April 11, 2010 -
PRLog -- BMI expects the Ivorian construction industry to expand by 15.81% in real terms in 2009 to reach a value of US$0.8bn. Although growth will slow somewhat in 2010 as a result of the global economic downturn, it will still remain strong. By 2014, BMI expects the sector to reach a value of US$1.67bn. Infrastructure will be a key driver of this expansion as the government attempts to repair the country's transport network, which was badly damaged during the 2002-2003 Civil War and is hindering the full exploitation of Côte d'Ivoire's cocoa resources. In addition, BMI believes that it is essential for the country to invest in energy infrastructure in order to avoid power outages. However, foreign investment will be necessary as political instability, endemic levels of corruption and a lack of a coherent legal framework are all factors discouraging the inward flow of capital. De spite this, capital investment should reach US$2.25bn in 2009, an increase of 4.1% year-on-year. After this, investment should pick up, reaching US$3.4bn by As feared, Côte d'Ivoire's elections - paramount to a revival of investor confidence - have been delayed yet again. Robert Mambe, president of the electoral commission, broke the news in early November 2009 that an ill-prepared electoral list will force back the November 29 election date by at least two months. Current speculation pegs the elections around late February or early March 2010, although there is little certainty. Meanwhile, Côte d'Ivoire's poor transport infrastructure, deteriorating road networks and an increasing number of checkpoints are also having a negative impact on foreign investment and are alienating ongoing operations. World Bank official Juan Gaviria highlighted the problem in November 2009, claiming that the cost of road freight in Sub-Saharan Africa is now on average 200% higher than in developed regions. Indeed, according to a recent study of 24 African nations, poor infrastructure is reducing GDP growth in the region's economies by 2% per year, while it is also reducing business productivity by 40%. The undeveloped road network means that haulage costs are among the highest in the world, which is putting pressure on the margins and competitiveness of African businesses. Further problems can be witnessed in the energy sector. In December 2009, Côte d'Ivoire's state-owned electricity company disclosed that the power shortfall in the country will continue until the economic climate is conducive for new investments to take place. The general secretary of the power utility, Mathias Kouassi, said that the country currently has a power capacity of just 860 megawatts (MW), although current demand is also a very low 876MW. According to the utility's estimates, Côte d'Ivoire needs XOF250bn (US$560mn) worth of investments in infrastructure to increase the capacity of the electricity sector. Kouassi further noted that China is a likely partner for the government in tackling the power shortages; a partnership that would also incl ude access to Côte d'Ivoire's oil and gas sector. Market Overview Côte D'Ivoire As feared, Côte d'Ivoire's elections - paramount to a revival in the country's investments - have been delayed yet again. Robert Mambe, president of the electoral commission, broke the news in early November 2009 that an ill-prepared electoral list will fo rce back the November 29 election date by at least two months. Current speculation pegs the elections around late February or early March 2010, altho ugh there is little certainty. This disappointment was balanced, however, by the IMF's upbeat economic review of the country in November 2009, under its Poverty Reduction and Growth Facility. The favourable review gives Côte d'Ivoire access to a XOF35.772mn or US$57.3mn disbursement. Despite the election postponement, the IMF praised the country's progress in political normalisation. There was good news in the cocoa market for Côte d'Ivoire's short-term income, as London prices neared their highest in 25 years. Despite strong production levels in Côte d'Ivoire this quarter, infrastructure risk led in large part to the price hike. Buyers are acute ly aware of the world's leading producer's inadequate infrastructure and, with no turnaround in sight for the medium term, do not expect prices to cool soon. More positively, slides in European demand seem to be easing in line with modest returns to economic growth across Europe. The government's steps in the previous quarter to improve cocoa exports in the 2009-2010 harvest seem to have delivered, although this will put more pressure on infrastructure. The most glaring absence of news over the past two quarters involves a refinery in San Pedro. Since March 2009, when the government and Venezuela's Arevenca said they were in talks about building a US$7bn refinery in five years, both sides have been silent, raising doubts about whether the schedule or even the refinery itself is a serious ambition. Côte d'Ivoire was already suffering from chronic underinvestment in the years leading up to conflict and the problem was exacerbated by the seven years of hostilities. Despite the relative absence of projects being announced, the country's infrastructure outlook could turn bright if elections are conducted in the first quarter of 2010. Investors may become much more willing to make commitments if they see the country can successfully manage an election that has been delayed several times in the past. Côte d'Ivoire's much-improved debt situation also gives the government a much more solid position on which to negotiate projects. More optimistically, parties involved in the West Africa Power Pool (WAPP) met in November 2009 to discuss the Interconnection Project Feasibility Study for the 330kV transmission link from Côte d'Ivoire to Nigeria, passing through Ghana, Togo and Benin. Delegates at the conference are now expected to produce a final report to be used to procure funding fo r the project. In the previous quarter, the European Union-Africa Infrastructure Trust Fund, established by European Investment Bank, granted EUR1.75mn
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