Dutch P&O Nedlloyd and British Transport and Communications International (TCI), has been awarded a 30-year build- operate-transfer concession to extend the port of Abidjan.

Foreign trade and The government has continued to struggle to meet its obligations on external payments debt, with arrears totalling CFAfr1.6bn with the African Development Bank and CFAfr31.1bn with Agence française de développement.

Mali

Outlook for 2001-02 With the next round of elections only two years away, political manoeuvring within both the ruling, Adema, and the opposition parties will increase. Corruption issues will also continue to dominate the media and political agenda. The government led by the prime minister, Mandé Sidibé, will continue to show a strong commitment to economic reforms and financial liberalisation. Real GDP growth will remain solid, at around 5% a year.

The political scene Infighting within the ruling Adema has increased, as the succession to President Alpha Oumar Konaré, seems increasingly open; the former prime minister, Ibrahim Boubacar Keïta, is losing support for his candidacy. General Amadou Toumani Touré, has yet to announce that he will run in the 2002 presidential election. The opposition has remained divided.

Economic policy The IMF has disbursed US$9m under Mali’s three-year poverty reduction and growth facility. An interim poverty reduction strategy paper (PRSP) has been made public. Top officials from the cotton parastatal CMDT have been arrested on allegations of fraud. Other cases of corruption have been revealed.

The domestic economy The Banque de France has released its annual economic report on Franc Zone countries, and real GDP growth in Mali in 1999 is estimated at 5.3%. Projections for the cotton harvest in 2000/01 are low. There has been new energy shortage. South Africa’s Randgold has started production at its Morila gold mine.

Foreign trade and Mali has reached completion point under the original heavily indebted poor payments countries (HIPC) debt initiative, leading to a debt write-off of US$220m. Further debt relief amounting to US$650m is expected under the enhanced HIPC initiative.

Editors: Charlotte Vaillant (editor); David Cowan (consulting editor) Editorial closing date: October 5th 2000 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule

EIU Country Report October 2000 © The Economist Intelligence Unit Limited 2000 Côte d’Ivoire 5

Côte d’Ivoire

Political structure

Official name République de Côte d’Ivoire

Form of state Unitary republic

Legal system Based on the 1960 constitution and the Napoleonic Code—currently suspended

National legislature Assemblée nationale; 175 members elected by universal suffrage for a five-year term— currently suspended

National elections October 1995 (presidential) and November 1995 (legislative); next elections in 2000, on October 22nd (presidential) and December 10th (legislative)

Head of state General Robert Guéï, who deposed President Henri Konan Bédié in December 1999

National government The Comité national de salut public (CNSP) headed by General Robert Guéï took control of the country on December 24th 1999 and dissolved parliament; a provisional government was formed on January 5th 2000

Main political parties Parti démocratique de Côte d’Ivoire (PDCI)—the former ruling party; Rassemblement des républicains (RDR); Front populaire ivoirien (FPI)

President of the CNSP & minister of defence Robert Guéï (CNSP) Prime minister Seydou Diarra

Minister of state Infrastructure & transport Mathias Doué (CNSP)

Key ministers Agriculture & animal resources Ahmed Timité (PDCI) Communication & culture Henri Sama Damalan (CNSP) Construction & environment Christophe Nado Economy & finance Mamadou Koulibaly (FPI) Mines & energy Moussa Touré (PDCI) Family & women’s advancement Constance Yaï Foreign affairs Charles Gomis Health & social protection Jeanine Tagliante Saracino Higher education & scientific research Seri Bailly (FPI) Industry & tourism Affi N’Guessan (FPI) Infrastructure Michel Badia Yoro Interior & decentralisation Grena Mouassi (CNSP) Justice Yao Pascal Konan (CNSP) Labour & civil service Hubert Oulaï National education Michel Amani N’Guessan (FPI) Security Akawa Augustin Assaud Social affairs & national solidarity Marthe Biley Achi-Brou (PDCI) Technical education & professional training Léon Emmanuel Monnet (FPI) Trade Saint-Cyr Djikalou (CNSP) Youth & sport Honoré Zohin (CNSP) Government secretary-general Félix Dyela Tyeoulou Governor of the regional central bank (BCEAO) Charles Konan Banny

Economic structure

Annual indicators

1996 1997 1998 1999 2000a GDP at market prices (CFAfr bn) 5.5 6.2 6.7 6.8 7.1 GDP (US$ bn) 10.8 10.6 11.4 11.1 10.1 Real GDP growth (%) 6.9 5.9 5.4 1.5 –1.5 Consumer price inflation (av; %) 2.5 4.0 4.7 0.8 3.2 Population (m) 14.8 14.1 14.3 14.5 14.8 Exports of goods fob (US$ m) 4,532.4 4,636.8 4,482.9 4,300.8 3,854.4 Imports of goods fob (US$ m) 2,673.3 2,674.5 2,650.6 2,871.5 2,486.4 Current-account balance (US$ m) –319.4 –260.6 –306.2 –812.9 –874.5 Foreign-exchange reserves excl gold (US$ m) 605.8 618.4 855.5 630.4 622.1 Total external debt (US$ bn) 19.5 15.6 14.9 14.7 15.4 Debt-service ratio, paid (%) 26.0 25.2 26.7 20.0 14.8 Exchange rate CFAfr:US$ (av) 511.6 583.7 590.0 615.7 703.4

September 29th 2000 CFAfr743.34:US$1

Origins of gross domestic product 1998 % of total Components of gross domestic product 1998 % of total Agriculture, forestry & fishing 32.1 Private consumption 64.8 Services, transport & trade 38.5 Government consumption 10.6 Manufacturing & construction 11.5 Gross domestic investment 18.2 Public sector (incl taxes) 11.5 Exports of goods & services 44.2 Energy & petroleum 6.4 Imports of goods & services –37.8 GDP at market prices incl others 100.0 GDP at market prices 100.0

Principal exports 1998 % of total Imports 1998 % of total Cocoa & products 37.2 Raw materials & semi-finished products 30.7 Coffee & products 9.2 Capital goods 26.8 Petroleum & products 9.0 Consumer goods 21.6 Fish 6.2 Fuel & lubricants 20.9

Main destinations of exports 1998b % of total Main origins of imports 1998b % of total France 15.2 France 26.6 US 8.1 Nigeria 9.8 Netherlands 7.0 China (mainland) 5.8 Germany 6.5 Italy 5.0 Italy 6.3 Germany 4.0 a Estimates. b Based on partners’ trade returns; subject to a wide margin of error.

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Quarterly indicators

1998 1999 2000 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr Output Industrial production index (1985=100) 125 151 165 170 127 150 164 n/a Prices Consumer prices (end-period; 1996=100) 108.0 107.3 108.8 110.0 111.6 108.8 110.9 114.0 % change, year on year 2.2 2.0 0.5 –2.7 3.3 1.4 1.9 3.6 Financial indicators Exchange rate CFAfr:US$ (av) 590.8 557.8 584.4 620.7 625.8 631.9 664.9 702.8 CFAfr:US$ (end-period) 561.6 562.2 610.7 635.1 615.1 653.0 686.7 686.4 Interest rates (%) Deposit (av) 3.50 3.50 3.50 3.50 3.50 3.50 3.50 3.50 Discount (end-period) 6.25 6.25 5.75 5.75 5.75 5.75 5.75 6.50 M1 (end-period; CFAfr bn) 999 1,219 1,286 1,169 1,121 1,198.0 n/a n/a % change, year on year 9.9 12.9 9.8 8.1 12.2 –1.7 n/a n/a M2 (end-period; CFAfr bn) 1,510 1,704 1,827 1,709 1,621 1,676 n/a n/a % change, year on year 3.5 6.0 6.6 5.9 7.3 –1.7 n/a n/a Sectoral trends (‘000 tonnes) Exports Cocoa beans 41.2 339.1 462.2 98.8 148.1 404.0 601.3 n/a Coffee beans 60.5 16.2 23.0 55.6 32.9 6.1 69.5 n/a Foreign trade (CFAfr bn) Exports fob 475.7 676.3 812.9 538.3 502.9 794.2 763.2 n/a Imports cif –433.5 –457.0 –404.6 –468.7 –412.1 –466.8 –463.8 n/a Trade balance 42.2 219.3 404.6 69.6 90.8 327.4 299.4 n/a Foreign reserves Reserves excl gold (end-period; US$ m) 691.7 855.5 956.9 839.1 648.6 630.4 746.2 n/a Sources: Institut national de la statistique, Bulletin trimestriel; Direction Générale des Douanes, Direction de la Conjoncture et de la Prévision Economique; IMF, International Financial Statistics.

EIU Country Report October 2000 © The Economist Intelligence Unit Limited 2000 8 Côte d’Ivoire

Outlook for 2001-02

Political outlook

Domestic politics The recent purge in the military and government clearly indicates that the leader of the military junta, General Robert Guéï, will do everything he can to win the presidential election on October 22nd. It is unlikely that the contest will be fair and transparent as a result. Official harassment has reached unprecedented levels, and the risk of procedural irregularities and vote-rigging on election day is considerable. There is now a strong possibility that the outcome of the election will be challenged. This will fuel social unrest and cause further delay in the planned timetable for a return to civilian rule. Party activists are also likely to turn to violence ahead of the presidential contest, particularly if Alassane Dramane Ouattara, the leader of the Rassemblement des Républicains (RDR), is disqualified. Even if civilian rule returns in early 2001, division and discontent is likely to persist in the army, posing a constant threat to stability.

Although the constitutional referendum in July passed off peacefully, with a good turnout of 58%, there are major obstacles to a smooth return to civilian rule: the probable disqualification of Mr Ouattara from the presidential election and the controversial decision of the leader of the military junta, General Robert Guéï, to stand. In addition, preparations for the elections— from the registration of voters to the drawing up of a budget and the enactment of an electoral code—by the all-party Commission électorale nationale (CEN) has been greatly delayed by the crisis triggered by an alleged attack on General Guéï’s residence in September. Since then, all political activities have been banned, causing outrage in political circles. The attack also prompted an unprecedented purge of the military and government. A number of army officers and soldiers have been arrested, most of them from the north, Mr Ouattara’s political base. The pro-RDR generals, Lassana Palenfo and Abdoulaye Coulibaly, have been sacked from the transitional government and taken refuge in the Nigerian embassy after a warrant was issued for their arrest in connection with the attack. But though General Guéï may have temporarily averted a possible military counter-coup by paralysing hostile elements in the army, he also knows that the use of force against them could provoke a backlash as soon as they have time to reorganise. Therefore General Guéï is likely to continue using force throughout the electoral period and harass his political opponents and their supporters.

Fuelled by regional and ethnic divisions, political violence is likely to increase ahead of the election. Despite mounting international pressure to delay the election and solve the political crisis first, General Guéï has insisted that the poll will be held on time. In fact, it seems that most political parties support General Guéï’s stance, fearing that the presidential contest might be indefinitely delayed otherwise. The Supreme Court’s ruling on the RDR leader’s eligibility, which is due on October 7th, will dominate the run-up to the election. The endless debate over Mr Ouattara’s nationality and the military junta’s harassment of the RDR may have prepared public opinion for the probable disqualification of the RDR leader. But there is a strong possibility

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that, if Mr Ouattara is ruled out as a candidate, RDR demonstrations may break out in urban areas and regions of the Muslim north provoking a crackdown by the security forces. However, the RDR does not have much experience of this kind of protest action, and its impact is likely to be restricted as the party starts to focus on the forthcoming parliamentary election in December.

Election watch As well as the problem of Mr Ouattara’s eligibility, questions have been raised over Emile Constant Bombet, the candidate of the former ruling party, the Parti démocratique de Côte d’Ivoire (PDCI). Shortly after his nomination as the party’s presidential candidate, the prosecutor’s office reopened the file against him over the misappropriation of EU funds. Mr Bombet will be ineligible if a case is brought against him. If the Supreme Court rules against Mr Bombet’s candidacy, PDCI supporters are unlikely to take to the streets. The consequences would be more political, as the next person on the PDCI’s reserve list is the ousted president Henri Konan Bédié. But Mr Bédié, who is still in exile in France, could also be disqualified, since there is a warrant out for his arrest. The third candidate on the PDCI list is retired Admiral Lamine Fadiga, whose candidacy was supported by only 14% of the party in August. The veteran leader of the Front populaire ivoirien (FPI), Laurent Gbagbo, is the candidate least likely to face eligibility problems. Even General Guéï could in theory be disqualified since according to the military code a serving officer must resign at least six months before he may stand in a presidential election. This will not happen, however, since the president of the Supreme Court, Tia Koné, is one of General Guéï’s former legal advisers. General Guéï is to run as an independent, which is unprecedented in Côte d’Ivoire.

Most of the candidates draw their electoral support from their home region, making an outright victory in the first round very unlikely. In the unlikely event of a fair and transparent election, the FPI stands out as the political force towards which the other bear the least antagonism. This would give Mr Gbagbo the best chance of winning in the second round. A victory by Mr Ouattara is very unlikely, since the PDCI, FPI and General Guéï’s Mouvement de la Concorde Nationale (MCN) will all vote against him in a second round. If Mr Ouattara is disqualified, many RDR supporters are likely to abstain or vote for the FPI. During the FPI convention on August 26th, the FPI leader adopted a more conciliatory tone, offering to form a government of national unity with other parties. But the outcome of the election will primarily depend on how far General Guéï is prepared to pervert the democratic process. While he will probably use his position to bribe constituency leaders, who will then use their considerable influence to make the local electorate vote for him, his electoral campaign is likely to dominate the national media. Vote-rigging could also take place, should he get to face the FPI or the PDCI in a second round. The outcome of the election will probably be challenged as a result. If none of the competing parties accepts his victory, however, the legislative election, announced for December, could be delayed until a compromise is reached.

International relations The restoration of democratically elected government remains the external donors’ main condition for normalising relations. Western governments have

endorsed the results of the referendum, but they have warned that a military candidate in the election would undermine the restoration of democracy. France has reacted in emollient terms to recent events. This was to be expected, given the reaction to earlier comments by the French minister of co-operation, Charles Josselin. His hint to the military junta not to exclude Mr Ouattara from the presidential contest led to a diplomatic stand-off and anti-French protests in Abidjan. Since then, France has preferred to remain behind the scenes, while backing the OAU’s efforts to find a solution to the crisis.

Economic policy outlook

Policy trends The transitional government will fail to implement the IMF’s recommended measures during the transition period. Discussions with the IMF are not expected to resume before a legitimate civilian government is back in place in 2001. Without the IMF’s seal of approval, most donors are unlikely to come forward. The incoming government will probably negotiate a one-year staff-monitored programme (SMP) before it can qualify for a larger poverty reduction and growth facility (PRGF) for its programme of economic reforms in 2002-04. The SMP will mainly focus on restoring budgetary discipline and transparency.

Fiscal policy There is a serious risk of slippage in public spending during the electoral period. The EIU estimates the fiscal deficit, on a commitments basis and including grants, to be around 3.5% of GDP this year. But the dismal state of public finances is better reflected in the continued accumulation of domestic payments arrears and a suspected increase in non-authorised payments and extra-budgetary expenditure—both of these were notoriously high under the Bédié administration. Value-added tax (VAT) and customs receipts have also remained low, reflecting the contraction in real GDP. The fiscal deficit will slowly decline to pre-coup levels in 2001-02, assuming that external assistance and a programme of fiscal reforms, particularly measures to tighten expenditure, improve revenue collection, widen the tax base and increase transparency, resume.

Monetary policy The regional central bank, Banque centrale des Etats de l’Afrique de l’ouest (BCEAO), will continue to pursue sound monetary policy. Inflationary pressures throughout the zone in 2000 have prompted the bank to increase its rediscount rate and repurchase agreement rate by 0.75 percentage points and tighten its reserve requirements ratio. The reserve requirements for commercial banks in Côte d’Ivoire were left unchanged, however, because of the economic crisis. Monetary policy will remain tight in 2001, partly reflecting the European Central Bank’s continued efforts to prop up the euro against the dollar (the CFA franc has been pegged to the euro at a rate of CFAfr656:¤1 since January 1999). Some relaxation is expected in 2002.

Economic forecast

International assumptions Real GDP in the EU, Côte d’Ivoire’s main trading partner, is set to grow by 3.4% this year, the fastest growth since 1990, before falling slightly to 3% in

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2001 and 2.6% in 2001. Our forecast for soft commodity prices remains bearish. Although grains and sugar are expected to show some recovery, world prices for beverages (coffee, cocoa and tea) will continue to be weak over the forecast period. World prices for cocoa, Côte d’Ivoire’s main export, will nonetheless start a slow recovery, rising from an average of 40.8 US cents/lb this year to 42.5 US cents/lb in 2001 and US$54.3 US cents/lb in 2002. This, however, compares poorly with the pre-1999 price levels of 60-75 US cents/lb. If West African producers stick to their announced plans to destroy some 250,000 tonnes of cocoa beans in 2000/01, prices may recover more sharply. Our oil price forecast for Dated Brent has been revised up sharply to US$28.9/barrel this year and US$25.4/b in 2001. This is because the recent OPEC production agreement is unlikely to release enough oil on to the market in time to prevent prices spiking during the coming northern hemisphere winter season.

Côte d’Ivoire: international assumptions summary (% unless otherwise indicated) 1999 2000 2001 2002 Real GDP growtha World 3.5 4.9 4.2 4.1 OECD 2.9 4.1 3.1 2.7 EU 2.3 3.4 3.0 2.6 Exchange rates (av) ¥:US$ 113.9 106.7 104.0 102.0 ¤:US$ 0.939 1.072 1.058 0.952 SDR:US$ 0.731 0.768 0.775 0.738 Financial indicators ¤ 3-month interbank rate 2.97 4.35 5.19 4.70 US$ 3-month commercial paper rate 5.18 6.40 6.55 5.25 Commodity prices Oil (Brent; US$/b) 17.9 28.9 25.4 19.4 Cocoa (US cents/lb) 51.7 40.8 42.5 54.3 Coffee (robusta; US cents/lb) 67.5 44.7 37.3 33.5 Food, feedstuffs & beverages (% change in US$ terms) –18.6 –6.1 4.2 10.4

a Regional aggregate GDP growth rates are weighted using purchasing power parity (PPP) rates.

Economic growth With the elections postponed, continued military unrest, and poor prospects for the country’s main export commodities, cocoa and coffee, confidence in the economy remains at a very low ebb. Fearing that the situation may deteriorate, consumers have started to hoard basic commodities and send their savings abroad when possible. Activity in both the private and public sectors has remained depressed, and real GDP is now forecast to contract by 1.5% in 2000. Despite all this, foreign enterprises have continued buying into the cocoa, oil, and infrastructure sectors, hoping to better their position on the market once the economic and political crisis is over. This is because, apart from being the world’s largest producer of cocoa, Côte d’Ivoire has one of the most diversified economies in Sub-Saharan Africa.

Because of its underlying strength, the Ivorian economy should recover quickly when the current political crisis is over. Real GDP is therefore forecast to grow

by 3% in 2001 and 5% in 2002, assuming the transition period comes to an end next year, external assistance resumes and world cocoa prices rise. Once a civilian regime is firmly in place in 2002, most public work projects that stopped after the December 1999 coup are expected to resume, while new investment projects, particularly Ranger Oil’s major offshore field, Espoir, will also come on stream.

Côte d’Ivoire: forecast summary (% unless otherwise indicated) 1999a 2000b 2001c 2002c Real GDP growth 1.5 –1.5 3.0 5.0 Gross agricultural growth –4.5 –5.6 3.2 2.0 Consumer price inflation Average 0.8 3.2 3.0 3.0 Short-term interbank rate 5.0 5.0 5.0 4.8 Government balance (% of GDP) –2.7 –3.0 –2.1 –2.2 Export of goods fob (US$ bn) 4.3 3.9 4.1 4.6 Import of goods fob (US$ bn) 2.9 2.5 2.5 2.9 Current-account balance (US$ bn) –0.8 –0.9 –0.7 –0.5 % of GDP –7.3 –8.7 –6.1 –4.2 External debt (year-end; US$ bn) 14.7 15.4 14.8 14.3 Exchange rates CFAfr:US$ (av) 615.7 703.4 694.1 624.7 CFAfr:¥100 (av) 540.5 659.5 667.4 612.5 CFAfr:¤ (year-end) 656.0 656.0 656.0 656.0 CFAfr:SDR (year-end) 896.2 922.7 864.7 829.1

a Actual. b EIU estimates. c EIU forecasts.

Inflation According to the Institut national de la statistique, consumer prices rose by 1.3% in June, boosted by seasonal increases in food prices and a 9.4% rise in petroleum prices. Inflationary pressures were expected to continue into July and August, as higher fuel costs fed into higher public transport costs and the 1999/2000 agricultural marketing season drew to a close. However, in contrast to the pattern of previous years, consumer prices are not expected to fall significantly in the later part of 2000, as a result of spending during the electoral period. In consequence, average inflation in 2000 is now forecast to overshoot by 0.2 percentage points the 3% target rate set by the regional grouping, Union économique et monétaire ouest-africaine (UEMOA). Inflation will remain within the UEMOA target in the following years.

Exchange rate Since it is pegged to the euro at a rate of CFAfr656:¤1, fluctuations in the CFA franc primarily reflect the growth differential between the euro area and other major industrialised economies, developments somewhat detached from the economic reality of the country. The EIU has made a sharp downward revision to its forecast for the rate of exchange of the euro against the US dollar, reflecting recent currency market movements. Although we expect the euro to recover eventually, there is little prospect of this happening within the next six months. The exchange rate is now forecast to average US$0.93:¤1 in 2000, rising to US$0.95:¤1 in 2001. As a result of the pegging, the CFA will also

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depreciate, to CFAfr703.4:US$1 in 2000, from CFAfr615.7:US$1 in 1999, before recovering to CFAfr694.1:US$1 in 2001 and CFAfr624.7:US$1 in 2002.

External sector Merchandise imports will fall to US$2.5bn in 2000, reflecting the depressed level of consumer and government consumption. This will help to maintain Côte d’Ivoire’s trade surplus at US$1.4bn in 2000, despite depressed export prices. Fuelled by increased demand for intermediate and capital goods, imports should start rising by next year, reaching US$2.9bn in 2002. Meanwhile, exports will steadily recover from US$3.9bn in 2000 to US$4.6bn in 2002, as world commodity prices rebound, trade with the subregion resumes and the capacity to produce higher value-added cocoa products increases. Exports of crude oil and petroleum products are also set to rise. The current- account deficit will reach 8.7% of GDP this year, falling to 6.1% of GDP in 2001 and 4.2% of GDP in 2002. Côte d’Ivoire is unlikely to benefit from a debt- relief package under the World Bank-IMF’s heavily indebted poor country initiative over the forecast period.

Late note The country remains calm following the Supreme Court’s decision on October 7th to disqualify all but five of the 19 candidates standing in the presidential election on October 22nd. Only General Guéï and the leader of the Front populaire ivoirien, Laurent Gbagbo, stand a chance of winning; the other three remaining candidates represent minor political parties.

The political scene

The new constitution is The constitutional referendum, the first phase of the return to civilian rule, approved by referendum took place on July 23rd in a relatively peaceful atmosphere. There were some organisational problems, however, and voting had to continue the following day. The interior minister, Colonel Mouassi Grena, blamed the Commission de supervision du referendum (Cosur) for the problems (under previous regimes, the Ministry of the Interior was the sole election body), but any thoughts of the military administration taking over the preparation of the presidential

election, originally mooted for September 17th, were uncompromisingly opposed by opposition leaders, who later forced the transitional government to nominate the chairman of Cosur, Honoré Guié, as the president of the Commission nationale électorale (CNE).

The turnout at the referendum was good, reaching 58%, and a substantial majority, 86.75%, voted in favour of the proposed constitutional and electoral laws. Since all parties urged a yes vote, campaigning was virtually non-existent and voting was, by and large, a formality. This, however, belied the deep controversy over the new constitutional arrangements. A couple of days before the referendum took place, the military junta, Comité national du salut public (CNSP), introduced an 11th-hour amendment to the presidential eligibility clause, stipulating that both parents of a presidential candidate had to be Ivorian citizens. The previous text had stipulated that only one parent needed to be Ivorian. The move was greeted with approval by the Front populaire Ivoirien (FPI) and the former ruling party, Parti démocratique de Côte d’Ivoire (PDCI), but criticised by the Rassemblement des républicains (RDR), whose leader, Alassane Dramane Ouattara, was the target of this new clause. Despite its reservations, the RDR urged a yes vote on the grounds that it did not wish to delay the return to democracy. However, some local RDR officials in the predominantly Muslim north, Mr Ouattara’s stronghold, chose to ignore the party line and, arguing that the clause was divisive, called for a no vote, which in some areas was up to 68% of the vote. Other key changes subject to referendum included a five-year presidential term renewable once and the use of a single ballot paper in elections to reduce opportunities for fraud.

General Guéï will run for Ending months of speculation, the CNSP leader, General Robert Guéï, has president decided to run as “the candidate above all parties”. He claims that much of the CNSP’s programme is still outstanding. General Guéï had initially hoped to run for the PDCI, but he seriously underrated opposition to him within the party. Only days before the original deadline for presidential candidates to register, the PDCI’s interim leader, Laurent Dona Fologo, tried in vain to secure his party’s support for General Guéï, but rank-and-file activists were vehemently against backing a man who had ousted the party from power. In the end, General Guéï did not even stand as a candidate for the party’s nomination. With a high rate of abstention in its voting, the PDCI finally chose Emile Constant Bombet, the former interior minister, as its presidential candidate. However, the party is split between activists that backed Mr Bombet (35% of the vote) and those still loyal to the ousted president, Henri Konan Bédié (27% of the vote). Despite his forced exile, Mr Bédié is still seen by many as the most legitimate PDCI candidate. The ousted president has nonetheless decided to endorse Mr Bombet’s victory, while announcing that he would still stand for election as an independent candidate.

Supporters of General Guéï, many of whom are from the PDCI political establishment, have set up an informal political organisation, the Mouvement pour la concorde nationale (MCN), to back General Guéï. The impact of this fourth political force is unlikely to be significant, however. In announcing his candidacy, General Guéï has not received the kind of national acclaim that supported him in the wake of the December 1999 coup and his candidacy is

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unlikely to provoke mass defections from most political camps. In fact, following the announcement of his candidacy in August, more than 1,500 demonstrators from a coalition of non-governmental organisations, trade unions and youth wings of political parties marched in the capital, Abidjan, to demand his resignation as head of the CNSP. The MCM is therefore likely to win support based on ethnic and regional affiliations in the west of the country, the home region of General Guéï which is also that of Mr Bombet and the FPI leader, Laurent Gbagbo.

The presidential elections The new constitution gives the vote to 18-year-olds for the first time and up to are delayed 1m people aged between 18 to 21 are now eligible. But the government’s call on young voters to register has been overshadowed by continued disputes over the controversial nationality eligibility conditions; and less than two weeks before the presidential election was due on September 17th, only 250,000 of them had registered. In late August, citing registration problems as well as budgetary and logistical constraints, the CNE advised the transitional government to postpone the presidential election until October 22nd. No new date was set for the legislative elections, however. In fact, the question was not even raised, as all the political debate and concerns continued to focus on the presidential eligibility. Since the CNE’s decision, the country’s political crisis has worsened and there is now a strong possibility that the overall electoral schedule may be affected once more.

Candidates’ eligibility is Tension has risen as the Supreme Court’s ruling on presidential eligibility challenged approaches. The fate of the candidates will be decided by the Supreme Court on 7th October. The CNE received applications from 19 presidential candidates by the deadline for registration, which was extended to September 22nd. The heads of two large Muslim organisations, the Conseil supérieur de imams and the Conseil national islamique, have repeated the warnings they gave in March (July 2000, page 16) that unfairly banning some candidates from the race is likely to result in social unrest and have called for “endurance in face of harassment”. On August 19th pro- and anti-RDR students clashed after security forces broke up a pro-RDR rally.

The RDR leader, Mr Ouattara is set for a tough test, as lawyers acting for the government have claimed to have documents proving that he is a Burkinabè national. This has been vehemently dismissed by the RDR. In the meantime, anti-foreign feeling erupted again in South-West region, when Burkinabè migrant workers and local Krumen people clashed over land issues, killing 15 people. 2,500 Burkinabè subsequently fled to the regional capital, San-Pédro, and army and paramilitary forces have been sent to the region.

The eligibility of other presidential candidates is also at stake. Mr Bédié’s candidacy is likely to be rejected since a warrant is out for his arrest on a charge of embezzlement (July 2000, page 17). Likewise, Mr Bombet was held several times following the December coup in connection with corruption investigations, but was then cleared after General Guéï publicly said in April that there was no evidence of wrong-doing against the former interior minister during a political visit to western Côte d’Ivoire, their common home region. The public prosecutor, however, re-opened the file following Mr Bombet’s

selection as the PDCI candidate, and he could be ruled out of the race if there is a case to answer. General Guéï’s supporters have raised a constitutional clause which requires civil servants (such as the FPI leader, Laurent Gbagbo) to resign six months before seeking election. In retaliation, the other political parties are questioning General Guéï’s own eligibility on the grounds that the electoral code also requires military personnel to resign six months before standing for office. In addition, political parties, with the RDR as the most vocal, have expressed concern about the impartiality of the newly appointed president of the Supreme Court, Tia Koné, who was formerly a legal adviser of General Guéï.

Mutinies in the army The security forces have not been immune to the rising tension and divisions that have characterised the political scene. Army discipline, in particular, has become a burning concern, since a mutiny was launched simultaneously in Abidjan, the second city, Bouaké, and Korhogo in the north on July 4th. The mutineers looted banks, seized vehicles (some of which belonged to diplomats), and quantities of weapons were stolen, many of which are still unaccounted for. International air traffic was closed down and a 24-hour curfew was ordered. Most public and private services were paralysed as a result. The mutiny was eventually quashed by a well-equipped gendarmerie, leaving three dead. This was the first time that security forces had turned their guns on each another in Côte d’Ivoire. The unrest appeared to be over allowances allegedly promised after the December military coup; the mutineers were demanding up to CFAfr6m (about US$9,000) each. But negotiations under General Mathias Doué, a high-ranking member of the junta, ended with a promise to pay CFAfr1m. The transitional government has pleaded poverty and it is unclear how much of the bonus has been paid. Occurring six months after the December coup, the military unrest was an evident illustration of dissension within the security forces and General Guéï’s lack of control over the army. Although looting by mutineers was systematic and devastating, especially in Bouaké, only 51 soldiers have appeared before military courts on charges of disobeying orders and aggravated theft. Eleven were sentenced to 10 years in prison. In fact, General Guéï mostly blamed politicians for instigating the unrest. Some RDR leaders were subsequently arrested for questioning, but no evidence was produced.

General Guéï’s residence is The two-day mutiny sparked off a wave of rumours of coups and assassination attacked plots. Concerned about his own safety in the immediate wake of the mutiny, General Guéï undertook his first reshuffle of the security services, recruiting retired French military advisers and dismissing some of his bodyguards. In early September, seven soldiers were detained on suspicion of subversion, and the police announced that two Ivorians recruited by former President Bédié had been plotting to overthrow the military regime. In the early hours of September 18th, a group of rebel soldiers attacked General Guéï’s residence. They were eventually driven back by loyalist troops, after two hours of heavy fighting left two bodyguards dead and many wounded. The incident was described as an assassination attempt against the military junta leader, and an unprecedented purge in the military followed. At least 14 military personnel were arrested, most of them members of the presidential guard from the north.

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General Guéï has also recruited seven other Frenchmen to the presidential guard, including the retired higher commanding officer, General Lacaze. They are expected to reorganise the presidential security unit.

The government is In an address to diplomats and politicians on September 21st, General Guéï reshuffled repeated charges that politicians were manipulating sections of the military, and promised to restore order as soon as possible and hold the presidential election on time. Meanwhile, the residence of the minister of security and member of the CSNP, General Lassana Palenfo, was searched by the gendarmerie. General Palenfo and the minister of infrastructure, General Abdoulaye Coulibaly, also a high-ranked member of the CSNP, are known for their sympathy to the RDR leader. General Guéï reshuffled his government on September 22nd, and not only were General Palenfo and General Coulibaly dismissed but a warrant arrest was issued against them, after General Guéï accused both of them of complicity in the attempt on his life and threatening the security of the state. Both have taken refuge in the Nigerian embassy. With the nomination of two other military men, General Akawa Augustin Assaud to be minister of security and Colonel-Major Yao Pascal Konan to be minister of justice, both of them from the gendarmerie, the most faithful military force to General Guéï, the transitional government is turning into a tough military regime. To counter this impression and prepare for the election, General Guéï brought two new civilians into the government: Yao Yves Kouaré as deputy minister of finance and Honoré Douty as deputy minister of defence.

Official harassment of the Though the December military coup was at first popular many Ivorians have opposition increases become disillusioned, as General Guéï is seen to have turned his back on his promises to establish a genuine democracy. Even before he announced his candidacy, there was mounting disquiet about the junta’s commitment to the democratic process. For example, the launch of the RDR manifesto at a hotel in July was cancelled after paramilitary forces surrounded the building on the grounds that campaigning had not started. Yet giant posters asking General Guéï to run as the people’s candidate had gone up in Abidjan and in rural areas. Also in July, security forces clashed with pro-RDR demonstrators supporting a French call for no “artificial” exclusion of candidates from the presidential election. Meanwhile, Muslim religious leaders started to voice complaints of harassment by the police and the gendarmerie.

Everything now seems to indicate that General Guéï will do whatever he can to maintain himself in power. The Ligue ivoirienne des droits de l’homme has denounced General Guéï for using the state-owned media and state funds and resources for his pre-electoral campaign. In the latest case of press harassment, a journalist from the pro-RDR daily, Le Jour, was beaten up by members of the presidential guard over an article questioning General Guéï’s eligibility to stand in the election. The Union nationale des journalistes de Côte d’Ivoire and a press watchdog, the Observatoire ivoirien de la liberté de la presse, started a campaign to put a stop to “military delinquency”. But official harassment has surged since the alleged assassination attempt in September.

Weak control over the army could partly explain the attack on Mr Guéï’s residence; however, several political parties claimed that the incident was a

“masquerade and manipulation” aimed at clamping down on political activity, or even postponing the presidential election for an infinite period. Indeed, shortly after the event, General Guéï announced that any kind of political meeting was now banned (a ban on open-air political meetings was already in force). This has angered the FPI and the PDCI, who have condemned the ban on political activities as non-constitutional and say they are prepared to challenge it. It has also been suggested that the attack could have been staged to disqualify the RDR leader from the presidential contest. A few hours before the event General Guéï had declared on national television that he had information that an attempt would be made on his life. For RDR supporters, the timing of this announcement and the attack of his home were all a plot against Mr Ouattara, and although General Guéï fell short of arresting the RDR leader, he did target his Northern supporters in the army and the government. According to General Palenfo, most of the soldiers arrested after the attack on General Guéï’s residence have been tortured and killed.

International interference As political tension in the country has increased, Côte d’Ivoire’ international is condemned and regional allies have started to voice their concern about the lack of stability and transparency over the move to democracy in the country. But General Guéï has so far refused to sanction any external involvement in the country’s domestic affairs. In July hundreds of protesters took to the streets in Abidjan accusing France of meddling in their country’s internal affairs and chanting anti-French slogans, after the French co-operation minister, Charles Josselin, warned about the risks of artificially excluding potential candidates from the presidential race, a direct hint at Mr Ouattara’s expected exclusion. This again demonstrated the highly sensitive nature of the debate over nationality The French embassy in Abidjan subsequently reinforced security measures and is reportedly drawing up evacuation plans for its 25,000 nationals in case of an emergency before or after the election. Along with France, the United States and the US-based National Democratic Institute have also warned the military leader against running, but General Guéï has ignored their advice.

The Organisation of African Unity (OAU) and Côte d’Ivoire’s regional neighbours are also very concerned at current developments. At a regional summit in the administrative capital, Yamoussoukro, all the political parties agreed to set up a government of national unity after the elections. A week following the alleged coup attempt in September, OAU heads of state met in Togo’s capital, Lomé, to discuss the political crisis in Côte d’Ivoire. Although General Guéï refused to attend the summit for security reasons, other political leaders failed to attend the meeting, because of a ban preventing them leaving the country without prior authorisation. In the immediate wake of the summit, seven OAU heads of state, including the South-African president, Thabo Mbeki, and the Algerian president, Abdelaziz Bouteflika, went to Abidjan to meet the CNSP leader and politicians. Arguing that the country needed more time to defuse the current political tensions, they proposed that the presidential election should be postponed and a transition executive council of all parties set up in the interim, which received a mixed reaction across the Ivorian political class and a blunt refusal from General Guéï.

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The anti-corruption drive The much vaunted anti-corruption and clean-up operation (July 2000, page 17) falters has been slow and has made little progress since the selective arrest and detention earlier this year of some PDCI veterans accused of misappropriating public funds. The transitional government has not been able to prove that public funds embezzled by former president Bédié, are being held in Swiss banks. In the case of Jean-Michel Moulod, the former head of the Port Autonome d’Abidjan, questions have been raised about the rigour of the audit and the qualifications of the consultancy firm carrying out the audit. Following the last mutiny, some PDCI executives were released, but those who joined General Guéï have carefully stayed away from any current political debates. It is felt in some quarters that some PDCI leaders are supporting General Guéï as a way of ensuring immunity from investigation and that the anti-corruption drive is becoming a political lever.

Economic policy

IMF deplores fiscal slippage The transitional government’s attempt to normalise relations with and poor governance international financial institutions and donors has been overshadowed by the political crisis and impending elections. Although the transitional government has shown some commitment to essential reforms, negotiations with the IMF in the first half of the year over a staff-monitored programme (SMP) have failed because agreed fiscal and governance reforms remain outstanding. This was clearly highlighted in the Fund’s annual review of Côte d’Ivoire’s macroeconomic and policy performance, which was released in early September, three months after it concluded Article IV consultations with the government.

According to the report, fiscal slippage in 1999 continued through to the first half of 2000, despite intensive monitoring by IMF staff and the government’s efforts to tighten the budget. This has led to an accumulation of domestic and external arrears and off-budget spending. Although the poor fiscal performance partly reflects depressed world commodity prices and a drop in the disbursement of external assistance since the December 1999 coup, the Fund insists that the main reasons for the slippage lies in excessive tax exemptions, fraud and weak expenditure control, three areas that the government needed to tackle urgently. Simplifying value-added tax (VAT) and containing the government’s wages bill (despite the recent wage increases and bonus to the military) were also seen as priorities.

The Fund also noted a number of outstanding governance issues beside those emanating from poor public expenditure control, tax fraud and a general lack of budget transparency. In particular, the authorities were urged to:

• remedy the shortcomings identified by the external audit of the former agricultural marketing board, Caisse de stabilisation des prix des produits agricoles (Caistab; 4th quarter 1999, page 14);

• resolve the outstanding issues of non-performing crop loans in the coffee and cocoa sectors; and

• deal swiftly with any new cases of fraud and corruption.

An IMF mission to review progress made in the areas of governance and public finances was scheduled for September, However, as early as July 19th, the minister of economy and finance, Mamadou Koulibaly, announced that the government would not contact the IMF for talks about the interim programme unless significant progress had been made. This proved rather ominous, as most programmes of reform have now been brought to a halt by the ever- deepening political crisis. In its report, the IMF noted that recent political developments had seriously affected macroeconomic and structural policies and stressed the importance of the forthcoming election in reducing political uncertainty and normalising relations with external creditors.

A mixed record on On a more positive note, the IMF was said to be encouraged by the progress structural reform made in the liberalisation of the cocoa and coffee sectors, trade liberalisation, and privatisation. The privatisation programme has continued since the December 1999 coup, though progress has been extremely slow. Recent developments include the following.

• Although the government recently called for bids for the oil refinery, Société ivoirienne de raffinage (SIR), this proved unsuccessful, and the privatisation of the company has been put on hold. High crude oil prices (despite the recent liberalisation of prices for petroleum products) and political instability in the country seem to be the main factors behind this. This is the second time that the SIR privatisation has fallen through. Shortly after seizing power, the CNSP suspended the privatisation process, on the grounds that it lacked transparency and competitiveness. At the time, strategic investors like Total and Elf-Aquitaine (now merged) and Shell had come forward with attractive bids. With an annual capacity of 3m-4m tonnes and an annual turnover approaching US$600m, SIR is the largest company up for privatisation.

• In September the government decided to dissolve Air Ivoire and set up another company, Nouvelle Air Ivoire, as the first step towards privatising the company. An offer by Air France/Air Afrique for a 51% stake in the company has been shortlisted by the government’s privatisation committee.

• The Ministry of Agriculture has embarked on the last phase of the privatisation of the cotton sector, by selling its last remaining ginneries to a farmers’ co-operative (see Agriculture).

• The IMF has called for an audit of the state-owned bank, Caisse autonome d’amortissement, so that an appropriate strategy for its privatisation or liquidation can be decided.

The domestic economy

Agriculture

Reforms in advance of the The government has announced new reforms for the cocoa and coffee sector in new agricultural season advance of the 2000/01 marketing season (October-September). This follows the dissolution of the New Caistab (Caisse de stabilisation des prix des produits

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agricoles) in May (July 2000, page 19). The successor to the old agricultural marketing board and jointly-owned by the government, farmers and exporters, the New Caistab was to act as a regulator in the context of a liberalised market. However, it proved inefficient and badly-prepared for the August 1999 liberalisation of producer prices, a move that coincided with a slump in world prices and led to widespread protests from farmers. According to the minister of agriculture, Ahmed Timité, the new strategy, drawn up under the stewardship of General Guéï’s adviser, Patrick Achi, in consultation with representatives of the coffee and cocoa industry, is aimed at improving farmers’ revenue and ensuring fair competition to prevent large groups from taking dominant positions in the market. However, details of the new structure have not yet been fleshed out, and how the system will actually function remains unclear. In particular, there has been mounting speculation whether the new strategy will meet the farmers’ demands for the re-establishment of some form of price stabilisation. In addition, no timeframe has been announced, and much of the sector is still operating through the New Caistab, even though some of its activities, such as reliable crop forecasting, are non-operational. The marketing season is to be officially opened in the first two weeks of October.

New regulations in the cocoa sector

• The New Caistab is to be taken over by a privately run, Bourse du café et du cacao (BCC). As the new commodities regulator, the BCC will supervise the sector’s purchasing and exporting operations, monitor stocks, gather statistics and promote co-operation.

• Two decrees have been passed: one effecting the dissolution of the Conseil inter- professionel du café et du cacao (whose consultation and co-ordination activities will fall within the scope of the BCC), the other decree reinforces competition rules with regard to purchasing and exporting activities, which are now open to farmers’ associations.

• Although committed to liberalising the industry, the government has also announced the creation of two new public bodies: the regulatory watchdog, Autorité de régulation du café et du cacao (ARCC); and the Comité inter-ministériel des matières premières, a ministerial office in charge of promoting the government’s policy targets. The BCC will be answerable to the ARCC.

Meanwhile, the minister of agriculture said in early September that the export tax on cocoa and coffee beans might be raised in the near future. The tax known as the droit unique d’exportation (DUS) is normally set by the government at the beginning of each season and is paid by the exporter prior to shipment. The DUS was reduced last year to CFAfr125/kg (20 US cents/kg) from CFAfr150fr/kg, under pressure from exporters, on the grounds that the DUS reduced their profit margins and affected their competitiveness. It was also hoped that this would indirectly boost farmgate prices. The DUS on coffee beans is CFAfr10/kg. The scale of the possible increase was not specified.

Buying and storing Despite the confusion surrounding the coming agricultural season and rising capacity rises political risk, leading exporting groups, and also increasingly farmers’ co-

operatives, have continued to invest heavily in the cocoa industry in advance of the 2000/01 marketing season. One effect of the sector’s liberalisation, by cancelling purchasing licences, has been increased competition between farmers’ associations and grinders to collect cocoa beans directly. Purchasing activities in the cocoa sector were formerly monopolised by Lebanese family businesses but, with liberalisation, the demand for upcountry warehouses and pre-export treatment plants has increased considerably. For example, the Abidjan-based company Balton SNES, a subsidiary of the London-based Balton CP Group, has been active in the construction of treatment plants, and upcountry warehouses for Barry Callebaut of Switzerland, Neumann/Ibero of Germany, and Cargill of the US. Most of the plants should be ready for the beginning of the marketing season in October.

In late August, General Guéï laid the foundation stone of a treatment plant in the Central region town of Oumé, being built by Balton SNES. With an annual capacity of 30,000-45,000 tonnes, the plant will be run by the Société co- operative agro-industrielle de la Tène, for the benefit of 18 farmer’s co- operatives, with a membership of around 27,000 farmers.

Cargill’s processing plant in Youpougon, Abidjan, with a capacity of 65,000- 100,000 tonnes of cocoa beans is also to become operational in October. This will greatly increase Côte d’Ivoire’s processing capacity, which is currently 200,000 tonnes, roughly equivalent to the mid-season harvest.

Boosting world cocoa prices : low credibility for a regional plan

Under a plan aimed at boosting world prices, Côte d’Ivoire, Ghana, Cameroon and Nigeria agreed in July to destroy 250,000 tonnes of cocoa beans in the 2000/01 season in an attempt to tackle oversupply on the market. A committee has been formed to finalise arrangements at the end of October. There are no details on what percentage each country would destroy and who would pay for the scheme. Cocoa traders have expressed scepticism about the plan and say it is uncertain that the plan will result in substantial price increases.

ADM raises its stake The US commodities giant Archer Daniels Midland (ADM) has increased its presence in Côte d’Ivoire by buying a majority stake in the ailing Ivorian group Sifca, in which it already held a 30% stake, for CFAfr50bn (US$67m). Under the terms of the deal, two new companies will be formed. The first, ADM Cocoa-Sifca, in which ADM will hold an 80% stake (the remaining 20% going to Sifca) will take over most of Sifca’s activities in the cocoa sector, buying, storing and conditioning, and to a lesser extent processing. Sifca-Côte d’Ivoire (Sifca-CI) will deal with activities in the coffee sector and also continue some cocoa operations, notably running three cocoa processing plants. Sifca’s main cocoa processing plant, Unicao, which can process 86,000 tonnes of cocoa a year, will be jointly owned by the two firms. ADM Cocoa-Sifca has an estimated handling capacity of 150,000-200,0000 tonnes of cocoa beans a year, making ADM the leading cocoa exporter on the domestic market, followed by Cargill, which hopes to purchase 150,000-170,000tonnes this year, compared

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with 148,000 tonnes in 1999/2000. Sifca-CI will continue to handle 50,000 tonnes of cocoa beans and 60,000 tonnes of coffee.

Cotton to be privatised The government is to hand over 80% of the state-owned textile enterprise, Compagnie ivoirienne de développement des textiles-Nouvelle (CIDT- Nouvelle) to the farmers co-operative, Union régionale des entreprises coopératives de la zone des savanes de Côte d’Ivoire (URECOS-CI). This is the final step of a liberalisation programme started in 1998. There was no open tender, which contravenes the World Bank-IMF’s conditions of fairness and transparency. In addition, URECOS-CI will pay CFAfr16bn (US$21m), which is much lower than the price paid by other consortia when the textile parastatal, CIDT, was split into three blocks in October 1998. CIDT-Nouvelle has four ginning mills with a total capacity of 103,000 tonnes and a silk mill.

A new mill, owned by Compagnie cotonnière ivoirienne (LCCI) and located in M’Bengue, near Korhogo, became operational in August. With a capacity of 100,000 tonnes, the new plant is the biggest cotton ginnery in West Africa. This puts the country’s total ginning capacity at 424,000 tonnes, which roughly matches domestic seed cotton production. Before, lack of ginning capacity meant that raw cotton was sometimes stored for long periods in less than optimum conditions. Société Ivoire Coton (SIC), owned by the Aga Khan group and the Belgian group Reinhart, is also planning to open a ginning mill in the near future.

Côte d’Ivoire: export crop production, final estimatesa (‘000 tonnes) 1998/99b 1999/2000b Cocoa 1,163 1,300 Coffee 131 325 Seed cotton 368 400 Cotton fibre 87 95

a Cumulative arrivals at the ports of Abidjan and San-Pédro. b Agricultural season (Oct-Sep).

Sources: EIU; E D & F Man; Reuters.

Infrastructure

Abidjan port is to be The Anglo-Dutch consortium, Locodjoro Development Consortium (Lodeco), expanded consisting of the Dutch company P & O Nedlloyd, which holds an 89% stake in the consortium, and the British companies, Transport and Communications International (TCI) and Christiani & Nielsen, has been awarded a 30-year build-operate-transfer concession to extend the port of Abidjan, Port Autonome d’Abidjan (PAA). This is the result of more than two years of negotiations with the Ivorian authorities. The consortium had already completed a feasibility study for the port extension in February last year and has been chosen over France’s Bouygues. The project, worth US$130m, includes:

• the construction of a container terminal over 40 ha;

• an industrial free zone spread over 162 ha; and • a telecommunication centre.

The planned capacity of the new container terminal is 500,000 units per year and will help to relieve congestion at the port’s container terminal in Vridi. It will be located on the other side of Abidjan’s lagoon, at Locodjoro. The consortium will also conduct a feasibility study for a new bridge across the lagoon linking the Plateau business district with the Locodjoro area. Work is expected to start in 2001 and be completed by 2004. According to the developers, the project could generate some 10,000 jobs. The port of Abidjan is the busiest in francophone West Africa, and handled total freight of 15,338m tonnes in 1999, a significant portion of which is destined for its landlocked neighbours, Burkina Faso and Mali. Côte d’Ivoire’s second port is San-Pédro, which handles small volumes of timber and cocoa.

Foreign trade and payments

Debt arrears begin to The government has continued to struggle to meet its obligations on external mount debt, while making sure salaries are paid on time. According to the IMF report published in July, non-reschedulable external arrears had started to accumulate in late 1999, reaching CFAfr67bn (US$90m) by end-June 2000. Most of these arrears are of principal repayments on official debt owed to the Paris Club of bilateral creditors. Indeed, the government has continued to prioritise payments to the IMF, the World Bank, and the African Development Bank, with the French aid agency, Agence française de développement (AFD) next in line. Up to the end of August, Côte d’Ivoire had no outstanding arrears with the IMF and the World Bank. However, its arrears with the African Development Bank were CFAfr1.6bn and with the AFD they were CFAfr31.1bn. On September 1st the AFD suspended its disbursements, for the second time this year, after the government failed to make further payments.

According to the IMF, as of mid-July, the authorities had made full principal and interest payments to commercial creditors after some delay. However, according to government estimates, payment arrears to the London Club of commercial creditors stood at CFAfr160m at the end of August. The government will also continue to use the available grace periods to the full in order to ease its cash flow. In particular, payments to the World Bank are now almost systematically made with a delay of 90 days, the maximum grace period allowed by the Bank before sanctions are imposed. As a result, September payments, due in two instalments and totalling US$27.5m, will probably be paid in the last two weeks of October. But pressure by then will be tightening, as a semi-annual Brady commercial bond disbursement of US$36m falls due on September 30th. Analysts say that arrears will mount, but seem confident that some payments will be made before default.

EIU Country Report October 2000 © The Economist Intelligence Unit Limited 2000 Mali 25

Mali

Political structure

Official name République du Mali

Form of state Unitary republic

Legal system A new constitution was approved by referendum in January 1992

National elections April 1997 (legislative), later annulled and re-run in July-August 1997. May 1997 (presidential). Next elections (legislative and presidential) due in 2002

Head of state President, currently Alpha Oumar Konaré, elected by universal suffrage

National government The prime minister and his appointed Council of Ministers; the current government, appointed in September 1997, is dominated by Adema

Main political parties Alliance pour la démocratie au Mali (Adema, the ruling coalition). The main opposition alliance is the Collectif des partis politiques de l’opposition (Coppo). It includes Mouvement patriotique pour le renouveau (MPR); Rassemblement pour la démocratie et le progrès (RDP), and Congrès national d’initiative démocratique (CNID). Other prominent opposition parties include Union soudanaise-Rassemblement démocratique africain (US-RDA) and Mouvement pour l’indépendance, la renaissance et l’intégration africaine (MIRIA)

Prime minister Mandé Sidibé

Key ministers Armed forces & veterans Soumélou Boubèye Maïga Culture Pascal Baba Coulibaly Economy and finance Bacari Koné Education Moustapha Dicko Employment Makan Moussa Sissoko Foreign affairs & Malians abroad Commandant Modibo Sidibé Health Traoré Fatoumata Nafo Industry, commerce and transport Touré Alimata Traoré Justice Abdoulaye Ogotembely Poudiougou Local authorities Lieutenant-Colonel Sada Samaké Mines, energy and water Aboubacary Coulibaly National, regional & urban development & the environment Soumaïla Cissé Rural Development Ahmed El Madani Diallo Security & civil protection Général Tiécoura Doumbia Territorial administration & local collectives Ousmane Sy

Governor of the regional central bank (BCEAO) Charles Konan Banny

Economic structure

Annual indicators

1996 1997 1998 1999 2000a GDP at market prices (CFAfr bn) 1,318 1,421 1,530 1,652 1,717 Real GDP growth (%) 4.3 6.8 3.8 5.3 4.8 Consumer price inflation (av; %) 6.5 –0.7 4.0 1.3 0.8 Population (mid-year; m) 9.19 9.37 9.79 10.0 10.2 Exports fob (US$ m) 433 561 556 569 480 Imports fob (US$ m) 551 546 558 592 600 Current-account balance (US$ m) –261 –178 –203 –234 –220 Reserves excl gold (US$ m) 432 415 403 350 308b Total external debt (US$ m) 3,006 3,142 3,202 3,000 n/a External debt-service ratio, paid (%) 15.5 10.2 12.6 n/a n/a Cotton productionc (‘000 tonnes) 452 523 519 460 330 Exchange rate (av; CFAfr:US$) 511.6 583.7 590.0 615.7 70

September 29th 2000 CFAfr743.34:US$1

Origins of gross domestic product 1998 % of total Components of gross domestic product 1998 % of total Agriculture 46.1 Private consumption 74.7 Industry 20.9 Government consumption 10.7 Manufacturing 7.2 Gross domestic investment 24.0 Services 33.0 Exports of goods & services 24.0 GDP at factor cost 100.0 Imports of goods & services –33.3 GDP at market prices 100.0

Principal exports 1999 US$ m Principal imports 1998 US$ m Raw & lint cotton 256 Machinery 305 Gold 231 Petroleum products 301 Livestock & products 45

Main destinations of exports 1999d % of total Main origins of imports 1999d % of total Italy 18.2 Côte d’Ivoire 18.7 Thailand 14.8 France 18.9 Portugal 4.2 Senegal 3.8 Germany 6.5 Belgium-Luxembourg 2.6 a EIU estimates. b Actual. c Raw cotton; crop years beginning October 1st. d Based on partners’ trade returns; subject to a wide margin of error.

Quarterly indicators

1998 1999 2000 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr Prices Consumer prices (1995=100) 110.4 114.9 111.9 106.8 109.0 112.5 109.3 105.6 % change, year on year 3.6 6.5 5.6 1.0 –1.2 –2.1 –2.4 –1.1 Financial indicators Exchange rate CFAfr:US$ (av) 601.6 590.8 557.8 584.4 620.7 625.8 631.9 664.9 CFAfr:US$ (end-period) 611.7 561.6 562.2 610.7 635.1 615.1 653.0 686.7 M1 (end-period; CFAfr bn) 264.8 245.7 267.6 248.1 314.4 278.4 266.0 n/a % change, year on year –0.6 –2.9 4.5 –16.4 18.7 13.3 –0.6 n/a M2 (end-period; CFAfr bn) 360.6 344.1 359.5 352.7 407.4 383.6 363.0 n/a % change, year on year 4.0 1.2 4.2 –8.4 13.0 11.5 1.0 n/a Foreign tradea (US$ m) Exports fob 88.5 62.9 64.2 48.1 66.2 57.9 62.0 57.9 Imports cif –312.6 –289.3 –323.1 –308.6 –307.7 –318.8 –319.6 –326.3 Trade balance –224.1 –226.4 –258.9 –260.5 –241.5 –260.9 –257.6 –268.4 Foreign reserves Reserves excl gold (end-period; US$ m) 410.5 410.1 402.9 425.7 376.3 330.5 349.8 n/a a DOTS estimates.

Sources: IMF, International Financial Statistics; Direction of Trade Statistics.

Outlook for 2001-02

Political outlook

Domestic politics With the next round of elections only two years away, political manoeuvring within the ruling Alliance pour la démocratie au Mali (Adema) and in the opposition camp will increase, as politicians seek to become their parties’ presidential candidate. The organisation of the elections will be a topic of debate, as all politicians are keen to avoid a repeat of the chaotic 1997 presidential and legislative polls.

Corruption issues will also continue to top the media and political agenda. Recently, former officials of the cotton parastatal, Compagnie malienne de développement textile (CMDT) have been detained, including several close to the former prime minister, Ibrahim Boubacar Keïta. Similar investigations can be expected throughout the forecast period, partly as a means of settling political scores, but also in an effort to regain some of Mali’s lost credibility with the international donor community. Media attention will also turn to Mali’s preparations for the 2002 African nations’ football cup, which it will host. The organising committee has already come under criticism, on a variety of counts.

Election watch The succession to the incumbent president, General Alpha Oumar Konaré, seems increasingly open. The nomination of the former prime minister, Mr Keïta as Adema’s presidential candidate, thought until 1999 to be a formality, is looking increasingly unlikely, as a growing reformist bandwagon prepares to challenge his candidacy. A powerful faction in the government of the prime minister, Mandé Sidibé, the rénovateurs also seems prepared to split the party to prevent his nomination. Moreover, President Konaré’s attitude towards his former head of government appears increasingly unfavourable, although he has not indicated who he would like to succeed him. This opens the intriguing possibility of rival Adema candidates contesting the election. Much of Mr Keïta’s future will depend on the proceedings of the ad hoc anti- corruption commission set up in October 1999. So far this body has con- centrated on investigating leading members of Adema from the Keïta period.

Among other likely front-runners, the former head of state General Amadou Toumani Touré has yet to announce his long-awaited candidacy, even though the electorate, notoriously apathetic about presidential campaigns since the establishment of multiparty democracy in 1992, could respond well to a campaign similar to his 1991-92 rallying cry of kokadjé (cleanness), after he overthrew the military-backed rule of Moussa Traoré amid considerable bloodshed. The increasingly divided political opposition will, meanwhile, probably fail to agree on a single candidate, and each party will field its own candidate the first round of the election as a result. But it will probably come together in the second round to support General Touré, should the latter face Adema’s candidate, which is the most likely scenario.

International relations Mali will continue to win international recognition for its efforts in regional peacekeeping, the consequence of President Konaré’s chairmanship of both the francophone Union économique et monétaire ouest-africaine, and the wider regional body, Economic Community of West African States (ECOWAS). Under the auspices of ECOWAS, the president has been active in trying to find an interim solution to the current conflict on the Guinea-Liberia border. A presidential visit to France on September 24th-25th is a confirmation that relations between Mr Konaré and the French president, Jacques Chirac, have improved in recent months. Mr Konaré offended Mr Chirac in 1995, by refusing to fly to Dakar to meet him after his (Mr Chirac’s) recent election.

Economic policy outlook

The government led by the prime minister, Mandé Sidibé, will continue to show a strong commitment to economic reform and financial liberalisation. Despite difficulties in the cotton industry, the budget has remained largely on track, according to the last IMF-World Bank mission in May 2000. Disbursements under the 1999-2001 enhanced structural adjustment facility will continue. In addition, Mali’s status as a leading beneficiary of the heavily indebted poor countries (HIPC) debt initiative, led by the World Bank, will result in appreciable cuts in the overall debt burden over the forecast period. This will free up valuable domestic resources, helping the government to revive its poverty alleviation programme and increase expenditure in education.

Consensus over the need to speed up the privatisation programme should help President Konaré’s anti-corruption offensive to produce results. Serious corruption at the power parastatal, Energie du Mali, is as much to blame as incompetence and underinvestment for the recent dry-season energy shortages. In addition, the finances of the cotton parastatal, Compagnie malienne de développement du textile, need auditing.

Economic forecast

Economic growth According to the latest report from the Food and Agriculture Organisation’s Global Information and Early Warning System, growing conditions in Mali in the 2000/01 season have remained favourable, with generally well-distributed and regular rains. Flooding in the north in late August should have limited impact on overall agricultural production. Assuming no catastrophic reverses in the regional climate, the EIU continues to forecast sustained real GDP growth over the outlook period. However, the deepening crisis at CMDT makes the previous forecast of 6% for 2001 far less certain than previously assumed. As CMDT accounts directly or indirectly for up to 35% of domestic economic activity and Mali is Sub-Saharan Africa’s largest cotton producer, the implications could be significant. Therefore we have lowered our GDP forecast to 5%. This is entirely due to the problems at CMDT, however, since elsewhere, the economy will continue to perform well. In addition to the continuing strength of the non-cotton agricultural sector, investment in mining will rise and the gold sector is expected to expand.

Inflation Inflation will remain tightly controlled. The regional central bank, the Banque centrale des Etats de l’Afrique de l’ouest (BCEAO) continues to maintain tight monetary policy, offsetting the inflationary impact on imports of the weak euro, to which the CFA franc is pegged, and the effects of high international oil prices. Monthly indices so far this year suggest very low (if not negative) rates of year-on-year inflation, and the broadly satisfactory food supply position should ensure that this remains the case throughout the dry season and into next year’s growing season. Overall, our assumption is that average inflation will not exceed 1% in either forecast year.

Exchange rate Since it is pegged to the euro at a rate of CFAfr656:¤1, fluctuations in the CFA franc primarily reflect the growth differential between the euro area and other major industrialised economies, developments somewhat detached from the economic reality of Mali. The EIU has sharply lowered its forecast for the euro exchange rate against the US dollar, reflecting recent currency market movements. Although we expect the euro to recover eventually, there is little prospect of this happening within the next six months. The exchange rate is now forecast to average US$0.93:¤1 in 2000, rising to US$0.95:¤1 in 2001. As a result of the pegging, the CFA will also depreciate to CFAfr703.4:US$1 in 2000, from CFAfr615.7:US$1 in 1999, recovering slightly to CFAfr694.1:US$1 in 2001 and CFAfr624.7:US$1 in 2002.

Mali: forecast summary (US$ m unless otherwise indicated) 1999a 2000b 2001c 2002c Real GDP growth (%) 5.3 4.8 5.0 5.0 Consumer price inflation (av; %) 1.3 0.8 1.0 1.0 Exports fob 569 480 540 570 of which: cotton 256 210 200 220 gold 231 260 270 290 Imports –592 –600 –625 –630 Trade balance –23 –120 –85 –60 Current-account balance –234 –220 –170 –110 Exchange rate CFAfr:US$ (av) 616d 703 694 625

a Official estimates. b EIU estimates. c EIU forecasts. d Actual.

External sector The external sector is dominated by the fluctuating output of Mali’s traditional main export, cotton. The continuing troubles at the state cotton company CMDT are reflected in our export projections. Not only is the CMDT in worse shape than many suspected, but farmers’ confidence in cotton as a cash crop has been badly shaken, suggesting that the sector will remain depressed for at least the next two seasons after a decade of spectacular (and, environmentalists argue) unsustainable expansion. As a result, gold will almost certainly overtake cotton as Mali’s key merchandise export this year and over the forecast period. The radical downward revision of our forecast for cotton exports in 2000-01, coupled with new figures recently released by the Banque de France, has led us to revise our current-account forecast for Mali quite significantly. Assuming a continuing relaxation of pressure on the invisibles balance owing to debt-

service relief under the HIPC initiative, we now expect a current-account deficit of roughly US$170m in 2001, although the following year could see a (highly speculative) current-account deficit of US$110m.

The political scene

Adema’s battle lines are The ruling Alliance pour la Démocratie au Mali (Adema) has experienced an drawn uncomfortable few months, which look likely to continue into 2001. From June onwards, disagreements at committee and constituency levels intensified, under a steady media gaze. The party’s executive committee, meeting at the end of July, agreed to hold a national party conference in October. Just before this, 69 of Adema’s 129 deputies had voted in favour of immediately holding an extraordinary congress, which would challenge the leadership structure through primary elections. The national party conference is expected to cause further damage to the party’s façade of unity, amid rumours of arcane procedural manoeuvring to turn it into an extraordinary congress. Members of the current cabinet and their supporters have a strong collective bias against the Adema president and previous prime minister, Ibrahim Boubacar Keïta, and many of his generation of ministers. They are thought to have the support of the president, Alpha Oumar Konaré, who leaves office in 2002. He is assumed to be against Mr Keïta standing as his successor: Mr Konaré was not happy with the explosion of official corruption in 1999, as power supplies failed and relations with the IMF and key donors deteriorated. His long-standing relationship with General Amadou Toumani Touré, a possible independent candidate and transitional head of state in 1991-92, is perhaps a further reason why he would split his own party against Mr Keïta, and the October conference will probably do precisely this. In September 16 more Adema deputies came out in favour of an extraordinary congress, bringing the total of those challenging Mr Keita’s position to 85 out of 129.

Family links come into play In a surprisingly frank interview in August, a leading Adema minister, Kadiatou Sow Sy, indicated that she thought it a bad idea for a country’s ruling party to adopt its chief officer as its presidential candidate. Mrs Sy’s husband, Ousmane

Sy, is minister of decentralisation and territorial administration, and as such the man who knows the most about how Mali’s recently decentralised electoral system works. The message could hardly have been clearer: an attempt by Mr Keïta to run for the presidency will be torpedoed from inside his own party. Both Mr and Mrs Sy are closely identified with the “CMDT clan” (now also known as the rénovateurs), named in reference to the corruption scandal in the troubled cotton parastatal, Compagnie malienne de développement textile (CMDT), which has greatly soiled Mr Keïta’s image (see Economic policy). Other prominent members include the planning minister and long-standing enemy of Mr Keïta, Soumaïla Cissé. The defence minister Souméylou Boubèye Maïga, personally close to Mr Konaré, is also clearly in the CMDT camp.

General Touré is enigmatic Meanwhile, General Touré has maintained his enigmatic silence about his and the opposition divided possible presidential ambitions. But his candidacy is gathering serious support among the influential Malian diaspora, generally estimated at 3m-strong, many of whom are wealthy through business. In Dakar, Abidjan, Paris and other capitals, informal committees called “Plebiscite 2000-ATT” have sprung up since early 2000, while domestic support committees are reportedly growing in strength. General Touré is assumed to be watching the Adema split develop, while judging when to decide that the people have asked him to put himself forward.

The opposition, however, is as divided as ever. In late July the Collectif des partis politiques de l’opposition (Coppo) relaunched itself. Coppo was the umbrella body for opposition parties which decided to boycott the political process after the botched legislative and presidential elections of 1997. However, three parties including the Mouvement pour l’indépendence, la renaissance et l’intégration Africaine (MIRIA) immediately walked out, claiming that they were unwilling to sacrifice their identity. Another veteran opposition party, the Union soudanaise-Rassemblement démocratique africain, then followed suit. This and other factional squabbles, plus a lack of resources, make it highly unlikely that Coppo will be able to field a single, credible candidate at the polls.

The Traoré question One issue that will not go away as election day approaches is the fate of the remains open former head of state (from 1968 to 1991), General Moussa Traoré. Since he was found guilty of various crimes in a series of trials lasting from 1992 to 1997, he and his wife have been in detention in a villa in Markala, north of Ségou. In early August they were transferred to Algeria for medical care, and it was reported that General Traoré, 64, looked frail as he boarded the plane. Returning on August 20th, General Traoré was clearly looking better, according to airport workers. Were General Traoré to die in the next 18 months, Mr Konaré—a minister under General Traoré—would face a dilemma over how to mark his passing. Although the general was convicted of human rights and economic crimes in trials which were regarded as relatively well-organised, several major figures including General Touré have argued for a forgive-and- forget approach to the Traoré era. Whether or not to allow a state funeral would therefore be a delicate question.

Economic policy

The IMF applauds Mali’s The IMF has disbursed a further SDR6.75m (US$9m) tranche of Mali’s three- poverty reduction efforts year poverty reduction and growth facility (PRGF), and has published the government’s interim poverty reduction strategy paper (PRSP). Completion of a full PRSP is one of the conditions for receiving debt relief under the enhanced heavily indebted poor countries initiative (see Foreign trade and payments). The Fund noted that the terms of trade had swung badly against Mali in 1999- 2000, squeezing the government’s taxation revenue from trade. (This trend has been accentuated this year by the move of the Union économique et monétaire ouest-africaine to common external tariff open-market arrangements.) The IMF nevertheless commended the government for having reduced non-essential spending and rapidly correcting reform slippages at various levels of the budgetary system.

Corruption continues to The issue of high-level corruption in Mali is arguably as political as it is dog policymakers economic, although the economic policy implications are important in such a poor and informalised economy. The issue has stayed close to the top of the agenda during the quarter, which for the first time saw the arrest or investigation, of high-level figures from outside the ruling party, the Alliance pour la démocratie au Mali (Adema). The publication (and leaking) of reports from the ad hoc anti-corruption commission—set up by the president, Alpha Oumar Konaré—have painted a picture which surprises few urban Malians: that high-level corruption involves major economic operators and government suppliers on the one hand, and top officials, often with close links to Adema, on the other. The commission’s most recent report, in July, highlighted:

• serious problems at the state property agency, the Agence de promotion immobilière, including tendering irregularities and payments arrears. The agency has long been a byword for irregular and speculative practices in Bamako’s booming construction sector;

• poor administration at the state pension funds and at the now-privatised tobacco parastatal, Société nationale des tabacs et allumettes (Sonatam); and

• major discrepancies in food stock accounts at regional depots of the UN World Food Project; prosecutions are expected over this.

Meanwhile, in July a fact-finding mission to the Ségou region revealed underassessment of customs dues topping US$10m in recent months, while police raids in Bamako have uncovered networks of reselling for illegally imported and untaxed petroleum products. In reality, such mid-scale graft has been endemic since the mid-1990s, and local people point out that the crackdown on corruption could just as easily have been launched in 1997-98. However, this would have been more difficult politically for Mr Konaré, who has always been a shrewd judge of when to turn a blind eye to the spare-time activities of his officials and party lieutenants.

Top cotton officials are In a further development, high-level officials at the cotton parastatal, arrested Compagnie malienne de développement textile (CMDT), including its former

director-general Drissa Keïta, were detained on charges of corruption and maladministration in August. Charges are expected shortly. During 1999, considerable—and suspicious—overordering of spare parts and supplies contributed to a company loss of CFAfr57bn (US$92m) by end-September. Trade union representatives and the independent press were signalling problems at the company as early as May 1999, but the government was sluggish in its response, as Mr Konaré decided whether to launch a comprehensive anti-corruption drive. The political subtext to the CMDT scandal, is that Mr Keïta was kept in his post by Mr Konaré for several years, as a counterbalance to a powerful faction within Adema, grouped around the finance minister (now development minister), Soumaïla Cissé. Mr Cissé’s allies spent much of the 1990s trying to destabilise Drissa Keïta. Although the former prime minister Ibrahim Boubacar Keïta has also suffered destabilisation from the CMDT scandal, there is no suggestion of wrongdoing on his part. The former prime minister is not related to the former director-general of CMDT. If Drissa Keïta and his associates ever come to trial, their evidence could be sensational. Meanwhile, insiders at the company blame Mr Keïta’s successor, Bakary Traoré, for the increasing mistrust felt by rural producers. Mr Traoré was previous head of Banque nationale de développement agricole (BNDA), the rural development bank, which has a poor reputation in cotton-growing areas.

The domestic economy

The Banque of France Released on September 18th, to coincide with the annual meeting of finance makes its annual report ministers of the 15 member countries of the African Franc Zone, the Banque de France’s annual report broadly confirms the performance of the domestic economy in the 1995-99 period (estimates for 1999 have until recently been subject to wide variation).

Mali: national accounts (CFAfr bn unless otherwise indicated) 1996 1997 1998 1999 Private consumption 1,055 1,000 1,222 1,299 Public consumption 210 221 176 195 Gross fixed capital formationa 275 324 292 328 Exports of goods and services 265 362 377 382 Imports of goods and services 487 486 538 552 GDP at market prices 1,318 1,421 1,530 1,652 % change year on year 4.3 6.8 3.8 5.3 Inflation (%) 2.8 0.9 3.0 1.3

a Including variation in stocks.

Source: Banque de France, La Zone Franc, Rapport annuel.

The report confirms particularly that capital formation was buoyant despite the poor agricultural performance in 1999. Meanwhile, a slight deterioration in public finances was noted in 1999, as public spending slightly overshot its target to help offset the deterioration in the terms of trade. Expenditure

totalled CFAfr418bn (US$678m), compared with a planned CFAfr410bn under the terms of the IMF-backed structural adjustment programme. The Banque de France’s key conclusions were that:

• structural conditions favour continuing steady growth, assuming the government continues to keep the budget under control and that expansion in the agricultural sector continues;

• an improving energy balance, with the final arrival of power from the Manantali dam project in 2001-02, will underpin the expansion of the urban economy; and

• privatisation and radical reform of state-owned industries remains vital to the overall picture.

CMDT’s fortunes go from After several months of turmoil at the cotton parastatal, Compagnie malienne bad to worse de développement textile (CMDT), government ministers were gloomy in early August over the prospects for cotton in the coming 2000/01 season (October- September). In-house CMDT planners were quoted as saying that if the 2000/01 crop topped 400,000 tonnes of raw cotton, “it would be the work of God”, and that even 300,000 tonnes “would be welcome”. The rural development minister, El Madani Diallo, forecast a slump in production in the key southern areas of Sikasso, Bougouni and Fana. This, he blamed on rural producers switching out of cotton and into foodstuffs, in response to conditions on world and liberalised domestic markets. In May the government’s decision to modify the producer-price structure had led to a revolt by farmers, who objected to the effective withdrawal of bonus payments per kg of cotton produced, which they regard as an integral part of the overall payment structure. By the end of August the Liverpool-based trade weekly Cotton Outlook had revised its forecasts for 2000/01 output sharply down, to 160,000 tonnes of ginned cotton, compared with a provisional production figure for 1999/2000 of 200,000 tonnes.

Irregular early-season rains have compounded farmers’ difficulties, which also stem from what consultants have described as “catastrophic” management. The CMDT made a loss of CFAfr28.2bn (US$45.8m) in 1999, according to a report by the consultants Ernst & Young, completed in July. Ernst & Young also noted the weak capitalisation of the company, which will become a worse problem as results from the unpromising 2000/01 season come in. Raising capital for the CMDT on the regional stockmarket, the Bourse régionale de valeurs mobilières (BRVM) is the consultants’ preferred solution.

Energy bottlenecks remain Although the arrival of the rains in June improved hydroelectric power a problem supplies to Bamako, in August there was serious disruption to gas consumers in the capital and major cities when Total-Mali’s main depot was hit by lightning. However, Total staff argued that debts owed by the state, which is due to phase out gas subsidies in December, posed as great a problem as the lightning strike. Urban domestic gas consumption has increased five to seven times in the past decade, partly owing to a combination of subsidies to distributors and a publicity campaign promoting gas as an alternative fuel to wood.

Morila mine about to open South Africa’s Randgold confirmed in August that its Morila mine would go into production as scheduled in October, with a projected 6.3-tonne annual production from 150 tonnes of proven and viable reserves. In July AngloGold, the other major South African player in the Malian gold sector, acquired 50% of Randgold’s stake in a deal worth a total of US$132m. This guarantees the early-phase financing required to bring the mine into production on schedule. Responding to the announcement, the director of the Direction national de la géologie et des mines (DNGM), Ibrahim Abba Kantao, predicted that Morila could guarantee the state (a minority shareholder with a statutory 20%) an annual CFAfr11bn in revenue. Mali also remains on course for production of 40 tonnes in 2001, slightly below the EIU’s previous assumptions. This is due to continuing uncertainty over the start-up dates of two other major projects. The DNGM is privately optimistic about the medium-term outlook for the industry, citing continuing improvements to mining legislation and the knock- on effects of Morila-scale projects: the mine will generate 500 jobs. However, a skills shortage at technician and engineer level is a worry for Mr Kantao and his colleagues: they have recently called for the establishment of a national mining school.

Foreign trade, aid and payments

HIPC completion point is On September 12th, Mali was accepted into the World Bank-IMF’s heavily finally reached indebted poor countries (HIPC) debt initiative. Although the “completion point”, which triggers an across-the-board debt reduction, was technically on schedule, it was only reached after heavy pressure from the Bank over official corruption, and in particular the dubious circumstances surrounding the attribution of GSM rights to a locally based and French-backed cellphone network earlier in the year.

At the heart of the HIPC deal will be a write-off of US$220m of debt owed to the Fund and the International Development Association (IDA, the World Bank’s concessional lending affiliate), and covered by the original HIPC initiative. In net present value terms, this amounts to US$128m. In addition, Mali has now been formally admitted to the enhanced HIPC framework (in place since 1999). Successful completion of this addition programme will trigger an all-creditor debt reduction of US$650m (US$401m in net present value terms). The IMF and IDA have indicated that they will provide interim debt relief against this future write off. Total savings are, however, lower than the notional US$870m being forgiven. The actual value of the two initiatives to Mali is put at roughly US$340m. Mali’s total external debt was estimated by the World Bank at US$3.2bn in 1998, most of it on highly concessional terms.

The current account suffers Figures confirmed by the Banque de France in its annual report on the Franc in 1999 Zone economies, released in September, confirmed that 1999 saw a steady tightening of Mali’s external current position, offset only by a continuing rise in gold exports. This reinforces expectations that the final figures for 2000 will also show a substantial current-account deficit: terms of trade remained weighted against Mali for most of the year.

Mali: current account (CFAfr bn) 1996 1997 1998 1999 Exports (fob) 221.4 327.7 328.1 350.3 of which: cotton 132.6 158.7 144.8 157.9 gold 39.7 117.2 133.1 142.3 livestock & products 30.0 31.3 28.1 28.0 Imports (fob) 282.1 318.5 329.3 364.4 of which: capital goods 155.2 108.5 179.1 188.2 petroleum products 52.3 73.8 70.0 62.6 food products 58.0 64.9 89.5 63.7 Trade balance –60.7 9.2 –1.2 –14.1 Services balance –149.1 –156.9 –159.2 –168.1 of which: freight –114.9 –117.7 –120.7 –126.7 Current-account balancea –133.4 –104.2 –119.9 –144.0 Import cover (%) 78.5 102.9 99.6 96.1

a Including others.

Source: Banque de France, La Zone Franc, Rapport annuel.

Cotton performed better than expected as the lead export in 1999 (although this will certainly not be the case in 2000-02, when gold revenue is expected to increase, despite the alarm caused by the 1998-99 price slump.

Aid news Since June the World Bank has announced credits totalling CFAfr196bn (US$275m) for poverty reduction, to be spent on further improvements to rural water supplies and transport networks. The sum is repayable on highly concession terms, over 40 years, with a ten-year grace period.

In late August Japan announced two grants totalling of FFr61m. The bulk of the money is allocated to poverty reduction, although some is to be used to help Malian importers, according to the government. Earlier, Japan donated spare parts worth nearly US$3m to the state railway company Régie de chemins de fer du Mali, which has been suffering severe shortages of serviceable traction power and rolling stock in recent years. Mali has indicated that it will be opening an ambassador-level diplomatic mission in Tokyo. Japan is a highly visible donor in many African countries, principally medium-sized anglophone economies, but has so far had a relatively low profile in Mali.